CAF Supports Bolivian Employment Program and Pension Reform

The Andean Development Corporation (CAF) will contribute $25 million to the National Employment Program and back the new financing structure for Pension Reform. These agreements were reached with the Bolivian government during the current visit of the CAF Programming Mission.

CAF President, Enrique García, was planning to hold Thursday a meeting with President Quiroga, before signing the agreement. García, however, has been delayed in Washington following the tragic events in the United States and the cancellation of flights in that country. Despite the delay, the CAF mission continued its technical work with the Bolivian authorities. García's meeting with President Quiroga and the signing of the agreement is expected to take place in the next few weeks.

The Mission told the Bolivian authorities the CAF was ready to grant a $400 million loan for the September 2001-August 2002 period. This amount will be used for projects that favor economic reactivation, the execution of public and private infrastructure works, and backing for the financial and productive system and development of the stock market.

This financing is intended to assist Bolivia to achieve its national objectives through financial operations that take maximum advantage of the catalytic capacity of the Andean Development Corporation, through co-financing with private financial institutions and other actors in the capital markets, application of instruments such as guarantees, political risk insurance and indirect investment through funds in which the Corporation participates.

Employment Program As support for Bolivia’s strategy to reduce poverty and the "12-month plan," the Andean Development Corporation agreed to provide $25 million. The principal objective is an immediate injection of fresh money into the Bolivian economy to stimulate aggregate demand and reactivation, and cushion the social effects of the economic crisis.

Pension Reform On the basis of the priorities defined by the Bolivian government in the "12-month Plan" and the areas of interest of the Andean Development Corporation, the two sides carried out a joint review of the need for an integrated program to refinance the domestic debt contracted by the National Treasury, which has grown in recent years following the financing of the pension reform. The multinational lender could participate with approximately $150 million for restructuring the financing of the Pension System.

The CAF, which is the principal source of multilateral financing for Andean countries, has offered unconditional support for the structural reforms that Bolivia has adopted in the last decade, convinced that these initiatives lay the bases for sustainable economic growth with high social content and a successful fight against poverty.

The CAF Programming Mission praised the Bolivian government’s efforts to maintain economic stability, reactivate the economy, and evaluated the execution of structural reforms and major works of sustainable infrastructure.