Commitment to Peru

(Lima, October 27, 2006).- A high-level mission headed by CAF President & CEO Enrique García visited Lima to finalize the design of the work plan of the Andean Development Corporation (CAF) to support the Republic of Peru for the next five-year period. During the visit García announced that the multilateral organization was planning to approve operations for Peru for a total of US$4.00 billion for the 2007-2011 period. The new funds will be targeted at the public and private sectors, with emphasis on activities in the areas of public infrastructure, social development, private investment and macroeconomic stability. During the visit to the Peruvian capital, the CAF head met with President Alan García and signed a loan agreement for the Integrated Rehabilitation Project of the Huancayo-Huancavelica Railway (known as the Macho Train) in a ceremony in the Palace of Government. The CAF mission also met with the government team headed by Jorge del Castillo, president of the Council of Ministers, as well as with personalities from the private, professional and political sectors from around the country.

The CEO also signed three agreements with institutions from various regions of the country on upgrading infrastructure, stimulating private investment, and supporting education in rural and marginal areas. Also during the visit, the University of the Pacific made García an honorary member of the University Senate.

Favoring productivity and growth in Peru Speaking on the funds planned for public infrastructure in the 2007-2011 five-year period, García explained "the idea is that the loans improve productivity and growth by reducing transport costs, expanding markets and generally strengthening the logistical platform for competitiveness, with a view to increased international participation." With this objective, CAF will help Peru by financing projects related to the South American Development Hubs that involve the country through the South American Regional Infrastructure Integration Initiative (IIRSA), continuing the promotion of border integration processes.

The CAF president said "all the activities aimed at developing and upgrading physical infrastructure have an impact on the living conditions of the surrounding population, so the projects will adopt an integrated approach to create synergies between the social aspects and improvement of the conditions of competitiveness."

In the social development area, CAF will support actions and policies to promote social inclusion, providing the population with mechanisms to strengthen labor mobility in a context of modernization of the institutional base, while guaranteeing access to goods and public services. On this point, CAF will work jointly with the government on programs to increase the coverage, quality and efficiency of water and sanitation services through the "Water for All” government initiative, concentrating on areas with the highest poverty levels.

With respect to public-private partnerships (PPPs), CAF - pioneer in this area - will support the investments that the new government is planning to revitalize the agenda of concessions and investment projects with PPPs through operations to improve infrastructure in areas such as energy, transport, mining, hydrocarbons, and manufacturing. In relation to the multilateral organization’s support for the macroeconomy, Peru has achieved a notable level of stability in this area, especially the strengthening of public policies and the decentralization process.

In the 2007-2011 period, CAF support will be supplemented by contributions from non-reimbursable technical cooperation for the areas of governance, competitiveness, strengthening of financial markets, and cultural and community development. In this respect, the Corporation is accompanying Peru in its efforts to promote institutional development, and economic and social reforms that result in the satisfactory functioning of its institutions.