Contribution to strengthening Colombian financial system

(Caracas, December 3, 1998) – A US$100 million loan, with a six-year term, was today approved for the Financial Institutions Guarantee Fund (FOGAFIN) of Colombia to strengthen the organization’s financial capacity to effectively perform its function of providing financial backing for institutions which require it.

CAF President & CEO Enrique García said the funds contributed by the Corporation were support for the financial system and for the stabilization and reform process being implementing in Colombia, country which has been making deep structural changes in its economy, especially restoration of macroeconomic equilibrium.

He added that although this credit was not the solution to all FOGAFIN’s financial requirements, it is a flexible and timely contribution which backs the steps the government is taking to reinforce public confidence in the financial system in general.

To achieve its objectives, FOGAFIN requires a total of US$500 million, which will be provided – in addition to CAF which is the first multilateral organization to give approval – by a sectoral credit granted by the World Bank and the Inter-American Development Bank (IDB).

FOGAFIN was set up in 1985 following the crisis of the 1980s which affected Colombian financial institutions and banks as a means of guaranteeing the deposits of the public and the creditors of these institutions. The Fund backs the deposit insurance scheme which protects small savers.

Another objective is to preserve economic equilibrium and equity by preventing unjustified benefits of any kind for the shareholders and managers of financial institutions which can damage them and their customers.