Costa Rica becomes 16th shareholder

The Andean Development Corporation (CAF) today expanded its presence into Central America with the formal entry of Costa Rica into this multilateral financial institution. A share subscription agreement for US$20 million was signed in the Presidency of the Republic by the CAF executive president, Enrique García, and the president of the Central Bank of Costa Rica, Eduardo Lizano Fait, in the presence of the president of Costa Rica, Miguel Ángel Rodríguez, who acted as witness of honor, accompanied by senior government officials.

In his remarks, García said that with the entry of Costa Rica, the CAF was strengthening its identity as an institution committed to the development of Latin America. "We hope that with the membership of Costa Rica, our institution can contribute to facilitating integration between the countries of South America and Central America acting as a bridge for communication between the two regional blocs." The pillars of CAF’s mission are sustainable development and regional integration since the shareholders include all the countries of the Andean Community and MERCOSUR, together with Mexico, Chile, Spain, Panama, Trinidad and Tobago and Jamaica.

The multinational lender has become an important link in the Latin American integration processes, with a leading role in the South American Regional Infrastructure Initiative (IIRSA), a growing presence in the Puebla-Panama Plan and unifying force between the Andean Community, MERCOSUR and other regional schemes.

Solid support for the development of Costa Rica

García said that Costa Rica occupies second place in the competitiveness index prepared by the World Economic Forum and Harvard University, with only Chile ahead in Latin America. This creates a very favorable outlook for the country in the regional context and is a solid basis for future cooperation with the CAF aimed at stimulating sectors with growth potential. In this context, García mentioned technical and financial assistance for small and medium-sized enterprises, which benefits from the infrastructure that exists in the program of the National Development Bank.

The CAF head added that one of the areas of action that the CAF is considering is the financing of physical infrastructure, particularly related to integration, with private-sector participation in concession projects through A/B loans and other cofinancing actions. The A/B loans form part of a CAF program to attract and channel funds from international banks, which together with funds from the multilateral lender are used to finance priority projects in the private sector in shareholder countries.

The CAF can also assist Costa Rica with the placing of sovereign bonds on international financial markets through the partial guarantee program which is already in operation in some countries. Under this program, countries gain access to voluntary capital markets under the best conditions of risk rating, terms and interest rates, since the institution is the highest rated issuer in Latin America. The CAF is also able to support productive road integration projects with Panama and assist with the design and financing of a bi-national program of road connectivity between the two countries, within the guidelines approved for the Puebla-Panama Plan.

Assistance for the Secretariat Pro Tempore of the Group of Rio.

As its first action for Costa Rica, the executive president signed a non-reimbursable technical cooperation agreement for US$100,000 with the minister of foreign relations of Costa Rica, Roberto Rojas López. These funds will be used to help Costa Rica take on the Secretariat Pro Tempore of the Group of Rio and the related work program.

This is the first time that a Central American country has been given this responsibility in the Permanent Latin American Consultation and Political Consensus Mechanism, better known as the Group of Rio, which represents the region in negotiations with the rest of the world.