Ecuador: approvals for US$337 million in 2004

(Caracas, December 14, 2004).- In 2004, CAF approvals for Ecuador totaled US$337 million, representing 10% of the total of US$3.50 billion.

In the area of basic needs, environment and infrastructure, US$93 million were destined to finance major projects for economic integration and social development. The CAF approved three projects: construction of the San Eduardo Tunnel for US$35 million; improvement and modernization of the Land Terminal for US$14.1 million; and the Potable Water and Sanitation Project in the South Border Cordon for $40 million. In the same field, and in keeping with CAF’s vision of supporting local governments, US$4 million was granted for the bridge over the Ambato River.

In the area of macroeconomic stabilization and structural reforms, the CAF supported the Ecuadorian government’s initiative for actions to improve fiscal sustainability and transparency, instrumentation of decisions on strategic sectors to improve competitiveness, and actions to adapt to the new conditions of trade relations. The loan backs this important structural reform strategy for sustained growth with quality.

Support for the productive sector was channeled through approval of US$118 million for operations to finance large companies that contribute to national development through creation of sources of employment, technological innovation, and an entrepreneurial and competitive approach. Examples are companies in labor-intensive sectors such as production and export of bananas and tropical fruits to the world market, packaging and food (meat, agroindustrial, etc). Initiatives for construction of a private hydroelectric generation project also received approval.

Funds were channeled into productive sectors through various financial institutions to finance plant expansions, acquisition of fixed assets and working capital for innovative Ecuadorian companies.

In view of the Ecuadorian productive sector’s need for viable alternatives for capitalization and long-term financing, the CAF decided to promote the formation of a capital fund for SMEs know as Fondo País Ecuador. The Fund makes capital contributions (purchase of bonds convertible into shares) in selected companies. The participation of new institutional investors is planned to reach the maximum of capital of US$20 million. The Fund will make medium and long-term investments in private companies evaluated and qualified in line with investment policies.

In the area of social and community development, the CAF, in alliance with other organizations, is promoting the "Randinpak" Project (“Lend a Hand” in Quechua) for indigenous and campesino women in Chimborazo province. A US$200,000 contribution was made to strengthen this initiative of the Chimborazo Federation of Indigenous and Campesino Women for production of organic Andean grains.

The project is executed in the human, social, productive, educational, health and environmental dimension by 4,000 women who are directly involved in the project, which benefits 20,000 people in 87 communities in Chimborazo, one of the poorest provinces in the country.

The Corporation is also involved in strengthening Community Tourism Initiatives, a joint project with the ESQUEL Foundation aimed at developing sustainable community tourism, preserving cultural identity and protecting the environment.

The Plan Esperanza is another example of the CAF’s strong links with social development. Execution was entrusted to the Ecuadorian Episcopal Conference in a very successful alliance: in the first stage, 145 projects were executed, instead of the 49 initially planned. The projects involved community development, education, health, sanitation, housing and multiple development, with a CAF contribution of US$29.4 million. For the second stage now under way, the CAF approved a US$25-million loan.

In the area of Governance, the third edition of the Governance and Political Management Program was executed jointly with the Catholic Universities of Ecuador and Guayaquil. The program is designed to train a critical mass of leaders and their support teams at institutional level in public management and political affairs. In 2004 over 200 participants from various provinces of the country graduated from the project.

The Transparent and Efficient Municipalities Program promoted the implementation of the cadastre modernization project known as "Automated Multipurpose Cadastral Information System" (SICMA), and the "Digital Quito" electronic government strategy, which the city government is planning to implement. In the locality of Manta, the CAF continued its cooperation with the implementation of a cadastral project, and electronic government through its participation in the IACD programs.