Ecuador: loans for US$232 million granted

US$232 million to finance infrastructure and competitiveness programs in Ecuador

The Andean Development Corporation (CAF) and the Republic of Ecuador today signed in Caracas two loan agreements for a total of US$232 million. The first agreement finances the Fiscal Sustainability and International Competitive Integration Program, which receives US$120 million. The second agreement for US$112 million relates to the first tranche of the loan to support the multiyear “Transport and Competitiveness Sectoral Program" which receives a total approval of US$259.7 million.

The agreement was signed by CAF Executive President Enrique García, and Ecuadorian Ambassador to Venezuela Paulina García de Donoso, representing the ministries of Economy and Finance, and Public Works and Communications of her country.

The CAF chief emphasized the priority nature of both operations in Ecuador´s plans to achieve sustained growth with quality and social equity. He said that the Fiscal Sustainability Program would be an important tool for managing the government´s fiscal accounts. It contains a series of actions that give priority to controlling public expenditure and achieving an efficient and transparent management of government borrowing to ensure fiscal, financial and social sustainability in the medium and long term.

The program will also develop a reform plan to strengthen the oil sector and promote private-sector participation in this area, as well as creating incentives for new investments in the electricity generation sector in an effort to structure a modern and competitive system of power generation and distribution.

The program supports strategic pillars for improving the country´s competitiveness aimed at successful integration into the global economy, with increased exports and improvements in productivity.

The specific objectives to be financed with funds from the Transport and Competitiveness Sectoral Program include support for business capacity through strengthening the national company incubation system; creating incentives for associative schemes between companies or clusters (to improve quality, achieve economies of scale and export growth); mass access to information and communication technology; and institutional strengthening to streamline bureaucracy (government online), environmental management, develop quality systems and promote competition.

The Transport and Competitiveness Sectoral Program, with a total cost of over US$400 million for execution over four years, consists of a series of plans to strengthen the private transport sector as an indispensable element for improving the country’s productive competitiveness, and financing the rehabilitation and maintenance of priority transport works.

The program will equip the country with a modern road infrastructure to speed up transport of freight and passengers, cut logistics costs, improve safety and increase the efficiency of the national road network. It will also contribute to regional physical integration through financing for priority works in the framework of the IIRSA initiative.

Both loans have ten-year terms while the Fiscal Sustainability and Competitive Integration Program has three years´ grace and for the first tranche of the Transport and Competitiveness Sectoral Program has two years´ grace.