Ecuadorian development counts on CAF

(Caracas, October 5, 2006). As part of the actions of the Andean Development Corporation (CAF) in favor of Latin American development, CAF Vice President and Deputy CEO Luis Enrique Berrizbeitia and Ecuadorian Ambassador in Venezuela Francisco Suéscum signed two loan agreements for the Andean country totaling US$450 million. The first is a loan for the Program to Strengthen Debt Management and Quality of Public Expenditure and the other is for the Social Investment Assurance Program, second phase (PRAISE II).

On the first loan totaling US$250 million, the CAF official said, "the Ecuadorian government has proposed the need for an agenda of specific multiple actions on two fronts: public debt management and improvement of the quality of expenditure on public investment projects which is where this loan is specifically targeted."

The operation supports the Ecuadorian government’s efforts to execute the agenda, with the aim of guaranteeing the strengthening of public credit management with a view to improving capacities and benefiting proactively from market opportunities, achieving an adequate borrowing profile, at the same time as reducing the interest payments in the budget. The program also supports another segment of financial budgetary management which is improvement of the standards of efficiency, transparency and accountability of the budgetary resources assigned to sectional governments and other beneficiaries.

On this aspect Berrizbeitia commented, "in a context of severe restrictions on resources, the same degree of importance should be given to the analysis of public expenditure from the point of view its contribution to reducing poverty and promoting growth, as to budget compatibility with development plans and sectoral strategies." He emphasized the importance of this other component of the operation because it deals with a key issue in the development field, which is the quality of public expenditure.

The social component The objective of the other loan for US$200 million signed today is to protect the social investment of the Ecuadorian state in 2006 and 2007, specifically in health and education, giving priority to the underprivileged sectors of society in the framework of the 2006 Social Development Agenda promoted by the Ecuadorian government, to support the achievement of the Millennium Goals.

The program has been conceived as a catalyst and guarantor of the financial flows for two priority programs: first, through protection of the execution and expansion of the Universal Health Assurance Program (AUS) up to US$130 million; and second by guaranteeing higher quality and equality in the planned coverage for 2006 and 2007 of the Program for Universalization of First-Grade Primary Education (UEB) for an amount of US$70 million.