KfW, CAF Pledge USD 298 million for Health and Energy Programs

Latin America will receive additional funds to advance the economic and social revival plans led by authorities, through two recent loans of up to EUR 245 million granted by Germany’s Development Bank (KfW) on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ), to CAF—development bank of Latin America.

The loan agreements were signed by KfW’s Claudia Arce, Director for Latin America and the Caribbean and Simon Erhard, Director of the KfW Agency for Peru, and CAF’s Gabriel Felpeto, Vice President of Finance and Gloria Gamero, Director of Institutional Financial Resources. The signing ceremony was attended by Florian Theus, Head of the Development Cooperation Section of the German Embassy in Peru.

With a strong commitment to underpinning the well-being and quality of life of the people, the German Financial Cooperation through KfW and CAF will allocate USD 115.6 million to finance projects in the health and hygiene sector on favorable terms, aimed at mitigating the adverse effects of COVID-19, and programs to improve public healthcare systems in Latin American countries. This is the first phase of a program that is expected to carry over to 2021 with an additional USD 188.6 million, with an extended approach to cover vulnerable populations and SMEs in pandemic-affected regions.

The other funding program for USD 182.5 million will target projects for the construction of electricity distribution and transmission networks that have a climate approach. This loan for energy transmission projects has been an integral part of CAF’s 10-year energy efficiency and renewable energy program with KfW.

After signing the agreement, CAF’s Vice President of Finance Gabriel Felpeto noted: “We continue to work to attract funds at favorable rates to Latin America and the Caribbean when they most need it; that is why we are pleased to announce these new facilities with one of CAF’s oldest partners. We expect these funds to help us improve the well-being of the population and boost competitiveness in the region.”

In addition, KfW director for Latin America and the Caribbean Claudia Arce stated: “CAF is an important and strategic partner to address global challenges such as climate change. For KfW and German financial cooperation, it is important to continue this joint work, while cooperating in alleviating the impact of the COVID-19 pandemic on Latin American countries.”

KfW Peru Agency director Simon Erhard highlighted: “Thanks to the presence of CAF and KfW with our respective regional agencies in Lima and our constant exchange, we have improved our already great institutional relations. We are confident that due to this close coordination, we will be able to undertake other important joint operations over the next few years to improve the lives of the population, the environment and economic conditions.”

The head of the Development Cooperation Section of the German Embassy in Peru, Florian Theus, noted: “Multilateral institutions like CAF are very important to meet the greatest international challenges of our time, such as climate change and the COVID-19 pandemic. I am therefore very pleased that the German government can support this objective today by signing the two loan agreements between KfW and CAF.”

Over the past decade, CAF and KfW on behalf of the German government have issued concessional loans of more than USD 1.57 billion, and USD 955 million over the past 5 years, to promote CAF-funded projects in the region. These come to complement non-reimbursable and cooperation funds to promote predictability and feasibility studies and implementation of CAF projects in their initial phase, thanks to the support of the Germany’s Ministry of Development Cooperation (BMZ) and the European Commission through the Latin America Investment Facility (LAIF) initiative.