Loans for investment plans in Brazilian municipalities

(Caracas, March 28, 2007).- As part of the Support Program for Municipal Governments in Brazil (PRAM), which has an initial quota of US$200 million, the Andean Development Corporation approved two loans for the Brazilian municipalities of Florianópolis and Canoas totaling US$27 million. In both cases, the executing agencies are the municipalities themselves, and the loans are guaranteed by the Republic of Brazil.

"These are the first operations under the PRAM, whose structure permits CAF to act directly at the first level of subnational government by giving the option of obtaining finance in US dollars or local currency. The scheme supports one of the priority objectives of the Brazilian government which is to develop local infrastructure and administrative decentralization," said CAF president & CEO Enrique García. "This partner country has seen demographic growth of over 26 million in the last decade, mainly in the urban areas of medium-sized municipalities which were not prepared to respond to the growing demand for infrastructure and basic services created by this situation," García added.

The US$15.1 million loan granted to Canoas municipality, which is in Rio Grande de Sul state and is part of the Porto Alegre metropolitan area, will be used to execute works of road infrastructure, macro-drainage and environmental recovery. The works will have a high positive impact because they will benefit about 60,000 of the lowest income families in the municipality who live in areas susceptible to flooding.

Florianópolis municipality, capital of the southern state of Santa Catarina, received approvals for US$11.9 million to finance the Road System and Pedestrian Rehabilitation Project, which consists of road works to improve the island’s connection with the mainland and with some of the city’s barrios, as well as urban rehabilitation in areas with tourism potential. Execution of the program is very important for the city because it will considerably improve vehicle and pedestrian traffic and strengthen tourism which is the municipality‘s main source of income.