Loans for US$100 million approved by Executive Committee

January 27, 1993

(January 27, 1993?).-- Five loans for a total of US$100 million were approved by the CAF Executive Committee during its 40th meeting held in Caraballeda, Venezuela, on January 26.

The loans will finance investment projects in the public and private sectors, considered priority for the development of the five member countries: Bolivia, Colombia, Ecuador, Peru and Venezuela.

The sectors to be financed by these loans are physical, industrial, financial infrastructure and privatizations.

Venezuela: new loan for petrochemical sector One of the loans, for US$12.9 million, will go to the Venezuelan petrochemical sector. This is the fifth loan CAF has made to this sector, given its great potential for development and its attractiveness for the private sector and foreign investors.

The loan granted to the joint venture Aceites y Solventes Venezolanos VASSA SA, with majority private capital, will be used for construction of one plant and modernization of another, in order to produce 15 metric tons annually of food-grade white oils and 25,000 tons/year of medicinal-grade aliphatic solvents. The total cost of the project is US$30 million.

White oils are the most versatile products and oldest derivatives of oil and are mainly used in the cosmetics, pharmaceutical, plastics, rubber, fiber and textile industries.

Aliphatic solvents are present in the preparation of paints and coatings, inks, adhesives, sealers and pesticides, among other uses.

The production of these plants will cover domestic demand and over 60% of combined production will be exported.

There is heavy demand for white oils, especially on the Latin American market (Chile, Argentina and the Andean countries).

The beneficiary company is a joint venture with majority private capital.

Bolivia: upgrading road infrastructure A US$23.5 billion loan was granted to the Republic of Bolivia to partially finance six road infrastructure subprojects, currently in execution, as supplement to external financing from the Inter-American Development Bank (IDB) and World Bank (WB).

The executing bodies of the works to be financed are the National Road Service and the Santa Cruz Development Corporation.

The six subprojects comprise the corridors: Quinquibey/ Yucumo, Patacamaya/ Tambo Quemado, resealed La Paz/ Oruro and Caihuasi/ Confital, and the national program of maintenance and lowlands of the east. The total cost is US$290 million.

Execution of these sections will give private companies, particularly exporters, safe, rapid and competitive connections for transporting their products.

The high cost of transport due to the deficient road and rail infrastructure reduce the competitiveness of Bolivian exports. For this reason the government has implemented a road plan -- with support from international organizations, including CAF -- to provide infrastructure for competitive access to international markets and develop non-traditional exports.

After completion of these roads, Bolivia will become the center of a authentic network, covering several countries (Argentina, Brazil, Chile, Paraguay and Peru) and linking the Atlantic and Pacific Oceans.

Colombia: loan for private productive sectors Corporación Financiera de Colombia SA (CFC), one of the country’s leading financial institutions, will receive a US$10 million loan for development the private productive sectors.

CFC will channel these funds to final borrowers through medium- and long-term sub-loans.

The program -- whose total cost is estimated at US$20 million -- will finance investment projects to set up or modernize companies in the agriculture, fisheries, mining, industrial, tourism and transport sectors, which will produce goods on competitive terms -- with a resulting increase in exports -- and generate productive jobs with the setting up of new industries.

Priority will be given to companies which develop new projects and technologies, and which preferably process local raw materials.

Ecuador: upgrading the national road network For the Ecuadorian State a US$30 million loan was approved for the National Road Program, whose objective is to raise the level of service and improve management of the country's road network in order to reduce the impact of transport costs on prices of products.

The executing body is the Ministry of Public Works and Communications (MOP) through the Public Works Department.

It is estimated that 80% of Ecuador’s nearly 40,000 km of roads are in a deteriorated state, which affects the transport of goods and passengers from the centers of production to centers of consumption and export.

Part of the national road program will be cofinanced by IDB and CAF through a Multiyear Investment and Maintenance Program to be implemented from 1993 to 1997.

The IBD/CAF contributions, which total US$150 million (27% of the total cost of the multiyear program), will finance completion of certain works, increased road maintenance, institutional strengthening and execution of economic and environmental studies.

Peru: support for privatized companies A US$25 million loan was granted to the Republic of Peru to finance a multisectoral global credit program for privatization.

The executing body is the Development Finance Corporation (COFIDE), which will channel the funds -- through the financial system -- to recently privatized companies as a contribution to the privatization process.

The loan will provide these companies with funds to initiate their reconversion and modernization processes, raise their levels of quality and upgrade their production lines, which will attract new private investors, resulting in growth of productive sectors and improvement of their competitiveness.

In line with the macroeconomic policy adopted by the Andean countries, which includes a wide-ranging privatization program, CAF is supporting initiatives to increase the participation of the private sector in economic activity.

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