Record figures for CAF in 1992

(December 18, 1992).-- "In the first year of my term. I am very pleased that we have achieved record figures for volume of operations approved in our member countries," CAF President & CEO Enrique García told a press conference in the headquarters of the institution in Caracas on December 17.

Operations approved totaled US$1.93 billion which, compared with the US$1.20 billion approved in 1991, is an increase of 48%, García said.

Of this amount, US$1.10 billion went to the private sector, approximately 55% of the total, which reflects an important shift in the Corporation’s orientation, which is acting in line with the policies of the countries of Latin America. "If we add the funds we granted to public financial institutions for the private sector, the figure is even higher," he added.

Disbursements in 1992 totaled US$1.50 billion; a 40% increase compared with the US$1.00 billion disbursed a year before.

Additionally, the distribution of operations is more balanced between countries, and between public and private sectors.

PRIVATE SECTOR The CAF president said the institution was supporting the reform processes which the member countries were implementing, with the aim of increased private sector participation in development processes, and a reassignment of the State’s role. The State should be smaller, but stronger -- he said -- and should be dedicated in essence to aspects such as basic infrastructure, education, health, elimination of poverty and ecology."

"Along these lines -- he continued -- we are supporting the countries in their privatization processes and directing our activities increasingly toward development of small- and microenterprises, fundamental factor for expanding wealth and ownership and reinforcing capital markets."

Many of the CAF loans are channeled to small- and medium-sized enterprises through financial intermediaries such as public and private banks of the subregion.

INTEGRATION In García's opinion, regional integration in 1992 has become an irreversible process, with the Andean Group as the most advanced integrationist scheme in developing countries.

He added that there is now a free-trade area between Bolivia, Colombia, Ecuador and Venezuela, while Peru, the fifth member, has a temporary suspension from some commercial and economic aspects until December 1993. However, Peru has signed some bilateral agreements to preserve the existing trade flows with Venezuela and Colombia. In relation to Ecuador, the bilateral agreement negotiated increases trade liberalization; and with respect to Bolivia, there is virtually a bilateral free-trade zone.

He said the common external tariff was low and consistent with the policy of the participation of Latin America in the international economy, and there is a customs union between Venezuela, Colombia and Bolivia.

"In this context, CAF must become the vehicle of communication between the Andean Group and other regional integration schemes," García said.

In this respect, CAF expanded its shareholder base with the entry of Chile in August 1992. It also opened the possibility of integrating the Andean and South American countries with the Caribbean area by granting lines of credit to Trinidad and Tobago, and soon to Jamaica and Barbados. Additionally, the first operation took place with the Banco Centro Americano de Integración. These actions show that CAF is an important bridge between integration schemes for investment and trade.

Also during the year, the Corporation strengthened its international position and is now positioned among the world’s 500 largest banks. According to Euromoney magazine, CAF is in position 393, number 12 in Latin America, and - excluding Brazil, Argentina and Mexico - is the largest bank in the region with respect to capital.

PLANS FOR 1993 In addition to continuing its decisive support for the private sector, in 1993 CAF will collaborate with the physical infrastructure projects of the subregion, especially in the areas of transport, energy and communications which are critical for real integration. In this respect, in 1992 the Corporation prepared a study which will be the basis for prioritization of the projects in each country. CAF confirmed its willingness to support these projects with funds and act as financial agent for generating funds from other organizations.

Another important point emphasized by the CAF president was development of capital markets, because they stimulate domestic saving, strengthen stock markets, and create instruments appropriate for improving distribution of wealth and strengthening markets.

He assigned great importance to ecological issues and announced that CAF would develop programs to improve use of funds, avoiding damaging effects. The projects financed will be analyzed with the necessary care to measure the environmental effect and introduce the required corrections.

Finally, García said he was optimistic about the future growth of the institution he heads.