Representative in Bolivia concludes mission

The Andean Development Corporation is the main source of multilateral financing for Bolivia, the CAF representative in Bolivia told the press in a leave-taking after concluding his mission in the country.

The Andean Development Corporation has steadily increased its contribution to the execution of development projects in the public and private sectors, becoming Bolivia´s main source of multilateral financing. However, the restrictions on public borrowing agreed between Bolivia and the International Monetary Fund have limited the country´s access to financing from the CAF, despite the need for external financing to give viability to major investment programs and projects that contribute to reducing poverty.

CAF representative in Bolivia José Vicente Maldonado met with the press to take his leave at the end of his term in the country. He emphasized the growing importance of the Corporation´s contribution to the development of the Bolivian economy. Maldonado will now head the new CAF representation office in Brazil, which is to be opened soon. He thanked CAF President Enrique García for his confidence and constant support. He also recognized with gratitude the backing received from CAF executives, particularly the efficient work of the staff of the representation office in Bolivia.

In the 1997-2002 period, the Corporation approved loans for Bolivia totaling US$2.14 billion. The loan program is aimed at priority sectors on the country’s strategic menu: export finance for the private sector, development of export brokers, financing of the energy sector, strengthening the financial system and microfinance, support for capitalization processes, decentralization, and programs to improve equity in the distribution of economic benefits, the representative said.

The Andean development bank is the main source of multilateral financing for Andean countries in general, and Bolivia in particular, Maldonado added.

The CAF has played an anti-cyclical role, channeling larger volumes of funds in a very adverse international context for Latin American countries, characterized by fiscal and financial restrictions and social tensions. Financing was granted for the construction of the Bolivia-Brazil gas pipeline, one of the most important energy integration works in Latin America. The multinational lender has also backed initiatives to improve the competitive environment and promote the country´s integration into global markets, including the setting up of the National Productivity and Competitiveness Council.

CAF disbursements for financing development projects in the Bolivian public and private sectors has been steadily increasing, rising from US$106 million in 1992 to US$365 million in 2002. Between 1997 and 2002 disbursements totaled US$1.60 billion.

The loan portfolio is another indicator that reflects the CAF´s important contribution to the execution of projects in Bolivia. Loans increased from US$172 million in 1992 to US$703 million at the end of 2002, reflecting net growth of US$531 million in the period.

A good percentage of the portfolio is the result of CAF´s effort to attract external funds for operations in Andean countries in fulfillment of its catalytic role in attracting funds.

Over 92% of the total portfolio in favor of Bolivia is financing for medium- and long-term investment programs and projects, which is evidence of the Corporation´s efforts to make medium and long-term funds available. These loans were used to finance infrastructure and mining projects, and the modernization and/or expansion of companies in priority sectors. About 74% of the portfolio consists of loans to the public sector with the remaining 26% for private sector, including equity investment and funds.

Infrastructure makes up 45% of the loan portfolio, financial intermediation (commercial and development banking) 44%, and the remaining 11% is shared between mining, tourism, agriculture, manufacturing, public administration and other economic sectors.

The CAF´s firm commitment to Bolivia´s social and economic development is shown in its participation in the HIPC External Debt Reduction Program. In 1998-1999 and in the first quarter of 2002, the CAF portfolio in Bolivia was reduced by US$74 million due to the application of the benefits of that program, which allowed the Bolivian state to release funds to finance social plans, with priority for education and health.

In the current period, the multilateral lender plans to approve a total of US$450 million for projects to be executed by the public and private sectors. The amount of disbursements is estimated at US$456 million. The projects that will benefit include Support for the Bolivian Economic Program, Transport Infrastructure Program, Basic Sanitation Program, National Emergency Employment Plan, and other operations for trade and working capital which will benefit the private sector and the Bolivian financial system.