Spain becomes first shareholder outside Latin America

Spain today formalized its membership of the Andean Development Corporation (CAF) with the signing of the agreements that accredit it as a shareholder of this international financial institution in a ceremony in the Spanish Ministry of Economy. The second vice president of government and minister of economy of Spain, Rodrigo de Rato y Figaredo, and the CAF executive president, Enrique García, signed the agreements for a capital contribution of US$300 million, consisting of US$100 million in ordinary shares and US$200 million in subscribed callable capital.

"This event - García said - has a special significance because Spain becomes the only non-Latin American member country, which will strengthen the traditional cultural, political and economic ties that unite Spain with the other 14 shareholder countries."

During the ceremony in Madrid, a memorandum of understanding was signed with the Ministry to set up a Spanish Fund for Technical Cooperation in the CAF. The Fund will be used to finance non-reimbursable loans, and pre-investment and technical cooperation projects. The Spanish contribution will be five million euros.

A solid financial relationship

Spain’s membership of this multilateral institution is in line with the policy of opening to Latin America pursued by this European country in recent years. The CAF will offer Spain an opportunity to strengthen its relations with the two principal mechanisms of regional integration ¾ the Andean Community and MERCOSUR ¾ since all the member nations of these blocs are now shareholders.

Spain’s presence is also evidence of CAF’s successful role as a catalyst in attracting resources from international financial markets to provide financial backing for projects in Latin America.

The institution has played an important anti-cyclical role by providing finance for its shareholder countries in good times and bad, establishing itself as the principal source of multilateral financing in the Andean region and an important link in the Latin American integration process.

The CAF has always maintained strong financial links with Spanish banking institutions such as Instituto de Crédito Oficial (ICO), Caja Madrid, BANESTO, BSCH and BBVA through credit lines and cofinancing operations for major projects in the region, many of them with Spanish participation.

Prudent financial and credit policies, backed by the governments of shareholder countries, have given the CAF the best risk rating of any Latin America issuer. Its long-term debt is rated "A" by Standard and Poor's, "A2" by Moody's and "A" by Fitch. For several years the CAF has had regular access to international capital markets, which have become its principal source of funds. At the end of 2000 the institution was the first multilateral lender to launch a short-term note program on the Spanish market for a maximum of €500 million.