Support for Bolivia confirmed

The Andean Development Corporation (CAF) confirmed its backing for the Bolivian democratic process and its commitment to the Bolivian government´s initiatives to achieve sustainable, equitable, quality growth that generates employment with respect for cultural diversity and the environment.

CAF Executive President Enrique García held meetings with President Carlos Mesa and his economic team to review the results of the development bank´s mission in Bolivia. Under the direction of CAF Country Programs Vice President Liliana Canale, the mission analyzed the current situation with a view to identifying how the CAF could assist the country in these difficult circumstances.

García emphasized his backing for the constitutional transition which, despite the difficulties, is a clear demonstration of political maturity and democratic commitment.

He underscored the importance of maintaining stability and promoting quality economic growth that is inclusive and generates productive employment, as part of a structural solution to improve the distribution of wealth and reduce poverty in the country, repeated the need to create adequate conditions for recovery of investment.

The CAF head stressed the importance of strengthening the productive base and improving competitiveness indexes, taking the necessary decisions in the public and private sectors to increase exports and attract foreign investment and resources without which it would be difficult to achieve high growth levels. These factors are critical for responding to social demands in a framework of stability, he added.

The energy sector should be seen as the platform from which the country can move forward in a transition process from an economy based on natural resources and raw materials to one based on knowledge, technology and other value-added sectors, García said. Bolivia cannot waste an energy resource that could have a significant impact on the population´s living standards. These resources should be used to strengthen the country´s prospects through improvements in the competitive environment that would come from greater investment in education, health, sanitation, based on the wealth effect of an appropriate energy policy.

Mindful of need for a rapid response from the international financial community, the CAF, as the country´s main source of financing, is offering extraordinary support which will be concentrated in the following areas of priority action: (1) urban and rural social infrastructure to reduce poverty; (2) strengthening governance and democratic institutions; (3) infrastructure to lay the foundations for the development of a competitive and modern economy; (4) strengthening of productive and financial sectors to benefit small and medium-sized enterprises, main generators of employment; (5) and support for design of policies, institutional strengthening and project financing in the public and private sectors aimed at the efficient and sustainable use of the country´s abundant natural resources.

García announced that operations would be approved for at least $100 million for the rest of 2003 for works in the priority areas mentioned, which brings the total to $548 million with drawdowns expected to exceed $300 million. Annual approvals of over $400 million are planned for future years.

Finally, the CAF president said that the social, political and economic sectors accompanied by the international community need to work together in this particularly critical situation in the interests of Bolivian development, making a decisive contribution to economic growth with social and political sustainability.