The CAF in Bolivia: strategic alliance for development

The Andean Development Corporation and Bolivia have established in recent years a strategic alliance to achieve higher levels of development, and provide sufficient infrastructure to sustain the country’s economic activity and improve the living standards of its inhabitants.

The CAF has concentrated its efforts on four basic chapters: i) strengthening infrastructure to improve competitiveness and integration; ii) preservation of macroeconomic stability, economic reactivation and reduction of poverty; iii) reinforce the productive and financial sectors; and iv) preservation of the environment and sustainable use of natural resources.

These efforts were materialized through the execution of various development projects in the public and private sectors which helped to improve production conditions, facilitate access to basic services, increase exports, cut production and transport costs, favor commerce, improve internal links, expand integration with neighboring countries, and improve the living standards in some regions of the country.

With CAF’s support, it was possible to improve road infrastructure (Road Rehabilitation and Maintenance Program, Maintenance and Paving Program Tarija-Bermejo Highway, Santa Cruz-Puerto Suárez Road Integration Corridor, Integration Highways of the Bolivian South); expand production of cement factories; develop mining; increase production of oils for export; and execute projects related to hydrocarbons, energy, electricity and transport of gas and liquids, rail services, provision of water and sewage, and telephone services.

Figures

In the 1999-June 2004 period, the Corporation approved loans totaling US$2.43 billion for Bolivia with total disbursements in the period of US$1.46 billion. The portfolio increased steadily to US$864 million at the end of the first half of 2004. A large part of the portfolio is the result of CAF’s catalytic role in attracting external funds for operations in Andean countries.

Over 95% of the total portfolio in Bolivia’s favor represents operations to finance medium- and long-term investment programs and projects, which demonstrate the Corporation's efforts to increase the availability of medium- and long-term funds.

The public sector accounts for 75% of the portfolio and the private sector the rest, including investment in equity and funds. By sector, 54% of CAF loans to Bolivia are destined for infrastructure (social and economic), 29% for financial intermediation (mainly SMEs), and 17% is shared by mining, tourism, agriculture, manufacturing, public administration, and other economic sectors.

Strategic menu

In the area of infrastructure development, CAF’s work in Bolivia has supported the construction of the basic road system to facilitate access by producers to domestic and export markets; upgrade transport conditions, especially affected by the rainy season; integrate the country; improve conditions for trade; facilitate exports, and promote integration with neighboring countries. These actions are particularly significant because Bolivia is a landlocked country with a very complex geography.

Also in this area, the Corporation promoted sections of road corridors to facilitate exports to Chile, Peru, Brazil, Argentina and Paraguay, many of which are part of the hubs designed by the IIRSA initiative.

One of the most important loans granted in recent years was for the Bolivia-Brazil gas pipeline (US$215 million) for sections in both countries. This is one of the most significant energy integration projects in Latin America because of its economic and financial impact on the Bolivian economy.

The ultimate objective of all these initiatives was to improve the country's competitive environment and help Bolivia to successfully integrate into global markets.

The Corporation has backed the efforts of various Bolivian administrations to maintain the country's economic and financial stability, stimulate economic reactivation and combat poverty. Under this heading, it is worth mentioning the financing and technical support given to small and microenterprises, an important sector of the national economy because of its direct impact on raising the living standards of the poorest groups of society.

Through various mechanisms, the CAF participated actively in strengthening the productive and financial sectors, improving the capital position of the banking system, rescheduling the productive sector’s debt with the financial system, and helping to provide liquidity to the financial system when needed. The Corporation granted lines of credit to finance export operations, working capital and new investments for the manufacturing, industrial, agroindustrial and export sectors.

With the aim of favoring institution building and improving governance, the CAF gave decisive help to decentralization processes. Technical cooperation funds were channeled to develop culture; preserve artistic heritage and cultural and ethnic values; strengthen human capital; contribute to reducing the technological gap; generate employment and diversify sources of income.

Through the Andean Competitiveness Program (PAC), the CAF supported initiatives to strengthen Bolivia's competitive position. This program has promoted the productive chains of soy, quinoa, wines, grapes, singanis, wood and leather, and developed contacts for the future installation of company incubators. In this framework, the CAF also worked for the creation of the National Productivity and Competitiveness Council.

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