Two agreements signed in Colombia

First agreement

BOGOTA.- Enrique García, president & CEO of the Andean Development Corporation (CAF), and Juan Carlos Durán, president of Fondo Nacional de Garantías SA (FNG), signed in Bogota a risk participation agreement for US$10 million. Under the agreement, CAF will partially refinance guarantees issued by FNG in favor of Colombian banks, with a view to mobilizing credit for working capital in Colombian SMEs.

The agreement was signed today in the presence of Colombian Minister of Trade, Industry and Tourism Jorge Humberto Botero, who emphasized its importance for FNG. By sharing the risk of its guarantees with an institution as strong and prestigious as CAF, the institution can support more Colombian SMEs, the minister added.

The CAF president said that the operation was aligned with the Corporation's mission and strategic objectives because it reinforced the private sector as an actor in sustainable development, and strengthened Colombian competitiveness and productivity.

The operation provides US$80 million for refinancing of loans which will benefit approximately 5,800 SMEs, achieving an important multiplying effect. The agreement is a valuable precedent in the Andean region as the first operation of this nature that either FNG or the Corporation has carried out.

Small and medium-sized enterprises are a very important part of the industrial fabric and make a significant contribution to the generation of employment, stimulating sustainable economic development. SMEs also offer important opportunities for accessing international markets. However, they face a series of internal and external restrictions, especially difficulties in gaining access to credit. Both CAF and FNG are making constant efforts to overcome these limitations and the financing operation is a joint step in that direction.

FNG President Botero said that between January 1 and August 31, 2005 his institution had guaranteed loans for 1.5 trillion pesos. This year’s target is 2.4 trillion pesos, which should benefit 160,000 users, he added.

Second agreement

Signing in office of Trade Minister

Support for Colombian FTA process

Enrique Garcia, CAF president & CEO, and Jorge H. Botero, minister of Trade, Industry and Tourism, signed today an agreement for a non-reimbursable technical cooperation grant for consulting services on the design and start-up of a methodology for presentation and appraisal of projects for the Trade Capacity Building Group of the Andean-United States FTA.

The CAF president said the decisive support that CAF had been providing to the countries now negotiating the FTA would continue. "Although the FTA is not a substitute for a development strategy or international participation, well-managed, it can be a powerful instrument for improving the conditions of competitiveness and the business environment in which economic, commercial and foreign trade activity takes place, which is perfectly aligned with CAF’s purpose."

The Colombian Ministry of Trade, Industry and Tourism requested CAF to provide 80% of the funds required to obtain consulting on the design, formation and implementation of a specific methodological and procedural scheme to permit projects to operate through the Trade Capacity Building Group and the Cooperation Committee. The advice will help prioritize and improve technical and transparent feasibility so that the financed projects have a real impact on the implementation of the FTA and on the development of the internal Agenda.

In its process of cooperation with governments in relation to the ongoing negotiations for the signing of the FTA, CAF jointly organized with the Economic Commission for Latin America (ECLAC/CEPAL), the Seminar "Implementation and Administration of Free Trade Agreements: Challenges for Government and Business Groups" during the 12th negotiating round of the FTA between Colombia, Peru and Ecuador, and the United States. The event, held on September 22 in Cartagena, Colombia, took place in the framework of the "adjacent room" sessions which accompanied the negotiations. The seminar for business leaders and members of Congress from Colombia, Ecuador and Peru was a contribution by CAF and ECLAC to the debate on moving ahead with consensus building on public policies and the instruments that enhance the benefits of the FTA.