US$10 million granted to Peru for South Inter-Oceanic Social and Environmental Management Program

(Lima, July 20, 2006).- The Andean Development Corporation and the Republic of Peru today signed a US$10-million loan agreement for the partial financing of the execution of the Program for the Environmental and Social Management of the Indirect Impacts of the South Inter-Oceanic Road Corridor. The purpose of the project is to promote sustainable socioeconomic and environmental development, improving the standard of living of the population and campesino and native communities of the road corridor’s area of influence of.

The main objectives of the project include:

1. Develop and execute projects and priority activities that prevent or mitigate indirect impacts on the area of influence of the South Inter-Oceanic Road Corridor.
2. Promote the development and financing of sustainable activities in favor of localities in the project’s area of influence.
3. Improve the management of the protected natural areas and formalize the creation of new protected areas.
4. Establish financial mechanisms to strengthen forest concessions and finance productive activities in the project’s area of influence.
5. Support the participation and monitoring of the indirect impacts, and the financing of projects by organized civil society.

The formulation and structuring of the program has involved a series of key actors in the area of influence, including representatives of civil society from the localities and areas directly affected, as well as local and regional governments, guaranteeing the incorporation of elements to promote key aspects, such as the integrity of the indigenous territories, and the sustainable management of the natural resources of the area of influence of sections 2, 3 and 4 of the South Inter-Oceanic Road Corridor.

"This new financing for Peru confirms the CAF commitment announced by its President & CEO Enrique Garcia to stimulate development and social inclusion, on this occasion through an action plan that mitigates the environmental impacts of the road project which crosses practically virgin ecosystems with great environmental and social value," CAF director representatives in Peru Germán Jaramillo said.

Peruvian Minister of Economy and Finance Fernando Zavala said that the program was closely related to the Nineteenth State Policy on Sustainable Development and Environmental Management of the National Accord, which commits the Peruvian government to integrate national environmental policy with economic, social, cultural and land planning policies, to combat poverty and achieve the sustainable development of the country. "The program will also contribute to institutionalizing the public and private environmental effort, in order to protect biological diversity, facilitate the sustainable exploitation of natural resources, guarantee environmental protection and promote sustainable settlements, which will improve the quality of life, especially of the most vulnerable population," Zavala said.

This major integration road corridor is an essential component of the government's strategy in favor of decentralization, inter-territorial compensation and social equity, which stimulates the generation of important socioeconomic changes in a region of almost six million inhabitants, and higher levels of poverty than the national average. The project is also clearly oriented to regional integration with neighboring countries and represents the first road interconnection between Peru and Brazil. In this respect, the corridor project will open trade flows between Central Western Brazil and the North of Bolivia, and toward the Pacific Ocean basin.

The South Inter-Oceanic Road Corridor is part of the South American Regional Integration Infrastructure Initiative (IIRSA), supported by CAF, which is essential for stimulating regional integration and for increasing the export capacity of public and private companies in its shareholder countries, as well as helping to create the competitive advantages required by the globalization of productive processes.