US$10.50 billion approved for Latin America in 2010

(Special, December 14, 2010). "Latin America is today no longer part of the problem in the global economic scene, but part of the solution." These were the words of Enrique García, president & CEO of CAF – Latin American development bank – as he announced the results of the institution’s activities in 2010, including approvals of US$10.5 billion in favor of the region, a 13% increase over 2009 and double the amount of annual approvals of five years ago.

"This year ends with a clear economic recovery in the region – García said – achieving close to 6% average growth and even exceeding 7% in some of the countries. This favorable performance is the result of Latin America’s strong macroeconomic fundamentals, an external environment with historically high raw material prices, and broad access to low-cost external financing, in a context of ample international liquidity.”

Although the region has made progress, there are still significant structural challenges to overcome, such as concentration on a few exports, low levels of savings and investment, and a relatively low growth of productivity in comparison with, for example, the Southeast Asian countries, he added.

"Average growth of the region in 2011 is forecast to fall to levels of 4% to 4.5%. Despite significant achievements such as a substantial reduction of poverty, Latin America cannot be satisfied with this if it wants to reverse serious social problems of inequality and improve conditions for development and social inclusion, along with creation of new employment opportunities."

The CAF president & CEO said the current situation was favorable to speeding up structural reforms in a long-term strategy, which includes microeconomic and social aspects such as investment in infrastructure, education and advanced technology, and in the necessary institutional strengthening of the public and private sectors.

He emphasized the need to revive the dynamic of the ongoing regional integration processes as a necessary condition for improving the region’s competitiveness in the global context.

Approvals doubled in the five-year period

In 2010, CAF approvals for the public and private sectors totaled US$10.50 billion, over 13% growth in the year and double the figure of five years ago, while the loan portfolio has had exceptional growth of 17%, García said.

Of the total approved this year, 41% went to financing economic infrastructure and integration projects; 19% to social and environmental development and 39% to productive sectors, through direct operations and financial intermediation. In fact, the institution has become the main source of multilateral financing for infrastructure in Latin America, with emphasis on projects that promote regional integration.

In the area of cooperation funds, CAF approved over US$40 million this year, mostly in non-reimbursable funds, for institutional strengthening, social inclusion and the cultural identity of the region, together with programs for competitiveness, research and public policies which stimulate quality and inclusive economic growth.

"CAF also supports its shareholder countries in emergency response and prevention through financing facilities and non-reimbursable funds, as in the case of approvals throughout the year for Bolivia, Brazil, Chile, Colombia, Costa Rica, Haiti, Panama, and Venezuela."

García emphasized the institution’s permanent and timely support for regional integration and cross-border development projects in an effort to strengthen existing integration mechanisms.

Finance from the world for the region

Reaffirming its presence on the most demanding capital markets, the president of the Latin American financial institution reported that in 2010 CAF doubled its public issues, making nine placements on European, Japanese, Swiss, Uruguayan and Yankee markets and the exclusive Uridashi retail market, for a total of US$2 billion, making a total of US$12.5 billion after adding the US$10.50 billion generated in other funds.

This market activity is evidence of the catalytic role CAF plays in attracting funds into Latin America from industrialized countries to promote investment and trade opportunities in the region.

The institution’s ratings are among the highest of the region’s debt issuers, recognizing its excellent financial indicators, solid legal structure and the permanent commitment of its shareholders countries. A highlight of 2010 was the upgrading of CAF’s prospective rating from Stable to Positive by the prestigious Standard & Poor's agency.

Fulfilling its role as a valued bridge between Latin America and the rest of the world, in 2010 the institution deepened its relations with North America, Europe and Asia. "CAF is committed to supporting its shareholder countries in opening new horizons and establishing a long-term integrated development agenda. In this role, CAF channels additional resources, both financial and technological, with the aim of achieving sustained development and moving toward consolidation of economies stimulated by competitive advantages," García said.

CAF, a Latin American development bank for Latin America

In recent years, the institution has built up its Latin American dimension and today has 18 member countries - 16 in Latin America and the Caribbean – along with Spain and Portugal. It has the distinction of being a multilateral organization which is 97% owned by emerging countries, which means its agenda was developed in Latin America for Latin America.

CAF has also become an important source for generation of Latin American knowledge and promotion of its technological development. Operating activity takes place in the framework of an Integrated Development Agenda designed to reconcile the objectives of macroeconomic stability, microeconomic efficiency, social equity and environmental balance.

“CAF’s successful development has been due to the unwavering support of its shareholder countries, resulting in regular capital increases, and full compliance with their financial obligations," García concluded

Following the subscription of significant increases in paid capital agreed by member countries, totaling some US$4 billion, equity will double over the next five years to US$12 billion, which will triple the financial and operational capacity available for meeting and responding to the region’s needs.