US$133 million for infrastructure and telecommunications support projects for Brazil

(Caracas, June 28, 2006).- The Andean Development Corporation (CAF) approved US$132.6 million in two loans for Brazil: US$100 million for the largest telecommunications service provider in the country (Embratel), and US$32.6 million for the Santa Catarina State Regional Integration Program-Phase I, to be executed by the state infrastructure department (Deinfra).

CAF President & CEO Enrique García explained that "this operation confirms the support that CAF grants to member countries for their development needs, fulfilling once again its catalytic role of attracting external sources of financing on better conditions." García added: “With this financing we are cooperating with the financing needs of Embratel, a company with an outstanding record, supporting its strong competitive position in the country."

The loan for Embratel provides partial finance for the company's investment plan in telecommunications assets, and for corporate purposes. The operation was structured under an A/B loan, where CAF contributes US$34 million for tranche A, and Banco Santander Central Hispano US$66 million for tranche B.

The A/B loans are a cofinancing mechanism developed by multilateral organizations to finance development projects jointly with other international financial institutions.

In favor of regional integration The other loan approved for Brazil is destined for the Santa Catarina State Regional Integration Program - Phase I for US$32.6 million. Its objective is to promote intra- and inter-state and regional integration, consolidate socioeconomic and tourism development, strengthen land planning, and the execution of the required road infrastructure. The overall objective is to create viable conditions for the new private investments in the port sector, which are currently in process of implementation in the Costo do Encanto area in the northeast region of Santa Catarina state.

The total cost of the program is estimated at US$65.5 million, of which 49.7% is provided by the CAF loan and 50.3% from contributions by Santa Catarina state. Specifically the CAF resources will finance the paving, supplementary works and signposting of 85 kilometers of the route, facilitating access to the coast from this region, particularly the port of São Francisco do Sul and the future port of Itapoá. It will also cover execution of the Environmental Control Plans, and environmental and works supervision, among others.

The execution of the first phase of the Regional Integration Program will create the conditions for the prompt execution, by a prominent private group, of the construction project of Itapoá port, which will specialize in container handling. The new port will relieve the heavy congestion in the ports of São Francisco do Sul and Paraguaná in Paraná state.

This road and port connection is vitally important because, due to the geographical characteristics of land occupation, the socioeconomic activities of Santa Catarina state have a spatial distribution which makes them heavily dependant on the road and maritime transport infrastructure and explains the importance of operations such as the one financed by the CAF loan.