US$150 million granted to Peru for sections 2 and 3 of the South Inter-Oceanic Road Corridor

(Lima, March 9, 2006).- The Andean Development Corporation (CAF), represented by its director in Peru, Germán Jaramillo, and the Republic of Peru, represented by Economy and Finance Minister Fernando Zavala, signed a guarantee agreement to back the construction of Sections 2 and 3 of the South Inter-Oceanic Highway. During the ceremony in the office of the minister, CAF and the concession holder Concesionario IIRSA Sur S.A., represented by its managing director Luiz Fernando de Castro Santos, signed a bridge line of credit agreement for US$150 million.

Germán Jaramillo, CAF director representative in Peru, explained that the agreement reflected CAF’s commitment to regional integration, competitiveness and development of social inclusion. "The South Inter-Oceanic is an infrastructure integration project which will contribute to the economic and social development of over nine million people in Peru and the entire region. We also have the satisfaction that this new form of financing - with the participation of the State, the private sector and CAF - represents an innovative mechanism that opens important opportunities for the benefit of all Latin Americans."

The concessions for construction, operation and maintenance of Sections 2 and 3 were awarded on June 23, 2005. Section 2 covers 300 kilometers of road between Cuzco and Madre de Dios department, and Section 3 covers 403.2 kilometers of the continuation of the highway through Madre de Dios to Iñapari on the border with Brazil. The respective concession agreements were signed on August 4, 2005.

The South Inter-Oceanic Road Corridor, which is part of the South American Regional Infrastructure Integration Initiative (IIRSA), will promote the growth of the national economy, improve the trade balance with Brazil and Bolivia, and reactivate agricultural markets throughout the south of the country.

Over eight million people in ten regions of Peru will benefit from the construction of the Inter-Oceanic Highway. The ten regions directly involved are: Madre de Dios, Puno, Cusco, Tacna, Moquegua, Arequipa, Ica, Ayacucho, Apurímac and Huancavelica representing 32% of national territory and concentrating 20% of the Peruvian population.