US$293 million approved for Ecuador

(Caracas, March 21, 2006).- The Andean Development Corporation (CAF) today approved US$293 million for two operations in Ecuador. The operation to Strengthen Debt Management and Quality of Public Expenditure will be executed by the Ministry of Economy and Finance, while the Supplementary Works and Annex Bridge to the Rafael Mendoza Bridge in Guayaquil, will be executed by the Ministry of Public Works (MOP).

On the $250-million loan to support the Program to Strengthen Debt Management and Quality of Public Expenditure, CAF president & CEO Enrique García explained that "the Ecuadorian government has accepted the challenge of addressing the urgent need for an agenda of specific actions on two fronts: public debt management and improving the quality of expenditure in public investment projects."

The CAF President said that "the agenda considered by CAF and the Ministry of Economy and Finance in this loan includes the activities of strengthening debt management to harmonize financing requirements with the opportunities and advantages of internal and external markets, in a framework of optimization of the use of funds.”

García emphasized the importance of the other component of the operation which covers a key area of development related to the quality of public expenditure. "The government of Ecuador has decided to treat this variable from the perspective of its contribution to development, and not only its effect on the deficit as is traditional." The CAF CEO added, “In a context of strong restrictions on resources, it is equally important to analyze public expenditure from the point of view of its contribution to reducing poverty and promoting growth, as well as the compatibility of the budget with development plans or sectoral strategies."

Bringing Guayaquil nearer The other operation approved for Ecuador is a US$43-million loan whose main objectives are to facilitate and decongest the heavy traffic flow in areas of Guayaquil, La Puntilla and Durán, continuing the support CAF has been giving since the 1990s to strengthen the transport sector in Guayaquil and Guayas province, along with the South American Regional Infrastructure integration Initiative (IIRSA); resolve and prevent the environmental problems that affect the roads and their natural environment in the project’s area of influence; and improve living conditions in the area, reducing transport costs and facilitating access to services, markets and raw materials.

This project was conceived by the Ministry of Public Works as a fundamental work and integrated solution for improving the only direct route linking Guayaquil with the rest of the country, along the Guayaquil-–La Puntilla–Durán corridor. This work is needed to continue and strengthen the sustainable development of the western coastal region of the country. The project supplements the effort that Ecuador, through the ministry, is currently making with CAF support, which granted a first loan for US$57 million, now fully executed. The loan will be used to finance the reconditioning of the existing bridge and its extension, construction of a new segmental bridge over the Daule River, construction of road solutions including access to the bridge, the reconditioning of the existing bridge over the Babahoyo River and the La Puntilla overpass.

The total cost of the project is estimated at US$147.9 million, of which CAF loans, taking into account the previous operations, cover almost 70%,and 30% relates to government contributions. According to the project execution timetable, the works are scheduled to be handed over to serve the community in December 2006.

Ecuadorian development can count on CAF. In a response to Ecuador's need to promote its development process, in the 2001-2005 period CAF approved operations totaling about US$2.36 billion for both private and public sectors.

The constant credit support for Ecuador from this institution is shown by its 80% contribution to total approvals from multilateral organizations (CAF, IDB and World Bank) last year, which ranks it as the country’s leading multilateral financier.