US$400 million contingent line of credit for Peru

(Caracas, February 4, 2009).- The Andean Development Corporation today approved a US$400 million contingent line of credit in favor of the Republic of Peru, to mitigate risks derived from the financial crisis on international markets.

CAF President & CEO Enrique García said the operation was intended to back the Peruvian government’s efforts to execute its public debt strategy by means of a preventive financing instrument which provided financial funds to the country. The operation was requested under the umbrella of the anti-crisis program presented last December by Peruvian President Alan García which, in addition to a series of fiscal measures aimed at strengthening the sustainability of economic growth, includes preventive financing instruments with various multilateral organizations.

"CAF is making this line of credit available to the government of the Republic of Peru to cover possible financial requirements in a situation of scarce access to finance on international markets for reasons exogenous to fiscal and monetary management, and thus give continuity to the public debt management strategy," the CAF chief said.

García added that it was important for CAF to support initiatives such as these, because they guarantee funds for optimal execution of public debt management and, taking advantage of the favorable economic environment, have reduced the fiscal burden and increased flexibility for allocating public expenditure to priority sectors.

This operation in favor of Peru was approved as part of CAF support for the economies of CAF member countries, given the magnitude of the current international financial crisis. Last October, García announced that the institution had implemented a US$1.50 billion contingent line of credit for liquidity to support member countries.