US$ 6 billion to be approved for Colombia over the next three years

(Bogotá, June 19, 2009).- Today, the executive president of the Corporación Andina de Fomento (CAF), Enrique García, announced that, during the period 2009-2011, the multilateral agency will approve a total of US$ 6 billion for Colombia, and this has been established in the Operational Plan revised with the Colombian Government this week.

“The Operational Plan responds to the strategy agreed upon between the Colombian Government and CAF, geared mainly to financing infrastructure and social development projects as well as to supporting the government’s anticyclical program,” explained Enrique García.

The operations approved in 2009 come to approximately US$ 2 billion and are broken down by sector as follows: 36.5% for economic infrastructure and social and environmental development; 29.2% for macroeconomic stability and structural reforms; 18.5% for competitiveness, the productive sector, and MSMEs; and 15.9% for financial systems and capital markets (see Graph 1). The public sector maintains the lion’s share of the approved funding.

García indicated that, in the area of infrastructure, CAF seeks to strengthen the public and private portfolio with top level clients in the light of the high demand for financing in this sector. Worthy of special mention are the funding of US$ 270 million for the La Línea Tunnel and private credits for projects in the electricity sector (US$ 190 million) and airport development (US$ 75 million, including El Dorado airport).

As for support for the government’s anticyclical program, CAF is apparently to approve US$ 1.8 billion in freely available funding, short-term lines of credit, working capital, foreign trade capital, and funding for fast-maturing, labor-intensive projects.

With the operations program proposed for Colombia by CAF, a positive net flow for the public sector of US$ 197 million is planned for 2009. Besides credit funding, CAF will allocate US$ 1.3 million in non-reimbursable technical cooperation for initiatives in Colombia. These funds will be channeled to the preparation of projects in accordance with the Corporation’s strategic guidelines and also to the strengthening of the country’s institutions.

The multilateral agency’s executive president highlighted CAF’s financial soundness, also pointing out that, in 2008, it reached a record level of approvals amounting to US$ 8 trillion and posted profits of US$ 311 million. CAF’s non-sovereign risk has been on the increase and today represents 58.5% of approvals. The total portfolio comes to US$ 10.3 trillion and equity to US$ 4.6. The risk rating agencies have ratified their investment grade rating for the Corporation (A and AA).

Finally, García commented that CAF expected an increase in its capital, acceding to the request of its shareholders. In situations such as the present one, in which the governments of partner countries respond anticyclically, the role of the Corporation is to accompany those efforts and, therefore, backing by shareholders for the raising of capital is fundamental for fulfilling this role.

Graph 1 Approved Operations by Strategic Sector - 2009