US$892 million for Venezuela

(Caracas, December 12, 2006).- A report on activities in 2006 was offered in Caracas by CAF President & CEO Enrique García, who announced a record figure of US$5.66 billion for annual approvals. For Venezuela approvals totaled US$892 million representing 16% of the total approved by the Corporation for this period.

On CAF support for Venezuela, García said that "this year the most important support was for economic infrastructure and social development, providing financing for execution of integrated programs of mass transport and housing development, respectively, for various sectors of the population." Additionally, for the private sector financial instruments were designed to contribute to execution of strategies for accessing capital markets, he added.

Support for social and transport programs As part of the actions executed by CAF in the social area in its member countries, this year US$400 million was approved for Venezuela for the Habitat Program, whose primary objective is to support the National Government Investment Plan for housing and habitat development and improvement, to improve the living conditions of at least 120,000 families in a situation of social vulnerability. “Support for programs such as these means cooperating with the government strategy to reduce poverty because access to an asset of such vital importance as housing gives citizens a better quality of life. Actions like these also increase self-esteem and integratef citizens into a way of life that includes caring for the environment, because the program is based on the concept of integrated habitat," García said.

In relation to the Public Investment in Mass Transport program, a US$400-million loan was granted to meet the transport needs of heavily populated parts of the Caracas Metropolitan area, as well as other urban centers in the country, such as Valencia and Maracaibo. The provision of a rapid and efficient service, which decongests the communication routes in these localities, will improve the quality of life of citizens, as well as contributing to environmental conservation of the areas of influence. The operation involves public investment in five metro systems: Line III of Metro de Caracas, Section El Valle-La Rinconada; Line IV of Metro de Caracas, Section Capuchinos-Plaza Venezuela; Metro de Los Teques; Metro de Valencia; and Metro de Maracaibo.

First bond issue by a multilateral As part of the activities of multilateral financial organizations in 2006, CAF made the first issue of bonds in local currency by a multilateral organization in Venezuela since 1976, for a total of 215 billion bolivars at five years. This is the highest amount issued to date by a single issuer in this South American nation other than the government.

The CAF president said that the multilateral institution "is committed to developing and deepening the capital markets of the region and, through this operation, is making a great contribution in this respect." This payment is part of approval of a two-year program, totaling 450 billion bolivars by CAF in the period.

Integrated response to Venezuelan development The CAF President said the Corporation has concentrated its efforts on an integrated development agenda which aims to improve the living conditions of Latin Americans, through sustained quality growth, meaning inclusive development that generates employment. García proposed that an agenda based on three fundamental aspects: stability, efficiency, and equity. To do this the agenda must take into account the principles of environmental sustainability, increased international participation, and democratic governance, with the joint participation of public and private sectors, civil society, and the international community.

On this basis, CAF approved a US$50-million Partial Credit Guarantee for issues of bolivar-denominated bonds by Electricidad de Caracas on the local capital market. "With this type of transaction, CAF plays a very important catalytic role by contributing to the development of capital markets, and at the same time strengthening the private sector through structured operations, which facilitates the obtaining of funds in local currency at longer terms than currently available and on better financial conditions," García said.

With respect to the environmental component supported by the Corporation in Venezuela, the Biodiversity Program (BioCAF) completed the CAF–GEF/UNDP project on Biotrade in the Andean region. In the participating countries (Colombia, Ecuador, Peru, and Venezuela) studies were finalized to identify barriers and inadequate incentives; barriers to entry to international markets; criteria for selecting and evaluating pilot biotrade initiatives; and strategies to improve quality and marketing, among others.

The most important action of the CAF Competitiveness Support Program (PAC) in Venezuela this year was the promotion, in alliance with Ideas Foundation, of the Support System for Creation of Enterprises, with the participation of several Venezuelan universities, the firm McKinsey & Company, the Institute of Advance Administrative Studies (IESA), and company incubators in the Sartenejas and Mérida technology parks.

In the area of Cultural and Community Development, the main activity was support for projects to build capacities and strengthen social responsibility and capital. The Music Program continued in its orchestral, choral, lute sections. In the area of productive community management, an important action was the training of young people in La Guaira through the workshop school promoted by the Spanish Agency for International Cooperation and Vargas municipality.

Lastly, in relation to the Governance Program, the operations financed included the Integrated Automation Project for Sotillo Municipality Land Registry System, continuation of the Governance and Political Management Program, in alliance with George Washington University and Andrés Bello Catholic University, as well as the Efficient and Transparent Municipalities Program in alliance with the OAS and the Canadian International Development Agency (CIDA).