Sunday 15 September, 2019

Gov't gets first tranche of $300M loan from CAF Development Bank

The Ministry of Finance said it has signed the first tranche of a Policy-Based Loan Agreement in the sum of US$180 million with the Corporación Andina De Fomento (CAF) Development Bank.

The Ministry said the total loan of US$300 million will be used for the implementation of the Programme to support Government’s “Medium-term Fiscal Consolidation Strategy – Phase II”, to boost potential growth and reduce the economy’s vulnerability to external fluctuations and volatility of external terms of trade.

The programme aims to increase fiscal revenues; improve public expenditure efficiency and accountability; strengthen public debt management and promote fiscal policy sustainability. Policy actions which will be supported under the loan agreement include:

- Tax policy reform for the energy sector

- Corporation tax reform

- Implementation of an environmental tax

- Improve public procurement mechanisms

- Strengthening of the Central Audit Committee of the Ministry of Finance

- Review of the Public Debt Legislation

- Improvement of the Bond Market

- Establishment and operationalization of the National Investment Fund

- Monitoring fiscal consolidation progress

The loan is being pursued under the International Financial Organizations (Corporación Andina De Fomento) Act No. 5 of 2017.

"CAF is a development bank created in 1970, owned by 19 countries – 17 of which are Latin American and Caribbean countries, Spain and Portugal- in addition to 13 private banks in the region."

"CAF promotes a sustainable development model through credit operations, non-reimbursable resources, and support in the technical and financial structuring of projects in the public and private sectors of Latin America’," the Ministry said. 

 

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