MercoPress. South Atlantic News Agency

Brazil looks to join CAF for US$1B

Brazil's government is negotiating with the Andean Development Corporation to become a fully-fledged member, which would require an investment of about US$1 billion, Brazilian Planning Minister Paulo Bernardo said Sunday.

"We are in a phase of negotiations to become full members of CAF," as the development bank is known, Bernardo said. "We already have the go-ahead from President (Luiz Inácio Lula da Silva) to proceed with this operation." The investment decision comes as Brazil evaluates its participation in regional development banks. Brazil is looking to resolve problems at the Financial Fund for the Development of the River Plate Basin, known as FONPLATA, whose other members are Argentina, Bolivia, Paraguay and Uruguay. "We have started a debate with the other countries to find a way out for FONPLATA, which is a very bad situation," he said. Bernardo also said Brazil is considering joining the Bank of the South, a new regional development bank which Venezuela wants to have up and running by the end of the first semester. But the minister said there may be other options. "We think initially that maybe the best alternative would be a significant strengthening of the CAF," Bernardo said. Other countries of the region could also join in CAF, as Brazil is doing, he said. If the Bank of the South does move forward, then Brazil would be willing to match any equity investments made by Venezuela and Argentina, Bernardo said, adding that it would make sense to stagger any buildup of capital rather than just making one large initial payment at launch. For Brazil, it is essential that the Bank of the South meets international standards of governance, have a slim structure and clear objectives, he said. (Reuters)