March 13, 2018

The Minister of Finance, Luis Caputo, gave a speech this morning at the panel “Infrastructure Financing: the Argentine PPP plan”, held at the CCK building within the framework of the Launch of the Regional Express Network (RER, for its acronym in Spanish), which will be developed through the Public-Private Partnership tool.

During his speech, the Minister of Finance talked about the opportunities Argentina has to offer and about the PPP scheme as a tool to settle the country‘s infrastructure debt. In this sense, Caputo said that “this Administration’s greatest challenge is to settle this debt because, at the same time, we want to lower deficit and taxes”.

Likewise, Caputo defined the PPP tool as the “most affordable, safe, efficient and transparent way to develop infrastructure” and he explained that “the studies conducted in England evidence that 30% of public works were completed within the budget, compared to the 80% of PPP projects”. Regarding the delay to complete the projects, Mr. Minister said that “in public works the average was 25% and in PPP only 1%”.

The Minister of Finance also highlighted “the financial engineering of the PPP scheme which makes it an attractive option for investors and which is more affordable and efficient for the Government”. “We have achieved the ideal combination to attract investors and to generate more competition to obtain the lowest cost”, Mr. Minister highlighted. In addition, Caputo said that “there are already 60 projects amounting USD 30 billion, which this year will be added to the 1.5% of GDP in infrastructure budget” and which “will represent 1% per year in the next 4 years”.

The Undersecretary of PPP, José Luis Morea, explained the risk structure and distribution at the panel “Financial structure of the PPP project for RER”. This way, he said, “PPP projects have a solid technical structure”, and he highlighted that the “financial-legal structure is efficient and mitigates risks”.

During his speech, Morea said that “our goal is to maximize competition, which will attract local and international enterprises, thus generating convenient and sustainable offers for everybody”. “For enterprises to engage in 5-year works, it is necessary to mitigate the risk of the agreement remaining unperformed”, he added.

Likewise, Mr. Undersecretary said that the team of the Ministry of Finance is “taking into account the successful experience of other countries in the region, such as Chile, Peru and Colombia”. “We offer the best projects, ready for tender. We also create great incentives for the projects to be attractive and financed by the private sector”, Morea added.

Finally, he talked about transparency in tender processes, which can be consulted on the Under-secretariat of PPP website. “In addition, we have the support of the following bodies: the Argentine Anti-corruption Agency, the General Auditing Office and the Bicameral Commission of PPP Agreements Follow-up of the Congress”, he added.

The RER is a new railway system that will connect the 6 metropolitan trains of the City of Buenos Aires, avoiding transfers to get to the central area of the City of Buenos Aires or to travel through the different municipalities of the Metropolitan Area of the City of Buenos Aires (RMBA, for its acronym in Spanish).

The following officials participated in the Launch: the Vice Chief of Cabinet of Ministers, Gustavo Lopetegui; the Minister of Transport, Guillermo Dietrich; the Secretary of Transport Planning, Germán Bussi; the Secretary of Transport Public Works, Manuela López Méndez; the Mayor of the City of Buenos Aires, Horacio Rodríguez Larreta; and the Secretary of Public Ethics, Transparency and Fight Against Corruption, Laura Alonso.

The Minister of Finance, Luis Caputo, signed this afternoon, together with the Regional Director for Argentina and Brazil at Agence Française de Développement (AFD), Philippe Orliange, the first loan agreement of the “Water and Sanitation Development Program” of Belgrano Plan for USD 70 million, 5.23% interest rate, 15-year period (5-year grace period). This is the first financing agreement between the AFD and Argentina.

This loan will serve as a complement to the USD 200-million financing contributed by the Inter-American Development Bank (IDB) for the above-mentioned Program, which is aimed at extending the coverage of potable water and sewage systems and at improving the environmental, sanitation and hygiene conditions through the management of water and sanitation providers of the Belgrano Plan region. The following officials attended the execution of the agreement: the Ambassador of France in Argentina, Pierre Henri Guignard; the Director of AFD in Argentina, Juliette Grudman; the Chief of Cabinet of the Ministry of Finance, Pablo Quirno; and the Undersecretary of International Financial Relations, Martin Soto.

This will enable to meet the Government’s targets as regards potable water and sanitation, which are aimed at reaching 100% potable water coverage and 75% sewage service coverage for 2019. In this sense, the loan will finance environmental, social, water and sanitation studies, as well as the strengthening of service providers and investment at a local level in infrastructure of potable water and sanitation. These projects will be executed within the Belgrano Plan area, which includes the Provinces of Catamarca, Chaco, Corrientes, Formosa, Jujuy, La Rioja, Misiones, Salta, Santiago del Estero and Tucuman.

The AFD had its first mission in Argentina in October 2016, when different projects were submitted to the investment sectors of the Agency. Since then, the Ministry of Finance has maintained a constant dialogue in order to make progress in the analysis and negotiation of the financing alternatives offered and to coordinate the technical missions of French experts in the country. For this reason, the AFD decided to establish an office in Argentina.

AFD is a financial institution and it provides technical and financing assistance both in developing and emerging countries and in the French overseas provinces. As a public organization, it depends on the Ministry of Foreign Affairs and International Development and on the Ministry of Finance of France.