1. Central American Bank for Economic Integration
CABEI Special Fund for Social Transformation in Central America (FETS)
Central American Bank for Economic Integration

2. Special Fund for Social Transformation in Central America
FETS was created in November, 1999 by CABEI’s Board of Governors as the Bank’s soft window that offers concessional financing to HIPCs.
Honduras and Nicaragua are eligible to receive financing through FETS.
With the creation of FETS, CABEI has joined the efforts of the international community to improve the living conditions of the region through the provision of concessional financing, which linked to the debt relief assistance being provided under the HIPC Initiative, will contribute towards the achievement of the region’s poverty reduction goals.

3. Special Fund for Social Transformation in Central America
CONCEPT
Special “Window” offering concessional financing for Programs and Projects related to Central American country-led poverty reduction efforts.
MAIN OBJECTIVES
To improve social and living conditions of Central American families.
To boost international competitiveness within the Region.
To provide proper assistance in order to meet population basic needs.
To help combat enviromental deterioration and depletion of natural resources.
To foster civil society participation in the beneficary countries.

4. Special Fund for Social Transformation in Central America
CAPITALIZATION
USD MM
CABEI - yearly allocations from net income 49.5
European Union – donation
Denmark – donation
Other sources

5. Special Fund for Social Transformation in Central America
MAIN CHARACTERISTICS
Financing Modalities
Soft Credits
Trust Funds
Co financing Programs
Donations
Other Financial Mechanisms of interest to the Donor Community.

6. Special Fund for Social Transformation in Central America
APPROVALS AND DISBURSEMENTS
Approvals 
Disbursements
(USD MM)
Country
2002
2003
2004
2005
2006
Total
Honduras
52.4
3.7
4.2
10.1
0.8 1
19.8
Nicaragua
41.9
2.8
3.9
7.3
9.6
23.6
94.3 7 14
8.1
10.6
43.4

7. Special Fund for Social Transformation in Central America
MAIN BENEFITS
Integrates funds from different sources for common goals (multiplier effect).
Guarantees the sustainability of a continuous flow of concessional resources.
Ensures the visibility of the different contributions.
Includes a number of mechanisms to identify, manage, implement, monitor, evaluate and measure the impact of its programs and projects.
Reduces the cost of granting and managing resources for donors which do not have a strong presence in the Region.

8. Special Fund for Social Transformation in Central America
MAIN CONSTRAINS
Scarce concessional resources within the international donor community.
Great investment needs in HIPC countries when compared to CABEI’s limited capacity to allocate funds from its net income.
Capitalization structure. Does not incorporate replenishments.

9. Special Fund for Social Transformation in Central America
LEVERAGE MECHANISM
It provides concessional funds that can be leveraged through a mixture with CABEI’s ordinary resources.
Approved Amount
Type Of Resource
USD MM %
FETS
94.43
53.2
CABEIs Balance Sheet
82.88
46.8
Total
177.31
100
Average Leverage Ratio (Total to FETS)
1.9

10. CABEI/IADB Joint Initiatives in HIPC Countries
Special Fund for Social Transformation in Central America
CABEI/IADB Joint Initiatives in HIPC Countries
Public Sector / Nicaragua:
Currently discussing the possibility of cooperating on the financing of long term projects.
Focus on Renewable Energy (USD 50.5MM) and Health (USD 75MM).
Under the proposed scheme, IADB would provide concessional funds that would be leveraged through a mixture with CABEI’s ordinary resources.
Joint efforts in order to explain the structure to the Nicaraguan Government (“one single package”).

11. Special Fund for Social Transformation in Central America
CLOSING REMARKS
CABEI does not have its own “concessional funds”, but over the years has developed strong ties with governments, cooperation agencies, and development banks willing to channel concessional funds through CABEI.
CABEI has demonstrated strong commitment towards poverty reduction and debt relief efforts.
CABEI has developed mechanisms to efficiently use concessional funds and continue financing HIPCs.
CABEI is determined to keep its “franchise value” for HIPCs.