WASHINGTON, D.C., January 7, 1999 --- The Inter-American Development Bank and the International Finance Corporation have approved a US$258 million financing package to help modernize Correo Argentino S.A., the world's first fully privatized national postal system.
In 1993, the Argentine post office was corporatized and the market was deregulated. The corporatization was followed in 1997 by a competitive bid for the postal service concession, which was awarded to Correo Argentino S.A., which will operate the official mail and other postal services under a 30-year concession.
The financing package consists of $75 million from each multilateral and a jointly syndicated loan of up to $108 million to be provided by participating commercial banks. IFC's investment includes equity and quasi-equity components totaling $12 million. The multilateral financing signals the continuing commitment by IDB and IFC to support the privatization process and regulatory reforms in Latin America.
The investment will help Correo upgrade its mail handling centers, including a new central sorting plant for Buenos Aires; improve its management capacity and efficiency; upgrade communications systems and machinery; and make building improvements. The project will also reconfigure and retrain the labor force and strengthen health and safety conditions at the company.
The success of this pioneering investment will help prove that the private sector can provide national postal services in a highly competitive environment, said Declan Duff, Director of IFC's Telecommunications, Transportation, and Utilities Department. He added that this is likely to be a model for consideration in other countries and that the World Bank Group stands ready to help.
Mr. Hiroshi Toyoda, Manager of the Private Sector Department at the Inter-American Development Bank, said that this groundbreaking transaction will position the company to enhance efficiency in postal operations, promote competition, and provide improved services and product diversification. Solid management and advanced technology will enable the company to significantly increase services to its customers and improve reliability in order to better meet the needs of its clients.
The Correo Argentino S.A. consortium is comprised of Sideco Americana S.A., part of Argentina's Macri Group, and Banco de Galicia y Buenos Aires. The British Post Office has been selected by Correo Argentino to be the on-site technical advisor for the concessionaire.
The Private Sector Department of the IDB was established in 1995 to provide long-term financing and guarantees to facilitate the development of private sector infrastructure throughout Latin America and the Caribbean.
IFC, part of the World Bank Group, fosters economic growth in the developing world by financing private sector investments, mobilizing capital in the international financial markets, and providing technical assistance and advice to governments and businesses.