JULY 2010 USD 600 MM MATURITY 2016 EUR 100 MM COP 111,980 MM MATURITY 2014 AUGUST 2008 CHF 200 MM MATURITY 2013 MXN 750 MM

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1 DECEMBER 2010 USD 50 MM NOVEMBER 2010 EUR 400 MM NOVEMBER 2010 CHF 250 MM 192 MATURITY 2018 MATURITY 2015 OCTOBER 2010 JPY 4,600 MM JULY 2010 USD 600 MM MAY 2010 USD 74 MM MATURITY 2015 MATURITY 2016 MARCH 2010 USD 50 MM MARCH 2010 EUR 100 MM OCTOBER 2009 PEN 144 MM MATURITY 2015 APRIL 2009 COP 127,500 MM APRIL 2009 COP 111,980 MM FEBRUARY 2009 JPY 10,000 MM MATURITY 2019 MATURITY 2019 DECEMBER 2008 COP 94,250 MM AUGUST 2008 CHF 200 MM MAY 2008 MXN 800 MM MATURITY 2018 MATURITY 2013 MATURITY 2010 NOVEMBER 2007 JPY 5,000 MM NOVEMBER 2007 MXN 750 MM JUNE 2007 JPY 10,000 MM MATURITY 2010 MATURITY 2012 MARCH 2007 VEB 127,500 MM FEBRUARY 2007 VEB 107,500 MM JANUARY 2007 USD 250 MM MATURITY 2012 MATURITY 2012 SEPTEMBER 2006 USD 250 MM JUNE 2006 VEB 215,000 MM MAY 2006 PEN 248 MM MATURITY 2011 MATURITY 2018 JULY 2005 JPY 5,000 MM JULY 2005 JPY 15,000 MM MAY 2005 USD 250 MM MATURITY 2012 MATURITY 2008 MATURITY 2015

2 OCTOBER 2010 JPY 9,800 MM 193 MARCH 2010 USD 100 MM JUNE 2009 USD 1,000 MM MATURITY 2019 DECEMBER 2008 COP 150,250 MM MATURITY 2013 JANUARY 2008 USD 250 MM MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 196 SUMMARY FINANCIAL STATEMENTS 196 LOAN PORTFOLIO 197 LIQUID ASSETS 197 FUNDING 198 CAPITAL 199 ASSET-LIABILITY MANAGEMENT JUNE 2007 JPY 20,000 MM MATURITY 2010 NOVEMBER 2006 EUR 300 MM MATURITY 2011 JULY 2005 USD 150 MM MATURITY 2009 FORTY YEARS OF FINANCIAL SOLVENCY AND STRENGTH

3 194 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION During 2010, rating agencies recognized CAF s credit quality. Standard & Poor s improved the Institution s outlook of its long-term debt from stable to positive. Likewise, Fitch Ratings, Japan Credit Rating Agency, and Moody s Investors Service ratified the ratings assigned to CAF s short- and long-term debt, as shown in Table 1. The decisions of these agencies reaffirm CAF as the Latin American frequent issuer with the highest credit ratings. This responds to the strength and stability of its operational results, the conservative management of its credit policies, the independence with which it undertakes its operations, and the continuous support of its shareholders. Table 1. CREDIT RATINGS Long-term Short-term Fitch Ratings A+ F1 Japan Credit Rating Agency AA- - Moody s Investors Service A1 P-1 Standard & Poor s A+ A-1 Once again, CAF was reaffirmed as the most important source of multilateral financing for its founding countries, while it has become an important provider of financing to its Latin American and Caribbean shareholder countries. During the year, the Institution approved a record amount of operations for USD 10.5 billion, and disbursed USD 7.7 billion, mainly directed at financing medium- and long-term projects. During the year, it is worth noting the conversion of Brazil, Panama, and Uruguay into full members. Also, shareholder countries continued to meet timely payments that have been committed for a total of USD 405 million, mainly derived from the USD 2.5 billion capital increase approved in 2009 in order to strengthen the Institution s capital base. In the same line, Spain subscribed an additional USD 327 million. Net income reached USD 166 million, representing USD 69 million less than the 2009 result. This was mainly due to a decrease of the LIBOR interest rate evidenced in recent years and which reached a record low in As a result, the main profitability ratio, Return on Equity (ROE), was 3.0%. Regarding bond issues in international markets, 2010 became the year of greatest activity in CAF s history, both in the number of transactions as well as in the amount placed. The Institution issued bonds for approximately USD 2.0 billion in the US, Swiss, Japanese, and European markets, includ-

4 ing CAF s first placement in the Uridashi Japanese market, aimed at private investors where traditionally only issuers with very high credit ratings participate. Likewise, CAF also entered the Uruguayan market with two issues of USD 50 million each. Regarding short-term financing, the commercial paper programs in the US and Europe increased to accommodate a larger demand that resulted in placements of approximately USD 3.4 billion during Graph 1. BALANCE SHEET As of December 31 st, each year (in millions of USD) ASSETS 20,000 LIABILITIES AND SHAREHOLDERS EQUITY 20,000 18,000 18,000 16,000 16,000 14,000 4,127 14, ,000 8,000 1,931 2,458 3,281 3,685 12,000 10,000 8,000 6,747 8,463 9,719 10,600 12,794 6,000 8,097 9,548 10,184 11,687 13,783 6,000 4,000 4,000 2,000 2,000 3,693 4,127 4,554 5,287 5, LIQUIDITY LOAN PORTFOLIO OTHER ASSETS LIABILITIES SHAREHOLDERS EQUITY Graph 2. NET INCOME AND PROFITABILITY For the years ended December 31 st NET INCOME (in millions of USD) PROFITABILITY RATIOS 9.4% 10.5% % % 5.3% 4.7% % 3.6% 3.1% 3.0% % 1.6% % 1.0% 0.5% ROE ROA 6-month LIBOR

5 196 SUMMARY FINANCIAL STATEMENTS As of December 31 st, 2010, total assets reached USD 18.5 billion, a 17% increase with respect to the amount registered at year-end 2009 (Graph 1). This was mostly due to increases in both the loan and liquidity portfolios. Loan portfolio closed at USD 13.8 billion, representing an 18% increase over the previous year. The other major component of assets, liquidity, totaled USD 4.1 billion, and represented 22% of total assets and 33% of total. financial liabilities. As of December 31 st, 2010, shareholders equity reached USD 5,8 billion, with paid-in capital of USD 2.8 billion and additional paid-in capital of USD 616 million. At the close of 2010, total equity represented 31% of total assets and 37.2% of risk-weighted assets, according to the methodology established in the Basle Agreement. Net income reached USD 166 million in 2010, mainly reflecting the growth of the credit portfolio. However, this result was lower than in 2009 due to the decrease interestincome derived from the decline of the LIBOR interest rate, which in 2010 reached historically low levels. Return on Equity (ROE) declined to 3.0% in 2010 compared to the 4.7% registered in 2009, a level close to the average return on US 10- year Treasury bonds (3.2%) and well above the average 6-month LIBOR rate (0.5%). At the same time, Return on Assets (ROA) for the year was 1.0% (Graph 2). LOAN PORTFOLIO At year-end 2010, CAF s loan portfolio reached USD 13.8 billion, representing an 18% increase over the USD 11.7 billion registered the previous year. The distribution of the loan portfolio maintained a larger concentration in public sector projects, which represented 80% of the total portfolio at December 31 st, From the perspective of portfolio distribution by country, Ecuador showed the largest exposure with 17.7% of the total, followed by Venezuela, with 16.2%; Peru, with 15.8%; Colombia, with 14.3%; Argentina, with 10.1%; Bolivia, with 9.4%; Brazil, with 8.1%; Uruguay, with 4.8%; and Panama, with 1.0%. The increasing participation of shareholders which recently became full members favors the growing diversification of the portfolio in the short- and medium-term. In this regard, the new full members, together with those in the process of becoming full members, represented 25% of the loan portfolio at the end of CAF s policies limit exposure to any individual country to a maximum of 30% of the total portfolio. Financing of infrastructure and social and environmental development projects continued to be one of CAF s main activities, representing 73% of the total loan portfolio at the end of 2010.

6 Likewise, the loan portfolio maintained its excellent credit quality (Table 2). At year-end 2010, there were no Non-performing loans, and loan loss provisions amounted to USD 141 million or 1.0% of the total loan portfolio. During the year, there were no write-offs. Table 2. ASSET QUALITY As of December 31 st, each year (in millions of USD) Overdues Loans in non-accrual status Allowance for loan losses ,4 Overdues as a percentage of loan portfolio 0.0% 0.0% 0.0% 0.0% 0.0% Non-accrual loans as a percentage of loan portfolio 0.0% 0.0% 0.0% 0.0% 0.0% Allowances as a percentage of loan portfolio 2.33% 1.76% 1.41% 1.23% 1.03% 197 Graph 3. LIQUID ASSETS As of December 31 st, 2010 LIQUID ASSETS At December 31 st, 2010, liquid assets totaled USD 4.1 billion, representing 22% of total assets and 33% of financial liabilities.the investment portfolio was characterized by its short duration an average of 0.40 years and excellent credit quality (Graph 3): 97.4% of liquid assets at an average rating of AA/Aa2; and only 2.6% non-investment grade. CAF policies require that at least 80% of liquid assets be held in investment grade instruments with credit ratings of at least A-/A3. Investment grade 97% Non-investment grade 3% FUNDING In 2010, CAF registered the largest bond issue activity in capital markets in its history, successfully placing almost USD 2 billion in 10 transactions. It is worth mentioning the following: USD 600 million issued in the US market, EUR 400 million (approximately USD 538 million) issued in the European market, the second issue in the Swiss market for CHF 250 million (approximately USD 262 million), and JPY 14,400 million (approximately USD 178 million) issued in the Japanese market. In addition, CAF placed two issues of USD 50 million each in Uruguay s market, continuing with its strategy of making placements in the local markets of its shareholder countries. Also, it is worth noting the first placement in the Japanese Uridashi market for USD 74 million, aimed at retail investors. This market is traditionally opened only to issuers with very high credit ratings. Furthermore, CAF maintains an important presence in short-term markets through commercial paper programs in the US and Europe markets, which were increased to USD 1.5 billion and US 2 billion, respectively, to accommodate higher demand. This resulted in a placement of approximately USD 4 billion, maintaining competitive levels. In addition, time deposits maintained their importance as a stable and competitive source of funding, exceeding USD 2.6 billion at year-end.

7 198 Regarding medium- and long-term loans, CAF obtained a USD 100 million syndicated loan in Asia (specifically in Japan and Taiwan), of credit line from ICO, and continued with the local currency loan program for microfinance institutions, among others. At December 31 st, 2010, 70% of CAF s funding came from international capital markets. Bonds represented the main source of funds with 58% of total funding (Graph 4). In addition, deposits from institutional investors in the region represented 22% of total debt, followed by commercial paper with 12%, and by other short-term loans and medium- and long-term lines of credit with 8%. CAF has long-standing relations with the most important international banks, with official institutions from around the world, and with other multilateral financial institutions. Graph 4. LIABILITIES As of December 31 st, 2010 Bonds 58% Borrowings and other obligations 8% Commercial paper 12% Deposits 22% For details on the issues placed by CAF in 2010 please refer to Table 3. Table DEBT ISSUES IN THE INTERNATIONAL MARKETS Date Market Amount in original currency Equivalent of issuance (in millions) in USD million Bond issuance March Private placement EUR March Uruguay USD March Private placement USD May Uridashi USD July Yankee USD October Samurai JPY 14, November Swiss CHF November Euro EUR December Uruguay USD Sub-total ,988 Total ,507 Short-term issuance programs Commercial paper (USA) USD 1,500 1,500 Commercial paper (Europe) USD 2,000 2,000 CAPITAL During 2010, CAF received new capital contributions from its shareholder countries for USD 405 million. This amount was mostly related to capital suscriptions from the five Series C shareholder countries that were in the process of becoming full members (Argentina, Brazil, Panama, Paraguay, and Uruguay), for a total of USD 1.5 billion. Of these countries, Brazil, Panama, and Uruguay became full members during the 2010 fiscal year. The remaining contributions corresponded to the capital increase approved in 2009 for USD 2.5 billion, and were paid as scheduled. At the end of the year, the Institution s capital amounted to USD 5.8 billion, 9% higher than the amount registered at the end of 2009, strengthened by the inflow of contributions from shareholder countries, and by retained earnings.

8 As a result of the increase in shareholders equity, capitalization ratios remained within the levels established in CAF s policies on this matter (Table 4). Table 4. CAPITALIZATION RATIOS As of December 31 st, each year Gearing (times)¹ Leverage (times)² Capital/risk weighted assets (BIS)³ 41.1% 36.3%* 38.4%* 41.7%* 37.2%* 1 According to internal financial management policies, this exposure measure should be less than or equal to According to internal financial management policies, this measure of indebtness should be less or equal than According to internal financial management policies, the level of capitalization should be greater or equal than 30%. * Since 2007 the capitalization ratio was calculated based on the new methodology according to Basle II. ASSET-LIABILITY MANAGEMENT In order to reduce foreign exchange and interest rate risks, CAF s lending and borrowing activities are primarily conducted in floating-rate USD. At December 31 st, 2010, more than 99.6% of assets and 98.8% of liabilities were denominated in USD after swaps, and 99.7% of the loans and 98.8% of the financial liabilities were based on the 6-month USD LIBOR. Transactions that are not denominated in USD nor based on the 6-month LIBOR are swapped into these terms. The swaps book totaled USD 7.1 billion at the end of CAF s policies require that swap counterparts be rated at least A+/A1 or have a collateral agreement. In addition, CAF has Collateral Security Agreements (CSA) with its main counterparts. This reduces credit risk since valuations are made on a mark-to-market basis, and the debtor party must place the corresponding collateral in accordance with certain pre-established parameters. The Institution does not engage in the trading of derivatives. These instruments are used for hedging purposes only. CAF seeks to maintain a conservative relationship between the average life of its assets and liabilities. At December 31 st, 2010, the average life of its assets was 4.7 years and the average life of its liabilities was 3.6 years. The latter value does not include shareholders equity, which represents a high percentage of CAF s financing and favors the maturity profile of liabilities.