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FOR IMMEDIATE RELEASE WOIILD INTERNATIONAL BJi\~JK FOR \~: RECONSTRUCTION D
1818 H STREET, N.W., WASHINGTON 25, D. C. TELEPHONE: EXECUTIVE 3-6360 Public Disclosure Authorized
PRESS RELEASE No. 523 FOR RELEASE SUBJECT: $75 million loan in Italy A.M. Newspapers Saturday, March 1, 1958
The World Bank, with the participation of more than 20 financial institu
tions in Germany, the United States and Canada, has made a loan equivalent
to $75 million in Italy.,, The funds are being lent to the Cassa per il Public Disclosure Authorized Mezzogiorno, a governmental agency, for industry, agriculture and electric
power development in Southern Italy. The Bank has now made ~ive loans totaling
over $238 million in support of Italy's program to raise the standard of living
• in the area comprising the Italian mainland south of Rome and the islands of
Sicily and Sardinia.
The participants are providing $12,830,200 of the loan. Seven German
Public Disclosure Authorized and 14 .American banks are participating, in each c~se a record number. The German banks are as follows:
Deutsche Bank, Frankfurt :> Bayerische Hypotheke-und Wechselba.nk, Munich Commerzbank Gruppe, Dusseldorf, Hamburg and Frankfurt Bz,,:f_nkmann, Wirtz &° Co. , Hamburg Berenberg Gossler and Company, Hamburg Norddeutsche Kreditbank, Bremen Vereinsbank, Hamburg
The other banks are:
Bank of America Mad16~al Trust and Savings Association, San Francisco Public Disclosure Authorized Bankers Trust Comp~y ~, New York Belgian American Bank & Trust Co., New York Bro'WD. Brothers Harriman & Co., New York The Canadian Bank of Commerce, Toronto 'The Chase Manhattan Bank, New York Chemical Corn Exchange Bank., New York Continental Illinois National Bank & Trust Co., Chicago - 2 - The First National Bank of Boston The First N~tional City Bank of New York Girard-Corn Exchange Bank, Philadelphia • Grace National Bank of' New York Irving Trust Company, New York The National Sha'Wlllut Bank of Boston The Philadelphia National Bank
The participants are taking ~he first six maturities of the loan which
fall due between February 15, 1961 and August 15, 1963. The participations are without the guarantee of the World Bank.
The Cassa peril Mezzogiorno is the governmental agency established in
1950 to administer Italy's program for the development of the south. Originally
the program was directed mainly toward raising farm output, improving transpor
tation and raising health and sanitation standards, for which the Cassa was
all:6tted the equivalent of $1.6 billion over a ten-year period. The program has since been extended twi~e: first to twelve years and now to fifteen. The
• funds placed at its disposal have been doubled to $3. 2 billfon, and the emphasis has been shifted to industrialization. From the start of operations to the end
of 1957, the Cassa has actually invested and stimulated! private investment to an estimated total of $1.6 billion, and its activities are already arnotable
factor in the generally improving economy of the South.
During the past seven years, a subs,tantial improvement has talten place in
the econqmy of Southern Italy. Output of' farm products has incre?{Jed by some / ,) ~< 40% and industrial production'has risen by about 50°/o. Improvements in economic
conditions have had favorable effects on unemployment, Italy's outstanding
economic problem, and there a.re now hopes for its eventual solution.
In commenting on the loan, Eugene R. Black, President of the World Bank,
said: "The long continued association of the Bank with the Cassa program
reflects the confidence we have in its success. The recent extension of
the life of the Cassa and the shift in emphasis from agriculture to industry
presents new opportunities in.the economic life of Ital;y. The Cassa will now ii - 3 - have the more complex task of stimulating others to take the initiative in • pro~9ting industrial development. I am confident that those responsible for the Cassa program will rise to this task with the same skill and determination
that they have show in the past."
Of the Bank's loan, $29.4 million has been allocated to industrial projects on the mainland and in Sicily; $29.2 million to electric power projects on the mainland and in Sicily; and $16.4 million to irrigation projects on the mainland. Industrial Projects
The equivalent of $29.4 million from the Bank's loan has been allocated
for six industrial projects with a total cost of more than $68 million. Most
of the funds will go to three companies for the development of the rich potash
mineral deposits recently discovered in Sicily. These deposits, although not
yet fully explored., may prove to be among the world's largest and most im::_::,ortant • • Two of th":! projects are in the province of Caltanissetta and the third in the province of Enna. All three include both the development of potash mines
and the construction of plants for processing the potash ores into several
types of fertilizers. One of the companies is also building a plant for the
production of chlorine and caustic soda, thus laying the foundation for the
manufacture of heavy chemicals. Sicily's abundant raw materials give promise
that it will be a leading center in Italy for the manufacture of chemicals.
Until now, Italian consumption of potash fertilizers has been extremely
low, even compared with consumption in countries with similar soil conditions.
The availability of potash fertilizers locally produced at low cost will
stinru.late use; the demand should also be increased by improvements in agri
cultural methods and by large-scale irrigation projects now in progress in the
• region. To the extent that there is any surplus over domestic requirements,
it should yield foreign exchange since it seems likely that potassium sulp?ate
can be produced in Italy more cheaply than elsewhere in Europe. 'ti
• - 4 - The other in clothing plant in Salerno. All six projects are either extensions of existing plants or new enter prises being established by large concerns that have been operating in Northern Italy for a long time. These concerns, in addition, will supply substantial amounts of capital and the necessary technical knowledge to operate the new projects. The plants will provide employment for about '4,000 persons and will benefit the balance of pa~~nents. Electric Power Pr~;iects One of the ef:rects of the Cassa program is a substantial rise in the consi.rnption of electricity in Southern Italy. The recent extension of the • prograr.1 to 1965 :1 and the greater emphasis on industrial development, will mean that demand will continue to increase. The Cassa is re-lending $29.2 million of the Bank's loan to two power companies which together serve areas containing more than a third of the total population of Italy. The Bank funds will help to finance projects which will cost a total of $48.9 million, and will add a further 36o,ooo kilowatts of capacity to systems serving Southern Italy. The projects consist of the con struction of a 300,000-kilowatt thermal plant in Naples, the largest center of industry in the southern part of Italy; and the Guadalami hydroelectric pumping project which will add a further 60,000 kilowatts of power capacity to one of the two systems which serves Sicily. Irrigation Projects The loan will provide the Cassa with $16.4 million out of a total • equivalent to $106.6 million, to be spent on public works to bring into ' - 5 - maximum production, through irrigation, flood control and drainage, two impor tant agricultural areas of Southern Italy: 96,000 acres of the Volturno Plain • north of Naples; and 158,400 acres of the Tavoliere Plain north of Foggia, near the Adriatic coast. Both projects are well situated "'-ilith respect to marketing and transportation. The Volturno project is located between Naples and Rome; and the Fortore irrigation project in the Tavoliere plain has excellent trans port connections with large consuming centers in Italy and in Central Europe~, 1 It is expected that farming will be considerably more intensive in the project areas as a result of irrigation and drainage. Much of the land will produce two crops a year, and the crop pattern will change to a more remunerative one, with the growing of more vegetables, fruit and industrial crops such as hemp, sugar beets and tobacco. There will be a substantial increase in livestock production as well. It is estimated that the value of farm production in the areas w:i.11 inc1"'ease by the equivalent of $22 million annually. The two projects • will create about 27,000 full-time jobs; in addition there will be more employ ment in trade, processing industries and transportation as a result of increased farm production. Terms and Signing The loan is for a term of 20 years and bears interest of~' including the 1% commission which is allocated to the Bank's Special Reserve. Amortization will begin on February 15, 1961. The loan is guaranteed by the Republic of Italy. A~er having been approved by the Bank's Executive Directors, the loan documents were signed in Washington on February 28. His Excellency, Signor Manlio Brosio, .Ambassador for Italy in Washington, signed the Guarantee Agreement for the Republ.ic of Italy:; Professor Gabriele Pesc,~tore, President of the Cassa peril Mezzogiorno, signed the Loan Agreement on behalf of the borrower, and Mr. W.A.B. Iliff, Vice President, signed on behalf of the World Bank. The Honorable Pietro Campilli, former Chairman of the Ministers' Committee for the • South., and now President of the European L"lvestment Bank, attended the signing ceremonies.