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World Bank Document \) 2;1 .t, :f?OR IMMEDIATE RELEASE 0 ( 1 INTERNATIONAL BANK FOR .. RECONS:TRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized 1818 H STREET, N.W. WASHINGTON 25, D. C. TELEPHONE:' EXECUTIVE 3-6360 Bank Press Release No. ($7 SUBJECT: Joint Bank~IDA financing IDA Press Release No. 7 in Chile June 28, 1961 The World Bank and its affiliate, the· International Development Association (IDA), today joined in providing the equivalent of $25 million to phile (0_r the Public Disclosure Authorized i'Ilprovement of road transport. IDA is extending a development credit of $19 million for the construction, rehabilitation and consolidation of the main secon­ dary roads in 10 southern provinces of Chile, the country's most important agri- • cultural region. The Bank is making a loan of $6 million to finance imported equipment required for road maintenance operations throughout the whole country. This is the second IDA credit in Latin America; one of $9 million was 0 ex-" C Public Disclosure Authorized tended last month for highway development in Honduras. Today's 11)A credit is for a term of 50 years, interest-·free. It is repayable in foreign exchange, amortiza­ tion to begin after a 10-year period of grace. Thus, the first payment will be due December 1, 1971. Thereafter, la/o of the principal Will,.be repayable·) annually,, for 10 years and 3% will be repayab·le e.ach year for the final 30 years. A service i;harge ,of' 3/4 of 1% annually on .. the ~unts withdrawn and outstanding will be made to meet IDA' s administrative costs. The Bank loan is f'or 1,.a term of -nine years and bears interest of 5-3/4o/o, in­ Public Disclosure Authorized .. eluding the 1% commission which is allocated to the Bank's Special Reserve.· • Amortizatidn will begin December l_, 1964. "The Bank of America N.T. & S.A., The C) ,.1 \ - 2 M£trine Midland Trust Company of New York, .,and The First Pennsylvania Ba.nld.ng au.1. 1J.1l'1.:.st Company a.re participating in the loan, without the World Bank's guarantee, • • C 0 0 for a total a.mount of $250,000 representing part of the first maturity. Because of its unusual geography, C,hile:fis particul~,}Y depend.~nt on good transpor,tation facilities. i It lies bet,~Jen the Andes and the Pacific Ocean in an area about 2,500 miles long, and averaging about 110 miles in width·: The road system comprises the Pan American or Longitudinal Highway extending 2,200 miles ~~ :i~-.m1 north to south, and about 33,000 miles of transve.;rsaf roads. //• The work ~o be undertaken with the assistance of the IDA credit wU-,1 improve the tr~nsversal road system in the 10 provinces of Southern Chile,,, where the l~ge nu!n'.~~)er of dirt roads become·' tmpassable during the five-month rainy season each year fmd where damage caused by the earthquakes of May 196o has been only partially ~epaired. About 6oo miles -of roads will be newly built or relocated and 1,600 mil~s of existing roads will be improved. These roads form the basic framework _,.1f the transversal road system in these southern provinces providing connect ion,, 0 . Q ,J I/ :) ,. between the main producing areas and consumption and process·ing centers. When the work is finished, the Southern zone will have an integrated all-weather road syster:1. The benefits to be derived from good road transport in the Southern zone will ~trengthen the whole Chilean economy. This region already produces some 3.2 mil­ l ion tons of agricultural products annually, re~resenting about 53% of _total 1 Chilean output~ In 1959 the valp.e of' this output reached th~ equivalent of $206 million. In the same year Chile,; imported $72 million worth of' a.gr:t.cultural produ :, 1 i1cts . Of this total $50 million' was spent on sugar, wheat, meat, fre-sh fruits, milk and oils, all of which are produced in'· the road project area. Improved,. road. ,1)' communications will not 1,,_only ' result in direc't economies in road vehicle,, oplration.1/ •• .l (\ \\ f - 3 - and enable present production to be ,marketed throughout the year wlthout undue • spoilage in transit, but will be SJ.1 inducement to furtlier agricultural d~velop­ men;t. This is particularly true of Arauco Province where large tracts of land have remained undeveloped despite their undoubted potentialities and proximity to the large and expanding market of the industria.:i. area of Concepcion. Highway maintenance in Chile has been hampered by lack of sufficient funds, overage equipment and inadequate buildings and repair facilities. Improved main- \ tenance operations are needed not only to conserve the existing network but especially to protect the heavy investment being made in new construction and road improvements. The maintenance and repair equipment to be financed by the Bank loan of $6 million is a prerequisite to the execution of a comprenensive road maintenance program. The total cost of the road construction and maintenance projects is esti­ mated at the equivalent of $62. 5. million. The $25 million from the IDA credit • and Bank loan will cover the foreign exchange requirements. The remaining funds will be provided by the Chilea.n Government • · Execution .of the projects will be the responsibility of the Highway Department of the Ministry of Public Works. It is expected that .the construction work will be carried out over a period of about three years, ending in June 1964. All work will be executed under t1nit price contracts let on the basis of international com­ petitive bidding. / .• , - 4 - SuE_pleg,ienta.l Statement, on the INTERNATIONAL DEVEL~J!!'._ASSOCIATION ,, j/ ··c . ·., . '' • The Intern~tional Development Association was created by member countries of the World Bank in the fall of 1960. IDA now has 48 members and initial subscrip­ tions equivalent to $872.58 million. The Latin American cotmtries which have so far become members a.re Bolivia, Chile., Colombia, Guatemala, Haiti, Honduras, Mexico, Nicaragua and Paraguay. IDA is an independent legal entity with financial resources separate from those of the World Bank. It is intended to assist countries which for reasons beyond their control are not able to achieve a satisfactory rate of economic development on the basis of their own resources and. conventional external financing. The terms of IDA's financing are not specified in its charter, which prescribes only that they shall be flexible and shall bear less heavily on the balance of payments of underdeveloped countries than do conventional loans. The terms of the credits s9 • far announced, while not necessarily indicative of the general pattern of future' IDA credits, are strikingly different from the terms on which development funds have hitherto been available. IDA is presently investigating projects situated 111 cou..~tries of Africa, the Middle East, South Asia and the Far East, as well as in Latin America. They in­ clude not only projects of the type the World· Bank finances, such as road develop-· ment, port facilities and irrigation works, but·$ much broader range, such as industrial. estates, municipal improv~~~nts and technical training programs. IDA is ) specifically designed to finance projects which contribute most to the development of the country concerned, whether or not they are directly productive. In deter­ mining 'Which projects to finance, IDA will apply the same standards of project preparation and execution as the Bank does. This wtll be faci.litated by the fa.c-:, fl () f/ that its affairs and those of the Bank ~e '·jointly administered. Mr. Eugene R . Bla.ck §s President of the World Bank is.ex officio President of IDA, and the • officers and staff of the Bank serve in their same capacities in IDA. • IF ~ ~ ~ ~ w r ~ / 4' ©) ~ ~ ~ • ~ ~ t ~ ~ ~ ~ ~ SOUTHERN CHILE ROAD NETWORK ----- Partarnerican Highway Provincial boundaries • 0 IOOKm MAY 1961 IBRD-816 .
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