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R-E S T R I C T E D

RCUtiLAllNs COil R e p o r t No.T.O. 242 a TO BE UEPTh1 YONCINSD1lO Public Disclosure Authorized

This report was prepared for use within the . In making it available to others, the Bank assumes no responsibility to them for the accuracy or completeness of the information contained herein.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Public Disclosure Authorized

APPRAISAL OF INDUSTRIAL EQUIPMENT PROJECT

FOR COSTA RICA Public Disclosure Authorized

April 25, 1960 Public Disclosure Authorized FILE COPY

Department of Teclmical Operations CURRENCY EQUIVALENTS

Official Rate

U.S. $1.00 - Colones 5.615 (¢ ) 5' 1 - $0.178 0 million - $178,000

Free Market Rate U.S.$1.00 - (I 6.65 APPRAISAL OF INDUSTRIAL EQUIPMENT PROJECT FOR COSTA RICA

TABLE OF CONTENTS

Paragraphs

SUIThRY AND CON«CLUSIONS ...... i - vii

I. THE IMPORT PROGRAM ...... 1 - 4

II. OF EXISTING LOANS ...... 5 - 23 Coffee Processing...... 10 - 11 Sugar ...... 12 - 13 Milk Processing ...... 14 - 16 ...... 17 - 20 Miscellaneous Industries ...... 21 Machinery Imports ...... 22 - 23

III. THE NEED FOR A LOAN ...... 24 - 32

IV. THE LENDING PROGRAM ...... 33 - 37 Foodstuffs Industries ...... 34 - 35 Textiles ...... 36 Miscellaneous Industries ...... 37

V. TB BANKING SYSTEM ...... 38

VI. PRESENT AND PROCEDURES ... . . 39 - 45

VII. PROPOSED ORGANIZATION AND PROCEDURES . ... . 46 - 52

VIII. CONCLUSIONS AND RECOM1'ENDATIONS 53 - 60

Annexes

1 - Loan 147-CR - Industrial Loans - Loans over $10,000 requiring Bank approval Loan 219-CR - Industrial Loans - Loans over $25,000 requiring Bank approval as at February 29, 1960 2 - Loans 147-CR and 219-CR - Distribution of Industrial Loans by purpose 3 - Textiles 4 - Imports of Machinery 5 - Volume of 6 - Banco Central de Costa Rica - Balance Sheets 7 - Banco Central de Costa Rica - Profit and Loss Statement 8 - Commercial of Costa Rica - Consolidated Balance Sheets, 1954-1959 9 - Commercial Banks of Costa Rica - Consolidated Profit and Loss Statement 10 - Loans 147-CR and 219-CR - Loans in Arrears as at December 31, 1959 APPRAISAL OF INDUSTRIAL EQUIPMENT PROJECT

FOR COSTA RICA

SUMMARY AND CONCLUSIONS

i. The Bank has made two loans to the Banco Central de Costa rFica to finance an import program for the development of and in- dustry: in September 1956 for an amount of $3.0 million (Loan 147-CR) and in February 1959 for $3.5 million (Loan 219-CR). About $2.86 million of Loan 219-CR had been disbursed as at March 31, 1960, and the amount of apDlications which were under consideration by the commercial banks far exceeded the balance available for lending. The Banco Central has made application for a third loan of $2 million for imports of industrial equip- ment (see paras. 1-4).

ii. The program financed under Loans 147-CR and 219-CR has worked well so far. Industrial projects financed with the proceeds of these two loans are operating satisfactorily or are under (see paras. 5-23).

iii. The volume of Costa Rica's traditional exports is unlikely to expand as rapidly during the next few years as in the past, and the price of coffee, its principal , seems likely to decline from its already reduced level. To offset this slowing up of growth in import income and make possible an increase in real national income exceeding the rapid in- crease in Costa Rica's population, an accelerated growth of domestic income is required. Domestic industries provide a promising field for expansion, and recently enacted legislation should provide a stimulus for such expan- sion. Besides helping to maintain or increase real per capita income, ex- pansion of domestic industrial production would provide oppor- tunities for the growing population and contribute to the balance of payments (see paras. 24-32).

iv. There is demand for long-term for industrial projects which would be difficult to meet without a third Bank loan. Improvement of facilities to prepare export crops (coffee and, to a minor extent, sugar) for market and the installation of facilities for the manufacture, mainly from domestic raw materials, of products now imported would probably be the main purposes for which loans would be made (see paras. 33-37). v. The banking system, which is responsible for the operation of the loan, is in a healthy condition under the strict supervision of the Banco Central (see para. 38). - ii - vi. Although the program financed under the two Bank loans has been successful, certain aspects of the organization and procedures for the operation of the proposed loan need improvement. In particular, the terms of the industrial loans have in a number of cases been too sh-rt,with the result that borrowers have had repayment difficulties (see paras. 39-45). vii. In view of the fact that the Barco Central has undertaken to im- prove the organization in Costa Rica for appraizing and follow`Tng up loans, as suggested in paras. 46--52, the governmentTs prDgram folr ic,-,ortirg indus- trial capital offers a suitable basis for a lcan oL 1z maillion equiva- lent with a twelve-year term (including a three-ysar grace period) (see paras. 53-60). I. THE IMPORT PROGRAM

1. Towards the end of 1952, the Government of Costa Rica initiated a program for the extension of through the banking system to en- courage the import of capitnl goods for agriculture and industry. Under the program, the Banco Central de Costa Rica made loans in foreign exchange to the four nationalized commercial banks and these banks in turn granted loans to their customers for the import of program goods through regular commercial channels. Between 1952 and 1956, loans totalling 031.6 million (US.$5.7 million equivalent) were granted under the program. Early in 1956, however, lending was slowed down because of Costa Rica's balance of payments difficulties.

2. To help the government continue the program, the Bank made a loan of $3 million equivalent (Loan 147-CR) to the BancD Central on September 18, 1956. The loan became effective in March l957, and by the eoa of August 1957 had been entirely committed by the commercial banks. It was fully disbursed by the closing date of September 1, 1958.

3. In September 1957, the Banco Central requested a second loan for the continuation of the program. Passage of enabling legislation by the Congress of Costa Rica was delayed until late October 1958, and the new loan of US$3.5 million equivalent (Loan 219-CR) was not signed until Feb- ruary 11, 1959. It became effective on May 1, 1959.

4. As at December 31, 1959, the four commercial banks had committed 015.2 million (US$2.71 million equivalent) and were considering additional applications totalling over V8.5 million (US$1.52 million equivalent). On the instructions of the Banco Central they had discontinued accepting appli.- cations in mid 1959, since applications under consideration already con- siderably exceeded the balance available for commitment under Loan 219-CR. By March 31, 1960, disbursements under Loan 219-CR had reached $2.86 mil- lion, and there is no doubt that the loan will be fully disbursed before its closing date (September 30, 1960).

II. DISTRIBUTION OF EXISTING LOANS

5. The distribution by economic sector of loans granted under Loan 147-CR and of commitments and pending applications under Loan 219-CR as at September 30, 1959 is shown below:

Loan 147-CR Loan 219-CR Granted by the Committed by the commercial banks commercial banks Pending - …- Million ------Agriculture Equipment 5.2 7.0 3.6 Materials () 7.2 2.1 -

Industry Equipment 4.6 3.4 7.5 17.0 12.5 11.1 - 2 -

6. Although the final distribution of Loan 219-CR will not be known until the loan has been fully disbursed, it seems probable that a larger proportion of that loan will go to industry than was the case under the first loan. Only 27% of the total amount of Loan 147-CR went for industry; under Loan 219-CR, in contrast, 47.2% of the total value of commitments and applications receiving consideration as at September 30, 1959 were for industrial projects.

7. All loans to industry of 10,000 and over under Loan 147-CR and of $25,000 and over under Loan 219-CR required Bank approval. A list of these loans is given in Annex 1. In the case of Loan 147-CR, such loans constituted over 80% of the total amount loaned for industry.

8. The distribution of credits granted for industry under Toan 147-CR, and of commitments and applications under consideration for industrial pro- jects under Loan 219-CR as at September 30, 1959 is shown in Annex 2. A summary follows:

147-CR 219-CR Total (?er cent of total value)

Foodstuffs 31.0 50.5 44.8 Coffee processing 1.7 18.5 13.5 Sugar refining 1.4 18.2 13.2 Milk processing 20.5 10.2 13.3 Other 7.3 3.7 4.8

Textiles 43. 26.3 3L._ textiles 27.1 7.9 13.6 Synthetic 16.4 15.9 16.1 Other - 2.4 1.6

Miscellaneous 25.5 23.1 23.9

100.0 100.0 100.0

9. As the table indicates, about 40% of the total value of industrial loans is accounted for by three food processing industries-coffee process- ing, sugar refining, and milk processing (roughly 13% each)--and 31% by tex- .

Coffee Processing

10. Facilities for cleaning, sorting and grading coffee beans in Costa Rica are still largely primitive. coffee is dried out of doors and pro- cessors have a minimum of mechanical aids. Although the increase in Costa Rica's coffee output from 630,000 Spanish quintals J a year on the average in 1955-1956 to 1,050,000 quintals in 1958-1959 made some expansion of capa- city necessary, the principal need was for modernization. Most of the cre- dits granted to coffee processors under the two Bank loans have been for that purpose.

1/ 1 Spanish quintal = 101 lbs. 11. The new facilities reduce processing losses and,by making possible better sorting and grading,enable Costa Rica to get top prices for its high quality crop.

Sugar Industry

12. Costa Rican sugar refining facilities, too, are largely obsolete and inefficient. In many refineries, yields are as low as 175 lbs. per ton of cane processed, as against 210-225 lbs. in more modern Costa Rican re- fineries. All the credits extended to sugar refiners under the two Bank loans have been for modernization.

13. The new facilities reduce Costa Rica's relatively high productiori costs and improve its competitive position on export markets. As a result of a sharp rise in output in recent yrears, Costa Rica now has a small sugar surplus for export. Production in 195g-1959 is estimated at 1.1 million quintals as against a domestic consumption of about 800,000 quintals. Exports amounted to an estimated 166,000 quintals. IJ.S. imports from Costa Rica in 1959 amounted to about 80,000 quintals, and Costa Rica is now attempting to increase its U.S. import quota to 200,000 quintals (10,000 tons).

Milk Processing

14. In the milk processing industry, two loans have been made, both to the local milk in San Jose. The first loan, granted under 147-CR,was for a new 40,000 bottles per day pasteurizing to double the cooperative's pasteurizing capacity. The cooperative is now operating the new plant successfully at full capacity and producing an additional 14,000 bottles a day at its older plant.

15. Pasteurized milk consumption is increasing steadily on the Central Plateau, the area serviced by the cooperative. There is considerable room for a further increase since raw milk consumption in this area still amounts to about 150,000 bottles per day. However, the cooperative has ample capa- city in its older plant for an increase in production, and will probably not have to expand its pasteurizing facilities again for a couple of years.

16. The second loan to the cooperative, granted under Loan 219-CR,is for a dried whole-milk processing plant. The new plant is expected to meet most of the country's requirements for dried whole milk and largely elimi- nate imports of that product, now amounting to over $1 million per year.

Textiles

17. Costa Rica has had a small industry for a number of years. In the early 1950's, hoiwever, its equipment was largely obsolete, and it supplied less than 15% of the total quantity of textiles consumed in the country. Expansion, facilitated by the government's capital import credit program, began in 1954, and was well under way when the Bank's first loan became effective. Credits granted under that loan made possible a further increase in imports of textile machinery and equipment in 1957 and 1958. - 4 -

By the latter year, textile production in the country had risen to almost three times its 1953 level and met over 25% of total requirements. Pro- duction of stockings and knitwear, in particular, has increased sharply since 1956 (see Annex 3).

18. The new machinery is largely automatic, and some progress has been made in retiring the older non-automatic machinery. In spite of the shift to automatic machinery, emplDyment in the industry increased almost two and a half times between 1952 and 1958 and amounted to almost 1,100 in the latter year; wage and salary payments increased almost fourfold in the same period.

19. The increase in production of textiles has not yet resulted in a reduction in imports. Indeed, imports of yarn, fabrics and knit goods were at an all-time high of about US$11 million in 1958, roughly 12% of total imports in that year. Imports of certain classes of textile products have already begun to level off, however, and in 1958 Costa Rica exported sweaters and other knitted garments valued at $125,000. In the case of cotton tex- tiles, Costa Rica has been largely self-sufficient in raw materials since 1952. The cotton crop is now large enough to permit a furuher expansion of cotton textile production; in 1958 exports amounted to almost 500 tons out of a total output of 1,600 tons.

20. If the recent rate of investment can be maintained, the domestic textile industry should be able to supply a rapidly increasing proportion of total requirements with a resulting large saving in imports.

Miscellaneous Industries

21. The balance of the first two IBRD loans has gone to a wide variety of industries. Special mention should be made of a loan under Loan 147-CR for a concrete pipe plant. The pipes are used mainly in town sewers, where they replace imported pipes. The plant has been operating success- fully since 1958, and the borrower, Productos de Concreto Ltda., is now planning to expand its production of precast concrete blocks.

Machinery Imports

22. In the past three years, Costa Rican imports of industrial and agricultural machinery were as follows (see Annex 4 for details):

1956 1957 1958 - - $ million - - -

Industrial Machinery 8.5 8.6 8.7 Agricultural Equipment 2.7 3.7 3.0

23. Although the industrial machinery group includes highway construc- tion and power plant equipment, cottage industry equipment and spare parts for existing that would not be eligible for financing under Loans 147-CR and 219-CR, the figures give a fair idea of total foreign exchange requirements for machinery imports. They may be compared with disbursements out of Bank Loan 147-CR in 1957 and 1958 of $0.8 million for industry and $2.2 million for agriculture. - 5 -

III. THE NEED FOR A LOAN

24. In the fall of 1959, the Banco Central applied to the Bank for a $3 million loan for the further continuation of the industrial and agri- cultural equipment import program. The Banco Central subsequently amended its application, reducing the amount requested to $2 million and proposing that the loan be used to finance the import of industrial equipment only.

25. As the latest economic report on Costa Rica (WH-93a) points out, the prospects for growth in the country's foreign exchange earnings are much less favorable today than they were in the 1950's. Although Costa Rica's earnings from exports of bananas, cacao, meat and a variety of minor products are expected to increase, the total increase seems likely to be only slightly larger than the reduction in its earnings from coffee, its leading export. A continued decline in coffee prices from their already reduced level is expected to more than offset the modest increase in the volume of coffee exports looked for in the next few years (see Annex 5).

26. The growth of Costa Rica's national income in the early 1950's (6.5% per annum in 1950-1955) was due in large part to the great increase in its export earnings. After 1955, export earnings increased more slowly, and the rate of increase in real national income fell to 3.9% per annum in 1955-1958. This rate of increase in real national income was exceeded by Costa Rica's exceptionally high rate of population growth with the result that per capita real income declinedslightly between 1955 and 1958. There is no indication that the rate of population growth will decline in the next few years. Thus, if per capita real income is to rise or at least cease declining, the growth of domestic income must be accelerated to off- set the expected slowing up in export income growth.

27. A rapid expansion of Costa Rica's domestic economic activity is needed also to provide employment opportunities for the growing population. Agri- is not expected to offer much additional employment,for the increased output of crops for the domestic market is likely to come mainly from a rise in yields. Hence it will be necessary to rely mainly on the growth of manu- facturing and the industries for the provision of new employment opportunities.

28. The best prospects for industrial expansion are in light consumers' goods industries based, for the most part, on local agricultural and pastoral products. Examples are cotton goods, edible oils, shoes and goods.

29. Costa Rica has a population of about 1.1 million, with a per capita income in 1958 of about $335 equivalent. It is a country in which wealth is fairly evenly distributed. There is thus the basis for a large enough market to permit domestic production on an economic scale of a number of consumer goods. The high level of in the country contributes to a sound basis for industrialization. Workers can be trained and abilities developed to the extent necessary. - 6 -

30. Conditions seem to justify the fostering in their early stages of domestic industries to produce goods that are now imported. An indus- trialization law approved by the Congress on September 3, 1959 would offer such assistance. The law offers a wide range of benefits to local industry, including substantially increased tariffs, exemption *of new companies from taxes and duties on imported equipment and raw materials, and government guarantees of foreign exchange loans obtained by private industrial concerns.

31. To provide the financing required for industrial expansion, a con- tinuation of the import credit program is needed.

32. The requirements of industrial companies for medium and long-term loans for the import of capital goods appear to be substantial. Loan 147-CR, $764,000 of which was for industry, was fully committed in less than one year. Loan 219-CR, $1.6-$1.7 million of which is likely to be for industry, is expected to be fully committed in about one year. A considerable backlog has accumulated since the commercial banks discontinued accepting applica- tions for credits under that loan in mid 1959. In view of the rapidity with which the first two loans were committed, the existence of a backlog of demand for loans, and the stimulus to industrial development likely to be provided by the new industrial law, it seems probable that a loan of $2 mil- lion could be committed for industrial projects within two years.

IV. THE LENDING PROGRAM

33. The Costa Rican economy is a free enterprise economy, and there is no central plan for industrial development. It is therefore difficult to predict precisely how the proposed third loan for imports of industrial capital goods would be distributed among the various industries. The Banco Central de Costa Rica estimates, on the basis of the distribution of the industrial portion of the Bank's two first loans, that the proposed loan would probably be distributed as follows:

Per cent of Proposed Loan

Foodstuffs Industries 30% Textile Industry 35 Other Industries 35

100%

Foodstuffs Industries

34. Most of the money loaned for projects in the foodstuffs industries would probably be for the further modernization of coffee processing plants and sugar refineries. In spite of some improvement, these facilities are still out of date and further modernization is essential to increase effi- ciency, reduce costs, and improve the quality of the product offered for sale. - 7 -

35. Projects in other foodstuffs industries under consideration in- clude a small food cannery, a freezing plant and a new slaughterhouse and packing plant to be located near San Jose. The projected slaughterhouse would serve the Central Plateau, leaving the existing Barranca plant for export purposes.

Textiles

36. The rapid expansion of the textile industry in the last few years indicates that this is an attractive field, and the assistance promised by the new industrialization law should spur growth. Projects in all branches of the industry--the manufacture of cotton yarn and of cotton and synthetic woven and knit goods--are known to be under consideration.

Miscellaneous Industries

37. Projects in other industries now under study include the expansion of an existing precast concrete block plant and a detergent plant.

V. THE BANKING SYSTEM

38. The banking system continues to be in a healthy condition under the strict supervision of the Banco Central. Because of the capital goods import program, medium and long-term loans have been increasing, and as at December 31, 1959 represented 37% of all loans for agriculture, cattle raising and industry.

Balance Sheets and Profit and Loss Statements for the Banco Central and the commercial banks appear in Annexes 6 to 9. The Profit and Loss Statement of the Banco Central is summarized below:

1955 1956 1957 1958 1959 - …Million-

Operating receipts 8.6 9.6 10.6 10.3 11.9 Operating costs 2 3-0 4.0 5.6 5.9

___ 6.6 6.6 _ 6.0

The consolidated net profits of the commercial banks have been as follows:

8.2 8.1 9.2 11.4 10.6 -s -

VI. PRESENT ORGANIZATION AND PROCEDURES

39. The Bank's first two loans to Costa Rica for capital goods im- ports, (147-CR and 219-CR) were rnade to the Banco Central de Costa Rica. The Banco Central in turn reloaned these monies to the four nationalized commercial banks, making no charge for the service and bearing the exchange risk.

40. Each conmercial bank was allocated a fixed portion of each of the Bank loans which it reloaned to its customers at i4-%over the Bank interest rate. Because the loans were made to a large number of small borrowers, the commercial banks did not consider the 1-%J spread great enough to justify the hiring of special personnel to appraise and supervise projects. Indus- trial projects submitted for loans were, therefore, appraised initially by the Departamento de Estudios Economicos of the Banco Central, and later on by the Departamento de Irdustrias of the Ministry of Agriculture and Industry. The appraisals were inadequate at first, but they imlproved considerably as a result of training provided for some of the personnel and their accumu- lation of experience. At present, the appraisals cover the tec4nical and economic aspects of the projects well, but need further improvement on the financial side.

41. The projects submitted to the Bank for approval (all applications of $10,000 and over under 147-CR and all of $25,000 and over under 219-CR) were, with very few exceptions, sound and were approved.

42. The commercial banks have followed cautious loan policies. They have exercised great caution with respect to the -ecur5ty provided and have sent experts out periodically to check on the physical value of the assets serving as . The terms of the loans have been determined by the type of security offered: terms of up to six years have been granted for loans secured by mortgages, while the terms of loans secured by chattel mortgages or the borrower's signature have not exceeded three years. In setting the terms of the loans, account has not often been taken of the nature of the project or of the actual financial requirements of the bor- rower, and grace periods have rarely been accorded.

43. As a result, a relatively large number of industrial borrowers have fallen into arrears. Figures given in Annex 10 show that as at December 31, 1959, 18 loans totaling 0974,000 were in arrears as to interest or prin- cipal for more than 90 days; 3 of these loans totaling ¢48,600 were in the hands of attorneys for collection. Of the 18 loans in arrears for over 90 daye, 13 totaling Z869,000 (aliaost 90% of the total amount in arrears fDr over 90 days) were for industry. Industrial loans in arrears for over 90 days represented almost 20% of the 04.6 million granted to industry under Loan 147-CR. (Since Loan 219-CR became effective only on Nay 1, 1959, it seems unlikely that many of the industrial credits under that loan were in arrears for more than 90 days at the. close of 1959). Moreover, the fi ures on arrears do not include credits whose amortization schedules have been modified. - 9 -

44. An end-use survey of industrial projects in December 1959 found, however, that virtuall:r all the completed industrial projects financed out of the Bank loans were operating satisfactorily. Thus the repayment diffi- culties of the borrowers do not seem to have been due to any defects in the projects, but rather to the fact that the terms of the loans granted were inappropriate. Although the Costa Rican banks have usually permitted bor- rowers encountering repayment difficulties to postpone repayment, it is ob- viously unsound financial practice to plan amortization schedules so un- realistically.

45. Although the commercial banks have been cautious in their lending policies, their follow-up , both with respect to the progress of projects and to the financial situation of their borrowers, has been inadequate.

VII . PROPOSED ORGANIZATION AND PROCEDURES

46. Experience with the first two loans suggests that some change in the procedure for relending in Costa Rica is desirable. The volume of in- dustrial loans is not large enough to justify either the establishment of industrial departments in each of the four commercial banks or the creation of a development bank. It does seem large enough, however, to justify the establishment of an industrial department, specializing in medium and long- term lending, in one of the existing commercial banks.

47. One of the four commercial banks--the Banco de Costa Rica--has taken steps to organize such an industrial department. It plans to hire the necessary personnel and to train these persons abroad. The IBRD has informed the Banco de Costa Rica that it is willing to help it in getting this department started, by providing training for one or two of the persons hired, and by giving advice on the operations of the department in its early stages.

48. Although the four commercial banks are all nationalized, there is a good deal of healthy competition among them. It would cause resentment, therefore, if all of the proposed third Bank loan were to be channeled through the Banco de Costa Rica. Any such arrangement would, moreover, be inconvenient for some of the present borrowers who have dealt with one of the three other commercial banks for a long time. Finally, as the Banco de Costa Rica has not yet organized its industrial department, it would not be able at once to handle applications for the whole volume of new industrial loans.

49. For these reasons, it is not recommended that the proposed new Bank loan be allocated entirely to the Banco de Costa Rica, but that, as in the case of the two earlier loans, it be allocated among all four commercial banks. It is, however, recommended that a substantial part of the proposed loan be channeled through the Banco de Costa Rica.

50. Projects submitted to the three other commercial banks would con- tinue to be appraised by the Departamento de Industrias of the Ministry of Agriculture and Industry which has been responsible for appraisals under the first two loans and is well equipped to appraise the technical and economic aspects of industrial projects. Projects submitted to the Banco de Costa Rica would be appraised by its new industrial department, although at the outset it would probably have to work closely with the Departamento de Industrias. All the commercial banks would be expected to pay more attention to the financial appraisals of the projects. - 10 -

51. Responsibility for follow-up work would rest with the commercial bank making the loan. To promote greater attention to such work, it is recommended that the commercial banks be required to submit to the Bank completion reports and annual reports on the operations of the projects.

52. Like the first two loans, the proposed loan would be to the Banco Central. The Banco Central would bear the exchange risk, and would relend the proceeds of the loan to the commercial banks. To improve the operation of the loan, it is proposed that Bank representatives should visit the com- mercial banks more frequently than in the past. The Banco Central would of course supervise the whole operation,

VIII. CONCLUSIONS AND RECOMMENDATIONS

53. The technical and economic aspects of the projects are covered adequately in the present appraisals. However, improvement is needed both in the financial side of the appraisals and in the follow-up work on loans.

54. One way to achieve such improvement would be to have one of the commercial banks specialize in lending for industrial development. The Banco de Costa Rica has already taken steps to create an industrial depart- ment, and the Bank has agreed that, if the loan is made, it would help the Banco de Costa Rica to get this department started on a sound basis. Since the department would need to support an adequate staff, including at least one engineer and one economist, it is recommended that the Banco de Costa Rica be allocated a substantial portion of the proposed third loan by the Banco Central.

55. The Departamento de Industrias of the Ministry of Agriculture and Industry would continue to be responsible for technical and economic appraisals of projects submitted to all four commercial banks, including the Banco de Costa Rica. That bank's new industrial department would be expected to take over that responsibility as it gained experience. All the commercial banks would be expected to assume greater responsibility for appraising the financial aspects of projects and to devote more atten- tion to follow-up work, two fields in which their performance is inadequate at present.

56. To cover the cost of the work which the commercial banks are ex- pected to assume, it is recommended that the spread between the interest rate which they pay to the Banco Central and the rate paid them by their borrowers should be increased from the present figure of 14% to 2%.

57. It is recommended that the Banco Central continue as in the past to supervise and be responsible for the operation of the loan. - 11 -

58. As in the case of 219-CR, it is recommended that all applications for loans of over $25,000 approved by the Costa Rican banks should be sent to Washington for Bank approval. It has been agreed that no loans of less than $5,000 will be submitted to the Bank.

59. Since industrial loans frequently require longer terms than the seven-year term of Loans 147-CR and 219-CR, it is recommended that the pro- posed loan have a twelve-year term including a three-year grace period. To remove any incentives to the commercial banks to shorten the term of their loans, they would be required to repay the Banco Central when they were re- paid by the ultimate borrower.

60. The continuation of the import program for industrial capital goods, initiated by the Government of Costa Rica in 1952, offers a suitable basis for a Bank loan of $2 million. ANNEX 1 Page 1

LOAN 147-CR - INDUSTRIAL LOANS

Loans over $10,000 requirin, Bank approval

Project Amount Amount Number Company Projet Approved Disbursed

- - - U.S. $ -- - -- 1. Tubos Vibrapack Tube Factory 16,640 16,664

2. Manufacturera de Mantas y Sacos Sugar bag factory 80,760 77,938

4. Hilados y Tejidos Saprisa Cotton textile 30,298 29,924 5. Coop.de Productores Pasteurization expan- de Leche sion 162,779 159,568 6. Domingo Flaque Mlontull 125 Kw.hydro plant 12,615 not disbursed 7. Industria Frigorifica del Pacifico ice plant 28,490 28,490 8. Guillermo Downing Cotton ginning plant 91,751 89,184 Pasos 9. Central Agricola de Cartago Animal feed grinder 14,229 14,147 10. Herman Garcia Angulo Biscuit Plant 29,813 24,008

11. Lavanderia y Dry Clean- ing La Margarita Ltda. equip. 20,967 22,100 12. Carlos Federspiel & Co. Lithographic press 14,123 13,941

13. Las Trojas, Ltda. 150 H.P.hydro plant 14,194 14,019 14. Fabrica de Tejidos cotton textile Suiza, Ltd. machinery 127,061 126,272 15. Cooperativa Agricola modernization and expansion; coffee processing & sugar mill and 100 Kw. D.E. power plant 17,857 cancelled 16. Hilados y Tejidos M & E - cotton Saprisa textile plant 53,176 not disbursed 17. Prensa Libre Renovated machine 48,131 not disbursed Sub-total - Bank approved ind. projects 762,884 616,255 Small projects not requiring Bank approval (loans under $100,000) 142,956

Total - Industrial Projects 7592211 ANNEX 1 Page 2

LOAN 219-CR - INDUISTRIAL LOANS

Loans over $25,000 requiring Bank approval as at February 29, 1960

Project Amount Amount Number Company Project Approved Disbursed _ _ -U_-.S.$ 1. Manuel Ortuno e Hijos Expansion of hard- Ltd. board,plywood etc. 28,262 27,880

3. Central Azucarera de Second-hand boiler Turrialba and coffee process- ing plant 32,246 31,848 4. Las Trojas Coffee processing plant - Part I 47,940 44,797 Part II 37,570

5. Mario Aurelio Castro Odio Bottle caps 45,196 33,612 6. Textiles de Expansion of stock- Costa Rica ing production 86,000 - 7. Manufacturera de Cards & looms for Mantas y Sacos Ltd. cloth production for sacks 56,876 54,859 8. Ingenio Florencia Sugar mill moderni- zation 158,705 - 9. Industrias Sedalana, Synthetic textile Ltda. mill ( and ) 129,440 _

10. Lachner d Saenz Ltd. Tire recapping plant 25,533 22,215

11. Antonio Lehman Printing press 32,800 - 12. Coop. de Productores 151,981 - de Leche Dried whole milk plant

Sub-total 832,549 215,211 Small projects not requiring Bank approval 659,964 (loans under $25,000) Total 876,175 ANNEX 2

LOANS 147-CR AND 219-CR

Distribution of Industrial Loans by purpose (as at September 30,1959)

Loan 147-CR Loan 219-CR Total .1i

Being i .. Disbursed Approved Appraised in000 equiv. Foodstuffs ------in '000 colones - - - - 64 385 1,610 2,059 368 13.2 Coffee processing 79 632 1,384 2,095 374 13.5 Milk processing 952 - 1,113 2,065 369 13.3 Other 336 111 299 746 133 4.8 Sub-total 1,431 1,129 4,405 6,965 1,244 44.8

Textile Industry Cotton 1,260 490 364 2,114 378 13.6 Synthetic 761 488 1,252 2,501 447 16.1 Other -36 224 260 46 1.6 Sub-total 2,021 1,014 1,840 4,875 871 31.3

Shoesand 48 29 47 124 22 0.8

Wood & Cork Industry 145 255 161 561 100 3.6

Wooden 10 32 15 57 10 0.4

Pulp & Paper Industry - 159 - 159 28 1.0

Printing & equipment 138 122 193 453 81 2.9

Leather and hides 17 27 - 44 8 0.3

Rubber 34 - 143 177 32 1.1

Chemicals 85 99 32 216 39 1.4

Construction materials 187 6 148 341 61 2.2

Mechanical & electrical industry - 110 427 537 96 3.5 Const.of transportation equipment 31 78 - 109 19 0.7

Other _493 396 3 942 168 6.0 Total 4,640 3.4U 7,506 15,560 2,778 100.0

1/ Applications included in this list will not all be approved. Therefore this cannot be regarded as the final distribution for loan 219-CR. ANNEX 3 Page 1 Costa Rica - Textiles

Costa Rica has had a small textile industry for a nt&ber of years. In the early 1950's, however, its equipment was obsolete and i.t s-'pplied no more than 15% of total consumption. The last half dozen years have seen a great change in its position. Imports of machinerly and equipment have increased from about 855,0C0 a year on the aver--.ge in 150-1953 to -735,000 in 1958, and prcduction has risen almost th.-eeQo d compared with 1953, to ¢ 23.4 million in 1958. At a rate of / 6.2 per J.S. dollar (the exchange rate used for import calculations by the IXF) this was equivalent to U.S.83.8 million. Imports in that year amounted to about U.S.$l1..0 million (imports of yarn and fabrics TJ.S.$10.2 million, and Liports of knit goods U.S."7G0,000). Thus domestic production amounted to about 23 of total apparent consumption (production plus imports).

Figures showing the development of the industry since 1943 are given below:

Table 1

Costa Rica: Selected Statistics for Textile Industry

Imports of Tex- Value of Production Machinery Output at of Cotton Consumption of Yarn and Equipment 1958 Prices Yarn Cotton Synthetics (Thous. U.S.$) (iiil. ) ------Metric Tons ------

1943 n.a. 5.7 179.8 205.7 13.8 5.5

1948 n.a. 6.5 191.7 206.4 46.3 2.9

1950 11.9 n.a. 259.2 305.4 n.a. n.a. 1951 74.0 n.a. 152.3 195.5 n.a. n.a. 1952 112.4 n.a. 186.8 216.1 n.a. n.a. 1953 26.5 8.4 201.2 220.7 85.0 22.0 1954 277.6 9.8 214.5 259.9 105.6 17.7 1955 275.8 14.8 305.1 369.9 165.6 43.4 1956 438.1 16.7 354.6 402.6 193.3 57.7 1957 474.2 18.9 370.6 449.7 225.6 67.3 1958 735.0 23.4 469.4 600.3 248.6 68.4

Note: All data supplied by the Banco Central de Costa Rica, Departamento de Estudios Economicos.

Although the expansion of the industry was well under way when the Bank's first loan for capital goods imports (147-CR) became effective in March 1957, the loan made possible the maintenance and even acceleration of the pace of growth. Credits granted under the loan helped to increase the volume of imports of textile machinery and equipment bv 8% in 1957 and Page 2

by more than 50% in 1958. This increase in investment was undoubtedly re- sponsible in part for the increase in the rate of growth of textile produc- tion to 24% -n 1958, compared with 13% in each of the two preceding years.

Modernization

The industry has been modernized as well as expanded as a result of the investments made in the last half dozen years.

Table 2

Costa Rica: Equipment in the Princia Branches of the Textile IndustrYJ

Looms Circular Frames A NA A NA Total

1952 4 185 - 12 201 1957 176 189V/ 26 31 442 1958 2072/ 156 1044/ - 467

A: Automatic NA: Non-Automatic

1/ Excludes equipment in factories producing hosiery and part of the equip-

- ment for braidmaking, for comparability. Information on this equipment is not available for early years.

2J Includes looms in a braid factory. 3/ Includes flat frames for the production of jersey and of women's full- fashioned hosiery. 4/ Includes circular frames for the production of women's hosiery and cotton tubular goods.

Wages and Employment

Despite the improvement in its efficiency, employment in the industry increased almost two and a half times and wages and salaries al- most fourfold between 1952 and 1958.

Table 3

Costa Rica: Employment and Earnings in the Textile I ndustry

Employment Wages and Salaries (Nos.) (Thousand Colones) 1952 451 1,273 1956 784 3,287 1957 818 n.a. 1958 1,080 4,985 ANTEX 3 Iage 3

Character of Production

The expansion has been mainly in the production of fabrics (woven and knitted). Producers of synthetic and woolen fabrics have met their growing requirements for yarn entirely from imports, and al- though domestic production of cotton yarn has increased (see Table 1), domestic yarn represented only 78% of all yarn consumed in 1958, compared with almost 87% on the average in 1952-1954.

The industry is, however, producing a wider range of fabrics. Between 1956 and 1958, there was a very great increase in the production of knit goods (stockings, underwear and sweaters) and the share of total production accounted for by these items rose from 37% in 1956 to 47% in 1958.

Table 4

Costa Rica: Textile Production, by Major Products (Thousand Colones)

Per Cent 1956 1958 Change Woven Fabrics Cotton 4,685 6,343 + 35.4 Synthetic 6,023 +_16.6

Total 9,849 12,367 + 25.6

Knit Goods Underwear 2,276 4,111 + 8o.6 Hosiery 1,356 3,772 +178.2 Sweaters (all fibers) 1,809 2,855 + 57.8 Other Products 250 290 + 15.9

Total 5,691 11,028 + 93.8

Grand Total 15,540 23,395 + 50.5

Balance of_Payments Effects

The expansion of textile production has gone hand in hand with an increase in cotton crop output. IL 1952, the country which had pre- viously imported three quarters of the raw cotton spun in the country became virtually independent of such imports. Since then, except in 1955 when the 40% increase in cotton yarn production outran the growth in raw cotton production and in 1956, when all Costa Rican crops were badly damaged by storms, the growing requirements of the cotton spinners have been met from domestic sources. In 1958, in addition, the couuntry had a net export of about 470 tons of cotton, valued at close to $300,000. ANNEX 3 Page 4

Table 5

Costa Rica: Domestic andLmpQrted Raw Cotton Consumed in Yarn Production (Metric Tons)

Domestic Imported Total

1943 2.3 197.5 199.8

1948 17.6 195.4 213.0

1950 50.3 179.7 288.0 1951 42.5 126.7 169.2 1952 201.1 6.4 207.5 1953 220.0 3.5 223.5 1954 235.7 2.6 238.3 1955 282.9 56.1 339.0 1956 277.7 116.3 394.0 1957 411.8 - 411.8 1958 521.6 _ 521.6 1959 532.7 - 532.7

There has not yet, however, been any reduction in textile imports. Although total imports of yarn and fabrics fell from about US$9.5 million in 1954 to US$7.7 million in 1956, they rose thereafter to US$10.2 million in 1958. This increase was offset only in part by a decline in imports of knit goods (stockings, underwear and outer garments) from roughly US$1.00 million in 1954 to about US$0.7 million in 1958. There was, however, a leveling off of imports of certain products in 1958 (in particular, cotton and synthetic woven goods) and a significant decline in imports of hosiery and knit underwear. In addition, although imports of knit outer garments increased in 1958, this increase was in part offset by an increase in ex- ports of these products to US$125,000 from US$93,000 in 1957 and US$10,000 in 1956. Details of imports of yarns, fabrics and knit goods, available only for 1955-1958, are shown on the following page. ANMEX 3 Page 5

Table 6

Costa Rica: Imports of Yarns and Woven and Knit Goods (Thousand U.S. Dollars)

1955 1956 1957 1958 Yarns

Wool 186.0 237.2 302.4 310.5 Cotton 385.6 362.3 473.2 581.0 Synthetic 239.1 361.7 439.8 502.0 All Other 26.1 25.9 28.1 20.2

Total Yarn 836.8 987.1 1,243.5 1,413.7

Fabrics

Cotton Fabrics 3,447.5 2,982.3 3,892.3 3,779.7 Woolen Fabrics 631.9 522.4 553.2 632.6 Synthetic Fabrics 1,465.3 1,477.1 1,999.8 1,981.1 , , , etc., fabrics, net, , ribbon, etc. 340.0 356.8 384.8 479.3 Rubber coated and impregnated fabrics 300.3 238.5 233.9 306.7 Bags and sacks 206.2 365.9 329.4 607.9 Blankets, , etc. 444.7 292.5 313.4 403.0 Bed linen, table linen, towels, etc. 114.5 117.5 163.6 160.9 All other fabrics and products excluding clothing 350.0 399.2 393.2 __443.2

Total Fabrics 7,300.4 6,752.2 8,263.6 8,794.4

Total Yarns and Fabrics 8,l37.2 7,739.4 9,507.2 10,208.0

Knit Goods

Hosiery 488.6 588.1 648.0 457.8 Knit Underwear 214.7 212.6 188.3 151.7 Knit Outer Garments 94.1 94.4 69.0 125.3

Total Knit Goods 797.4 895.1 905.3 734.8 ANNEX h

COSTA RICA - IDPORTS OF 14ACHINFRY

1956 1957 1958 Class and Code Number 195_5 1958

711 Motors and boilers except electrical motors 1,410 1,241 1,404

715 Machine tools (metal) 136 169 106

716 01 Pumps 315 472 436 02 Industrial tractors,handling,etc. 8 9 34 03 Cranes & earthmoving equipment 1,205 1,257 1,007 04 Wood, cork, etc. machine tools 250 187 149 05 Tools 150 46 53 06 Paper manufacture 16 10 21 07 Printing and binding 159 266 259 08 Textile industry 438 474 735

11 machines 473 536 560 12 Air conditioning 367 404 633 13 Others except elect. 1,937 1,878 1,720 14 Roll bearings 107 106 125 15 Spares 286 312 234

716 Sub-total 5,712 5,957 5,965

721 01 Electric generators, motors, , etc. 1.378 1.368 1.319 Total Industrial Eqzuipment 8,636 8,735 8,794

712 Agricultural Equipment 525 672 885

713 Tractors 2,208 3,018 2,160 ANNEX 5

COSTA RICA

VOLUME OF EXPORTS

Year Bananas Coffee Cacao (million stens) (thousand bags (thousand of 60 kilos) metric/tons)

1958 8.6 760.0 7.7 1959 (estimate) 6.0 760.0 12.0 1960 6.9 735.0 13.2 1962 8.0 780.0 16.0 1965 10.0 852.0 21.3

EXPORT PRICES

Bananas Coffee Cacao Gross Michel Cavendish -- US$ per stem ------US cents per lb.- 1958 3.10 - 50 34 1959 est. 3.25 2.50 43 26 1960 t 3.25 2.50 40 21 1962 " 3.50 3.00 38 21 1965 3.50 3.00 35 21

VALUE OF EXPORTS (US $ million) Bananas Coffee Cacao Meat Other Total

1958 26.5 50.5 5.8 3.2 5.9 91.9 1959 est. 19.5 43.0 6.9 5.0 5.0 79.4 1960 " 21.8 38.9 6.1 5.0 5.5 77.3 -1962 " 27.0 39.2 7.4 4.5 6.5 84.6 1965 " 33.0 39.5 9.9 6.0 8.o 96.4

Source: Economic Report for Costa Rica (WH-93) Appendix I. Banco Centra'l de Costa Rica

Balance Sheets (inimillion Colcines)

:nd of year i9 1955 1956 1958 2S

Assets

International Monetary Reserves

Own Assets 87.8 109.5 66.0 65.8 109.3 74.6 Suscription to IMF 28.0 28.0 28.0 28.1 28.1 28.1 Total International Monetary Assets 1i; 137.5 94.0 93.9 137.4 102.7 Less International Monetary Obligations 2b.2 27.1 27.43 43.2 46.4 Total International Monetary Reservea 91.6 110.4 66.6 56.4 94,2 56.3

Loanm and Discounts To Commercial Banks 97.8 77.3 105.3 142.1 123.7 168.3 Other 24.5 21.8 25.0 26.1 26.0 33.0 Total Loans and Discounts 122.3 99.1 130.3 168.2 149.7 201.3

Investments

Securities 2.8 9.3 18.3 15.2 11.2 13.9 Fixed Assets 9.0 9.2 9.7 12.1 12.4 13.6 Total Investments 11.8 18.5 28.0 27.3 23.6 27.5

Other Assets

Miscellaneous 17.7 20.0 19.1 18.3 18.7 11.9 International Monetary Obligations contra accounts 24.2 27.1 27.4 37- h3.2 46.4 Total Other Assets 41.469 455.8 61.9 58. Total Assets 267.6 275.1 271.4 07.7 329. 343.4

Liabilities

International Monetary Obligations IRD Loaf 10.0 15.4 25.4 Other International Monetar, Ob(ligations 27.5 27.8 21.0 Total International Mornetary Ubligations 214.2 27.1 27.3 37.5 43.2 46.4 Currency in Circulation 177.3 178.9 175.9 195.6 213.4 216.0 Deposits 46.1 47.2 44.0 4S.3 46.3 52.3 Other Liabilities 2.5 2.6 2.7 2.8 0.8 1.0 Fund for Amortisation of Contingent Assets and Liabilities 10.6 11.7 13.1 14.3 15.8 17.1 Capital and Reserves 6.9 7.6 8.L 9.2 9.9 10.6 Ilad i 2srt tI F: n 21.0

1/ Includeis subscription to I.M.F. i:a coloneg: f 21.0 million. Banco Central de Costa Rica

Profit and Loss Statement (In million Colones)

~2. 1955 19657 l958 12959 Income

Interest on loans and discounts 2.4 1.5 2.0 2.5 3.1 3.0 Interest on investments 1.0 1.9 2.3 2.9 2.0 3.6 Profits on exchange 4.1 4.5 4.4 4.3 4.2 4.4 Commissions and other wrofits 0.6 0.7 o 0.9 0.9 0.9 Total Income T.1 9.6 10.6 10.3 11.9

EXpenditures Wages and other payments to personnel 1.8 2.2 2.3 2.9 3.2 3.3 Per diem for the Board of Directors 0.1 0.1 0.1 0.1 0.9 0.1 Other costs of administration 0.8 0.9 o.6 0.7 0.8 1.5 Interest _ - 0.3 0.7 1.0 Total Expenditures -27 7 §:5 ;o 37-9

Net Profit 5.4 5.4 6.5 6.6 7 6.o

Distribution of Net Profit

Service of 7% National Bank.ng Bonds (Government of Costa Rica) 2.6 2.7 3.3 3.3 2.4 2.5 Provisional Payment for Law No. 1552 - - - - - 0.5 Employees Retirement Fund 0.2 0.2 0.2 0.3 0.2 0.3 Amortization of Loans & Fixed Assets 1.0 0.9 1.2 1.2 o.6 0.8 Provision for Social Laws 0.2 0.2 0.2 0.2 0.3 0.3 Amortization of Fractional Currency 0.7 0.7 O.8 0.8 o.6 0.8 Legal Reserve 0.7 0.7 0.8 0.8 o.6 0.8 5.4 5.4 6.5 6.6 4.7 6.0 Comercial Banks of Costa Rica

Consolidated Balaace Sheets. 1954-1959 (Millions of Comes)

Ehd of Tear 1954 1955 1956 1257 195B 1959 Assets Legal Cash on Hand Cash 22*0 26.1 24.8 26.5 32.7 30.6 Less Cash Surplus 1.7 3.0 0,4 13.6 o Minimim Legal Caah in Vaults 20.3 2M .4 29.1 7;I Depodits in Banoo C6atral de Costa Rica 25.4 29.2 32.9 36.0 37.5 41.6 Total Legal Cash on Hand 717 Other Awasabilities Surplus Cash 1.7 3.0 0.4 1.9 3.6 0.5 Other Punda 3.8 2.4 4.0 5.1 4.0 5.4 Foreign Exchange 22.3 25.9 22.8 25.4 30.1 36.6 Total Available Fundsi; M7 Ui 93.0 104. 1 Ioans and Discounts Short-Tem Loans - - 289.9 352.6 358.0 398.5 Medium and Long-term Loans - - 100.2 103.3 126.2 175.7 Special and Other Loans - - 7*0 6.4 6.1 8.0 Loans in Foreign Currency - 0.1 0.1 0.1 0.2 Total Loans and Discounts 397.3 1;79 M4s Invest mts FixeMsets 24.0 26.4 31.9 34.6 38.5 40.4 Securities 8 14.2 4 53.8 Total Investnts 1J 4h14 I3 94.2 Other Assets 9.8 8.2 9.7 9.4 15.1 11.8 Non-negotiable bonds, Lar 1351, Art. 37 _ 6S 60.7 18-9 Total Assets 435.1 480.5 538.1 667.3 713.9 821.5

liabilities Demand DOposits 204.5 230.5 239.7 256.5 284.5 319.3 Term Depoaits 7.3 9.9 10.1 12.0 13.4 14.6 Obligations in Foreign Currency 15.7 19.5 25.6 21.6 28,0 32.5 Bonds in Circulation 5.0 18.0 20.0 15.0 27.2 38.6 Obligations to Banco Central de Costa Rica 97.7 77.4 105.2 142.0 123.7 168.3 Obligatimns to Other Banks 1.7 - _ _ 1.3 0.2 Other Liabilities 7.9 8.5 9.7 12.0 17.8 19.2 Capital and Reserves 95.3 116.7 129.3 207.9 218.0 228.8 Total Liabilities 435.1 480.5 538.2 667.0 WU Conmercial Banka of Costa Rica

Consolidated Profit and Loss Account (Millions f oons

1956 197 1958 1959

Income

Interest on loans and discoints 23.3 26.3 30.7 34.8 39.0 ) 37_7 Interest on investmeits 0.4 0 1.0 0.8 0.7 ) Profits on exchange 1.1 1.1 1.1 1.2 1.3 1.5 Comissions and other profits 5.5 90 90 Total Income 338- AK52 E meaditures

Wages and other paymuets to personnel 11.8 14.2 16.4 17.7 19.5 18.5 Per diem for Board of Directors 0.5 0.5 o.6 0.8 0.7 0.3 Other costs of ads4nistration 5.4 5.2 6.o 8.7 9.1 n.0 Interest 4.5 5.2 7.2 9 78 Total lxpenditires ___ __ 3__ 37. 6

Net Profit 7.9 8.2 8.1 2 11.14 10.6

Distrilbution of net profit

Service of 7% National BankiDg Bonds (Governent of Costa Rica) 1.2 1.3 1.2 1.3 1.3 Provisional payDmt for Law No. 1552 - - hWloyees' Retire,2t Fund 0.7 0.8 0.8 0.9 1.1 Amorti4ation of loans and Fixed Assets 0.3 o.8 o.6 1.3 1.3 Provision for Social L - - 0.1 0.1 0.1 Legal Reserve 5.6 5.2 5.3 5.5 7.5 Dividends 0.1 0.1 0.1 0.1 0.1

7.9 8.2 8.1 _ .1 4 ANNEX 10

LOANS 147-CR and 219-CR

LOANS IN ARREARS AS AT DECEMBER _31, 1959

In hands of attorneys In arrears for Less than 90 days Over 90 day for collection Tota.l E 5o.loan ofAa t .ut em t NC) f loans AX Noofaoan -At

Agriculture 26 1,224,,782 - _ 3 48,626 29 1,273,408

Fertilizers 6 463,844 1 48148 - 7 511,991

Importers 9 656,579 1 7,734 - - 10 664,313

Industry 16 864,943 13 869,366 - - 29 1,734,309

Total 57 3,210,148 15 925,248 3 48,626 75 4,184,021

Note: This table indicates total amount of loans which are in arrears in the payment of amortizatiom or of interest.