Announcement of Loan Granted to Chile on October 10, 1951

INTERNATIONAL BJulK FOR REC OMSTRUCTI ON AlID DEVELOPMEln' FOR THE PRESS FOR IMMEDIATE RELEASE Preas. Release 262 October 10, 1951 The Interne,tionat---)l3ank for Reconstruction and Development today- mad• a lo$n of $1,300.·ooo for· the .,xploratton 8Jld ~s~ of undergrowid ,,re.ter re.sources of· the Rio Elq~i Vei°ley in: CM.le,- . ·The borrower ts the Corporacion de Fome~to de la Proct,wci<>n (FoDJe!lto), an agency- o.f the Chilean Gove~ent, _and the lQan is guaranteed. by the Chilean Goveri1ment. This is the third loan the Bank has me4, in Chile. In Mal'ch 1948, a loan Qf $13,500,000·wa~ JDade to FomentQ and to Empresa. Nacional de Electricidad, S.A., a Fomellto subsidiary, fo.r hydroelecttle development; at the same time $2,500,000 was lQaned to Fomento for the· purchase ot • agr1cuJ. tura.1 machine:cy-. An increased food s~pply 1$ one·of 'Chtl?'s IIJOSt preesin~ needs. At present agricultural .. prQduction ti,, cQnf.'ined primarilt to the central part of the country. In· the ·desert and valley lands ot the north 1 t ia relatively small, due to la.ck of ~~a tet, In. these :n9rther11 valleys, there< is, a substantial amQunt Qf land whtch has irrigation faciU. tiee but an insufficient water suPPlf, and betweeh 150,000 and 200,·ooo acr~s of. other good land which could be ·cultivated if ir:rigation faciiities ·were pro- vided. t-li th an adequate supply ot wa.ter, the prodU.c·thtity of the ·pre~ ently cultivated lands could. be greatly- in~~eased, ·tmd more la.n~ could be brought into proc;luction.. Chile's P.<>rtll.em valleys could -then s-u:p'!'lY' the important mining eormn,m:itie$ of· the· north wHh a $Ubstantial, portion of the foodst'Q.ffs whic:;h they :now import, The Rio Elqui Vall,ey is H~cated ab.out 2.$0 miles· ~orth of Santiago. ·There are in the ~le,- e,bO\lt .50,600 ae:r~s of cultiva"Qle land, most of  ',,,- ·•:1 -2- which is now served. by irrigat.ion canal$.· ·Due t·o the uncertainty of wat,r ,supply, ·about 10,000 of ,,these acres are not·cultivated even ~n good years. Records ot the last 23 y-eai's show that tn ·one year out of three on the average_, and once for a.s many as five years in succ~ssion., .the water avaiiable h .1nsu:f'f1ci.ent even for the 40·,000 aci-es J-egula.rly under cul tiva.tion. The P'U,fpoee of tne project, which tll~ l3ank's loan will, help to finance, is to e~plore the undergro'1!ld water resources of the Ric ~qui v~.lley- and, if sufficient water is fo1U1d, to assist in using it fQr ·!tiri- ga.tion~ The J3ankt s lQan w1·11 be ueed to finance the 1np:>ortat1on of. equi1>- ment and to pay for services ·J\ecessacy to carey out the project. In the first phastf-of 'ifrre- proJe~t, ;•!Ork will be :undertaken to determine the amount ~ of water wh1.ch might pe obtained by ~umping in the Rio El.qui Valley- The second phase will consist of the installation of permanent pumps ·on the wells ,,,hich are found to produce q'1anti ties of watet adequate for ec·onomica,l· pumping, and the provision of electric power for the operation of the ,lJUlllps. If the wells drilled in the exploratory phase produce the expe~ted ..volume of water, they could supply wa,t·er for an addi tio:p.al 5.000 ~cres annually. The eventueJ. reEJulte of the pr.oject ~annot be ·determined un.t11 'the first phase has been completed, However, in the optnion of all the g$olo- gists who have 1nve$tiga.ted ·the region, ~nougb water wjll be foUJ1d to cover· · the present deficiency !n the fequjremen.ts·ot tlle Rio Elq'1i Valle7 and to · provi.de wate:r for t~e trrigatio:n of up to 21,000 addition.al acres ··o! adjacent land that could be brought '1nder c~~:t!vation. This, however, would req:u,ire the installation ot more wotks than .ar~ included in·the preeent project, ~ which~ be regarded a~ a pilot ~dertak1nt, Successful resUl ts from the !)l"QJect wo~d PrC>vJde th.e basis f9r . () • estimating th~ s1m1iar in character. cost and_ practi ciabit1~y· ,;.i other trrige,tion project's Cond.1t1:on~ 0 on· the Rf6 Elqui are typical of the riv~rs in northern Chile. All have the't:r so'1rces in the anow fields o"t the Ande@ range and fall to the s·e~ within an average distance of abou~· 100 miles. It the pr.oject success!ul,ly p·roves the existence ot l,a.rge· underg·rowid wate~ resources iii tne Rto Elqui Valley. lt would poi·nt the wq t~ a ~uch larger Q.evelopment of 1~:rig:ation and agric'Q]. ture in other· river vsl.leys of the arid regions of the north, where the soils are good and the climate is mild. The project wtll be ca.r:ried ~i.it by the irrigation dlvision of Chile's Department Qt li.iblic Works, the fi~st stage being undertaken ~r1th the . . . .. • ···,_) . '· . ' . assistance of ·teclµiical experts esp~ci.ally retained for thls pu.rpose; Foui'ento, the recipient ot the Bank•~ loan~ ·~dll render services such as purchasing eq~ipnent and hiring COil'Sul·tB1+ts, The loan is for a. term Of ten years arid Carrie$ all 1Jiterest rate ·of ~J/81, per ~um incl-u.d.i~ the usual 1% coriuniss'ion charge w}lich, in a.ccQrd;;.. . ance 1./1 th the :Bank 1 s Articles of .Agr.eeltlent·, ·~s ~1,o~ated t·o it's s-peciai reserve fund, Amortization payme~tsy. c~culated to :ret'ire the ioan by- maturity, will start on .April 1, 1955·. After approval by the Ballkt s Eicecu.tive Directors·, 'the Loan Agreement was signed today by Jorge Schneicf,r,. N~w. York Represen·tatlve·, on behalf of the Corporfi(liOn de Fome11to de la Produccion, and by Eugene R. Black, President, on behalf ot t;he I~te~tio~al Bank 'for Reebt>.'struct.ion and Development. The· G\28.:fSJ\t~e J\gree~~Jlt was signed. by F~lix ·Nieto d·~l Rio, 0 • Chilean .An(bassador in Washin.gtori, OJl behalf ·of the GQverrunent of· Chile, and l>y ~r. Blade on behalf ot the :Bank:,