Announcement of IDA Lends Fourteen Million Dollars for Agricultural Credit in Honduras on May 20, 1976

.World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. • Telephone: (202) 393-6360 IDA News Re lease No. 76/20 May 20, 1976 IDA LENDS $14 MILLION FOR AGRICULTURAL CREDIT IN HONDURAS A project designed to accelerate agricultural development in Honduras wi 11 be supported by a $14 million credit approved by the International Development Association (IDA), an affiliate of the World Bank. Total cost of the project, expected to be completed by 1982, has been estimated at $20 million. The Project wi 11 provide investment credit for agrarian reform settlements and for private farmers whose holdings are within the legal limits of the agrarian reform law to enable them to meet its standards for efficient production. The Project wi 11 also include a substantial technical assistance program to improve Government services for the agrarian reform program. A major agrarian reform effort began in 1973 under temporary legislation which was replaced by a comprehensive law in December 1974. The program's objective is to redistribute land among Honduras' rural poor in order to improve income distribution and achieve high levels of agricultural production. Thus far under this program, the • government has distributed land to almost 30,000 families. Its goal is to distribute over 300,000 hectares to 62,000 families in the 1976-79 period. The IDA credit will help finance on-farm investments for dual purpose beef-dairy farms, livestock fattening operations, and annual and perennial crop production such as bananas, rice, corn and beans. It wi 11 also support the continued rehabilitation and improvement of the banana lands of the lsleta agrarian reform settlement severely damaged by a hurricane in 1974. In addition, the IDA credit will finance agroindustry by providing finance f.or rice mills and other food processing industrieso IDA funds wi 11 also contribute to the financing of equipment for private contractors to provide services to private farmers for land clearing and irrigation. An experienced Project Credit Unit in the Central Bank of Honduras wi 11 be responsible for the implementation of the project. An important component of the project is a technical assistance program which accounts for about 30 percent of the project's total cost. This program is expected to strengthen sector production through the provision of crop research, production extension techniques and training, project preparation studies, and other services. The I DA credit has been made to the Government of Honduras for a term of 50 yea rs, including 10 years of grace, at no interest except for a service charge of 3/4 of one percent to meet IDA's administrative costs. The Government wi 11 re-lend the IDA credit to the Central Bank, which in turn wi 11 channel the funds to final sub-borrowers through participating local banks • • NOTE: Money figures are expressed in US dollar equivalents.