Announcement of Expansion of Rural Credit in the Philippines on April 7, 1977

•World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. • Telephone: (202) 393-6360 BANK NEWS RELEASE NO. 77/80 APRtL 7, 1977 EXPANSION OF RURAL CREDIT IN THE PHILIPPINES Approximately 15,000 farmers, fishermen and rural entrepreneurs will benefit from a rural credit project in the Philippines which is being supported by the \forl d Bank 111:i th a 1oan of $36. 5 mi 11 ion. The project is the fourth rural credit operation to receive World Bank assistance since 1965. Under the $91.3 million project, funds will be provided to participating rural banks and stock savings and loan associations. Medium and long-term credit will be made available by these institutions for investments in farm mechanization, light transportation, coastal and inland fisheries, small-scale livestock development, and smal~~scale cottage and agro-industries. The Central Bank of the Philippines, through its Department of Rural Banks and Savings and Loan Associations, will administer the credit program financed under the project. The investments are expected to result in substantially increased production of rice, as well as corn, sugar, poultry, pork, beef and fish products. This • will generate additional income for small farmers and improve nutritional standards in the rural areas. Other investments in cottage and agro-industries will expand production of small capital and consumer goods for domestic and export markets. Transport and· farm machinery investments will provide needed services in rural areas. At full development, the value of annual incremental production to be generated by the project is estimated at about $50 million. Approximately 10,000 smaller farmers will receive total annual incremental income of $7.2 million per year, which will average about $725 per borrower. The project is expected to create directly more than 10,000 jobs as well as provide substantial indirect employment. Net foreign exchange savings of about $9 million a year are estimated. The World Bank loan of $36.5 million is being made to the Central Bank of the Philippines. It is for a. term of 15 years, including 4! years of grace, and carries interest of 8.5% a year. The Central Bank will relend $35.7 mil1ion of the proceeds to participating rural banks and stock savings and loan associations at an interest rate of 9% a year. Repayment to the Central Bank will substantially reflect the aggregate of the repayment schedules of subloans made by the rural banks and the stock savings and loan associations. The Central Bank will pass on $300,000 of the loan proceeds to the Department of Agriculture to finance an agricultural machinery testing, evaluation and standardization project and will utilize the balance of $500,000 to finance · purchase of vehicles, studies and staff training. • Two fina,rcral institutions in 'iermany--Deutsche Genossenschaftshank, Frankfurt, and Berliner Handels-und Frankfurter Bank, Frankfurt--·have aoreed to participate in the 1oan for a tot a1 amount of $2. 7 mi 1lion. Note: Money figures are expressed in US dollar equivalents. ··