Announcement of Loan of Fifty-Four Million and Five Hundred Thousand Dollars to Australia of March 18, 1955

--~ FOR IMMEDIATE RELEASE ' . INTERNATIONAL BANK FOR ·;RECONSTRUCTION AND. DEVELOPMENT ~ (WORLD BANK) 1818 H STREET, N.W., WASHINGTON 25. 0.C. TELEPHONE: EXC:CUTIVE 3-5360 PRESS RELE.\~ No. .38'9 Ji SUBJmT: Bank lends Australia t/ (: I Ma;rch 181 19SS . $54.S nd,llion. The World Bank today maqe a loan of $54.S million to th6 Commonwealth of Australia to finance imports of equipment for the development of agriculture., transportation, electric power' and i?}dustry. The loa9; agreement was signed at the Bank's headquarte.rs in Washington by R. G. Menzies, Prime Minister of Australia.., and by Eugene R. Black., President of the Bank}· The Bank has arranged to sell $10.4 million of the loan., without its guarantee, to 11 private banks in the United States -- the largest number ever to participate in such a transaction with the World Bank. The amO\mt being sold represents the first six maturities of the loan, which fall due 1·rom March 15, 1958., :through September 1$, 196o. The ~leven banks are: Manufacturers Trust c·o. 1 1 The First National Ba,nk of Boston, The First Hational Bank of ChicagQ, Bank ot America National Trust & Savings Association, The Philadelphia National Bankj The Chemical Corn Exchange Baruc, .J. P. Morgan & Company, Inc • ., Na~ional $hawmut ·Bank, Brown Brothers Harriman & Co • ., The Pennsylvania c,,,ompany for Banking and Trusts, and Empire Trust Company. This is the Bank's fourth loan to Australia, n,and b:rin~ to $2SB.S mi;lton the amount the Bank has lent for the import of capital gooq;s and equipment needed from the dollar area for development in various sectors of th~ economy '"'of Australia. Today's loan~ like the other three, will beQefit both private and public enterpri$e. Goods imported with the proceeds will be used by farmers, :private businesses,, and e i ;/ CoJJD11onwealth \snd State agencies. II  -2- About $47 million of the loan has been allocated· to agricqlture and transportation. Althou~~ Australia is. a highly industrialized country, agri- cultui-al products still ac,eount for more than 80% or her eamings in intern&tional trade. Ihdi vidual farmers are increasing their agricultural output through more extensive mechanization, and imported machinery and equipment has enabled the Commonwealth and State go,rernm.ents to carry forward programs to intensify land use and increa~e productivity through reclame.tion,. pasture development, irrigation., water and fodder conservation. Toda.y•s loan will finance further imports of equipment and machinery for thuse purposes, largely tractors, combine harvesters, hay balers and other equipment for fodder conservation. Australia's rapid economic growth has put a heavy burden on transport of all kinds, and the problem has been accentuated by the long distances to be covered in the country. Approximately hall' of today's loan is for the purchase oi' equipment to :unprove transportation facilities., particularly roa.d tx~ansport. Improved roads s.nd an increase in the nwnber of cormrieircial vehicles have been increasingly important in Australia. At present only about .one-fourth of the road network is paved and emphasis therefore is on improv~ents and maintenance of existing roads rather than new construction. The loan will finance imports of tractors., graders and other road construction equipment ±):rr this purpose. It will also pay ro1· trucks and for components of trucks which will 'l)ti, assembled or manufactured in Australia. The chief need in the railway sector is to reduce operating costs am improve efficiency. Diesel traction has proved generally more economical than steam traction in Australia, particularly where steam locomotives require long dtstance haulage of bunkering coal and extensive facilities for water. For this reason the railroads have begtm to introduce diesel t1•a.ction. Most of the r~ilroad allocation,, from today's loan will be used for the import or components for the manufacture ot dies~l electric locomotives and railcars. Thie loan will also pay for five four- engined aircraft to fill the immed:i.ate req:uire.1nents of Qantas »npire Airways, Ltd., Australia's international airline, • - .3 - The reJrBinder of the loan (about $7.S million) will be used to buy equipment for power plants and transmission lines and for manui'actur:ing industries. Th~- industrial equipment will be used in iron and steel production, food processing, mining and automotive and general engineering industries. The largest alloca,tions from the $204 millicn of earlier Bank loans have been made to agriculture and transportation. Nearly $70 million is being used to buy tractors and other equipment for agriculture. Equipment such as combine harvesters, hay rakes and balers, forage harvester~. and specialized tractors has contributed to the recent gains 1n agricultural productivity in Australia. Up to June 30, 1954, some 6,000 farms totaling 8.8 million acres had been allocated to veterans under the War Service Land S-attlement scheme l\ Much of the equipment, financed by the Bank is being used in the development of these farms. In the 1953-54 season, production of most of Australia's main agTicultural products had nearly' reached the targets set for 1957-58. About $76 million from the earlier loans is being spmt for improvement of the railways, for modernization and improvement of Australia's air fleet and for better road transport. The re-equipment of railways, and particularly the introduction of diesel locomotives, has brought about a marked improvement in rail service at lower cost. The loans are also being llsed for electric power development, and new thermal plants with ~- :c.otal generating capacity of 150,000 kilowatts are now in operation. Other funds f'rom the loans were allocated to help increase production of coal and, metals., and £or the ptn"chase of varied manuf'a,cturing equipment. Today's loan was signed after it had been approved by the Bank's Executive Directors. It is for a term of 15 years and bears interest of 4-5/8% including the 1% statutory conunission charged by the Bank. Amortization will begin March 1$, 1958.  (! • •. ' FOR IMMEDIATE RELEASE :-;, "t> INTERNATIONAL BANK FOR • . RECONSTRc,UCTION AND DEVELOPMEN.T (WORLD BAN.K) 1818 H STREET, N.W., WASHINGTON 25. D.C. TELEPHONE: EXECUTIVE 3-6360 State1J1ent by Eugene R•.Black, President o£ the World Bank at the signing q~ the.$S4.S million loan to Australia March 18, .19.SS . We have an old friend with us today. It· gi.ves me great personal pleasure to welcome Prime Minister Menzies here at l!ank headquarters •. ·. ·I am parti~ularly glad that his visit coincides with what is a happy occasion.-tor .an of us.'!'-.. · the eigning··of the Bank's fourth .loan to Australia. We ·have lent a greater amount tor economic development in Aust~alia than ·.in any other country in the world'.. We have confi.denc.e in A~stralia I s future, I am gratified that this confidence is shared by the private investment markets, • a fact which is well demonstrat~.d ·by the presence here today of ·the r~presenta-. tives of eleven .private Unit,ld Sta.tea banks,. .who are· taking parts ot our latest loan. I am Qonf'ident that this loan will help to. bri:ig about, furt,;ner advances in many sectors ot Australia I s econonr, ~· Lik• our prevtous loan:,s, it will contribute especially to· incre~sing agricultural. ·produQtion, an~ to. improvement· of key means of transport ....-. road, rail and air. And i.t will also assist in the generation ·ot elect~c. po~r and the expansion of industry•. The Bank is following with keen interest the rapid strides Australia is .maldng all along the line. I· saw s,9meth1ng of tht, at first hand.when I visited ./tlstralia in l9S2, but 1111ch heacit1q has been made since then.. Australia is one of the faet•et denlc;,ping co'lll;ltries in the worl)i, and I am gla:l that the Bantc is aeso- ciate,l with this developmen.t. l'o iv mind,: our experienct;t in Australia is an out- standing example of effective working re:J.ations between the Bank an:l a membet country.. .l: am sure that: these relations wtll be as cordial in tne . future a~ tbey haw b•,n a, Qeginn~. ,j.n the past,., ·and that the' progi-ess Australi~ has al. readt ,,ml\de is only ·