Announcement of Twenty Five Million Dollars Loan to the Union of South Africa on October 1, 1957

~···'. WORLD • INTERNATIONAL BANK FOR RECOI\ISTRUCTION AND DEVELOPMENT 1818 H STREET, N.W., WASHINGTON 25, D. C. TELEPHONE: EXECUTIVE 3-6360 PRESS RELEASE NO. 505 SUBJECT: $25 million loan tr, the October 1, 1957 Union of South Africa. The World Bank today made a loan in various currencies equivalent to $25 million to the Union of South A:frica for the import of equipment and materials required fc,r the expansion of railway capacity •. The Bank loan was made concurrently with the granting of a $20 million 1·evol\ri.ng credit to the Union by a. group of' United States commercial banks. This line of credit, which was arranged. by Dillon Read & Co. Inc., will replace a similar credit of $10 million which was first ma.de available in 1951 and has since been • regularly renewed. The-participating banks are: Bank of America National Trust and Savings Association The First National City Bank of New York The Hanover Bank Bankers Trust Company Chemical Corn Exchange Bank The New York Trust Company The First Natir,na.l Bank of Chicago The World Bank loan, togeth~r with $10 million of additional funds to become available from the new revolving credit from the United States banks, is to be used for the expansion program of the South African Railways and Harbours Administration, the gr,vernment department which is responsible for operating the railroad network on 'Which South Africa depends for long d?'~ta.nce transport. Since World War II the rapid economic growth of the country h~, been particularly marked in industries requiring large railroad freight capacity: iron and steel, building construction, base metals and agricultural produce, mainly wool and grain. Bulk freight, which accounts for much the gre~ter part of traffic on the South African railways, has increased by more tha.n half sinee 1945 and tota1.ed some 75 million tons in 1955-56.  - 2 Since 1947 the Railways and Rar'b'nJ:rs Administration has been engaged in a series of expansion programs to meet the continuing pressure on the ra.ilwa.y system. Although good progress has been ma.de and much larger freight capacity no~/exists, there are still periods wh~n the production of ( . . certain important (south African exports, especially coal, iron ore, manganese i . and chrome, is held. back for lack of transport. Today's lean is the fourth made by the Bank towards the Administration's expansion pr(')grams., ·and brings Bank loans for this purpose to a total equivalent to $100.2 million. The three earlier loans were used ma.inly to import locomotives, rolling stock and structural and permanent way materials; smaller amounts were used for road tram:port equipment and harbor craft. The $25 miJ.:.~ig;g: --,~ loan made tnday will be applie·d to the Administration's program during the three-year period ending March 31, 196o. It is estimated that over this period gross capital expenditures ~n the program will total the equivalent of about $540 million, of which about $28o million will be spent a.broad. The most imp(.)rtant item in the program is a further increase in line • and yard capacity. SOme 16o miles of line will be double-tracked., 140 miles regraded., 450 miles electrified and five :marshalling yards enl~ged or con- structed. About 80 miles of new suburban or branch lines will be built. Further electrification will call for the procurement of about 200 electric locomotives, 155 motor coaches and 375 trailers. Diesel traction will be introduced and 135 diesel locomotives Will be bought. In addition., the Administration will purchase 70 steam locomotives., 1.,100 coaches and 19,000 freight cars. Procurement of these supplies will be through international competition, as is customary with World Bank loans and is also the nor:mal • procedure of the Railways and Harbours Administration. The expansion program Will substantially increase the carry1.ng capacity of the railways and thus provide the basis for, further economic development.  - 3- The total rrt World Bank loans in South Africa nnw stands at $16o.2 nrl.llion equivalent. The loans nther than those for the railways were to finance increased electric generating capacity. Twn loans, each equivalent to $30 millinn, w~re made to the Electricity SUpply Commission for this purpose in 1951 and 1954. The Bank loan nf $25 million is for a period of' ten years, and carries interest of 5-3/4%. Amnrtization will begin on April 1, 196o, and will be continued in half-yearly installments through October l, 1967. The Loan Agreement was signed in New York by Eugene R. Black, President of the Wc,rld Bank and by the Hon. J .F. Naude, Minister of Finance of the Union C..overnment. The Agreement doubling the commercial.line of' credit was also signed by Mr. Naude today at the offices of Dillon Read. & Co. Inc • • •