Announcement of Five Million Dollars Loan to El Salvador on January 7, 1959

,., FOR IMMED-IATE RELEASE ' ,, WOIILD INTER.NATIONAL BANK FOR RECONSTRUCTION AND DEVEjLOP,!YlENT I~~ > ' 1818 H STREET, N.W., WASHINGTON 25, D. C. TELEF'-IONE,: EXE'.CUTIVE 3-6360 (i PRESS RELEASE NO. 569 (1 SUBJECT: $5 mi.llioll"'l;0an to J'anuary 7, 1959 El Salvador ·"~-, i,\ i'he World Bank today made a loan of $5 mill1ori to El Salvador for a program being carrted, out to provide an all-weather road network throughout the Pacific coastal plain. The loan will help to finance the constr,~ction of 21 feeder roads,·and §Ome additional work on the Coastal Highway, the :main artery of tpe • • .J - s,ystem. The new road net~o;rk will open up a large, pote'ntially rich area to settlement and agriculture, as w~ll as greatly improve communications in the southern half of El Salvador. • The First National City Bank of New York, Grace National Bank and the Nat~ma.l Bank of Washington are participating in the loan, without the World Bank's guarantee, for a total amount of $300,000. This represents part of the first two maturities which fall due on April 15 and Oct,ober 15, 1963. The: 190-mile , Coastal Highway, now under construction, is being partly 1 .Jr' financed by a World Bank loan of $11.1 million :made in 1954. At th~t time the , Government had also made plans to build, at the appropriate time, a number of feeder roads that would branch off thi:,p Highway to provide an adequate road system thl:'Oughout the entire region. Work on the coastal Highway is well advanced and the feeder roads will now be built. The 21 feeder roads will have a total length of 230 miles. Eighteen of them Will be branches of the Coastal Highway; many of them will repJ.ace existing 1:. tracks and ea:rth roads which in the rainy season are !)assable only by ox-ca.rt. Design standards have been established. ~ccord.ing to the expected volume of . traffic. The other three roads will form important connections with the J.nt.er- American Highway an.cl have been designed as second.a.~· roads.  - 2 r' • The Bank loan will alet, h~lp to finance the completion of certain parts of the Coastal Highway: the bridge over the Rio de Paz to linlf the Highway wj.th the Pac~fic Highway in Guatemala; the 2!-mile approach to the bridge; and the paving of an additional 18-mile section of the'R1.ghway. The cost of the bridge is to be '"', shared equally by El Salvador and Guatemala.. When the Highway is completed it ' I.'. will provide an important connection for through traffic across El Salvador // 11 from the border of Guatemala to Honduras and countries to the south. The 'construction of this 0 road network is part or' t~e Government's eccno:mic development poli.cy to increase and diversify agricultural production through the opening up of new and under--utilized land. The plains along the Pacific coast contain the only_ sizeable expanse of fertile lan~ remaining to be develope4 ~n El Salvador. This area is suitable for .crop cultivation, livestock raising and dairy farming, but much of it has been virtually inaccessible. An adequate • road network will open up this region to denser settlement and t• more intensive cultivation. This will alleviate population pressure elsewhere in El Salvador and provide more employment for the labor force. )j,S;:\ The increased output of corn, rice, truck crops and meat products that 'can be expected from this region Will 1 reduce El Salvador's relatively high level of food imports, while higher pro- duction of cotton for export will increase foreign exchange earnings. The feeder roads and supplementary projects are expected to take four years to complete at a. cost equivalent to $~0 million. The Bank's loan of $5 million will be used for imported equipment and services and the Government will finance the loeal currency costs. The detailed engineering work on the feeder !7 roads will be done by the Highway Department with the as~istance of consulting engineers. The consulting engineers will also supervise ·most of the construe- c) tion work which Will be carried out by contractors selecten on the basis of • international competitive bidd~ng.  () • 3c - The loan. is for a term of 15 y~?a.rs a.nd will bear int~rest of 5-3/4'fo, including the 1% commission which is: allocated to the Bank's Special Reserve. Amortization will begin in .APril 1963. ' - After having been approved by the Bank's Executive Directors, the loan documents were·signed on behalf of the Government of El Salvador by Dr. Hector David Castro, Ambassador ~pr El Salvador in the United States and by Mr. Roberto Parker, Minister of Public Works of El iSa.lvador.  tN ~ -'.·/\ ~ EL SALVADOR FEEDER ROAD PROJECT AGRICULTURAL REGIONS MAIN ROADS cita16 \ O Qoffee Inter-American Highway V '-""\ and completed portion 1 Cotton of Coastal Highway, ~ ') ,t, ·,.'\ Coastal Highway under Forests in mountainous construction and swamp)' areas + . .....-·-"'.'\ . () u faj.I~LirJ Coastal Areas and Other paved roads All weather roads ~ ·-·_.; \ Priority Numbers Proposed Feeder Roads Complementary Projects -~ \ ~ ~ ; 4 111 1 I I I I I I I I RAILROADS ~ ·, 8 ;·-·-·"'"" <, / / ·,1 L. ·--·~·-·'-·,,,,,· """·-·,\ \ J ) ,'j(. " l 0 10 20 30 40 ~OKM January 1959 IBRD - PR