Announcement of Mexico to Improve Highways and Build Up Skilled Labor Force on October 8, 1987

HOLD FOR RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 88/13 Contact: Ciro Gamarra (202) 676-1217 MEXICO TO IMPROVE HIGHWAYS AND BUILD UP SKILLED LABOR FORCE ,q'.17 WASHINGTON, October 8 -- Mexico will improve its federal highway network and strengthen its manpower training system, supported by two World Bank loans totaling $215 million. The first loan, of $135 million, will assist a five-year maintenance improvement program to halt rapid deterioration of roads. The loan will finance road and bridge repairs, maintenance equipment, staff training and consulting services. The second loan, of $80 million, will support a project to improve employment services and skills training, particularly assisting small- and medium-scale enterprises and expanding retraining programs for the unemployed. These are the first two World Bank loans to Mexico in the current fiscal year. In the previous fiscal year, ended June 30, the Bank approved eight loans to Mexico, for a total of approximately $1.7 billion. Highway Maintenance The Highway Maintenance Project is designed to help rationalize public sector investment, assisting the Government of Mexico through its Secretariat of Communications and Transport in improving road maintenance operations for the 41,000-kilometer federal highway network. The project is consistent with the World Bank's support to Mexico by focusing on the rationalization of highway sector expenditures, while ensuring that road infrastructure is in satisfactory condition to support economic recovery, including the development of non-oil exports. The estimated total cost of the project is $281.5 million, with the balance of $146.5 million to be provided by the government. The project covers about one-third of the government's road maintenance improvement program which will require a total of about $910 million for the period 1987-1991. Under this program, about 18,200 kilometers of the federal road network will be resurfaced, about 400 bridges repaired, and about 2,270 maintenance (more) NOTE: Money figures are expressed in U.S. dollar equivalents.  - 2 - vehicles and equipment items will be replaced. About 31 workshop facilities will be rehabilitated or expanded and nearly 16,000 skilled and semi-skilled workers will be trained. The project complements an ongoing highway sector project assisted in 1984 by a $200 million World Bank loan. The Bank has made a total of 20 loans, for over $1.5 billion, to Mexico's transport sector since 1954. Manpower Training The manpower training project will complement World Bank assistance for economic restructuring and trade liberalization in Mexico. It aims to reduce human resource constraints to growth, improve labor productivity, and lessen the social impact of adjustment. The project is expected to strengthen state employment services and the Ministry of Labor and Social Welfare retraining program for displaced and unemployed skilled and semi-skilled workers. It will also help to implement a retraining program for 160,000 displaced and unemployed workers over the next four to five years, during which the effects of restructuring on the labor market are expected to be at their peak. A system to assist small and medium-scale enterprises, in strategically selected sectors and geographical areas, in upgrading the skills of employed workers will also be established under the project. The project will also provide institutional strengthening to the Ministry of Labor and Social Welfare to guide effective development of training, introduction of information systems and preparation of policy studies. The total cost of the project is estimated at $156 million, with the balance to be provided by the enterprises ($40.3 million) and by the government ($35.7 million). The project is designed to support other World Bank operations for industrial recovery, trade policy adjustments, and promotion of small- and medium-scale enterprises. The Bank loan will also complement two previous Bank operations, totaling $171 million, for strengthening technical training. The World Bank loans are for 15 years, including three years of grace, with a variable interest rate, currently 7.76 percent, linked to the cost of the Bank's borrowings. They carry an annual colllll'litment charge of 0.75 percent on the undisbursed balances. - 0 -