Announcement of Eight Million Five Hundred Thousand US Dollars Loan to Philippines for Dredging Equipment on July 26, 1961

FOR IMMEDIATE ... RELEASE •· W O R L O El A: N .. K. • '•' 1818 H STREET, N.W., WASHINGTON 25, 0. C. TELEFHONE: EXECUTIVE 3-6360 Press Release No. 703 SUBJECT: $8.5 million loan to Philippines July 26, 1961 for dredging equipment The World Bank today made a loan equivalent to $8.5 million to the Republic of the Philippines to finance equipment needed :f'or a program of dredg- ing and maintaining harbors and ports at depths satisfactory for ocean-going and inter-island shipping. The island-economy of the Philippines is heavily de- pendent on efficient sea communications in its foreign and domestic trade. The new equipment will make possible the additional dredgi11g needed for the safe • na,:Tigation and ready maneuvering of ships using the country's public ports • Seven prj.vate banks are participating in the loan, without the World Bank's guarantee, for a total amount of $920,000 representing the first five maturitiel-; which fall due between September 15, 1963 and September 15, 1965. The participating banks are the New York Agency of The Chartered Bank, the New York Agency of The Hongkong and Shanghai Banking Corporation, Bank of America. National Trust and Savings Association, The Chase Manhattan Bank,. The First I National City Bank of New York, Manufacturers Trust Company and National Bank of Commerce of Seattle. The Philippine archipelago consists of 7,100 islands, extending 700 miles east-west and 1,200 miles north-south. All towns of any size are located on or near a coast. The coastal to,m.s are not only the trade centers of their local areas but are also clearing points for the foreign and inter-island •• trade of' the agricultural, forestry and mineral areas of the interior. 351 public ports, 25 a.re ports of entry for vessels engaged in foreign trade. Of the  - 2 - • Manila is the most important port, especially for imports and trans-shipment, bt1t many other ports handle a substantial amount of cargo. About 5,700 ships a year call at Philippine ports to load exports and discharge imports. The main exports are copra products, sugar, hardwood, abaca :and minerals, including chrome, iron and copper. Imports include such essential items as petroleum, machinery, vehicles, wheat, chemicals, paper, yarn and fabrics. Upwards of 8.2 million tons of export-import cargo moved through the ports of entry in the yea:r 1958-59. In the same year coastal and inter-island traffic amounted to about 4 million tons at the country's largest ports. The dependence of the Philippine economy on ocean transport empha- sizes the importance of dredging harbors to accomnx>date ships carrying its ex- ports and imports. Freight charges must be kept at reasonable rates since • Philippine exports a.re sold in highly competitive world markets and also to avoid. raising the cost of imported goods which woulct have an adverse effect on foreign exchange holdings. There is now a serious need for additional dredging in Philippine ports for regular maintenance, for port improvements and for greater depths to accommodate the larger ships now in use. .Arrears in maintenance dredging trace back to the complete cessation of dredging during world War II. The arrears have continued to grow in the pa.st 15 years because of the age and inadequate capacity of the dredging equipment at the disposal of the Philippine authorities. In addition, port extensions have enlarged, the navigational and turning areas which require regular dredging. Navigational dredging at Philippine ports is the responsibility of the Division of Ports and Harbors (DPH) of the Bureau of Public Works. DPH f;, • has worked out a dredging program to be carried out over the next ten years to reduce maintenance arrears, effect improvements and ensure normal maintenance.  - 3 - • Channels and turning areas of Manila Harbor will be dredged to 40 feet below the low water mark, most of the ports of entry to 35 feet and the ports for inter-island shipping to depths varying from 15 to 25 feet. The equipment being financed by the Bank loan will provide some of/? /( \'-.,/ the equipment needed for this program. It consists of one hopper dredge, one cutter suction dredge, four small: dredges and auxiliary equipment, orie 40-ton floating crane and equipment for the construction of a slipway and a workshop for the repair of the dredging fleet. Most of the equipment has already been ordered on the basis of international bidding and the remainder will be pro- cured on the same basis. The loan is for a term of 17 years and bears interest at the rate of 5-3/4% per annum i.ncluding the 1% commission which is allocated to the • Bank's Special Reserve. Amortization will begin September 15, 1963 . •