Announcement of Ecuador's Low-Income Housing Program Assisted by Sixty Million World Bank Loan on January 14, 1988

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. BANK NEWS RELEASE No. 88/35 Contact: Ciro Gamarra (202) 676-1217 ECUADOR'S LOW-INCOME HOUSING PROGRAM ASSISTED BY $60 MILLION WORLD BANK LOAN WASHINGTON, January 14, 1988 -- Ecuador's efforts to increase the supply of affordable housing for lower income groups while minimizing public subsidies will be assisted by a World Bank loan of $60 million. The loan will help finance the Ecuadorian Housing Bank's (BEV) nationwide investment program, to cost $312 million, for the period 1988-93. The project consists of developing about 12,500 serviced lots, some including houses, and providing about 15,000 home improvement loans. Technical assistance to BEV and to the National Housing Board (JNV) will be provided to help improve housing standards, contracting and supervision practices, portfolio management and operational efficiency. Vehicles and equipment will also be provided to facilitate project implementation. With an estimated total cost of $85.7 million, the project will be executed throughout the country over five and one-half years. The balance of the project cost will be met by the BEV and the JNV ($17.1 million) and by the beneficiaries ($8.6 million). Concurrent with the project, BEV will introduce a lending instrument bearing market-related, variable interest rates and providing for capitalization of interest. Under the instrument, monthly payments will be capped at 25 percent of beneficiaries' household income. Any payment due in excess of this amount will be automatically capitalized for later payment. Adoption by BEV of market-related interest rates and the new lending instrument is expected to help mobilize domestic resources for shelter while improving the allocation of resources, making shelter more affordable and providing for recovery of the investment costs of the project. The project also aims at encouraging private developers to build low-income housing. BEV's investment program will also be financed by the Inter-American Development Bank ($57 million), the Society for Technical Cooperation of Germany-GTZ ($3 million), the United States Agency for International Development ($23 million), BEV and JNV ($138 million) and the program beneficiaries ($31 million). The World Bank loan to the Republic of Ecuador is for 17 years, including four years of grace, with a variable interest rate, currently at 7.72 percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.75 percent on undisbursed balances. NOTE: Money figures are expressed in U.S. dollar equivalents.