Announcement of Forty Million US Dollars Loan in Mexico on September 20, 1963

. JNTERNATJONAL BANK FOR .RECONSTRUCTION AND DEVELOPMENT 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 63/40 Subject: $40 million loan in Mexico September 20, 1963 The World Bank today made a loan equivalent to $40 million to assist in financing Mexico's highway program during the three years, 1963-66. The pro- gram includes the reconstruction, completion or new construction of 40 roads having a total length of 4,100 miles, widely scattered throughout the country, and the purchase of maintenance and laboratory equipment to improve and expand maintenance operations and to facilitate the control of road construction. The roads selected for the program have been given high priority in the development • of Mexico• s highway network. Some will provide shorter routes between important centers, others are being built to higher standards to accommodate the constantly increasing traffic, and the new roads will provide access to potentially important agricultural regions which are now virtually isolated from the rest of the country. Eight commercial banks are participating in the loan, without the World Bank's gµarantee, for a total of $3,225,000 representing the first four mablrities and part or the fifth which fall due between April 196.5 and April 1967. The partici- pating banks are First National City Bank; Wells Fargo Bank, San Francisco; National Bank of Commerce of Seattle; Wachovia Bank and Trust Company, Charlotte; The Northern Trust Company, Chicago; Sou them Arizona Bank and Trust Company, Tucson; The First Pennsylvania Banking and Trust Company; and J. Henry Schroder Banking Corporation, New York. The loan was made to Nacional Financiera, S.A., an official financing instftu- • tion which by law is authorized to incur external loans on behalf of the Mexican Government. The program is being carried out by the Secretariat of Public Works through its various s~ecialized departments.  - 2 - ,.' The Mexican Government has for many years been carrying out a continuing read ",. improvement program and its network, although still small in relation to area, population and the requirements of its rapidly developing economy, has been greatly expanded. Since late 1955, the highway network, including toll roads and national, • state and local roads, has increased from some 15,820 miles to 30,000 miles. During the same period, the number of vehicles has increased from 550,000 to 906,000. Two earlier World Bank loans are already assisting Mexico's highway program. A loan of $25 million made in October 1960 is paying pa.rt of the cost of building or rebuilding 1,960 miles of trunk roads. A loan of $30.5 million made in June 1962 is helping to finance an extension of Mexico's toll transport system, which in- cludes construction of 240 miles of three new toll roads, four access roads, five bridges and the purchase of a ferry-boat. The three-year program being assisted by today's loan includes the improve- ment or reconstruction of 1,340 miles of 11 paved roads, completion of 1,256 miles of·20 roads already under construction, and construction of nine new roads totaling 4lt about 493 miles. The program also provides for the procurement of maintenance equipment to replace worn-out machinery, to intensify mechanization of operations and to meet the increased needs resulting from a growing network carrying an in·· creasing amol.lllt of traffic. .An indication of the magnitude of road. maintenance operations is the fact that expenditures for this purpose have increased three- fold in ten yea.rs. In addition, laboratory equipment will be procured for the Department of Projects and Laboratories, -which is in charge of the design and scientific control of the highways. Most of the 11 roads to be reconstructed were built some 2() years ago to standards which are inadequate for the needs of the present volume of heavy traffic. They require Widening, realignment and strengthening of the pavement • •  ' - 3 - • The trunk roads to be completed or constructed under the project w.i.11 provide shorter connections or better alternatives between towns and cities which are already linked by other routes. Twenty-three feeder and penetration roads will be built or improved to provide adequ~te access to regions which are primarily agricultural. At present some of these regions can be reached by tracks usable only by animals, or by trails which are used by trucks in the dry season under hazardous and costly conditions to vehicle opera.tors. When better access to markets is provided, it will be possible to introduce new crops, facilitating the transition from a subsistence to a market agricultural economy. The total cost of the program is estimated at the equivalent of $96 million. The Bank loan of $40 million will cover the foreign exchange requirements. The local currency costs of 699 million pesos 'Will be financed by the Government of Mexico • • The loan is for a term of 20 years and bears interest at the rate of 5-1/f!/a per annum, including the 1% commission which is allocated to the Bank's Special Reserve. The loan is guaranteed by the Government of Mexico. Including today's loan, the Bank has now made 13 loans in Mexico, tota).ing $439.5 million, principally for the development of electric power, agriculture, railways and roads • •