Announcement of Irrigation loan in Mexico on April 29, 1963

0 WORLD Bll,.NK.·. l • INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 1818 H STREET, N.W., WASHINGTON 25, b. C. TELEPHONE: EXECUTIVE3-6360 2,, Bank Press Release No. 63/10 April 1963 Subject: Irrigation loan in Mexico The World Bank today made a loan equivalent to $12.5 million for the improve- ment of irrigation on 820,000 acres of farmland in Mexico. The loan will help to finance the completion and rehabilitation of three irrigation systems, two in the northeast and one in north central Mexico. As a result of the project, the annual net income from crop production on the lands at full development is expected to • increase by the equivalent of about $10 million • The loan was made to the Nacional Financiera, an agency through which the Mexican Government borrows abroad. The project will be executed by the Secre- tariat of Hydraulic Resources, which w~s established in 1947 to develop and ad- minister the water resources of Mexico. Agricultural production represents about one-fifth of Mexico's gross national product and accounts for half of its exports. The principal ·crops by area planted are corn, beans, cotton, wheat and sugar cane; and the most important export crops are cotton and coffee. Mexico now produces al.most all its basic food requirements, but there is a pressing need to increase production to meet the demand of the rapidly increasing population, to improve the national diet, and to increase exports. M'ucih of the rise in agricultural production in recent years has been ma.de pos~ • sible by +,he expansion of irrigation farming. More than .a quarter of' Mexico's ;\ .ii total cultivated land of 42 million acres is now under irrigation. Most of the recent expansion has been the result of public investment, mainly in large scale  ,......... • - 2 - projects; these now encompass almost six million acreil and, in value, account for about 35i of Mexico's total ~icultural output. The Government is currently engaged in a program to complete and rehabili- tate large irrigation districts where inadequate drainage systems have led to rising water tables and consequently deterioration of soils. A World Bank loan of $15 million made in January 1961 is assisting the first stage of this program which provided for improvement of irrigation in four districts covering 1,430,000 acres on Mexico's northwest coast. The project now being financed will assist in improving irrigation in three more districts. Two of them, Baja Rio Bravo a.no. Bajo Rio San Juan, are conti- guous and situated just south of the Mexican-United States border- in northeast Mexico. The third, Ciuda.d Delicias, lies some 6oo miles to the west in north central Mexico. While the _three districts differ in detail, they have the same general characteristics. The regions a.re semi-arid and need irrigation for any reliable agricultural production; they are adequately served by means of com- • munication and present no fundamental obstacles to the development of first-class irrigation farming conditions. They will be able to sustain a high level of pro- duction when existing irrigation and drainage works at"e improved and extended, arrears of maintenance are made good, and farming practices improved. The main works to be undertaken with Bank assistance are the digging of· about 640 miles of new drains and the renovation of 430 miles of existing drains; the lining of 280 miles of canals and the extension and rehabilitation of another 200 miles; a.nd the improvement of control structur,es and works necessary for better water distribution. These works, together with a limited amount of on-farm drainage and land improvement, Will lower the ground water table, prevent further deterioration of land and restore to full production much of the land that is now • af'fected.  .. 3 - The total cost of the public works to be undertaken is estimated at the equivalent of $32.8 million. The Bank loan Will cover the foreign exchange component and the domestic currency costs will be financed by the Government. of Mexico. The project at Bajo Rio Bravo will be completed in five years and at the other two districts in four years. The private on-farm improvements will follow by one or two years. The loan is for a term of 20 yea.rs and bears interest at the rate of 5-l/21c, annually, including the l"/o commission which is allocated to the Bank's Special Reserve. Amortization will begin July 1, 1968. The loan is guaranteed by the Government of Mexico • • •