Announcement of World Bank to Help Argentina's Flood Rehabilitation Program on September 30, 1992

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.*Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 93/19LAC Contact: Ciro Gamarra (202)473-8721 WORLD BANK TO HELP ARGENTINA'S FLOOD REHABILITATION PROGRAM WASHINGTON, D.C., September 30, 1992 -- The World Bank has approved a $170 million loan to Argentina to help finance a rehabilitation program to remedy the damage caused by the severe flooding in seven Argentine provinces last May. Floods from the Parana, Paraguay and Uruguay rivers have caused serious infrastructure damage and forced the evacuation of about 120,000 people from the provinces of Buenos Aires, Chaco, Corrientes, Entre Rios, Formosa, Misiones, and Santa Fe. The objectives of the $270 million project are to help finance flood reconstruction needs in the seven afflicted provinces and provide a sound institutional framework for coordination and implementation of the overall rehabilitation program. The project, designed to restore normal economic activity in the areas affected, include assisting in the rehabilitation of essential transport infrastructure, social infrastructure, and flood control works. Emergency flood control works will include strengthening embankments seriously eroded or nearly washed out and the replacement of dike sections in danger of collapsing. Temporary structures used to divert river flows from residential areas and pumping equipment will also be repaired and replaced. A housing program will include reconstruction of homes destroyed or severely damaged through a program of grants and self-help work for about 5,700 low-income families who will rebuild their own units on stilts to reduce future flood damage. Rehabilitation of education and health facilities to provide for the construction of new buildings, also on stilts to prevent damage by future floods, are part of the project. In addition to the $170 million loan, the World Bank has reallocated $20 million from an earlier loan of $200 million for provincial development, originally approved in December 1990. This reallocation, approved in early August, is enabling the government to begin the most urgent flood damage repairs and to strengthen the institutional framework. NOTE: Money figures are expressed in U.S. dollar equivalents. -2- To cover the balance of project cost, the government of Argentina will provide $40 million and the seven provinces will finance another $40 million. As project activities are restricted to vital repair and reconstruction operations that can be completed in 24 months, the World Bank loan will be disbursed in 30 months. The early repair and restoration of flood defenses are essential to prevent future damage and loss of production from flooding until they are fully rehabilitated. This is considered sufficiently important to justify the short-term nature of the proposed investments. Furthermore, the project will improve the government's capability to react to possible flood disasters by providing valuable experience to and strengthening the institutions involved, by improving the early warning system and by developing studies on non-structural mechanisms to deal with floods. There are several positive environmental consequences of the project, including restoration of damaged health facilities to deal with the increase in health problems related to the floods. The $170 million World Bank loan to the Republic of Argentina is for 17 years, including 4 years of grace, with a variable interest rate, currently 7.6 percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.25 percent on the undisbursed balance. -0-