Announcement of Twenty-Two Million Dollars Loan to Thailand for Irrigation on November 25, 1964

INTERNATIONAL BANK FOR • RECONSTRUCTION AND DEVELOPMENT 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 64/40 Subject: $22 million loan to Thailand November 25, 1964 for irrigation The World Bank today made a loan equivalent to $22 million to the Kingdom of Thailand to assist in financing an irrigation project in the Me Klong River Basin. This is the fi~h loan made by the Bank for the development of irrigation and im- provement o-r flood control in Thailand. Improvements in regul9-ting water supply have been an important factor in the large increase that has taken place in recent yea.rs in the production of rice, the staple food of the people and the largest ex~ port commodity. • Four commercial banks are participating in the loan, without the World Bank's guarantee, for a total of $1,025,000, representing the first two maturities which tall due on March 15, 1971 and September 15, 1971. The participants are The Chase Manhattan Bank, New York; First National City Bank, New York; Bank of America National Trust and Savings Association, San Francisco; and The First Pennsylvania Banking and Trust Company, Philadelphia. The Me Klong River Plain comprises the southwestern pa.rt of the great Central Plain of Thailand. The Royal Irrigation Department plans to develop irrigation facilities on 964,000 acres, to be carried out i~ stages over a period of ten years or more. About 9<11, of the area is already planted to rice but losses in crop pro- duction from floods and drought are not uncommon. The project being as~fsted by the Bank loan is the first stage of the Me Kl.ong It p.rovides tor •• River Basin development and will take ti ve years to complete.  - 2 - regulated irrigation, surface drainage and partial flood control of 432,000 acres. ' ~ It also includes land classification for the entire development, and investigations and feasibility studies for the balance of the development. The Government will intensify its extension services and establish demonstration farms in the area to instruct farmers in irrigation farming and the use of fertilizers. Rice production will continue to be the principal crop during the rainy season, and about 19,800 acres will be suitable for the g!"owing of other crops during the dry season. Ten years ago rice production in Thailand was about 7.2 million tons and has since increased by a third. This increase has enabled Thailand to meet domestic demand in the face of a population growth rate which is now more than 3'1,, and to maintain a surplus tor export which now accounts for nearly a third of the country's foreign exchange earnings. With over 8o1, of Thailand'~ population 11ving i; ~ rural areas and dependent on agriculture for their livelihood, there is a continuing need. to increiise crop production. When the full benefits from the first stage of the Me Klong River irrigation development are realized in about nine years, it is ex- • pected that rice production alone in the area Will increase from 200,000 to 4oo,ooo tons annually. The net benefit to the economy is estimated at the equivalent of about $11 million per annum. The works to be undertaken include the construction of a diversion dam at Tha Maung, canal intake structures and irrigation canals, flood protection dikes, a navigation lock and an earth closure dam, the improvement of natural drainage channels and about 25 miles of feeder roads. The project Will be carried out by the Royal Irrigation Department which is experienced in the construction of similar works. The Depart,ment will retain consultants or qual_ tied experts to review pre- liminary designs, to help prepare final designs, and to supervise construction of the major works. Consultants or experts will also assist in the land classification ~ • - 3 .. and the investigation and preparation of studies for the further development of the Me Klong River Ba.sin. The total cost of the project is estimated at the equivalent of $57.9 million. The Bank loan of' $22 million will cover the foreign exchange requirements and will be used for the purchase of imported equipment, spare parts and supplies and for consultants' services. The Government Will provide the balance of the funds needed to complete the project and to operate and aiaintain it. The Bank loan is for a term of 20 years and bears interest at the rate of ~ per annum. Amortization will begin March 15, 1971, after a six-year period of grace • • •