Announcement of 15 Million Dollar in Peru on May 19, 1965

I) L' 1' JNTER,NATIONAL BANK FOR • RECONSTRUCTION AND DEVELOPMENT 1818 H STREETli N.W .. WASHINGTON D. C. 20433, TELEPHONE: EXECUTIVE 3~6360 Dank P,t·ess Release No. 6'H24 Su.!?je_il: $15 milU.on loan in Peru May 19, 1965 The World Bank has approved a loan equivalent to $15 million to the Banco de Fomento Ag:ropecuario del Peru ,to provide funds for the ,an.co• s program of lending to farmers for the development of agricu1ture and,livestoek production. The Banco is the major source of agricultural credit in Peru, and has been an important fac~ tor in the increasing output of crops for both domestic and foteign markets in Jr'j' recent years!' This loan will provide half the funds required thrdu·gh March 1967 . . for farm. .. investments to be assisted by the ·san~o' s medium and· long-term lending •• program. !tis the fourth and much the largest loan which the World B4?lk has made in support of the Banco. beginning in 1954. Three earlier loans of $5 million. each were made, Nine con&ercial .banks have1\ agreed to participate in the loan, without the li World. Ban.~•s guarantee, for a total amount of $750,000 representing the first maturity-~and ,,art· of the second maturity whi,~b fall due between October 1969 and Aprir T970~ ·rhe participants are Meadow Brook National Bank, Hew York; Fidelity- Philadelphia Trust·Company; First Wisconsin National BaDk of Milwaukee; National Bank of Detroit; The .Philadelphia National Bank; The First Pennsylvania Banking and. . T1'Ust"Company 1 Philadelphia; 'First Western Bank and Trust C.om~ny, Los Angeles; "Gr~e · National Bank, New York; and· ·The Northem· Trust Company, Chicago. ··ConUnuation. of· farm cTedit from the Banco is essential to the implementa- ·tion of thE Government 1 s· agricUltural policies for meeting the.. economic needs of the country.. PeT capita .food consumption is rising w.ith more and better food  - 2 - supplies and improved wage levels. While expc,rts of agricultural products com- •. i prise about a third of total exports, Peru is still importing substantial quan- tities of such foodstuffs as dairy products, cereals, meat and fruit. All these could be produced locally in much g,Teater quantities with the extension of cul- tivation to new lands and an increase in agricultural productivity. The capital investment required for further agricultural development con- siderably exceeds the farmers'· own financial resources and \\ cannot be carriel on without agricultural credit. The Ba~co's role is to provide supervised credit to farmers for irriga,tion facilities, improved soil preparation and water manage- men.t":11~"mechanizat.ion, increased use of iertili~e:-s and pesticides, and the intro- duction and multiplication of improved plant.and animal breeding stock. In the course of its operations, it also provides comprehensive technical services. • Since World Bank assistance-began in 1954, ~he Banco has ma~e over 14,400 medium and long-term loans to some 6,000 farmers for defined programs of develop- ment. It is estimated that the gross value af production on farms which had re- ceived credit amounted to the equivalent of $44 million in 1963. Since 1954, II irrigation loans have provided water for some 58,000 acres of new land and im- proved the water supplie$ to a further 12,000 acres. Loans for land leveling have improved about 24,000 acres, while drainage loans have been applied to 9,600 acres. Livestock loans have added considerably to the supply of high-qualitY, breeding stock and made possible the establishment of large numbers of breeding herds under private ownership. Tree crops have been planted on about 53,000 acres. Miscellaneous loans have reuulted in better transportation on rivers, improve~ ment of farm buildings and domestic water supplies, and the establishment of processing plants and storage warehouses. The World Bank loan announced today will enable the Banco to continue it·s medium and long-term lending program on the same scale that ha·s prevailed for •  - 3 - .4'1 the last three years. The,program as a whole, for the three-y~ar period beginning April 1, 1964, will require the equivalent of $30.4 million. The Bank''s loan will prQ~ide $15 million of this amount; $6.3 million will come from the Banco 1 s own re- sources, ahd participating farmers will provide the remaining $9.1 million. In addi- tion to this lendin~ program, the Banco will continue its program of short-term agricultural credit, which acc~unts for a substantial part of its operations, as w~ll as certain commercial and promotional activities it performs on behalf of the. Government. As in the past, the World Bank funds will be used for ,such defined develop- ment purposes as farm water supplies, land improvement, agricultural machinery, livestock, fencing, tree _and plantation crops, processing.and storage facilities. and farm buildings. It is expected that lajger amounts will be lent for farm • water supplies because of the growing interest.of farmers in irrigation and the availability of technical assistance from the Government in the more efficient use of water resources. The program also gives considerable emphasis to the production of livestock. Earlier World Bank loans financed, the importation of large numbers of high-quality pedigree dairy cattle, dual purpose cattle and sheep, and the wide-sprea4}; establishment of breeding herds and flocks. Founda- ;/ ·tion herds have now beet;f established so that many high quality animals can be i! \\ purchased locally, altho~-~11 some importation of pedigree livestock is still envisaged. The $15 million loan ia for a term of 15 years and bears interest at the rate of 5%% per annum. Amortization will begin October 1, 1969. The longer term -- 8 to 9 years characterized the earlier Bank loans -- and the larger amount will permit longer relending terms and provide a reasonable flow of funds for con- • tinued relending. This will help to strengthen the Banco 1 s fina~cial position and effectiveness. The loan is guaranteed by the Government of Peru.