Announcement of Six Million Three Hundred Thousand US Dollars Loan to Uruguay for Livestock Development on July 1, 1970

INTERNATIONAL 8/\NK FOR • RECONSTRUCTION AND DEVELOPMENT 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 70/45 Subject: $6.3 million loan to Uruguay July 1, 1970 for livestock development The World Bank ha,:1 approved a loan equivalent to $6.3 million to Uruguay, which will provide technical and financial support to continue the national live- stock development program for another year. The Bank loan will provide funds for a credit program to incre,de beef cattle pr,,duction through loans for ranch de- velopment, importation of pasture seeds, phosphate fertilizers and equipment, and for technical services. The livestock industry is the mainstay of the Uruguayan economy. Together • with associated industries, it generates about 30% of the national income. Ex- ports of beef and 'WvOl and their by-pr<)1ducts account for about 85% of Uruguay's export earnings. This will be the third loan to Uruguay to help livestock development. In 1959, the Bank made a $7 million loan for a pilot project. Its main purpose was to demonstrate to the nation's ranchers the advantages of modern techniques of pasture improvement and management. The results of the pilot project were so encouraging that the Bank made a second livestock loan in an amount of $12. 7 mil- lion in 1965. The new loan will enable the program to continue while the Uruguayan Governme\~t resolves policy issues affecting the livestock industry. In mid-1969, the Government began. to take steps to restore producer incentives which had been eroded during the period of acute inflation and to encourage meat packers to export larger quantities of beef. The long-existing monopoly of the • Government-owned meat packing plants in the Montevideo market was eliminated, /more Bank P.R. No. 70/45 - Uruguay-Livestock • - 2 - the artificially higher slaughter charges substantially redui:ed, export taxes on beef and wool lowered and internal consumer prices of beef raised by an average of 15%. As a result of these measures and a finning up of the prices for Uruguayan beef in world markets, ranch gate producer's prices for beef cattle have now risen by more than 301. There has been substantial progress in efforts to restructure the meat inspec- tion service: inspectors are being trained and the director's and inspectors' salaries are being paid by the Govermnent instead of by the packing houses. Addi- tionally, a small inter-ministerial group, with the help of internationally re- cruited t1\e&.1;; processing specialists, has prepared a Plan of Action to modernize the meat packing plants. Finally, Government action has been completed to re- move all import taxes on agricultural machinery and meat processing equipment. • Together, these measures should provide adequate incentives for increasing pri- mary production and simultaneously help Uruguay to increase its exports of beef and wool. Total investment in the program over the one-year period will be equi- valent to $13.1 million. The Bank loan of $6.3 million will finance the foreign exchange requirements. The remaining cost will be financed by the Government (12%), participating banks {25%) and ranchers (15%). The Bank loan will be for a term of 12 years, includin~ a four-year period of grace, and bear interest at the rate of 7% per annum. - 0 - •