Announcement of Five Million Dollars Credit for Agriculture in Afghanistan on June 12, 1970

• INTERNATIONAL DEVELOPMENT ASSOCIATION 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IDA Press Release No. 70/25 Subject: $5 million credit for agricul- June 12, 1970 ture in Afghanistan Modernization of agriculture in Afghanistan is b~ing assisted by the Inter- national Development Association (IDA) with a credit of $5 million, a major part of which will be used to help finance a three-year lending program of the Agri- cultural Development Bank of Afghanistan (AGBANK), the main institutional source of agricultural credit in the country. Under the program, AG.BANK will provide medium and long-term loans to farmers for the purchase of farm equipment, in- cluding tractors and pumpsets, and for improvement of small irrigation schemes. • A substantial rise in farmers' incomes is expected to result from increased pro- duction of staple food and cotton. Technical assistance to be provided under the project will improve AGBANK's lending techniques and increase the effectiveness of the Ministry of Agriculture and Irrigation (MAI), which provides technical and extension services to tanners. Agriculture is the dominant sector in the Afghan economy, supporting about 80% of the country's approximately 14 million people. Food grains -- wheat, bar- ley, rice and corn -- account for over 90% of the cropped area, with the balance planted to ~otton, sugar beet and cane, oil seeds, fruit and vegetables. In addi- tion to supporting AGBANK's annual lending operations over the next three years, the IDA credit will also assist MAI in expanding its extension services and in im- proving its planning, design and construction of small irrigation works throug~ the use of experts. Fellowships will be provided for the training of AGBANK and • MAI staff. AGBANK is currently being provided with technical and management assistance under a project financed partly by the United Nations Development Pro- gramme (UNDP), with the World Bank as Executing Agency. /more IDA P.R. No. 70/25 - Afghanistan-Agriculture • - 2 - The project is the third operation to be financed by the World Bank Group :;_r. Af.~~h,.1 ni~ta11, and the first in the agricultural sector. The increased pro- Gect:.LOU t':lat is e:q.,e:cr.cd to result is estimated to have an annual value of $12 Tuillion equivalent, including about $4.6 million equivalent of import savings and $1 million in direct export earnings. The project is estimated to cost $7.2 million equivalent, of which $5 mil- lion will be financed by the IDA credit and the remainder by the Government, AGBANK and participating farmers. The credit will be extended to the Kingdom of Afghanistan for a term of SO years, including 10 years of grace, interest-free, with a service charge of 3/4 of 1%. The Government will make available $3.7 million of the credit to AGBANK, and will use the balance to finance expenditures for spare parts, technical assistance and fellowships. - 0 - • •