Announcement of Twenty-Two Million US Dollars Loan for Tourism Infrastructure in Mexico on December 23, 1971

• 1818 H STRE.ET, N.W .. WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 71/90 Subject: $22 .o million loan for tourism Deceni>er 23, 1971 infrastructure in Mexico The World Bank will provide the equivalent of $22.0 million to help finance tourism development in the Zihuatanejo area, on the Pacific coast of Mex:lc;o. This will be the first tourism infrastructure project to b.a assisted by the Bank. The Zihuatanejo project will provide the infrastructure reqtd.red to establish a new tourist resort at Ixtapa beach, 114 miles northwest of Acapulco. It will also include rehabilitation and expansion of the fishing village of Zihuatanejo, expected to triple its present population during the next few years. In a setting of great natural beauty there will be space. for • hotels and private homes~ shopping centers, golf courses, and ancillary services. The Mexican Government is giving particular emphasis to tourism, both to increase foreign ~xchange eamings and to ·provide employment in depressed areas. Tourism requires less capital investment to create jobs than most other sectors. The Govemment' s investments for new tourism projects outside existing resort areas are carried out by Infratur, a trust fund of the Bank of Mexico. Besides the Zihuatanejo project, Infratur has undertaken another at Cancun, on .the Yucatan coast, with financial aid from the Inter-American Development Bank. In temational tourism has grown rapidly in Mexico in the past 10 years; in the decade of the 60s, visitors from abroad increased threefold reaching . 2.2 million in 1970. Tourism is now Mexico's largest single source of foreign exchange earnings which have risen from $160 million equivalent in the early 60s to $575 million in 1970. The project being helped by the Bank loan will have a total cost estimated at $44.0 ml.lli~ equivalent. It will include the infrastructure ~ithin the • tourist zone at I~tapa, comprising the main boulevard and other streets, land i:eclamation, flood control and beach works as well as new st.reets in /mre  ,, Bank P.R. No. 71/90 - Mexico tourism Zihuatanejo. - 2 - Moreover, works at both places will include electric power distribution networks and public lighting, and water, sewerage and storm • water drainage systems. A new international airport will be built about 6 mile$ southeast of Zihuatanejo, designed to cater to direct flights from major United States cities. All major civil works contracts in the project financed by the Bank will be awarded on the basis of international competitive ~idding. Loan funds will be provided for training of hotel penonnel. The loan will als~ finance feasibility studies for other tourism zones. In the preparation of the Zihuatanejo-Ixtapa project, major attention was given to the environment. Ecological studies carried out by Infratur' s consultants led to the design of measures to maintain the quality of the sea water and to prevent harm to the great diversity of marine life in the area. The Govemment will take all the necessary measures to prevent pollution of the tourist area from industrial plants which may be built in the future. The first stage of the Ixtapa beach development is expected to be implemented over 8 to 9 years and envisages the provision of 3,500 hotel room and 500 residences, together with other necessary services. employment created by the levelopment is expected to be more than 4,500. Direct • The Bank loan is being made to Nacional Financiera, S .A. , the Mexican Govemment agency authorized to contract extemal financing for development, which will channel the funds to Infratur, the Secret aria de Obras Publicas (Secretariat of Public Works), and the Secretaria de Recursos Hidraulicos (Secretariat of Hydraulic Resources). The loan is guaranteed by the United Mexican States and is for a term of 25 years, including a five-year grace period, at an annual interest rate of 7~. Four financial institutions are participating in the Bank loan for a total of $400,000 equivalent. They are: Provident National Bank, Philadelphia; Marine Midland Bank - New York; The Riggs National Bank, Washington, D.C.; and The Tokai Bank, Limited, Nagoya. • - 0 - • • • December 23, 1971 TECHNICAL DATA PROJECI: Tourism COUNTRY: Mexico TOTAL COST: $44.0 million equivalent BANK FINANCING: $22 .0 million equivalent loan, 25 years, 5-year grace period, 7~ interest per annum. OTHER FINANCING: The Government of the United Mexican States IMPLEMENTING ORGANIZAtIONS: Fondo de Promocion de Infraestructura Turistica, Calle Isabel la Catolica 24 (4° Piso), Mexico, D.F., Mexico; Secretaria de Obras Publicas, Avenidas Xola y Universidad, Mexico, • D.F., Mexico; and Secretaria de Recurses Hidraulicos, Paseo de la Reforma 69, Mexico, D.F., Mexico. PROJECT DESCRIPTION: To provide infrastructure required for establishing a new tourist resort at Ixt:apa, rehabilitation and expansion of the nearby town-resort of Zihuatanejo and building of a new intemational airport. PROCUREMENT: Civil works, electric power distribution networks, and water, sewerage and storm water drainage systems. Feasibility studies of other tourism zones. Training of hotel personnel. Contracts for major civil works subject to international competitive bidding. CONSULTANTS: Consultants will be used to carry out tourism feasibility studies. ESTIMATED COMPLETION DATE: 1974-75. - 0 - •