Announcement of Report on the Bank's Mission to Guatemala

INTEJilTATiON.A.t :BAmC FOR P..m:-ccmSTRUCTI0!1 AND DEVELOPM!N.T I i FOR THE PRESS \) PRESS RELEASE NO. 253 'Tttesdny ;. ·Jµly 3, 1951. Recommendations for the economic development of Guatemala· ~irected towB.rq. improvement in its standard of living were tod~ made publtc in the report o'£ 0 a mission sent to Guatemala. under the sponsorship "of the Int·ernational 13anlc fo:r: Rec<"mstruction and Development in collaboration with the G.overnment of Guatemala..,. •) I His Excellency, Coronel Jacobo Arb~nz Gu.zman. President of the Republic' C) .of Guatemala. •. immediately ~nnounced the appoi'ntmen\ of a 13-man compiission, · representing all major sectors of the Guatemalan eommuni ty, to study th~:;::-!':cport and render advice on it to the countryt·s Nation~vl :Scon.omi~ Oo'Wlcil. , Among the • members of the commission are representatives of the important elem~~ts of the \.._,r' comruunit~, including m~..nufacturing, conunercial, agricultural and: labor groups,. property owners, and the National University. The commission will hold i tp first meeting today. The Report of the Mission :was presented to President Arbenz y-0<sterde.y by Dr. George E. Britnell in Guatemala City. Dr, :Britnell, Head of the Department of Economics and p·olitical Science at the Univer$1ty ot Saskatchew~, Ca.nada:~- was Chief of the Mission wl+ich'' went to Guatemala. in June 1950 to make a genel'al survey of the country' Q development poten,tfali ties 2.nd to recommend measu.res to facilitate their re~lization. Enrioue Lope~-Herrarte and John JI •. Adler of\> - H ' • ,, tP.$ staff of the XnternationaJ. Bank also a.~t(Jnded the presenta.tion ceremonies,., A Summa~; of the Mission's neport wr.i..s reipased simultaneously todau l;>y the :Xnternetional :Bank in Wa.shington a.n(l by \he Gove,rnment of Gi,tateJQala in Gua.temala Ci ti. The full re-_port is e..icpeeted to be availtt.ble to the public in the next ,. 'J.~{1 months. ~"-,..Jl  The general pi~ogram for the eeono·m1c, development 0£ Gua.teinala. proposed by the Mi$s1ori places :primar,J empha,~ie on the impJ;"ovement of agricultural ·p~o_;. ;:::::, . ' !'.."' J 0 ~ , duetivity a.nd the exp~sion of transportation facilities, p;,rticularly highi}atSe •: • ' /0 • " J Improvement in these sectors would l~y ~he foundation for the gra.o.ual di versi~ (\ (/ D fication of the econq~ and the J=Xpansion of man~acturing industries~ •/ 'rhe Summa.rJ of the Report co.nta.ins tne main (Jonclusions and recoJ:I1IJ1en&ations 0 of the MissJon. It first analy,.;es_ certain g~neral aspects of the econopiy and. ,it.s fun~ental problems; ex~..mines in deta~,l problems :l..Jl agriculturea) industry; -;, mining• transportation, teleGo,mmunice.tions and power; deals with pu,blic policies "1) . .,...-:/ affecting develo,pm~nt; awraises the_ fina.nci~ resources ava:l,le,ble to Guatetna.la for, cartying 01;1t 1 t,_~:. development progr~ and.. finally offers three al terne.ti-¢,e · • ' ','t_.-...' .:-- -- - -· -· - • -- -·- -·· - cc:" programs of l)UC\liC investmente 0 /1 ·, },.\ Xn his letter of tran~ittaJ. 'to the ;President of Guatem~~;;Eu€ene R, lllackj , "' • President of the lnternational ~q,nk,' said that' in ttie opj,nion of the l3a.nk,'O the Report "provides an objective anEtlysis of the pot~ntialities and probleme in the econo?Qic development o~ Guatemalp.. ''' _,. The :Ba:nlt has not ~ad the opportunity to ~/ consid~,:' fully the many recommen4,a.tions contained in the R~ort· and, theret'oreJ these should be reg°'rc;l.ed as" suggestion~ for considera.ti'on by yo~ Government ' u rather tlla.n as podtive recQmmend.a:tions of the J:Jank.· itevertheless~ we believe :J that the analyse~ and reeommenda.tions made by the Mission deserve the ~c;,st care- ·,; ful consideration by tbe Government and people o{ GuatemaJ.a; The conclusions 0 ., ~ of the· Missio~ will 'be fully· e:ff ective only j f they serve as a basis and a guide \ u - \ ~ nhe prepar~hon., in V ·· by the Guatemalan a"Q.tho~i ties theinse·lves, of a sound, . a integrated, and well balancec;l developn1ent progrnm." In the opinion o:t" the Mission, it is in,the fv.rther expansion of agrieult'\ll'e, 1 particulurl~r in cof£ee and lo,.,-cost food ,croP9 , that . Guatemal.o. .... ean fine\ the ;  ... ,..,._,. 0 l'.) - 3·-: most protniEJing basis f o:r f1:1ture econo~ic p;rogres~. .in no other C_entral,b .Amer\canR~ubliQ are there so m~ climatic conditio~s and soil types ·con.- I,~ ' • • • • • • duci ve to varied ,agricultural p~od"Q.ctlo~~ ~ricul tu.re is Gu~temala• s · basic . . 1ou.r"ce of wealth and ~ apptecia1:>le rise irt?G'18,temala.' s standa~d of ·.l~ving can \.-...,../'-...._,,..,._~,Po • • . . t,~). . . com., only thro'1gh i,mprovement of agricult~~. \~ . . The ,~l!ldon proposes the op.~ning up of the Pactfic coastal pl~n to mechanized agriculture in order to i~cr~ase tll~ p~oduction of basic foodstuff's, : . :t such as corn, beans, rice and meat. ln the opinion. o~ the Miss~on., the develop- . ~ ment of this area ot'fers by far t~e ~~a.test ;posl:ltbiljt1es _for achiev.!ng .a rapid 0 and subs~anti~ increase in food~t~;f's at reduced prices, the ~ey to t.he grc,t;,th • . l of domestic markets, and ~ fundaDlental prer.equis-ite fQ't' further economic d~ ~- . . ~ velo.pment. ihe Misdo~ points. out, however, that before further developmet1,t tn this area· can be successfully un,.dertalten, a vigorous effort will be neQe~sa.ey to eliminate the malarial mosqu:1 to. The aepQrt stresses that\ improvements. in ') marketing, sto~age an~ credit facilities. are of almost equal .!mportanoe as 0 technical me~sures in increas~~ )he supply of basic crops .. ln order to provide the finan~ial re/o~c es fpr the ~ml)lement~tio~ of this program,. th~ Mission recommends als() an all-out et:fort to increase coffee pro,. duction. Coffee is (}uatepiala 1 s mQst i?nportant export a.ndi in 1949 aocounted ~o~ 72'/o of ~he ·tdttil v~ue of its exports. With the aid· of well directed reJea.rch and extendon work and the introductlon of improved methods of cul t:lva.tion, processing ~d market1,ng, t~ts one ini"U.s.t17 can l>rovide most of the funds for. fin~ci~ developinep.t needs. in all fields over the n~t few ye~rs. 0 '1-lle Mission also m.akes .reeo~ell~tt,ons con9erning the Finqn.s lfo.oiona.i,~s, () ;,.·.· (:0 ·--~. farm,, o~ed OJ." controlled by the Government... 'lhey repree~nt a su.b~tantinl part I ~o ·per cent of the nat!~n '.e • of' the total Qulti:vated a~rea,ge and pro~.u.ce 20 to 1', l  - 4 .... ·,) \) .. ~of{ee.p7'U~d:er ~ore ~fficient ,;;'/ ~anagenent, .t~e Mission believes the Fincns ·could 0 show a substanti~ . increase in produ~tion and at the .same ·time ~:;,r.ed-uction in .'\ (\ co-st.. The Mission J1as the?"~t~re .fe_cow.nended. ei ·thorough reorg;m.izat1on of the ,./(.:'.t::)::, 11.neas, wb,i ch woW.d include. C'l.l.\rifif~t;,_ pn of the ,;pr~~ ent f i~cial post t]t of the :rincas, elimination of some of t~e pr~sent · ~es ~d re~aMqns t1hich handicap Fincas•· . administratiQ~, and eelection of an .able general ~age~ ·with wide experie~~e in tropical· agricultur.e. In ~Ai t.ion to auch meas-qres designed tg bring an immediate increase in .Pro~,~i;ivity, the Mission recommends that a .start be ma.de on the long""'range probl.em of integrating the· Indians into the money e~ononv of tlie co~t~~· ·At 11 C.:_ _-. present the large Indian popUla.tion is concentr~ted in the highlands and i't c~ti.yat~s marginal land on a subsistence basi~· Guatemala• s second basic need h fo,.- _improved transportat:ton, --- "proba.bly • the gree.test sint$1.e l}arrie:r to Guatemala.·' s econo~c development alld, ci,.ltural . integration is the present in~.d.equa.e.y of her transportation system.• " ,As the \,t • first ~tep toward relievt~g this situa.tion, t.b.~ Mission recommends the a.do:ption · of a basic national plan for tlle developmep.t a,id J!lainteJ1S.noe of hightrmi.$;• · First prio1...i ty Jn the transporto.tj.o}l p:rogram is g.i ven to the e,ctendcm or completion of main arteries serving important industrial and eigricul tural area.a and cente1·s of pop~ation, · A highwa, to the Atlantic coast should be built ~o provide () aeC8$S to the see.,. In addition, arteries .consisting of two mn.jo:r highwpys runn11ag in a generel east-:-weet dire.ction, .~ne ip the hi;:.:,lands and one on the south coast, sho1.lld be completed aJ:1.d connected by two lateral roao.s, one. in the ea.stern and one ,in the weste~ part of the Republic, Com:pletion of the Fo,n American :ftighwq ( ea,st.-w·est l\ighw~ in the highla.i1d,a) will be of pe.rttc;rular benefit to G"Q2,.-tema1a: a.$ 1t: "till proinote intemr,,t!,pn8,l qornmerce wi. th Mexico @d • ,:---~.---_,-,,. ·------1  /• -5~ with m. Salvador and ether · ~er,tra.1 American Republics to the south, and will ope~ the country t.o tourb t trade from Oa;nada: an.a the United States·.· I • ~he,,Misdon: NOommer Ar. the expansion of domestic air lines to serve isolated areas as a.i.r t:ruaport r .t::ers immediate partial relief from the difficulties created by the ~ed :- ao mtainous terraino As tf!Ro ~re no".- wlde variations in the !"ates and servi.ces ain.ong all forms of I\ transport, tbe Y ~•s~on recomme~ds the creation of a non~political Public Uti 1 i ti~@ O()mmis s .qa II , . ' Such a commission would protect and balance the interests of boih ~?,e publ~ ,.c ~.d the carri1 rs and ·would coordinate '\\ rates, services and condi.tions of ,. ger ..tion cimo::1g tb. va.rio":s carriers. 0 ,. The ~~Sf .on. r commends that the GQrernment seek by n~gotiatio~ to modify existing· e.g· eeanent with the l:p.t1 ~a.tio ~al F~ilw,q Company (iRCA). One objective of such r: ~r>tio.tio .e would be to Jake P· ssible the constr..1ction of a new ca~rgo- • pa.1usen€ ; pier at ru.erto :Barrios, Q.,;ia.te:. ala's chief ;port. Most of ·the export and import ·tonn~ge of ;he country no~ moves through this p~rt over one pi er owned a:nc.. ,per.ri.ted by IJ QA. ,'l'he Missio 4 i,ropo ,es tha,t m1,1tual agreement bE! sought on the construction ot a new pier by the l:RCA o: by the Governmen.t or by both. This would afford IRO~ ! the opportunity to ;lncl, ude the ·new pier in the terminal opera.- tions 1 t now co1 ··ducts, as an al tei ~ti ve ~o 1 ts operf'.tion by the Government or by another' pri v~te com:pa.ny 1 and wo,iJ.(1 provid. ~ for control of rail and terminal rates and services b;r • the pruposM. Publi ~ Utili 1 ies\'. Conunission. The ma..~ir .um inve$tment program propoi ad by the Mission calls for total de- velopmental. ~ x:,penditures ov )i the ne~~ six ye~rs of approximately 60 million q'Qetzale, (f so,000.000) abo ~e th~_.,;exhting l,:evel of expenditures. !his represents 1 a. 60~ inc1~e .se ove;r the 194 1-4r~ level of i: .vestment and 1 s ba.sed.. ,e?L th.~ assumption ,.,, I ' (l that the e<' 1ivalent of $20 •. ,00,000 wlll be invested trom abroad. The Mission ie of  C 0 - ,s .... the opinion° that· Gua.tetnala '·~ assume tn~)\~ebt burden if' ·the producttve ca.p~city J ot the, co'\lntey it ·more fully uti11 zed .~long the ·11nes reoonurleJ14e.d ,!n the. reJ>o~t. The 'Mission has also prep~red ·two alte.~tive prog~-~ based upon modified. ' . i) a.ssump.tions. ~he ·aeduce~ Investment P·rogral!l assumes fore:1,gn loa11s ,-equivalent to $14,000,000,; an~ the Pv-A~-You-Go program ass~es no borrowing of a:ny kine\• fhe ReyoTt stv.tes that ln a.n. effort t'8 Jn&tch the desirable with the possible.. a. h1gb ·aeg·ree at selectivity was used in dra,d~g :up the propo11ed alternative inv~st;nent schedul~s for· natlon~l d~velopment. ·xt pointi, ou,t that the three programs .are int~nded to ·represent no more· th~ rough b.ases for refinement., and that 1 t is the !'!ope of the M1s$i·on the.t "t~ey c~.n serve as a stE).rting point in the Governm~·t-t s own efforts tbward sound economic development !ll1d a ~igher level of living for the peol)le of q,iatein~a•" ~be. M~ssion members were as follows.: •• George E, Brit~ell H,ead ot·the Department of ~onomj.cs and PolitiQ~ Science .Sa~ka.tcnewan, Canada ... a.t the U~ivei-siti of · Oh~ef o-f Mission J i Ralph H. Allee ·D{recto'r:, lJite~J\Jnerican .In11ti tute o1 Agricu} t;u-al Science, Turr:la+l,,a.• ¢~.s~a Rica. 1 }ij.~rc,: 1, !Benrendt Ass~st~t ·to 'Chief of., Dire~to~>p:f' :a.e·$earch. Mi,s·don 'l!bQp.omic Development A4ministra.tio~, Government ot PQ.erto R1oo ·(for~er);,- Pr~fes~or ot· Intern~tlonal Atf:a1 rp., c·olgat·e Universj. ty) ) · George·s· De'fle~rieu.. ,Economist Int·ernationa.l 13$.rlk for B.econst;ruction and I>evelopiq eri-t ,r·ederi.co C.pnsolo Li~ison Officer l:nterila.tionp,:t ·:sank .for Reco.nsti,J.ction -and Development .Major General Edmund H, Leavw. • U. $.A.. ,Adv1ser on T;l'al}spor1;at1on 'l':ransporta,tion Consultant :an~"·Oo~icatJ.ona · )) 1-;.  0 - .7."!'9 :Jult·o o:.· Mc·ralez Assistant.Adviser on . Inte:r--Ameriaan 'Institute of :Agriculture '.Agricw.tu.ral Science . AlbJtrt o. Rhoad ·,Aesistant Adviser on -'lnter-~erican Institute of Agriculture · .Agricul t~:ral $Qi ence · · J.. Stuart Sneddo~ Adviser on Iri,dustey. H-ininc Indust~ial Consultant and Power • (I