Announcement of Afghanistan Receives Thirteen Million Dollars for Agriculture on April 17, 1975

\..,,,, I\ 1.0,•.,,~\ /> ,'l'" • INTERNATIONAL DEVELOPMENT ASSOCIATION ([DA]) 1818 H STREET. N.W .. WASHINGTON D. C. ~~0433 TELEPHONE. EXECUTIVE 3-6360 IDA News Release No. 75/14 April 17, 1975 AFGHANISTA'tJ RECEIVES $13 MILLION FOR AGRICULTURE Afghanistan's efforts to increase the country's foodgrain production will be assisted by a credit of $13 million from the International Development Association (IDA), an affiliate of the World Bank. The project will make more funds available to the Agricultur,al Development Bank of Afghanistan (AgBank) for loans to farmers for on-farm in7estments and to the ~ghan Fertilize~ Company (AFC) to build fertilizer warehouses throughout the country. Agriculture is the key sector in the economy of Afghanist~n~ Over 85% of the population depends on it for their livelihood .. It accounts for over 50% of the country's gross domestic product and 74% of the exports. The agricultural sector, however, faces a number • of institutional constraints including insufficient rural credit and inadequate supply of modern agricultural inputs. The IDA credit is part of the Government's continuing efforts to improve the situation. At full development in 1285, the project will bring major benefits . The country's average annual agricultural production, mostly foodgrains, will increase by 233,000 tons valued at $23 million. Afghanistan will be.able to achieve self-sufficiency in wheat and to increase exports of commodities like cotton. About 43,000 farmers and their families (a total of 276,000 people) will benefit from higher incomes. About 26,000 man-years of additional employment will will be generated. The project includes a) making more funds available to the AgBank for credits to farmers for investing in farm mechanization (tractors, oxen, animal-drawn implements, water pumps, and sprayers); on-farm development; and for modern inputs like fertilizer, pesticides and improved seeds; b) providing funds for AgBank to consolidate and upgrade its w1anagement capabilities; and c) providing funds to the • AFC • ?tote: Money figures are expressed in US dollar equivalents. /MORE  -2- The IDA credit to the Government of Afghanistan is for a term of 50 years, including 10 years of grace. It will be interest free, e~cept for a service charge of 3/4 of 1% to meet IDA's • administrative costs. The Government will lend $11.7 million of the proceeds to AgBank at 5% per annum for 15 years including 5 years of grace. The AgBank will lend to farmers at appropriate terms. The Government will utilize the balance of the IDA credit as follows: $500,000 as equity in the AgBank to finance its supporting services; and $800,000 to AFC. Procurement of tractors, attachments and spare parts will be on the basis of international competitive bidding. The credit is the second from IDA to the AgBank. The first IDA credit of $5 million was made in 1970. • -0- •