Announcement of Loan Granted to the Republic of Colombia on September 10, 1953

HOU) FOR RELEASE HOLD FOR RELEASE INTERNATIONAL BANK FOR RECONSTRT.CTION Pl~D DEVELOPMENT FCE THE. PR~ FOR RELEASE $:00 P.M. _FRESS RELEASE NO. 338 September 101 19S3 The International Bank for Reconstruction and Development today made a loan of $14,JSo,ooo to the Republic of Colombia. Tne loan will help the Goverrunent carry fon-1ard improv~ents in the national highway system which were begun in 1951 as a matter of pressing importance to ~b.e economy. It will also support a (\,_ long-range, comprehensive road maintenance program being undertaken for the tn-st time in Colombia. Completion of the rehabilitation program now under way on the arteries carrying the heaviest traffic will enable the roads to bear the steadily increasing volur11e or cQmJnerciaJ. traffic, will reduce transportation. costs and will improve ,. access to rapidly developtng areas. A well-organized and continuing program of highway maintenance will as5\lre that the new road5-, as well as the mole ne~wor,k of national highways, will be kept in good conditio~ and. be of lasting benefit to the country. Since 1945, there ha~ been a sharp inc-:rea.se in all kinds of trarfic on Coloml:>ia 's roads. The registration of trucks has almost tripled; the registr~.tio. · or buses and a,.utomobiles has doubled. Trucks, or which there wer,e nearly 28,000 in 19Sl, ~Gcount tor two-fifths of all motor vehicle registration, and for two- thirds of. all roa.9- traffic; a.nd their nwnber i~ increa'sing by about 15% a year. i~-:;April 1951 the Bank made a loan of $16.5 million to pay for imported equipment and r112:terials needed to rehabilita~,abou.t l,800 miles of Colombia's princip.al hi~ays. Difficulties or constr~tion on Colombia 1 ~ rough mountainous • .f .. . ·' ·~ terrain, frequent la~lides, and delays in ·delivery of heavy eq~pment, have made it n.,ecessary to reTii,se the cost ·estimates upward apd to extend the construction • c· ;, . ·•· ... ·, \/ ' I • - 2 - • period from mid-19S4 to the end of 19SS. In addition, as the project progressed., experi~ce showed that more paving would be necessa.ry to enable the roads to withstand traffic and weather conditions, and it is now planned to pave over . the 15% originally planned. / . 8~ or the total mileage rather than ( The proceeds or the loan made today will be used to help fit11nce foreign exch~nge costs required to complete the original project to adequate standards, wifh some minor change.$ and additions; to increase the percentage of roads to be paved; and to establish a comprehensive maintenance program ror the entire national highway system. The Colombian Ministry of Public Works has detennined that road conservation will take precedence over new construction and reconstruction of roads: funds will be allocated to other highway operations only after adequate funds to meet all maintenance requirements are assured. To assure a competent and continuing organization to carry out the program, the maintenance section or the Minisiry of Public Works will be reorganized. For an initial period or at least two year~ the Ministry will retain the services or a provisional staff of consultants from -abroad who will assist and train the permanent Colombian staf'f in modern methods of road maintenance. The maintenance program defines detailed standards ot procedui~~ and performance, sets up annual budgets., and provides £or the acquisition of an adequate stock or mainten~ce ancj ~epair equipment, a system of repair shops, and a training program for equipment opera tors, mechanics and shop foremen. The total cost or the revised road construction project and of the initial stages of the maintenance pr9gram is estimated at tne equivalent of 274,560,000 pesos, ot which 77,i2S,OOO pesos ($30.,BSo~ooo) in foreign exchange will be covered by.the Bank. loans made today arxl in.1951. The present loan is for a·term of 10· yeara and carries interest of 4-3/1.1, including the 1$ commts~ton whieh., under the Banl<' s Articles of !{greement, is ;\ . ,, •. 1:, f.,. I (,; • • ~ .: allocated to a special reserve. - 3- Amortization payments will begin May Economic progress is continuing in Colombia. 15, 19$6. Industry has recovered from• short lived rece~sion in 1951 and is expanding in all sectors. Agricultural pr~duction, although developing more slowly, is incre~sing. Although credit has expanded., the co~t of living has barely risen over the past two and a half years. The new Government is committed to continue policies of monetary stabilization. The foreign exchange position is f2.vorable. Cololli>ia achieved a trade surplus of $41 million in 19$1 and iS6 million in 1952., and with the prospect of /( I • a good coffee .crop. in 19$2/3'' a.nd the C;ontinuance of' high export prices should again realize a sizeable export surplus in 1953. At the same _t:une., balanced budgets, sound monetary policies and import controls have kept imports with;in reasonable limits. Colombia is investing heavily in projecis to develop basic services such as transportation, power, irrigation and public fac:Uities and in projects for the domestic production of industrial materials, such as steel, coal, sulphur, and wood and papG·r products, ltlich are- now imported. When these projects are com- pleted., they will provide the basis for new industries, benefiting the balance or payments position by import replacement and to som~3 extent by new export possi.,- bilities. After approval by the Bank• s Executive Directors., the loan document~ weJ"e signed today by the Colombian Ambassador in Washillgton., Dr. Eduardo Zuleta-Angel., on behalf of the Republic of Colombia, and by Eugen, R. Black, President, on behalf or the International Bank • •