Announcement of Five Million Dollar Loan for Agricultural Development in Colombia on December 29, 1954

FOR IMMEDIATE RELEASE 0 • INTERNATIONAL BAN(<" FOR RECONSTRUCTION AND DEVELOPMENT ( WORLD ·BANK) 1818 H STREE!,?'N.W., WASHINGYON 25, 0.C. TELEPHONE: EXECUTIVE3-6360 (l PRESS RELEASE NO. 383 SUBJroT: Bank lends $5 million for FOR IMMEDIATE RELEASE (~, agricultural development December 2i, 1954 ,in Colombia. The World Bank, in participation with the Bank of the Manhattan Company and The First National Bank of Boston, today made a loan of $5 ,million to finance imports of tractors and other fann equipment into Colombia. The loan will make it possible to continue the mechanization and consequent expan,sion of fann pro- ductron at the accelerated rate which ha.s prevailed in Colombia sinQe 1950. i • The Bank of the Manha.ttan Company is participating in the loan to the extent of $2 million representipg the first four maturities falling due semi-annually in 1957 and 1958. The First National Bank of Boston is participating to the extent of $1 million representing the fifth and sixth maturities falling due :in 1959. Both banks are participating in the loan without the World Bank's ~rantee. · The bd~c-wer is the Caja de Credito Agrario, Industrial y Minero., an autorfr omous official credit institution. The Caja has nearly 200 branches which provide credit and banking facilities to runl communities and s~ll agricultural supplies. /"J The activities of the Caja have grown steadily in recent years and it is n6~ one of the most important agencies in Colombia for promoting the developn1ent and ·ex- pansion of agriculture • ••• ,< :1, ·-~,~" / _, .' ,f} 0 \)  ] -'!- This is the second loan which the Bank has made to the·· Gaja £or purchases \) (1 of agric'Ql.tural machinery. A loan of $S million in August ).949 paid for the iJn- port of nearly 1.,000 medium, light and heavy tractors with auxiliary equipment. Funds received by the Caja from the sale of this 'I \1 machinery were used to est,ablith ,_::<-.:; a revolving fund which financed the import of nearly· 21 000 additional tractci-~~ '::,t" ""' These tractor imports py the Caja were somewhat greater than the total number o~''·\, /1. ) tractors estimated to be in operating condition in Colombia at the. time the loan was made., and accounted for about half' of all tractor imports in the years.19,SO through 19S3. To<ky' s loan will pay for the iJnDort of tractors., spare parts., tools and other repair and maintenance equipment. .As in the case of the first loan, the Caja will place orders for the machinery on behalf of established distributors, who will sell the machinery at a reasonable price to farmers., cooperativ:es and others engaged in agriculture •. The funds which the Caja receives from the sale of the machinery will be placed in the revolving fund to finance additional ma- chinery imports and to service the loan from the Bank. Under the first Banlc loan; purchases r.rom the revolving fund 8Dlounted to about $16 million bringing. the total value of imports resulting from the loan to al.most $21 mil.lion. The machinery purchased Uilder the £~st loan "f{as an important £actor in the marked increase of agricultural productionJ it permitted an expansion of culti- "'~ vated areas~ raised yields per acre and reduced cqst~ of production. Most of the machiner., is being used in :tour areas part:tcularly suited to mechan~zed agrioul- Jt_ ture: in the Sinll River area to exp~lcr)cotton productio11; in the Department ot Tolima tor increased product£6n of rice and sesame; in the. Ctiiuca Valle 1 tor . the 1 production ot ~gar can$., ;doe., beans and maJ.•e; and on the pie,in of Bogota tor /. the cultivation of potatoes., wheat and vegetables. i  •. ? ; • • !) Increases in Colombian agricultural. production., howev~., have not kept ab;rea.st or the gravth in demand brought about by pop\ll.ation increase and rising standards of consumption. Furthermore., expansion or industry:n in recent years has drawn labor away from rural districts., and there is a shortage of farm labor in the lowland areas where.~ the best possibilities tor expansion exist. Further mechanization o£ agriculture is n,eded therefore if Colombia is to increase its supply of foodstuffs and to reduce costs of production. 11 Today's loan is for a term o£ 7 years and bears interest of 4-1/4% includ- ing th~ statutory 1% commission charged by the Bank. Amortization 'Will begin May 15., 1957. The loan is guaranteed by the Gover·nment of Colombia. This is the eighth Bank loan for development projects in Colombia, and brings the total. lent to $74.3 million. In addition to agriculture., the· loans are assisting in the developmen~ of electric ·power., highways and railroads. The Colombian econo?ey" has madE:t great strides in recent years., as shown by the rise in agricultural and irxlustrial output., the rate of investment., an in.- creasing volume of exports ancl an acc:umU].ation of foreign exchange holdi,ngs. All government., expenditures, including capital expenditures., have been met from current revenues) and public finanoe . has not generally added to inflationary pressures. V/hen the price of coffee, Colombia's ch!ef export., fell recently the Government acted promptly to check the resulting dru.n on foreign exchange re- serves J and the outlook for the Colombian econoJQ" remains favorable. After having been approved by the Bank's EKecutive Directors, the loan docu- mente were signed today by His &cellency Dr·. Eduardo Zuleta Angel., ,Colombian I\ .Ambassador in V~ashingtoii, on be~alf of the Government of Colombia., by Dr. Misael Pastrana, the representative of ti:ie Caja ~ the United States., on behalf' of the ., : . , O.ajit, and by Robert L; Ge.mer, Vice President., on behalf of the World Bank.