Announcement of One and a Half Million Dollar Loan to Nicaragua for the development of agriculture on August 30, 1955

·., HOLD FOR RELEASE N.RNATIONAL BANK FOR ECONSTRUCTION AND DEVELOPMENT <WORLD BANK) 1818 H STREET, N.W., WASHINGTON 25, 0.C. TELEPHONE: EXECUTIVE 3-6360 PRESS RELEASE NO. 42.3 FOR RELEASE A.M. Newspapers SUBJECT: $1.5 million loan in August 30, 1955 Nicaragua. The World Bank, in participation with the Bank of America, has made a loan of $1.5 million for the development of agriclllture in Nicaragt1a. The loan will finance the importation of machinery, eqt1ipment and materials to be t1sed for land clearance., ,, r~~ soil erosion control, pastt1re improvement and milk processing, and the importation .l~ of cattle for breeding pt1rposes. tit The Bank of America's participation amounted to $735,000, representing the first seven maturities of the loan, falling dt1e from October 1, 1957 through Oct ob er 1, 1960. The Bank of America participated in the loan wi thot1t the World Bank's gt1arantee. The loan was made to the Institute de Fomento Nacional, an autonomous goverrunent agency which provides financial and technical assistance for industrial and agri- cultt1ral development. ' Through the medium of appropriate loans, the Institute will make the Bank-financed goods available to various private agricllltural enterprises - farmers, machinery operators and owners of milk processing plants. · In recent years there has been a rapid expansion of cotton cllltivation in Nicaragua, ·part of which has been at the expense of foc'id crops. At the same time present methods of gDowing cotton are creating seriolls problems of soil erosion. The Institllto is therefore promoting measures to expand the area available for the . t i vation of food er.ops and to conserve the soil. Abollt one-,,tenth of the Bank's loan will be used to finance the pt1rchase of six crawler-tractors for clearing timber and leveling new land, and one motor grader 'for ,__. contot1r terracing to prevent '' ... 2 - 'soil erosion. The Instituto will supply the machinery on rental or hire-purchase terms to private operators who carry out these operations for farmers. ' • The Institute is also actively encouraging the efforts of farmers to expand milk and beef production. Ne~rly a quarter of the Bank's loan will finance the importation of fencing wire, overhead irrigation plants, windmills and haymaking machinery for pasture improvement, Over a third of the loan will be used to finance the costs of imported installations for producer-owned milk processing plants. Plans have been prepared for the establishment of seven milk collection centers and proce~sing plants. This chain of plants will effectively cover the milk-producing areas of Nicaragua, and by providing an increased supply of pasteurized milk and milk products shou.ld help to raise dietary and health standards. To improve the quality of Nicaragua's beef and milk cattle, suitable breeding stock will be brought in from other countries·. The Insti tuto has already had considerable experience in the selection and importation of ~attle on behalf of f~rs and proposes to speed up this operation by importing 800 head of cattle, financing their purchase with the remaining quarter of the Bank's loan. About 10% of the cattle will be used by the Institute to stock its own stud farm, and the .:·r~ i remainder will be sold on credit to fanners. The loan is for a term of 12 years and bears interest of 4-1/4% per annum, including the statutory 1% commission charged by the Bank. Amortization will begin October 1, 1957. The loan is guaranteed by the Republic of Nicaragua. This is the Bank's eighth loan in Nicaragua and brings the total of loans there to $18.2 111illion •. The Bank has now lent $7 .95 million for electric power development, $3.25 million for agriculture, and $7 million for highways. After having been approved by the Bank's Executive Directors, the loan documents w~re ~igned on August 26 by His Excellency Dr. Guillermo Sevilla-Sacasa, Nicaraguan Ambassador in Washington, on behalf of the Government of Nicaragua, by Mr. Alfredo Sa.a, General Managei:, on behalf of Institute de Fomento Nacional and by Mr. Eugene R. Black., President, on behalf of the World Bank. ... ... ......