Thailand - Second Railway Project

R E S T- R I C T E D - FILE coPY Report No. P 96 -'F8LE COPY This document was prepared for internal use in the Bank. In making it available to others, the Bank assumes no responsibility to them for the accuracy or completeness of the- information conlained -herein. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATIONS of the PRESIDENT to the EXECUTIVE DIRECTORS concerning A PROPOSED LOAN to THE STATE RAILWAY OF THAILAND July 28, 1955 Department of ations Asia and Mld_,_ 3ast  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOhMENDiTIONS OF THE PR'SID- NT TO THE EXECUTIVE DIRECTOrS ON A PROPOSED LOAN TO THE STATE RAILijAY OF THAILAND 1. I submit herewith the following report and recommendations on a pro- posed loan in various currencies equivalent to $12 million to the State Railway of Thailand (SRT). PART I - HISTORICAL 2. On October 27, 1950 the Bank made a loan of tS3 million to Thailand for the rehabilitation of the railways. It was fully disbursed by June 1954. 3. Early in 1953 the Government submitted for Bank consideration the investment program of SRT. The Bank informed the Government that it con- sidered the development of transport to be among Thailand's most pressing needs. In July the Bank expressed its willingness to consider a loan to finance part of the railway investment program and outlined the steps to be taken by the Thai authorities before loan negotiations could begin. In September Thailand sent a delegation to Washington for technical dis- cussions of the program. 4. These discussions were adjourned in February 1954 pending a recon- sideration co Thailand's economic and financial position, which had been deteriorating. The Govenrnment, on advice of a special representative of the Bank, who stayed in Thailand for three months, adopted measures to improve the situation. As these measures began to bring results, the Bank informed the Government in June 1954 on what basis it would be prepared to resume negotiations. W^Then an agreement on the basic points was reached, a member of the Bank's staff went to Thailand to have preparatory dis- cussions, which started in November. He was joined there in February 1955 by a Bank engineer and a railway consultant. Detailed discussions were then held on the investment needs, operations and organization of SRT and a five-year investment program, limited to high-priority items, was jointly drawn up. The Bank informed the Government on June 6, 1955 that it was prepared to open negotiations for a loan to finance a part of the agreed program. 5. On July 15, loan negotiations were opened with H.E. the Ambassador of Thailand to the United States and the Financial Counselor of the Royal Thai EEmbassy, representing respectively the Guarantor and the Borrower. 6. If the proposed loan is made, it would be the Bank's fourth loan to Thailand; Bank loans to Thailand would then total the equivalent of