Announcement of World Bank Lends Hundred Million Dollars for Industrial Equipment in Mexico on May 4, 1978

. . . - FOR, IMMEDIA""CE RELEASE . ~ • World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. • Telephone: (202) 393-6360 BANK NEWS RELEASE NO. 78/82 MAY 4, 1978 WORLD BANK LENDS $100 MILLION FOR INDUSTRIAL EQUIPMENT IN MEXl~O The World Bank announced today the approval of a $100 million loan to.support its third industrial equipment project in Mexico to provide medium-and long-term financing to industrial enterprises. The loan will help the Fondo de Equipamiento Industrial (FONEI) to finance investment projects for the production of industrial goods or to expand exports of services from Mexico's northern border zone. These operations wiil involve total investments of about $425 million. FONEJ is a Federal Government trust fund managed by the Banco de Mexico. Under • the project, FONEI wi 11 provide medium-and long-term financing to industrial enterprises through the commercial banking system to help finance machinery, equipment and other fixed assets. The project will facilitate industrial investment and will have a substantial impact on Mexico's balance of payments by increasing exports of goods or services or by substituting imports efficiently. Based on FONEI 's past operations, subprojects financed under the loan are expected to lead to net annual foreign exchange earnings, or savings, of about $130 million, at full capacity. The subprojects will also have a sub- stantial employment impact, generating 13,000 to 16,000 new jobs. They will also help to generate a similar number of jobs indirectly. About 80% of FONEI 's financing has in the past gone to projects outside Mexico City, thus contributing to industrial decentralization and regional develop- ment. The project will also help FONEI achieve a number of important institu- tional improvements, including an increased reliance an sound appraisal techniques in lending by Mexican banks and strengthened project supervision procedures. The scope of FONEI 's operations and promotional activities will be broad en ed. The $100 million loan to Nacional Financiera, S.A. (NAFINSA) will have a term of 17 years, including 4 years of grace, with interest at 7.5% per annum. The Bank has made two previous loans to FONEI, one for $35 mill ion in 1972, and a second for $50 million in 1976 • • NOTE: Money figures are expressed in U.S. dollar equivalents.