Announcement of an Eighteen Million Dollar Loan to Peru for Irrigation on April 6, 1955

J.: HOLD FOR RELEASE INTERNATIONAL BANK FOR .RECONSTRUCTION AND DEVELOPMENT <WORLD BANK) 1818 H STREET, N.W., WASHINGTON 25, 0.C. TELEPHONE: EXECUTIVE3-6360 PRESS RELEASE NO. 396 FOR RELEASE A.M. Newspapers SUBJ EXJT: . $18 million loa.n to Pe!"u. April ¢>, 1955 .ft,~ AMo~t..e.-4 The World Bank .haa maae a loan of $18 million to Peru. The 'f'unds will help to finance a project to irrigate 125,000 acres of new land in the coastal region or northern Peru. The land will produce food and long staple cotton; the consequent reduction of food imports and increase of' cotton exports will contribute signifi.;. cantly to the :improvement of Peru's trade position. The Manufacturers Trust Company and The New York Trust Company are participating • in the loan without the World Bank's guarantee to the extent of $496,ooo. This represents the first two maturities falling due in September 1959 and March 1960. The irrigation project is located near the to~m or Piura, the capital of a large and growing agrtcultural and industrial region, about 600 miles north of Li.ma •. The soils of the area are well suited to cultivation but lack of water for irriga-. tion has heretofore made it impossible to bring the land .P1to production. The irrigation project is being carri€d out in two stages.. The first stage was undertaken by the Peruvian Government and completed in December 1953. It. con- sisted of the building of turmels and canals to divert water from. the dependable flow of the Quiroz river to the Piura river~ an erratic stream which sometimes dries 11p 'eompletely. This diversion system has nade it .PossibJe to increase the culti- vated a.rea ip .the Piura valley from 37,000 to 77 ,ooo acres. The Bank•s: loan will help .to finance the second stage of the Quiroz-Piura ·'·· project: T)lat stage con sis·~ .or the constr\lction of a dam which will c:r~te a" reservoir to store water from the C:live:rs:i;.on canal, and the building of SJ.miles of  • - 2- main canals and 200 miles of latera:l canals. Wate:t\ fr.om the new reservoir used in • ••• conjunction with i-rater from the di version canal will be sufficient to irJ;"igate some ,, . . \\ /1 125,000 acres of now uncultivated land. i!/ The total cost of the project is expected to be equivalent to $28.5 million., The Bank's loan will cover the cost of imported services, equipment, materials ~md supplies. The Go.vernment will provide the domestic currency needed to meet the local costs of the project. Work is scheduled to start in 195.5 and the project should be complete in 1958. Peru• s imports of food have cont:mued to mount each year be~ause agr-icultural production has not been sufficient to keep abreast, of growth in demand brought about by population increase and rising standards of consumption. About 60% of the new acreage to be brought into production will be devoted to food crops and pasture, and the output will be for local conswnption. The remaining acreage will be used to grow long staple cotton., a readily exportable commodity which commands premium • prices throughout the world. The project is conveniently situated for the export of cotton through the nearby port or Paita. 'The Government is acquiring the land to be irrigated., and plans to se~l it at reasonable prices in lots ranging i.rl size from 35 to 2.50 acres. There are many farmers in Peru experienced in working coastal iITigated lands and willing to acquire and cultivate new land as it becomes available. This fact.,, and the steps which the Government will tB.ke to provide credit and other "assistance to tanners, should ensure that the newly irrigatedcc"~l,an.d is promptly brought into cultivation. The Govenunent will extend long-tenn loans fer the purchase of the land. The Goverrunent will also make agreements wi.th the Banco de Fomento Agropecuario to ensure that adequate creqit is available to purchasers for the clearing and preparation of the land., .knc1 with the Sex-vic;Lo Cooperativo Interamericano de Produccion de Alimentos (SCIPA) to see that it~ machinery pools are ai,sailable to  C - .:3'.- those farmere who do not own their own equipment. Thus two agencies· whicl7, • bem,.tited from three of the Bank's p1•evious loans will be coJJaborating 1n this project. The Banco de Fomento Agropecuario has received a $S million loan from the World Bank to widen the scope of its operations, and SCIPA has received ty9 loans t,otaling $3 millionqto add new equipment to its ·agi-icultural machinery pools, Today's loan is f'or a term of 2S years and bears ~terest of 4-3/h% per annum., including the statutory 1% commission charged by the Bank. Amortization w}.11 I I ) 1 / / begin on September 15., 1959. After ha1.ring been approved by the Bank's Executive Directors., the loan documents were signed on April 5 by His Excellency., Don Fernando Berckemeyer~ ·Ambassador for Peru in the United States., on behalf of the ~vernment of Peru and by Eugene R. Black., President., on behalf of the World Bank • • •