Romania - Orchards Project

Document of FuSE COPY The World Bank FOR OFFICIAL USE ONLY R"t No,. P-2833-RO REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR REOCONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE BANK FOR AGRICULTURE AND FOOD INDUSTRY OF ROMANIA WITH THE GUARANTEE OF THE SOCIALIST REPUBLIC OF ROMANIA FOR AN ORCHARDS PROJECT June 2, 1980 Tni _cmet ha a restricted dit butlo ad may be used by recipints oy In the pefoance o1 tbdhr Otchd ts. Its eoetnts may t otherwie be dicloed witbout Wed DBk *Id*roa.  CURRENCY EQUIVALENTS Currency Unit Leu (Plural Lei) 1. Official Rate Lei 4.47 = US$1.00 Leu 1.00 = US$0.22 2. Tourist Rate Lei 12.00 = US$1.00 Leu 1.00 = us$o.08 3. Conversion Rate for Traded Goods Lei 18.00 = US$1.00 Leu 1.00 = US$0.06 The Official Exchange Rate of lei 4.47 per US$1 is used only for accounting purposes. The rate used for tourist transactions is lei 12 per US$1. Be- ginning in March 1978, a trading rate of lei 18 per US$1 has been used to convert the prices of all traded goods; this rate is considered representative of the average cost of convertible foreign exchange. Fiscal Year January 1 to December 31 GLOSSARY OF ABBREVIATIONS BAFI - Bank for Agriculture and Food Industry CAP - Agricultural Production Cooperative ERR - Economic Rate of Return GEDM - General Economic Directorate of Horticulture ICA - Intercooperative Association IAS - State Agricultural Enterprise (State Farm) MAFI Ministry of Agriculture and Food Industry SMA - Station for Agricultural Machinery (State Mechanization Units) UAC - United Agro-Industrial Councils  FOR OFFICIAL USE ONLY ROMANIA ORCHARDS PROJECT Loan and Project Summary Borrower: Bank for Agriculture and Food Industry (BAFI) Guarantor: Socialist Republic of Romania Beneficiaries: State enterprises and cooperatives Loan Amount: US$50 million Terms: Repayable in 15 years, including a 3 year grace period, through semi-annual installments. Interest at 8.25 percent per annum. Relending Terms: Relending to State enterprises at 2 percent per annum during construction and 4 percent after construction. Relending to cooperatives at 3 percent per annum. State enterprises subloan maturities would be up to 17 years including up to 7 years grace, and cooperative subloan maturities would be up to 20 years including up to 10 years grace. The Government would bear the foreign exchange risk. Project Description: The project is a credit scheme through BAFI and consists of (i) a 2-1/2 year tranche of Romanian investment commit- ments for 29,820 ha of new orchards, (ii) 19 modern fruit packing and controlled atmosphere cold storage facilities, and (iii) technical assistance to help improve fruit handling, storage, and processing and improve applied research for mechanization of fruit production and harvest- ing. The project would support the adoption of high density planting technology in Romania. The project would also support the Government's efforts designed to meet unsatisfied domestic demand for fresh fruit which has been hitherto suppressed due to shortage of local fruit with the Government keeping fruit imports to a minimum to conserve scarce foreign exchange. Incremental production resulting from the project would reach 528,000 tons annually. Per capita consumption of the types of fruit financed by the project would increase to 71 kg by 1988 from the present level of 36 kg. The project is also expected to create about 19,500 jobs in new orchards. There is a small risk that fruit yields or quality would be somewhat below expectations due to weather, lack of inputs or problems in orchard management. However, according to the sensitivity analysis carried out for the project, this would not depress the economic return on the project seriously. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Cost Estimates: Local Foreign Total