Announcement of Loan for State Railways of Ecuador on November 1, 1957

1 FOR IM MEDJATE RELEASE WOIILD , . ,!NTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPIVlEN"'f 1818 H STREET, N.W., WASHINGTON 25, D. C. TELEPHONE: EXECUTIVE 3-6360 PRESS RELEASE NO. 511 SUBJECT: Loan for State Railways November 1, 1957 of Ecuador The World Bank today signed a loan of $6oo,ooo to Ecuador for repairs to the State Railways (Empresa de Ferrocarriles del Estado). The loan will finance imports of spare parts, tools and materials, and eight petroleum tank cars. It will also pa.y for the services of expert~ +.n assist in improving the administrative procedures of the railways. The objective is to permit a minimum service to be maintained on the line between • Quito, the capital city, and Duran, situated on the River Guayas opposite the country's main port of.' Guayaquil. In the meanwhile a long-term rehabilitation program will be drC."'\tlll up to enable the railways to catch up 'With arrears of maintenance and to handle increased traffic. Preparation of' such a program will not be completed for a.bout a year. The loan is for a four-year period and will be amortized by semi-ann\1$1 instalments from May 1959 to Nov,:mber 1961. The rate of interest, including the 1% commission provided for in the Bank's Articles of Agreement, is 6i. A German and a United States commercial bank are participating in the loan to a total equivalent to $118,ooo. The Grace National Bank of New York is taking up p~rt of the first maturity a.nd the Bayerische Hypotheken und Wechsel- bank, of Munich, is taking up the balance of this maturity and part of the second. These maturities are due respectively in May and November, 1959. Both •• participations are without the Bank's guarantee • The improvement of the Quito-Duran railway line is one of the most urgent needs of the Ecuadorian'economy. This line carries most of the grain, petroleum and other bulk goods needed in the interior and provides an outlet to the I • • • tropical coastal plain for agricultural produce from the Sierra. But there has been a continued deterioration in the condition of locomotives and rolling stock, resulting in serious interruptions in the service. The Bank has for several years been working with Ecuador in seeking ways of increasing the efficiency of its railway operations, and today's loan represents a further step in this collaboration. At the suggestion and with the financial assistance of the Bank, a foreign consultant was retained by the Government in 1954 to make recommendations on ways in which the railways could be restored to a satisfactory condition. A number of the recommendations made by the consultant have already been adopted. An experienced General Manager was appointed six months ago with powers to carry out a general reorganization; an autonomous Railway Authority has been set µp to operate the network; and the payroll has been greatly reduced by a cut of approximately one-quarter in the number of persons • employed. The Bank has now lent a total equivalent to $33.6 million in Ecuador. Two loans, amounting to $23 million, were made for the building of important new roads and the .setting up of a highway maintenance program. Two others provided $10 million to expand generation and distribution capacity in the Quito area, where a severe power shortage has ex!sted for several years. After having been approved by the Bank's Executive Directors the loan docu- ments were signed by His Excellency Dr. Jose R. Chiriboga V. , Ambassador in Washington, on behalf of the Government of Ecuador, and by Mr. w.A.B. Iliff, Vice President, on behalf of the World Bank • •