Romania - Moldova Agricultural Credit Project

Document of The World Bank FOR OFFICIAL USE ONLY FILE CTPY Report No. P-3168-RO REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE BANK FOR AGRICULTURE AND FOOD INDUSTRY WITH THE GUARANTEE OF THE SOCIALIST REPUBLIC OF ROMANIA FOR A MOLDOVA AGRICULTURAL CREDIT PROJECT December 4, 1981 I_This document has a r.strieted 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.  CURRENCY EQUIVALENTS Currency Unit: Leu (Plural Lei) 1. Conversion Rate for Ttaded Goods effective January 1, 1981 Lei 15.00 5 US$1.00 Leu 1.00 5 US$0.07 2. Tourist Rate effective February 15, 1981 Lei 11.00 - US$1.00 Leu 1.00 aU$b0.09 Fiscal Year January 1 to December 31 GLOSSARY OF ABBREVIATIONS BAFI - Bank for Agriculture and Food Industry (Banca ?entru Agricultura si Industrie Alimentara) CAP - Agricultural Production Cooperative (Cooperative Farm) EkR - Economic Rate of Return ICA - Inter-Cooperative Association lAb - State Farm Enterprise (State Farm) IELIF - Enterprise for Exploitation of Land Reclamation Works HAFI - hinistry of Agriculture and Food Industry bMA - Station for Agricultural Machinery (State Mechanization Unit) UAC - Unified Agro-Industrial Council  FOR OFFICIAL USE ONLY ROMANIA MOLDOVA AGRICULTURAL CREDIT Loan and Project Summary Borrower: Bank for Agriculture and Food Industry (BAFI). Guarantor: Socialist Republic of Romania. Beneficiaries: State enterprises, cooperatives, Agricultural Mechanization Stations and individual producers. Loan Amount: US$95 million. Terms: Repayable in 15 years, including a 3-year grace period, through semi-annual installments. Interest atl.6 percent per annum. Relending Terms: Relending to State farm enterprises (IASs), Agricultural Mechanization Stations (SMAs), Popular Councils and Directorate for Exploitation of Land :clamq-ior '_ rks (DELIF) at 2 percent per annum during construction and 4 percent after construction for terms of up to 10 years including up to 3 years grace, to cooperatives (CAPs) at 3 percent for terms of up to 16 years including up to 3 years grace, and to individual producers at 3 percent for terms of 5 years. The Government would bear the foreign exchange risk. Project Description: The project would address the problem of low productivity and production in the agriculture sector in Moldova region, one of the less developed regions in Romania. The project would cover about 17 percent of the Government's overall investment of about $1,671 million for agricultural development of the project area over the period 1981-85, and implement the following priority components among the Government's overall investments in the area through a program of subloans to be made by BAFI; (a) farm mechanization, (b) agroindustries, (c) soil erosion control works, (d) credit to individual producers, (e) pasture improvement, (f) dairy farms and (g) vineyards. Substantial production efficiency improvement is expected through modernization of agriculture, provision of more systematic assistance to individual producers and preservation and improvement of agricultural land in the project area. The value of annual incremental production at full development is estimated at $136 million in 1981 prices. At least This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - II - 1000 new jobs would be created under the project. The project would face normal risks of climatic uncertainties and inadequate agricultural inputs, but these risks are considered no greater than can be normally expected with similar operations in Romania. Cost Estimates Local Foreign Total --- US$ Million ---