Announcement of World Bank Provides Industrial Credit for Small and Medium-Scale Industries in Honduras on December 24, 1981

. ~ · FOR JMMEDIA TE RELEASE . . (-) .•World Bank ,1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 82/33 Contact: Ciro Gamarra December 24, 1981 (202) 477-8031+ WORLD BANK PROVIDES INDUSTRIAL CREDIT FOR SMALL AND MEDIUM-SCALE INDUSTRIES IN HONDURAS Honduras wi11 use a $30 million loan from the World Bank to promote the private industrial sector. The loan will provide fore:ign exchange for investment in small and medium-scale private industries involved in manufacturing, agroindustry, forestry and wood processing, fishing and fish product industries, and related services. The 1oan is the Wor 1d Bank I s second to Honduras for i ndust r i a 1 credit. Under the first loan of $15 million, approved in early 1979, the Wor1d Bank assisted the government in estab1 ishing an industrial development fund (FONDEI) in the Central Bank, which provides term financing through the entire Honduran financial system, private and public, for sound private industrial projects. This sytem has proved to be a very viable financing mechanism. Through this loan, the World Bank will continue: supporting the government's industrial strategy by helping to promote and maintain rapid and efficient growth of industrial output, exports and employment. It will also continue to strengthen the institutional capabilities created under the first proJect to select, prepare, and finance effic!ent industrial private investment projects, particularly of small and medium-sized manufacturing firms. These firms contribute about one half of the total duran manufacturing sector. Co-financing resources from export-credit lines will be available to private industrialists to supplement loan resources. With the loan funds, FONDEI will finance some ~i25 private enterprises, involving total investment costs of about $47 million. About 4,200 new Jobs are expected to re- sult from these new investments. Technical assistance will be provided to improve the capabilities of FONDEI and the financial intermediaries. Since FONDEI began operations in0mid 1979, about 80% of its industrial financing has been covered by the first World Bank loan. By March 31, 1981, FONDEI had financed a total of 127 investments. Of these, 46 involv~1 small enterprises whlch received an average loan of $28,000. Almost a third of the loans, and half of the total amount, went to new firms. The majority of banks and financieras in Honduras participated as financial intermediaries in channeling Bqnk funds. ;. The World Bank loan to Honduras is for 20 years, including five years of grace, with interest at 11.6% a year. (FONDEl 1 s address is: Edificio Amato, 2o. Piso, Avenida Cervantes, Tegucigalpa, Honduras, C.A.) NOTE: Money figures are expressed in U.S. dollar equivalents.