Announcement of Loans and Credits Totaling Forty-Four Million Nine Hundred Thousand Dollars to Malawi on December 13, 1983

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. * Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 84/28 Contact: Pam Brennan IDA NEWS RELEASE NO. 84/24 (202) 477-3293 December 13, 1983 THE WORLD BANK AND IDA TO SUPPORT FIFTH HIGHWAY PROJECT IN MALAWI Malawi will borrow $44.9 million in loans and credits from the World Bank and the International Development Association (IDA) for a fifth highway project that will promote the economic development of the northern half of the country and improve the movement of goods into and out of the country. The project includes upgrading of an important section of the North-South road, and financing a transport system study of the northern access route linking Malawi and the Tanzania/Zambia corridor. IDA is the concessionary lending affiliate of the World Bank. Malawi's major highways cover some 5,500 kilometers (km) and are fairly well developed south of the capital, Lilongwe. The northern half of the country is less well served. Malawi's transport policy has three broad objectives: to facilitate the economic integration of the country by linking the Northern, Central and Southern Regions with reliable all-weather road connections; to promote a balance pattern of growth by improving access to the rural areas; and to provide efficient links with existing transport routes to the Indian Ocean seaports to support its international trade. The project is designed to assist Malawi in achieving these objectives. The construction of the 50 km northern section, to be co-financed by the African Development Bank (AfDB) will substantially complete Malawi's main North-South road linking Karonga in the far north with Bangula in the far south. This section, together with the project's improvement of the main and secondary road network, and the nationwide extension of the very effective labor intensive District Roads Improvement Program, will provide rural people throughout Malawi with improved access to markets, supplies and social services. The strengthening of the Government's transport planning capacities and financing of the transport system study will help guide Malawi's import and export traffic to the most effective international routes. NOTE: 1) Money figures are expressed in U.S. dollar equivalents 2) IDA credits are denominated in SDRs (Special Drawing Rights), which are valued on the basis of a "basket" of currencies. The U.S. dollar equivalent of the SDR amount of the IDA credit reflects the exchange rates existing at the time of the negotiation of the credit. - 2 - The project has a total cost of $78.5 million. The World Bank is providing a loan of $18 million; IDA, a credit of SDR 12.4 million ($13.1 million); and the IDA Special Fund, a credit of SDR 13.1 million ($13.8 million). The AfDB is providing a loan of $16 million and the Government of Malawi, $17.6 million, towards the cost of the project. The World Bank loan is for 20 years, including five years of grace, with interest rate linked to the cost of the Bank's borrowing. It also carries an annual commitment charge of 0.75% on undisbursed balances and a front-end fee of 0.25% on the amount of the loan. The IDA credits are for 50 years, including 10 years of grace; they carry no interest but have small annual service charges (0.5% on the undisbursed balances of the credits and 0.75% on the disbursed balances). -0-