Announcement of Five Million Five Hundred Thousand US Dollars Highway Loan to Honduras on May 9, 1958

FOR IMMEDIATE RELEASE :: . WOIILD • INTERNATIONAL BAI\H( FOR R 1818 H N STREET, f\J D DEVELOPI\tlEI\IT' N.W., WASHINGTON 25, D. C. TELEPHONE: EXECUTIVE 3-6360 PRESS RELEASE NO. 535 SUBJECT: $5.5 million highway loan May 9, 1958. to Honduras The World Bank today made a loan of $5.5 million to Honduras for highway development. The loan will be used for the construction of a new paved highway to connect Puerto Cortes, the main Caribbean port, with the national road net- work; and for the improvement of' the Western and Southern Highways. The Western Highway serves one of the most heavily populated regions of Honduras; the Southern Highway links Tegucigalpa, the capital, with the Pan .A:merica.ri Highway and w-lth the Pacific ports. The loan will also finance the preparation of final engineering • designs for extending the Western Highway to link it with the highway network of El Salvador. The Bank of America and the National Bank of Washington are participating in the loan, without the World Bank's guarantee, to the extent of' $229,000. This represents the first two maturities and pa.rt of the third and fourth maturities which fall due between March 1, 1961 and September 1, 1962. The total cost of the projects being undertaken is estimated at 21 :million lempiras ($10.5 million). The Bank loan will finance the cost of imported equipment, materials and services, and the local currency costs will be .met by a loan from the United States Development Loan Fund, to be amortized over the same period as the Bank loan. The construction projects will be carried out under unit price contracts to be awarded on the basis of international competitive • bid.ding; they should be completed in about two and a half years • The projects being financed are part of a larger program of highway develop- ment currently being undertaken by the Honduran Government. A better highway  - 2 - .• system is one of' Honduras' most urgent development needs. Economic progress • will be hampered until the ma.in highways are improved to accommodate traf:fic during all seasons of the year. As a :first step in the creation o:f an adequate national highway system, the Government borrowed $4.2 million from the Bank in 1955 to help finance equipment, -materials and technical services :for a program o:f road repair and maintenance. Consultants were retained to assist in reorganizing the Highway Department and in the training of its personnel in modern techniques of road maintenance. The consultants also made preliminary studies :for new construction work, which included two o:f the projects now to be undertaken. Puerto Cortes Highway Most of Honduras' seaborne imports and exports pass ~hrough Puerto Cortes, the country's principal port on the Caribbean Sea. At present the port is reached by a single-track railroad and by a :road whtch is rongh and often • impassable during the rainy season. A new paved highway will now be built from Bu:falo to Puerto Cortes, a dista.~ce of 45 miles. The project also includes the paving of accesses to the docks at Puerto Cortes, a by-pass around the center of San Pedro Sula, Honduras' second largest town, a 540-foot steel bridge across the Chamelecon River, and eight smaller bridges of reinforced concrete. The new road will provide an all-weather highway connection between the port and San Pedro Sula and the surrounding valley, which is the most important industrial and agricultural region in the country. At a point near Bufalo it will connect with other highways leading to ~egucigalp~, to the Pan American Highway on the Pacific coastal plain and to the western region. It should reduce operating costs for motor vehicles by at least 30%. Cheaper and :more efficient transport between the principal port and the interior may be expected • to stimulate the economy in general •  - 3 - . Western Highway • The Western Highway runs 106 miles from Sa.,.~ Pedro Sula south-westward to a point 62 miles from the border of El Salvador. Most of the road is in fairly good condition and adequate to accommodate expected traffic for the next several years. However, most of the stream crossings in the road a.re fords which are often impassable in the rainy season. Under the project now being undertaken, 12 bridges and 17 box culverts will be built and approximately 31 miles of approaches and access roads. The loan is also helping to finance final engineering plans for extending the highway to the border of El Salvador. The conversion of the Western Highway into an all-weather road is essential because of the importance of this area of the country. The Highway serves one of the :most densely populated areas of Honduras and a potentially rich agricultural region. The development of the region has been retarded by a lack. of reliable • overland connections with the ·country's principal markets and port of export . Southern Highway The Southern Highway is at present the most heavily traveled route in Honduras. It is the only means of communication between the Pacific coast lighterage ports and Tegucigalpa and the interior. This Highway is used to trans- port about half of the country's oil and gasoline imports; it is also one of the main arteries for the movement of exports and imports to and from El Salvador, and is the only existing connection in Honduras with the Pan American Highway. So:me sections of the Highway have already been paved by the Highway Department and the present project consists of the completion of the base and pavement of the remaining 31 miles of this Highway. The loan is for a term of 20 years and bears interest of 5-3/8%, including the 1% commission which is al~ocated to the Bank's Special Reserve. Amortization will • begin March 1, 1961. After having been approved by the Bank's Executive Directors, the loan docu- ments were signed by His Excellency, lt.,ernando Villar, Minister of Economy and Finance, on behalf of the Government of Honduras and by J. Burke Knapp, Vice President, on behalf of the World Bank. • ~ 0 10 20 30 40 50KM + t . .. • DRY WEATHER ROADS ROADS PROJECTED OR UNDER CONSTRUCTION RAILROADS I 1111111 I 111 INTER-DEPARTMENTAL BOUNDARIES 'r? • INTERNATIONAL B0UNDAR1 PROJECT ROADS Pacific Ocean MARCH 1958 IBRD-431R