Announcement of Five Million Five Hundred Thousand US Dollars Road Loan to Peru on December 19, 1960

• LNTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 1818 H STREET, N.W., WASHINGTON 25 1 D. C. TELEPHONE: EXECUTIVE3-6360 PRESS RELEASE NO. 664 SUBJEC'.I': $5.5 million road December 19, 19W loan to Peru The World Bank today made a 1oan equivalent,,,;to $5.5 million to Peru to im- prove road transport between the Amazon l\rea. in €.q,gt,ern Peru A.nd Limn, II the capital city. The loan will cover the foreign exchange costs of recon- \) :; structing a 105-mile section of road, ,_beginning at Agu~ytia and ending at Pucallpa on a :tributary of the Amaz<?n, at the eastern end of Peru's Central Highway. In- ~ddi'tio~i-, the lo~ will finance the cost of conducting preliminary studies for the improvement of an adjoining 324-mile section of the Highway. ~ The new all-weather road wiil provide cheaper, quicker and safer transport and will accelerate the development of the central part of the Amazon area of Peru. Grace National Bank of New York is participating in the loan, without the World Bank's guarantee, to the extent of $50,000 representing part of the first maturity which falls due January 1, 1965. I' The 522-mile./Central Highway is the only road linking the coast of Peru with the eastern region of the countrf bordering on the Amazon river which, with If its many tributaries, provides acces~· to vast, potentially productive regions. The first 93 miles of the Highway from Lima is a good hard-surface road; the 324-mile section from Morococha to Aguaytia, while an all-weather road, is narrow, winding and rough; the section between Aguaytia. and Pucallpa is a dirt road which is impassable during the six months of the rainy season. Situated • at the head of the navigable. section of the uc,ayali river, Pucallpa serves as  (\ - 2 - f a. river port f'or the large area ~tre~ching toward Iquitos in the north. Since • theOdirt road was built in 1944 the population of Puca.11.pa has grown froo)~~ few ~ a ~ hundred to about 20,000, and the population of the area is expected to grow rapidly wh~n the ro~d is imp:,;o,.!ed. (\ Although the developme,nt of the nAmazon, region has been retarded by excessive. tfansportation costs and by its \isolation from }he coast during the rainy season, 0 important a.ctivity has already begun. Timb~r output in the region accounts for// about 85% of natiopal timber production, and Pucallpa has become the most important sawmill center in Peru. Numerous other agricultural products, mainly bananas and other tropical fruit, rubber and cacio, a.re being produced in the - ~' . .· region, and cattle breeding has been successful. Chea.per., reliable and faster transport can be expected to stimulate greater production thereby increasing tfie region's contribution to the Peruvian economy. The Ministry of Development and Public Works is responsible for the execution of the project and will retain consulting engineers to assist it. The construction work will be earried out by contractors under unit price con- tracts to be awarded on the basis of international competition. Construction is,, scheduled for completion by (;the end. of 1964. The total cost of reconstruction of the Aguaytia.-Pucallpa r,oad and of the '(, 8tudy for impr0ving the Aguayti.a-Morococha road is estimated at the equi valentAt // (( of $11 million. The World Bank loan of $5.5 millton will,. cover the cost of imported services and equipment; a loan 0£ $4. 5· millicm recently authorized by the Uuited States Developm,ent Loan Fund will cover most of the Peruvian currency costs; and the Peruvian Government Will finance the remaining domestic, •  0 r, l {. ,, ·~' - 3 - • The Government will also finance the total cost, 'including an estimated $700,000 for imported equipment, spare parts and services, of its genera.1 High- , , way=ma:tntenanc.e program. Th=ls program we.a undertaken with the assistance of a (\ World Bll.nk loan of $5 million made in August 1955 and, under the terms o:f the loan signed today, it wi~l be continued for another two years. The Bank loan is :for a term of 15 years and bears interest of 5-3/4i in- cluding the 1~, commission which is allo.cated to the Bank's apecial Reserve. , Amortization wi.\:I- begin January 1, 1965. Including today's loan, the Bank has ma.de 12 loans in Peru totaling $82 million. In tiddit.ion to road ma.intenanc~, the earlier loans were for the im- - provement of ~he Port of Callao,, for the development of agric~ure_. irrigation I ~. and electric power and for the construction of a cement plant. • After having been approved by the Bank's Executive Directors, the loan documents were signed by His Excellency Fernando Berckemeyer, Ambassador of Peru in the United States, on.-behalf of the Government of Peru . • 1)  ,••. ECUADOR COLOMBIA • t BRAZIL I • FEBRUARY 1960 19110 H7R •.,