Announcement of Five Million US Dollars Loan for Peruvian Agriculture on June 18, 1960

FOR IMMEDIATE RELEASE WORLD • 1818 H STREET, N.W., WASHINGTON 25, D. C. TELEPHONE: EXECUTIVE 3-6360 PRESS RELEASE NO. 63-7 SUBJECT: $5 million loan for June 18, 1960 Peruvian agriculture The World Bank today announced a loan equivalent to $5 million to the Banco de Fomento Agropecua.rio del Peru for the continuation of the Banco' s program of investment for the development of agr.·:tculture. The proceeds of the loan "Will be used for the importation of livestock, farm machinery, fencing materials, and equipment for land improvement, irrigation and processing plants. Five private banks in the United states are participating in the • loan, without the World ~ank's guarantee, for a total amount of $1,206,000, representing the first three maturities which fall due between February 1, 1963 and February 1, 1964. The participating banks are Bank of America, N.T. & s.A., 1::1~ Hanover Bank, The Bank of New York, Girard Trust Corn Exchange Bank and Grace Na+tonal Bank of New York. The Banco Agropecuario is an autonomous credit institution of the Peruvian Government and is Peru's only source of medium and long-term credit for agricultural development. The Banco's lending prograro. has contributed significantly to the development of Peruvian agriculture both in the production of crops and livestock for domestic consumption and of a variety of export crops. The loan made today will provide the Banco with the foreign exchange • ,~:t needs for its program during the next three years; including local currency requirements, is estimated at the equivalent of $17. 2 mj_llion. the total cost, Specifically, the loan will help to finance credits  - 2 - • for the L~provement of irrigation facilities and more effective use of water· on some 100,000 acres of land now under partial irrigation; importation of about 500 tractors plus equipment, the development of a the further 15,000 acres of plantation crops; the importation of over 1,000 head of breeding .stock, both cattle and sheep; the erection of about 1,560 miles of fencing, and the establishment of rubber, tea and coffee processing plants. This is the third $5 million loan the World Bank has r,1ade to the Banco. The two earlier loans provided the foreign exchange component of credits amounting to the equivalent of f,25. 7 million which the Banco has extended since 1954. The credit program during that period financed the improvement or development of 125,000 acres of irrigated land; the • importation of 1,100 farm tractors, for 1,250 miles of fences; 6,500 head of livestock, and material the development of 30,000 acres of permanent plantations and the establishment of plants which ha:ve inoluded a milk- processing plant in Lima, seven coffee de-pulping and drying plants, a coffee warehouse,~ and grain-cleaning plants and improvement of a sugar factory. Most o:(' the investment has been made for the production of cotton, sugar and nd.lk in the Pacific coastal area, and for plantation crops, such as coffee, cocoa, tea, rubber and bananas, in the highlands of the Andes and in the Amazon region east of the Andes. During the three-year period 1955-1958, the value of cotton exports rose from an annual average of ~i72 million to fi76 million, sugar from fi.J34 million to t>39 million-" and coffee from ~~5 pti.llion to ~~12 million • • During that period there were also import savings through increased production of milk and tea.; imports of milk products fell from 7h,500 .!. • - 3 - • tons in 1956 to 47,300 tons in 1958 and net imports of tea .fell by nearly two-thirds. As in the case of the p:r,aviou.9 Bank loans, the good.Et financed by the current loan, except for livestock, will be imported and sold through regular trade channels. The Banco Agropecuario will extend credit to agriculturalists for their purchase. The Banco itself will import livestock for distribution to farmers. The loan is for a term of 8 years and bears interest of 6% per annum, including the 1% commission which is allocated to the World Bank's Special Reserve. Amortization will begin in February 1963. The loan is guaranteed by the Government of Peru. Including the loan announced today, the World Bank has lent a net • total of $52.5 million in Peru for the modernization of its main port, Callao, the Quiroz-Piura irrigation project, agricultural development, highway maintenance, a cement plant and for the credit program of the Banco Agropecuario. After having been approved by the Bnnk's Executive Directors, the loan documents were signed by His Excellency Fernando Berckemeyer, :, Peruvian Ambassador in Washington, on behalf of the Government of Peru, and by Dr. Emilio Foley, General Manager, and Sr. Cesar Cardenas, Legal Adviser of the Banco, on behalf of the Banco de Fomento .Agropecuario del Peru. ,. .. ·'""