Announcement of Eleven Million US Dollars Loan to Costa Rica for Highways on October 13, 1961

· FOR IMMEDIATE RELEASfi:: INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION 1818 H STREET, N.W. WASHINGTON 2 5, D. C. TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 714 SUBJECT: $11 million loan to IDA Press Release No. 12 Costa Rica for highways October 13, 1961 The World Bank and its affiliate, the International Development Associa- tion (IDA), today joined in lending the equivalent of $11 million to Costa Rica fer the improvement of its highway systano The Bank loan and tbe IDA develop- ment credit, each for the equivalent of $5.5 million, will help to finance the reconstruction and construction of about 420 miles of national and regional high- ways and the import of equipment for highway construction and maintenance • • Three commercial banks are participating in the loan, without the Bank's guarantee, for a total of $150,000, part of the first rna.turity, due May 1, 1965. elphia; The First The Banks are: Fidelity-Philadelphia Trust Company, Philad1 Pennsylvania Banking and Trust Company, Philadelphia; and Girard Trust Corn Ex- change Bank, Philadelphia. The Bank loan is for a period of 15 years, at 5-3/4% interest, including the 1% commission which is allocated to the Bank •s Special Reserve, and is re.-· payable in foreign exchange. The IDA development credit -- the first of its kind to Costa Rica -- is also repayable in foreign exchange, but has a term of .5'0 years, and is free of interest. The first repayment of the credit will be c:u.e on Novenber 1, 1971. Thereafter, 1% of the principal will be repayable annually for ten years and 3% will be repayable each year for the remaining • 30 years. The only annual charge on the IDA credit will be 3/4 .snounts 'Withdra'trn and outstanding, to meet IDA's administratlve costs~ of 1% on the • - 2 - • Costa Rica, with an area of 19,700 square miles and a population of approximately one million, is the second smallest of tre Central .American Republics, with good land resoQ~ces and a highly literate and industrious population. A well-developed highway system is vital to the realization of Costa Ric a' s considerable potential for economic growth. The highways now carry 80% of total pas'senger traffic and 70% of freight• Over the past ten years there has been a threefold increase in the number of road vehicles, causing considerable damage to road surfacing and foundations. The road system also suffered from the insufficiency and poor condition of road maintenance equipment. The highways to be reconstructed under the project represent about one- third of Costa Rica's national and regional highway system. The majority of these highways serve the central plateau, populated by about three-fifths of • the total population and containing the bulk of the country's agricultura1 and manufacturing wealth. Improvements in road alignment, width, and surfacing of existing roads will cut present vehicle operating costs by 12% to 25% on most of the project highways. Three new highway sections are to be constructed, two to relieve the severe tr~.ffic congestion in the San Jose area and the third to open up a rich agricultural region. These works., together with the improvement of the maintenance organization, constitute the first and most important stage of a seven-year highway development program to improve and extend the country's highway network. Including today's loan the Bank has now lent the equivalent of $2508 million in Costa Rica, for the development of agriculture and industry, and for the construction of a hydroelectric plant on the Rio Macho. • After having been approved by the Bank's Executive Directors, the relative documents were signed on behalf of the Government of Costa Rica by His Excellen~J 0 Espiritu Salas Sa., Mi!lister of Public Works of Costa Ricao