Announcement of World Bank Supports Agricultural Growth in Argentina on June 27, 1988

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. 88/101 Contact: Ciro Gamarra (202) 4 73-8721 WORLD BANK SUPPORTS AGRICULTURAL GROWTH IN ARGENTINA WASHINGTON, June 27, 1988 -- Argentina's efforts to boost agricultural growth will be assisted by a World Bank loan of $106.5 million. The loan will help finance an agricultural credit project which aims to increase growth in a vital sector with underused potential and substantial importance for foreign exchange earnings. The $355.5 million P,roject will increase agricultural growth through modernization of the farm machinery pool; livestock development; and adoption of cost-effective, efficient technology consistent with growth, diversification, and soil conservation. The agricultural sector generates about 70 percent of Argentina's foreign exchange earnings, 16 percent of gross domestic product, and 17 percent of employment. The project will include a nationwide line of medium- and long-term credit to support sectoral investments of $354 million over a four-year period. This credit line will finance modern agricultural machinery, on- and off-farm grain storage facilities, land improvements, orchard establishment, livestock development, small-scale agro-processing facilities, and working capital complementary to these investments. The credit line will be administered by Banco de la Naci6n Argentina (BNA), a government-owned collllllercial bank, and by private and provincial banks. Loan proceeds will be disbursed in about eight years. The project will also include a monitoring and evaluation component of $1.5 million to track the credit flows and to provide feedback to the Secretariat of Agriculture, Livestock and Fisheries. By modernizing the machinery and adopting newer technology, Argentine agriculture is expected to become more efficient and cost-effective. In addition, the development of an apex lending operation will directly support an important objective of the government's banking sector adjustment program, supported by a loan of $400 million approved by the World Bank last March. The agricultural credit project will channel all its funds at cost through financial intermediaries at the same time that the Central Bank is reducing its rediscounts for the agricultural sector. NOTE: Money figures are expressed in U.S. dollar equivalents.  i I ) - 2 - The project will be cofinanced by a $105 million loan from the Inter- American Development Bank. The balance of the cost will be provided by the participating financial intermediaries ($45 million) and by the sub-borrowers ($99 million). The World Bank loan to BNA is for 15 years, with a five-year grace period, at a variable interest rate, currently of 7.72 percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.75 percent on the undisbursed balance. - 0 -