Announcement of Colombia to Improve Farm Credit System with World Bank Loan on February 11, 1988

FOR IMMEDIATE RELEASE World Bank 1818 H Street,~ W. Washington, D.C 20433, U.S.A. BANK NEWS RELEASE NO. 88/44 Contact: A.M. Pimenta-Neves (202) 676-1218 COLOMBIA TO IMPROVE FARM CREDIT SYSTEM WITH WORLD BANK LOAN Washington, February 11, 1988 -- Colombia's efforts to improve its farm credit system will be strengthened with the assistance of a World Bank loan of $15 million. The loan will help the country's main financial intermediary for agriculture to become more efficient and self-sustaining. The Agricultural, Industrial and Mining Credit Bank (Caja Agraria), will reinforce its lending operations by raising the quality of its loan portfolio, improving collections, introducing computerized data systems and simplifying the credit process. Caja Agraria will also strengthen the way it taps resources for lending, the operations of its branches and its staff capabilities. Agriculture accounts for more than 20 percent of the gross domestic product in Colombia and over 60 percent of exports. Caja Agraria supplies half of all agricultural credit in the country and most of the credit and financial services to small farmers (other than coffee growers). It has assets equivalent to $1.4 billion, a network of 878 branches and a staff of 13,000. Until the early 1970s, Caja Agraria was reasonably efficient, but since then its operational effectiveness and quality of services have weakened. A self-sustaining and profitable Caja Agraria operation is expected to lessen the need to finance the agricultural sector through non-market mechanisms, and eliminate the drain on the national budget for covering Caja Agraria's operating deficits. The project is expected to be carried out over three years at a total cost of $35 million. Caja Agraria will provide the remaining $20 million to cover the cost. The Bank loan to Caja de Cr~dito Agrario, Industrial y Minero (Caja Agraria) is for 17 years, including four years of grace, with a variable interest rate, currently 7.72 percent, linked to the cost of the Bank's borrowings. It also carries an annual conunitment charge of 0.75 percent on the undisbursed balances. NOTE: Money figures are expressed in U.S. dollar equivalents.