Announcement of Dollar 18. 5 Million Road Loan to Uruguay on October 26, 1962

.,,. WORLD ~ • INTERNi\TlONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 1818 H STREET. N.W., WASHINGTON 25. D. C. TELEPHONE: EXECUTIVE3-6360 Bank Press Release Ro. &2./ 37 SUBJECT: $18. 5 million road loan October 26, 1962 to Uruguay The "World Bank today made a loan equivalent to $18.5 million to uruguay for the improvement of road transportation. The loan will be used to rebuild to all-weather standards Uruguay's main north-t;:outh trunk highway, which ex- tends f'rom Montevideo, the capital and principal port, to Rivera about 320 miles to the north on t~e Brazilian border. The loan Will also help to finance a program to improve the country's highway maintenance o.tganization • and its operations, and will provide funds for a. study of Uruguay's future highway needs. Five commercial banks a.re participating in the loan, without the world Bank's guarantee, for a total amount of $365,000 representing the first maturity which falls due in March 1967. The participating banks are Gira.rd TrUst Corn Exchange Bank, Philadelphia; Nederlandsche Handel Maatschappij N.v. (Nether- lands Trading society), New York; First Wisconsin National Bank of' Milwaukee; The First Pennsylvania Banking and Trust company, Philadelphia; and Grace National Bank 9f New York. The Montevideo-Rivera. highway, known as National Route 5, traverses the center of Uruguay. Its service area comprises about a quarter of the country, and accounts for over a third of livestock and a.gricultural production. The road is also an important international artery for some of the products of • southern Brazil, such as timber, for Argentina and other countries via the  ' .' ~ • - 2 - .·· port of Montevideo. For the most part the highway has no improved surface and in frequently impassable during the rainy Gee.sons; the nouthern section ifj too narrow and unsafe for the high volume of traffic. The high cost and uncertainty of travel on the road have discouraged the migration of capital and tecbnica.l ekills into the central and northern section~ of Uruguay, and impeded the growth of agricultural and livestock industries in the area. The improvements being undertaken with Bank usista.nce will provide an all- weather road, assuring year-round accessibility of this important section of uruguay and substantially reducing transport costs. This should not only stimu- late agricultural and livestock production, but should al.no make possible & greater diversification of ~conomic activity outside of Montevideo and the coastal zone, where now about two-thirds of the country's population of 2.8 mil- lion is concentrated. Under the Bank-financed project, about 300 miles of National Route 5 w:111 be improved by widening, paving, raising the grades of certain sections fre- • (lUently inundated, replacement of inadequate drainage structures, the widening of eight bridges and the construction of ten new bridges. The work will be carried out under unit-price contracts awarded on the basis of international competitive bidding, and is exp~cted to take four years to complete. The short distances between towns and low density of population outside Montevideo make Uruguay a country well suited to highway transport. Highway traffic has been increasing rapidly in recent years and ia now the principal carrier of passengers and freight. Most of the country's roads are not paved, however, and high-speed travel, which is common becaw;e of the flat and open terrain, is destructive and calls for e~nsive and continued ma.int~nance. •  - 3 - • Some seetions of the main roads are well kept up but road maintenance is generally below §tandard mainly-because of the inadequacy of equipment. Equipment and engineering assistance to be financed by the loan will enable tJrugu.ay'a maintenance organization to introduce new and improved methods and provide the basis for growth to meet the requirements of the expanded high- way system. The highway planning study to be undertaken is essential for the prepara- tion of a long-range program for investment in highways and for the establish- ment of priorities based on economic considerations. The study will also assist in the organization and operation of the Highway Department, including the estabUshment of a highway planning office. The total estimated cost of reconstructing National Route 5 is equivalent • to $25.4 million. The Bank loan of $18.5 million will finance its foreign ex- change costs and also the cost of imported equipment and servi.ces for the main- tenance program and the high.way study. The Government of Uruguay will finance the local currency requirements. The loan is for a term of 15 years and bears interest of 5-1/2~ annually including the 1% commission which is allocated to the Bank's Special Reserve. Amortization 'Will begin in March 1967. This is the fifth Bank loan to Uruguay. Earlier loans totaling $71 mil- lion were made for the development of electric power and agriculture and for the expansion of telephone services • •  URUGUAY PRINCIPAL NATIONAL HIGHWAYS - Concrete or asphalt highways - - - - Macadam or tosca highways - - - - · - - Dirt roads KILOMETERS - Improvement project - Railroads \ B O L I V ;...,~-/ \ (1>4 .) B R A z \..r----.r~ -s-.., '--·, w .I ·,., G'v.., ·1 ...J ( ASUNCIO~~ ~ !, - } t ...._..,:,.; :x:I / u.i A R G E N T I NA \ANTIAGO ®) ; '··>., "·. . . . . . . . . . ·,.\ · ~~----....___--~-------,--i """- ...__...... \ '· ..... ......... . ~. ~ AYSANDU MAY 1962 IBRD-998 ,'; I