Announcement of Two Million Six Hundred Thousand US Dollars Irrigation Loan in Nicaragua on March 1, 1963

0 • INTERNATJONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 1818 H STREET. N.W., WASHINGTON 25. '0. C. TELEPHONE: EXECUTIVE 3-6360 Dank Pr~ss Release No. 63/4 SUBJECT: $2.6 million irrigation March 1, 1963 loan in Nicaragua The World Bank today made a loan equivalent to $2.6 million for the first large-scale irr1igati.on project in Nicaragua. The loan will help to finance the Rivas irrigation scheme, under which water will be brought to 22,000 acres of land in western Nicaragua, between Lake Nicaragua and the Inter-American Highway. Irri- gation of the area is expected to raise farm income, to increase domestic food supply and to add appreciably to Nicaragua's foreign exchange earnings from agri- • cultural exports • Irvine Trust Company, New York, is participating in the loan, without the world Be..nk's guarantee, to the extent of $135,000, representing the first four maturities which :fall due between March 1967 and September 1J968. Agriculture is the mainstay of the Nicaraguan economy; exports of cof:f'ee and cotton account for over half' the country's earnings in international -:trade. World prices for these commodities have declined in recent years, however, and the Govern- ment's policy is to encourage divei"sif'ication of production. Beef cattle p:roduc- tion, partly for export, has already increased, and exports of bananas commenced in The output of' food crops, however, has decreased. one reason is the brevity and variability o:f the rainy season over much of ,.the Pacific Zone. To o,~ercome this deficiency, the Government is encouraging irrigation, and has provided tech- • nical assistance and credit to farmers for the developme3?it of small-scale private pump schemes. Several thousand acres already have been irrigated, and agricultural experts believe that eventually some 175,000 acres could be developed as large- ~, "scale p:rojects. "' .'  - 2 - The Rivas irrigation project is 70 miles south of Managua. Although the soil • and topography a.re well suited to irrigation agriculture, the land is at present used. primarily for grazing. With irrigation there will be a considerable reduction in the area under pasture in ·favor of year-round cropping. The main crops expected to be gromi are bananas, plantains, corn., rice, sugar cane, beans, sesame and truck crops. Some $2 million worth of bananas, sesame and sugar will be exported from the projf;tct area annually. It is estimated that the net value of the increase in annua~ production when the project is i'ully developed will be about 11 million cordobas (US$1.8 million). The main works to be undertaken comprise an intake and conveyance canal from Lake Nicaragua, two pumping stations and reservoirs, and 54 miles of ·distribution canals and laterals, together with on-farm distribution systems. Associated works include a 41-mile power transmission line to bring electric power from Granada into :the project area; the improvement or new construction of about 56 miles of roads to provide all-weather access to the farms in the project area; and the establishment • of an experimental and demonstration fa.rm. The irrigation works will be constructed and operated by Empresa. de Riego de Rivas, an autonomous government agency established for the purpose. Empresa will also operate the demonstration and trainit!g farm and provide technical assistance to individual farmers. The power transmission line will be buil.t and operated by Empresa Nacional de Luz y Fuerza; power will come largely from the Rio Tuma power plant, also financed by the world Bank. The road construction and improvement will be carried out by the Government's Highway Department. The total cost of the project is estimated at the equivalent of $4.6 million; the Bank loan will cover the foreign exchange requirements. The loan is for a term of 25 years and bears i~terest of 5-1/2% per annum including the 1% commission which. is allocated to the Bank's Special Reserve. Amortization will begin in March 1967. l