Announcement of the World Bank's to Support Improvement of Irrigation Networks in Mexico on February 17, 1994

FEB-18-' 94 FR I 11:41 ID: LRCUP-LRc-LL, - NU: EUe-byb- (1 FOR IMMEDIATE RELEAS[ World Bank 1818 H Street, N.W., Washington, D.C. 20433, USA * Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 94/60LAC Contact: Ciro Gamarra (202) 473-8721 WORLD BRANK TO SUPPORTIMRVEN OF IRRIGATION NER KSINMEIC WASHINGTON, D.C., February 18, 1994 - About 42,000 farmers in nine states in Mexico will beneat from a project to improve on-farm and minor irrigation networks. A $200 million World Bank loan to Mamico will assist the project which, for the Arst time, involves cost-sharing by the private sector and the government. The beneAciary farmers will repay 100 percent of on-farm investments and 50 percent of minor irrigation networks which are primarily public infrastructure. The project will cover 400,000 hectares in the states of Baja Califoriia, Chihuahua, Sonora, Sinaloa, Durango, Guanajuato, Aguascalients, Michoacan, and Tamanlipaj. It will directly benefit 42,000 farmers in 14 irrigation districts that have been rehabilitated and transferred to users under an earlier irrigation project supported by the World Bank. The project is expected to increase the value of production from irrigated agriculture, to generate greater returns on public and private investment in irrigation, and water and energy savings, improve management of groundwater resources, reduce salinity and water- logging risks, and generate employment. In addition, over 1.5 million ha will beneit from technological support, communications and training included in the project. The project is also expected to generate about 52,000 new jobs through incremental harvested land and diversiftcation into high value crops like fruits and vegetables, which are labor intensive. The project fits within the World Bank's strategy to assist in increasing the efficiency of the agricultural sector in Mexico through promoting both economically and financially viable private sector investments in agriculture, and the overall efMciency of the smctor. The main objective is to assist irrigation farmers to complete the transfer process, consolidate existing irrigation investments through direct user participation in decision- making and investment, move to diversified agricultural production, and increase their efficiency in the use of land and water resources. NOTE: Money figures are expressed in U.S. dollar equivalents. FEB-18-'94 FRI 11:41 ID:L~-LArCE-LAC FAX NO:202-676-9271 #659 P03 -2- These d opmcnts will increase the profitability and sustinahility of irrigated agricultur in Mexico, as wel as the potential for exploiting new markets to be developed under the North Amercan Eec Trade Agreent (NAFA). The c of the pjet is timate at s568. millia. The Govemnment of Mexico will provide $137.2 millon, ru~al credit and rediscount $146.2 million, and farmrs and private bank $85.4 million. The World ank lom will be disbursed over six years. During the past 25 years, Mexico has recived 19 World Bank loans for the rrigation and sub-drainage sub-uctor, amounting to about 51.4 billion. Thuse projbcts contributed to the creation of about 500,000 ha of i~igated land and rehäbilitatinn of an additional 900,000 in central and norhern Merico. On December 1991, the World Bank approved a S400 million loan to Mexico to help financc an irrigatin and drainag secor project to support investåmnts to complete and rehabilitate or modemiz eisting major of-farm systems. The World Bank loan was made to Nacional Financiera (NAFIN), with the guarantec of the United Mexican States. It is for 15 years, including five years of grace, with a variable interest rate, currently 7.27 percmnt, linked to the cost of the ank borrowings. It also carres an annual com~mitmnt charge of 0.25 percent on the undisbursed balance. -0-