Announcement of Seventeen Million Five Hundred Thousand Dollars Loan for Industrial Investments in Morocco on May 6, 1966

•• 1818 H STREET. N.W., WASHINGT..1N D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 66/19 Subj.ect: $17.5 million loan for industrial May 6, 1966 investments in Morocco The World Bank has approved a loan equivalent to $17.5 million to the Banque Nationale pour le Developpement Economique (BNDE), a private development finance company in Morocco. The loan will provide BNDE with the capital it expects to need to finance the foreign exchange costs of private industrial investments in Morocco during the years 1966 and 1967. BNDE is the major institutional source of long-term industrial finance in Morocco. During its existence of just over six years, it has assisted new or ex- • panding industrial enterprises which probably accounted for about three-quarters of total private industrial investment in Morocco in that period, thus contributing significantly to the economy. With additional resources provided by the Bank loan, BNDE will be able to continue its key role in the further development of Moroccan industry. This is the second loan to. be made by the Bank to BNDE. A loan of $15 million was made in December 1962, and the following month the International Finance Corpo- ration (IFC), an affiliate of the Bank, invested the equivalent of $1.5 million in BNDE's share capital. The loan announced today will increase BNDE 1 s total resources, excluding rediscounting facilities at.~the Central Bank, to about 265 million dirham:; ($52.5 million). Share capital amounts to DH 30 million ($6 million). The Moroccan Government and the IFC have substantial minority interests and the remainder of the capital is owned by shareholders in Morocco, Belgium, France, Germany, Italy and the • United States. The Moroccan Government has made an additional DH 30 million ($6 million) available in the form of low-cost, long-term loans.  • - 2 - From 1959 to 1965, BNDE made 131 direct loans and equity investments totaling DH 172 million ($34 million), equivalent to an annual rate of about DH 27 million ($5.3 million). In recent months loan and investment activity has stepped up con- siderably; between late November 1965 and February 1966, loans and investments amounting to DH 29 million ($5.7 million) were.approved. The industries which have received assistance from BNDE include electric power and mining, food and beverages, petroleum and derivatives, textiles, transportation, mechanical and chemical manu- facturers. While the largest part of the investments have been for projects in Casablanca, Rabat, Fes and Marrakech, several have been in other tonns throughout Morocco. In 1965, BNDE distributed its first dividend of 3% for the year 1964. The upturn in the pace of BNDE's activities in the past few months is expected to continue throughout 1966 and 1967. The Government's cu~rent development pl~n envisages a substantial increase in private industrial investment during these years. Important investments are ~xpected in pulp, paper and paper transformation, in cement and other building materials, such as ceramic tiles and plate glass. In • the food industry, considerable expansion is envisaged in fruit juices, and the processing of other agricultural products and fish. An expansion is also expected in the spinning and weaving of cotton and artificial fibers. Particularly promising is the construction of hotels to accommodate the rapidly growing tourist industry. The financing of hotels in Morocco is currently handled by an autonomous government agency. BNDE has applications for a number of hotel projects and, µnder an arrange- ment being discussed, they might be financed in part out of the proceeds of the Bank loan. Morocco's 1,200-mile coastline and other natural attractions are drawing more tourists to Morocco yearly. With increased accommodations for tourists, the number could triple by 1970 to 1,000,000 a year, greatly increasing Morocco's foreign ex- change earnings. • • • 3• The Bank loan to BNDE will be operated as a line of credit and will he com- mitted for individual projects to be agreed upon from time to time by the Bank and BNDE. The loan will be for a term of 18 years; interest will be applied to each part of the loan at the World Bank's standard lending rate current wheu such part is committed for one of BNDE's projects. The amortization schedule will con- form substantially to the aggregate of the repayment schedules applied to BNDE loans and investments financed ~~,t of the proceeds of the World Bank loan, none of these repayment schedules to extend beyond 15 years. the loan is guaranteed by the Kingdom of Morocco • • •