Announcement of Twelve Million Five Hundred Thousand US Dollars Loan in Colombia on May 15, 1968

C.) • 1818 H STREET, N.W., WASHINGTON D. C. 20433 TE' EPHONE: EXECUTIVE 3-6360 /, Rank Press Release No. 68/21 Subject: $12.S million loan in Colombia Nay 15, 1968 The World Bank announced today that it is making a new loan -- of $12.5 mil- lion -- to be used by five Colombian development finance companies (financieras) to ·continue their contribution to the growth of the private sector of the Colombian c~onomy. The loan is being made to the Banco de la Republica, the central bank, "l;v~iich will make the funds available to these institutions. The fi'7e companies, e.stablished between 1959 and 1963 in various parts of the country, have played a major role in Colombia's economic development by providing 1,!edium and long-term loa.ns, import•export financing, equity participations, pro· • r :...otior.s and underwriting,r and guarantees to private business in the country. e;;timate that up to June ~:or; more than 13,000 workers. 1967, their loans and investments had helped create jobs They The financieras' operations are broadly diversified with commitments in agri- culture and livestock, textiles, metals, engineering, food and beverages~ paper and printing,. chemicals and other dynamic sectors of the economy. The five i1.1stitutions have developed both internal and e1ct:ernal sources of capital which might not otherwis~ have ~,come.available and have used this capital /,,I creatively in promoting new enterprise&. They have alsc'servad as a valuable con- duit for introducing modern financing techniques into Colombia. The institutions which will be the beneficiaries of the loan are Cnrporacion ,, Financiera Colombiana in Bogota (which began operations in 1959): Corpor·acion Fi- nanciera Nacional in Medellin (1960), Corporacion Financiera dt? Caldas :l.n Manizales "·.•.. .\ (1961), Corporacion Financiera del'(Jalle in Cali. (1962), and. Corporacion Financiera :el Norte in Barranquilla (1963). /more  - 2 - In 1966 the World Bank made a loan of $25 million to the Banco de laRepublica • _or the five financieras. The International Finance Corporation, the World Bank ;-~::fi liate that invests exclusively in private enterprise in developing member coun~ ~ries, had previously invested approximately $4,750,000 in the share capital of Colombiana, Nacional, and Caldas. These funds have been utili~ed, and the new loan now being provided will suppor ~he finan~ieras in their further financing of ~olombian businesses. The World Bank loan will co·ver the direct foreign exchange costs of projects to which the financieras commit funds. The interest rate will be the.Bank's cur- rent rate at the time of crediting each investment project. Terms will be up to 15 years, with amortization in semi-annual installments, expected to beg~n on February 15, 1969. * * * The other principal resources of the Colombian development finance companies are their own equity, credit lines with Banco de la·Republica and foreign commercial banks and the Private Investment Fund of Colombia, a special fund managed by the • Danco de la, Republic. The aggregate value of their portfolios was Col$1. 8 billior~ (US$110. 8 million) as of December 31., 1967. Their equity portfolios increased fro1.i Co1$13 million. (US$800,000) at the end of 1961" to Col$318 million (US$19.6 million) at the end of 1967. The loan is the 30th made by the World Bank to Colombia and brings to $468 mi~- - lion the total of Bank loans made to that country. In addition, the Bank's affil . iate, the International Development Association, made one credit or $19.5 million for highways in Colombia. IFC has made 21 commitments, totaling $14.7 million (net of cancellations), in 13 Colombian enterprises. - 0 - •