Announcement of Twenty-One Million Eight Hundred Thousand US Million Loan for Highway Development in Mexico on June 17, 1970

NTERNATIONAL BANK FOR RECONSTRUCTf Of'~ AND DEVELOPMENT 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 70/41 Subject: $21.8 million loan for highway June 17, 1970 development in Mexico A World Bank loan of $21.8 million, announced today, will finance the con- struction and improvement of about 650 miles of roads in Mexico to help meet the growing demands of an expanding economy. The loan, the Bank's sixth for highway development in Me~ico, brings the total of such assistance to $~76.5 million. The rapid growth of road transport in Mexico is reflected in the number of vehicle registrations which have increased from 675,000 to 1,495,000 in the past decade. During the last ten years the length of the road system has more than doubled to 42,780 miles. The well developed federal road network connects the ~ capital, Mexico City, with all the state capitals and main ports of entry, as Vdll as the major centers of production and consumption. By building new roads and by illlproving some of the existing ones the project being financed by the Bank loan is designed to increase the productivity of highway transport by re- ducing operating costs and travel time. The works now being financed consist of the improvement of five roads total- ing 360 miles and the construction and paving of another five roads totaling 286 miles. The most important highway to be constructed is the Tuxtepec-Matias Romero road which will reduce the travel distance between the more developed part of the country centered on Mexico City and the region o·f the Gulf of Tehuantepec, while integrating into the national economy the rural cente~s in the foothills of the Sierra Madre de Oaxaca. That road, as well as two roads • in the Puerto Vallarta neighborhood will also help the development of tourism • /more  , . - r ; ... ... .. \\ ! Bank P.R. No. 70/41 - Mexico--Highways - 2 - Among the roads to be improved is the Zapotlanejo-Lagos road which serves Guadalajara, Mexico's second. largest city, with its population of 1.3 mil- • lion. The improvement of this high;--;ay is important for the development of Guadalajara and the Pacific west coast and will help further the Goverrunent'a policy to reduce the degree of economic concentration in Mexico City. The project works are scheduled for completion by'<the end of 1974 at a total estimated cost equivalent of about $56.8 million. The Bank loan of $21.8 million will finance the estimated foreign exchange component. The remaining costs will be met by the Mexican Government. With minor excep- tions all contracts for the works will b~ let on the basis of international competitive bidding. • The Secretariat of Public Works, a Federal agency with extensive ex- perience in highway construction and maintenance, is responsible for the planning, construction and maintenance of federal highways and will execute the project. The loan will be made to Nacional Financiera, S.A., a Mexican Govern- ment financial agency, and guaranteed by the Government. The loan will be for a term of 25 years, including a grace period of 5 years, and will bear interest at 7%. Franklin National Bank, and National Bank of No~th Amertca, both of New York, are participating in this loan for a combined total amount of $250,000. - 0 - •