Announcement of Two Million Six Hundred Thousand Dollars Credit to Honduras for Livestock Development on January 7, 1970

• INTERNATIONAL DEVELOPMENT ASSOCIATION 1813 H STREET, N.W .. WASHINGTON 0. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IDA Press Release No. 70/1 Subject: $2~6 million credit to Honduras January 7, 1970 for livestock development A credit of $2.6 million from the International Development Association (IDA) to Honduras will fin~r.ce half the cost of a five-year lending program to be car- ried out by the Centrcl.1. Bank of u~rAd.uras throurh commercial banks to increase the production of be2f and dairy cattle. Uncle: th~ procL1m commercial b:mks will for the first time make long-te:CTn lnans for agriculture, cattle producers operating about 135 ranch~s will greatly increase their incomes and the value of their herds, • and improve their prc0uctiun techn.i..ques. The bt::!ncfit to the balance of payments of Honduras will be equivalent to $1.7 million a year. The Honduran economy is predo~inantly agricultural, with banan&s accounting for about a third of agricultural production and livestock one-fifth. The Govern- ment's ag~icultur~l policies are directed toward increasing livestock production to raise the extremely low level of domestic beef consumption and to achieve more diversification nf exports. The greatest need in the livestock sector is for long- term financing for ranch development which the program being assisted by the IDA credit will provide. Most of the ranches expected to participate in the program are located in the North Atlantic Zone which has the greatest concentration of suitable ranches and the most favorable resources for development. Loans will be used for ranch im- provements, such as pasture establishment, fencing, watering facilities, ranch • buildings, parasite control equipment, and improved breeding stock • /more IDA P.R. No. 70/1 - Honduras-Livestock - 2 - The Central Bank will be the Executing Agency. A Project Commission repre- senting the various institutions concerned with livestock development in Honduras • will coordinate and supervise the project. A Project Director will hnve technical responsibility for carrying out the project. Technical assistance to ranchers for the preparation and supervision of ranch development plans will be provided by livestock technicians employed by participating banks and seconded to the Project Di.rector. The total cost of the project is estimated at the equivalent of $5.2 million, half of which will be provided by the IDA credit and the remainder by the com- mercial banks (35%) and ranchers (15%). An amount of $4 million will be for long- term development loans, $1 million for working capital and $200,000 for technical • services. The Government will relend about $2.45 million of tl1e IDA credit to the Central Bank at 4~% interest, to be relent at 5% to participating banks. These banks will make loans to ranchers for tenns of 8 to 12 years at current commercial rates of interest. The remaining $150,000 of the IDA credit will be given as n grant by the Government to the Central Bank for technical services related to the project. The IDA credit will be for a term of SO years, including a 10-year grace period. It will be interest free but will carry a service charge of 3/4 of 1% to cover IDA's administrative costs. - 0 - •