Announcement of Twenty Million loan to Ecuador for Industrial Financing on June 28, 1971

INTERN·ATION-AL BANK ·FOR .RECONSTRUCTION AND DEVELOPMENT 1818 H STREEi-, l'\LW,, WASHINGTON 0. C. 20433. TELEPHONE: EXECU'!'!VE 3-e360 Bank Press Release No. 73/47 Subject: $20.0 million loan to Ecuador for June 28, 1973 indq6trial financing The World Bank has ~pproved a $20.0 million loar-. to assist in financing industrial projects in Ecuador through two development finance companies:· Comisi~n de Valores-Corporacion Financier& Nacional (CV-CFN), a Government-owned company, and Ecuatoriana de Desarrollo S .A. -Compaii!a Financier& (COFIEC), which is ,pri- vately owned. This is the second loan by the Bank to Ecuador for this purpose~ Th~ first, of $8. o million made in 1970, was rapidly eommitted by .the two finance· companies. · · IE:cuador's industri.al sector has performed well in i'th~ last few years, but . ' faste:t growth has been hampered by the lade. of sufficient long-term ciedit facilities. The development of the petroleum sector is giving added impetus to ~ industrial investment in the country and this is likely to be reflected in increas- ing d~ds for jndustrial credit. I The two development finance companies will utilize the loan funds to cover the cost of import~d gbods and services required by their clients over the next' I I two years for projects involving the expansion of ~isting enterpris~s or· the establishment of new ones. The two companies are Ecuador '.s main suppliers qf lon~-term credit t~ 'industry.· 'Their share in i~d·ustrial financing has be~n rising steadily since they started operations in the mid-1960's. By 1971 CV-CF~ . ' · ~d COFI~C, were providing over one-fourth of industri.al financ;ing for fix~d assets iu.the country. The World Ban~ loan is being made to the Republic of Ecuador and will bear ' ' ' 'in~erest of 7 1/4%' per annum •. The Central Bank, as fiscal agent for the Gove~- . ment, will re-lend the proceeds to CV-CFN and COFIEC at 9%'. Repay1:1ents by the I,·. Government to the World ijank·will be based on reimbursements fro~_CV-CFN's and I COFIEC 's borrowers, who may obtain financing from Bank funds for te.rms. of up to 15, years . • 0