Announcement of One Hundred Ten Milllion US Dollars Loan for Livestock and Agriculture in Mexico on June 14, 1973

INTERNATIONAL BANK FOR • RECONSTRUCTION AND DEVELOPMENT 1818 H STREET, N.W., WASHINGTON 0. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 73/38 Subject: $110.0 million loan for livestock June 14, 1973 and agriculture in Mexico With the approval today of a $110.0 million loan to help finance a $272 million live- stock and agricultural project, the World Bank lending to Mexico crosses the $1.5 billion mark. This will be the eighthagricultural loan to ~xico and the project will support the Government's program to increase and diversify agricultural production, to introduce more modern methods of production, and to spread th~ benefit of economic development more widely. Of the loan,$25.0 million will support an approximately $50 million long-term credit and technical assistance program for ejidatarios (cooperative farm settlers) and small landholders. About 22,500 low-income agricultural families will receive investment credits at 7.6% interest. This sub-project marks a departure from the general lines of three earlier Bank-financed credit projects in that it will assist Mexico's search of new approaches to draw more of its 4 million rural families into the country's growing market economy. Under the project special efforts will be made to raise the volume and quality of investment credit to low-income farmers in the States of Oaxaca, Guerrero, Queretaro and Aguascalientes, which are among Mexico's poorest regions. Typical beneficiaries will be farmers having annual family in- --comes equivalent of $600-$700, which puts them among the poorest 25% of the population. The new loan also includes $82.8 million to assist farm investment of approximately $195 million and agro-industrial investment of $20 million. About 10,000 sub-lo~ns are expected to be made under this sub-project, at interest rates varying from 10.5 to 12% and will assist mainly the expansion of livestock and crop production and agro-industries, meet the needs of food and fiber products of the country's rapidly growing population, and con- tribute to increased export earnings. Complementary technical studies and services will also be financed by the loan funds. As in three earlier projects, the Bank loan is being made to Nacional Financiera, S.A., the Mexican financing agency which borrows abroad on behalf of the Mexican Governme~~. The agency will transfer the proceeds of the loan to Fondo de Gara:ntia y Fomento para la Agricul- tura, Ganaderia y Avicultura -- a trust fund managed by the Bank of Mexico -- which will rediscount loans made by participating public and commercial banks. The Bank loan, guaranteed by United Mexican States, will be for a term of 20 years, including four years of grace, with annual interest at 7~. Seven financial institutions in Curacao, Japan, the Netherlands, Switzerland and the United States are participating in the Bank loan for a total amount of approximately $911,000 equivalent. They a:r;-e: Algemene Bank Nederland N. V., Amsterdam; Union Bank of Switzerland, Zurich; Lavoro Bank Finance Company N.V. Curacao; The Mitsui Trust and Banking Co., Ltd., Tokyo; Lake View.Trust and Savings Bank, Chicago; Wells Fargo Bartle N.A., ~San Francisco; and The Huntington National Bank of Columbus, Columbus, Ohio, - Q -