Second loan administration report on the loans to the Kingdom of Belgium and the Belgian Congo

, \ E.A. 27a RESTRICTED J. J This report is restricted to use within the Bank. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT SECOND LOAN AD~1.lNISTRATION REPORT on THE LOANS TO THE KINGDOM OF BELGIUM A~TD 'THE BELGIAN CONGO of March 1, 1949 and September 13, 1951 October 13, 1953 Department of Operations Europe, Africa a.nd Australasia  -<i" Conv0rsion Rates for Belgian and Belgian Congo Currency 1 Belgian franc 1 Congo franc U. S. $1 .: 50 francs I franc = 2 U. S. cents 1,000,000 francs U. S. $2 0, 000  Second Loan Administration Report on the Loans to the Kingdom of Belgium and the Belgian Congo Table of Cont ents ~ General ••••••••••••••••••••••••••• • 1 0 • • • • • • • • • • '. . . . . . . . . . . . . . . . . . . . Relations with Belgiwn •••••••••••••••• ,. •••••••••••••••••••••••••• 1 Political developnents ••••••••••••••••••••••••••••••••••••••••••• 1 Economic position of Belgium ••• ~ ••••••••••••••• •.••••••••••••••••• 2 Economic developnents in the Belgian Congo ••••••••••••• "••••••••• 2 mvestmen.t ............................................. . 2 Commodity prices •••••••••••••••••••• GI • • • • • • • • • • • • • • • • CO. 3 IToduction and consumption •••••••• " •••••• 4 I'{ . . . . . . . . . . . . . . Foreign trade •••••••••••••••••••••••••••' e. • • • • • • • • • • • • • • 4 Balanc e of pa.;.yment s •• s • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 5 Finatlce •••••••••••• 7 eti • • • • • • • • • • • • ,. • • • • • • • • • • • • • • • • • • • • • The 1949 loan to the Kingdom of Belgium •••••••••••••••••••••••••• 8 The 1951 loans to the Balgian Congo and the Kingdom of Belgium ••• 9 ..  ADMINiSTRATIVE MAP OF TH E BELGIAN CONGO --. - STATE BOUNDARY • CAPITAL OF THE COLONY - - - - - - PROVINCIAL BOUNDARIES @ PROVINCIAL CAPITALS I I I I I I RAILWAYS @ DISTRICT CAPITALS ., j N \....'" ~. 5 0 U 0 A N 0° ~ t - - - - - - ( ) ----+----~y~=--~ < ~ Q:- >1 lJ... 0:: W I- eO ~ ~ ~ ~ a -<l ~ 1-' ...... G 12° " ~ ~ A " r-·- U) " , · ,~ ~ I • tV DIY 0 <:> 300 , r H £ R N ~~ KILOMETERS 20° • 24° 2"  SECONJ LOAN ADHI!ITST?ATION P.E?Of:T ON' THF:: LOANS TO Bj:;I~GI1JH A..llD T}ffi BELGIPj~ CONGO GENERAL 1. This report follovfs the first adnli.nistration re'Jort on the Bank's 316 million ioan to Belgium (No. Loan 96a, dated Jun~ )0, 1950) and the reports (Nos. P20., E...179a and E-I80a, dated September 10 and 11, 1951) submitted to the Executive Directors in connection with the loans of $40 million and $30 million to the Be1gtan Congo and BelgilL"ll respec- tively. 2. To date, the Bank has made the following three loans in the Belgian franc area: Bond Repay- Date of Last Sales ments Borrower Amount Interest A~reemellt Maturitl to AUr,.17 .1953 (In $ (in $ Pmi1 fion' million) March 1, March 1, Kingdom of Belgium 16 4-1/4 1949 1969 16 0.5 Sept. I), Sept. 15, The Belgian Congo 40 4-1/2 1951 1976 Sept. 13, Sept. 15, Kingdom of Belgium 30 4-1/2 1951 2916 All payments due on the loans have been punctually made. In August 1953, t~,OOJOOO of bonds evidencing the r~16mil1ion loan were purchased by Bel~"','ium a month before the due date. RELATIons UlTH BBLGIUM 3. The Bank has maintained close contact with the Belgian Government Which has always readily furnished information about the use of the loans. The President, the Director of Operations for Europe, Africa and Australasia, and other representatives of the Bank ha.ve made, several visits to Belgium but no Bank lnission has visited the Belgian Congo since the loans for' its development were made in Se,tember 1951. PotIT IC1l11 DEVELOPl.:ENTS 4. On July 17, 1.951, after the abdication of his father, King Leopold III". Prince Baudouil1 became King of the Belgians. 5. The Christian Social Party, wInch had obtained a small majority in Parliament in the general electiQn of June 1950., continued in power. HO'wever, it suffered losses in the municipal elections of October 1952 while gains were registered by the Socialist Party. 6. M. Duvieusart's government resigned in August 1950. It was succeeded by the cabi~t of M.Pholien, which gave place on January 15, 1952 to' another Christj,an Social goverim~ht formed by U. Van Houtte, 'who had been Minister of Finance under U~Pholien.  -2- 7. The Government signed the European Defence Community Treaty on May 27, 1952, and Parliament ratified the treaty sett.:tng up the :Suropean Coal and Steel Community on June 12, 1952. ECONOMIC POSITIOH OF BELGIUM 8. Although production has declined in some Belgian industries in 1952 and 1953, and the foreign trade position of the Belgo-Luxembourg Economic Union is no long~r exceptional~y favorable, the chanpes do not , _give rise to anxiety about the soundness of the Belgian economy. An anaiy- , sis of economic developments in Belgium has recently been made by the stalf' of the International Monetary Fund in connection -rrith its 1953 consultations 'with Be1g1l.'Uu. it discussion of the economic situation in BelGium has there- fore been omitted from this report and the TIt11? paper is attached. ECONOMIC DT::VELOPi\1l'~NTS IN THE B~LC·I~:.N CONGO 9. Since the Bank made its loans in September 1951, economic activity in too Belgian Congo has been influenced mainly by the rate of investl::ent and by commodity price fluctuati0ns. Until 1952 both were rising and they w"orked together to stimulate out!,ut,; subsequently, 11OV1eV€r, 'Vn th COJ!1Llodi ty pri.ces driftine dO'V~'IlVlards, they have tended to work in opposite direct,ions. Investment 10. Gross private investment in the Congo has recently been exceptioI'. ally high. From 19h8 to 1952 it totalled 2, billion francs ($500 million), or as much as had been officially estimated for the entire ten years of the Development Plan. In 1951 and 1952 it averaged roughly 6;,8 billion francs ($136 million) annually, of which replacement and maintenance accounted for 40-50%. Private investment was concentrated ort indust~, agriculture, the distributive trades and housing. In 1951 corporations operating in the Congo invested 2.6 billion francs in mining, 800 million francs in manufacturing, and 600 million francs in agriculture. 11. Public capital expend.iture under the Ten-Year Development Plan was originally also estimated at 2, billion francs ($,00 million). Partly because of the rise in prices since 1948-49, when the Plan was drawn up, and partly because new projects have been added, this estimate has been revised upward to 45 billion francs ($900 million); in addition, 15 billion francs ($300 million) is to be spent under the Plan after 1960. 12. Inve stment in basic services has proceeded more slowly than was anticipated v.,hen the Bank loans were negotiated. Under the Plan 2.9 billion francs "ras 5_flvested in 1951 and 4.3 billion francs in 1952; this included investment by the Native Welfare Fund and gover11l'OOnt advances to contractors. A comparatively small part of. tl"Ese amounts may have been spent on replace- ment and maintena:ree; the bulk was new investment. In addition, extraordi- nary budget expenditure outside the Plan came to 800 million francs in 1951 and l.~ billion francs in 1952. Altogether, actuuI investment expencj- ture'in the public sector approximated 12 billion francs ($2hO million) i1". the years 1948-1952.  -3- 13. Public investment fell beldv7 e:h."Pectations because of the time required to launch a vast development plan, and of the claims on resources and facili ties arisin~ from the une:;:pected1y hi.gh level of private invest- ment. Tr~ first serious bottlenecI{ appeared in autumn 1951 in the f:teld of transport. Port installations at Matadi and Le0901dvi1le, and railway facilities between these two cities could not handle the vastly eA~anded volume of traf'fi\\~, and IOOasures had to be taken to regulate the flO1'V of imports. The emergency had passed by the end of December, 'V'Then addi- tional transport equipment was put to use, and since spring 1952 transport facilities have apparently matched the requirements of' foreign trade. 14. Another temror~a!""'.r difficulty was the inadequate capacity of the building trades. Shortages of both cement and equipment appeared as residential building in urban areas competed with the demands of govern- roont and business. Increased imports of building materials and the slacken- ing of residential construction relieved the situation late in 1952. 15. The shortage of native labor and pa.rticularly the low level of productivity of those e~)loyed, has been and remains the most persistent obstacle to the development of the Congo.. Of the native population of nearly 12 m:tllion, about 1.1 million are nOw . .Torktnc for wages. Alt.hough there are 2.5 million adult me!! among the 9.5 million people not yet brought fully into the market econo~, a sudden substantial ir~rease in the number of native vra(!e earners at tl"e expense of native agriculture 'would endanger the local food supply ani raise social !'/roblems. Immigration from over-populatec; Ruanda-Urundi is being promoted and has reached the rate of 15,000 men per annum, and some workers are comine into the Katanga province from neighboring British territories. At the same time the mining industries are continuing tmir efforts to raise ,roductivity thrQugh mechanization. However, neither the influx of rnan?ower from outside nor its release by mining companies is enough to prevent labor shortages from being felt all through the economy. 16. Limitations of finance have not hampered the progress of public investment. Appropriations for the Plan inc{lud~d in the extraord?-nary budgets for the years 1948-1953 total Z7 billion francs. Additional com- mitments amounting to 9.3 billion francs were authorized in 195.3. Further, the Minister of Colonies was given authority in May 1952 to borrmv up to 20 billion francs to carry out the Plan. Vrith private investloont i.n pro- ductive facilities likely to slow dOl\'ll somev.:hat, it should be easier for public investment in basic services to go ahea.d and thus n:aintain a balanced development of the Colony. £2!:'l!!E.di ty Prices 17. The Belgian ConGo is heavily dependent on eXDorts of raw materials. Merchandise exports are equivalent to about one-half of the nat:!.onal income of the Colony, and eAT)ort duties consti.tute about one-third of ordinary budget revenije. Due to the di versi ty of i ts conunodi ty exports, the Congo has been less f?'~verely affected by the end of the 1950/.51 com- modi ty boom than many other underdeveloped countries i, The fall in prices of most agricultural conunodities tn 1951 and the first half of 1952 VIas largely offset by too rise in prices of minerals which continued through  -4- the third quarter of 1952. Ylhen prices of minerals registered a decline in spring 1953, agricultur'al prices had already become stabilized. However mineral prices" particularly those of non-ferrous metals, have since declined further. Production and Co~ump~ion 18. The inves~liment ef:r~rt and the rise of mineral ::>rices brought increased production. In 1951, tl~ gross national product ros~ by 10% in real terms. In 1952, there w"as a further rise and mineral production was more than a th.i..rd above the 19h8-49 level. In 1953, hm·;ever, mining operations have slolV-ed down somewhat. As the following table shows J the output of some minerals in 19.52 exceeded forecast.s for 1960 made when the Ten-Year Plan was drafted: 1952 0:1'_ 1960 (forecast) Copper - metric tons 192,000 206,000 180,,000 Cassiterite - metric tons 15,000 15,000 20,000 Cobalt - metric tons 6,000 7,000 4,000 Zinc - metric tons 81,000 98,000 80,000 Uanganese - nettie tons n,ooo 128,000 {not determined: Gold - kj.lograms ll"OOO 11,000 1S,OOO. Industrial diamonds - carats 10, 02, ~J 000 ll,01i! ,000 8,,000,000 19. Although no such complete data eJCist for agriculture,it is estimated that the volume of aericultural production was 5% higher in 1951 than in 1950; thi s vras ae hieved by a rise of 16% in the European and of 2% ill the native output. Further expansion in native output in 1952 could be expected from the increase by 3u,OOO to 100,000 of the nwnber of pa.rcels of l.and allotted to native peasantry. 20. Industrial production is growing steadily and ""vas 2~h higher in 1951 than in 1950. Ou~put of textiles alreawJ exceeds the local demand" and the textile industry is turning its attention to neighborinC' markets, as the breWing industry did sotre time ago. New liGht chemical plants, YfOOdVforking, building trade and nechani..ca1 workshops are also contributing to the increase in the output of goods and services. 21. In recent years, nativeconswnpt.ion has increased substci:n.tially and the local market has broadened. Between 1948/h9 and 1951, consumption of su~ar went up by 80% and that of fresh and imported meat by about 70%. Native purchases of shoes have more than doubled" those of durable household goods nearly doubled, and purcr..ases of bicycles have increased nearly four times. Despite the irnproveroont in the native standard of living, however, food and clothing still account for nearly 90;~ of native consumption excluding expenditure on hous'ing. Foreign Trade 22. Foreign trade of the Congo and Ruanda-Urundi expanded rapidly from 1950 to 1952.. The expansion was I\1ainly in imports, whicn roughly doubled both in value and volume. Exports rose by only ,0% in value  -5- (practically all the rise occurring in 1951) and by less. than 10% in volume. In the first half of 1953 b01th i~orts and e~orts declined some- what. Unlike those of many ot~r primary producers, the Congo's terms of trade improved even in 1952 because the prices of its mineral exports con- tinued to rise. In view of the recent deoline in non-ferrous metal prices, however, further improver.snt in the terms of trade seems unlikely and their reversal may be expected, e,'en though i~port prices have fallen. 23. About 75% of Congo imports (1re manufactured goods,; the :rest is composed of foodstuffs, fuel, and building materials. Among exports, half a dozen commodities assunethe greatest importance. Cop~r itself accounted for about 30% of total exports in 1952, and cotton, coffee, palm oil, cobalt and cassiteri./,f rna"de up another 40%. The following table gives the composition of the foreign trade 'of the Conrro and Ruanda- Urundi in recent years (in billions of francs): ConSU!JErs' goods J~or F~,~e1 and 'Imports 1950 (~i.f.2 Total 9.4 Europeans 1.7 .- Hatioiles 1.9 -- ma\terials 2..0 . EqJ.iproont 3.8 1951 15.4 2.5 3.3 3.1 5.9 1952 20.1 2.9 3.5 4n9 8.8 1953 (1st quarter annual rate) 17.2 2.7 2.4 4.0 8.1 Industrial Exoorts (f.o.b.) Total A~ric\utural Ero9uc~~ Minerals products 1950 13.4 6.5 6.7 0.2 1951 19.9 9.8 9.8 0.3 1952 20.1 7.8 12.1 0.2 195.3 (1st quarter annual rate) 18.1 6.7 11.2 0.2 24. If imports are computed at f .o.b. values and exports in accordance vdth their final destination (i.e. after processing in Belgium and the United Kingdom for account of the Con(;o exoorter), the regional distribution of foreign trade in 1951 and 1952 shows the Belgo-Luxembourg Economic Union as the leading trade partner with about 40% of the total, follmyed by the United States with over 20%; next conle the la:t'ge Western European countries, Scuth Africa and the Hhodesias. The position of Belgium is not due to a restrictive com."OOrci~l -poliey, for the Congo has been bound since 1885 by international agreement~ to maintain a non- cliscrll~natory policy. Balance of~Yl!en~ 25. The expansion of inmorts, to 1vhich the investment effort naturally gave rise, coupled vdth the usual large deficit on account of invisibles, led in 1952 to a substantial derici t on current account. The Congo regularly ~kes large mt paynents to Be1ZiUJ!l and other countries for transport, insurance, and other services, and in the form of dividends, interest, and private remittanees. These paynent~ were particularly heavy during a year of high profits li~ 19S2. The available balance of payments  -6- data illustrate the development of the external financial position of the Congo and Ruanda-Urundi since 1950 (in billions of francs): \~, Current transactions - 1950 - 1951 - 1952 Receipts 17.9 23.0 25.5 Payments ¥>.!!'i-termcaE! tal movements - 14.8 ).1 21.6 .....- 1.4 - 27.3 -1.8 Receipts ).4 1.5 3.6 o.s Payments Short-term capital movements I - 2.9 - 0.7 0.8 -Oe4 3.2 errors and omissions '-- Change in foreign '-e~e.re5e~~ .0.1 ~ 5.9 -- 1.5 3.7 ---- 0.5 1.9 26. The regional breakd~ ot the 1952 balance of payments is given helm'!' (in billions of fraIl(~s) I u.s. &. Sterling Other Current transactions - DLEU Canada Area Countries .' r Receipts 9.0 5.5 3.) 7.7 ~~erm Payments ca!;1i tal movement! 1j.7 -4.7 ~ 0.2 - 3.4 ...0.1 -4.9 2.8 Recei.pts 1.2 1.7 0.7 Paynents Shorl-termcaw--tal move~~ - 0.4 0.8 -- 1.7 - 0.7 errors ana 'oms sions' -0.2 0.5 0.2 ~ ...-..- ~ in foreign ,exchange, Change ... reserves -3.9 1.7 0,.4 3.1 Because of the large invisible payments, the Congo traditionally has a current account defiei t with the mother couptry. In 1950 and 19$1 this deficit was fully coYered by current account surpluses ,1i.th the rest of Western Europe and the United States. In 1952, hO\'1ever, these current sur- pluses were not sufficient to offset tm deficit with Belgium, which was 'lIl\1.Ch increased by purchases of capital goods~ 27. In too past few' years tne Congo's monetary reserves have risen steadily. Net gold and convertible foreign exchange holdings of the Banque du Congo Belge increa~ed from 3.8 billion francs to 4~6 billion francs in  -7- the first half of 1952. Between July 1, 1952, when the new Centra.l Bank of, the Belgian Congo and Ruanda-Urundi began operat:tons, and June 30, 1953, its holdings increased from 4.6 billion francs to 7.1 billion francs. The 1951 balance of pa~ments surplus on current account was supplemented by a net infloW' of long- and short-term capital. In 195.2, when a deficit was recorded on current account, it Vfas mOJ:~ than offset by an inflow of capi tal, primarily at long term. Taken regionally, the effects 0:[ capital transfers have not been the saJOO. 1~:ith l;festern Europe (other than Belgium) an~ the United States,the Congo has in recent years had a capital account su~lus on top of the current account surplus. On the other hand, the inflow of Belgian capital has as a rule not been sufficient (except in 19.50) to cover the Congo's current deficit 'with the mother country. - - Finance 28. The inflow' of long-term capital from abroad, ytJ'hich enabled the Congo to carry out its invest~nt., effort, bas been less i~ortant to the private than to the pub 1 'i_c sector of the economy. l:[ost of the funds for pri vate capital expenditure came from the reinvesttrEnt of profits by colonial enterprises. Undistributed profits of joint stock companies amounted to 2.1 billion francs in 1951 an.d 3.3 billion francs in 1952, compared vd.thabout 1 billion francs tn 19.50. Net moveroont of private capi tal into the Congo amounted to 931 million francs in 1951 and 763 mil- lion francs in 1952, compared )"I.'ith 378 million francs in 1950. By far the largest :9art came from Belgj.um in form of subscriptions to new share and bond issues of corporations operating in the Congo. 29. Public investment, on the other hand, has hitherto been mainly financed by Belgian and ot~r foreign capital. In 1950, the Congo Govern- roont borrO'L'Yed 2.3 billion francs in Belgium, 60 million Swiss francs (668 million Congo francs) in SWitzerland, and obtained through Belgium a loan of $1.8 million (90 million francs) from I:ISA. In 1951, I·:ISA made a second loan of ~p15.5 million (775 million francs) to Bel8ium for u5'c in the Colony, and the Bank made two loans totaling $70 million (3.5 billion francs). In 1952, the Congo again borrowed 60 mil1ton swiss francs in Sv;itzer1and. AltogetrJSr about 8 billion francs (:\3160 million) were made a.vailable since 1950 for public capital outlay in the Colony. 30. The fact that the Congo Government borrowed extensively abroad is connected 1:\1. tIl its budgetary' lOOthods. By len" the surplus in the crdinary budget of the Colony, YThich has persisted for a number of years, is credited to a Budget Equalization Fund, established in 1951 (as a successor to the Fonds de Crise of 1931) to cover future ordinary budget deficits. In addition, an annual appropriation for the Fund, amounting to sorre 600-800 million francs has been included in orcinarJ expenditure. The Fund appears to be held mainly in Belgian Treasury paper and is to t.hat e)..'tent not available to finance government investment expenditure in the Congo. It now a,nlOtUlts to about 11 billion franc s and some questions have recently been raised as to the wisdom of allcw.~ng it to increase further. 31. The allocation of government revenue to the Budget r.qualization Fund, and the cautious financial policy of the Congo Government, have in the main counteracted the influence of the external uayments surplus on the  -8- money supply. In 1951 the inflationary effect of the balance of payments surplus and an expansion of bank credit to business could onlY' partly be r.outralizede In 1952, h~vever, the same factors ap~ear to have been fully offset by too activities of the Congo Treasury and a. moderate expansion in savings. Consequently there was no increase in money supply in 1952. THE 19u9 LOAN TO THE Y.INGDOM OF JELGIUU 32. The $16 million loan to the Kingdom of Belgi urn, of which about $2 million is still undisbursed, was made to finance imnorts of industrial and power equipment for the follo'wing three Belgia.n companies engaged in expandi ng and modernizing their productive facilities; Original. allocation Present allocation ( In . ~_ lons 0 f ' "' I" ao 11ars ) Corapagnie des Fars Blancs et Toles a Froid (Ferb1atil) Societe Anon~ne d'Ougree- 1darihaye 5.80 Union des Centra1es Electriques de Liege-Namur-Lu.xembour g (J.Jinalux) 16.00 16.00 33. The allocation to FBrblatil Y{as used for a c old rolling mill which was completed in June 1950 and for a tinplating ~tll finished in March 1951. Siree the foreign exchange cost of the project proved slightly lower than estimated, the allocation to Ferblatil11'1aS reduced by $50,000 in February 1953. 34. The reversing sla.bbing and blooming mill, for which the original allocation to Ougree-l\1arihaye was used, was corn~leted in May 1950. As the foreign exchange cost of the mill was lower than originall~r expected, the Bank agreed in October 1951 to disburse the balance of the co~anyt S orj.gi- nal allocation, amounting to about $600,000, for paYl1ent of 30,000 tons of coal purchased in the United states. < 35. The allocation to Linalux was used for a therrral pmver plant consisting of two 50,000 kw 1.lni ts and ancillary facilities e The nlant "lv-as completed in January 1952 and its output in that year amounted to 608 million kwh. The foreign exchange costs involved ,"vere substantially less than anticipated because certain equipment items manufactured ab:t"oad were purchased against Belgian francs. Consequently, the allocatton for the Linalux project Vias reduced by $1.75 million in February 1953. About $350,000 of the reduced allocation is still undisbursed. 36. A repre~~ntati ve of the Bank ,risi ted the three companies early in 1952 and found that the nellT faeilities were operating satisfactorily.  -9- 37. In February 1953, at the request of the borrower, the Baru< appro"~d the transfer of the undisbursed balance of the Ferblatil allo- cation and of part of the undisbursed balance of the Ltnalux allocation, totalling $1.8 million in all, to Ougree-Marihaye to finance 'Dart of the , cost of a continuous hot strip mill on order in th? United states. Ship- rrent of equipment was to begin in august 1953 and the mill is expected to b~ ctHnpleted by April 1954. 38. B.y making funds available to modernize and expand the steel industry, the Bank is helping to increase the productivity and capacity of this le'c;,ding Belgian industry and strengthen its competitive :?osition in foreign markets. The assistance of the Bank in equipping the Linal we power plant made ~o5sible the replacement of obsolete g-enerating equip- ment su:pplying power tel the heavy industries in the Liege basin. THE 1951 LOANS TO THE BELGIAN CONGO AND THR KINGOOH OF BBLGIUM 390 The purpose of these loans "as to support the Ten-Year revelo!,roont Plan for the Belgian Congo by helping the Colony and the mother country to 1?ay for c;lddi tional imports resulting fr()m the execution of the Plan. The dOIOOstic currency equi,ralent of the loans is being used to finance investment in rl"ver transport JI ports and raill'lays (including housing and other services for emnloyees) carried out in the Congo by the Office d'Exploitatlon des Transports Color.~aux «(Jt~ra.co), an autonomous public organization. 40. The loans are related to a 11 billion franc public investment program forming part of the Ten-Year Plan. This program, originally expected to last two years, from July 1, 1951 to June 30, 1953, will pre- slUnably be completed in mid 1954. It is comoosed of three roughly equal parts, t-v-ro of which cover investment ~_n transport and other basic sen;'ces by the Gongo Go,,-ernment, and the third, investment in transport by Otraco. 41. In 1952, the Bank disbursed the loans on the basis of actual investnent expenditure made by otraco during the period July 1, 1951 - June 30, 1952. ;'In 1953, hmr.rev€r, the rate of disbursement has not been determined by actual otraco expenditure but by a special formula, 'which takes into account total expenditure on the program and ensures that full disbursement of the loans will coincide with the completion of the ?ntire program. 42. To date, $47.h million of the loans has been vdthdra,m in respect of investroont expenditure in the Congo between July 1, 19.51 and May 31, 1953. Of this arllOu.~t, $27.1 million has been withdrat'm by tbe Belgian Congo and $20.3 million by Belgium. While all payments to Be1gitun have been in dollars, the equivalent of $3.4 mil'lion has been paid t;: th~ Congo in Swiss francs. On September 18, 1953, the u..~th­ drawn ~alance of the loans amounted to $22.6 million. In view of the delay in carrying out the program, the closing dcate, originally set for September 30, 1953, has been postponed to September 30" 1954. 43. Estimates of the rate at which the Ten-Year Plan could be carried fonrard proved in the event to be too optimistic. The main reasons for the delay have been indi.cated in paragraphs 13 ~ 15.. During the two4payear  -10- period, July 1951 ... June 1953, actual expenditure on the program, to which the Bank's loans are related: amounted to 7.8 billion francs, or only 7~ of the 11 billion francs goal originally .set for June 30, 1953. , 4h. The following table shows expenditure on the program to June 30, 1953, subdivided by broad categories of public investment: Program Exoenditure tin millions ~f francs) % TranSDort and communicatiens ... Government ),600 1,128 31 Transpert-ot~ace 3,500 2,922 83 Pewer and water supply 700 774 110 Public buildings, housing and public health 2,100 2,2}~1 107 Native educatien, research and agriculture 1,100 688 62 11,000 7,753 70 4,. Of the 7.8 billion francs, about 1.2 billion were spent in the secend half of 1951, 3.9 billion in 1952, and 2.7 billion in the first six months of 1953. The trend ef the average monthly expenditure since July 1, 1951 to. June 30, 1953 is shovrn below (in millions of francs) I July 1 - December 31, 1951 210 Jan. 1 - June 30, 1952 260 July 1 - December 31, 1952 385 Jan. 1 - June 30 J 1953 436 46. Investment in power and water installations, public buildings, housing and public health amenities has already exceeded the estimates laid dO~nl in the program for these categories. Expenditure by otraco on its transport facilities has advanced more rapidly than expenditure on education, research and agriculture. Const~~etien of transport and com- munication facilities financed directly by the Government started late and progressed most slowly of all, mainly because surveys took longer than expected. 47. The rrGin elements of goveI-ument expenditure on transport and corrnnunications are shown in the fo11cnving table (in millions of francs): Roads 656 Waterways and ports 220 Railways 134 Airports h9 Communications 69 1,128 YIhen completed these facilities vd11 open up vast areas and bring thousands of people into the market economy-. Investment in roads, airports and com.. munications is the responsibility of the Goverrunent alone. Development of waterways and ports is carried out jointly by the Government and otraco, the former concentrating on basic construction and the latter providing  -11- mainly operating fa.cilities. As to the railways, they are t1ainly the sphere of activity for Otraco and private cOl~lpanies, the direct role of the Governnent being fairly lim-t . ted. 48. The most i1n:portC'..nt part of the road progr~.m is the construction of three arteries linking Bukavu (formerly Costerraansville) on the ea.stern border of the Colony vii th 1\:1atadi, Elizabethville, and Stanleyville. The total length of these main roads will be about 4,600 km. At the end of 19.52, surveying was completed for 944 km., 179 kIn was actually uncier construction, and contracts had been awarded for another 2h5 Ian. Ne", embanknents in the port of Hataai, and piers and landing-sin yarious rivet- ports are being built. Pork has started on the 250 lane Kabalo-Kabongo section of the Kamina-Kabalo connection between the Dri vate netlworks of the Lmver Congo-Katanga Railway (BCK) and the Upper Congo-Great African Lakes Railway (CFL). Short lines connecting tV/O :i~ndustrial areas in th& Kasai province with the main BCK r(;J.ilvlay line iiVere completed in 1952. Gonstruction of r~Iays for the new Leopoldville airport and various works on other airports are also in progress. In the field of telecormnunicatirms, urba.n and long distance telephone retworks are being expanded. 49. Investment in transport by Otraco consists of the follovving items (in millions of francs): Ylatcrways. and river ports 1,,933 J:1atadi-Leopoldville railway 772 Port of Hatadi 105 Mayumbe railway and port of Boma 78 Lake and road transport facilities of the Kivu Railway COITlpany . 34 2,922 Considerable progress has been lna.de at the ocean l')Orts of l::atadi and Boma, and at the main river ports. New warehouses have been built and carfjo- handling equipment installed. A number of tugs, barges, and other craft have been added to the fleet of vessels onerating on the inlanc; vrater.o'lays and more are still to coroo. In 1952 the loading capacity of Otraco IS river fleet expanded by little less than lCY:~. Sir.ti.lar progress has been made in the constructj~on and improvement of houses, dispensaries and other social amenities for Otraco e~loyees. On the railways, work has proceeded on various permanent way improvements, particularly the replacement of lighter 1'lTi th heavier rail, the doubletracldng of some sections and the construction of new sidings, Workshops are being expanded and modernized, stations and other buildings progressively improved.. Subst.antial numbers of new locomotives, mainly dies~ls, and of new freight cars have been brought into service, and large amounts of similar equipment are on order. 50. By u.sing its expanded and modernized facilities to the limi. t of capaci ty, Otraco has been able to handle ·viTi th improved efficiency a con- tinuously increasing volume of traffic. Its transport s;rsteM has distri- buted steadily groFdng quantities of imported goods, and of mineral and ae:ricultural conulJodities produced in t,he Congo. The growth of traffic  -12- handled by the Otraco system is illustrated by the following data: Traffic in thousands • of ton-kilometers in Percentage increase 1952 _-2!~.50 _ ---------~-------- Inland watervvays 1,346;.527 31 Matadi-Leopoldvi11e railway 633,828 hI Kivu railway (lncl. lake and road transport) 14,915 44 Port of':,la,tadi (in thousands of metric tons) 1,366 44 51. The Govermrent participates in the capital of two private power co~anies set up to build and operate large hydroelectrtc plants. Construc- tion of the dams for the Zongo project between Leopoldville and ~iratadi, and for the Tshopo project near Stanle:yvil1e ls proceeding. Plans are beine draym up for the construction of the power plal1ts on the Kiymb() ri.ver near Albertville J and on the Ruzizi ri'ler wfii.ch forms the bounda~J 'between the Congo and Ruanda-Urundi. ~xpansion of existing municipal p01!ler and water distribution systems is under way • .52. Improvement in housing and health conditions, and in educa- tional standards, is a prime objective of tlw Governn~nt. In Leopoldville, Elizabethville, StanleyviIle, Luluabourg, Bukavu, and in o"u'her to?'IlS, construction vTork is progressing on ac'.m:i.nistrati ve and school build:tngs, European houses and ap~rtments, and basic rnrur;dcipal services for native comnuni ties. Throughout the Colony, numerous hospitals and dispensaries have been completed, and additional lOOdical facilities are being provided. 53. New schools and professional training centers for natives are betng built. Geological exploration and survey vFork is proceeding, weather stations and laboratories are being set up, and scientific equipment in- stalled. Progress is being made 1vith agricultural research, ~and recla- mation, irrigation, reforestation and other ~nti-erosion measures~ Additional agricultural storage facilities and research centers are beinr. built and livestock and farm machinery and implementa purchased. 54. In short, the infonnation regularly rece:tved from too Ministry of Colonies gives the il~')res6ion that the 11 billion franc program, to which the loans are relatied, is proceeding satisfactorily, even though a Iittle mere slowly than vras anticipated in 1951. The Bank has not yet had the opportunity of inspecting on the spot the physical progress of the program, but intends to send a mission to the Belgian Congo in 1954.