Announcement of World Bank and IDA Approve Fifty-Two Million Dollars in Emergency Assistance to Nicaragua on December 20, 1979

FOR l·MMEDIATE RE°LEAS"E · ~ World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 80/36 December 20, 1979 IDA NEWS RELEASE NO. 80/17 WORLD BANK AND IDA APPROVE $52 MILLION IN EMERGENCY ASSISTANCE TO NICARAGUA The World Bank and its soft-loan affiliate, the International Development Association (IDA), have approved a lending package of $52 million to Nicaragua providing concessional, emergency assistance to support agricultural and industrial rehabilitation and urban reconstruction in the country. The package includes two separate operations: one of $30 million ($20 million from the World Bank and $10 million from IDA} to assist the government's efforts to regain prewar levels of output, exports, and employment in the agricul- tural and industrial sectors. A second IDA credit of $22 million will assist in the reconstruction of six major secondary cities that were heavily damaged during the recent civil war. • This additional emergency financing follows the decision the World Bank made in November 1979 to revise three projects currently being implemented in Nicaragua to meet urgent reconstruction needs. AgricuLtural and Industrial Rehabilitation The agricultural and industrial rehabilitation project, assisted by a $20 million World Bank loan and a $10 million IDA credit, will help finance lines of credit to support medium-scale private farms and some of the larger new state enterprises in the agricultural sector. It will also provide credit for existing enterprises, either private or public, in the industrial sector. The total estimated cost of the project is $38 million. Implementing responsibility for both the agricultural and industrial components will rest primarily with the Special Development Fund, a second-tier lending institution attached to the Development Bank of Nicaragua. The agricultural component wil~ provide resources to reactivate production of crops and livestock for both the domestic and export markets. It includes a rehabilitation credit line of $7 million for medium-scale private farms and for crop and livestock activities in the state controlled intensive, integrated farm enterprises. A credit line of $7.5 million to finance the resumption of a coffee renovation program is also included. Long-term financing will assist the replace- ment of old coffee plantations by high-yielding varieties. Overall, about 150 small-scale and 520 medium-scale farms are expected to benefit from this component • of the project. ... I NOTE: Money figures are expressed in U.S. dollar equivalents.  • - 2 - The industrial component will provide $15 million in loans to support government priorities for the initial reconstruction of the industrial sector. Industrial enterprises, including those in the construction and construction materials subsectors, will be eligible for rehabilitation financing. Most of the $15 mill ion will be used to acquire goods and services for the repair or replacement of fixed installations, and for current production. Urban Reconstruction . . The urban reconst~uction project supported by a $22 mill ion IDA credit will assist the government 1n the reconstruction of damage caused by the recent civil war. It will deal with emergency urban problems and will have a substantial impact on employment and incomes. Disbursements under the project will be completed in 18 months. The project has an estimated cost of $26 million. It includes $6.8 million to meet immediate physical reconstruction needs in six heavily damaged cities: Estelf, Leon, Masaya, Matagalpa, Rivas, and Chinandega. It will also provide $3.2 million for the rehabilitation of small-scale enterprises, including loans for construction and repair of commercial and industrial buildings and 1 workshops. Another $12 million will be used for the rehabilitation of Managua s public transport system, to replace about 140 buses and 150 microbuses, provide • spare parts, maintenance facilities, and safety equipment, and improve about 29 kilometers of pavement on bus transit routes. The $20 million World Bank loan to the Republic of Nicaragua has a term of 20 years, includin~ 5 yPars of grace, with interest at 7.95% annually. The two IDA credits, of $10 mill ion and of $22 million, to the Republic of Nicaragua, are for 50 years, including 10 years of grace. They carry no interest, except for a charge of 3/4 of 1% for administrative costs. - 0 - • FORM NO. 1121 (5-76} T ECHN I CAL D A T A .ROJECT: Agricultural and Industrial Rehabilitation COUNTRY: Nicaragua TOTAL COST: $38 million BANK FINANCING: $20 million for a term of 20 years, including 5 years of grace, with interest rate at 7.95% per annum. IDA FINANc'!NC: $10 million, on standard IDA terms. OTHER FINANCING: Sub-borrowers and participating institutions, $7.5 million. IMPLEMENTING ORGANIZATION: Fondo Especial de Desarrollo (FED) (Banco de Desarrollo de Nicaragua) (BON) 4A Calle S.E. Managua, Nicaragua PROJECT DESCRIPTION: The agricultural component includes: (a) agricultural rehabilitation credit line ($7 mill ion) to provide ~hort- and medium-term credit for medium-scale private farms and for the crop and livestock ctivities of state-controlled farms; (b) FED development credit 1 int ($7.5 million) • o provide long-term financing for the resumption of the coffee renovation program; and (c) technical assistance ($0.5 million) to finance consultant services, vehicles and equipment, and livestock survey. The industrial component will assist the government in its efforts to help viable industrial enterprises to regain prewar levels of industrial output, exports,and employment. This component will provide funds to finance the cost of goods and services for current production and the repair of replacement of fixed installations. PROCUREMENT: Under the agricultural component, sub-borrowers will purchase their requirements through established local commercial channels, which are adequately competitive. Vehicles required for FED and BON will be procured, in group orders, during the first year of the project following the receipt of price quotations from at least three suppliers. For the industrial component, procurement will follow the standard practice of the World Bank for industrial development and finance lending in principle, but will allow for bulk purchases of imported inputs. Whenever an individual order for goods and services, other than consultants' services, is expected to exceed $50,000, price quotations will be required from at least three local suppliers, and final placement of the order will require the prior approval of the participating institution making the subloan. CONSULTANTS: About 14 man-months of consultant services to provide assistanc~ to BDN for the development of agricultura~ credit policies and procedures and tc FED in financial and management matters will • be required under the agricultural component of the project . ESTIMATED COMPLETION DATE: 1981 - 0 - FORM NO. 1121 (5-76) T E C HN i CAL 0 A TA PROJECT: COUNTRY: TOTAL COST: Urban Reconstruction Nicaragua $26 mi 11 ion • IDA FINANCING: $22 million, standard IDA terms OTHER FiNANCING: Government of Nicaragua, $4 million IMPLEMENTING ORGANIZATION: Ministerio de Vivienda y Asentamientos Humanos (MIVAH) Managua, Nicaragua Fondo Especial de Desarrollo (FED) (Banco de Desarro 11 o de Nicaragua) (BON) 4A Ca 1 le S. E. Managua, Nicaragua Ministerio de Transportes y Obras Publicas (MTOP) Apartado 88 Managua, Nicaragua CABLE: MTOP 1343 PROJECT DESCRIPTION: It includes: (i) municipal reconstruction: to repair and improve infrastructure, replace destroyed municipal physical plant and equipment, and reconstruct and rehabilitate urban services; (ii) credits f o . rehabilit~tion of small-scale enterprises: loans to small-scale firms, cooperatives. and micro-enterprises for (a) construction and repair of commercial and industrial buildings and workshops, and (b) replacement of equipment and working capital; and (iii) rehabilitation of Managua's public transport system to replace about 140 buses and 150 microbuses, provide spare parts, maintenance facilities, and safety equipment; improve about 29 kilometers of pavement on bus transit routes; and provide technical sistance in urban transport planning and to the newly formed Managua municipal transport company. PROCUREMENT: Procurement of maintenance vehicles by MfVAH and lighting fixtures and materials (other than poles) by the Institute Nacionai de Electricidad (INE) will be under international competitive bidding (ICB) in ~c~ordance with IDA guidelines. Local competitive bidding procedures acceptable to IDA will be used by the MIVAH to place civil works contracts for municipal infrastructure and buildings, by the lnstituto Nacional de Agua y Alcantarillado for water supply, and by the INE to procure poles. Local municipal boards will implement minor works such as street improvements by force account. Procurement procedures for the rehabilitation of small enterprises component will conform to iDA policies for industrial development and finance projects. For the Managua public transport rehabilitation, the purchase of vehicles, spare parts, and maintenance-shop ~quipment will be carried out by contracts awardea through ICB, in accordance with IDA guidelines. CONSULTANTS: An estimated 45 man-months of consultant servfces will be required for the Managua public transport rehabilitation component of the project. ESTIMATED COMPLETION DATE: 1981 - 0 - •