Announcement of World Bank Lends Forty Million Dollars for Development Banking in Ecuador on June 21, 1979

, .. '- c FOR IMMEDIATE RELEASE·· . ' • ~ I) \ eWorldBank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 79/112 June 21, 1979 WORLD BANK LENDS $40 MILLION FOR DEVELOPMENT BANKING IN ECUADOR The World Bank has approved a $40 million loan to assist Ecuador to carry out its fourth development banking project. The loan will support the development of Ecuador's capital market and provide additional long-term financing for the industrial sector. Loan funds will be allocated to financieras according to their ability to mobilize term domestic resources through bonds, medium- and long- term loans and equity contributions. Approximately 80 subprojects requ1r1ng total investments of around $160 million can be expected to benefit from the loan. Most subprojects are expected to be in the food processing, beverage, textiles, and forest products • subsectors where Ecuador enjoys a comparative advantage. The subprojects are also expected to directly generate about 3,200 new jobs • Greater competition in the mobilization and channeling of long-term resources will also be promoted by opening participation in the project not only to the Corporaci6n Financiera Nacional (CFN) and the Ecuatoriana de Desarrollo S.A., Compafifa Financiera (COFIEC), the country's traditional medium- and long-term financial intermediaries, but also to eligible new development banks. The project has important institution-building features, including the creation of a Capital Markets Study Unit within the Central Bank to carry out studies leading to reforms of the capital market. Another feature is the establishment of a special mechanism for financing large government industrial ventures through CFN. The $40 million loan to the Republic of Ecuador has a term of 15 ye~r~; including 3 years of grace, with interest at 7.9% a year. The Central Bank, as agent for the borrower, will onlend the loan's proceeds, in sucres, at 10.7% per annum. Participating development banks would relend to ultimate benefi- ciaries at between 14 and 16% a year depending on the subloans maturities. The World Bank had previously approved three development banking loans to Ecuador totalling $54 million • • NOTE: Money figures are expressed in U.S. dollar equivalents.