Announcement of World Bank Provides Twenty-Five Million Dollars for Industrial Development Project in the Philippines on June 14, 1979

FOR IMMEDIATE RELEASE rtm ~ .World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 ' .. "": ~ BANK NEWS RELEASE NO. 79/109 June 14, 1979 W~RLD BANK PROVIDES $25 MILLION FOR INDUSTRIAL DEVELOPMENT PROJECT IN THE PHILIPPINES The World Bank has approved a $25 million loan to the Republic of the Philippines to assist the government with its lending and technical assistance programs for the improvement of small- and medium-scale indus- tries. About $24.5 million of the Bank loan will be made available by the government to the Industrial Guarantee and Loan Fund (IGLF), a govern- mental compensatory fund. The IGLF will then lend the funds, through accredited financial institutions, to about 510 small- and medium-scale industries which would normally be denied access to term credit. The remaining $500,000 wi 11 finance the establishment of nine • regional offices of the Medium and Small Industries Coordinated Action Program (MASICAP) of the Ministry of Industry and provide them with per- manent professional staff. The aim of the program is to stimulate invest- ment in small- and medium-scale industries by providing technical assistance to small entrepreneurs in project preparation. The Bank-assisted project is designed to support the government's small- and medium-scale industries development program, which aims to reduce income disparities. It will help bring about a greater regional dispersal of investment, and aid the development of a number of financial institutions. The loan will also help the beneficiary institutions develop expertise in project evaluation, preparation, and supervision. The restructuring of MASICAP will aid potential users of its services in the preparation of project feasibility studies, which will help in the promotion of financially promising and economically viable projects. In all, some 11,500 jobs are expected to be created in rural and urban areas as the industries benefiting from the project improve and expand through the funds made available. The Bank loan is for a term of 20 years, including a 5-year grace period, with interest at 7.9% per annum. The IGLF component will finance an.equivalent of the direct and indirect foreign exchange cost of each sub- project, which wilt account for about 56% of the total cost of the average subproject. IGLF is expected to finance 75% of the cost of each subproject, • of which the remaining 25% would be financed by project proponents' equity . Disbu.rsements under the Bank loan will be made against 75% of each subloan; IGLF will provide the remaining 25% out of its resources provided to it free of cost by the government. NOTE: Money figures are expressed in U.S. dollar equivalents.