Announcement of Three Hundred Twenty-Five Million Dollars Loan to Mexico for Seventh Agricultural Credit Project is the Largest World Bank Loan Ever Made on July 10, 1980

I /lo ~ FOR .IMMEDIATE RELEASE 'NorldBank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 81/3 July 10, 1980 $325 MILLION LOAN TO MEXICO FOR SEVENTH AGRICULTURAL CREDIT PROJECT IS THE LARGEST WORLD BANK LOAN EVER MADE Mexico will be assisted by a $325 mill ion loan from the World Bank to carry out an agricultural credit project aimed at increasing the production of agricul- tural commodities as well as income and employment in rural areas. The loan is the largest ever made by the World Bank in 33 years of operations. This loan raises the World Bank total lending to Mexico in 1980 to $625 mil- lion. During this year, the Bank has approved three other loans to Mexico, total- ling $300 million, for small- and medium-scale mining, irrigation, and small- and medium-industry projects. The Seventh Agricultural Credit Project wil) provide medium- and long-term credit for investment in crop development, livestock production, fisheries, and agro-industries. l·t is expected to benefit directly about 140,000 families, or some 770,000 people . • The project is a continuation of Bank assistance to the Agricultural Trust Funds in the Bank of Mexico (FIRA) and will help to finance lending for a wide range of investments throughout the country as well as to strengthen tre capacity of FIRA and the participating banks to serve the agricultural sector. The project wi 11 involve a total investment program of $1,179 mi 11 ion, equivalent to about 20% of FIRA 1 s 1980-82 medium- and long-term operations. Funds will be channeled through some 90 private and public lending agencies to individual farmers, farmer groups, and cooperatives. About 63% of the total lending program will be for annual and perennial crops; 32% for livestock; and 5% for agro- industries and fisheries. Approximately one-half of the project funds are earmarked for low-income producers. A program of applied research, training, and monitoring will provide support to credit operations. The project is expected to increase production of basic crops (maize, beans, wheat, and soybeans), cotton, sorghum, safflower, milk, beef, and pork. The in- cremental production of these basic food crops alone will amount to foreign exchange savings of about $177 million annually in 1979 prices. The $325 mill ion World Bank loan is being made to Nacional Financiera, a finan- cial agency of the Mexican government, with the guarantee of the United Mexican States. it is for a term of 17 years, including 4 years of grace, with interest at 8.25% per annum . • Thr World Bank has previously financed six agricultural credit projects in Mexico, totalling $600 million, to support lending for crop and livestock develop- ment and for agro-industries. NOTE: Money figures are expressed in U.S. dollar equivalents. FOAM NO. 1121 (5-76) T E C H N I CAL DAT A PROJECT: COUNTRY: TOTAL COST: Seventh Agricultural Credit Mexico $1,179 mill ion • BANK FINANCING: $325 mill ion for a term of 17 years, including 4 years of grace, with interest at 8.25% per annum. OTHER FINANCING: Agricultural Trust Funds in the Bank of Mexico (FIRA), $501 .6 million; beneficiaries, $181.3 mill ion; and participdting banks, $111 . 1 mi 11 ion. !MPLEMENTING ORGANIZATION: Agricultural Trust Funds (FIRA) Bank of Mexico lnsurgentes Sur 2375 Mexico D.F., Mexico PROJECT DESCRIPTION: The project will: (a) support the government's agricultural diversification program, including expansion and development of fisheries and agro-industries, with increased low- and medium-income farmer participa- tion; (b) strengthen FIRA's planning and programming capabilities and provide an insti- tutional framework for efficient allocation of financial resources through private an.a. public lending agencies; (c) induce private commercial banks to increase participati~ in agriculture through FIRA's rediscounting facility and strengthen each agency's subloan evaluation and supervision capabilities and technical services; (d) intensify training for the technical staff of FIRA as well as those of participating banks; (e) establish an operating regulations and procedures manual to standardize the participating banks' lending under FIRA; and (f) strengthen FIRA's monitoring and evaluation capabilities and data base system. PROCUREMENT: Bulk purchasing under international competitive bidding wil 1 not be feasible since the agricultural lending activities will be implemented over a 2-1/2 year period, be widely distributed, cover a variety of investment activities, and involve a large number of sub-borrowers. An adequate selec- tion of machinery, tractors and other agricultural equipment and inputs is available to sub-borrower~ through local and international ~uppliers and permits can be obtained to import machinery and tractors in horsepower ranges that are not available in Mexico. in earlier projects, FIRA will require sub-borrowers to obtain quotations from several sources of supply whenever practicable for goods, civil works, and imports of breeding livestock to be financed under subloans. Equipment for the demonstration and technical assistance programs will be procured through FIRA's ordinary procedures. CONSULTANTS: A total of 40 man-months of consultant services is included in the project. The services required will be for planning and agricultural finance, training and demonstration programs, monitoring and evaluation, and computer services. ECONOMIC RATE OF RETURN: ESTIMATED COMPLETION DATE: n .a. 1983 - 0 - •