Uganda - Industrial Rehabilitation Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-3290-UG REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT TO THE REPUBLIC OF UGANDA FOR AN INDUSTRIAL REHABILITATION PROJECT April 28, 1982 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (as of April 2, 1982) US$1.00 = USh 85.40 USh 1.00 = US$ 0.0117 USh I million = US$11,710 (From October 1975 to May 1981, the Ugandan shilling was tied to the I4F's Special Drawing Right (SDR 1.00 = USh 9.66). In June 1981, the Ugandan shilling wjas devalued by about 90%; since then it has been floating. As a result, the US$/USh exchange rate is now subject to change.) ACROYNYMS EAC - East African Community GDP - Gross Domestic Product GOU - Government of Uganda ,PED - Ministry of Planning and Economic Development UCB - Uganda Commercial Bank UDB - Uganda Development Bank FISCAL YEARS Government July 1 - June 30 Uganda Development Bank January 1 - December 31 Uganda Commercial Bank October 1 - September 30  i- FOR OFFICIAL USE ONLY UGANDA INDUSTRIAL REHABILITATION PROJECT CREDIT AND PROJECT SUMMARY Borrower: Republic of Uganda * Beneficiaries: Uganda Development Bank (UDB) and Uganda Commercial Bank (UCB). Amount: SDR 31.5 million (US$35 million equivalent). Terms: Standard. Relending Terms: (a) US$30 million equivalent to UDB: Up to US$10 million as equity and the balance for a maximum of 15 years at 6.5% p.a. interest. (b) US$5 million equivalent to UCB: Up to US$1.25 million as equity and the balance for 10 years at 6.5% p.a. interest. (c) UDB and UCB to Subborrowers: Maturities of up to 15 years and 10 years, respec- tively, for UDB and UCB subborrowers, including grace periods of up to 4 years, at 14% annual inter- est. The Government would carry the exchange risk against a charge of 1% per annum to be paid by the subborrowers. Project Description: The project would consist of two lines of credit, of US$30 million equivalent to be channelled through UDB and of US$5 million equivalent to be channelled through UCB, to finance capital expenditures for the replacement of obsolete or broken-down plant, machi- nery, tools and other equipment of industrial enter- prises in the public, joint, and private sectors. This would include: costs of installation and com- missioning; up to two years stock of spare parts for * plant and machinery; trucks and other transport equipment; repairs of existing structures and civil works; costs of key expatriate management staff for project operation up to two years after rehabilita- tion; and up to six months requirements of imported raw materials for fully utilizing rehabilitated equipment. The risks of the project are those norm- ally associated with industrial finance projects of this type in a country with unsettled economic con- ditions, deficiencies in infrastructural services, weaknesses in Government administration, and most importantly an extreme scarcity of foreign exchange resources. The project, together with the proposed second reconstruction program, would assist in stabilizing economic conditions and generating for- eign exchange on a continuing basis. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - iii - Estimated Disbursements: