Announcement of Romania to Improve Agricultural Productivity with World Bank Assistance on January 11, 1982

' • ·'.: 1 1'\~(?IATE J{El.iASE . 1818 H Street, N.W., W~shington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE No.82/38 Contact: Thomas B1inkhorn _Jan~a ry 11 , 1982 (202) 477-4685 . -·~ . . ~ ROMANIA TO IMPRfi:,E AGRICULTURAL PRODUCTIVITY WITH WORLD BANK ASSISTANCE A regional develo,ment project to increase agricultural productivity in Romania will be assisted by a W9rld Bank loan of $95 million. The loan wi 11 be the first from the World Bank to Romania to support a regional in- tegrated agricultural project. The location will be Moldova, one of Romania's less developed regions. This development project, costing $290 mi11ion, will deal with the major causes of low productivity in Moldova. About 63% of Moldova's population of 3.3 million still lfve in rural areas, compared with 5}% for Romania as a whole. The region suffers fr~m a double handicap: a-:relatively low level of mechani- zatton, as compared to other regions, and an emerging shortage of farm labor. The principal crops in Moldova are maize and wheat. Significant crop yield losses occur bec~use equip~ent is lacking for timely weeding~ pest con- trol, and harvest. Other major activities include livestock, vineyards, and sugarbeet. A major investment under the project will b~ the purchase of 6,500 tractors, about 1,500 harvesters and combine-harvesters, and other equipment such as trailers for transport. The borrower of the World Bank loan is the Bank for Agrfcuft.ure·- and F~od Industry, a specialized agency. The equipment purchased through the loan will be made available to agricultural mechanization stations, which play a major role in providing hire services. Assistance will also be provided for agro- industries, soil erosion control works, pasture improvement, dairy farms~ ~nd _vineyards. The loan will be used by 97 mechanization stations, eight state farms, 25 cooperatives, and 12,000 individual producers in the region~ Increased production is expected to provide the project with an eeonomic return on investments of about 31%. In addition, about 1,000 new jobs will be created. Since 1975, the World Bank has made l5 previous loans to Romania for agriculture, totalling $976.6 million. The Giurgiu-Razmivesti Irrigation Pro- ject, the first agricultural project financed by the Bank, has been successfu11y completed -- yields are growing at an even faster rate than had been expected. Other Bank ioans are assisting nationwide 1 ivestock and orchard\d~~!~lopment pro- jects, including the Moldova region. The investments supported by these ioans •• have been identified' and excluded from the integrated rural developo,ent project . The World Bank loan to the Bank for Agriculture and Food Industry, with the government as guarantor, is repa'/able over 15 ye.ars, including ~~ree years of grace, with annual interest ~t 11.6%. NOTE: Money figures ar~ expressed in U.S. dollar equivalents.  0 T :~ ,C H N I C A L ,. D A T A • 0 0 ,:::_7 cPROJEC<J": ,~. M,oldova Agricultural Credit r~ COUNTRY-;· Romania '/ TOtAL COST::-, $290 mi 'f 1 ion . BANK FIHANC I NG:,:- $95 mi 11 ion QTHER·-· FINANCING: Bank for /~9riculture and Food Industry and Cof Vi:,Jnc i ers, $184 mi 1·1 ion Sub-borrowers, $11 • 2 m111 ion IMPLEMENTING ORGANIZATION: Bank for Agric~!lture and Food Industry · (Banca Pentru Agricultura si lndustrie Alimentara) Strada Smirdan No. 3 Bucharest, Romania PROJECT DESCRIPTION{ It includes: (a) farm mechanization, (b) agro-ind~~triesr (c) soi 1 erosion control. works, (d) credit to . ind iv idua 1 producers, (e) pasture improvement, (f) dairy farms, and (g) vineyards. Subloans will be mqde through the Bank for Agriculture and Food Industry (Banca Pentru Agricultura si lndustrie Al imentara) for these operations. • PBOCU,REM~NT-: Equipment and mater ta 1s amount i og to $95 mi11 ion wi 11 be procured following international competitive bidding pro- ;~~--cedures / ) in accordance with World Bank guidelines. Romanian manufacturers will be al- -,,,,.,,'lowed.a preference of 15% 01· the applicable customs duty, whichever is lower. About $7.0 mf".t'lion worth of these equipments aad ch~micals are not available in Romania (agro-industry processing equipment, pesticid~s, and phosphate fe~tilizer). About $88 million will consist mainly of farm ~achinery, for which Romanian manufacturers Jj,re highly competitive. The remaining equipment,works and materials, al,J domestically Lyroduced, w i 11 be procured under Romani an procedures. CONSULTANTS: n.a. ECONOMIC RATE OF RETURN · ESTIMATED COMPLETION DATE: About 31% 1986 - 0 ·.,. •