Announcement of Colombia to Restructure Industry with Two Hundred Million US Dollars World Bank Loan on May 3, 1991

F_F-0uS_-" ` U 11 1 ILS.PIt~-HI IR ill:-b-C UZ41 P1 JAI fl FOR IMMEDIATE RELEASE World Bank 1818HStreet, N.W., Washington, DC. 20433 U.SA *Telephone- (202) 477.1234 BANK NEWS RELEASE NO. 91/ Contact: Ciro Gamarra (202) 473-8721 COLOMBIA TO RESTRUCTURE INDUSTRY WITH $200 MILLION WORLD BANK LOAN WASHINGTON, May 3, 1991 -- The World Bank has approved a $200 million loan to Colombia to help finance an induetrial restructuring and development project. The project will provide capital and other support to assist the private sector in renovating existing production capacity to reduce costs. -The project will also assist in increasing product quality and service, building new production capacity goods in which Colombia has a comparative advantage, or phasing out capacity in areas that are unlikely to produce acceptable long-run returns in an internationally competitive business environment. With an estimated cost of $500 million, the project includes a private sector credit program to finance investments and technical assistance to industrial enterprises, and public-sector support services and programs to facilitate labor adjustment, environmental pollution control, and project implementation monitoring. The executing agency, Banco de la Republica. will relend $192 million of the loan proceeds in local currency to participating financial intermediaries for the project's private sector credit program. The remaining $8 million of the loan proceeds will be made available to the government for the public sector support component. The project is expected to help Colombia to shift its industrial production capacity to areas of comparative advantAge in the international marketplace. It will lead to significant incresses in productivity, sustainable growth, and export market orientation of a number of industries. as well as to improved environmental control. The project will als. be financed by beneficiary enterprises ($148 million), participating financial intermediaries ($103 million), and private investment and enterprise equity funds ($49 million). The World Bank loan is expected to be disbursed over seven years. NOTE: Money figures are expressed in U.S. dollar equivalents. -2- The project is part of a package of World Bank-supported policy and institutional reforms to facilitate the realization of Colombia's Economic Modernization Program. An $80 million-World Bank loan was approved in March 1989 for a fifth small and medium scale enterprise project, And a $304 million Bank loan was approved in December 1990 to support broad-based public sector regulatory and enterprises reforms. The World Bank loan to,the Banco de la Republica has the guarantee of the Republic of Colombia. It fa for 17 years, including five years of grace, with a variable interest rate, currently at 7.73 percent. linked to the cost of the Bank's borrowings. It also carries an annual comitment chArge of 0.25 percent on the undisbursed balance. 0- FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, DC. 20433, U.S.A. *Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 91/ Contact: Ciro Gamarra (202) 473-8721 WORLD BANK PROVIDES SUPPORT TO URUGUAY SINCE 1950 Thirty Four Loans Totalling $1.1 Billion to Assist the Country WASHINGTON, May 14, 1991 -- Uruguay's development efforts have been assisted by the World Bank since August 1950. A total of 34 loans, amounting to $1,113.1 million, have been provided to help finance development projects and, in the past five years, to assist the structural adjustment and recovery program. The most recent Bank loan to Uruguay is a $65 million operation to support a debt and debt service reduction program, including principal cash buyback and the purchase of the interest collateral associated with the par bond. The first loan to Uruguay, of $33 million, was made on August 21, 1950 to the General Administration of Electric Plants and State Telephone (UTE), the government power company, for the expansion of the country's power and telephone facilities. After intermittent project lending to Uruguay since 1950, the World Bank entered into a substantial program in 1985 to support the government's stabilization and structural reform efforts designed to obtain sustained economic growth. The World Bank has supported policy reforms through adjustment lending, including two structural adjustment loans (SALs) and has also progressively increased investment assistance. One SAL of $80 million was approved in June 1987 and another, of $140 million, in June 1989. In addition, the Bank supported policy reforms in the agricultural sector. Apart from the adjustment loans and related technical assistance, project loans included support for agricultural development, energy (electric and hydrocarbon-based), transport and water supply. NOTE: Money figures are expressed in U.S. dollar equivalents. -2- In fiscal year 1990, which ended in June 30, 1990, the World Bank approved two loans to Uruguay, totalling $127.5 million. These included a $65 million loan for the second agricultural development project and a $62.5 million for a power modernization project. As of March 31, 1991, about $623 million of the total amount committed by the Bank to Uruguay had been disbursed, of which about $318 million had already been repaid to the Bank. Ten loans remain under execution with $353 million undisbursed, after reducing $72 million in amounts canceled and not including the $65 million debt reduction loan just approved. World Bank lending to Uruguay is designed further to promote adjustment, achieve greater export-led development and restore the country's creditworthiness. The lending program aims to support reforms that would help to reinvigorate and sustain the momentum of the adjustment program and to strengthen the country's balance of payments. It also pursues to stimulate increased investment, additional export promotion and overcome key bottlenecks. Further lending operations to Uruguay include support for the redefinition of the public sectors role, the rehabilitation and expansion of the telecommunications network and a housing project. -0O- -3- WORLD BANK LOANS TO URUGUAY As of May 1991 SECTOR LOANS AMOUNT* Agriculture and Livestock 10 $ 220.7 Education 1 9.7 Industry 3 89.4 Non-Project 3 285.0 Power and Telephone 8 117,7 Technical Assistance 2 7.5 Telecommunications 1 40.0 Transportation 5 220.8 Water Supply 1 22.3 TOTAL: 34 $ 1,113.1 *Original amount, round numbers, in millions of U.S. dollars.