Announcement of Nine Million Five Hundred Thousand US Dollars Loan in El Salvador on October 1, 1963

• INTERNATIONAL BANK FOR RECONSTRUCTION AI\JD DE\/ELOPMENT 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 $9.5 mil ..:.i,:in loan in 1 Be..nk Press Release No. 63/44 Subject: October l, l'.)63 El Salvador The World Bank today made a loan equivalent to $9.5 million to assist in the development of a modern telecommunications system in El Salvadore The loan will help to finance automatic exchange equipment for 26,000 telephone lines in the three principal cities, San Salvador, Santa Ana, and San Miguel, together with "'~.he construction of a micro-wave radio syste~ 'connecting these three cities and several smaller communities throughout the country. Five private banks a.re participating in the loan, without the World Bank's • guarantee, for a total of $385,000 representing the first two maturities which fall due in May and November 1968. The participants are First National City Bank, New York; Girard Trust Corn Exchange Bank, Philadelphia; The Philadelphia National Bank; Continental Bank International, New York; and The First Pennsylvania Ba:uking and Trust Company, Philadelphia. Economic development in El Salvador will be greatly assisted by an adequate system of telecommunications. The country is densely populated and prospects for increasing agricultural production are limited. Special emphasis is, therefore, being placed on expanding industrial production, both for the local market and for the Central American common market in which El Salvador now holds a favorable trading position. ~he expansion of in&:t.stry and business, however, is hampered by the 1ll1Satisfactory quality and limited capacity of El Salvador's present tele- communications services. There are only 16,000 telephones in the whole country, ,. about 6 per 1,000 people; in the capital, San Salvador, alone there are over 12,000 applicants awaiting telephone service.  - 2 - The project now being financed is the first phase of a long-range program and will meet the most immediate and essential needs. Two new main automatic ex- changes and two satellite exchanges will be built in San Salvador and equipped with 20,000 lines; and the existing 7,000-line exchange will be modified to interconnect • with the new exchanges. The principal exchange will have equipment for long dis- tance, information, repair and special services. A 4,000-line automatic exchange will be provided in Santa Ana and a 2,000-line exchange in San Miguel. With the exception of some underground conduits and cables in the center of San Salvador, practically all the outside plant, cables, wires and poles, in the three cities will be rebuilt. Equipment will be provided for direct dialing between the three cities and to connect them with Sonsonate, Usulatan and Santiago de Maria. The entire project is scheduled for completion by mid-1967. The loan was made to Administracion Nacional de Telecomunicaciones (ANTEL), a newly established autonomous government agency responsible for providing tele- communications services in El Salvador. The project now being financed has been reviewed and approved by a team of consultants from the French Ministry of Posts • and Telecommunications which the Bank retained to carry out the United Nations Special Fund study of the need$ for telecommunications facilities in the region of Central America and Panama as a whole • .ANTEL will retain qu.a.lified consultants to assist in planning and supervising the project, in the training of personnel, &.nd in organizing and operating the various services during the initial years. The total cost of the project is estimated at the equivalent of $13.6 million. The Bank loan will cover the foreign exchange requirements and the local currency costs will be financed by ANTEL's internal cash generation and a bond issue in El Salvador. Contracts for construction and for the supply of equipment will be awarded on the basis of internation9.l competition. The loa.n iB for a term of 20 yegXs and bears interest at the rate of 5-1/2% • per annum including the 1% commission which is allocated to the Bank's Special Re- serve. Amortization will begin in May 1968. The loan is guaranteed by the Republic of El Salvador.