Announcement of Two Million Two Hundred Thousand Dollars Loan to Paraguay on December 16, 1964

JNTERNATJONAL BANK FOR • RECONSTRUCTION AND DEVELOPMENT 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 64/43 Subject: $2.2 million loan to Paraguay Decemb.~r 16, 1964 The World Bank today made a loan equivalent to $2.2 million to Paraguay for the improvement of the highway between Asuncion, the capital, and Encarnacion, the second largest c'ity. The loan will provide the additional foreign exchange needed i to rebuild the road to all-weather standards and will supJ)lement a. $6 million credit extended by the Bank's affiliate, the International Development Association (IDA), in 1961 for this road and for the improvement of maintenance of Paraguay's primary road network • ... • Bank of London and South America Limited is participating in the loan., witho~t the World Bank's guarantee, for an amount of $6o.,ooo representing the first two maturities which fall due in February and August 1970. Several factors have contributed to an increase in the estimated cost of the project by an amount of $2.5 million to a total of $10.5 million. Consultants had nearly completed final designi~ :;?or the road when unprecedented floods occurred. This compelled them to redesign major portions of the road and bridge works by raising the elevation of the road, enlarging drainage and bridge structures, and taking other preventative ~easures against floods. Furthermore, traffic had in- 11 creased at a much faster rate than had been predicted so that it was decided to reconstruct the road to a uniform width of,9,J~leters throughout its entire iength and to provide for triple surface treatment to meet increased traffic requirements. The unexpectedly rapid growth of traffic gives promise that, despite the increased proJect costs, savings to road users will be even greater than llad been previously forecast.  - 2 - • \1 The ~;tmcion•Encarnacion highway forms part of a triangle, ma:de up on the /I 1 other tW9; sides by the Pa.rans River, the border of Argentina, and by the road froru Asuncion to Puerto Presidente Stroessner on the Brazilian border. The tri- angle encompasses the most densely populated and potentially rich agricultural are~s in Paraguay. Its development'has been given top priority by the Govern- ment and a survey is being conducted by the Unit~d Nations Special Fund, With the World Bank as Executing Agency, to determine a network of feeder roads to open up the h:ftlterland and thus increase the benefits of the two trunk roads. The section of road to be improved With Bank and IDA (:"'~:!.stance begins at Par~gua.ri, 40 miles from Asuncion, and runs 190 miles to Encarnacion, a port OI;l the Parana River. Included is a new bridge, 1,100 feet long, acros,'l the Tebicuary River at Villa Florida, where at present all vehicles must cross by one primitive • ferry. Contracts for ~onstruction of tne road and briege h~."lta been let after intt. r- r..a.t:!.onal competitive bidding, and consultants have been engaged to supervise con- struction which should be f~;aished before the end of 1967. Today's l3ank loan is for a,term of 25 yea.rs and bears interest at the rate of ~i per annum. Amortization will begin February 15, 1970.