Announcement of World Bank Lends Two Hundred Million US Dollars for Mexico's Medium-Size Cities on February 17, 1993

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. *Telephone: (202) 477-1234 BANK NEWS RELEASE IBRD NO. 93/51 LAC Contact: Ciro Gamarra (202)473-8721 WORLD BANK LENDS $200 MILLION FOR MEXICO'S MEDIUM-SIZE CITIES WASHINGTON, D.C., February 17, 1993 -- The World Bank has approved a $200 million loan to Mexico to help finance a project to improve the quality and efficiency of urban transport systems in medium-size cities across the country. The project will also assist the government of Mexico in decentralizing responsibility for urban transport management and will finance urgent infrastructure improvements as well as control of environmental impacts of urban transport operations. There are presently 21 medium-size cities with population ranging from 400,000 to 1,200,000 with an average annual growth of over four percent per year, which are expected to absorb the bulk of future urban growth in Mexico. Many responsibilities for urban transport management have been returned to the cities, but they have neither the institutional framework nor professional expertise to carry out them satisfactorily. On a national basis, the project will provide for institutional strengthening of the Ministry of Social Development (SEDESOL) and of the National Bank of Public Works and Services (BANOBRAS) and training for urban transport professionals. On a local basis, the project will provide sub-loans to eligible medium-size cities to cover institutional strengthening studies for transport plans, and for urgent improvements including road and maintenance and rehabilitation, paving of access routes to low income areas and junction corridor improvements. Three cities, Ciudad Juarez, Leon and Toluca, have already completed the plans and are ready to apply for implementation sub-loans. Benefits from infrastructure investment will result from reduced vehicle operating costs, travel time savings, more cost-effective investments and improved environmental conditions. The poor will benefit through improved transport infrastructure and better public transport services, particularly from the paving of access routes to low income areas, which will account for almost one fifth of total project costs. The $471.1 million project is expected to be implemented and the loan disbursed over seven years. In addition to the World Bank loan, the government of Mexico will provide $174.7 million and the municipalities and states $96.4 million to cover the cost of the project. The $200 million World Bank loan was made to BANOBRAS with the guarantee of the United Mexican States. It is for 15 years, including 5 years of grace, with a variable interest rate, currently 7.43 percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.25 percent on the undisbursed balance. NOTE: Money figures are expressed in U.S. dollar equivalents.