Announcement of Twenty-Five Million Dollars Loan for Development Finance Company in the Philippines on September 23, 1966

• 1818 H STREET. N.W .. WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Pr~ss Release No. 66/55 Subject: $25 million loan for development Septamber 23, 1966 finance company in the Philippines The World Bank has approved a loan equivalent to $25 million to the Philippines National Bank for relending to the Private Development Corporation of the Philippines (PDC~). The loan will assist the growth of PDCP·, which is already making a signifi- cant contribution to industrial development by private enterprise in the Philippines. PDCP was established in 1963 with assistance from the World Bank and its affiliate, the International Finance Corporation. At the time of PDCP's establishment the World Bank made a loan of $15 million and the International Finance Corporation sub- scribed P 800,000 (equivalent to $205,128) to its share capital. PDCP has now almost • fu:i.ly conm.itted its initial resources of foreign exchange and will need substantial additional resources to continue to pursue private enterprise development oppor- tnnities. The second World Bank loan will meet its foreign exchange needs for ab.:;ut the ~ext two years. PDCP was launched in 1963 to assist in the creation, expansion and moderniza- tion of private productive enterprises in the Philippines. More particularly, its purpose has been to encourage pa.rticipation of foreign and domestic private capital in development, to help develop capital markets, and to encourage the growth of technical, financial, managerial and administrative skills in the country. In its first three years PDCP made 34 project loans totaling P 84 million ($21.5 million) in industries ranging over food processing, electric power, transportation, textiles, printing and publishing, chemicals, cement, glass, metal products, machinery and • mini.ng. Twenty-three of the loans were for expansion or modernization of existing enterprises and eleven were for new ventures. PDCP has contributed also to the development of the local capital market through participation in four underwriting  - 2 - ventures. One of these was the first underwriting of a public offering in the Phi.lippines made on a "firm" basis. In the context of the Philippine economy, PDCP is still a small institution and • its contr.ibution to the development of this economy is, as yet, relatively modest. But it$ financial and technical guidance already has been of value to the business community and among Philippine financial institutions providing long-term loans for private investment, PDCP has rapidly gained import~nce. In 1965, PDCP pi;ovided probably more than one-tenth o~ all long-te~ loans made by such institutions for private investment other than real estate. It has established itself as an efficient and useful organization and has been able to contribute to sound 1:,ndustrial growth by its assistance in the preparation and appraisal of private industrial projects. As its resources are augmented, PDCP will have the opportunity of becoming a more important source of finance for private industry. The World Bank's latest loan will increase PDCP 1 s total resources to the equiva- lent of.$52.3 milli.on made up of share capital of P 25 million which is held by • Philippine investors, the IFC, and banking and investment institutions in the United States, England, Germany and Japan; a P 27.5 million loan from the United States Agency for International Development, and the earlier $15 million loan from the Wor~d Bank. The initial.amortization schedule of the Bank loan provides for repayment over a term of 17 years. The amortization schedule will· be amended from time to time to conform substantially to the aggregate of the repayment schedules applied to PDCP loans financed out of the proceeds of the World Bank loan. The loan will bear intere$t at the rate the World Bank charges for similar loans at the time of actual commitment of funds for specific projects. The loan will be gua.ranteed by the Government of the Philippines. •