Colombia - Second Livestock Development Project

RESTRICTED FILE copy X Report No. P-755- This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF COLOMBIA FOR THE SECOND LIVESTOCK DEVELOPMENT PROJECT November Z5, 1969  INTERNATIONAL RANK FOR RECONSTRUCTION ANTD DEVE irJDPNT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF COLOMBIA FOR THE SECOND LIVESTOCK DEVELOPMENT PROJECT 1. I submit the following report and recommendation on a proposed loan in an amount in vorious currencies equivalent to $18.3 million to the Republic of Colombia, the proceeds of which are to be made available to the Caja de Credito Agrario, Industrial y Minero ("Cajaf') to finance livestock development. PART I HISTORICAL 2. The proposed loan would be the Bank's sixth loan for agriculture in Colombia. Two loans (18 CO and 108 CO) for $5 million each to finance the importation of agricultural equipment have been fully repaid. A loan (502 CO) of $9 million was made in June, 1967 to the Colombian Agrarian Reform Institute (INCORA) for the first phase of the Atlantico No. 3 Irrigation Project. Another loan of $17 million was made in June, 1969, for an INCORA agricultural credit project. In May, 1966 the Bank made a loan of $16.7 million to finance the first stage of a long-term livestock development program and has now been requested to assist in financing the continuation of this program. 3. A Bank mission to Colombia appraised the proposed loan during January-February, 1969 and negotiations were held in Washington during July 28-30, 1969. The Government of Colombia was represented by Dr. M1isael Pastrana Borrero and Dr. Eduardo Gaitan Duran (Ambassador and Counsellor respectively of the Colombian Embassy in Nbshington), the Caja by Dr. Eduardo Vega Franco (Financial Manager), the Banco de la Republica by Dr. Rafael Gama (Assistant Manager) and the Colombian Planning Office by Dr. Alfonso Mbjia (Director, Projects Department). 4. The proposed loan would be the thirty-ninth made to Colombia and would increase the total amount of Bank loans to Colombia to $618.3 million (net of cancellations). IDA has made one credit of $19.5 million  - 2 - for highways to Colombia. The following is a summary statement of Bank loans and IDA credits to Colombia as of October 31, 1969: Loan or Amounts (US$ Million) Credit Undis- No. Year Borrower Purpose Bank IDA bursed Fully disbursed loans and credits 313.7 19.5 345 1963 Acerias Paz del. Rio, S.A. S;+eel 30.0 1.2 369 1964 Empresas Publicas de Medellin Power 42.0 14.2 448 1966 Government Agriculture 16.7 6.5 451 1966 Banco de la Republica Industry 25.0 3.4 499 1967 Empresa Nacional de Tele- Con'm.ni- comunicacionies cations 16.0 11.0 502 1967 Instituto Colombiano de la Reforma Agraria Irrigation 9.0 8.7 53,4 1968 Banco de la Republica Industry 12.5 7.7 536 1968 Empre9a de Acueducto y Water Alcantarillado de Bogota Supply 14.0 9.7 537 1968 Empresa de Energia Electrica de Bogota Pbower 18.0 10.14 550 1968 Government Roads 17.2 12.8 551 1968 Ferrocarriles Nacionales Railways 18.3 17.14 552 1968 Government Education 7.6 7.4 575 1968 Interconexion Electrica S.A. Power 18.0 15.5 624 1969 Government Agriculture 17.0 17.0 625 1969 Banco de la Republica Industry 25.0 25.0 Total (less cancellations) 600.0 of which has been repaid to Bank and others 122.0 Total now outstanding 478.0 Amount sold: 17.5 of which has been repaid 15.0 2.5 Total now held by Bank and IDA 475.5 19.5 167.9 5. Twenty-three loans have been completely disbursed. On the remainder, disbursements are now proceeding normally. The Executive Directors pre- viously approved an amendment to the Loan Agreement for Loan 369 CO, under which the Loan was split into two tranches and the Closing Date was post- poned by two years to December 31, 1970 (R67-136). Effective December 26. 1968, $3 million of the undisbursed balance was cancelled, and on present indications a further $4-5 million will be cancelled prior to the new Closing Date.  6. IFC has made 31 investments and underwriting commitments in sixteen enterprises in Colombia totalling $17.5 million (net of cancellations). PART II - DESCRIPTION OF THE PROPOSED LOAN 7. Borrower: Republic of Colombia Beneficiary: Caja de Credito Agrario, Industrial y Minero. Amount: Equivalent in various currencies to $18.3 million. Purpose: To increase productivity in the livestock sector by providing long- term finance to the participating ranchers. Amortization: 18 years, including 6-year grace period, with repayment in 25 semi-annual installments from September 15, 1975 to September 15, 1987. Interest Rate: Seven percent. Commitment Charge: 3/4 of one percent. Relending Terms: 14 percent consisting of Bank interest rate plus no more than 3