Yugoslavia - Telecommunications Project : Loan 0657 - Press Release - Conformed

FOR IMMEDIATE RELEASE 4o WORLD BANK 13,. ANO) 1818 H STREET. N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 70/11 Subject: $40 million loan for telecommunica- February 18, 1970 tions in Yugoslavia A World Bank loan of $40 million, announced today, will help to finance the expansion and modernization of Yugoslavia's national long distance and inter- national telecommunications systems. The project forms part of a seven-year $470 million development program which will bring about a significant improvement in Yugoslavia's domestic and international telephone and telegraph services. Yugoslavia's postal and telecommunications services are provided by 41 aut- onomous regional enterprises. Their operations and development plans are coordi- * nated by the Community of Yugoslav Posts, Telegraphs and Telephones in which all are members. The greater part of the country's telecommunications system has been developed since 1961, and most of the telephone network is automatic. How- ever, the rapid growth of the economy, particularly of industry and tourism, has brought about a demand for telecommunications service far beyond the capacity of existing installations. There are some 800,000 potential subscribers awaiting telephone connections, and during business hours the long distance lines are heavily congested. The seven-year development program has been well designed to meet the coun- try's essential requirements. It will add 1,000,000 main telephone lines to the existing 400,000; extend and modernize the transmission system, almost quad- rupling the number of national long distance circuits; and improve the quality and increase the number of international telecommunication links. -2 - The Bank loan will help to finance that part of the program related to the national long distance transit and to the international networks. It includes the installation of automatic international telephone and telegraph exchanges in Belgrade and Zagreb, and the related international telecommunication links con- necting with other European countries, Africa and North America. An important item will be a ground station for satellite communications using the INTELSAT net- work for intercontinental and long distance continental traffic. most of the equipment for these complex systems will have to be imported. The total cost of the part of the program assisted by the Bank is estimated at the equivalent of $95 million, including $65 million in foreign exchange. The Bank loan will provide $40 million of the required foreign exchange; contracts will be awarded after international competitive bidding. The balance of the for- eign exchange will come from suppliers' credits. The beneficiaries of the loan will be the 17 enterprises which account for 80% of Yugoslavia's telecommunication facilities and traffic. The enterprises will finance the local currency costs mainly from their own resources. The loan will be made to the Yugoslav Investment Bank, through which most of the World Bank's loans to Yugoslavia have been channeled, and will be guaran- teed by the Socialist Federal Republic of Yugoslavia. It will be for a term of 20 years, including 5 years of grace, with interest at 7%.