10891 International Bank for Reconstruction and Development WORLD BANK FIFT ENTH ANNUAL REPORT * 1959-1960 Fifteenth Annual Report co n te n ts PRESIDENT'S LETTER OF TRANSMITTAL . . . . . . . . . . . . . . . . 2 FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . 3 THE YEAR'S ACTIVITIES . . . . . . . . . . . . . . . . . . . . 4 General . . . . . . . . . . . . . . . . . . . . 5 The Year'sLending . . . . . . . . . . . . . . . . . 10 Financial Operations . . . . . . . . . . . . . . . . . 11 Technical Assistance . . . . . . . . . . . . . . . . . 14 COUNTRY-BY-COUNTRY ANNEX . . . . . . . . . . . . . . . . . I9 A frica . . . . . . . . . . . . . . . . . . . . . 19 Asia and the Middle East . . . . . . . . . . . . . . . 23 Europe . . . . . . . . . . . . . . . . . . . . 29 Western Hemisphere . . . . . . . . . . . . . . . . . 31 FINANCIAL STATEMENTS A Balance Sheet. . . . . . . . . . . . . . . . . . . 36 B Statement of Income and Expenses . . . . . . . . . . . . 38 C Currencies Held by the Bank . . . . . . . . . . . . . . 39 D Subscriptions to Capital Stock and Voting Power . . . . . . . . 40 E Summary Statement of Loans . . . . . . . . . . . . . . 41 F Funded Debt of theBank . . . . . . . . . . . . . . . 42 G Notes to Financial Statements . . . . . . . . . . . . . . 44 OPINION OF INDEPENDENT AUDITOR . . . . . . . . . . . . . . . 46 OTHER APPENDICES H Administrative Budget . . . . . . . . . . . . . . . . 47 I Governors and Alternates . . . . . . . . . . . . . . . 48 J Executive Directors and Alternates. . . . . . . . . . . . . 49 K Statement of Loans . . . . . . . . . . . . . . . . . 50 L Principal Officers of the Bank . . . . . . . . . . . . . . 58 International Bank for Reconstruction and Develonment September 27, 1960 My dear Mr. Chairman: In accordance with Section 10 of the By-Laws of the International Bank for Reconstruction and Development, I have been authorized by the Execu- tive Directors to submit to the Board of Governors this Annual Report of the Bank for the fiscal year July 1, 1959 to June 30, 1960. The first section of this year's Report surveys the various activities of the Bank in the fiscal year. An Annex follows, giving a country-by-country summary of the year's operations. Finally, there appear the customary Appendices, including the Financial Statements as of June 30, 1960; the Administrative Budget for the fiscal year ending June 30, 1961; and a Statement of Bank Loans. Sincerely yours, EUGENE R. BLACK President Chairman, Board of Governors, International Bank for Reconstruction and Development .2* Financial Highlights (Expressed in millions of United States Dollars) Fiscal Years 1959 1961) LOANS OF THE YEAR S703 S659 SALES OF PARTS OF BANK LOANS 148 243 REPAYMENTS OF LOANS TO BANK 45 74 DISBURSEMENTS ON LOANS 583 544 GROSS INCOME 122 151 NET INCOME 46 59 TOTAL OF SUPPLEMENTAL RESERVE 2s2 341 TOTAL OF SPECIAL RESERVE 138 165 TOTAL RESERVES 420 506 BORROWINGS OF THE YEAR (Gross) 432 375 IN THE UNITED STATES 10t I125 IN OTHER COUNTRIES "32 250 NET INCREASE IN FUNDED DEBT 247 168 -3- THE YEAR'S ACTIVITIES. I A. L-z. ~4Ir LO N INFSA7ER15-6 LON4NPEIU ER Ileyer s31loas eremae i 2 contiesan terioris,and%ee euhlen t $69 illon B Y JUNE 30, 1960, the total of the Bank's loans low-income countries. Between 1955 and 1958 the for reconstruction and development had risen above aggregate foreign debt of these countries increased by $5,000 million. New loans during the fiscal year more than 60% and the indications are that a further amounted to $659 million, slightly below the total of sharp rise took place in 1959 in the debt of several of the previous year. Later sections of this report note the Bank's member countries in Asia, the Middle East high levels of activity in other aspects of the Bank's and Latin America. (A study of this subject, entitled operations; of particular significance was the record Debt Servicing Problems of Low-Income Countries, volume of sales to private investors of parts of the 1956-1958, by Dragoslav Avramovic and Ravi Gulhati, Bank's loans. These sales greatly reduced the need for was published for the Bank in July, 1960, by the Johns the Bank to borrow new funds from the market, and Hopkins Press.) Although most of these countries as a result the funded debt of the Bank rose by only still possess a margin for further borrowing on con- $168 million, the smallest increase for several years. ventional terms, there is a growing realization in the For international economic relationships 1960 industrial countries of the need to export develop- clearly marks the beginning of a period of change, in ment capital on terms which will not bear as heavily which new needs are emerging and new institutions on the balance of payments of the poorer countries. and new techniques to meet them are in process of Fortunately, there are signs that some of the industrial taking definite shape. In large part this is due to countries will be able to export capital on an increas- heightened international awareness of the magnitude ing scale. The Western European countries as a whole of the financial requirements of the less developed generated a sizeable trade surplus during 1959, en- countries, whose efforts to achieve a high rate of eco- abling thcm to reduce their outstanding debt to the nomic growth continue to impose strains on their United States and to the International Monetary Fund resources available for development. at an accelerated rate; some of these countries, as is It is true that the external accounts of these countries discussed below, also began to explore new ways of benefited during the past year from a substantial in- increasing their contribution to the flow of capital to crease in the volume of their exports, but their terms low-income areas, and thereby supporting Western of trade did not show a similar recovery. Also, in a Europe's traditional role as an important supplier of number of countries better economic management development capital. Also, notwithstanding pressures brought benefits both to investment programming on its balance of payments and a further out-flow of and to the balance of payments. But the structural gold from its reserves, the United States continued to problems remain serious. Burdensome surpluses con- be the largest single source both of capital and tech- tinue to depress the market for several commodities nical assistance for the less developed countries, dis- on which many less developed countries rely for their bursing approximately the same amount of financial earnings of foreign exchange. Some countries face assistance during 1959 as in the preceding year. heavy debt schedules on earlier borrowing. And the demand for external long term capital remains at THE PAST YEAR HAS SEEN several new initiatives on least as strong as ever, the part of the industrial countries, not only to in- As a result of these and other factors, there has been crease the flow of development funds but also to seek a further increase in the external public debt of the better coordination of their assistance to the less .5. developed areas of the world. Some of these initia- resources will be the equivalent of $1,000 million, of tives have been along traditional lines, increasing the which the equivalent of $787 million will be available resources available to existing national and inter- on a fully convertible basis. IDA will provide develop- national financing organizations; others have been ment finance to the less developed areas of the world novel, involving new international groupings. What included within its membership. A considerable de- effect these developments will have on the Bank's gree of flexibility is given to IDA by its Articles of own operations cannot at present be foreseen, but Agreement, both in the purposes for which it may pro- the Bank stands ready to do everything in its power to vide finance and in the terms on which it may make assist the common objective of all those endeavors - loans. IDA will be administered by the Bank and will an increased supply of investment capital for worth- have the same management; although it will finance while programs of economic improvement in the less a wider range of projects than the Bank, it is to be developed countries. expected that IDA's methods of project appraisal will be similar to those of the Bank. THE BANK WAS DIRECTLY affected by two of these A unique feature of IDA is the division of member developments. The first was the increase in its own countries into two groups for purposes of subscription capital, which was approved in September, 1959, and of funds. Subscriptions will be payable over a five-year became effective during the fiscal year. As a result, at period, and the countries in both groups will pay 10% the end of June, 1960, the subscribed capital of the of their initial subscriptions in gold or freely con- Bank was $19,308 million, more than double the figure vertible currencies. One group, however, the 17 more of a year earlier. About 90%, or $17,300 million, of industrialized member countries of the Bank, will pay this subscribed capital remains on call and reinforces the remaining 90% in five equal installments in gold the Bank's capacity to borrow in the money markets or freely convertible currencies; the other group, the of the world. 51 less developed countries, will pay their 90% in The second development was the proposal for the their national currencies, which IDA will not be free establishment of a new International Development to convert into other currencies or to use to finance ex- Association (IDA) as an affiliate of the Bank. IDA was ports from the country concerned without its consent. proposed as an instrument to promote economic de- IDA is to keep the adequacy of its resources under velopment by providing finance on terms more flexible regular review. It is contemplated that the first review and bearing less heavily on the balance of payments will take place before the end of the first five-year of the recipient countries than those of conventional period, and subsequent examinations at intervals of loans, thereby furthering the development objectives approximately five years thereafter. General or indi- and supplementing the activities of the Bank. vidual increases in subscriptions, however, may be In response to a resolution put forward by the authorized at any time. United States and adopted by the Bank's Board of Governors at the Annual Meeting in Washington in OTHER INTERNATIONAL INITIATIVES sprang from the October, 1959, the Executive Directors drafted Articles increasing interest of the industrial countries, par- of Agreement for IDA, and these were transmitted to ticularly those of Western Europe, in providing de- the Bank's member governments in February, 1960. velopment finance and a consequent recognition of Many governments thereafter began the legislative the need to coordinate their efforts. Opportunity was action necessary to enable them to accept membership taken to discuss these problems at a series of meetings in IDA, and at the end of the fiscal year this process in Europe and in Washington early in 1960. was sufficiently advanced to make it appear likely that These meetings considered various proposals to IDA might come into being in the fall of 1960. amend the functions and membership of the Organiza- If all members of the Bank join IDA, its initial tion for European Economic Cooperation (OEEC) to .6- bring them into line with current requirements. Having This division of the waters necessitates the construc- been founded as a central instrument of the European tion in Pakistan of works to replace, by transfer from nations which were participating in the Marshall the three Western Rivers, supplies to meet the irri- Plan, OEEC created special machinery for the liberali- gation uses in those areas of Pakistan which have zation of European trade and payments, and played hitherto depended on supplies from the three Eastern a considerable part in European economic recovery. Rivers. The effect of this transfer would be to release Now that many of its initial tasks have been dis- the whole flow of the three Eastern Rivers for irriga- charged, it has been suggested that OEEC should em- tion development in India, and, as part of a settle- bark on new activities, including work in the field of ment, India would agree to contribute towards the development financing, and that its membership costs of these works. The system of works to be should include the United States and Canada. constructed would, however, provide further sub- In the meantime, pending decisions on general eco- stantial additional irrigation development both in nomic organization, eight principal creditor nations India and Pakistan and would develop important of the world took action to establish the Development hydroelectric potential in both countries. It would Assistance Group, which held its first meeting in also make an important contribution to soil reclama- Washington in February, 1960. The objectives of the tion and drainage in Pakistan, and provide a measure Group are to consider ways of increasing and coordi- of flood protection in both countries. nating economic assistance to the less developed The Bank has evolved a Plan to finance the required countries. At the invitation of the Group, the Bank expenditure of about $1,050 million equivalent, partly is participating in its meetings and has submitted in foreign exchange and partly in local currencies. Of material based on its own experience. this amount approximately $850 million equivalent In the past year also, the new Inter-American De- would be spent on replacement and development velopment Bank (IADB) has come into being, and has works to be constructed in Pakistan, and approxi- set up its headquarters organization in Washington. mately $200 million on development works to be The IADB is a new international agency which will constructed in India. finance economic development in Latin America, and The Governments of Australia, Canada, Germany, its management is now engaged in its first task of New Zealand, the United Kingdom and the United spreading knowledge of its policies and objectives States have made commitments, subject to legislative both in the countries of Latin America and in the authorization, to contribute approximately $650 mil- United States, to which it must look for financial lion equivalent toward the total cost; these contribu- support. The Bank was able to provide the IADB with tions would be in grants, or, in the case of the United assistance during its organizational stage, and looks States, partly in grants and partly in dollar loans re- forward to future opportunities for cooperation. payable in local currency, and would be usable for purchases anywhere in accordance with the Bank's YET ANOTHER EXAMPLE of international coopera- general practice relating to international competition. tion in development financing concerns the proposed Part of the United States contribution would be in Indus Basin Settlement Plan. Pakistan rupees, either in loan or grant form, to meet The Plan would be based on a division of the Indus part of the local expenditures in Pakistan. Waters on the lines of the Proposal made by the Bank In addition, the President of the Bank has been pre- to the two Governments in February, 1954. Under pared to recommend to the Bank's Directors that the this Proposal the three Eastern Rivers of the Indus Bank should participate with loans to India and system (Sutlej, Beas and Ravi) would be for the use Pakistan of the order of $103 million. of India, and the three Western Rivers (Indus, Jhelum The implementation of the financial plan, and the and Chenab) would be for the use of Pakistan. participation in it of the Governments concerned and .7- - 4- In Mexico a Bank loan r Js is helping to finance the Temzaxcal project. The generators will be powered by water from an irrigation and flood control reservoir on the Tonto River. By lending $1,600 million for electric power the Bank has helped to fmance TI million kilowawes ofynew generating capacity, thoasands of miles of transmission linesa and nany large-scale new or expanded ~ power distribution systems. Above is the Kurobe hydroelectric project i in a remote gorge of the Japanese Alps. A vital need for Pakistan's economie development - is a greater supply of electric power. The Bank has made three power loans in Pakistan, - --- totaling over $30 million. On the right men and women are laboring on the foundations of a new diesel power station which will bring new power to the rapidly gro wing industries of Karachi. -8-, w . of the Bank, would be contingent on the ratification THE MEMBERSHIP of the Bank remained unchanged of the Water Treaty now under negotiation. at 68 countries during the year. The applications for The Treaty negotiations between India and Paki- membership of Laos and Portugal have been approved stan, with the good offices of the Bank, were accelerated by the Bank's Board of Governors and await action in the summer of 1959, following agreement by both by the two Governments. Nepal has applied for mem- Governments on the general principles on which a bership, and Nigeria has notified the Bank of its wish Water Treaty should be based. The detailed drafting to become a member after becoming independent in of the Treaty began in Washington in October and October, 1960. Appendix D lists the capital subscrip- was still continuing as the fiscal year came to an end. tions of Bank members at the end of the fiscal year. The Bank took other action in connection with During the fiscal year the regular staff of the Bank India and Pakistan during the year. An interim meet- rose from 605 to 650; the continued increase in the ing was held in March, 1960, of the group of indus- Bank's activities, together with the assumption of new trial countries providing large scale development responsibilities, has meant a continuous program of assistance to India, a group which had first been called recruitment. The number of nationalities represented together by the Bank in 1958. The meeting reviewed on the staff showed a further increase, from 48 to 53. developments in India's balance of payments in the This continues a long term trend toward a greater past year, and progress made in providing assistance. variety of representation, which has had the effect of Plans were discussed for holding the next full meeting making the composition of the staff more representa- of this group later in the year to undertake a prelim- tive of the Bank's membership. For example, in 1950 inary review of the foreign exchange requirements of United States citizens made up over 65% of the total the Indian Third Five Year Plan. Another initiative staff. This year the proportion was 43%. Approxi- aimed at securing well informed consideration of the mately the same figures also apply to the composition economic problems of India and Pakistan was taken of the professional staff of the Bank. by the President of the Bank, who suggested to three There were two changes during the year in the internationally known bankers that they visit the sub- principal officers of the Bank. Mr. Davidson Sommers, continent to gain first-hand impressions of the current Vice President, resigned to join the Equitable Life situation and prospects there. As a result Mr. Hermann Assurance Society of the United States as Senior Abs of the Deutsche Bank of Frankfurt, Sir Oliver Vice President and General Counsel. Mr. Sommers Franks of Lloyds Bank of London and Mr. Allan had been with the Bank since its earliest days and was Sproul, formerly of the Federal Reserve Bank of New General Counsel for ten years, up to 1959. His broad York, visited India and Pakistan for six weeks early experience and his qualities of judgement and wisdom in 1960. In recording their general impressions in a enabled him to make a unique contribution to the joint letter to the President of the Bank, the three work of the Bank. The Bank suffered another serious bankers praised the efforts of both countries and urged loss by the death in September, 1959, of Mr. Henry support for their development plans. The bankers W. Riley, who joined the Bank in 1947 and had been also warned of the many difficulties that would arise Treasurer since 1953. Mr. Riley brought outstanding in both countries as a result of the strain imposed on abilities to the service of the Bank, and commanded their economies by development expenditures. There the deep respect and affection of all who dealt with would also be problems calling for cooperation be- him. Mr. Robert W. Cavanaugh, formerly Chief of tween the two countries and the industrialized coun- the Finance Division, succeeded to the post of Treas- tries in a position to supply the finance required. urer in October, 1959. .9. THE YEAR'S LENDING New loans made during the fiscal year totaled $658.7 LIST OF LOANS million, slightly below the rate of each of the previous Expressed in United States Dollars two years. There were 31 loans in all, one more than - in 1958-59. The total number of the Bank's loans rose Country Purpose Amount to 265 in 53 member countries and territories. Austria Industry . . . . . . 9,000,000 For the fifth year in succession Asia and the Algeria and Pipeline . . . . . . 50,000,000, Middle East received the largest part of the year's Sahara Belgian Congo Agriculture . . . . . 7,000,000 loans, a total of $273 million. Africa accounted for Transport - 2 Loans . . 33,000,000 $183 million. Latin America received $134 million, Chile Power . . . . . . 32,500,000 Colombia Power - 2 Loans . . . 42,600,000 raising the Bank's loans in that region above the $1,000 Costabia Industry. 2,000,000 Costa Rica Industry . . . . . . 2,000,000 million mark. Lending in Europe continued to fall as Honduras Power . . . . . . 8,800,000 a reflection of the ability of most European countries India Railways . . . . . 50,000,000 to finance their own needs or borrow in the market; Istyy. 10 , 000 , 00 0 Iran Industry . . . . . . 5,200,000 the total lent by the Bank in Europe in the last Agriculture, Power . . . 42,000,000 twelve months was only $69 million. Two of the Italy Nuclear Power . . . . 40,000,000 Japan Steel - 2 Loans . . . . 44,000,000 year's loans - in Mauritania and the United Arab Re- Transport . . . . . 40,000,000 public - were made in countries where the Bank had Kenya Agriculture . . . . . 5,600,000 not previously invested. Mauritania Mining . . . . . . 66,000,00(- Nicaragua Power . . . . . . 12,500,000 The purposes for which Bank loans were made Norway Power . . . . . . 20,000,000 showed the usual concentration on basic facilities. The Pakistan Power . . . . . . 2,400,000 largest category was transportation, totaling $245 Industry . . . . . . 10,000,000 Transport . . . . . 12,500,000 million. Included were an oil pipeline loan for the new Peru Power . . . . . . 24,000,000 Sahara oil field, a loan for the improvement of the Agriculture . . . . . 5,000,000 Rhodesia and Agriculture . . . . . 5,600,000 Suez Canal, another for the first expressway in Japan, Nyasaland and loans for transport improvement in the Belgian Sudan Agriculture . . . . . 15,500,000 Congo, in India and in Pakistan. U.A.R. Transport . . . . . 56,500,000 Electric power loans totaled $208 million, and will Uruguay Ariculture. 7,000,000 help to add a total of more than one million kilowatts TOTAL . . . . . . $658,700,000 of electrical generating capacity in member countries. Most of these loans were supplementary operations in new privately owned industrial development bank in countries which had previously borrowed for power: Iran. The Japanese steel industry benefited by two Honduras, Italy, Norway, Chile, Colombia, Nica- further loans totaling $44 million. ragua and Pakistan. The loan to Italy was the Bank's More was lent for agriculture than for some years first investment in nuclear power. Iran and Peru were past, the total being almost $60 million. Of particular new borrowers for electric power development. interest in this sector were the Bank's first three loans Loans for industry aggregated $146 million, the for African agriculture, in Southern Rhodesia, Kenya largest being one of $66 million for iron mining in and the Belgian Congo. In the Sudan a loan was made Mauritania. Most of the other industrial loans were to assist a large-scale extension of the Gezira irrigation follow-up operations, designed to provide further for- scheme. The remaining loans consisted of one for the eign exchange to development banks fostering the Dez irrigation and power project in Iran, another for growth of private industry in Austria, Costa Rica, livestock improvement in Uruguay and a third for India and Pakistan. A first loan was also made to a agricultural development in Peru. *10* FINANCIAL OPERATIONS The year's new loan commitments brought the cumu- million of administrative expenditures were for special lative total of Bank loans, net of cancellations and services to member countries, including general survey refundings, to $5,068 million. Of this total, $1,149 missions, costs of mediation, training programs and million has been repaid or sold to other investors. At other advisory services. June 30, 1960, the effective loans held by the Bank Repayments to the Bank amounted to $74 million stood at $3,664 million, of which $2,807 million had and repayments to other investors were $84 million, been disbursed. reflecting the extent to which investors had bought Net earnings (exclusive of receipts from loan com- maturing portions of loans from the Bank. Total missions) were $59.5 million, an increase of $13 principal repayments were $158 million compared million over the previous highest figure. Disburse- with $109 million a year before. ments were $544 million, compared with $583 million Long-term money rates remained high in most last year. Sales of parts of Bank loans amounted to money markets during the fiscal year. For example, $243 million, compared with the previous high of $148 the only bond issue sold by the Bank in the United million of the year before. These sales of loans are States during the year carried annual interest of 5%, a equivalent to repayments to the Bank before maturity, higher rate than any previous Bank issue in that mar- bringing immediate replenishment of the Bank's lend- ket. As a result of these conditions, the Bank's interest ing resources. As a result, the Bank's need to go to the rate had to be raised from 6% to 61/4% early in 1960. market for new finance is correspondingly reduced; Subsequent changes in market conditions made it new Bank borrowing during the fiscal year totaled the possible to return to 6%. equivalent of $375 million, compared with $432 million the year before; allowing for redemptions, SALES OF LOANS funded debt rose by $168 million, compared with $247 AND NATIONAL CURRENCY CAPITAL SUBSCRIPTIONS million in 1958/59 and $625 million in 1957/58. Mention has already been made of the high figure - $243 million - of sales of parts of the Bank's loans. RESERVES, INCOME, REPAYMENTS About one-third of these sales took the form of par- AND INTEREST RATE ticipations by other financial institutions in Bank loans At June 30, 1960, the Bank's total reserves had reached at the time they were made. For example, participa- $506.5 million, an increase of $86.5 million during the tions in the loan of $50 million for the oil pipeline in year. The reserves consist of two parts. One, the Algeria, principally by insurance companies, totaled Supplemental Reserve accumulated from net earnings, $25 million. Most participations take the form of stood at $341.5 million at the end of the fiscal year, purchases of the early maturities of Bank loans, but compared with $282 million a year earlier. The other, an interesting feature in the pipeline loan was the a Special Reserve to which are credited receipts from purchase by financial institutions of portions of all the commission of 1% charged on the outstanding the maturities, running until 1971. In two loans balance of all loans, increased by $27 million to a total aggregating $33 million made to the Belgian Congo of $165 million. at the end of March 1960, commercial banks from Gross income for the year, excluding loan commis- four countries - Belgium, the Netherlands, Switzer- sions, was $151 million compared with $122 million land and the United States - took almost $10 million a year before, an increase of 25%. Interest and issue of participations in different currencies. The $20 costs rose to $77 million, compared with $66 million million Norwegian power loan of July 1959 attracted the previous year. Administrative costs were $10 a participation of almost $7 million by one German million, a small increase over 1958/59. About $1 bank, and $5.5 million of the early maturities of the * 11 * SALES OF BANK LOANS By Fiscal Years year by further effective releases by member govern- ments of their subscriptions to the Bank's capital in (In Millions of U.S. Dollars Equivalents) their national currencies; these additional releases 250 250 were equivalent to $116 million, and raised to over $1,600 million the total of members' subscriptions Outside U S. (including the small portion subscribed in gold or 200 200 dollars) which have been used or are available for the Bank's lending. 150 150 DISBURSEMENTS In the year's disbursements of $544 million, the trend continued toward the use of more non-dollar curren- 100 100 cies, reflecting the increased availability of these cur- rencies to the Bank; in the past year non-dollar currencies made up half of disbursements. A summary 50 of the currencies repayable to the Bank as of June 30, 1960 is given in Appendix E. 0 0 The following table shows the distribution by 1955 1956 1957 1958 1959 1960 countries of the orders placed by Bank borrowers using Bank loan funds. The normal procedure is for borrowers to place their orders on the basis of inter- national competition, and the table illustrates the wide distribution of orders which results. Suez Canal loan of December 1959 were bought by commercial banks in the United States, Japan and Loan Expenditures in Individual Countries the Middle East. There were participations, all with- (Estimates rounded to equivalent in millions of United States dollars) Disbursements by Cumulative Fiscal Cumulative out the guarantee of the Bank, in 25 of the 31 loans borrowers for total to Year total to imports from: June 30, 1959 1959-60 June 30, 1960 made during the year. But the majority of the sales of loans were from the Belgium $ 94.7 $ 10.7 5 105.4 Bank's portfolio and reflected increasing interest by Canada . . . . . 129.0 2.8 131.8 banks, insurance companies, and other institutional France.83.7 17.9 101.6 investors in maturities of Bank loans made in earlier Germany . . . . 270.5 50.6 321.1 years. Unlike participations, which are taken mainly Ialy.72.7 16.4 89.1 Japan 6 0. . 7 6. 9.6 70.3 by United States investors, almost all sales of older Swen . . . . . 33.5 7.7 41.2 loans are made to European financial institutions. Switzerland . . . . 58.0 8.6 66.6 This has been the case for several years, as shown in United Kingdom . . 383.3 75.8 459.1 the chart above. United States . . . 1,476.5 93.8 1,570.3 Participations and sales from portfolio are of two- All other countries . . 136.1 29.1 165.2 fold importance to the Bank. In the first place, they Total . . . . . $2,798.7 $323.0 $3,121.7 are an important source of funds -this year they Other disbursements* 578.6 220.9 799.5 were equal to more than 44% of cash disbursements. GRAND TOTAL . . $3,377.3 $543.9 $3,921.2 Secondly, they help toward the Bank's objective to * These include disbursements on loans in which the funds promote private investment in development financing, are used for local expenditures or for broad development programs where the source of the items imported with The Bank's funds were also augmented during the Bank funds is not specified. *12* DISBURSEMENTS IN U.S. DOLLARS THE YEAR'S BORROWING AND OTHER CURRENCIES New borrowing during the year totaled $375 million. By Fiscal Years Only one new bond issue was sold in the United States (In Millions of U.S. Dollars Equivalents) market; two-thirds of the total was borrowed from 600 600 investors in many other countries. New issues included I the Bank's eleventh borrowing in Switzerland, further Other Currencies - borrowing from Germany, and a return, after five 500 - 500 years, to the London market. US Dollars The first borrowing of the fiscal year was on July 11, 400 400 1959, when the Bank borrowed $30 million in U.S. dollars from the Deutsche Bundesbank, the central 300 300 bank of Germany, for three years at 41/2%. This borrowing replaced one of the same amount maturing on that day. 200 200 Then, on August 31, 1959, the Bank announced the sale, entirely outside the United States, of a $100 100 100 million issue of United States dollar bonds. These were two-year bonds, placed at par and with an interest rate of 434%. The sale was made by private 1955 1956 1957 1958 1959 1960 placement with 63 institutional investors in 35 coun- tries, marking a further broadening of the inter- national market for Bank bonds. Subscriptions re- ceived were more than double the amount of bonds available. Requests were received from many institu- Bank arranged to borrow DM 200 million ($48 tions which had not previously bought obligations million), drawings to be made from time to time over and from buyers in eight countries where Bank bonds 12 months beginning January 31, 1960 in installments had not been held before. Purchasers included central of DM 5 million or multiples thereof. On the occasion banks, government special accounts, commercial of each drawing the Bank arranged to deliver a 434% banks, insurance companies and corporations. three-year note in the amount drawn. At the end of In October the Bank borrowed $2.5 million and the fiscal year DM 100 million ($24 million) remained DM 10 million at 41/2% for two years from a Euro- undrawn from this borrowing. pean financial institution. On January 29, 1960, the Bank offered publicly at On December 16, 1959, the Bank returned to the par Sw F 60 million ($14 million) of 41/2% 12-year London market for the first time since 1954, selling bonds on the Swiss market. As with previous Bank an issue of £10 million ($28 million) of 5% Stock offerings there, the Swiss Credit Bank, the Swiss 1977-1982. The stock was sold at 961/2% and the offer Bank Corporation and the Union Bank of Switzerland was oversubscribed. The underwriters were headed by headed the underwriting group. The bonds will have Baring Brothers & Co., Ltd., and also included Ham- no sinking fund, and will be non-callable for eight bros Bank Ltd., Lazard Brothers & Co., Ltd., years. The issue is listed on the stock exchanges of Morgan Grenfell & Co., Ltd., N. M. Rothschild Zurich, Basle, Berne, Geneva and Lausanne. & Sons, and J. Henry Schroder & Co., Ltd. The only borrowing in the United States during The first borrowing of 1960 was once again from the year took place on February 9, 1960, when an the Deutsche Bundesbank, making the Bank's ninth underwriting group of 181 investment and commercial borrowing from that institution. On January 20 the banks headed jointly by Morgan Stanley and Co. and .13* The First Boston Corporation sold at par a new issue a loan of the same amount maturing on June 20. The of $125 million of Bank 5% bonds maturing in 1985. new borrowing was for 2/2 years, at 4%. It was The amount of the issue originally had been announced announced on the same occasion that the Bundesbank as $100 million but was increased to meet heavy had agreed to renew a note for $30 million, maturing demand, particularly from institutions which had not on July 11, 1960, for a further three years at 4%. previously bought Bank bonds. These institutions The acquisition by the Bank of its bonds to meet numbered 70 in all, and accounted for $25 million of purchase and sinking fund requirements during the the total bonds sold. More than one-fifth of the issue year totaled the equivalent of $21 million in United was sold with delayed delivery, which has been a States dollars, Canadian dollars, Netherlands guilders feature of all Bank issues in the United States since and pounds sterling. The Bank also retired $166 million 1957. This feature enabled investors to take delivery of its bonds and notes at maturity. The net result of and make payments for the bonds on one or more all these transactions was an increase of $168 million quarterly dates through February 15, 1962. By the in the Bank's funded debt, bringing the total out- end of the fiscal year, $3 million of these bonds had standing on June 30 to the equivalent of $2,073 been delivered by the Bank and the Bank also received million (See Appendix F). Although the greater part $16 million in delayed delivery payments for bonds of this total is denominated in United States dollars, sold in previous fiscal years, and $13 million equivalent the holdings of the Bank's bonds and notes are widely of a Deutsche mark borrowing arranged in July, 1958. dispersed throughout the world. Indeed, it was The final borrowing transaction of the year was of estimated on June 30, 1960, that about 53% of the $25 million from the Deutsche Bundesbank, to replace Bank's funded debt is held outside the United States. TECHNICAL ASSISTANCE Of particular note in the past year has been the in- began in September 1959, and was conducted by con- crease of the Bank's technical assistance activities in sulting engineering firms under the supervision of a connection with surveys financed by the United Na- two-man Steering Committee composed of representa- tions Special Fund. The Bank has maintained a very tives of the Argentine Government and the Bank. The close relationship with the Special Fund, many of final report of the consultants was expected to be sub- whose projects give promise of helping substantially mitted to the Government in July 1960. to fill the gap between the initial conception of major The other projects for which the Bank is acting as productive undertakings and their preparation in a Executing Agency are in different stages. In Nigeria, form suitable for financing. The President of the Bank the Niger Dam Survey is being conducted to ascertain is a member of the Special Fund's three-man Consul- the merits of constructing a dam for electric power tative Board, and the experience of the first full year generation, navigation, flood control and irrigation on of the Fund's operations provides a good foundation Nigeria's principal river. In British Guiana, a Plan of for continued and expanded cooperation between the Operation had been agreed, engineering contracts two agencies. awarded and on-the-spot investigations started by the The first Special Fund project for which the Bank end of the fiscal year in a study of methods for im- was Executing Agency was a survey of the electric proving access to the harbor of Georgetown. Another power needs and potential of Argentina. This survey project in Argentina is a comprehensive survey of *14- P9 - -. - --- The Bank has lent over $1,500 million to improve -- transportation by road, rail, water and air. One of the world's largest railroad modernization and expansion programs is that of the Indian Railways (above), where new electric locomotives, bought with Bank loans, --are taking over from older equipment. Port improvements have been financed in many countries. A completely new port is rising to replace the out-of-date facilities now in use at Guayaquil, the principal port of Ecuador. A new highway, above, in the mountains of Iran, where new highways are being built to meet modern needs. The Bank lent $72 million for this program. transportation needs and the preparation of a long- The assignment of Bank staff members to advise on range transportation program; the first phase of this development planning and assist with other problems project is due to begin in July. A minerals survey in of economic development was continued in several Surinam had been approved; field operations are ex- member countries. The Bank's resident representative pected to start early in 1961, following completion of in Honduras remained until the end of 1959, and the the necessary mapping and determination of the most two-man mission in Peru until March 1960. The ad- appropriate aerial survey techniques. Finally, a survey visory mission to Pakistan continued its work, as did of the siltation in the Port of Bangkok and of possible the Bank's resident representative in India. A resident remedial measures is under consideration and is being representative of the Bank, whose duties include ad- discussed between the Thailand Government, the vice and assistance to the Government when requested, Special Fund and the Bank. continued his assignment in Thailand; he is also a Three general survey mission reports, intended to member of the Advisory Board to the Committee serve as the basis for drawing up long-term develop- (representing Cambodia, Laos, Thailand and Viet- ment programs, were in process during the fiscal year. Nam) for the Coordination of Investigations of the The report of the mission to Libya had been submitted Lower Mekong Basin. A resident representative was to the Government in April and was soon to be pub- stationed in Ethiopia. An adviser was furnished to the lished. The report of the mission to Tanganyika was Planning Department of the Government of Colombia nearing completion and had been discussed with the for six months in 1959-60. The arrangement whereby Tanganyikan authorities. The mission to Venezuela the Bank and the United Nations provided an expert was completing the first full draft of its report. It had to serve as Director of the Ceylon Institute of Scientific already given the Government informal advice on and Industrial Research terminated at the end of 1959. urgent investment problems. The Bank has agreed to The Bank continued to grant a staff member leave to undertake its 20th general economic survey, in serve as the head of the Technical Bureau of the Plan Uganda, starting in September. Organization in Iran until June 1960. In a more specialized field, at the request of the During the year the Bank also organized a special Government, the Bank is undertaking a study of the unit within the staff to study the development of the agricultural economy of Ireland, and particularly of capital markets of various member countries, with a the pig and milk-processing industries. FAo aided in view to increasing the Bank's knowledge of this im- the organization and briefing of the mission, which portant subject and of determining whether and how began its work in mid-June. The Bank and FAo also the Bank might provide further technical assistance cooperated in providing two members and supporting in the creation and expansion of such markets. Sev- staff for the Food and Agriculture Commission in eral country studies have been undertaken and others Pakistan, and in sending an expert to study and are in prospect. recommend measures for improvement of the meat Help was furnished to member countries in the marketing system in Paraguay. At the request of the organization and operation of industrial financing United Kingdom, the Bank nominated the leader and institutions. The organization of a new development helped to recruit other members of a survey team to bank in Thailand was based on earlier recommenda- study the economies of the High Commission Terri- tions by the Bank. The possibility of forming a pri- tories of Basutoland, Bechuanaland Protectorate and vately-owned regional development bank in Central Swaziland, and to make recommendations for their America was investigated, and tentative proposals further development. In April/June, 1960, a Bank were formulated by the Bank for consideration by the mission visited Saudi Arabia at the request of the governments and private investors in that region. A Government to advise on economic development Bank staff member served as adviser to the Industrial plans and needs. Credit and Investment Corporation of India until the * 16* end of 1959; and another staff member was assigned Europe and one from the staff of the Bank. During for one year, starting in April 1960, to advise the the summer of 1959, at the invitation of the Govern- Pakistan Industrial Credit and Investment Corpora- ment and University authorities concerned, the Insti- tion. Development banks in Ethiopia, Pakistan and tute conducted a short course on economic develop- Thailand were aided in recruiting management and ment at the University College of the West Indies in technical personnel. During the year The Johns Hop- Jamaica; 19 officials from the Caribbean region, in- kins Press published Problems and Practices of Devel- cluding seven from countries outside the West Indies opment Banks by Shirley Boskey, a member of the Federation, participated. staff of the Bank. The book is based on the Bank's The training program for junior officials from the experience with development banking operations and Bank's member countries was continued, ten trainees on discussions at the conference of development bank from as many countries taking part in 1960. More managers which was sponsored by the Bank in 1958. than 100 trainees from 58 countries have now partici- The Economic Development Institute, administered pated in the General Training Program. In addition, by the Bank to improve the management of economic four senior officials of member countries received affairs in less developed countries, held its fifth course individual training during the year, under the Public from October 1959 to April 1960. There were 22 par- Finance and Special Training Programs. Since the ticipants, of whom nine were officials from Asia, five Bank started these Programs 55 senior officials from from Africa, two from Latin America, five from 30 countries have received specialist training. Bank Loans Classified by Purpose and Area JUNE 30, 1960 (Millions of U.S. Dollars, net of cancellations and refundings) Areas Asia Western and Middle Hemi- Purpose Total Africa East Australia Europe sphere Grand Total . . . . . . . . . . . 5,067.9 771.9 1,568.8 317.7 1,356.5 1,053.0 Development Loans: Total . . . . . . . 4,571.1 771.9 1,568.8 317.7 859.7 1,053.0 ELECTRIC POWER Generation and Distribution 1,604.9 178.0 441.3 29.3 333.0 623.3 TRANSPORTATION . . . . . . . . . 1,526.2 418.2 617.0 132.3 68.4 290.3 Railroads . . . . . . . . . . . 778.6 263.2 348.9 37.3 2.3 126.9 Roads . . . . . . . . . . . . 388.4 87.8 112.0 50.9 - 137.7 Shipping . . . . . . . . . . . 12.0 - - - 12.0 - Ports and Waterways . . . . . . . 226.3 17.2 136.5 - 46.9 25.7 Airlines and Airports . . . . . . . 56.9 - 5.6 44.1 7.2 - Pipelines . . . . . . . . . . . 64.0 50.0 14.0 - - - COMMUNICATIONS Telephones, Telegraph and Radio . . . 23.9 1.5 - - .2 22.2 AGRICULTURE AND FORESTRY . . . . . . 375.7 31.2 84.7 103.4 87.8 68.6 Farm Mechanization . . . . . . . 19.8 - - 89.4 2.0 28.4 Irrigation and Flood Control . . . . . 187.0 15.5 69.9 6.0 73.3 22.3 Land Clearance; Land and Farm Improvement 41.1 13.7 13.8 6.0 2.1 5.5 Crop Processing and Storage . . . . . 7.0 1.0 - - 4.2 1.8 Livestock Improvement . . . . . . . 12.6 1.0 1.0 - - 10.6 Forestry . . . . . . . . . . . 8.2 - - 2.0 6.2 - INDUSTRY . . . . . . . . . . . 835.4 103.0 350.8 52.7 280.3 48.6 Iron and Steel . . . . . . . . . 338.1 - 302.0 13.4 22.7 - Pulp and Paper . . . . . . . . . 113.7 - 4.2 1.1 88.4 20.0 Fertilizer and other Chemicals . 57.0 - - .3 56.7 - Other Industries . . . . . . . . . 94.0 - 5.2 23.7 58.8 6.3 Mining . . . . . . . . . . . 149.0 101.0 - 14.2 12.0 21.8 Development Banks . . . . . . . . 83.6 2.0 39.4 - 41.7 .5 GENERAL DEVELOPMENT . . . . . . . . 205.0 40.0 75.0 - 90.0 - Reconstruction Loans: Total . . . . . . 496.8 - - - 496.8 - *18* annex The information in this Annex describes loans and other Bank activities during the year. Loans to borrowers other than member governments carry the guarantee of the governments concerned. Interest rates shown include the 1% commission which is allocated to the Bank's Special Reserve. The participations of financial institutions in loans of the year were all without the Bank's guarantee. AFRICA ALGERIA AND SAHARA BELGIAN CONGO PIPELINE LOAN AGRICULTURAL LOAN $50 million 12-year 6% loan of December 10, 1959 $7 million 12-year 6% loan of March 30, 1960 BORROWER * Soci6t6 Ptrolire de Gerance BORROWER * The Belgian Congo Socit6 P6troli6re de Gerance is a corporation This loan aims at speeding up the transformation owned jointly by two companies producing oil in the of African farming from subsistence agriculture to the Sahara: Compagnie Frangaise des P6troles (Algerie), cultivation of crops for the market. The loan will a subsidiary of the Compagnie Frangaise des P6troles, finance part of the cost of a $15.5 million program the largest French oil company, and Soci6t6 Nationale designed to raise agricultural productivity, develop de Recherche et d'Exploitation des P6troles en Algerie, production of cash crops and cattle, and expand facil- which is largely owned by the French Government. ities for the processing of agricultural products. The The loan is guaranteed by the French Government program, which follows a pattern already developed and was used to finance part of the cost of a 410-mile in the Congo, consists of soil classification, the estab- pipeline bringing crude oil from the new Hassi lishment, within the existing tribal organization and Messaoud oilfield in the Sahara to the Algerian port under the supervision of an extension service, of over of Bougie on the Mediterranean. The pipeline came 50,000 Congolese farmers in permanent settlements on into limited operation in December, 1959, and addi- agricultural land, the introduction of improved farm tional pumps and pumping stations will be installed management, the planting of about 75,000 acres in successive stages. with oil palms, rubber, coffee, cocoa and tea, the The complete project is estimated to cost the equiv- establishment and improvement of cattle breeding alent of $105 million and should enable the French farms, and the construction of tea processing and com- franc area as a whole to save or earn the equivalent post plants. Considerable benefits in terms of increased of about $200 million to $250 million a year in foreign farm incomes and export earnings should be apparent exchange. In addition, the development of petroleum in the late 'sixties. resources will provide Algeria and the Sahara with low-cost fuel and power for industry, as well as im- TRANSPORT LOANS portant budget revenues from royalties and taxes. $28 million 12-year 6% loan of March 30, 1960 PARTICIPATION . A number of United States Insur- BORROWER * The Belgian Congo ance Companies, Pension Funds and Commercial This loan is helping to develop the roads and water- Banks (with one German Bank) are participating for. ways in the Congo which are the direct responsibility a total equivalent to $25 million. of the Government. Transportation in the Congo was -19* Improvements in living standards in the less developed countries depend direetly on more efficient farming. More than $375 million of Bank loans have financed agricultural inprovenents in every region of the world. With the aid ofa Bank loan to Kenya - new settlers are being shown how to create - n' individually-owned smallholdings - to replace obsolete and wasteful tribal systems of cultivation. Modern agricuitural equipment is the key to inereasedfårm production; the Bank's loans of foreign exchange have assisted many countries to import modern tractors and implements. On the left is one -Ø -of thousands of tractors - imported into Peru with Bank loan funds. 7 1 Economic development in the Sudan is based on the use of Nile water for irrigation. The well-known Gezira irrigation scheme brings water to a million acres of fertile land. The Managil project, partly financed by the Bank, is an extension of Gezira and will irrigate - 800,000 additional acres. Below, work has begun on a regulator on the Managil iain canal. 4Z4- originally geared to the needs of foreign trade and ETHIOPIA still depends primarily on the rail and river network. The proceeds of the loan are being used for the At the request of the Government, the Bank has sta- construction and reconstruction of about 445 miles of tioned a resident representative in Addis Ababa; his paved and gravel highways, the improvement of about assignment began in November 1959. 775 miles of roads, the provision of bridges and ferries, and the construction of about 1,765 miles of surfaced single lane roads in African farming areas containing the settlement and cattle breeding farms financed AGRICULTURAL LOAN under the agricultural loan described above. The loan $5.6 million 10-year 6% loan of May 27, 1960 will also be used to improve and expand several ocean, BORROWER * The Colony and Protectorate of Kenya river and lake ports and to import equipment to The loan will help to finance a government program, deepen and maintain navigable channels and to facil- known as the Swynnerton Plan, to improve and de- itate navigation. velop African agriculture and raise the living stand- ards of African farmers; loan funds will also be applied $5 million 10-year 6% loan of March 30, 1960 to the improvement of feeder roads. The Swynnerton BORROWER * Office d'Exploitation des Transports Plan was begun in 1955 and has had such encouraging Coloniaux (OTRACO) results that it is being accelerated and extended beyond OTRACO is a government agency which operates rail the initially planned period of five years. The loan is and water transport services in the Congo, including guaranteed by the United Kingdom. the seaport of Matadi. About half the Congo's foreign There are African agricultural areas in Kenya with trade is handled by OTRACO, as well as substantial good soil and adequate rainfall, but where inefficient local traffic. OTRACO is using the loan for the further use of land and the tribal system of tenure have pre- modernization and improvement of its facilities which vented production potentials from being realized. have been expanded in the 'fifties, partly with the aid Under the program, settled communities of African of previous Bank loans for the Congo's development farmers are established on individually allocated land. program. The total cost of the present OTRACO pro- The farmers are helped to produce crops and cattle gram is estimated at the equivalent of $20 million, more efficiently, and to market their produce. During about half of which is being spent on imports of roll- the next three years the program will concentrate on ing stock, river craft, port and other equipment and areas of high agricultural potential. Expanded exten- various materials. sion services, schools, demonstration farms and farm ** * * loans will help to modernize farms, develop cash crops, All three loans are guaranteed by Belgium; the and establish small herds of milk cows and beef cattle. Belgium Congo also guaranteed the OTRACO loan. Water supplies will be provided and cooperatives for PARTICIPATION * Nederlandsche Handel-Maatschap- marketing and processing will be organized and ex- pij, N.V. (Amsterdam), De Twentsche Bank (Amster- panded. Part of the loan will also be used to improve dam), The Chase Manhattan Bank, United States 23 roads of a total length of 564 miles to connect Trust Company of New York, Banque Lambert African agricultural areas with marketing points and (Brussels), Banque de Bruxelles (Brussels), Krediet- the main road network. bank (Brussels), Banque d'Investissements Priv6S PARTICIPATION * Barclay's Bank D.C.O. of London (Geneva), Central National Bank of Cleveland (Cleve- and Nederlandsche Handel-Maatschappij, N.V. (Am- land, Ohio) and Banca Nazionale del Lavoro (Rome) sterdam) are participating for a total equivalent to are participating in the two transport loans for a total $664,600, the former in sterling and the latter in equivalent to $9,721,000. Netherlands guilders. *21* MAURITANIA ture, lands allocated to farmers by tribal chiefs are cropped for a few years without regard to preserving MINING LOAN soil fertility; when yields begin to decrease, the farmers $66 million 15-year 61/4% loan of March 17, 1960 move to new plots. Growth of population in recent BORROWER * Soci6t6 Anonyme des Mines de Fer de decades has made for more intensive cultivation and Mauritanie (MIFERMA) grazing of lands, resulting in loss of soil fertility and This loan is helping to finance the development of serious erosion. Since 1956 the Government has sought high grade iron ore deposits in the Islamic Republic to convert this system to one of permanent holdings of Mauritania in northwest Africa. The project will with individual ownership of land and these efforts are open up completely new opportunities for economic already producing results in the form of settled com- growth in Mauritania, where the severity of natural munities with improved living standards. conditions narrowly limits development. Revenue Under the Government's program, lands are sur- from taxes and royalties should enable the Govern- veyed and allocated, water supplies are provided and ment to reverse the present budget deficits and enable farm-to-market roads constructed. Soil conservation the state to become self-supporting. The Bank loan is is taught and auxiliary services, such as agricultural guaranteed both by France and by Mauritania. research, credit and marketing are provided. The re- The loan will finance equipment and services to sult should be a doubling of food output over a period mine the rich ore deposits near Fort Gouraud, to con- of ten years. Most of the extra production would be struct a 420-mile railway to the coast, and to build a consumed domestically but prospects are good for new port, with ore-handling equipment, at Port increased exports of beef and tobacco. Etienne on the Atlantic. About 2,000 people will be The Bank loan will cover part of the cost of the employed by the company when the mine, railway, second half of this program to the end of 1963. The port and auxiliary services are in full operation. local costs, about $27 million, will be met by the Housing, community facilities, workshops, water and Southern Rhodesia Government and the Native De- power supplies will be provided both at Fort Gouraud velopment Fund to which both the Government and and the port. The cost of the complete project is esti- the farmers themselves contribute. mated at the equivalent of $190 million. PARTICIPATION * The Chase Manhattan Bank, Mor- Over half the shares in MIFERMA are held by French, gan Guaranty Trust Company of New York and The British, German and Italian consumers of iron ore or Northern Trust Company are participating for a total their representatives. The remaining shares are held equivalent to $2,347,000. by French financial interests (20%) and by an agency of the French Government (27%). SUDAN AGRICULTURAL LOAN FEDERATION OF RHODESIA AND NYASALAND $15.5 million 20-year 6% loan of June 17, 1960 BORROWER * Republic of the Sudan AGRICULTURAL LOAN The loan will help to finance completion of the $5.6 million 10-year 6% loan of April 1, 1960 Managil Irrigation Scheme between the Blue Nile and BORROWER * Federation of Rhodesia and Nyasaland White Nile south of Khartoum. The project is an ex- The loan is guaranteed by the United Kingdom. It tension of, and is patterned on the 1,000,000-acre will assist a program of the Southern Rhodesia Gov- Gezira Scheme, one of the best known and most ernment to improve the standard of living of African successful irrigation projects in the world. Since 1957 farmers through increasing their output of crops and the Government of the Sudan has financed, from its livestock. Under the traditional system of agricul- own resources, the development of some 585,000 acres *22* and the settlement of nearly 28,000 farmers under the area, and 60 diesel locomotives and 900 freight cars Managil Scheme. The Bank loan will be used to finance will be added to rolling stock. Cotton ginning capacity most of the foreign exchange cost of developing a in the area is to be increased by about 30%. The total further 241,000 acres, on which about 22,000 more cost will be the equivalent of about $49 million. farmers and their families will be settled. The produc- PARTICIPATION * The Chase Manhattan Bank, Irving tion of cotton, grain and other crops on the newly Trust Company and Bank of America are participat- irrigated lands is expected to result in a 10% annual ing for a total of $700,000. increase in the value of Sudan's agricultural output. The main works consist of about 160 miles of major TANGANYIKA canals and a distribution system of minor canals and laterals covering several thousand miles. A network The General Survey Mission to Tanganyika has com- of dirt roads and about 140 miles of light railway pleted a draft of its Report, which has already been branch lines will be built to serve the newly irrigated discussed with the Government. ASIA AND THE MIDDLE EAST INDIA PARTICIPATION * Lloyds Bank Ltd., London, The Chase Manhattan Bank, The Chartered Bank, New RAILWAY LOAN York Agency, Bank of America, Irving Trust Com- $50 million 20-year 6% loan of July 15, 1959 pany, The Hanover Bank, and The Riggs National BORROWER * India Bank of Washington, D. C. are participating for a This loan assisted the further expansion and mod- total equivalent to $3,762,000. ernization of the Indian Railways, the fourth largest railway system in the world. The railway program is INDUSTRIAL LOAN a central part of India's Second Five-Year Plan $10 million 10-year loan of July 15, 1959 (1957-61), and accounts for about one-quarter of all BORROWER * Industrial Credit and Investment Cor- public expenditures under the Plan. poration of India Ltd. (ICIci). Between 1957 and 1961, the Railways planned to ICIci was established in January 1955 by private raise freight capacity from 114 million to 162 million investors of India, the United Kingdom and the United tons annually and to increase passenger capacity by States to assist the growth of private industry in India. 15%, the total expenditures involved being estimated Up to May 1960 the Corporation had approved in- at the equivalent of about $2,355 million. By March vestments and underwritings amounting to the equiv- 31, 1959, three-fifths of these expenditures had been alent of $52 million. The principal sectors assisted by made. In 1958 the volume of railway freight traffic the Corporation have been the mechanical, electrical originating in India had reached a total of 135 million and automotive industries, paper, chemicals and tons; for the first time in many years the Railways pharmaceuticals, sugar and shipping. The foreign ex- were able to handle all the freight offered. The Bank change provided by an earlier Bank loan of $10 million has now lent $225 million toward the current railway was of particular value to private industry in 1958-59, program; the new loan was applied mainly to expendi- when India's foreign exchange resources were under tures for imported equipment, materials and services severe strain. The new Bank loan should meet the during the program's fourth year, which ended on Corporation's foreign exchange requirements through March 31, 1960. most of 1961. The Bank will charge interest on each -23. portion of the loan allocated to a particular project MULTIPURPOSE LOAN at the Bank's current rate of interest when the project $42 million 25-year 61/4% loan of February 20, 1960 is approved for financing. BORROWER * Iran PARTICIPATION * Bank of America is participating The loan will assist a multipurpose project for to the extent of $200,000. electric power generation, irrigation and flood control in Khuzestan in southwestern Iran. A concrete dam 620 feet high is being constructed in a precipitous IRAN gorge of the Dez River, thus harnessing the water to drive turbines which will be installed in an under- INDUSTRIAL LOAN ground power station. The station will have a capacity $5.2 million 15-year loan of November 23, 1959 of 130,000 kilowatts, and power will be transmitted BORROWER * The Industrial and Mining Develop- to the principal towns of Khuzestan, which include ment Bank of Iran (IMDBI). Abadan, one of the world's largest oil refineries. This new development bank, which came into opera- The Dez Dam will create a reservoir of 2.7 million tion at the end of 1959, was established by private acre feet of water for irrigation and flood control. investors in Iran, the United States, the United King- Khuzestan was once a highly productive agricultural dom, France, Germany, Italy, Holland and Belgium. area, and its many river valleys hold good possi- IMDBI will stimulate private industrial development by bilities for future development. The fertility of the making medium and long term loans and by investing soils, now depleted by centuries of cultivation, can in share capital. In addition, it will seek to promote be restored and its rivers can provide irrigation water and develop a capital market, guarantee loans and for wider areas. The present project includes the ex- commitments of other investors, and provide technical cavation of about 32 miles of main and branch canals and managerial assistance to Iranian industry. to bring water to a pilot area of 50,000 acres. If the While the Iranian economy depends mainly on pilot scheme succeeds, an additional 225,000 acres agriculture and oil, industry has also been developing can be irrigated from the Dez reservoir. The pilot rapidly in recent years. Iran manufactures most of its project also includes various public works and serv- cotton textiles and a large portion of its cement, ices for the regeneration of the area-roads, agri- glass, wood products and sugar. The processing of cultural research and training centers, farm extension other indigenous products, the manufacture of many services, education and health. The Dam will also articles now imported, the exploitation of the country's obviate the periodic flooding of the downstream areas minerals, and the development of the petrochemical of the Dez Valley. industry all offer opportunities for private enterprise. PARTICIPATION * The First National City Bank of The initial resources available to IMDBI were equiv- New York and Irving Trust Company are participat- alent to $42.4 million, made up of share capital of ing for a total of $600,000. 400 million rials ($5.3 million) subscribed by Iranian and foreign investors; an advance of 600 million rials ISRAEL ($8 million) from the Iranian Government; an exist- ing loan portfolio of 1,400 million rials ($18.7 million) Two Bank missions visited Israel during the year, to turned over by the Government to IMDBI for manage- review the economy and discuss possible Bank lend- ment; a loan of $5.2 million from the U. S. Develop- ing. In the course of discussions of a loan for ports ment Loan Fund; and $5.2 million from the Bank. in Israel, the Bank arranged for the Executive Direc- The Bank will charge interest on each portion of its tor of the Port of New York Authority to examine loan allocated to a project at the Bank's current rate the problems pertaining to the establishment of an of interest when the project is approved for financing. autonomous Israeli Port Authority. *24* One result of worldwide economic growth - is rapidly rising demand for more iron and steel. The Bank has made loans totaling $338 million to expand iron and steel capacity, particularly in India and in Japan. - - --On the left are the integrated steel works of the Yawata Iron & Steel Company, Japan's largest steel producer, whose facilities are being greatly extended with the help of Bank loan finds. Below are new blast furnaces and converters at the Burnpir works % -of the Indian Iron and Steel Company, another privately owned corporation 6 - - whose expansion has been assisted by the Bank. -J- ! JAPAN HIGHWAY LOAN $40 million 23-year 61/4 % loan of March 17, 1960 STEEL LOANS BORROWER *Japan Highway Public Corporation Two 15-year 6% loans of November 12, 1959 to be re-lent as follows: $24 million to the Fuji Iron and Steel Co., Lim- The growth of industry and population in Japan ited, $20 million to the Yawata Iron and Steel Co., Limited has far outstripped the existing transport system. The BORROWER * Japan Development Bank provision of modern roads is essential for further The Japanese iron and steel industry is engaged in development and Japan has now embarked on a $2.8 a program to expand crude steel capacity from 11.1 billion program for the improvement and reconstruc- million to 20.5 million tons in the period 1956-1962, tion of existing roads and the building of expressways. with the object of producing a higher quality and a The Bank loan is being used in the construction of wider range of steel products, and reducing operating the first expressway, from Amagasaki to Ritto, a costs by means of modern techniques. The Yawata distance of 45 miles between the Osaka metropolitan and Fuji companies are Japan's two largest producers, area and that of Kyoto. The area traversed is thickly and account for important parts of the program. populated and contains about 57,000 factories and The $20 million loan was re-lent to the Yawata workshops whose output covers the whole range of Iron and Steel Co., Limited, to assist the transfor- Japanese production. Traffic in the area at present is mation of its Tobata plant in northern Kyushu into heavily congested. The new expressway will be a four- a fully integrated steel plant, a project estimated to lane divided highway with tunnels, bridges, viaducts cost the equivalent of $117.6 million, and to result in and overpasses. Design speeds range from 50 to 74 large increases in iron and steel production capacity. miles per hour, reducing the average travel time be- The $24 million loan was re-lent to the Fuji Iron tween Amagasaki and Ritto from three hours to one. and Steel Co., Limited, for the construction of works PARTICIPATION * The Northern Trust Company, at the company's plant at Hirohata in Honshu on the Manufacturers Trust Company, Dresdner Bank A.G. inland sea. The new facilities will enable Fuji to in- of Frankfurt am Main, Commerzbank-Aktiengesell- crease its production of plates and sheets; and, by schaft of Dusseldorf, Brown Brothers Harriman & permitting a fuller utilization of existing rolling mills, Co. and Grace National Bank of New York are par- will increase the company's earning power. ticipating for a total amount equivalent to $1,631,000. PARTICIPATION * Morgan Guaranty Trust Company of New York, The First National Bank of Chicago, OTHER ACTIVITIES The Northern Trust Company, Chemical Bank New Both parties to a dispute concerning the French York Trust Company, Continental Illinois National Tranche of the 5% 1912 loan of the City of Tokyo Bank and Trust Company of Chicago, Manufacturers asked the President of the Bank, in his personal Trust Company, The Chase Manhattan Bank, The capacity, to draft a plan for settlement of the dispute, Philadelphia National Bank, Grace National Bank of which has existed since 1928. On April 1, 1960, Mr. New York, Irving Trust Company and The Riggs Black delivered to the Metropolis of Tokyo and to National Bank of Washington, D. C. are participating the representatives of the bondholders a settlement in the Fuji loan for a total of $2,566,000. plan as the recommended basis for agreement. Morgan Guaranty Trust Company of New York, The First National Bank of Chicago, The Northern LIBYA Trust Company, Chemical Bank New York Trust Company, Manufacturers Trust Company, The Chase The Report of the General Economic Survey Mission Manhattan Bank, The Philadelphia National Bank to Libya was presented to the Government in April and National Bank of Commerce of Seattle are par- 1960. The Report will be published by The Johns ticipating in the Yawata loan for a total of $2,055,000. Hopkins Press in September. *26* MALA YA $27.8 million and were for the construction of a 30,000-kilowatt steam power plant and the later At the request of the Government, a Bank mission expansion of this plant by 60,000 kilowatts. The visited Malaya in May-June 1960, to assist in a review latter, however, cannot come into operation before of plans for economic development. 1962 and in the meantime there is some shortage of power in Karachi. The Government therefore asked PAK ISTAN KESC to take emergency measures to expand its serv- ices. The first units of the new diesel plant will be in INDUSTRIAL LOAN operation in August 1960. $10 million 10-year loan of September 25, 1959 PARTICIPATION * Irving Trust Company, Bank of BORROWER * The Pakistan Industrial Credit and America, Brown Brothers Harriman & Co., and The Investment Corporation (PICIC) Philadelphia National Bank are participating for a The loan, like an earlier Bank loan of $4.2 million, total of $330,000. is being used by Picic to finance the foreign exchange requirements of private industrial projects. PICIC was RAILWAY LOANS established in September 1957 by Pakistani investors, $12.5 million 15-year 6% loan of November 30, 1959 together with British, Canadian, United States and BORROWER - Pakistan Japanese private interests, to promote growth of The loan will assist in meeting the minimum re- private industry in Pakistan. By December, 1959, the quirements of the Pakistan railways pending the Corporation had approved 73 loans totaling the formulation of a program of railway development to equivalent of $16.2 million, of which 63 have been be carried out during the period of Pakistan's Second wholly or partly in foreign exchange, amounting to Five-Year Plan. the equivalent of $10.6 million. Pakistan has two railway systems: one is the chief The recent revival of private investment activity in form of transport in West Pakistan where traffic is Pakistan resulted in a considerable increase in the growing at 6% per annum; the other system serves demand on Picic's resources, and it was estimated in East Pakistan where traffic growth has been even more 1959 that PIcIc would need an additional $20 million rapid. Despite good management, efficiency of opera- to meet its foreign exchange requirements through tion has been hampered by inadequate line and yard 1961. This need has been met by the Bank loan of $10 capacity and by a shortage of signalling equipment million, together with a $10 million loan from the and rolling stock. U. S. Development Loan Fund. The Bank will charge PARTICIPATION * Nederlandsche Handel-Maatschap- interest on each portion of its loan allocated to a par- pij, N.V. (Amsterdam), Manufacturers Trust Com- ticular project at the Bank's current rate of interest pany and Irving Trust Company are participating for when the project is approved for financing. a total equivalent to $949,000. OTHER ACTIVITIES POWER LOAN $2.4 million 15-year 6% loan of August 13, 1959 The Bank's resident advisory mission continued its BORROWER * Karachi Electric Supply Corporation work in Pakistan during the year. One member of the Ltd. (KESC) mission serves as a member of the Secretariat of the This loan financed the foreign exchange cost of a Food and Agriculture Commission, which was set up 14,700-kilowatt diesel power plant to provide rapid during the year with Bank and FAO cooperation. reinforcement of power supplies to the Karachi area. In April 1960 a Bank staff member took up his This is the third Bank loan to KESC for the expansion assignment as adviser to the Pakistan Industrial of its electric power facilities. The earlier loans totaled Credit and Investment Corporation. *27. The annual growth of world demand for electric power is now so high as to require a doubling of generating capacity every ten years. The Bank's power loans have raised generating capacity in countries at all stages of economic development. On the left are the access tunnels to the underground powerhouse of the 400,000-kilowatt Tokke power station, which will supply extra power to southeast Norway, including the city of Oslo. - - -------- High in the Austrian Alps dams have been constructed, with the aid of Bank loans, to store water for use in the new power stations in the valleys below. WOM91.t The Bank's largest loan for a power project, $80 million, was made in the Rhodesias . and helped to finance the gigantic Kariba Dam across the Zambezi River (below). Despite great dfficulties, the project was completed on time, and is already transmitting power to the Copperbelt and other industrial centers. * . - ------.",LL SAUDI ARABIA The Canal shortens the sea voyage between Asia and Western Europe by about 5,000 miles. It is one At the request of the Government a Bank Mission of the world's most important waterways: in 1958 at visited Saudi Arabia in April/June 1960 to advise on least one trip through the Canal was made by more economic development questions. than one-third of all ocean-going vessels and three- fifths of all oil tankers of over 4,000 gross tons. Traffic THAILAND has grown steadily and now amounts to 18,000 ships and 140 million tons of cargo a year, of which 70% The Bank's resident representative in Thailand took is oil, mainly from the Middle East. The discovery of up his post in July 1959. The Report of the Bank's new oilfields outside the Middle East may slow the General Survey Mission to Thailand was published rate of traffic growth in years to come, but the need by The Johns Hopkins Press on September 11, 1959. to improve the Canal arises to a large extent from the increase in the size of tankers now seeking transit, as well as from a growing volume of traffic. Under the loan agreement, the Suez Canal Authority CANAL LOAN will keep funds in reserve from its current revenues to $56.5 million 15-year 6% loan of December 22, 1959 provide the service for the loan. BORROWER * The Suez Canal Authority PARTICIPATION - Bankers Trust Company, Bank of The loan is helping to meet the costs of widening America, The First National City Bank of New York, and deepening the Suez Canal to accommodate ships Morgan Guaranty Trust Company of New York, of about 46,000 deadweight tons, compared to the The Chase Manhattan Bank, Bank of Tokyo, Ltd., present maximum of 36,000 tons. Modern harbor and Arab Bank, Ltd., Chemical Bank New York Trust communications equipment is also being purchased Company, The Hanover Bank and The Riggs National by the Suez Canal Authority to provide shipping Bank of Washington, D. C. are participating for a with the most efficient service. total of $5,500,000. EUROPE AUSTRIA and electrical engineering industries. This loan was fully committed by the end of 1958. INDUSTRIAL LOAN The second loan will finance further projects to be $9 million (maximum 15 years) loan of September 25, 1959 selected by the Investitionskredit and approved by the BORROWER . Oesterreichische Investitionskredit, A.G. Bank. Each part of the loan allocated for a particular When Investitionskredit was established in 1957 to project will carry the Bank's current rate of interest help to meet the need for long-term capital for private at the time the project is approved for financing. industrial enterprises, the Bank assisted its initial Similarly, separate amortization schedules will be operations with a loan of $10,765,000, which was used agreed upon and determined in accordance with the to finance the modernization and expansion of sev- circumstances of each approved project. The loan is eral concerns in the pulp, paper, paper board, textile to be fully repaid by October 1, 1974. *29* invited on an international basis and nine companies, British, French and American, submitted tenders. At the request of the Government, the Bank organized The plant will be built by General Electric Company a Mission, in consultation with FAo, to review the of New York through a Swiss subsidiary, and will present agricultural situation and programs for devel- incorporate a nuclear reactor cooled and moderated opment with special attention to the milk and pig- by boiling water and fueled by enriched uranium. processing industries. The Mission began its work in Construction of the civil works, substation and trans- June 1960, and is expected to complete its report in mission lines will be carried out by SENN. about four months. PARTICIPATION * Frankfurter Bank (Frankfurt am Main), Brinckmann, Wirtz & Co. (Hamburg), ITALY Dresdner Bank, A.G. (Frankfurt am Main), Baye- rische Hypotheken und Wechselbank (Munich) and NUCLEAR POWER LOAN one other European bank are participating for a total $40 million 20-year 6% loan of September 16, 1959 equivalent to $1,050,000. BORROWER * Cassa per il Mezzogiorno This was the Bank's first loan for nuclear power, NORWAY and will finance 60% of the cost of constructing a 150,000-kilowatt atomic power plant on the Gari- POWER LOAN gliano River between Rome and Naples. $20 million 25-year 6% loan of July 8, 1959 The Cassa per il Mezzogiorno (Fund for the South) BORROWER * Kingdom of Norway is re-lending the proceeds of the loan to the Societa The loan will help to finance the construction in Elettronucleare Nazionale (SENN), a company estab- the mountains of mid-Norway of two hydroelectric lished in 1957 to build, own and operate the nuclear power plants with a combined capacity of 168,000 power station. Power from the new plant will be fed kilowatts. Half the power from the plants will supply into the transmission systems of SENN's utility share- the grid serving the Trondheim area in mid-Norway, holders, covering about half of Italy and serving more and the remainder will be exported to Sweden. The than half the population. Power demand in the serv- loan will also assist the construction of 350 miles of ice area is growing rapidly; studies have indicated transmission lines to reinforce and interconnect the that if it is to be met, capacity should increase from power grids in middle and southern Norway. 4,140,000 to 7,250,000 kilowatts in the period 1958- The loan funds are being made available to the Nor- 1965. A particular advantage of the SENN plant will wegian Watercourse and Electricity Board, a Govern- be the experience it will provide in the building and ment agency which operates power plants with a total operating of nuclear power plants, which can be capacity of 1,163,000 kilowatts. The Board is also expected in due course to meet a growing part of the constructing other power plants which will add 680,000 additional demand for power in Italy. kilowatts to its systems, including the 400,000-kilo- The project was the outcome of a study carried out watt Tokke power plant for which the Bank made jointly by the Italian Government and the Bank to a loan of $25 million in 1956. establish the feasibility of a nuclear power plant in PARTICIPATION . Deutsche Bank, A.G. is participat- Southern Italy. As part of the study, tenders were ing for a total of DM 29.4 million ($6,993,000). *30* WESTERN HEMISPHERE CHILE years been subject to restrictions on the use of elec- tricity. The project for which this loan was made will POWER LOAN nearly double present capacity by adding 117,000 $32.5 million 25-year 6% loan of December 30, 1959 kilowatts of generating capacity to the system serving BORROWER * Empresa Nacional de Electricidad S. A. the city and its surrounding area. Included is a new and Corporaci6n de Fomento de la Producci6n 66,000-kilowatt hydroelectric plant and the addition This was the Bank's third loan to the same co- of an 18,000-kilowatt unit to an existing hydroelectric borrowers for the development of electric power in plant. Both plants are on the Bogotd River, which Chile. The loan will cover the foreign exchange costs falls 6,000 feet in the first 16 miles after leaving the of two new power plants, a hydroelectric plant in plateau on which the city is situated. Other works central Chile and a thermoelectric plant in the north. being assisted by the loan include the installation of The hydroelectric project includes the construction a new 33,000-kilowatt thermoelectric plant and exten- of a concrete arch dam, 300 feet high, across the Rapel sive improvement and rehabilitation of transmission River, 75 miles southwest of Santiago. Since this plant and distribution facilities in the area. is to serve the main center of electric power demand PARTICIPATION * Continental Illinois National Bank in Chile, including Santiago and Valparaiso, it will be and Trust Company of Chicago, Brown Brothers of large capacity - 280,000 kilowatts in four 70,000- Harriman & Co., Chemical Bank New York Trust kilowatt generators. Two hundred and twenty-five Company, Girard Trust Corn Exchange Bank and miles of transmission lines will be erected to distribute Grace National Bank of New York are participating the power. A secondary use of the reservoir created for a total of $691,000. by the dam will be to irrigate 25,000 acres of land in the Rapel Valley. $25 million 25-year 6% loan of May 10, 1960 The thermoelectric plant is to be built at Huasco BORROWER * Corporaci6n Aut6noma Regional del in northern Chile and will have a capacity of 15,000 Cauca (Cauca Valley Corporation) and Central Hidro- kilowatts. The principal power demand in the Huasco el6ctrica del Rio Anchicaya Limitada (CHIDRAL) area arises from mining, particularly iron ore, copper The loan will cover the foreign exchange require- and manganese. The development for export of high- ments of a $37 million program which will nearly grade iron ore deposits has high economic priority. double electric generating capacity in the Cauca PARTICIPATION * Girard Trust Corn Exchange Bank Valley, one of the most rapidly growing industrial and Grace National Bank of New York are partici- and agricultural areas in Colombia. A 33,000-kilowatt pating for a total of $175,000. unit will be added to the existing thermoelectric plant at Yumbo, itself established with the aid of earlier Bank loans, and a new hydroelectric plant will be constructed on the Calima River. The underground POWER LOANS powerhouse will have space for four generating units $17.6 million 25-year 6% loan of January 20, 1960 with a total capacity of 120,000 kilowatts; two 30,000- BORROWER * Empresa de Energia El6ctrica de kilowatt units will be installed initially. Bogota Most of the additional power from both plants will Bogotd, the capital city of Colombia and one of the be needed to meet the increasing load in Cali, the chief industrial and commercial centers, has for many industrial and commercial center of the Cauca Valley, *31. where power requirements have grown in recent years H0NDURAS at a rate of about 16% a year. The loan will also help to finance the additional transmission lines necessary POWER LOAN to incorporate twenty-five nearby towns and villages $8.8 million 25-year 6% loan of June 29, 1960 into CHIDRAL's transmission system and to intercon- BORROWER * Empresa Nacional de Energia E16ctrica nect with the system serving the Department of Caldas. The loan will help to finance the first stage of a PARTICIPATION * The Bank of New York, Manufac- program to develop the hydroelectric power potential turers Trust Company, The Philadelphia National of Lake Yojoa and the Rio Lindo, using the lake as a Bank, Grace National Bank of New York and Girard storage reservoir. The main works consist of dikes on Trust Corn Exchange Bank are participating for a the lake, a three-mile canal, and penstocks to carry total of $559,000. the water to a 27,000-kilowatt powerhouse. About OTHER ACTIVITIES 175 miles of transmission lines will be built to connect Beginning in October, 1959, a Bank staff member was the plant with the capital, Tegucigalpa, and with stationed in Colombia for six months at the request other towns in the northwest of Honduras. The of the Government, to assist the Planning Department project is scheduled for completion late in 1963, at a in the preparation of an investment program. total cost equivalent to $14,750,000. Electric power demand in the area is growing by about 9% a year. The new plant will be capable of meeting this growth in demand and also of being ex- INDUSTRIAL LOAN panded at a later stage to meet larger needs. $2 million 12-year 6% loan of May 4, 1960 PARTICIPATION * The National Bank of Washington, BORROWER * Central Bank of Costa Rica D. C. and Grace National Bank of New York are The Central Bank will use this loan to provide participating for a total of $103,000. medium and long-term credits to industrial firms for OTHER ACTIVITIES the import of capital goods. The Central Bank began The Bank's resident representative in Honduras com- a credit program in 1952 to promote the development pleted his assignment in December, 1959. of agriculture and light industry. Under the program, Costa Rica's commercial banks provide the credits to NICARAGUA borrowers and in turn receive credits from the Cen- tral Bank. The program has been assisted by two POWER LOAN earlier loans totaling $6.5 million. $12.5 million 25-year 6% loan of June 22, 1960 Growing emphasis is now being placed on diversi- BORROWER * Empresa Nacional de Luz y Fuerza fying agriculture and developing new industries to The loan will help to finance the construction of a reduce Costa Rica's traditional dependence on two 50,000-kilowatt hydroelectric plant on the Rio Tuma export crops - coffee and bananas. The outlook for and a 75-mile transmission line to bring power to the industrial growth, particularly in light consumer capital, Managua, and smaller towns en route. This goods, is favorable. The Central Bank expects that project is among the largest of its kind in Central foodstuffs industries will absorb about 30% of the America and will more than double the capacity of funds from the new loan, the textile industry about Nicaragua's power network. 35% and a variety of other industries the remainder. The project consists of the construction of a dam PARTICIPATION * Continental Illinois National Bank on the upper Rio Tuma on the high rainfall eastern and Trust Company of Chicago, Grace National side of the Continental Divide, creating a reservoir Bank of New York and Girard Trust Corn Exchange with a gross storage capacity of 410 million cubic Bank are participating for a total of $210,000. meters. The water will be diverted through a tunnel *32* - ; 13wAv,wrispoedn 'kthe average travel4time taken toicross Th BakhsasomdWon forhghaycostutin n olmba ofpa thed ew r highwaysarhepn to unie tregi