Public Disclosure Authorized                  Public Disclosure Authorized                                                            Public Disclosure Authorized   Public Disclosure Authorized




                                                                                            Chile, 1948

                                                       NUMBER 057
                                                       ORIGINALLY PUBLISHED: JANUARY 2007




                               January 2016
                                                                                            World Bank’s First Development Loans to
The World Bank Group Archives Exhibit Series contains exhibits originally
published on the Archives’ external website beginning in 2002. When the
Archives’ website was transferred to a new platform in 2015, it was decided that
older exhibits would be converted to pdf format and made available as a series
on the W orld Bank’s external database, Documents & Reports.

These exhibits, authored by World Bank archivists, highlight key events,
personalities, and publications in the history of the World Bank. They also bring
attention to some of the more fascinating archival records contained in the
Archives’ holdings.

To view current exhibits, visit the Exhibits page on the Archives’ website.
World Bank’s First Development Loans to Chile, 1948

Background

Reconstruction was the World Bank’s
main mission until 1948. On May 9,
1947, an agreement was signed
granting a reconstruction loan to
France in the amount of $250 million.
In August 1947 there were additional
reconstruction loans: to the
Netherlands, Denmark, and
Luxembourg.
                                             Early construction work of the Los Cipreses
                                                      hydroelectric power plant
The World Bank's loans were
important sources of funds for Western
Europe until the Marshall Plan took over the burden of reconstruction. This freed
the Bank to turn its attention more fully to development.

The International Bank for Reconstruction and Development announced on
March 25, 1948 that the Board of Executive Directors approved two loans to
Chile totaling $16 million (Loans 0005 and 0006): one for the development of
electric power and water resources and the other for the importation of
agricultural machinery and equipment. These were the Bank’s first development
loans and the first loans the Bank made to a country in Latin America.

                                             The First Development Loan (Loan
                                            0005)

                                              The first development loan (Loan
                                              0005) of $13.5 million was made to the
                                              Corporacion de Fomento de la
                                              Produccion and its subsidiary
                                              Empresa Nacional de Electricidad S.A.
                                              (Endesa) as co-borrowers. Chile’s
                                              potential hydroelectric capacity was
                                              estimated at a total of 6 million kw. At
 One of the tractors imported to Chile by the the end of 1942, the country's total
          Corporacion de Fomento
                                              installed capacity for the generation of
electric power amounted to approximately 50,000 kw, of which only 145,000 kw
was hydro power.
The proceeds of the Bank loan were to be used to purchase equipment, supplies
and services required for the development or expansion of four electric power
projects and for incidental irrigation.

The Second Development Loan (Loan 0006)

The second development loan (Loan 0006) was signed on the same day as the
Endesa loan. It was for $2.5 million to the Corporacion de Fomento for the
purchase of agricultural machinery. The project consisted of a program for the
purchase and importation by Fomento of agricultural machinery to increase the
productivity of Chilean agriculture.




          The Los Molles hydroelectric           The funicular to Los Molles
           plant constructed in Chile,            hydroelectric plant, 1953
                     1953

It was part of a large-scale program of agricultural mechanization initiated by
Fomento immediately after the war years, in order to offset shortages of local
production of foodstuffs resulting from under-utilization of arable land.

The machinery to be imported included tractors, threshing machinery, harvesters,
ploughing machines, land clearing and earth moving equipment, and irrigation
equipment.

The Bank's Approach to Development

Apart from these two loans for Chile for hydro-electric and agricultural
development, several other development loans were in an advanced stage of
negotiations at that time. Discussions were also in progress with regard to other
projects in many different countries.

 In addition, the Bank's approach to
development was officially framed
in the Third Annual Report of the
International Bank for Reconstruction
and Development, 1948:

"That approach is one of willingness to
help its members to analyze their
development problems, to work with
them in mapping out the broad lines
along which their development may be
                                           A tractor working on a land clearance project
advanced most soundly and rapidly,
and whenever possible to select for
initial financing those projects which seem most likely to contribute to such
advance".