. . 1 HO~O FOR RELEASE • , l •World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 For Publication Thursdayj September 14, 1978 WORLD BANK LOANS FOR $3.2 BILLION TO MEXICO SINCE 1949 In FY1978 the Bank provided a record $469.5 million for six projects The World Bank approved a record lending of $469.5 mi 11 ion for ·six development projects in Mexico, in fiscal year 1978 ended June 30. The loan commitments represent the largest amount for Mexico in one fiscal year since the Bank started operations in 1949. Mexico is the second largest borrower among the Bank's member countries, after Brazil, with a cumulative total of $3,261.6 mill ion. • Bank lending to Mexico also represents about 22% of the total lending to the Latin American and the Caribbean Region • The World Bank Annual Report 1978 published today said that, as of June 1978, the Bank had made a total of 54 loans, including the six in FY1978. Lending this year included a $200 million loan to help finance an agricultural credit project, the largest operation ever undertaken by the Bank in Latin America. The Bank also provided loans for industrial development, tropical agricultural development, small- and medium-scale industrial enterprises, urban development and tourism. In a section devoted to the analysis of the Latin America and the Caribbean Region's economic performance in 1977, the Annual Report cited Mexico as one example in which 11 priority was given to reducing inflation and to improving current account deficits. 11 The Report also pointed out that the pace and degree of improvement in the current account balance of Mexico, amor.g other countries, were "exceptionally strong 11 in 1977. • •• I • NOTE: Money figures are expressed in U.S. dollar equivalents. \ I A. • - 2 - Industry Reviewing the Bank lending to the Region, the Annual Report emphasizes the importance of a $47 million loan approved in fiscal year 1978 to support "intensive efforts to develop an appropriate small enterprise credit and technical assistance program in Mexico. 11 The Report adds that "this comprehensive project comprises a credit and loan guarantee program for small- and medium-scale industrial enterprises, to be carried out through commercial banks and other financial intermediaries; reinforcement of a program to provide risk capital to such enterprises; a program to lease plant buildings and equipment to small- and medium-sized firms; and the creation of a force of industrial development extension agents to .serve the sector." The small and medium-scale enterprises project will require investments of about $132 million over the initial three-year period. It will stimulate investment and employment in less developed parts of Mexico, helping to discourage migration to larger urban areas. The Bank also approved a $100 million ioan for industrial development. The loan will help the Fondo de Equipamiento Industrial (FONEI), a Federal Government Trust Fund, to finance investment projects for the production of industrial goods and to expand exports of services from Mexico's northern border zone. The industrial development project will involve total investme~ts of about $425 million. FONEI will provide medium- and long-term financing t-0 industrial enterprises through commercial banks for the acquisition of machinery, • equipment and other fixed assets. · ): Agriculture •(: Two of the loans approved this year were for the agricultural ~ctor. The first one, of $200 million, supported the sixth agricultural credit project in Mexico. fhe second, of $56 million, will help finance a tropical agricultural development project. The $200 million loan -- the largest made by the Bank for development purposes is assisting an agricultural credit project aimed at increasinfl production, improving incomes and creating employment in rural areas. With an estimated total cost of $627.2 mi 11ion, the agricultural credit project will provide medium- and long-term credit for investments in crop, livestock, and agro-industrial development. One-third of the credit program under the project will be earmarked for low-income producers with average annual family incomes of $500 to $1,000. • A • - 3 - The $56 million loan will help increase agricultural production in six areas in the tropical lowlands of Mexico. With a total cost of $149 million, the project is the first step of a long-term program to develop and bring into intensive agricultural production 2.4 million hectares in the largest under- exploited region of the country. Urban Development Some 50,000 low-income residents of the Lazaro Cardenas area, on the Pacific Coast of Mexico, will benefit from an urban development project assisted by a Bank loan of $16.5 million. With a total cost estimated at $36.l million, the project is expected to relieve a critical shortage of low-cost shelters and other basic urban servicest and provide increased job opportunities in the region. The project, the first of its kind in Mexico, is an integrated approach to the needs of the urban poor in the region, which is one of the fastest-growing urban areas in the country. The project is expected to be a model for future integrated urban programs designed to improve the living conditions of the urban poor. • Tourism Development A $50 million Bank loan will support a tourism development project, ineluding the construction of about 20,000 new rooms and other tourism fadilities. s The loan will help the Fondo Nacional de Turismo (FONATUR), the Mexican agency for tourism development, to carry out its 1977-79 nationwide program. The project is expected to generate over 32,000 permanent jobs directly and another 33,000 indirectly. Net foreign exchange earnings from th~ FONATUR program are expected to amount to some $3 billion during the life ofothe assisted subprojects. - 0 - • - 4 - WORLD BANK LENDING TO MEXICO • (As June 30, 1978) Number Original SECTOR of Loans Amount (In mi 11 ions of U.S. dollars) Agriculture and Rural Development 17 1,281.5 Indus try 8 457.0 Power ll 714.8 Tourism 3 114. 0 Transportation 12 547.8 Urban Development Water Supply 2 16.5 130.0 • TOTAL 54 3,261.6 •