Journal Issue

Recent Activity—World Bank Group

International Monetary Fund. External Relations Dept.
Published Date:
September 1972
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  • Bank Group lending reaches $3,082 million for fiscal 1972
  • IFC invests $41.26 million in last quarter

Bank, IDA, and IFC commitments approved during the last quarter of fiscal 1972 brought total lending by the World Bank Group from July 1, 1971 to June 30, 1972 to $3,082 million. Bank loans represented $1,966 million of this total and IDA credits, $1,000 million. IFC commitments were $116 million.

Although the deadline for notifications to IDA that governments will subscribe and contribute to the Third Replenishment had to be extended from June 30 to December 29, 1972, enough funds were available to allow credits totaling $680 million to be signed. Another $320 million in IDA credits to Ethiopia, India, Indonesia, Korea, Morocco, Pakistan, Senegal, Tunisia, and Turkey were approved subject to the availability of funds.

Loans for power projects

During the final quarter, the Bank approved a $76 million loan to the National Electric Power Authority (NEPA) of Nigeria to help finance a major power project. The loan will assist Nigeria to expand the generation, transmission, and distribution system of its power network, and will improve management and operations. This was the Bank’s fourth power project in Nigeria, and brings total Bank and IDA commitments in the country to $493 million—of which $242 million has been lent during the past two years.

Other major loans in the power sector were made in the last quarter to Mexico, Yugoslavia, Brazil, Nicaragua, Honduras, and Cyprus. The World Bank approved a $12 5 million loan to help finance Mexico’s power investment program, and a loan of $75 million to 11 electric power enterprises in Yugoslavia. The Yugoslav project will cost the equivalent of $225 million, and will improve the existing power distribution system.

A $60 million loan to Brazil is the twenty-fourth Bank loan to the power sector in that country since 1949. It will finance part of the civil works and engineering services for the São Simoa hydroelectric plant. Loans of $24 million to Nicaragua and $12.3 million to Honduras are the first steps in a coordinated development program of the power sectors in these two countries based on interconnection. It is hoped that this will lead, in the long run, to the integrated power development of the whole Central American region.

A power loan of $9 million was made to Cyprus, where demand has been rising by about 14 per cent annually in recent years. It will help sustain rapid economic development and the growth of industry and tourism and improve the standard of living.

Sector Working Papers

Electric power was featured in a series of sector working papers published by the World Bank since last year. The publications program was all but completed during the final quarter. The power sector paper, for instance, estimates that the Bank has been associated with the construction of about a fifth of the estimated 100 million kilowatts of capacity now in stalled in 41 developing countries. An additional 16 million kilowatts are still under construction.

Other sector working papers now in print include those on Education, Water Supply and Sewerage, Telecommunications, Transportation, Population Planning, Industry, Tourism, Agriculture, and Urbanization. The papers describe the distinctive economic, financial, and institutional characteristics of each sector, outline the role played by each sector in the economic development process, and review the scale and the approach of World Bank operations. The individual papers have been issued in English, French, and Spanish, and the collected papers are also being published in book form in the three languages.

In line with the Bank Group’s policies stated in the population planning paper, IDA during the last quarter extended a $21.2 million credit to India for a research project in selected areas of Uttar Pradesh and Mysore states. The project is the largest in the population field financed by the Bank Group and the first IDA project of its kind in India.

India’s population, which was 547 million in 1971, is growing by about 12 million persons annually. The main objective of the project is to develop a management information and evaluation system that will help India to build a more effective family planning program. The project is being financed jointly with Sweden, which is providing a $10.6 million grant. The project will meet the cost of building and equipping about 1,500 rural health centers, training schools, urban maternity homes, family planning clinics, and maternity and sterilization wards. The project, which is experimental and innovative, is designed to determine why India’s population program has slowed down and what measures should be taken to increase the number of acceptors.

Nairobi Airport loan

The Bank Group achieved another first during the final quarter with a loan of $29 million to help finance the initial phase of a master plan for developing Nairobi’s international airport. The total cost of the project will be about $46.3 million, with the Government of Kenya financing local currency costs of $17.3 million. The enlarged airport will give a boost to Kenya’s tourist industry, which now ranks with coffee as a principal source of foreign exchange. This is the first time the Bank has supported aviation in Africa. The project will be completed by 1975 and is expected to meet traffic needs until 1982.

The volume of Bank borrowings reached a new peak during the final quarter. In fiscal 1972, 30 issues of Bank obligations were sold for a total of $1,744 million, compared with $1,368 million in fiscal 1971.

In the last quarter, the Bank placed an issue of 7 ¼ per cent French franc bonds, due in 1987. The issue, in the amount of F 150 million (US$29.2 million), was placed on the Euro-bond market. The bonds, listed on the Luxembourg Stock Exchange, the first Bank borrowing in French francs, were placed by an international syndicate of banks managed by Lazard Frères & Cie and five other leading French banks.

One tranche of 10,000 million yen (US$32.4 million) was drawn down under a borrowing arrangement of up to ¥ 100,000 million [yen] signed in March 1972 with the Bank of Japan. This was the largest single borrowing agreement in the Bank’s history. The World Bank will draw down the loan proceeds over a period ending December 30, 1972.

During the final quarter, the Bank also borrowed 200 million Swiss francs (US$49 million) the largest issue publicly offered on the Swiss market by the World Bank. They are 5 ½ per cent bonds, due in 1990. A borrowing in Kuwait of 6 ¾ per cent bonds was for the equivalent of US$56 million.

IFC investments

Seven new investments, totaling $41.26 million, were made by IFC during the last quarter of fiscal 1972. Of these, three were for textile projects in Ecuador, Sudan, and Indonesia; two for the Brazilian steel and cement industries, and the other two for a tire manufacturer and an automobile producer in Yugoslavia.

La Internacional S.A., of Quito, the largest textile manufacturer in Ecuador, received a loan of $2 million to support a $12.2 million expansion program involving the installation of a new spinning and weaving plant, with an annual productive capacity of about 10 million yards of cotton and synthetic fabrics, and of a small hydroelectric plant for its power supply, and for the expansion and modernization of its existing plant finishing section. IFC had supported an earlier expansion program of this company in 1965. The new expansion has a high priority in the country’s plans for economic growth, and in addition to providing jobs for more than 400 new workers, will save the country about $6 million a year in foreign exchange.

A $1.52 million loan was made to support an expansion program of Khartoum Spinning and Weaving, a producer of gray sheeting from cotton grown locally and the most widely owned private company in the Sudan. The project will increase the company’s capacity by 5.5 million yards a year and is in line with the Government’s development policy. This was the second IFC investment in this company, which received a loan and equity investment from the Corporation in 1964. The Kuwait Investment Company and the Arab African Bank participated in the loan.

The other investment made in the last quarter in this sector was in an Indonesian-U.S. joint venture that is establishing a $16.7 million textile mill in West Java. IFC committed $6 million in loan and equity to this project, sponsored by P.T. Daralon Textile Manufacturing Corporation, Springs Mills, Inc., and the Tamin family, a leading Indonesian business group.

The Daralon plant, located in Tjibinong, will have a yearly output of about 11.7 million yards of dyed and finished polyester/rayon suiting fabric to be sold entirely in Indonesia. In this project IFC is associating itself for the first time with a U.S. textile manufacturer in setting up a textile mill, but the project is IFC’s third in the Indonesian textile sector.

New Brazilian projects

The Corporation continued to be active in Brazil and in the last quarter invested over $2 6 million in two very significant projects. One is a new $46 million cement project sponsored jointly by Brazilian, Swiss, and U.S. interests, and the other is a well- known steel producer in which the Corporation had invested before.

The cement project will be built and operated by the Companhia de Cimento Nacional de Minas S.A. (CIMINAS) near Pedro Leopoldo, Minas Gerais, the site of Brazil’s principal limestone deposits. Annual productive capacity will be about one million metric tons by use of the dry process, supplying about 12 per cent of the expected demand in its marketing area. IFC’s investment in this project consists of two loans totaling $18 million and an equity subscription of $3.2 million, a substantial part of which will subsequently be sold to local investors. The balance of the equity and loan financing of CIMINAS is being provided by the foreign and Brazilian sponsors, Holderbank, International Telephone and Telegraph, Companhia Industrial e Agrícola Santa Cecilia, and Banco Denasa, and by suppliers’ credits from French, U.S., and Danish sources.

The investment in the steel sector was made in Acos Villares, a leading producer of special steels and rolls, located near Sao Paulo. It consisted of a loan of $4 million, an equity sub-scription of up to the equivalent of $516,000 with a stand-by commitment for the same amount and a stock option for one half of it. It was the second IFC investment in this company, which in 1966 received another loan of $4 million and an equity subscription of over $900,000 represented in shares that have since been sold to private investors in Brazil.

Bank Loans and IDA Credits Approved During Fiscal Year 1972*(Expressed in millions of U.S. dollars)
Bank LoansIDA CreditsTotal
Central African Republic13.9013.90
Congo, People’s Republic of210.30210.30
East African Community18.0018.00
(Kenya, Tanzania, Uganda)
Egypt, Arab Republic of130.00130.00
Ivory Coast17.50117.50
Malagasy Republic115.30115.30
Sierra Leone14.3014.30
Upper Volta25.0025.00
Yemen Arab Republic17.7017.70
Syrian Arab Republic113.80113.80
New Zealand1818.00
Papua New Guinea110.019.20219.20
Costa Rica333.00333.00
El Salvador19.5019.50
Trinidad and Tobago12.0012.00

IDA credits to Ethiopia, India, Indonesia, Korea, Morocco, Pakistan, Senegal, Tunisia and Turkey, aggregating $319.5 million, were approved, subject to certain conditions including the availability of funds. In addition to the loans listed above, the Bank lent $60 million in fiscal 1972 to the IFC.

IDA credits to Ethiopia, India, Indonesia, Korea, Morocco, Pakistan, Senegal, Tunisia and Turkey, aggregating $319.5 million, were approved, subject to certain conditions including the availability of funds. In addition to the loans listed above, the Bank lent $60 million in fiscal 1972 to the IFC.

The purpose of the new investment is to expand the company’s present annual production capacity of about 50,000 tons of bars, rolls, and castings and to shift its product mix of special steel bars toward a greater proportion of higher-grade alloy and heat-treated carbon steels. The total cost of the project is estimated at $19.5 million, of which $10.9 million will be long-term loans provided by the Banco Nacional de Desenvolvimento Economico and by IFC: share issues will bring in $4.4 million and the company’s own cash generation will supply the remaining $4.2 million.

The project is in line with the Brazilian Government’s plan for expansion of the country’s steel industry and will contribute to increasing substitution of imports resulting in annual foreign exchange savings of about $9 million by 1976 and thereafter.

Finally, the Corporation made two investments in Yugoslavia. One was a $5.25 million commitment to a $25.5 million joint venture for the production of radial tires and rubber products, sponsored by SAVA, a Yugoslavian manufacturer, and SEMPERIT A.G. of Vienna, the major producer and supplier of tires in Austria; this enterprise will have an initial productive capacity of 13,700 metric tons a year. At full production it will employ more than 1,000 workers and, in addition to helping meet the rising domestic demand, will export 21 per cent of its output, thus generating through export trade and import substitution an annual amount of about $7 million in foreign exchange savings and earnings.

The other commitment made in Yugoslavia was a second investment of $5.0 million in a joint venture between Zavodi Crvena Zastava, Yugoslavia’s largest automobile producer, and FIAT S.p.A. of Italy, for the manufacturing and assembling of passenger vehicles; this enterprise had already received an equity investment of $8 million from IFC in 1968.

IFC’s commitments for the 12-month period ended June 30, 1972, totaled $115.6 million. Over the past 16 years, the Corporation has invested $693.8 million in 184 enterprises operating in 48 countries.


A World Bank mission led by Dragoslav Avramovic compiled this comprehensive analysis of the Colombian economy. The authors assess the country’s present needs and, through a novel preinvestment study program, make recommendations for the future needs of particular sectors. Industry, agriculture, transport, tourism, education, and public health are considered in detail.

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