current loan, in the amount of $3,250,000, will finance the import of tractors and other equipment to aid in reclaiming 660,000 acres of wasteland in the Punjab Province of West Pakistan. Reclamation of this land should raise agricultural production, increase export earnings, and permit the resettlement and productive employment of refugees. A large part of the increased production will consist of wheat for domestic consumption and cotton for export. The loan, for a term of 7 years, carries an interest rate of 4% percent, and amortization payments will begin on February 15, 1954. Turkey. Again lending its support to a program of development, the Bank, on June 18, 1952, announced a loan of $25.2 million to the Republic of Turkey to assist in the development of the Adana Plain, a productive agricultural and industrial area in south-central Turkey. Specifically, the loan will help to finance the foreign exchange costs of a multipurpose dam on the Seyhan River, to be used for flood control, irrigation, and hydroelectric power and related power facilities. The total cost of this phase of the Seyhan Project is expected to amount to the equivalent of $35.8 million; other parts of the Project will be financed out of Turkey's own resources. The present loan-the fourth made by the Bank to Turkey- is for a term of 25 years. The interest rate is 4% percent, with amortization payments beginning on April 1, 1957. Brazil.-Two loans, totaling $37.5 million, for electric power development and for railway rehabilitation in Brazil, were announced by the Bank on June 29, 1952. One loan of $25.0 million to the Comissao Estadual de Energia Electrica (CEEE), a State-owned agency, will finance the foreign exchange costs of equipment required to meet increasing demands for electric power in the State of Rio Grande do Sul. The total cost of this portion of the electrification program will be equivalent to about $80.0 million. The loan, guaranteed by the Government of Brazil, has a maturity of 25 years and an interest rate of 4% percent. Amortization payments will start in November 1957. The second loan, of $12.5 million to the Government of Brazil, will be used to cover the cost of imported rolling stock and equipment to meet the immediate needs for increasing the carrying capacity of the Central do Brasil Railroad, Brazil's largest railway. The total cost will be equivalent to approximately $76.0 million. The loan is for a term of 15 years, with an interest rate of 4% percent. Amortization payments will begin in November 1955. Australia. The Bank on July 9, 1952, announced a loan of $50.0 million to the Commonwealth of Australia to finance the import of capital goods and equipment required for development programs in the following fields: agriculture and land settlement, coal mining, iron and steel production, electric power, railways, road transport, the production of nonferrous metals and industrial minerals, and manufacturing industries. The programs themselves will be financed in Australian pounds. The loan differs from usual International Bank loans in that it is available for a general program of economic development rather than intended for a specific individual project. This is the Bank's second loan to Australia, a development loan of $100.0 million having been made to that country in August 1950. The loan extends for a period of 20 years and carries an interest rate of 4% percent. Amortization payments will begin in June 1957. TABLE XVII.-International Bank loan commitments and disbursements, Mar. 1, 1947, to Sept. 30, 1952 Source: International Bank for Reconstruction and Development. Peru. On July 9, 1952, the Bank also announced a loan of $1.3 million to Peru to finance the import of agricultural equipment necessary to improve methods of agricultural production and to reclaim old and open new land for cultivation. The loan should assist the country in reducing its dependence upon food imports and increase foreign exchange earnings. This is the Bank's second loan to Peru, a loan of $2.5 million having been extended in January 1952. Equipment financed by the current loan will be made available to farmers on a contract basis through an agricultural machinery pool operated by an agency of the Ministry of Agriculture. The loan, for a term of 7 years, bears an interest rate of 4% percent, with amortization payments starting in July 1954. Colombia.-To assist the Government of Colombia in carrying out a broad program for the improvement of the Colombian National Railroads, the Bank on August 26, 1952, extended a loan of $25.0 million to finance the import of equipment and services needed to build a railroad in the Magdalena River Valley and to build and equip railroad repair shops in Bogotá. This is the sixth loan made by the Bank to Colombia and brings the total of these loans to $55,030,000. The proposed 235-mile railroad will provide a reliable river-rail route between central Colombia and the Caribbean ports and will connect the country's eastern and western rail networks, while the new repair shops will provide facilities for reconditioning and maintenance of rolling stock. The total cost of the projects is estimated at $49.0 million. The railway improvement program also includes a thorough reorganization of the national railroads, which will be administered by an autonomous corporate body. The loan, which was given priority by the general survey mission jointly sponsored by the Colombian Government and the Bank, carries an interest rate of 4% percent. Amortization payments will begin on August 15, 1957. Iceland. On the same date, the Bank granted a third loan to Iceland in the equivalent of $854,000 in various European currencies. The loan, which is closely related to two previous nondollar loans granted to Iceland by the Bank, will assist in financing the construction of a nitrogen fertilizer plant to meet the country's increasing requirements. An increase in agricultural production, through more intensive use of pasture lands, should bring about a better balance in Iceland's economy by reducing the country's dependence upon fishing. The total cost of the plant is estimated at the equivalent of $7.0 million, with most of the financing to be provided through the Mutual Security Agency. The loan has a maturity of 17 years with an interest rate of 4% percent. Amortization payments will begin on June 1, 1954. Capital subscription-18 percent portion During the period under review, the Government of Canada released an additional Canadian $41.0 million from its capital subscription and thereby made available to the Bank the full amount of its original 18 percent payment to the Bank's capital, amounting to Canadian $58.5 million. Since the Canadian dollar is fully convertible, the Bank may use these funds to finance purchases by its borrowers both in Canadian dollars and in other currencies. Canada, along with the United Kingdom and the United States, had previously granted permission to the Bank to relend all of its 18 percent funds which are repaid by borrowers or recovered through sales of securities from the Bank's portfolio. During the current period, Belgium also informed the Bank that it would permit the relending of its 18 percent funds after repayment. In addition to Canadian and United States dollars, the Bank has used the following currencies in its lending operations: Belgian francs, British pounds, Danish kroner, Italian lire, Norwegian kroner, Swedish kronor, French francs, Swiss francs, German marks, Netherlands guilders, and South African pounds. Marketing operations On May 14, 1952, the Bank offered to the public, through an underwriting group of 119 banks and investment firms, $50.0 million of 3% percent bonds dated May 15, 1952, and due May 15, 1975, at 98% to yield 3.47 percent to maturity. This is the first issue of International Bank bonds to be marketed in the United States on a negotiated underwriting basis. The Bank will retire at par plus accrued interest through sinking fund operations $1.0 million of the bonds on or before May 15, 1958, and $1.5 million on or before May 15 in each year thereafter to and including 1974. The sinking fund is calculated to retire 50 percent of the issue prior to maturity, and the Bank may credit against the sinking fund bonds otherwise acquired and retired prior to the sinking fund date. The proceeds from the sale of the bonds will be used in the general operations of the Bank. As of September 30, 1952, direct obligations of the Bank sold to investors amounted to $495,902,798. Total sales of borrowers' obligations received by the Bank in connection with its loan operations reached the equivalent of $58,913,135 on this date, consisting of $42,848,401 sold with the Bank's guaranty and $16,064,734 sold without recourse. Fiscal operations For the fiscal year ending June 30, 1952, the Bank reported net income of $15,872,883, exclusive of $7,558,906 added to the special reserve as required by the Articles of Agreement. This compares with a net income of $15,156,947 for the preceding fiscal year, in addition to $6,388,543 set aside for the special reserve. Operations for the three months ending September 30, 1952, resulted in net income of $4,888,434 and the addition of $2,192,041 in loan commissions to the special reserve. As of September 30, 1952, the Bank's general reserve against losses on loans amounted to $62,916,534, while the special reserve totaled $29,876,695. CONCLUSION In continuing "to coordinate the policies and operations of the representatives of the United States on the Fund and the Bank" and carrying out its other responsibilities with respect to the relations of the United States with the two institutions, the National Advisory Council has noted the substantial progress achieved by both institutions during the period under review in adapting their policies and procedures to the changing problems of member countries |