Press Release Issued by the International Bank for Reconstruction and Development, Washington, May 9, 1947
The International Bank for Reconstruction and Development announced on May 9 the granting of its first loan, totaling $250,000,000, to Crédit National, a semi-public French corporation created to assist in financing the reconstruction and development of the French economy. The loan is guaranteed by the Republic of France. The executive directors of the International Bank, at a special meeting on May 9, voted their approval of the loan, which originated in a request for a $500,000,000 loan by the French Minister of Finance in an application dated October 8, 1946. The loan agreement was signed for the Bank by John J. McCloy, president, and on behalf of the Crédit National by Wilfrid Baumgartner, president. The guaranty agreement was signed by Henri Bonnet, Ambassador of France.
The loan is being made to assist France in the reconstruction of its war-torn economy and to finance the import of specific goods and equipment necessary to its economic rehabilitation. A portion of the proceeds will be devoted to the modernization of the steel industry, including a modern strip mill. The transportation system is to be improved by the purchase of locomotives and freight cars, cargo ships and canal barges, and commercial airplanes. Coal and oil, essential to industry and transport, figure largely among the prospective purchases, as do industrial raw materials, including semi-finished steel products and nonferrous metals. Under the loan agreement, the Bank will obtain full information concerning the goods to be purchased with the proceeds of the loan and their utilization. France will be free to purchase in whatever markets are most advantageous.
Because of its size and productive capacity, France is pivotal in western Europe. The economic rehabilitation of France will speed the recovery of surrounding countries and, through an expansion of trade, be beneficial to the rest of the world.
The loan is for a period of 30 years and will carry interest at the rate of 3¼ percent. In accordance with its articles of agreement, the [Page 709] Bank will also charge a commission of 1 percent per annum on the outstanding portion of the loan to build up a special reserve.
The French national recovery program calls for heavy imports during the next five years. Therefore, no repayment of principal is scheduled for this period. Thereafter amortization begins at a modest rate and increases gradually so that the loan will be completely amortized by its due date.
Mr. McCloy states that, although the Bank is not now prepared to make any commitments with regard to a further loan, it will be willing to consider an additional application from France later this year. Any new application will be considered in the light of the funds which the Bank will then have available for lending and of the progress made in carrying out the French economic and recovery program.