The Swiss Confederation and the International Bank for Reconstruction and Development have entered into an agreement, subject to ratification by the Swiss Parliament, whereby the Swiss Government will lend Sw.Fr. 200 million (about $47 million) to the Bank. Under the agreement, the proceeds will be made available on January 1, 1957, in convertible Swiss Francs.
In welcoming the agreement, Eugene R. Black, President of the World Bank, said that he is especially pleased that the Swiss Government has chosen the Bank as the vehicle by which these funds will be invested in economic development. He observed that the agreement also demonstrated the flexibility afforded the Bank's borrowing operations by the Bank´s access to loan capital from sources in many different countries.
"The transaction," Mr. Black said, "is welcome evidence of the confidence which the Bank enjoys in Switzerland. It is yet another successful incident in the fruitful and developing relations between the Bank and Switzerland. Since 1948, the Bank has sold eight Swiss Franc issues of its bonds, in a total amount of 346 million Swiss Francs, to private investors in Switzerland. We intend to go to the private Swiss market with further issues of our bonds, and this loan from the Government will not affect that intention."
It is expected that substantially the entire proceeds of the loan will be converted into dollars. This is in accordance with the wishes of the Swiss Government, which wants to invest these funds without adding to the liquidity of the Swiss money market. To the extent that the World Bank needs Swiss Francs for disbursement to borrowers making payment for Swiss goods and services, the Bank expects to cover those needs, as in the past, by using the proceeds of bond issues floated in the Swiss market.
Interest on the loan will be 3-3/8% per annum, payable annually a January 1. The principal will be repayable in six equal annual installments falling due on January 1 of each of the years 1960 through 1965, and will have a final maturity of eight years. The Swiss Federal Council and the World Bank may consider from time to time the possibility of revolving installments which become due.
The loan agreement was signed in Berne by Dr. H. Streuli, Minister of Finance., on behalf of the Federal Council; and by Henry w. Riley, Treasurer on behalf of the World Bank.