WASHINGTON, May 18, 2000--The World Bank's Board of Directors, representing its 181 member countries, today approved two loans to Iran for a total of US$232 million. The loans are to finance the Second Primary Health Care and Nutrition Project in the amount of US$87 million, and the Tehran Sewerage Project in the amount of US$145 million. Both loans focus on basic human needs and target the under-served areas and the poor, and are intended to support the reform efforts of President Khatami.
The Bank will closely monitor the two projects over their 5-6 year implementation period, to ensure that agreed benchmarks of progress are met. The World Bank will only consider a broader resumption of lending after the current efforts under the leadership of President Khatami to strengthen governance and economic reforms begin to show concrete results.
The Bank will prepare an interim Strategy Note in the next six to nine months for the consideration of Executive Directors that will outline the direction of the Bank's future relationship with Iran, taking into due account developments until then. The health and nutrition project aims to upgrade the primary health care facilities which serve about 18 million people, mostly women and children, in the poorer and under-served areas. The project focuses, in particular, on childhood malnutrition and mother's health, two weak spots of the otherwise well-performing Iranian health system.
The main beneficiaries are children under two years of age and pregnant and lactating mothers in provinces where malnutrition rates and particularly high.The Tehran Sewerage project would support investments in wastewater collection and treatment in Greater Tehran where at present only 10 percent of its 8 million residents have access to waste water service. The project would expand wastewater collection and treatment services to 2 million beneficiaries mostly in poor suburbs in the south of Tehran, where use of traditional sewerage system poses a great threat of pollution of surface and ground water and increased public health risks. The World Bank loans will be disbursed as a single currency LIBOR-based loan, with a maturity of 17 years and a 5 year grace period.
The loan for the Tehran Sewerage Project is accompanied by parallel financing from the Tehran Sewerage Company in the amount of US$195 million.Bank commitments to Iran from 1990-1993 amounted to US$847 million in support of six development projects, of which the first one, for earthquake recovery, has been completed and the remaining five are nearing completion, and are in satisfactory status. This World Bank lending comes as Iran moves forward with reforms under the leadership of President Khatami.
The World Bank supports the reforms, which will significantly benefit the poorer segments of the Iranian population. The central mission of the World Bank is poverty alleviation and its charter mandates only economic considerations to be taken into account in its lending projects. -------**
Attached are the concluding remarks at today's executive board discussion of the two loans by James D. Wolfensohn, chairman of the World Bank Board of Executive Directors. (IRAN: Second Primary Health Care and Nutrition Project and IRAN: Tehran Sewerage Project)"After full discussion, in which the views of every Executive Director were expressed including discussion of a possible additional delay of consideration by the Board -- the two basic human needs loans to Iran were approved.
Executive Directors have noted that, in accordance with the mandate of the Bank, the consideration of economic and human needs underpins the approval of these loans, as well as the expressed support of the Board for the reform agenda of the Government of President Khatami.
Any future lending programs to Iran will be discussed only after a review of concrete results of the reform program, and in the context of an interim Strategy Note, in six to nine months time. I would also like to note the deep concern of several shareholders with current internal events in Iran in particular their concern that their support of these projects not be construed as support for current events. The Executive Director representing Iran indicated that he would personally pass on to his authorities the sentiments expressed. We will record the US as opposing these loans, and Canada and France as abstaining."