Canberra, 25 June 1968
The Board of the International Bank for Reconstruction and Development will meet in Washington on 25 June to consider a $US7million ($A6.2million) loan for Papua and New Guinea for a major telecommunications project in the Territory.1
Assuming a favourable decision by the Board, this will be the first international loan for the Territory and I have therefore thought you would appreciate having some of the details.
The Territory Administration will be the borrower and the Commonwealth will enter into an agreement with the Bank guaranteeing repayment of principal and payment of interest and other charges.
The loan will be repayable over a period of fifteen years, with the first repayment due in 1973. The interest rate is expected to be 6¼ per cent. Drawings will extend over four years to 1972, which is the construction period for the project.
The loan and guarantee agreements will be executed in Washington before 30 June, but the signed agreements will be subject to ratification by the Territory House of Assembly and by the Commonwealth Parliament. Legislation for the guarantee agreement will need to be introduced in the Budget sittings, as the Bank requires the agreements to be effective by 31 October 1968.2
There have also been discussions on a slightly smaller loan from the International Development Association (l.D.A.) for a package of agricultural and livestock development projects in the Territory. Loans from I.D.A. are free of interest, although there is a small service charge, and are repayable over a period of fifty years. We hope to commence negotiations for this loan in August.
[NAA: Al209, 1964/6549 part lA]
1 For background, see Document 187.
2 The IBRD announced its approval of the loan on 27 June (see Current Notes, vol. 39, 1968, p. 298).