That hole is known as a weep hole, and indicates coolant leakage due to a failed outside waterpump seal. Rebuild the waterpump with new seals, bearings, and the impeller shaft if it is grooved, and it will stop leaking. If the bearings are worn, it is only a matter of time before the waterpump seizes or causes further damage. replacing the seals, bearings and shaft is not particularly expensive anyhow.
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