Lebanon - Education Project

CIRCULATING COPY TO BE RETURNED TO REPORTS DESK DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Not For Public Use FILE COPY Report No. P-1155 REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF LEBANON FOR AN EDUCATION PROJECT December 7, 1972 This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report.  1/ CURRENCY EQIUIVALENTS Currency Unit - Lebanese Pound (L.L.) Monthly Average 1970 US$1 = L.L. 3.27 L.L. 1 = US$ 0.306 1971 US$1 = L.L. 3.23 L.L. 1 = US$ 0.310 1972 US$1 = L.L. 3.06 (January- September) L.L. 1 = US$ 0.327 (September) US$1 = L.L. 3.01 L.L. 1 = US$ 0.332 1/ The Lebanese Pound is a freely fluctuating currency.  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVEWMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF LEBANON FOR A SECOND EDUCATION PROJECT 1. I submit the following report and recommendation on a proposed loan to the Republic of Lebanon for the equivalent of $6.6 million to help finance a project, which is part of its education development program, for constructing and equipping primary and lower secondary schools, and technical assistance for upper secondary schools. The loan would have a term of 25 years, including five years of grace, with interest at 7.25% per annum. PART I - THE ECONOMY 2. A "Memorandum on Current Economic Position and Prospects of Lebanon" (EME-26a) has been distributed to the Executive Directors in September 1970. An economic mission visited Lebanon in October 1972 and is currently preparing its report. Country data are presented in Annex I. 3. Lebanon's economic system is essentially an open, free-trade, laisser faire system, in which the private sector plays the major role and- government policy aims primarily at ensuring fiscal and monetary stability. In the Middle East setting, this and the absolute freedom of exchange and capital transfer have particularly helped in making the country the most important financial and entrepot centre in the region, attracting substan- tial deposits of foreign capital and foreign investments, and creating opportunities for various financial and trade services. This role has been supported by the country's attraction as a tourist centre, the rela- tively high level of education and the general atmosphere of religious and political tolerance. The Government has sought to encourage private enterprise in agriculture and industry by policies that aim at stabilizing prices of agricultural products and that provide incentives to promote private investment in industry under a law passed in 1967. 4. The services sector includes banking, real estate, tourism, educational and health services, transport, commerce and transit trade,- and accounts at present for almost two-thirds of gross domestic product. Commerce alone contributes 31% of GDP. The banking system developed rapidly-in the 19501s and up to 1966 under a system of virtually complete freedom. However, severe competition for deposits among banks, over- extension of investments, and low liquidity led to a banking crisis toward the end of 1966 and was followed by the introduction of banking controls.   - 2- A rapid growth in commercial bank deposits since then, together with a lgE in the expansion of domestic credits has created excess liquidity. E The other major sectors are agriculture, industry and construction. The contribution of agriculture to GDP has declined from 12% in 1964 to 9% in 1970 in spite of improved production technologies, due to constraints on growth imposed by the limited area of arable land and by the shortage of irriga- tion water, Fruits and vegetables are major crops and are exported, mairnfly to neighboring countries. Industry accounts for about 14% of GDP, and is primarily concentrated in such light industries as food processing, textiles, and construction materials. In recent years, industrfal production increased about 8%o annually, and exports rose by about 30% annually, Construction accouints for about 5% of GDPo It grew rapidly with investment in office buildings, housing, and hotels, and accounts for about 64% of investment expenditure, including some foreign capital. 6. In the decade ending in 1966, the Lebanese economy grew at over 6% annually in real terms. However, between 1967-70 a slow-down was brought about by the banking crisis and the 1967 war in the IMiddle East. As a re- sult, real growth in GDP averaged about 3% per year. The formation of a coalition Government in November 1969 ended an eight months' period without a cabinet, and together with the return of scme semblance of peace to the region and higher oil income in the Middle East restored confidence and encouraged capital flows, mainly from Arab oil-producing countries and from Lebanese emigrants. An economic recovery took place in 1971, particularly in tcurism, industry and construction. GDP, in real terms, grew over 7% in 1971 and has gained momentum in 1972. Following a decline in investment between 1965 and 1968 (from 22% to 17% of GNP), the investment rate increased to 18% of GNP in both 1970 and 1971. The private sector accounted for about 80% of the total. National savings which accounted for 13% of GNP in 1965 rose to 1405% of GNP in 1971. 7. The public sector in Lebanon has a somewhat limited role, and its relative importance has not inicreased in recent years. In the three years 1969-1971 total expenditures of government (including annexed and autonomous budgets) were equal to 20% of the GDP, while capital expenditures were about 3% of GDPO The Central Government's revenues have risen by about 6% per year from 1966 to 1970. However, while Central Government's current expenditures increased substantially, its capital outlays decreased slightly, Defense expenditures represent about 3% of GDP and expenditures on Education, Health and Social Affairs amount to about 4%. The Government's current budget has consistently shown a surplus which averaged about L.L. 100 million a year, cove'ring about two-thirds of government capital expenditure.   - 3 - Lebanonts balance of payments is characterized by high imports and a large trade deficit. This deficit, however. is more than offset by a surplus on services, particularly receipts from tourism and transporta- tion, net investment income and royalties from oil transit rights, a large but volatile inflow of short-term capital, and relatively small inflows of long-term capital and remittances from Lebanese working abroad. As a result Lebanon's balance of payments has been almost always in surplus and this is reflected in the growth of foreign exchange reserves and net foreign assets of the commercial banks. Net foreirn assets grew by 26% in 1970, 33% in 1971 and almost 20% in the first eight months of 1972 when they reached L.L. 3,690 milLion (US$1.2 billion), equivalent to eighteen months of imports. 9. Development planning in Lebanon has concerned itself with an indicative investment progran. for the public sector. It was initiated with the 1958 plan, which was only partially implemented and was followed by the 1964 plan, which was interrupted by the 1967 war. In 1972 the Goverment adopted a six-year plan (1972-77) which includes a public sector investment program of L.L. 1 ,740 million accompanied by indications of the direction and size of private investment, estimated at L.L. 5,460 million (US$1,820 million). The main aims of the Plan are: to maintain the country's 7% real annual growTh rate, to improve further the distribu- tion of income and education, to maintain a high rate of employment, to encourage balanced development of the different regions of the country, and to diversify the economy so as to reduce its heavy dependence on trade and services by modernizing agricullture and pushing industrialization. Of the total public investment 21% has been allocated to transport and communicationsj 20% to health and other -social services, 15% to agriculture and irrigation, 14% to 'education, and 10% to electricity and pover. 10. The public development expenditures envisaged by the plan average L.L. 290 million (US$97 million) a year, while past annual investments have been under L.L. 200 million, showing a slight decline from L.L 185 million (US$62 million) in 1969 to L.L. 175 million (US$58 million) in 1971. Administrative efficiency and coordination have been some of the constraints to an accelerated rate of development expenditures in the past and would have to be considerably improved in the future to prepare projects and implement the higher level of public investment. Nevertheless, given the dynamism and size of the private sector, and assuming no serious outbreak of hostilities in the region, the achievement of the Plan's growth target could be feasible. Public investments are to be financed mainly from surpluses in the budget of the Central Government and the autonomous agencies. The Plan also envisages a moderate level of medium and long- term public borrowing, both local and foreign.   11. 114eeting the plants objective of a balanced sectoral and regional development, that does not rely heavily on services which are affected by the situation outside Lebanon itself, requires an acceleration in the development of infrastructure and social services, particularly in trans- portation, education and utilities. A high rate of population growth -- about 2.5% per year -- and of internal migration have created urban con- gestion, particularly in Beirut. As a result, the urban infrastructure such as the water supply and se7iera&e s;-stensms an_ 2oads, particula:ly in Beirut, have been overstrained, and attentioii is neo;d!d if such strain is not to affect tourism and business ser-vices, as well as li;ing conditions0 12. Total external debt outstanding at the end of 1971 was US$73 million of which about US$10 million was undisbursed. Debt service payments were estimated at US$10.1 million in 1971, equal to 16% of exports of goods and net non-factor services. This is a reflection of conservative policies of the Government regarding foreign borrowing and also difficulties of ob- taining needed long-term funds for use in its infrastructure program. The debt service is low, and the country's debt-servicing record is good. Lebanon is creditworthy for borrowing substantial amounts on conventional terms. PART II - BANK GROUP OPERATIONS IN LEBAINON 13. The Bank has so far made one loan to Lebanon of US$27 million equivalent for power development made to the Litani River Authority in 1955J of which $15.3 million was outstanding on November 30, 1972. Performance under this loan has been satisfactory and there are no outstanding problems, Annex II contains a summary statement of this loan and of IFC investments as of November 30, 1972. 14. For some years, the Government pursued a conservative financial policy; it was reluctant to incur foreign long-term debt and consequently aimed at keeping public investment within the limits set by budget considera- tions. lWith the drop in the annual current budget surplus, there was there- fore a decline in investment in the public sector. The delay in the highways project which the Bank was considering in 1968/69 was one of the consequences of these factors. Howiever, with the restoration recently of a healthy eco- nomic climate and internal political stability, particularly after the elec- tions, the Government is giving more attention to public sector investment, to be financed partly from daaestic sources which are now more readily avail- able from internal borrowing and budget surpluses, and partly from long-term foreign borrowsing, including from the Bank. The proposed education project is the first operation to result from this new trend.   15. With this change in circumstances, the focus of the Bankts activity in Lebanon would be to participate in rtiuch needed ,nfrastructure and social services investments, most of wlich are included in the Six- Year Plan and which are essential for the growth of private investments in the productive sectors, The Barns would also support efforts of the Government to improve institutional arrangements for mobilizing long - term local funds needed to achieve the Plan public investment targets. Through its invoxvement in projects-In infrastructure and social serv'ces sectors--such as education--the Bank would also contribute to improving the present teclniques used for project preparation, evaluation and implementation therebyT enhamcincig the capacity of the administrative machinery to handle more efficiently-the large volume of public investments contained in the 1972-77 Plan, 16, In addition to the proposed education project, the Bank is considering a highway project lin-ing Tabarja and Tripoli. This project had been considered by the Bank in-1968/69, but was deferred on the request of the Lebanese Government. It has recently been revived and the government funds required have been budgeted, The project is expected to be ready for presentation to the Executive Directors later this fisc-al year. 17, Given the predominant role of the private sector in the lebanese economy, and in the absence of sufficient local sources of long-term capital, considerable interest has been shown in IFC financing. During 1971 IFC received proposals for a number of projects and approved its first two investments in the country. IFC's $093 million loan to Filitex SAL was approved in April 1971 to finance a $2;h million cotton spinning mill; in June 1971, IFC approved a loan of $1.2 million to the Lebanese Ceramic Industries Co. SAL for a $2.2 million project to - modernize and expand the company's wall tiles manufacturing facilities, Projects under consideration or for wjhich an IFC investment is likely to be requested include textile projects, a dry dock project, an agricultural cooperative, poultry, and greenhouse project, and a flatware glass project; All these projects are still in a preliminary stage of consideration,   -6- PART III - EDUCATION IN LEBANON 18. The education system in Lebanon is still largely patterned after the traditional French model. Primary education consists of a five-year cycle normally beginning at the age of six. General secondary education comprises a four-year lower and three-year upper cycle. Secondary tech- nical education and training is offered primarily at the upper cycle in courses of up to four years. Primary school graduates who do not go on to lower secondary schools can get further training in private vocational schools, offering mostly commercial subjects, or in public vocational schools. Higher education is offered in courses of normally four to five years in universities, teacher training colleges and technical institutes. 19. Although all citizens of Lebanon are entitled by law to an edu- cation, the Government provides only the srnaller part of the education sys- tem. Consistent with the private sectorls importance in all fields, the country has traditionally relied heavily on private schools, which account for 62 percent of total enrollment, are sponsored by different religious and commercial groups and vary widely in quality. However, in spite of increasing subsidies from the government, private schools are expensive, ranging from $81 to $203 per annum for the primary grades and $116 to $322 for the secondary level, and tuition costs are rising rapidly. iany school.s, including most of the public schools, are located in privately-owned, rented buildings uhich are ecpensive and often unsuitable since they were not built for the purpose. In 1971, about 8,L' percent of public prii.y--- students and all Fublic lower secondary students were taught in such buildings. 20. In primary education, 79 percent of the relevant age-group are enrolled, but only about 65 percent of those enrolled complete it. At lower secondary level, 35 percent of the relevant age-group are enrolled and repeater rates are high. Most of the students in private lower second- ary schools are taught by qualified teachers, but about 80 percent of those in public lower secondary education are taught by primary school teachers. At the upper secondary level, 32 percent of the age-group are enrolled. Education at this level is academically oriented, and traditional in content. The secondary technical education curriculum in industrial trades emphasizes general education and theoretical subjects. The system thus does not produce adequately trained practical technicians, which are in great demand, and encourages graduates to seek office jobs at sub-professional level. Lebanese universities enjoy a good reputation by the standards of the IHIiddle East and cater to many pupils from neighboring Arab countries. 21. In 1971, only 40 percent of primary teachers and about 25 percent of lower secondary teachers were qualified. However, primary teacher train- ing capacity has now been increased and is sufficient to produce a fully- qualified primary school teaching staff by 1980. Lower secondary teacher training began only in 1971 and is expected to meet the demand for science teachers by 1981, but it is not sufficient to train the general subjects teachers required.   -7- 22. Lebanonts national outlay on education and training is high for a developing country and amounted to 7.4 percent of GDP in 1971. Private resources account for slightly more than half of this expenditure. Future government expenditures on education are expected to grow at about 10 percent per annum over the period 1971-1980. IJhile recurrent expenditures will grow slightly, capital expenditures, which in the past seldom amounted to more than 4 percent of the government's annual expenditure on education, will increase to about 10 percent. The Government's capital expenditures for education will represent about 20d0 of its overall investment program from 1972 to 1980. 23. Planning of government primary and secondary education and train- ing is the responsibility of the Mbinistry of Education in cooperation with the Yinistry of Planning. The five regions of the country have Regional Planning Offices, attached to the PNinistry of Planning, which include an Office of Education, linking the local school authorities to the MNnistry of Education, where all substantive decisions are made. The government intends to create a modern educational system adapted to the country's current needs by re-orienting the highly academic system to a more practical one and extending educational opportunity to all segments of the population on an equal basis by improved public schooling. 24. In line with the priorities in the 1972-77 Plan, the government is focusing first on reforming, rationalizing and providing universal primary and lower secondary education and increasing the share of public education at these levels. This reform will start by (i) providing gradually compre- hensive lower secondary schooling for all primary school graduates, (ii) starting primary schooling at 5 years of age, extending primary education to six years followed by four years of lowiier secondary, and (iii) improving the quality and efficiency of education at primary and lower secondary school levels, economizing recurrent costs and imDroving teaching conditions and teacher/pupil ratios bj replacing rented buildings. Total public and private enrollments are planned to expand to 95 percent and 65 percent of the primary and lower secondary age-groups respectively between 1971-1980. To achieve this, the government will invest in the expansion of public primary schools and the replacement of inadequate private primary schools. In addition, it will provide facilities for about 80/o of expansion of lower secondary school capacity. It intends, simultaneously, to improve the quality of education by better and consolidated teacher training and by the introduction of revised and modern curricula. Once this is underway, it would then focus on reform of the upper secondary level. PART IV - THE PROJECT 25. The proposed project would assist the government in implementing its comprehensive education reform and development program for primary and lower secondary education. It includes (a) the design, construction, furnishing and equipping of 39 primary schools, 24 lower secondary schools and 3 primary teacher training institutes, (b) the extension, renovation,   -8- ;nd ecuipping of one lower secondary teacher training institute, an2d (c) the provision of technical assistance to prepare for the reform of upper secondary education. The total estimated cost is US $15.9 million (net of duties and taxes), with an estimated foreign exchange component of US $6.6 million to be provided by the proposed Bank loan. I'he Government would cover the local cost. A Loan and Project Summary is attached as Annex III together with a map showing the location of the project insti- tutions. A report entitled "Appraisal of an Education Project - Lebanon" (PE-52a), dated November 29, 1972, is being distributed to the Executive Directors separately. 26. The proposed project was identified in May 1971 by a UTESCO mission. A second UNTESCO mission assisted the Government in preparing it and it was appraised by a Bank mission in February 1972. Negotiations were held in Washington in November 1972. The Lebanese delegation was headed by ,Ir. Foued Naffah, Ninister of Finance. 27. The 39 primary schools included in the project would contribute a capacity of student places equivalent to about 9% of total enrollment by 1980. They would make possible the replacement of about 24,000 primiary school places now in rented -buildings and the absorption of about 7,000 students who would otherwise be in low quality government aided private schools, which would be closed. 'The primary schools would adopt the new curricula including modern foreign languages, mathematics and science. They would serve as model institutions for demonstrating the application of the new curricula and the use of new teaching methods and media to teachers in neighboring primary schools. Five of them would serve as demonstration schools for tuhe three primary teacher training institutes included in the project. 28. The 24 lower secondary schools included in the project would con- tribute a capacity of student places equivalent to about 5 percent of total enrollrment by 1980. They would accommodate about 14,400 lower secondary schools places which would replace public schools in rented _buildings. The curricula would include a commnon core of academic subjects and optional practical subjects for all students. As options, ten of the schools would of-ier agriculture and all schools would have home economics, woodwork and metalwork. The schools would serve as demonstration schools for new teaching methods and the use of new media and curricula. New examinations consistent rith the revised curricula would be. introduced not later than the end of 1976. 29. The three new prirnary teacher training institutes form part of the government's program to upgrade and modernize the primary teacher train- ing system. The institutes would offer 3-year pre-service courses at upper secondary level and 1-year upgrading courses for unqualified primary school teachers who have graduated from normal upper secondary level education. Each institute would enroll 650 pre-service and 110 in-service students. The institutes would also be used for in-service training of teachers and school administrators during vacation time.   -9- 30. The proposed project would furthermore provide new equipment, furniture and the renovation of the building of an existing lower second- ary teacher training institute to be used for training teachers, especial- ly in social sciences and modern languages, and also for periodic in-service training of directors of education and school inspectors. It would also provide technical expertise to assess the government staff responsible for planning the reform of upper secondary education. This wi1 include up to two man-years of services of experts specialized in fields such as edu- cation planning and administration, education economics and manpower anal- ysis, technical education, and education statistics. 31. The Conseil Ex6cutif des Grands Projets (CEGP), which is an auto- nomous office under the supervision of the linistry of Public Wviorks, will be responsible for the construction of the project institutions and all other construction activity under the Government's investment program for education. As C3GP has had virtually no experience in school-building, the project is expected to develop local school construfction knou-how which will benefit the rest of the program. The proposed project schools are expected to make an important contribution to refining planning norms, setting space standards, establishing technical and fiscal controls for construction and in relating planning of buildings to curricula changes and new teaching techniquet. 32. A Project Unit will be established within the CEGP to be responsible for the implementation of the project, coordination of activities with other government and private bodies, and liaison with the Bank. The project Unit would later help carry out the government's overall school construction program. The Unit would consist of a director, an architect, an educator, and a specialist from the iinistry of Planning. Appointment of the above officers and the establishment and operation of the Project Unit, with adequate accounting and procurement services, supporting staff and facil- ities is a condition of effectiveness of the proposed loan. 33. The schedule for implementing the project foresees acquisition and survey of sites and appointment of consultant architects early in cal- endar year 1973. Preliminary plans would be completed towards the end of 1973, and bid documents for construction and equipment purchase would follow 3 to 6 months later. By late 1974, awards of construction contracts would be made, and awards for purchase of equipment and furniture would follow within the following six months. Construction of the first schools would begin in early 1975 and continue through the following year-and-a-half. By late 1976, construction and equipping of the project's schools would be virtually concluded. This would coincide with the schedule for the preparation of new curricula, textbooks, examinations, and other pedagogic preparations. 34. Civil works and equipment supply contracts would be awarded under international competitive bidding in accordance with the Guidelines for Procurement under Wgorld Bank loans. Local manufacturers of equipment would be allowed a preferential margin of 15% of the c.i.f. costs of competing imports, or the generally applicable import duty, whichever is lower. Lebanon has no preferential tariff arrangements with other countries.   - 10 - Since Lebanon has an adequate and competitive furniture manufacturing industry which could supply the reouirements of the project, it has been agreed at the Government's request that the furniture for the project would be procured locally and not financed under the proposed loan. 35. The proceeds of the proposed loan would be disbursed against the c.i.f. cost of imported equipment or 100% ex-factory cost of locally produced equipment, awarded under the above procurement procedures. The foreign exchange component of technical assistance and of site devalopment and construction (estimated at 35%) would also be financed under the loan. 36. This project, and other new schools in the national reorganization and reform program will allow for centralized schools within their catch- ment areas, for improvement of teacher/pupil ratios, for more efficient teacher use, and for considerable public savings through substantially lower recurrent costs per pupil. These savings amount to US$1.1 million annually which represents a rate of financial return on the investment in the primary schools of 21.5% over a 15-year period and in the lowzer secondary schools of 24%. PART V - LEGAL JNSTRUMENTS AND AUTHORITY 37. The draft Loan Agreement between the Bank and the Republic of Lebanon, the Report of the Committee provided for in Article III, Section 4 (iii) of the Articles of Agreement and the text of a resolution approving the proposed loan are being distributed to the Executive Directors separately. The draft agreement conforms to the normal pattern for loans for education projects. 38e I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 39. I recommend that the Executive Directors approved the proposed loan. Robert S. McNamara President Attachments December 7, 1972   ANNEX I Page 1 of 2 pages COUNTRY DATA - LEBANON AREA POPULATION 2 DENSITY 10,400 km2 2.8 million (mid-1971) 269 per km/ Rate of Growth: 2.5 (from 1960 to 1971) 716 per km2 of arable land POPULATION CHARACTERISTICS HFALTH|l1969) Crude Birth Rate (per 1,000) 35_40 Population per physician 1,320 Crude Death Rate (per 1,000) 10-14 Population per hospital bed 240 Infant Mortality (per 1,000 live births) INCOME DISTRIBUTION (year) DISTRIBUTION OF LAND OWNERSHIP (1966) % of national income, lowest quintile e- % owned by top 10% of owners 57 highest quintile -- % owned by smallest 10% of owners 1 ACCESS TO PIPED WATER(l968) ACCESS TO ELECTRICITY (year) % of population - urban 85 % of population - urban. - rural - rural NUTRITION (year) EDUCATION (1970) Calorie intake as % of requirements .. Adult literacy rate % 69.0 Per capita protein intake .. Primary school enrollment . 87.5 2/ GNP PER CAPITA in 1971 US $ 618 GROSS NATIONAL PRODUCT IN 1971 " ANNUAL RATE OF GROWTH (%7 constant pricesk' US $ Mln. % 1960-65 1965-70 1971 GNP at Market Prices 1,748 100.0 6.0 4.1 7.4 Gross Domestic Investment 317 18.1 1.3 3.6 Gross National Saving 254 14.5 .. 5.9 lo.6 Current Account Balance21 63 3.6 Exports of Goods, PFS net;/ 576 33.0 20.0 7.1 16.5 Imports of Goods W 700 40.0 9.0 3.7 14.0 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1970 Value Added Labor Force V. A. Per Worker USL Mln. S Thous. % US $ _ Agriculture 136 9.1 101.8 18.9 1,336 48 Industry 304 20.4 136.2 25.3 2,232 81 Services 10o48 70.5 298.0 55.3 3,517 127 Unallocated . . 24 Total/Average 1,488 100;0 538.4 100.0 2,764 100 GOVERNMENT FINANCE General Government Central Government (L.L. Mn.) n% of GDP ( L.L. Mln.) % of GDP 1971 1971 1969-71 1971 1971 1969-71 Current Receipts 1,030.0 18.9 18.8 776.0 14.2 13.7 Current Expenditure 914.2 16.8 16.9 674.8 12.4 12.6 Current Surplus 115.8 2.1 1.8 101.2 1.8 1.1 Capital Expenditures 132.1 2.4 3.1 59.3 1.1 1.2 External Assistance (net) 17.0 0.3 0.3 - 1/ Estimate of the World Bank Atlas 2/ World Bank Atlas conversion 3/ Provisional estimate v Notcomparable with Balance of Payments statistics '/ Since national accounts at constant prices are not available, following rates of growth are estimates. 6/ Includes Central Government, annexed and autonomous budgets. not available not applicable  r pages COUNTRY DATA - LEBANONN August MONEY. CREDIT and PRICES 1965 1969 1970 1971 1971 1972 (million of L.L. outstanding end period) Money and Quasi Money 3,216 3,717 4,265 5,3414 5,005 5,974 Bank Credit to Public Sector -186 - 91 - 60 - 1514 - 99 - 219 Bank Credit to Private Seccor 2,393 2,201 2,211 2,715 2,490 3,060 (Percentages or Index Numbers) Money and Quiasi Money as % of GDP 91.3 81.4 87.7 98.] General Price Index (1966 = 100) .. 107.7 107.7 109.14 107.4 111.5 Annual percentage changes in: General Price Index .. 4.6 - 1.6' 3.8 Bank credit to Public Sector Bank credit to Private Sector 4.7 _ 22.8 . 22.9 BALANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 169-71) 1969 1970 1971 .iS . Mln % (Millions US $' Fruits and Vegetables ; 14 Machinery 2? 11 Exports of Goods, NFS net 472 524 647 Foodstx'ffs, Beverages, Tobacco i9 9 Imports of Coods, 578 627 757 Textile products 39 9 Resource Cap (deficit = -) -*T5o -0_3 - Chemical prodalcts 19 9 Metal produc's 1 9 Interest Paymentr (net) 43 43 50 Transport equipment 'i 7 Workers' Remittances 29 31 10 Dairy and animal products 13 6 Other Factor Payments (net) -2 2 -214 ) All other conmmodities 53 2 6 Net Transfers T . ) A otahe 207 100 Balance on Current Account -56 -53 -50 EXTEHNAL DEBT, DECEIDIR 3] 1971 US$.Mln Direct Foreign Investment 11. 12 14 Net MLT Borrowing 14 5 5 Public Debt, incl. gurrantecd 63.2 Disbursements . .. .. Non-Guaranteed Privat,- D2ht Amortization .. Total outstanding & Disburs;!d SuLbtotal 15 17 19 I/ Capital Grants - - - DEBT SFRVICE RATIO for 1971- Other Capital (net)Y/ 65 149 236 7 Other items n.e.i 3/ 34 35 34 Increase in Reserves (+) +58 +148 +239 Public Debt, incl. guaranteed 1.6 Non-Guaranteed Private Debt Gross Reserves (end year) 838 1011 1337 Total outstanding & Disbursed Net Reserves (end year) 579 727 966 RATE OF EXCHANGE 4/ IBRD/IDA LENDING, November 3O,1972(Million US $) Average _ 1970 IBRD ID US $ 1.00 = L.L. 3.27 L.L. 1.00 =1S $ 0.306 Outstanding & Disbursed 15.3 Undisbursed - Average - 1971 Average 1972 through September Outstanding incl. Undisbursed 153 US $ 1.00 =L.L.3.23 US $1.00 L.L. 3.06 L.L. 1.00 US $ 0.310 L.L. 1.00 = US $ 0.327 1/ Ratio of Debt Service to Exports of Goods and Net Non-Factor Services 2/ Short-term private capital 3/ Unrequited transfers 4/ Average of free market rates 5/ This figure is subject tov wide nsr4ins of error. inot available not applicable December 7, 1972  ANNS, TT THE STATUS OF BANK GROUP OPERATIONS IN LEBANON A. STATEMENT OF BANK LOAN (as at Novemiber 30, 1972) Loan Amount Number Year Borrower Purpose US$ million 129 LE 1955 Litani River Authority Power 27.0 of which has been repaid 11.7 Total now outstanding and held by Bank 15.3 B. STATEMENT OF IFC flVESTYM1TS (as at November 30, 19727 Amount of Loan Year Obligor ZLTie of Dusiness US$ millicn 1971 Filitex, S.AOL. Textiles 0.93 1971 Lebanese Ceramic Industries Co., SQA.L. Ceramic Tiles 1o20 Total Gross Commitments 2.13 Less cancellations, terminations, repayments and sales 1.00 Total Commitments now held by IlFC 1.13 Total undisbursed 0o615 C. PROJECTS DI EXECUTION None   AEi-RX III Page 1 of 3 pajcs LEBA14ON - EDUCATION PROJECT LOAN AND PROJECT SME'lRlY Borrower: Republic of Lebanon Amount: US$6.6 million equivalent in various currencies.0 The amount corresponds to the project's estimated foreign exchange component. Terms: Interest : 7' percent per annum Commitment Charge: 3/4 of 1 percent per annum Term : 25 years, including 5 years of grace ProL et Description: The proposed project would assist the Government in implementing its development program for primary and secondary education, the objectives being to (i) reorient the school system along more practical lines by introducing modern curricula and new teach- ing methiods, (ii) improve the distribution of educa- tional opportunities, and (iii) economize on edaca- ti.onal recurrent costs through rationalization of the public school system and replacement of rented buildings. The project would comprise: 1. Design, construction, furnishing and equipping of 39 primary schools (30,960 student places), 24 lower secondary schools (l14400 student places), and 3 prirmary teacher training institutes (2,280 student places). 2e Extension, renovation, furrishing and equipping of one lower secondary teacher training institute (380 student places); and 3. Technical assistance (2 man/years) in education planning and administration, economics of educa- tion, technical education, and education statistics. Proj ect Admninistration: Project Unit in the Conseil Executif des Grands Projets (CmP)   ANlNEX III Page 2 of 3 j2gr' E.,timated Cost: US$ million Local Forein Total 1. Physical Facilities 39 Primary Schools 3.9 2.5 6.4 24 Lower Secondary Schools 2.2 2-3 4.5 3 Primary Teacher Training Institutes 0.5 0.3 0.8 1 Lower Secondary Teacher Training Institute 0.1 0.1 0.2 2, Professional Services o.6 0.0 0.6 3. Technical Assistance 0.0 001 0.1 4. Contingencies (a) Physical o.6 0.4 1,0 (b) Price Escalation 1.4 0.9 2.3 Total Project Cost 9.3 6.6 15.9 Categories of Expenditures: US$ million Local Foreign Total Component 1. Construction (including professional services) 6.2 3.4 9.6 2. Furniture 1.1 - 1.1 3. Equipment - 1.8 1.8 4. Technical Assistance - 0,1 0.1 5. Contingencies 2.0 1.3 3.3 Total Project Cost 9,3 6.6 15.9 Financing_Plan: US$ million Bank Loan 6.6 Government of Lebanon 9.q Total 1509 Estimated Disbursements: C.Y. 1973 1974 1975 1976 1977 Cumulative Total 0.1 0.7 3.4 2.0 .4 6.6   ANNEX 3:IT Page 3 of 3 a 2ro ur en'rent Ar angements: International ccmpetitive bidding for civil works and equipment, in accordance with Bankts Guidelines for Procurement. 15% preference for local suppliers. Lebanon has no preferential tariff agree- ment with any country. Consultants: Services of Consultant Architects for design and supervision of constinction. Experts in education planning and aaministration, iducation econonics and manpower, technical education, and ecbacation statistics for the technical assistance portion of the Project. Ratn of Retumr: Financial rate of return: Primnaxy schools - 21 5% Lower secondary schools - 24 _D_P ReRort: PE-52a November 29, 1972   IHBhRD-393 L- K, El 35!30\ 36 5 Y R I A /*- 363 JUNE 197, - ;' 5s7 fYi U ?e .h;, R,A AO/ t t . _., - H 7 FO / oH lbo . / ,.iail ^ ,,_ / ~~~~~~~~ ~ ~~ ~ ~~~~~~~~~~~~~A K K A Ri - OF E,sTw RPOLI - . '- - t z oo,o HERMEL T I T RPO LI H E R M E L _~~~~~~~eo , ~ - , " t1i KOUJR A ( o Mediterroneon Sea K -- -V, E / ( - BATROUN -,& /.i / B~ A R0' 7builV J B A I L + | > B A B E K 5 boil JBAL I L ----- _----- -- '- ' ' / \ \ 34* KLEoSoR O U A N /K E _ s R FA) -34- ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ /30 __llir 802- \ t/(I / jDocoos / /~ S Y R I A BEY/RU S E T N IL C H A 0< Z J ChOUS F n yBEQAA EL GHARBI XJ , / ,/>- n LEBANON SAIDA mKr, _} / /a_EDUCATION PROJECT * 5 0 O1 R A C H A I Y Y A *Pri-oy I-oh-rtann ch..I 41 ) / -~"' " ...-. X idl schr oining school A to seooodosohoo -,-cocoly 320 ~ 33 30(/ /~ ~ ~> \ ee ' hRACHAIYA A Lo-es -oco-doy school -- copocity 540 ~~(15 S ~~~~~~~ ITS ~00L""'sscoodory schoo --cpoci,y 1, 120 / > r _s I / or: U j Primvrsyschool--copos y 480 I \0 ) E > \ / r: ProPir y school -- copocOy 960 CD t. POPULATION: Pesons pe sqore il ffa f More hoc 20, 000 I 1,500- 2,000 \ 1 5I S,00-- 50 NABATI YE =hI 500--O j/ ' N A B A T I Y E ' 1 tr) i t t~~~~~~~~~~~~~~~~~~~~ess thon 500 ff | , t S v (Populoi- nde-sily fig-ces ore bosed upo- 0t