Liberia - Second Highway Project

CIRCULATING COPY TO BE RETURNED TO REPORTS DESK FILE CLQY DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Not For Public Use Report No. P-1217-a-LBR REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN AND A PROPOSED CREDIT TO THE REPUBLIC OF LIBERIA FOR A SECOND HIGHWAY PROJECT May 9, 1973 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 It may not be published, quoted or cited without Bank Group authorization.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.  RATE OF EXCHANGE Liberia uses the US$  INTERNATICNAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTENATIONAL DEVELOPMENT ASSOCIATION REPCRT AND RECCM4lNDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN AND A PROPOSED CREDIT T3 THE REPUBLIC OF' LIBERIA FOR A SE-COND HIGHWAY PROJECT 1. I submit the following report and recommendation on a proposed loan for the equivalent of US$3.0 miUion and a proposed development credit for the equivalent of US$2.6 million to the Republic of Liberia for a second highway project. The loan would have a term of 25 years, including five years of grace, with interest at 7 1/4 percent per annum. The development credit would be on standard IDA terms. PART I - THE ECONOMY 2. A report on the current economic position and prospects of Liberia (AW-25b), dated June 1, 1971, was distributed to the Executive Directors. A Bank economic mission visited Liberia in March 1973 and is currently writing its report, which is expected to be ready in July. The following assessment incorporates its preliminary findings. Country data are given in Annex I. 3. The main features of Liberia's economy are the foreign invest- ment enclaves of iron ore mining, rubber plantations and tinber concessions prospering alongside a largely underdeveloped rural economy of subsistence farmers. The per capita GDP of about $250 1/, of which a substantial portion is repatriated abroad or retained in the enclave sector, obscures the real extent of poverty in the country (per capita GNP = US$200). Distribution of national income is very uriequal1 and the roughly 70 percent of the population engaged in traditional agriculture has an average per capita income ranging from $55 to $80. 4. While economic growth (GNP) in the second half of the l96O0s was just under 4 percent annually in real terms, it slowed down to 1.3 percent in 1971 and then picked up to 4.5 percent again in 1972. The slowdown in 1971 was largely due to a mild recession in the world iron ore market (iron ore accounts for about 71 percent of total exports) and continued weakening of export prices for rubber. However, the situation improved in 1972 as European demand for iron ore increased and rubber prices showed some improvement towards the end of the year. The adverse external developments weakened the budgetary situation in 1971. In December that year, the Government negotiated an IMF Standby Arrangement !/ Liberia's national accounts series were substantially revised by the recent economic mission.  -2- for 4 million SDR's. The budgetary situation improved in 1972 partly due to substantial cuts in expenditures, and there was no need to draw on the Standby. Budgetary revenues are estimated tlo have risen to about $78 million in 1972, about 11 percent above the previous year's level, due partly to increased excise taxes, maritime revenues and close to $4 million in extraordinary nonrecurring revenues. The budgetary current surplus rose from $20.1 million in 1971 to $22.8 million in 1972--i.e. from about 4.8 percent to 5.1 percent of GDP. 5. Despite weakened international demand for its key export commodities, Liberia's foreign trade surplus averaged about $65 million in the past two years. This trade surplus is more than offset by sizeable factor payments abroad. These have amounted in recent years to about $80-90 million annually and consist largely of returns on investments by foreign concessionaires. Merchandise exports increased by about 8.8 percent in 1972 (compared to 5 percent in 1971) partly due to an improvement in the iron ore market, but also due to the continued increase in the proportion of processed iron exported from Liberia. There are no official balance of payments estimates for Liberia, but net public and private capital inflows appear to more than offset the deficit on current account. 6. Development outside the enclave sector in the past has been hampered by the absence of sectoral investment programs, weak project preparation characterized by "ad hoc" decisions at a ministerial level, limited savings and inefficient public administration. However, the new administration of President W.R. Tolbert, which formally took office in January 1972, is committed to take steps to remedy these deficiencies. The Government is anxious to strengthen the entire planning mechanism and has requested Bank advice and financing for technical assistance needs for this purpose. This request is now being discussed with UNDP. As_a step toward'sa long-term development program, the Bank's economic mission, in preparing'its final report, will outline a suggested public investment'-- program for the next five-year period. 7. The Tolbert administration has made agriculture its first development priority and has stressed the importance of an integrated rural development approach so that benefits can be spread more widely. The Government is also emphasizing the need for greater efficiency in public administration. A Civil Service Commission has been set up to look into the establishment of an organized civil service system (salaries, merit promotion, pension schemes, etc.) and a newly established ' Public Administration Institute, financed by USAID, will provide training for middle and higher level civil servants. A reflection of the Government's desire to improve the tax structure was the passing of a number of tax measures in the first months of 1973. The regressive impact of the tax system was somewhat lessened through a reduction of the tax burden on low income families. An improvement in tax structure also took place through t1te shifting of business taxes from a profits to a more enforceable gross receipts basis. Although the immediate revenue yield of the new measures is modest, in the long run the revenue effect may be considerable.  -3- 8. Another positive development is that the Government has begun to strengthen its machinery for examining and reviewing concession agreements. The Government has just completed the renegotiation of its agreement with the major concessionaire, the LAMC0 iron ore mining company, and has as a result achieved a significant increase in revenues. A review of other concession agreements (iron ore, rubber and the increasingly important forest sector) will follow. Revenue from concessions amounted to about 25 percent of total government revenue. This contrasts with the share of concessions in the economy--more than 40 percent of value added (GDP) comes from the enclave sector and 85 percent of merchandise exports. The Government is rightly concerned not only with obtaining additional revenue, but also with raising the domestic value added, e.g. through local processing of wood instead of timber exports. 9. Since 1970 foreign loans and grants have financed 70 percent of total government development expenditure. Disbursements of external capital assistance averaged about $4 million annually, almost all for infrastructure projects. In addition, technical assistance grants, mostly from the United States, averaged about $10 million a year. These amounts represent a considerable reduction compared to the 1965-69 period when capital assistance averaged $13 million annually and technical assistance $12 million annually. 10. Public external debt outstanding at the end of 1972 was estimated at $150 million. About 65 percent is owed to the United States (mostly loans from USAID), 11 percent to Germany, 9 percent to IBRD and 14 percent to suppliers (mostly Italian). In the last two years, debt service has absorbed about 12.5 percent of export earnings net of factor payments and about 22 percent of current government revenues. The level of debt service is mainly a legacy from the past since the Government contracted large numbers of suppliers' credits in the 1960's. 11. Liberia's GNP may be expected to grow at an average annual rate of about 4.5 percent in real terms in the next several years. This compares with a projected population growth rate of 3 percent based on the latest completed population survey. Prospects for rubber exports now seem a little better. A recent Bank study indicated that rubber prices are likely to stabilize at about 194/lb., considerably above the level in recent years, by the mid-1970s. While the outlook for iron ore in the international market is moderately good, Liberia will face increased competition from Australia, Brazil and other countries; whose iron ore deposits are of a higher grade. Over the longer run, therefore, Liberia's resources for economic growth will depend, to an increasing extent, on the ability of the Government to formulate and to implement sound development programs outside the traditional enclave sectors. These programs themselves are essential if Liberia is to improve the living standard of its people. 12. Current_expenditure levels for health and education, maintenance programs, anA.government salaries are inadequate; this will be a constraint on Liberia's potential public saving performance. With reasonable success in efforts to mobilize public savings, budgetary sources (current surpluses less debt amortizations) are estimated to  - 4 - finance almost 30 percent of projected public investment over the next five years. The United States, and to a lesser extent Germany, are expected to continue to be major providers of external capital assistance over the next few years. The Government is keen to broaden the base for foreign assistance, and last October held a multilateral aid meeting in Monrovia for the transport sector, attended by three multilateral and seven bilateral aid agencies (para. 22 below). Over the past five years, 23 percent of the capital aid received on a disbursement basis (amounting to a total of $40.0 million) has come from the Bank Group; 69 percent from the United States, and 8 percent from other sources. PART II - BANK GROUP OPERATIONS IN LIBERIA 13. The Bank has made six loans for projects in Liberia totalling $21 million and the Association has made two credits totalling $8.4 million. IFC, which helped establish the Liberian Bank for Industrial Development and Investment (LBIBD[) in 1965, has subscribed 25 percent ($250,000) of its share capital of $1 million. The Bank's loans have been for roads, port expansion, power and LBIDI; the credits are for education and agriculture. Annex II contains a summary statement of Bank loans, IDA credits and -FC investments as of March 31, 1973, and notes on the execution of on-going projects. 14. The first Bank Group lending operation was a $3.25 million loan in 1964 for a road project (Loan 368-LBR). Engineering carried out by the then Department of Public Works and Utilities was inadequate and extensive redesigning was required. The Government requested a supplementary loan of US$1 million, which was approved in 1965 (Loan 368-LBR amended). Project execution on this and subsequent lending operations have been generally satisfactory. The agriculture and education projects (Credits 305 and 306 respectively), both approved in FY 1972, signified a shift in Bank Group lending strategy. Previous lending had gone almost ex- clusively into infrastructure, and Liberia prior to that had been a Bank-only country. While c otinuous support for infrastructure investment will still be required -- particularly in transport, where urgent priority needs remain -- more emphasis will be given to agriculture and education in Bank/IDA lending operations in the future. Both of these sectors have high priority in the Government's economic program. Because of inadequate local capacity to prepare and implement development projects in the agriculture and education sectors, technical studies and training are important features of both projects in these areas. UNDP does not have adequate funds to satisfy Liberia's technical assistance needs. And, therefore, the Government has turned to the Bank Group for added help. Besides providing technical assistance for specific sectoral purposes through its projects, the Bank Group, at Government's request, has prepared  -5- a report on development planning which calls for strengthening planning through infusions of some further technical assistance. The recent economic mission reviewed these recommendations with Government. Some financial assistance for a planning team may be required as soon as the Government has finalized its course of action in this area. 15. In the next two years, we plan to propose funding for the first of two rural development projects emerging from the studies provided for under the FY 1972 agriculture Credit. A second education project is also envisaged, as well as additional financial assistance to help meet further urgent priorities in the road system. So long as the Government persists in its efforts to improve economic performance, continued Bank Group lending, on a blend basis, would appear to be justified. Liberia's rich resources, being developed biy foreign private capital, provide the base for long-term economic growth and should make an increasing contribution to the resources available for development of the backward areas of the country, provided there are improved yields from renegotiated concession agreements. Since the overall level of Liberia's external indebtedness is still relatively moderate in relation to foreign exchange earnings -- despite the debt servicing burden on the budget -- the country is in a position to assume some lending on Bank terms. On the other hand, further IDA assistance should be considered on the grounds of the Government's resolve to improve economic policies, the widespread poverty in the country (particularly outside the enclave areas) and the time required before budgetary constraints arising from high debt servicing requirements can be overcome. PART III - THE TRANSPORT SECTOR IN LIBERIA 16. Liberia depends almost entirely on roads for the internal transport of goods and passengers. Yet, there is only one mile of road for every 10 square miles of land area -- one of the lowest such ratios in West Africa. Moreover, much of this mileage (more than 50 percent) consists of unsurfacea dry weather roads. Some areas are isolated and unable to realize their full development potential. Because of this dependence on roads, and because the existing road network needs improved maintenance, upgrading and extension to potentially productive agricultural areas in the interior, the Government continues to place high priority on road development. 17. The transport system includes about 4,200 miles of roads, 300 miles of privately owned railways, four seaports and five airports of which two provide international services. The railways are owned by the mining companies and haul almost nothing but iron ore. The seaports handle about 22.5 million tons of cargo each year, of which about 90 percent is iron ore. International air transport, particularly to and from other West African countries, has increased by about 5 percent annually over the past five years.  - 6 - 10. The Liberian road network has been developed over the last two decades with technical aid from the United States Bureau of Public Roads, with early financial aid from the U.S. Export-Import Bank and suppliers' credits. More recently, the USAID, the Federal Republic of Germany and the Bank have also contributed to development of the road network. Apart from the Bank's earlier highway loans, referred to in paragraph 14 above, the Bank has also assisted the transport sector with a loan of $3.6 million (617-LBR) approved in 1969 for development of the port of Monrovia. 19. Liberia's priority needs in the transport sector, as identified by recent studies, are (a) to alleviate growing congestion in and around the Monrovia port -- a prime center of economic activity; (b) to upgrade key primary roads and to renovate or extend secondary and feeder roads into those rural areas where the Government's agricultural development activities are or will be centered; (c) to establish an effective highway maintenance operation within the Ministry of Public Works, which has paramount responsibility in this sector. The latter is especially important given the deterioration of existing roads and the inadequacy or disrepair of highway maintenance equipment. These shortcomings resulted largely from the past failure of the Government to institute an effective highway maintenance system. The Government recognizes these needs and is determined to deal with ther.. 20. Expenditures for highway administration and maintenance are financed from the general budget. Over the 1968-72 period, annual recurrent expenditures for road maintenance and for salaries in the Ministry of Public Works increased from $1.2 million to $1.9 million, or by about an average of 12 percent annually. The allocation for maintenance operations alone rose by about 7.5 percent annually to almost $1.0 million. Still, this effort is not enough to keep the network in adequate condition. The Governmenu realizes this and has indicated that it is prepared to increase appropriations for maintenance operations. PART IV - THE PROJECT 21. A report entitled, "Liberia, Appraisal of a Second Highway Project", dated May 1973 and numbered 103a-LBR, is being circulated separately to the Executive Directors. A loan/credit and project summary is provided in Annex III. 22. This project originated from two feasibility studies. One on highway organization and maintenance, financed by the UNDP with the Bank as Executing Agency, was done by SAUTI Consultants of Italy in 1971; the other was a report on the Monrovia Port access roads done by Stanley Consultants of the United States and financed under a 1969 Bank port loan (617-LBR). These studies provided the basis for a proposed Five-Year Hignway Maintenance and Development Program (1973-77) prepared by the  -7- Government with Bank assistance. The Program was the subject of a highway aid coordination meeting in Monrovia on October 23-25, 1972, attended by representatives of multilateral organizations and bilateral donors. The project proposed here was discussed at that meeting and was appraised immediately afterwards by a Bank mission. Negotiations with the Government delegation, headed by the Assistant Minister of Finance for Fiscal Affairs, Mrs. Ellen Johnson-Sirleaf, took place on April 18-26. 23. The proposed second highway project, including several elements to be financed by other agencies, forms an important component of the Five- Year Program. This component consists of: Part I. Items to be financed by the Bank/IDA: (a) Upgrading of the Monrovia Bypass (8.4 mi.), which serves the port of Monrovia, including detailed engineering, construction of a two-lane paved road and supervision of construction; (b) Technical assistance over a four-year period Ci) to help reorganize the Ministry of Public Works, with particular emphasis on improving its capacity to adequately maintain roads and equipment; and (ii) to carry out a special study to promote the Liberian construction industry, particularly for road works; (c) Preinvestment studies, including: i. Detailed engineering for: - Key Monrovia port access ruads (the United Nations Drive and a new two-lane bridge); - Totota-Ganta road (85 mi.), if a feasibility study just completed by the British ODA and now being analyzed, indicates that upgrading is warranted; ii. Completion of the feasibility study and - preparation of detailed engineering for the Paynesville-Robertsfield-Totota road (70 mi.);  - 8 - iii. A feasibility study for the 15 mile Monrovia-Mount Coffee Dam road leading to a central water supply plant; (d) Equipment for workshops as required for highway maintenance operations. Part II. Items to be financed by the United States Agency for International Development: Highway maintenance equipment and spare parts. This will include new road maintenance equipment, including an initial stock ot spare parts; spare parts for reconditioning existing US-manufactured equipment (about 85 percent of the fleet); radio communication sets and traffic counters. Part III. Items to be financed by the Federal Republic of Germany: Training of personnel to operate, maintain and repair the fleet of highway maintenance equipment and to maintain roads. Part IV. Item to be financed by United Nations Development Program: A program coordinator, appointed to Ministry of Public Works and reporting to the Minister, to coordinate the various project components, and to advise Government on overall implementation of both this project and other aspects of the Five-Year Highway Maintenance and Development Program. Cost and Financing 24. The total capital cost of the project, including the portions to be financed by other agencies, is estimated at US$14.1 million, oI which about $11.9 million is foreign exchange costs, representing about 84 percent of total capital cost, or 87 percent of the cost net of taxes. Proposed Bank/IDA participation of US$5.6 million ($2.6 million IDA; $3.0 million Bank) wil1 cover the foreign exchange costs of Part I, or about 39 percent of the total project cost. Of this amount, about $50,000 would finance retroactively the detailed engineering for the Monrovia Bypass. The USAID has concluded an agreement with the Government to finance the foreign cost of Part II, and certain local cost requirements, totalling  -9- $4.4 million. The Federal Repub]ic of Germany will finance Part III, or about $1.9 million equivalent. It has already made an initial commit- ment to finance the costs of an expanded training program, involving the equivalent of about US$700,000. An additional amount of about US$1.2 million equivalent will be required in mid-1974 to complete the total training program. It is expected that the German Government will favorably consider a request by the Liberian Government to provide this assistance. The UNDP will provide about $0.1 million for the Program Coordinator. 25. The Government will finance the remaining local costs of the project, about US$2.1 million equivalent. In addition, the Government will have to allocate funds to meet the recurrent costs of road maintenance which will increase over the project period from about $2.0 million in 1973 to about.$2.9 million in 1977. These annual allocations are required to assure adequate maintenance and regular renewal of equipment. The amount proposed represents about 4.5 percent of the Government's total annual expenditures in 1973 and appears to be reasonable. These various costs have been discussed with, and accepted by, the Government. Implementation 26. The Ministry of Public Works will be basically responsible for executing the project. The Program Coordinator (see part IV of project description, para. 23) will play a central role, however, in coordinating the various aspects of the project, in working with consultants and in ensuring that other features of the Five-Year Highway Maintenance and Development Program are properly implemented. Success of this proposed project will depend greatly on close cooperation between the Government, the Bank Group, the USAID and the German Government. Thus, the Program Coordinator, who already has been recruited and approved by the Government, the Bank and other participating agencies, will be crucial to the entire effort. Several teams of consultants will assist in carrying out the project and will be responsible for reorganization of the Ministry of Public Works; training of staff; procuring highway maintenance equipment and spare parts; preinvestment studies and supervision of the Monrovia Bypass construction. The consultants for reorganization, preinvestment studies, construction supervision and the study of the construction industry will be selected by the Government in agreement with the Bank/IDA. Signing of Consultants' contracts for technical assistance for reorganization and for detailed engineering for the Monrovia Bypass, will be conditions for effectiveness of the Loan/Credit. Procurement and Disbursement 27. The Monrovia Bypass will be upgraded under unit price contracts awarded on the Basis of international competitive bidding in accordance with Bank Guidelines. Workshop facilities will most likely be built by local contractors under unit price contracts awarded on the basis of competitive bidding or by the forces of the Ministry of Public Works. Workshop equipment will be procured on the basis of international  -10- competitive bidding in accordance with Bank guidelines. Highway maintenance equipment and spare parts for reconditioning existing equipment will be procured and delivered in accordance with USAID pro- cedures. Special Bank Group assistance will be provided for a study aimed at identifying appropriate measures to strengthen the Liberian construction industry in order to increase--to the extent economically feasible--its participation in construction, maintenance and repair works, in particular for roads. This study will be carried out during the execution of detailed engineering for the Monrovia By-pass. 28. Disbursements from the loan/credit will be made for: (a) the foreign exchange component of the total cost of consulting services for technical assistance, for construction, supervision and for pre- investment studies and for the study of the Liberian construction industry; (b) the CIF cost (Monrovia) of equipment imported for remodeling and equipping workshops; (c) 66 percent of total expenditures (equal to the estimated foreign component) under the construction contracts for upgrading the Monrovia Bypass. Disbursements will be made first from the Credit account, and then from the Loan. Justification 29. This project is designed to help the Government meet high priority needs in the transport sector--an effective road maintenance system and improved access to the port of Monrovia from important agricultural areas. Tuie achievement of better maintenance would result in a more durable and lasting road network, thereby reducing transport costs. Under the most likely estimates of inputs, the maintenance program proposed as part of this project would yield an economic return of 30 percent. Even under the worst possible assumptions regarding traffic volumes, vehicle operating costs and capital costs, the economic return would be 16 percent. A sensitivity analysis shows the economic return on the upgrading of the Monrovia Bypass to be 42 percent under the most probable estimates of inputs. 30. Implementation of the highway maintenance program will help improve the overall skill level in the MPW. The total MPW work force will remain about the same; however, upgrading of the Monrovia Bypass is expected to create direct employment for about 150-200 laborers over the 18 months construction period. PART V - LEGAL INSTRUMENTS AND AUTHORITY 31. A draft Loan Agreement between the Bank and the Republic of Liberia, a draft Credit Agreement between the Association and the Republic of Liberia, the Report of the Committee provided for in Article III, Section 4 (iii) of the Articles of Agreement, the Recommendation of the Committee provided for in Article V, Section 1 (d) of the Articles of  Agreement of the Association, and the texts of the resolutions approving the proposed loan and credit are being distributed separately to the Executive Directors. The draft agreements conform to the normal pattern for loans and credits for highway projects. 32. 1 am satisfied that the proposed loan and the proposed Development Credit would comply with the Articles of Agreement of the Bank and the Association. PART VI - RECOMMENDATION 33. I recommend that the Executive Directors approve the proposed loan and development credit. Robert S. McNamara President Attachments May 9, 1973   ANNEX I Page 1 of 2 pages COUNTRY DATA - LIBHfRIA 1/ AREA 2/ POPULATION DENSITY 111,370 knsf 1.63million (mid-1972) 14.7 per km2/ Rate of Growth: 3.0 (from 1963t01972 ) per kmt/of arable land POPULATION CHARACTERISTICS 1970 HEALTH 1970 Crude Birth Rate (per 1,000) 51 Population per physician 13,598 Crude Death Rate (per 1,000) 16 Population per hospital bed 687 Infant Mortality (per 1,000 live births) 137 INCOME DISTRIBUTION (year) DISTRIBUTION OF LAND OWNERSHIP (year) % of national income, lowest quintile .. owned by top 10% of owners highest quintile .. % owned by smallest 10% of owners ACCESS TO PIPED WATER (year) ACCESS TO ELECTRICITY (year) % of population - urban .. % of population - urban - rural - rural NUTRITION 1964-66 EDUCATION 1970 Calorie intake as % of requirements 94.1 Adult literacy rate 10% of Adult Population Per capita protein intake 41.1 Primary school enrollment 50% of age group 7-12 GNP PER CAPITA in 1971 US $ 216 2/ GROSS NATIONAL PRODUCT IN 1971- ANNUAL RATE OF GROWTH (M, constant prices) US $ Mln. % 1960-6.5 1965-70 1971 1972 GNP at Market Prices 340.00 100.0 *- 6.0- 2.8- 4.6-/ Gross Domestic Investment 64.0 18.8 Gross National Saving 55.0 16.1 ., Current Account Balance -9.0 -2.6 . 4/ Exports of Goods, NFS 224.0 65.8 0.4 9.5 . 4.8 8 7 Imports of Goods, NFS 176.2 51.8 8.6WV 6.7a/ 8:5 7 7:5 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1972 Value Added Labor Force V. A. Per Worker USL$Mln. % Mln. % US$ % Agriculture 96.9 23.7 Industry 170.7 41-7 *. Services 141.8 34.6 .. Unallocated Total/Average 409.4 100.0 .. 100.0 ,, 100.0 GOVERNMENT FINANCE General Government Central Government ( Min.) % of GDP ( US $ Mln.) % of GDP 197 197 196 -7 1972 1972 1969-71 Current Receipts .. ,. .. 77.6 17.6 15.4 Current Expenditure .. 54.8 12.4 12.6 Current Surplus .. .. .. 72 -7 r Develomsnevrmnt Expenditures 7.4 1.6 2.2 External Assistance (net) * -0.8 -0.1 1.5 Capital assistance (gross) .. .. .. 3.3 0.7 1.9 Technical Assistance .. .. .. 8.0 1.8 1.9 'Inis table reflects imtormation received sy tne Feoruary-rarch Dasic mission. 2 Preliminary estimate. GDP at factor cost. Godds only in current prices. not available not applicable  ANNEX I Page 2 of 2 pages COUNTRY DATA - LIBERIA MONEY, CREDIT and PRICES 1965 1969 1970 1971 1972 (Million US i outstanding end period) Money and Quasi Money 1/ 26.6 31.5 42.1 43.9 57.0 Bank Credit to Public Sector (net) 15.9 6.9 7.4 9.9 5.5 Bank Credit to Private Sector 17.8 29.4 35.3 38.8 47.4 (Percentages or Index Numbers) Money and Quasi Money as 7, of GD2P' *- 10.2 10.5 11.5 General Price Index (1963 = 100)- 102.2 125.3 126.4 126.1 Annual percentage changes in: General Price Index 2.2 9.6 0.7 -0.3 Bank credit to Public Sector(net) 17.8 -37.6 7.2 33.8 Bank credit to Private Sector -14.4 22.2 20.1 9.9 BALANCE OF PAYMENTS -/ MERCHANDISE EXPORTS (AVERAGE 1970-7 2) 1970 1971 1972 US $ Mln % (Millions US $) Iron Ore 164.5 72.3 Rbibber 32.6 14.3 Exports of Goods, N1FS 213.7 224.0 243.6 Logs and Timber 7.0 3.0 Imports of Goods, NFS -159.5 -176.2 -186.7 Diamonds 5.9 2.5 Resource Gap (deficit -) - Coffee, Palm products and Cocoa 7.2 3.1 54.2 47.8 56.3 All other commodities 10.3 4.5 Interest Payments (net) -20.9 -29.5 -28.8 Workers' Remittances -13.7 -14.2 -14.9 Total 227.5 1oQ.o Other Factor Payments (net) -41.1 -32.5 -35.3 Net Transfers 15.8 19.4 15.2 EXTERNAL DEBT, DECEMBER 31. 1972 Balance on Current Account -13.6 -9.0o C7 14/ us $ Mln Direct Foreign Investment- 23.9 33.8 12.0 Net MLT Borrowing Public Debt, incl. guaranteed 159.6 Disbursements 8.7 10.7 6.6 Non-Guaranteed Private Debt *. Amortization -11.3 -10.1 -11.4 Total outstanding & Disbursed 159.6 Subtotal -2.6 0.3 -4.8 Capital Grants .. .. .. DEBT SERVICE RATIO for 19726 Other Capital (net) -2.2 -1.2 -5.6 % Other items n.e.i - -23.9 5.9 Increase in Reserves (+) Public Debt, incl. guaranteed 6.4 Non-Guaranteed Private Debt Gross Reserves (end year) Total outstanding & Disbursed 6.4 Net Reserves (end year) Public debt cin. guaranteed 9.5 RATE OF EXCHANGE - IBRD/IDA LENDING, (March 1973) (Million US $): Through - 1971 IBRD IDA US $ 1.00 = 1.00 = US $ Outstanding & Disbursed 14.9 - Undisbursed 5.5 8.4 Since - 1971 Outstanding incl. Undisbursed 20.4 8 4 US $ 1.00 1.00 - US $ 1/ Demand and Time deposits T Monrovia Consumer Price Index 3/ Preliminsry Mission Estimates D Iron Ore Only v/ Hatio of Debt bervice to Exports of Goods and Non-Factor Services oj As , of Exports of goods and NFS Minus Net Factor Payments. 7/ Liberia Uses the UO Dollar not available not applicable May 1, 1973 EPD/PRD  ANNEX II THE STATUS OF BANK GROUP OPERATIONS IN LIBERIA A. STATEMENT OF BANK LOANS AND IDA CREDITS (As at March 31, 1973) Loan or Amount (US$ million) Credit Number Year Borrower Purpose Bank IDA Undisbursed 368 1964 Republic of Lib. Roads 3.3 368 1965 Republic of Lib. Roads 1.0 617 1969 Republic of Lib. Ports 3.6 0.3 684 1970 Public Utilities Authority Power 7.4 0.2 778 1971 Public Utilities Authority Power 4.7 4.0 305 1972 Republic of Lib. Education 7.2 7.2 306 1972 Republic of Lib. Agriculture 1.2 1.2 839 1972 Liberian Bank for Development and Investment Development Finance 1.0 1.0 Total 21.0 8.4 13.9 of which has been repaid o.6 Total now outstanding 20.4 8.4 Amount sold 0.3 of which repaid 0.3 - - Total held by Bank and IDA 20.4 8.4 Total undisbursed 5 8.4 B. STATEMENT OF IFC INVESTMENTS (As at March 31, 1973) Amount in US$ million Year Obligor Type of Business Loan Equity Total 1966 Liberian Bank for Industrial Development Development and Finance Investment Company 0.25 0.25 less sold 0.01 0.01 Now held 0.20 .017  ANNEX II Page 2 C. PiZOJL.CTS INi EXI)CUTION Loan 14o. 617 - Port Development 1. This port project involved dredging the approaches and an area within the Monrovia port to accormmodate bulk ore carriers and tankers; provision of twc tugs and a pilot launch, as well as additional buoying aJnd lighting of the navigable channels; consultants' services for feasibility ;tudies for the development of road approaches to the port. Project execution has been satisfactory. The Bank has agreed, in principle, to the Government's request that funds still undisbursed be used to help finance an overall study of port development needs in Liberia, which was stipulated in the project. Al supervision mission visited Liberia in January, 1973 and, at Jovernment's request, has drafted terms of reference for the port develop- mient study. Locin llos. 684 and 778 - Power 2. The loans to the Public Utilities Authority (PUA) have helped finance the expansion of the Mount Coflee hydroelectric nlant; the installation of two gas tulrbines at the Bushrod (Monrovia) plant; procurement and erection of 42 miles of overhead lines in M4onrovia and 54 miles in outlying areas; establishment of a new substation and related facilities. While project executior has been satisfactory, PUA cannot complete payments on the Bank- funded items. There have been cost overruns mainly due to international currency fluctuations and the purchase of larger generators than originally anticinated. A request from the Government for a supplementary loan of $2.7 million is now being reviewed. Meanwhile, PUA has intensified its efforts to improve its arrears T)osition and the Government has passed legislation designed to reorganize the PUA into a more efficient operation. Credit No. 305 - Education 3. The education credit will help finance construction of, and provide ecuipment for, t-o new multila-teral high schools in the north and the east, each ofiering a wide curriculum in agriculture, mechanics and academic ,uhject ; construction of and equipment for a new college of agriculture and forestry; expansion of a rural teacher training institute and construction of an adjacent demonstration school; technical assistance and fellowships for manpower and education planning, technical teacher training, secondary education and project implementation. Some delay was encountered last year in obtaining recuisite excatriate staff for the project unit and the original effectiveness date had to be postponed. This problem has been overcome and the credit is effective. Oredit No. 306 - Agriculture 4. The agriculture credit includes feasibility studies and preparation of detailed investment proposals for two integrated rural development projects -- one in Upper Lofa county in ncrthern Liberia; the other in Bong county in  ANNEX II Page 3 the central region; a physical survey and detailed study of the Liberian- owned rubber industry; a pilot rubber scheme to provide Liberian rubber farmers with credits to rehabilitate untapped or poorly tapped rubber; improving rice research; reorganization of the Ministry of Agriculture and training for Liberians to prepare investment projects. Effectiveness of this credit also had to be postponed because of difficulties in obtaining necessary staff for the project unit. A project manager was designated in January, 1973 but left after a month because of irreconcilable differences with the Ministry of Agriculture. A replacement is now being sought. Loan No. 839 - Development Finance Company 5. This loan will help finance foreign exchange costs of industrial projects to be financed by LBIDI in 1972 and 1973. The loan is effective.   ANNEX III LIBERIA - SECOND HIGHWAY PROJ