Ecuador - Tungurahua Rural Development Project

Document of FILE COPY The World Bank FOR OFFICIAL USE ONLY Report No. P-21428-EC REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF ECUADOR FOR A TUNGURAHUA RURAL DEVELOPMENT PROJECT December 6, 1978 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit - Sucre (S/.) Calendar 1977 November 1978 US$1 - S/.25 S/.25 S/.1 - US$0.04 US$0.04 FISCAL YEAR January 1 to December 31 ABBREVIATIONS BNF Banco Nacional de Fomento (National Development Bank) IEOS Instituto Ecuatoriano de Obras Sanitarias (Ecuadorian Institute for Sanitary Works) IERAC Instituto Ecuatoriano de Reforma Agraria y Colonizacion (National Land Reform and Settlement Agency) INERHI Instituto Ecuatoriano de Recursos Hidraulicos (Ecuadorian Water Resources Agency) INIAP Instituto Nacional de Investigacion Agropecuaria (National Agricultural Research Institute) MAG Ministerio de Agricultura y Ganaderia (Ministry of Agriculture and Livestock)  FOR OFFICIAL USE ONLY ECUADOR TUNGURAHUA RURAL DEVELOPMENT PROJECT LOAN AND PROJECT SUMMARY Borrower: Republic of Ecuador. Amount: US$18.0 million Terms: Payable in 17 years, including 6 years of grace, at 7.35 percent interest per annum. Relending Terms for Agricultural Credit Component: Repayment period for subloans would be up to twelve years, including grace periods of up to five years. Up to 90 percent of subloans could be rediscounted at the Central Bank at interest rates that would yield spreads of between three and six percent to the financial intermediaries. Interest rates to ultimate beneficiaries would be 11 percent for small farmers and 14 percent for others. Project Description: This project aims at improving the productivity, income and general living conditions of 16,000 poor rural families (about 83,000 persons) living in Ecuador's Tungurahua province. Project components include (i) credit and other agricultural support services; (ii) the rehabilitation and expansion of irrigation works; (iii) construction and improve- ment of rural roads; (iv) rural electrification; and (v) other social services, e.g., provision of potable water and health services. Special Risks: The only special risk which this project faces would be the occurence of organizational and management problems owing to Ecuador's little experience, to date, with integrated rural development projects of this type. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - Estimated Costs: --US$ million- Local Foreign Total (a) Irrigation & On-farm Works 2.6 1.8 4.4 (b) Credit 5.2 2.4 7.6 (c) Tree Plant Production 0.1 0.1 0.2 (d) Storage Facilities 0.1 - 0.1 (e) Extension Services and Training 1.3 0.7 2.0 (f) Roads and Electrification 1.0 0.8 1.8 (g) Social Services 1.1 0.5 1.6 (h) Chibuleo Area Development 0.5 0.3 0.8 (i) Consultant Services 0.2 1.0 1.2 (j) Project Administration 2.1 0.5 2.6 Baseline Costs 14.2 8.1 22.3 Contingencies: Physical 1.1 0.7 1.8 Prlce 3.8 2.1 5.9 Total Project Costs 19.1 10.9 30.0 Financing Plan -US$ million----- Local Foreign Total Bank 7.1 10.9 18.0 Governmnt 11.0 - 11.0 Beneficiaries 1.0 - 1.0 Total 19.1 10.9 30.0 Estimted Disbursommts: US$ million by Fiscal Year ------- 1980 1981 1982 1983 1984 1985 1986 Annual 2.25 3.25 4.00 4.00 2.50 1.50 0.50 Cumulative 2.25 5.50 9.50 13.50 16.00 17.50 18.00 Rate of Return! The economic rate of return Is estimated at 21 percent for the components of the project with directly quantifiable benefits, whlch represent 74 percent of the total costs of the project. Appraisal Roeort' Report No. 2154-EC dated November 28, 1978.  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE IBRD TO THE EXECUT'IVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF ECUADOR FOR A TUNGURAHUA RURAL DEVELOPMENT PROJECT 1. I submit the following report and recommendation on a proposed loan to the Republic of Ecuador for the equivalent of US$18.0 million to help * finance the Tungurahua Rural Development Project. The loan would have a term of 17 years, including six years of grace, with interest at 7.35 percent per annum. PART I - THE ECONOMY 2. The most recent economic report on Ecuador, Report No. 1382-EC entitled "Current Economic Position and Prospects of Ecuador" was distributed to the Executive Directors on April 1, 1977. An economic mission visited Ecuador in April-May 1978 and its economic report is now in the final stages of preparation. 3. During the past six years, the Ecuadorian economy has gone through a phase of rapid economic growth spurred mainly by exports. Between 1971 and 1977, GDP grew at a 9.3 percent annual rate in real terms and by the end of the period the country's per capita income had climbed to about US$770. Petroleum exports were the main engine of growth of the Ecuadorian economy through 1976, despite a decline in the volume of petroleum exports since 1974. 4. After reaching EL maximum of 59 million barrels in 1973, exports of crude oil began to fall and had dropped to 38 million barrels in 1977. Owing to the international oil price increases, however, petroleum still accounted for 40 percent of total exports in 1977, the same share as in 1973. In 1977, the source of growth of the Ecuadorian economy moved from exports to domestic demand as domestic expenditures increased by 7.8 percent while exports * declined by 13 percent, af'ter a 14.5 percent jump in 1976, all in real terms. The most recent decline in exports could be attributed to: (i) the unrealistically high reference price asked for Ecuadorian petroleum exports, which has not been met by foreign buyers and has led to increased domestic stocks of unsold exportable crude oil; (ii) a rapidly increasing domestic demand for oil, stimulatecl by unrealistically low internal prices; and (iii) coffee stockpiling in the expectation of higher prices. 5. Despite the present relatively high average income level and a period of rapid economic growth, much of the Ecuadorian population continues to live in poverty. According to the 1974 Census, the incomes of two-thirds of the rural population were less than one-third of the national average. The average annual income of the poorest 25 percent of urban dwellers was only US$150 in 1975. While open unemployment is only about 3 percent, under- employment is estimated to be as high as 30 percent of the country's labor  - 2 - force. The high rate of population growth -- 3.5 percent per annum, one of the highest in the world -- remains an important impediment to the solution of underemployment and poverty. 6. Rapid increases in world prices for Ecuadorian agricultural exports, principally coffee and cocoa, largely contributed to the overall buoyancy of the economy during 1976 and 1977, leading to substantial increases in non-wage incomes and in wages of most urban workers. This resulted in rapidly growing consumer expenditures which brought a pressure upon domestically produced goods with inflationary consequences. The rise in consumer prices accelerated in 1976 and continued strongly during 1977 reaching an annual rate of 14.4 percent. 7. During 1970-77, Ecuadorian imports increased at an average rate of 12.1 percent in real terms. The main forces behind this increase were: (i) the high investment rates achieved during the period and the related demand for imported capital goods, mainly for the industry and transport sectors; (ii) the steep demand for inputs by the industrial sector; and (iii) the growing demand, in the recent years, for some imported agricultural products. 8. Fiscal policies in 1976-77 were clearly expansionary and monetary growth accompanying them, at least throughout the first half of 1977, was strong. The overall public sector deficit increased from 0.7 percent of GDP in 1975 to 2.5 percent in 1976 and 3.7 percent in 1977. In order to stem this trend and minimize the inflationary impact of fiscal policies, the monetary authorities introduced in mid-1977 restrictive credit policies which resulted in the decline in the rate of growth of money and quasi-money from 35 percent in 1976 to 20 percent by the end of 1977. 9. Financing of the fiscal and balance of payments deficit was increasingly sought in external financial markets. As a result, as much as 77 percent of the total public debt presently outstanding was committed in the last three years. Terms, maturity and grace periods of the newly con- tracted debt hardened somewhat as most of this new debt was provided from commercial sources. Ecuador's debt service ratio increased from 12.4 percent in 1971 to 14 percent in 1978 and is expected to reach 20 percent in 1980. 10. Ecuador's GDP growth rate in 1978-79 is expected to decline to around 5 percent as a combined result of an unfavorable turnaround in the terms of trade, the stagnation in the petroleum sector and the tight monetary policies. This decline is directly related to investment behavior. Fixed investment, after having reached a high level of 25.5 percent of GDP in 1977, began to be negatively affected by restrictive credit policies, indecisive petroleum policy, and the climate of uncertainty associated with Ecuador's ongoing elections. Investment may rebound in 1979, but only if development expenditures in the petroleum sector are carried out. 11. Real exports of goods are expected to increase by some 9 percent in 1978 and to remain unchanged in 1979 (when non-oil exports are expected to increase by only 4 percent, but petroleum exports are expected to decline).  - 3 - As a result, the country's resource gap has remained at around 2.0 percent of GDP in 1977 and 1978, and could be expected to increase slightly to some 2.6 percent of GDP in 1979. 12. In the medium term, the Ecuadorian economy has modest growth pro- spects. It is unlikely that the external sector will continue to play as strong a growth propelling role as in the past, as it is expected that oil exports are likely to continue their decline and agricultural exports may become affected by adverse world market price movements and limited export opportunities. The prospects of the Ecuadorian economy could be strengthened, however, through timely implementation of improved policies in the petroleum, agriculture and manufacturing sectors. 13. Domestic consumption of petroleum and its products has been growing at 15 percent per annum in the last several years. By 1977, one-third of the country's petroleum output was consumed nationally. Although the growth rate of domestic consumption is expected to decline in the coming years as a result of the decline in overall economic growth, the amount of petroleum available for export would still be reduced, limiting the country's import capacity. Under these circumstances, and unless new petroleum resources are discovered and exploited, the country's import capacity will become a serious constraint to the growth of the economy. Export prospects may improve in the next three years only if Ecuador resumes--as it is now intended--oil exploration, an effort which has slackened in the past few years. The two main economic policies which will have to be implemented here are first, the decision to invest substantially in oil exploration--whether with own resources or by the risk-taking foreign enterprise, and, secondly, the decision to increase domestic prices of petroleum. 14. The agricultural potential of Ecuador is at present largely under- utilized and could be used both as an engine for the medium-term growth and as a means to alleviate social inequities. Ecuador has enough fertile land to expand agricultural and livestock output at a reasonable cost. Its forestry and fisheries potential is also considerable and, while increases in production of crops and livestock should mainly satisfy the domestic demand, produce of forestry and fisheries could be directed to the foreign markets. In partic- ular, the agricultural potential of two important regions of the country-- the Costa and the Oriente--is great. New regional institutions have been created in order to manage the exploitation of these regions. The use of new lands together with the extension of improved techniques of cultivation should slow down the rural exodus, relieve the pressure on urban labor markets, and affect positively the distribution of income. Ecuador will have to make greater efforts to develop this sector and to reverse the rising trend of food imports and the stagnation of its exports. Infrastructure such as feeder roads, flood control, and storage facilities, as well as technical assistance should be significatively strengthened. Administrative inefficiencies con- sisting of often conflicting decisions and frequently changing policies which discourage investors will have to be overcome. As a result, private investment should be encouraged and productivity will be ultimately increased, which would lead to the agricultural sector becoming one of the leading forces in the Ecuadorian development.  - 4 - 15. The industrial sector of Ecuador, representing 17.5 percent of the country's GDP, should help in sustaining moderate growth in the next several years. Ecuadorian industry, predominantly privately owned, has been largely geared to import-substitution in consumer goods, and was operating in a strongly protective environment. This deflected entrepreneurs' interest from transformation of the country's natural resources. Moreover, with the relative prices of capital and labor distorted by the system of investment incentives, production techniques became increasingly capital-intensive. Measures aiming at a change in these policies, which in the past have been largely responsible for discouraging the industrial sector from involvement in activities in which it could have a strong comparative advantage, are now being discussed by the Ecuadorian Government. Their implementation would have an important effect on restructuring the industrial sector and should result in a strong, more efficient and consequently more export-oriented growth. In particular, tariff, price and interest policies would have to be changed in order to strengthen those sectors with more favorable export prospects and to avoid the possibility that inefficient industries be allowed to develop. 16. While the above policies still need to be formulated in concrete terms and implemented, it should be noted that as far as the recent past is concerned, the overall economic management in Ecuador could be generally considered as adequate. The Government has, by and large, resisted the temptation to sink oil revenues into wasteful and grandiose schemes and has, instead, used the proceeds of petroleum exports for more modest, and largely rationally selected investment. It has also fostered a climate conducive to increased private investment which resulted in a notable acceleration of the industrialization process which, while it has not taken an optimal path, has not been seriously inefficient, mainly because it is still in its initial stages. Moreover, the authorities have recently shown courage and determination in fighting inflation through a skillful use of short-term monetary tools. However, with the increasing recognition that future growth may become import-constrained and that the national resource base is in- sufficiently exploited, the Government is now standing at the crossroads. The continuation of the past development path is not advisable, while adoption of a new strategy calls for substantial changes in the policy framework. The situation is additionally complicated by the extension of the electoral process, at the commencement of which it has been decided to postpone major policy decisions until the new Civilian Government is installed. 17. Ecuador remains creditworthy for borrowing on conventional terms considering its growth prospects and relatively modest debt service burden. The Government is aware that further intensive borrowing from private capital markets would result in a deterioration of the country's debt service profile and has taken appropriate measures. The local currency financing built into the present loan is meant to support the country, to the extent possible, in its present efforts to improve its debt structure. The need for such financing arises essentially from debt and balance of payments management considerations rather than from an overall insufficient savings effort; national savings in Ecuador at present represent about 25 percent of GDP, a high figure for a country with a modest per capita income level.  PART II - BANK GROUP OPERATIONS IN ECUADOR 18. Bank group operations in Ecuador date back to 1954, when a loan was made for a first highway project. In all, the Bank and IDA have extended to Ecuador 21 loans and six credits, totalling US$276.7 million net of cancel- lations. As of October 31, 1978, US$147.6 million of this amount had been disbursed. The IFC has made eight loans and investment commitments in Ecuador. Two were for a large textile company, four in a development finance company and one each in a sugar mill and a cement company. These operations have amounted to US$22.4 million in commitments of which IFC now holds US$19.1 million. 19. Execution of Bank Group financed projects has been hampered by weak- nesses in Ecuador's implementation capacity. This, in turn, reflects the insufficiency of the country's public sector managerial and technical re- sources --a constraint that is still a major obstacle to Ecuador's economic and social development. Annex II contains a summary statement of Bank loans, IDA credits and IFC operations as of October 31, 1978, as well as notes on the execution of ongoing projects. 20. Bank and IDA lending in Ecuador was originally concentrated in transportation and power, where there were --and still are-- substantial bottlenecks to be overcome. Most of the nine loans and credits extended for transportation were to improve the country's road network; two loans were, however, made to help finance the expansion of the port of Guayaquil. Lending for power has aimed at improving generation and distribution facili- ties in Quito. The first livestock development loan, approved in FY67, marked the beginning of a diversification in the Bank Group's lending program away from straight infrastructure. Since then, the Bank Group has made seven loans and credits for agriculture and fisheries, three DFC loans to support industrial development, a credit and a loan for education, one loan for water supply and two technical assistance loans. Bank Group involvement in the directly productive and social sectors has grown to the point where it now accounts for about 53 percent of total Bank Group lending. 21. Turning to the future, Bank lending will continue to assist in (i) the creation of a physical and social infrastructure base capable of fostering development; (ii) the expansion of productive capacity in crucial sectors; (iii) the strengthening of agencies to implement projects effectively; and (iv) the improvement of living conditions for the urban and rural poor. In addition to the rural development project which this report recommends, the Bank is preparing industrial credit and petroleum projects, a slum upgrading operation for Guayaquil and a fishing port project. Most of these operations would have important institution building aspects and include sizable technical assistance components. 22. Substantial development financing has also been provided to Ecuador by the Inter-American Development Bank and USAID and, to a lesser extent, by other bilateral sources. A sectoral breakdown of development assistance to Ecuador by the main donors through December 31, 1977 is given in the following table.  -6- IBRD IDA IDB U.S./, Lending 1954-64 54.0 9.1 35.3 62.7 Lending 1965-77 184.0 29.6 423.3 73.0 Transport 61.5 - 65.1 - Power - 7.0 92.7 6.2 Education and Technical Assistance 19.0 5.2 4.1 5.3 Health and Sanitation 23.2 - 90.7 9.5 Agriculture and Fisheries 26.5 17.4 96.3 29.1 Industry 53.8 - 53.8 7.8 Urban Development - - 14.8 - Other - - 5.8 15.1 Total Lending 1954-1977 238.0 38.7 458.6 135.7 /1 Includes official export credits IDB has been, by far, the single largest lender to Ecuador. Most of its loans to the country have come from the Fund for Special Operations and normally carry a two percent interest, a 10 year grace period and repayment terms of up to 40 years. It is likely that IDB will remain Ecuador's major development lender in the immediate future, although the blend of IDB lending may become less concessionary than in the past. While the IDB's future lending program for Ecuador is a varied one, agriculture will account for an increasingly large share of it. USAID has not made any new commitments to Ecuador since 1973. Recently, however, this agency has expressed an interest in renewing its operations in the country, primarily in the agricultural sector. 23. As of December 31, 1977, Ecuador's outstanding public external debt, including undisbursed, amounted to about US$1,750 million. Bank Group lending constituted about 13 percent of this amount and absorbed about 7.8 percent of the country's external debt service. Assuming increased recourse to long-term bilateral and multilateral debt, by 1985 the Bank's share of Ecuador's out- standing public foreign debt could reach 15 percent and its share in debt service would climb to around 12 percent. PART III - THE RURAL SECTOR General Characteristics 24. Notwithstanding the petroleum sector's rapid growth since the early seventies, agriculture remains, in many ways, Ecuador's dominant sector. In 1976 it still accounted for about 20 percent of GDP, was the source of liveli- hood for about one half of the labor force and generated 30 percent of the country's foreign exchange earnings.  - 7 - 25. Wide ranging topographic and climatic conditions divide Ecuador into three distinct agriculturaL regions. The tropical, generally humid and flood prone Costa is where most of the country's agricultural exports--bananas, cocoa and coffee--are grown. Sulgar cane, beef ranching, rice, oil palm and fibers are also concentrated in the Costa. The second of these regions is the densely populated Sierra where temperate climate foodgrains, potatoes, vege- tables and deciduous fruits are grown. Most of Ecuador's dairy farms and sheep herds are also located in the Sierra. The third and most isolated region is the sparsely populated Oriente, the rain forest to the east of the Andes which is part of the Amazon basin. While the Oriente presently contributes little to sectoral output, it is slowly being settled and is known to have considerable potential for beef, rice, oil palm and yucca. 26. Nearly 60 percent of Ecuador's population are rural dwellers, most of whom are poor. In 1977 the estimated per capita income of the rural popula- tion was only about US$300 per annum, less than 40 percent of the national average. Moreover, 2.9 million of the 4.4 million persons living in rural areas in 1977 had per capita incomes below one-third the national average and 1.5 million of these lived in "absolute" poverty with per capita incomes of less than US$60 per annum. 27. Living conditions for most of Ecuador's rural population are pre- carious. Adult literacy is known to be much below the already low national rate of 69 percent and many children in rural areas are, in effect, barred from receiving an education by virtue of the fact that they live at great distances from schools. Of rural dwellings, nearly 90 percent do not have access to public water supplies, electricity or sewerage facilities. Health services in rural areas are generally poor and the relatively few local hospitals and dispensaries are badly equipped and understaffed. Infant mortality has been estimated at 79 per 1,000 births and waterborne infections are widespread and lead to a high incidence of illness and death. Transport in rural areas is a serious problem. Although Ecuador has a relatively good main road system, its feeder road network is deficient. In addition, many of the existing feeder roads become impassable during prolonged periods of rain. These conditions hamper the flow of goods and people into and out of rural areas. Institutional Framework 28. The Ministry of Agriculture and Livestock (MAG) has overall respon- sibility for the planning, programming, and implementation of Ecuador's agriculture/rural development effort. There are a number of autonomous agencies attached to MAG that deal with land reform, irrigation, agricultural research, storage and marketing. Several regional development agencies are also associated with MAG. Extension services offered by MAG were, until recently, organized along specific crop lines. Given the diversity that is typical of farming in Ecuador, however, MAG is in the process of restructur- ing itself in order to be able to provide integrated extension services to individual farmers.  - 8 - 29. Institutional credit to the agricultural sector has grown rapidly in recent years, from about US$66 million in 1971 to about US$500 million in 1977. About 70 percent of this credit is provided by the state-owned National Development Bank (BNF) and the remainder by commercial banks. Despite the rapid expansion of institutional credit for agriculture, only about 10 percent of farmers have access to it. Many other farmers utilize a large but unquantified volume of informal credit available from suppliers or money lenders. 30. Land distribution in Ecuador is skewed. According to the 1974 agricultural census, 54 percent of the country's farms occupied only 2.2 per- cent of the land being cultivated and were less than two hectares in size; roughly 75 percent of these "minifundia" were located in the Sierra. At the other extreme, 2.2 percent of individual holdings occupied nearly half the cultivated land. In an effort to effect change in this land tenure pattern, the National Land Reform and Settlement Agency (IERAC) was set up in 1964. Land distribution was also a central objective of the 1973-77 development plan. To date, the Government has had modest success in implementing its land reform program. Altogether, some 78,300 peasants (about 10 percent of land- holders) have been assigned about 1.5 million ha of land. Nearly 80 percent of the land assigned was, however, in new areas recently opened up to colonization and less than 90,000 ha of privately owned land have been expropriated and redistributed under the land reform. 31. Since its founding in 1959, the National Agricultural Research Institute (INIAP) has evolved into an institution of major importance and has attracted widespread international support. The Bank Group has provided financing for INIAP activities through credits and loans for crop and live- stock projects and through the recent seeds project (Loan 1229-EC) approved in FY76. Years of applied research have permitted INIAP to develop a reasonably good technical basis for providing practical advice on increasing agricultural productivity. In transmitting the results of this research to the farmers, however, progress has not been as good. Therefore, INIAP is increasingly concentrating on the development of lower cost technology packages for low income farmers, and on acquainting farmers with research results via extension services. 32. Created in 1966 as an autonomous unit reporting to MAG, the Ecuadorian Water Resources Agency (INERHI) is responsible for developing irrigated agriculture and ensuring the rational use of water resources. INERHI has developed a substantial capability in civil works design and construction, has brought some 35,000 ha under irrigation, and has projects underway that would benefit another 10,000 ha. Through a credit to help finance the Milagro Irrigation project (Credit 425-EC approved in FY73), the Bank Group has supported INERHI's programs. Performance and Constraints 33. Despite the rural sector's considerable potential and the existence in Ecuador of some modern and efficient agricultural operations -- most of which are export oriented -- the sector's overall performance since the  - 9 - sixties has been sluggish and local production of staple food crops has been trailing behind demographic growth. Since other sectors of the economy have experienced vigorous growth, the difference between rural and urban income levels has been widening as has the gap between the demand for, and the national production of, foodstuff. This has resulted in some food shortages, inflationary pressures and increased food imports. In 1976, for example, Ecuador imported nearly US$150 million in foodstuffs, equivalent to about 14 percent of the total import bill. The overall balance of trade for agri- cultural commodities was sitill heavily in the country's favor, however, as agricultural exports -- led by coffee, bananas and cocoa -- reached about US$500 million in 1976. 34. Ecuador's agricultural potential is large enough to permit a pronounced reversal of the trend described above. The country is endowed with the resources needed for a varied and greater output. There are sizable areas of uncultivated land that could be developed for agriculture and live- stock. About 40 percent of this land is, however, located in the Oriente, which is still largely isolated and uninhabited. Another one-third of the potential new agricultural land is in the Andean highlands where erosion, population pressures and land tenure patterns have, so far, constrained growth possibilities. The remainder is in the Costa, in areas where the best soils suffer from seasonal flooding and insufficient drainage. 35. Although putting new land to agricultural use in Ecuador is diffi- cult, most of the increases in agricultural production in the past have been due to the extension of the cultivated area and not to the wider use of improved techniques which would permit more intensive farming. The sector has operated with largely deficient extension services, credit, storage and marketing facilities, seeds and other inputs. Technological progress -- particularly amongst small farmers -- has been slow and average yields are generally low. Prospect and Strategy 36. The agricultural development strategy set forth in Ecuador's 1973-77 National Development Plan aims at a more efficient exploitation of the country's agricultural potential. In pursuit of this objective, the Government has raised farmgate prices for a number of basic crops, increased the flow of credit into the sector and reduced sales taxes and import duties on intermediate and capital goods used in farming. A Seeds Corporation was formed in 1973 to promote the production of improved seeds and the Govern- ment has allocated an increasing share of its budget to agriculture and rural development. 37. These measures have achieved some success. However, they still require substantial reinforcement. Agricultural planning and execution have been mostly undertaken on a piecemeal basis and policies affecting commodity prices have been uncertain, thus failing to provide adequate assurances to farmers. At the same time price supports have, in some cases, been excessive putting a drain on the budget. Government involvement in the marketing of farm inputs and agricultural products has also been generally unsuccessful.  - 10 - As was mentioned earlier, the physical infrastructure required to get farm produce to markets -- especially feeder roads -- is still limited, and the marketing system neither provides strong incentives to farmers nor facilities for efficient handling and distribution. Finally, despite recent Government efforts, institutional credit to the agricultural sector is still insuffi- cient. Bank Group Lending 38. In order to help overcome some of the constraints mentioned in the preceding paragraphs, Bank Group lending for agriculture has been growing and now includes seven loans and credits totalling US$43.5 million. The bulk of our lending in the sector, four loans and credits for US$31 million, has helped finance credit projects. The first three of these -- Loan 501-EC (approved May 18, 1967), Credit 173-EC (approved September 4, 1969) and Credit 222-EC (approved November 24, 1970) -- have now been fully disbursed and focused on Ecuador's livestock industry. They provided credit and intensive technical assistance to a relatively small group of progressive ranchers. The projects were well-managed and executed. A Project Performance Audit Report issued on October 21, 1975 for the first two credit operations indicates that they achieved their main objectives: to improve productivity in participating ranches and increase national beef production. The fourth and most recent agricultural credit project (Loan 1459-EC approved on June 14, 1977) has a broader thrust than its predecessors. Its aim is not only to continue promoting livestock but also to spur the development of crop farms and small agro-industries. This loan became effective on June 14, 1978 and is experiencing satisfactory progress in its start-up. 39. The Bank Group also extended a US$5.5 million credit (425-EC) in 1973 for an integrated agricultural development project based on irrigation in the Milagro area of the Costa. More than 80 percent of the credit's proceeds were for equipment and vehicles for the construction of irrigation and road infrastructure. These components have progressed well with disbursements on schedule. However, the project's on-farm development component is lagging. A loan to improve seeds (Loan 1229-EC approved on March 30, 1976) and a technical assistance loan (Loan 1230-EC) approved on the same day, round out Bank Group lending for agriculture in Ecuador. The technical assistance project provides financing for the establishment of a rural development planning and preparation group within Ecuador's National Planning Board. It also helped finance pre-investment studies for rural development projects. The proposed operation is the first rural development scheme prepared with funds made available under Loan 1230-EC. PART IV - THE PROJECT 40. The proposed project was prepared by the staff of MAG and INERHI with the assistance of international consultants. As has already been mentioned, financing for the project's preinvestment studies, which were submitted to the Bank in October 1977, was provided under the Bank's  - 11 - technical assistance loan (1230-EC). The project was appraised in November 1977. The appraisal mission's report (2154-EC dated November 28, 1978) entitled "Staff Appraisal Report Tungurahua Rural Development Project" is being distributed separately. Annex III contains a supplementary Project Data Sheet. Negotiations of the loan took place in Washington from November 15 through 22, 1978 and the Ecuadorian delegation was headed by Mr. Benalcazar, Coordinator General of the MAG, and by Mr. Erazo, Ecuador's Attorney General. Representatives of the Central Bank, Ministry of Finance and Planning Board also attended negotiations. The Project Area 41. The project woulcL be carried out in the Province of Tungurahua which is located in the Ecuadorian Andes approximately 140 km south of Quito (see the Map following Annex II]I). Tungurahua is relatively small. Its total area is only about 3,200 kmn and its population is 270,000, two-thirds of whom live in rural areas. The province's only large town is Ambato, the provincial capital. 42. Tungurahua's topography is typical of that found in the Ecuadorian Andes. Its altitude ranges from 2,400 m to over 6,000 m and the province consists of rugged mountains, steep slopes and fertile but narrow valleys. The province's climate is tLemperate and has little seasonal variations. Precipitation is relatively even throughout the year but rainfall varies between about 500 mm and 1,000 mm per annum within the province, depending on altitude and air currents. Precipitation tends to be low at the valley floors. 43. The project area of about 300 km is located just south of Anmbato and is inhabited by about 83,000 people. Population density is high, 277 per km , and most of the 16,000 families living in the project area are poor "minifundistas" farming between less than one and three ha per family. They are engaged in subsistence agriculture and their principal crops at present are potatoes, vegetables and fruits. 44. Infrastructure and support services in the project area are generally deficient. Although the province has a fairly extensive main road network linking it to Quito and Guayaquil, rural roads -- particularly at higher alti- tudes -- are few and poorly maintained; they become practically impassable following heavy rains. Existing irrigation systems supply water to a total net area of 6,700 ha in the project area. Virtually all distribution canals are unlined, however, and supply water irregularly. INERHI has reported that water losses in the distribution system reach 60 percent. Of the 13 villages in the project area, only five have potable water supply systems and only three of these provide hotLse connections. The remaining two systems offer only public standpipes. Other villagers and members of the widely dispersed population draw water from the irrigation canals or springs. Rural electri- fication is also deficient. Only eight of the 13 villages have electricity and only about 80 percent of the persons living in these eight villages have direct electrical connections.  - 12 - 45. As in the case of infrastructure, health and education services within the project area need improvement. Adult illiteracy is estimated at about 30 percent and many children living in the countryside do not attend schools because these are concentrated in or near villages. The health situation is worse. There are only 25 hospital beds in the area (one for every 3,320 inhabitants) and only one doctor per 7,800 persons, one dentist per 23,000 and one auxiliary nurse per 2,700 inhabitants. Health conditions are generally poor with most illnesses resulting from respiratory, skin and parasitic diseases. 46. Extension work has focused mainly on development of the paramo, cold and damp regions in the project area found above 3,000 m. Extension services for the project area as a whole are poor and none are offered to farmers in irrigated areas. Credit is provided principally by the National Development Bank (BNF). Only 10 percent of the farmers in the project area have access to institutional credit, however, and nearly two-thirds of the total credit volume goes to 15 percent of these borrowers. The small farmers in the project area have only limited marketable surpluses and practically no storage facilities. About two-thirds of the area's output is harvested and sold between April and July with 70 percent of this being sold in Ambato, the province's main marketing center. Project Objectives and Description 47. The objective of the proposed project would be to improve living conditions for some 16,000 poor rural families (about 83,000 persons) in Tungurahua province by increasing their incomes through increased productivity and by providing them with an improved infrastructure base and social services. This project would be the first Bank-supported integrated rural development effort in Ecuador. 48. The proposed project would include: (a) rehabilitation and expansion of irrigation systems and on-farm works on 1,800 ha in the Quero-Ladrillos area. This would benefit about 2,300 farm families; (b) on-farm works on 7,800 ha of irrigated land in the Huachi-Pelileo area benefitting about 9,700 farm families; (c) support services, including provision of credit and storage facilities, to improve agricultural production on the above- mentioned irrigated area and on 18,000 ha of rainfed lands in the Quero and Chibuleo areas where an additional 4,000 farm families dwell; (d) construction and improvement of the rural roads and rural electrification networks; (e) provision of social services including potable water, latrines, health facilities and community centers; and  - 13 - (f) consultant services to assist the project unit and to carry out studies for follow-up projects. The project would be carried out over a six year period (1979-85). It would be administered by MAG, through a project executing unit, in accordance with arrangements described in paragraphs 54 through 60. 49. About 20 percent of project expenditures would be for irrigation improvements. In the Quero-Ladrillos area, these works would consist of a water diversion structure, the rehabilitation (including lining) and construction of about 28 kn of main and secondary canals, the installation of six siphons and the improvement of on-farm irrigation works. In the Huachi-Pelileo area, the emphasis would be on improving on-farm irrigation. In both cases, water would be delivered to blocks of approximately 100 ha each. Farmers within these blocks would establish water user directorates which would participate in carrying out on-farm works. 50. Agricultural support services would be the project's single largest component accounting for nearly half of costs. Most of this would be for credit to farmers and farm cooperatives. Medium- and long-term credit would be provided for incremental farm inputs such as seeds and fertilizers, and for on farm investments such as fencing, agricultural equipment, cattle development and tree planting. In addition to credit, extension services would be intensi- fied in the project area and an existing fruit tree and forestry seedling nursery would be expanded. Three farm produce collection centers would also be constructed. Included in this component would be a first phase effort to provide infrastructure and services to the Chibuleos area, the poorest region in the province. This area of 3,000 ha is inhabited by an indigenous popula- tion of about 5,000 people who live in a subsistence economy. 51. Under the project, about 28 km of new feeder roads would be built and about 95 km of existing feeder roads would be improved. The electrical networks of the villages of Quero and Pelileo would also be improved and extended. 52. The social services component would include the installation of 16 potable water supply systems to serve 17,000 beneficiaries. Drinking water would be supplied through public standpipes located in villages and at strategically placed points that would serve the more widely scattered population. It would also provide for the construction of about 7,600 latrines which would benefit about 50,000 persons. Funds would also be earmarked to construct, furnish and equip two new health subcenters and eight new health posts; two existing health posts would be renovated and vehicles would be purchased for the use of lhealth services personnel. Finally, 20 community centers would be provided under the project. 53. Financing would be provided for about 90 man-months of consultants' services at an expected average cost of US$6,450 per month. All consultants would be recruited internationally. Their terms of reference were agreed upon during negotiations. These consultants would be retained, inter alia, to help administer the project and to strengthen extension services. In addition, the project would provide funds to help prepare a possible follow-up project in  - 14 - Tungurahua province and the second phase of the Chibuleo area development discussed above. The Government would prepare terms of reference for these studies and submit them to the Bank for approval not later than 12 months after the proposed Loan Agreement's signing (Section 3.05(b)(iv) of the draft Loan Agreement). Project Implementation 54. The proposed project is a multifaceted one which would require the participation of several ministries and Government agencies as well as local farmers. MAG would have overall responsibility for carrying it out and would establish a Project Unit for this purpose (Section 3.01(b) of the draft Loan Agreement). The Project Unit would be headed by an experienced Director, whose qualifications, terms and conditions of employment would be satisfactory to the Bank (Section 3.02(c) of the draft Loan Agreement). MAG has already identified a qualified person for the Director position and this candidate attended negotiations. The Project Director would be assisted by consultants including specialists in administration and extension services as well as an agricultural engineer and a horticulturist. These consultants, and their terms and conditions of employment, would also be acceptable to the Bank (Section 3.02(a) and (b) of the draft Loan Agreement). Because of their importance to the project's start-up, appointment of the Project Director and of the consultant for administration would be a condition of the loan's effectiveness (Section 6.01(a) and (b) of the draft Loan Agreement). The other consultants would be recruited no later than six months after the signing of the Loan Agreement (Section 3.02(b)(ii) of the draft Loan Agreement). 55. A Coordinating Board -- composed of senior MAG officials, the President of the National Planning Board, the Directors of INERHI and IERAC, the Governor of Tungurahua Province and farmer representatives as well as the Project Unit Director -- would be established to supervise the project's timely execution. The Minister of Agriculture, or his representative, would preside over the Board which would meet at least twice a year to review progress on the basis of semi-annual reports prepared by the Project Unit. An Advisory Board, made up of the regional directors of the various participating agencies along with the Project Director and representatives of the project's beneficiaries, would also be set up to facilitate coordination at the regional level. It would meet at least every three months and would receive quarterly progress reports from the Project Director. Both boards would be established within six months of the signing of the draft Loan Agreement (Section 3.01(c) and Schedule 6, paragraph 3, of the draft Loan Agreement). 56. The Project Unit would be directly responsible for execution of this operation. It would manage and coordinate the sundry activities of the participating agencies and be directly responsible for construction of the project's road, storage facilities and community centers components. It would also hire consultants, organize farmer cooperatives, prepare and implement training programs, handle tree-plant production and the development of the Chibuleo area. The Project Unit would draw up an annual investment plan and budget as well as a summary of projected expenditures. This would be submitted to the Bank at least two months prior to the start of the year in question (Section 3.05(b)(i) of the draft Loan Agreement).  - 15 - 57. MAG would provide the Project Unit's extension staff. In order to ensure that the extension personnel necessary for project activities would be available without affecting MAG's ongoing extension services elsewhere, the project would include t:he training of extension agents as well as the incremental costs of extension personnel. In addition MAG, together with the Project Unit, would prepare a plan for the implementation of the Chibuleo area development component. This plan would be submitted to the Bank not later than six months after the signing of the Loan Agreement (Section 3.05(b)(iii) of the draft Loan Agreement). INERHI would be responsible for the final design and construction of the project's major irrigation works. A condition of disbursement for the Quero-Ladrillos irrigation works would be that the Bank had approved the finaL design for these works (paragraph 4(c) of Schedule I of the draft Loan Agreement). INERHI would also, together with the Project Unit, be responsibLe for the provision of technical assistance in connection with on-farm irrigation works. It would also organize the water user directorates mentioned in paragraph 49 and would operate and maintain the major irrigation network. 58. The Ecuadorian Institute for Sanitary Works (IEOS) would design and construct potable water improvements, latrines and health facilities. Once constructed, local communities, assisted by IEOS, would operate and maintain the potable water systems and latrines. The Ministry of Health would be responsible for staffing and operating the health facilities. 59. The Ambato Power Company would prepare a plan for the rural elec- trification component and would submit it to the Bank for approval not later than one year after the signing of the Loan Agreement (Section 3.05(b)(ii) of the draft Loan Agreement). The company would then be responsible for this component's execution. After the Project Unit has completed the rural roads component, Tungurahua's Provincial Government would look after their maintenance. 60. In order to ensure that the above mentioned agencies would carry out their assigned tasks under the project, MAG would enter into supple- mentary project agreements, acceptable to the Bank, with them. It would, furthermore, be a condition of disbursement for each component that the Bank had approved the relevant supplementary project agreement (Sections 3.01(e) and paragraph 4(b) of Schedule I of the draft Loan Agreement). Cost and Financing 61. The project's total cost, net of taxes and duties, is estimated at US$30 million. Its foreign exchange component is about US$10.9 million, equivalent to 36 percent of project costs. The proposed loan of US$18.0 million would cover 60 percent of project costs, including the entire foreign exchange component and US$7.1 million of local costs (see paragraph 17). The Government would contribuite US$11.0 million; this would cover about 38 percent of project costs. The baLance -- about US$1 million -- would be provided by the project beneficiaries themselves. To ensure that funds would be readily available in a timely manner for project start-up and execution, the Government would establish, by June 30, 1979, a revolving fund in the Central Bank for  - 16 - the use of the Project Unit. It would deposit therein the equivalent of US$500,000 and replenish the fund, as needed, so as to maintain it at that level (Section 3.01(g) of the draft Loan Agreement). On-Lending Arrangements 62. Credit to the ultimate beneficiaries would be made available by both the BNF and private commercial banks. Participating financial inter- mediaries would be responsible for determining the creditworthiness of prospective sub-borrowers and would then be able to rediscount up to 90 percent of subloans made with the Central Bank. The eligibility of subloans for rediscounting through the Central Bank would be determined -- on the basis of the economic, technical and financial soundness of their supporting invest- ment plans -- by the Project Director of the Agricultural Credit Unit within MAG, which was created under previous Bank credit projects (Credits 173-EC and 222-EC and Loans 501-EC and 1459-EC). 63. The subloans would have terms of up to twelve years with grace periods of up to five years. The Ecuadorian Monetary Board would establish the interest rates at which subloans are rediscounted at the Central Bank, and such interest rates would yield a minimum spread of three percent and a maximum spread of six percent to the financial intermediaries. Interest rates to the ultimate beneficiary would be a minimum of 11 percent for small farmers, or cooperatives composed of small farmers, and 14 percent for others. At least 90 percent of the total amount of all subloans would be for small farmers (Schedule 5 of the draft Loan Agreement). 64. The annual interest rates of 11 percent for small farmers -- defined as those having net assets, including land, of less than US$20,000 -- and of 14 percent for other beneficiaries are adequate. Inflation in Ecuador has been dropping from a peak of 23 percent in 1974 to 14.4 percent in 1975, 10.2 percent in 1976 and 12.9 percent in 1977. Inflation in 1978 is estimated to have been 12 percent and it is expected to average 10 percent over the next three years owing to the Government's anti-inflationary policies. On this basis all sub-borrowers would pay positive interest rates. Recovery of Costs 65. Under Ecuador's 1972 Water Law, the beneficiaries of Government financed irrigation projects must pay for the operation and maintenance (O & M) of the irrigation systems and for the cost of these works. INERHI is entrusted with the responsibility of fixing water tariffs which would permit this. During the course of negotiations, assurances were obtained that these water charges will be sufficiently high (i) to cover all 0 & M associated with the project's irrigation component; and (ii) to permit the full recovery of the investment cost of these works. This cost would be periodically adjusted to take account of inflation (Section 4.04 of the draft Loan Agreement). 66. The cost of the tree seedlings would be fully recovered through adequate sales prices (Section 3.07 of the draft Loan Agreement). However, no direct recovery of capital costs is expected on investment incurred for  - 17 - roads, electrification, storage facilities or social infrastructure. Benefi- ciaries would, however, take care of the operation and maintenance of the potable water systems, latrines, community centers and storage facilities through community organizations including the traditional Ecuadorian system of self-help known as the minga. Procurement and DisbursemenLt 67. Most of the project's civil works components -- expected to amount to about US$8 million, excluding contingencies -- would be carried out on the basis of individually negotiated contracts or through MAG and INERHI force account. This procedure is suitable because most of the civil works in ques- tion consist of small jobs scattered throughout the project area, which would not be attractive to foreign contractors. Furthermore, the desirability of using labor intensive construction methods, including self-help organizations and small contractors located near the construction sites, would limit the opportunities for local competitive bidding. In those few cases where indi- vidual jobs would exceed US$150,000, contracts would be awarded on the basis of local competitive bidding, according to local procedures which are accept- able to the Bank, and after the Bank had reviewed the proposed award. 68. Goods and services financed through the project's agricultural credit component, totalling about US$7.9 million excluding contingencies, would be procured through normal commercial channels. Owing to the large number of sub-borrowers and the wide range of items to be financed, interna- tional competitive bidding would be impracticable. An adequate selection of local and internationally manufactured farm inputs and agricultural equipment is available through local distributors who maintain adequate stocks and spare parts. 69. Electrical equipment, expected to cost about US$200,000 would be procured through internationally competitive bidding in accordance with Bank guidelines. Other equipment, vehicles and spare parts needed for project execution and administration -- expected to amount to US$1.3 million, excluding contingencies -- would be procured according to local competitive bidding procedures which are acceptable to the Bank. Because of the sundry nature of these items and their generally small size, international competitive bidding for these would not be practical. 70. Disbursements under the loan are expected to take place over a six- and-one-half-year period beginning in mid 1979 and would be made against: (i) 58 percent of the subloans made to participating farmers; (ii) 54 percent of total expenditures for civil works; (iii) 54 percent of local expenditures for the incremental cost of personnel for project administration and extension work; (iv) 100 percent of foreign expenditures for vehicles and equipment manufactured abroad, 80 percent of expenditures for locally procured imported goods (excluding taxes and duties), or 100 percent of the ex-factory cost of these if they are manufactured locally; and (v) 100 percent of total expendi- tures for consultants' services and overseas training.  - 18 - Economic Justification 71. The proposed project would improve living conditions for an estimated 16,000 poor farm families (approximately 83,000 persons) living in the project area. Well over 90 percent of these persons presently have annual per capita incomes below US$250 and are amongst Ecuador's relative poor. Moreover, 65 percent of them are subsistence farm families with per capita incomes from agriculture at or below US$60 per annum, the "absolute poverty" level in Ecuador. 72. As the result of the credit, extension services and improved irriga- tion facilities which this loan would help finance, the project beneficiaries' agricultural output is expected to increase significantly. Farmers' incomes would rise correspondingly. At full development, an estimated 75 percent of participating farm families would have progressed beyond the present relative poverty level. Most of the remainder of the project's beneficiaries -- the very smallest of the "minifundistas" -- are expected to have augmented their agricultural incomes sufficiently to have crossed over into the present "relative poverty" range, i.e., between US$60 and US$250 per capita a year. 73. Based upon the expected yield increases, the economic rate of return is estimated at 21 percent for the components for which benefits can be quantified (accounting for 74 percent of total project costs). The economic return for investments in (i) the rainfed area would be about 36 percent, (ii) the Huachi-Pelileo irrigated area would be about 14 percent, and (iii) the Quero-Ladrillos irrigated area would be about 13 percent. In addition to the economic benefits referred to already, persons in the project area would also enjoy certain non-quantifiable benefits such as improved feeder roads, rural electrification, storage facilities and potable water facilities. 74. In a national context, the project would contribute to attaining self-sufficiency in fruits, vegetables and milk production. By helping to reduce income disparities between rural and urban areas, it would also tend to reduce migration to urban centers. In addition, given the relatively low investment costs -- US$1,500 per ha and US$1,600 per family in the Quero-Ladrillos irrigated area, and US$500 per ha and US$1,400 per family in the rainfed zone -- the project could be widely replicated. Finally, the project -- the first of several rural development schemes which the Government plans to carry out in Ecuador -- would afford valuable experience to MAG and the other participating institutions, which would be useful in carrying out similar operations elsewhere. Project Risk 75. The project faces the normal risks inherent in agricultural under- takings of this nature. A drop in farmgate prices and the incidence of diseases in the fruits and vegetables to be grown in the project area are, for example, always possible and could have a negative impact on the project's return. On the other hand, the demand for fruits, vegetables and dairy products may well be greater than foreseen and the unquantified economic benefits from improved storage facilities and feeder roads will probably be significant. A major risk facing the project would be the occurrence of organization and management problems, particularly since Ecuador has had little experience with this type of project. In order to minimize this risk and to avoid problems of inter-agency coordination, the project calls for the  - 19 - creation of a Project Executing Unit which would function under the aegis of MAG, but would be assisted and advised by the coordinating and advisory boards referred to in paragraph 55. MAG would also enter into supplementary project agreements with each of the participating entities in which the responsibili- ties of each party would be clearly set forth. Finally, the managerial and technical capacity of the Project Unit would be strengthened by means of 90 man-months of consulting services. PART V - LEGAL INSTRUMENTS AND AUTHORITY 76. The draft Loan Agreement between the Republic of Ecuador and the Bank and the Report of the Committee provided for in Article III, Section 4(iii) of the Articles of Agreement are being distributed to the Executive Directors separately. 77. In addition to the features of the Loan Agreement which are referred to in the text and listed in Section III of Annex III, a special condition of effectiveness of the loan would be the hiring of the project director and of the consultant for administration (paragraph 54). In addition, Bank approval of supplementary project agreements between MAG and each of the participating entities would be a condition of disbursement for expenditures by any of these entities (paragraph 60). Bank approval of the final design of the irrigation works for the Quero-Ladrillos irrigation works would be a condition of disbursement for this component (paragraph 57). 78. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 79. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President Attachments December 6, 1978 Washington, D.C.   ANNEX I TABLE 3A Page 1 of 6 pageS ECUADOR - SOCIAL INDICATORS DATA SHEET REFERENCE GROUPS (ADJUSTED AVERAGES ECUADOR /a LAND AREA (THOUSAND SQ. i(M.) - MOST RECENT ESTIMATE) TOTAL 283.6 SAME SAME NEXT HIGRER AGRICULTURAL 65.2 MDST RECENT GEOGRAPHIC INCOME INCOME 1960 /b 1970 /b ESTIMATE /b REGION /c GROLUP /d GROUP Ie GNP PER CAPITA (US$) ., 360.0 770.0 1066.7 867.2 1796.4 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 201.0 297.0 442.0 911.1 578.3 1525.0 POPULATION AND VITAL STATISTICS TOTAL POPULATION, MID-YEAR (MILLIONS) 4.2 5.9 7.6 URBAN POPULATION (PERCENT OF TOTAL) 36.0 /f.a 38.3 41.6 57.9 46.2 52.2 POPULATION DENSITY PER SQ. KM. 15.'0 21.0 27.0 25.6 50.8 27.6 PER SQ. KM. AGRICULTURAL LAND 89.0 99.0 117.0 77.6 93.3 116.4 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 45.0 /f.s 47.6 /f 44.5 If 42.0 42.9 34.8 15-64 YRS. 51.8 /f.R 49.5 /f 51.7 /f 52.2 53.5 56.0 65 YRS. AND ABOVE 3.2 Lf.R 2.9 /f 3.8 /f 3.7 3.5 5.7 POPULATION GROWTH RATE (PERCENT) TOTAL 3.0 3.5 3.6 2.7 2.5 1.6 URBAN 5.0 !h 4.1 /i 5.6 4.3 4.7 3.4 CRUDE BIRTH RATE (PER THOUSAND) 46.3 45.0 41.8 35.8 37.8 27.0 CRUDE DEATH RATE (PER THOUSAND) 16.9 12.0 9.5 9.1 10.8 9.9 GROSS REPRODUCTION RATE .. 3.3 3.1 2.6 2.5 1.9 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. 9.0 34.8 USERS (PERCENT OF HARRIED WOMEN) .. .. 6.3 15.1 20.0 19.3 FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1970-l1Q) 88.9 100.0 95.1 102.1 107.3 103.8 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 81.,0 91.0 93.0 103.9 105.3 110.4 PROTEINS (GRAMS PER DAY) 46.0 49.0 47.4 60.3 63.0 77.7 OF WHICH ANIMAL AND PULSE 24 ,0 22.0 21.9 26.7 21.7 22.2 CHILD (AGES 1-4) MORTALITY RATE 21.5 14.6 .. 8.7 8.0 1.9 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 51.0 57.2 59.6 62.6 57.2 63.0 INFANT MORTALITY RATE (PER THOUSAND) 100.0 76.6 70.2 56.9 53.9 38.2 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TQTAL .. 34.0 36.0 60.7 56.8 67.7 URBAN .. 76.0 67.0 78.0 79.0 83.5 RURAL .. 7.0 8.0 34.9 31.8 41.5 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. .. .. 61.1 30.9 70.3 URBAN .. .. .. 80.3 45.4 90.7 RURAL .. .. 7.0 25.4 16.1 38.3 POPULATION PER PHYSICIAN .. 2870.0 2110.0 1899.3 2706.8 1310.8 POPULATION PER NURSING PERSON .. 2640.0 2820.0 /i 1220.1 1462.0 849.2 POPULATION PER HOSPITAL RED TOTAL 520.0 /g,k 430.0 470.0 422.3 493.9 275.4 URBAN .. 190.0 .. 258.2 229.6 129.9 RURAL .. 4740.0 .. 2281.6 2947.9 965.9 ADMISSIONS PER HOSPITAL BED .. 17.0 .. 25.6 22.1 18.9 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL 5.1 5.2 .. 5.2 5.2 3.9 URBAN .. .. .. .. 5.0 RURAL .. .. .. .. 5.4 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL 2!.5 / .. Z2.0 2.0 0.9 URBAN 2.1 Ia . * 2.1 1.5 0.8 RURAL 2.8 1 .. .. 2.7 2.7 1.0 ACCESS TO ELECTRICITY (PERCENT OF DWELLLNGS) TOTAL 32.0 /g 41.0 51.2 64.1 59.2 URBAN 73. .. .. 77.3 67.3 78.0 RURAL 5.0 /g . L2.0 12.8 34.1 12.5  ANNEX I TARItE 3A Page 2 of 6 pages _ CvADOR - SOCIAL IN'DICATORS DATA SHEET REFERENCE GaOUPS (ADJUSTFD AVERAGES IUADOR Ia - M4OST RECENT ESTIMATE) SAME SAME SilT HIGHER MOST RECENT GEOCRAPHIC INCOME INCOME 1960 Lb 1970 /b ESTLtATE /b REGION Ic GROUP /d GROUP /e EDUCATION ADJUSrED ENROLLMENT RATIOS PRIMARY: TOTAL 83.0 97.0 102.0 103.5 99.8 97.6 FEMALE 79.0 95.C 100.0 102.9 93.3 87.4 SECONDARY: -OTAL 12.0 26.0 38.0 37.2 33.8 47.8 FEK'ALE 10.0 24.0 36.0 37.9 29.8 42.6 VOCATIONAL (PERCENT OF SECONDARY) 29.0 29.0 23.0 14.7 12.8 22.7 POIL-TLXCHER RATIO PRIMARY 39.0 38.0 39.0 32.8 34.9 25.4 SECOSDARY 11.0 15.0 16.0 17.8 22.2 24.9 ADULT LITERACY RATE (PERCENT) .. 68.0 69.0 L[ 74.9 71.8 96.3 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 2.0 5.0 5.0 26.9 12.4 32.3 LADIO RECEIVERS PER THOUSAND POPULATION 41.0 279.0 .. 173.5 104.5 201.9 TV RECEIVERS PER THOUSAND POPULATION 0.5 25.0 36.0 69.4 28.1 97.7 NEWSPAPER ("DAILY GENERVAL INTEREST") CIRCSLATION PER TEOUSAND POPULATION 54.0 41.0 41.0 72.8 45.2 70.9 CIN