Dominican Republic - Second Road Maintenance and Reconstruction Project

Document of FILE COPY The World Baiik FOR OFFICIAL USE ONLY Report No. P-2643-DO REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE DOMINICAN REPUBLIC FOR A SECOND ROAD MAINTENANCE AND RECONSTRUCTION PROJECT November 29, 1979 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.  DOMINICAN REPUBLIC SECOND ROAD MAINTENANCE AND RECONSTRUCTION PROJEC.T Currency Equivalents Currency Unit = Peso (RD$) US$1.00 = RD$1.00 RD$1 million 1 US$1 million System of Weights and Measures Metric British/US EquivaLeat: 1 meter (m) = 3.28 feet (ft) 1 kilometer (km) = 0.62 mile (mi) 1 square meter (sq m) = 0.386 square mile (sq mi) metric ton (m ton) = 1.1 US short ton (sh ton) Fiscal Year Abbreviations ONAPLAN National Ptl;iaing Office CEA State Sugar Council SEOPC Secretariat of Public Works and Communications DGC General Directorate of Highways DGCV General Directorate of Rural Roads DGPP General Directorate of Planning and Programing DGT Directorate of Transpo-rtation ERR Economic Rate of Return PTU Production Training Unit IDB Inter-American Development Bank UNDP United Nations Development Program USAID United States Agency for Iitecriational Development Fiscal Year January 1 to December 31  FOR OFFICIAI USE ONLY DOMINICAN REPUBLIC SECOND ROAD MAINTENANCE AND RECONSTRUCTION PROJECT Loan and Project Summary Borrower: The Dominican Republic Amount: US$35 million Terms: Seventeen years including four years grace and a 7.95 percent per annum interest rate. Description: The project would (a) pursue the strengthening and expan- sion of maintenance capacity undertaken under a ifirst project; (b) initiate a high priority reconstruction program for primary and secondary roads with 150 km of road reconstruction and the completion of final design studies of an additional 300 km of road reconstruction; (c) demonstrate the application of labor based techniques with the construction and improvement of 200 km of rural access roads; (d) upgrade SEOPC maintenance personnel through training; and (e) strengthen SEOPC's planning and programming capacity through the establishment of a special unit entrusted with that task. The project's major risk is the limited maintenance and reconstruction capability of SEOPC, which could be strained by t:he urgent reconstruction requirements resulting from the recent hurricanes. The rural roads program has a somewhat higher level of risk than other project components because of its experimental nature. This document has a restricted distribution and may be used by recipients only in the perforac of their official duties. Its contents may not otherwise be disclosed without World Bank authozon.  - ii - Estimated Costs: Local Foreign Total -----(US$ Million)----- Road Reconstruction 8.4 15.7 24.1 Road Maintenance 0.7 10.6 11.3 Training Program 0.7 0.4 1.1 Rural Road Program 1.5 2.3 3.8 Base Cost 11.3 29.0 40.3 Physical Contingencies 0.9 1.7 2.6 Price Contingencies 1.8 4.3 6.1 Total Project Cost 14.0 35.0 49.0 Financing Plan: US$ Million Percentage Equivalent Distribution IBRD 35.0 71.0 Government 14.0 29.0 Total 49.0 100.0 Estimated ---US$ Million Equivalent--- Disbursements: Bank FY 1981 1982 1983 1984 Annual 11.6 17.0 6.3 0.1 Cumulative 11.6 28.6 34.9 35.0 Economic Rate 50 percent for total project, including 23 percent for of Return: road reconstruction, 100 percent for road maintenance, and 27 percent for Rural Road Program. Staff Appraisal Report: Report No. 2698b-DO, dated November 27, 1979.  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE IBRD TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE DOMINICAN REPUBLIC FOR A SECOND ROAD MAINTENANCE AND RECONSTRUCTION PROJECT 1. I submit the following report and recommendation on a proposed loan to the Dominican Republic for the equivalent of US$35 million to help finance a Second Road Maintenance and Reconstruction Project. The loan would have a term of 17 years, including 4 years of grace, with interest at 7.95 percent per annum. PART I - THE ECONOMY 2. The last economic report "Current Economic Memorandum on the Dominican Republic," (Report No. 2492-DO) was distributed to the Executive Directors on May 11, 1979. Relevant social and economic data are presented in Annex I. This section describes economic developments prior to the onslaught of hurri- canes David and Frederick in August/September 1979 and then assesses the impact of the hurricanes on the economy. 3. During 1968-74, the Dominican economy experienced an unprecedented average annual increase in GDP of 10.5 percent. In 1974-1977, however, economic growth slowed to only 5.3 percent per year. In 1978, preliminary estimates indicate a further decline to 3.6 percent, while in 1979 ilt may be negative because of the hurricanes. 4. Economic growth during 1968-74 was led by exports of sugar and minerals, by tourism and by a high level of both private and public investment. During that period, the Dominican Republic was able to increase subsitantially the volume of sugar exports, start the exploitation of ferronickel deposits, undertake vigorous industrial expansion (mostly in import substitution indus- tries), and establish itself in the Caribbean tourism market. The main reasons for slower growth in recent years were poor agricultural performance, partly as a result of droughts in 1975 and 1977, increase in petroleum prices since 1974, the drop in sugar prices after 1975, and--more recently--the depressed world market for ferronickel and bauxite. Manufacturing, oriented mainly to the domestic market and heavily dependent on imported intermediate and capital goods, had been particularly affected by the slow growth of the economy and by shortages of electricity. Industrial expansion during 1975-78 averaged 4.7 percent per year, compared with the 1968-74 average rate of 13.7 percent. 5. The country's balance of payments, like that of most energy import- ing, primary products exporting countries, deteriorated in the latter part of this decade. In 1974 the cost of petroleum imports increased by over US$100 million and was largely responsible for the deficit in the balance of payments  - 2 - in that year. Steep increases in the price of sugar created a surplus in 1975; but since then, sugar prices have fallen drastically, the demand for ferronickel and bauxite has been weak, and the production of coffee and cocoa stagnated, with the result that the deficit on current account has widened. The balance of payments has also become sensitive to flows of capital from private sources, which in turn reflect the perception abroad of factors affect- ing risk and uncertainty in the Dominican economy. Because of a de facto dual exchange rate system and the openness of the economy, the weakness in the balance of payments is partly reflected in a 20 percent premium at which the U.S. dollar trades in the parallel market. There was an unprecedented overall balance-of-payments deficit of US$95 million in 1978 reflecting an estimated increase in the current account deficit from US$264 million in 1977 to US$377 million in 1978 due to a continued decline in sugar prices, a drop in coffee and cocoa prices, a substantial reduction of the volume of coffee and ferronickel exports and a decline in net capital inflows. Because of the massive increase in petroleum prices, the current account deficit in 1979 was expected to reach US$480 million before the hurricanes. 6. Inflation, which was minimal during the 1960s, accelerated in the 1970s. The average annual increase in the Santo Domingo consumer price index during 1971-77 amounted to 11.8 percent. This same index indicates a reduction in the rate of inflation during 1978 to 3.5 percent reflecting a fall in food prices following drought recovery and stable housing costs. These categories account for almost two thirds of the weight in the index, and had been the sources of upward pressure on prices during most of the decade. Recent increases in gasoline prices, electricity rates, and wages, will likely generate more upward pressure on prices during 1979. 7. Past fiscal policy was cautious. In 1968-77, current budget surpluses averaged 6 percent of GDP (varying between 3 percent in 1968 and 10 percent in 1975) and financed, on average, 98.5 percent of the Central Government's capital expenditures. Although the Government's long-term savings performance was impressive, it was achieved at the expense of extremely low growth of current expenditures, especially wages and salaries. During 1968-77, the average annual growth of recurrent expenditures was about 1.6 percent in real terms, and average real salaries of government employees dropped considerably. This austerity limited the Government's ability to operate and maintain the country's economic and social infrastructure as well as to attract and retain capable personnel in government service. 8. In 1978, the fiscal situation deteriorated, with an overall Central Government deficit estimated at RD$114.5 million, mainly as a result of a lower current surplus of RD$175 million, compared with RD$278.4 million in 1977. The reduction in the current surplus was attributable to wage increases granted to public employees, to a reduction of about RD$40 million in revenues due to lower value of sugar exports, the temporary suspension of export taxes on cocoa and coffee, and subsequent reduction by 50 percent of export taxes on coffee.  - 3 - 9. The Government which took office in August 1978 proposes to adopt measures to strengthen the balance of payments and public sector finances, stimulate export growth and eliminate price distortions unfavorable to agri- culture and employment creation. Although a comprehensive package of economic measures has not yet reached the stage of implementation, it is clear that the Government has recognized the need for appropriate adjustments in policy. It has resisted pressure to launch an ad hoc public works program to palliate the country's acute unemployment problem. The congress has recently approved legislation - the Export Promotion Law - providing tax incentives to exports and allowing those engaged in non-traditional export activities to sell their foreign exchange earnings in the parallel market, which normally trades at a premium over the official exchange rate. The Congress is also considering legislation providing special incentives for agro-industry. In addi-tion, the Government is seeking to strengthen the fiscal situation by channelling the plethora of earmarked taxes and special funds, which formerly put a large part of public sector resources beyond the allocation decisions of the annual budget, into a single consolidated fund and by improved administration of income taxes and customs duties. Taxes on liquor and cigarettes were increased earlier this year, while the tax on gasoline was increased when the prices on pet:roleum products were adjusted to reflect the rise on crude oil prices toward the end of June. It is expected that draft legislation, including value added and sales taxes, and modifications in the real estate tax will shortly be put before Congress. Also, measures are being taken to strengthen the autonomous agencies such as the electricity company, for which an increase in rates was recently approved, and the sugar corporation, which was relieved of the burden of a cross subsidy to the electricity company. The Government's abi.lity to secure approval by Congress of draft legislation will be critical to its success in improving public sector finances. Its willingness to apply the export promotion law in a flexible manner, and to adopt an appropriate monetary program - as soon as the hurricane emergency permits - will be critical to its efforts to diversify exports and strengthen the balance-of-payments. 10. Creditworthiness has recently become of some concern. The large balance-of-payments' deficit in 1978 resulted in the depletion of the country's already low net reserves. The level of gross reserves fell to less than the equivalent of two months of imports, and the prospect is for further reserve loss in 1979. Arrears in current payments, a periodic phenomenon in the Dominican Republic, are increasing once more. While the Administraltion is aware of these problems, its ability to implement appropriate corrective measures has suffered from legislative delays. These considerations adversely affect the country's ability to obtain financing from commercial sources even * though the level of public external debt in relation to GDP - 15.3 percent at the end of 1978 and the ratio of public external debt service to exports - 10.2 percent in 1978 are not high in comparison to other developing countries. The impact of the hurricanes (discussed in detail below) will add only one-half percentage point to the debt service ratio which was expected to rise to 18 percent in 1979 because of bunched repayment obligations, before declining to 15 percent in 1980. The country's future borrowing requirements wi:Ll be quite large, and will necessitate both concessionary and non-official funis. The  - 4 - Government has indicated that it will implement the needed economic measures while addressing the country's social problems. Because of limited export prospects, the recent petroleum price increase, and the additional economic constraints resulting from hurricane damages, there will obviously be diffi- culties in harnomizing these goals. As we continue the dialogue on economic policy, we will be monitoring closely the Government's response to the challenges it faces. We consider that the Dominican Republic will continue to be creditworthy for Bank lending provided the Government expeditiously imple- ments policy measures which have been approved by its Congress and others which it is now preparing. Economic Impact of the Hurricanes 11. On August 31, Hurricane David, with winds of 150 miles per hour, smashed into the southern coast just west of Santo Domingo and crossed the western section of the country to Monte Cristi, on the north coast just east of the border with Haiti. On September 2, Frederick followed the same path bringing less wind but deluging most of the country with torrential rains for four days and causing extensive flooding of low lying plains and in the fertile Cibao Valley, and landslides in many areas. 12. The death toll has been set at over 2,000, with the majority of deaths being attributed to drowning. Greater loss of life was avoided by moving people prior to the hurricanes from squatter settlements in low lying areas into schools, churches and public buildings offering more substantial shelter. An estimated 100,000 people are now living precariously in refugee centers. Over one million people were still receiving emergency assistance in October. 13. Damage to property has been extensive. Some 2,400 km of roadway and 58 bridges were destroyed. In the power sector, one hydroelectric station was destroyed, generating facilities were flooded at two other dams, while severe damage was done to the transmission and distribution network in the southwest. In the industrial sector, damages include the de-roofing of the majority of factories in the Haina industrial area and the de-roofing of a large part of the Herrera industrial estate in Santo Domingo. Damage to housing is partially reflected in the total destruction of about 20,000 units. 14. The economic impact of the disaster derives in part from the direct loss of current production due to the destruction of crops and livestock, the damage to goods in warehouses, and the interruption of services, largely in the public utilities distribution and transportation sectors. In addition, there will be an impact on future production due to impairment of productive capacity, which will take time to be restored. This is likely to be signif- icant in the case of permanent tree crops and forests, livestock, and elec- tricity. The latter suffered a loss of one fifth of its generation capacity. 15. Current estimates suggest a production loss of some RD$350-400 million in 1979, which will have the effect of converting an expected 4 to 5 percent positive growth of GDP into a decline of about 3 percent. While there should be a substantial recovery in 1980, production losses in 1980 attributable to the hurricanes could be as much as RD$130 million (in 1979 prices), equivalent to 2 percent of GDP.  - 5 - 16. Economic growth is very likely to be reduced over the medium term, not only because the repair of damage to assets will take time, but also because the cost of repair and replacement will require the diversion of investment from uses which would have created a net addition to productive capacity. The degree of investment diversion will depend on the extent to which additional foreign resources become available. 17. The balance of payments was further weakened by the hurricanes. Coffee suffered extensive damage to the current crop with losses estimated at 25-30 percent and of about US$40 million in export earnings. In sugar, the production loss has been put at around 125,000 tons valued at US$30 imillion. Cocoa export earnings could be down by US$20 million. Earnings from non- traditional exports will be reduced due to damage to factories and infra- structure. 18. The full impact of these losses will not fall in 1979, since not all lost production would have been exported before December 31. It has been estimated that in 1979, exports of goods and services will be reduced by some US$35 million. An increase in imports will be required to compensate food production losses, damage to inventories of intermediate goods, and to buildings and equipment. The goods and non-factor services account is expected to deteriorate by about US$60 million, but the deterioration could be larger if reconstruction efforts gain momentum. For 1980, an increase in tlne goods and non-factor services deficit of the order of US$120 million can be expected because of hurricane damages. 19. Assuming a substantial recovery of exports, additional transfers and heavy disbursement of special reconstruction loans, the overall balance of payments for 1980 could improve over former expectations. The $119 million gap, however, would not be sustainable without additional financing, since by then gross reserves may be approaching depletion. The authorities are consider- ing an expansion of the list of imports not elegible for official foreign exchange to dampen import demand. Nevertheless, additional financing will be needed and is expected mainly from commercial and bilateral sources. This clearly indicates the need for fundamental adjustments to balance-of-payment weaknesses that were already evident before the hurricanes and that have now been further aggravated. 20. As a result of the loss in production, especially in coffee and cocoa, and also the likely change in trade level and structure, current revenues in 1979 are expected to decline by some RD$25 million, or 4 percent of budgeted collections. The fiscal situation is expected to be tight; pre-hurricane projections pointed to a decline in the current fiscal savings of the Central Government, from RD$175 million in 1978 to RD$59 million in 1979, and a concurrent increase in the overall deficit from RD$115 million to RD$188 million. In addition to already programmed capital expenditures, emergency expenditure requirements by the Government of about RD$110 million have been identified, some of which will have to be met in 1979.  - 6 - 21. Physical asset damage has been estimated at around RD$400-500 million. Some assets are covered by insurance, and a substantial part of reconstruction will be left to private initiative. The Government's reconstruction program addresses programs of an emergency nature, while the revised three-year public investment program would address longer-term reconstruction needs. 22. The emergency reconstruction program is expected to be carried out during 1979 (40 percent) and completed in 1980. Total costs are estimated at RD$230 million. In agriculture, the program would emphasize the recovery of production of local food crops, which includes soil preparation, fertilizer application, and provision of seeds, and the repair of irrigation systems. Another priority is the immediate rehabilitation of coffee, cacao, and plantain production. 23. In the transport sector, priority will be given to the rehabilitation of the road system whose deterioration has been of concern for some time and to port repairs in Boca Chica, Haina, Santo Domingo, Barahona and Azua. Among highways, highest priority has been assigned to the reconstruction of Azua-Barahona, Cruz de Guayacanes-Santiago de la Cruz, Sanchez, and Duarte. The first two comprise the Emergency Road Project. The reconstruction of Sanchez and Duarte, which require minor repairs, is being undertaken with local funds. Some 2,000 Km of rural road reconstruction will be carried out with financing from the Inter-American Development Bank (IDB). 24. Repairs to the power generation and distribution system began immediately after the hurricanes. There has been substantial restoration of supply on an emergency basis, but the rehabilitation of the transmission and distribution network would need to be included in the government's longer-term programs. Repair of hydroelectric facilities at Valdesia, Tabera and Jimenoa are expected to be accomplished within 5 months for the first two facilities, while Jimenoa will require 30 months. 25. The reconstruction program in housing is expected to cost some RD$30 million. The first phase of the program would provide temporary tent shelters to about 6,000 families, while its major emphasis would be to provide low cost lots on publicly owned lands. Construction of low cost housing, taking into account changed settlement patterns and geographical distribution of the population, would be part of a longer term program. 26. As regards industry, the Central Bank has created a special fund of RD$50 million to finance replacement of inventories and other working capital requirements. 27. Expected assistance from bilateral and multilateral sources is listed below. These figures indicate programmed operations that have been advanced, as well as net increases in lending programs.  -7- Multilateral IDB: US$100 million IBRD: US$50 million Bilateral Federal Republic of Germany: DM 20 million = US$11 million Venezuela: US$40 million U.S.A.I.D.: US$15 million 28. The above does not fully reflect the assistance that will be avail- able for reconstruction. The IMF has recently approved a US$66 million operation for emergency assistance. Of the multilateral and bilateral sources of external finance, only the IMF's facilities, and $20 million from Venezuela would be disbursed by the end of 1979. About $40 million of IDB loans, and the proposed $25 million Bank loan to finance urgent import requirements would be quick disbursing and are expected to be drawn down during the first half of 1980. The Dominican Republic may benefit from a provision of $1-1/3 million allocation which was approved by the EEC for assistance to countries which have been hit by Hurricane David. Also excluded were emergency contributions to provide food, clothing and medicines. PART II - BANK OPERATIONS IN THE DOMINICAN REPUBLIC 29. The Bank Group began operations in the Dominican Republic in 1969. Except for an enclave mining project, lending to the Dominican Republic was on IDA terms prior to FY1975. Since then lending has been on Bank terms, including two Third Window operations. Two loans, for a tourism infrastruc- ture project and a second education project, were approved in FY1975 and two loans, both on Third Window terms, for highway rehabilitation and maintenance and population and family health, were approved in FY1977. Two loans, for irrigation (Nizao Irrigation Project) and tourism (Second Puerto Plata Tourism Project), were approved in FY1979, and a sugar rehabilitation project was approved in the first quarter of FY1980. Total Bank loans and IDA credits outstanding amount to US$135.1 million, of which US$88.7 million are undis- bursed. Annex II contains a summary statement of Bank Group loans and credits as of October 31, 1979 and notes on the progress of ongoing projects. 30. IFC has financed two operations in the Dominican Republic, an investment in a cement plant approved in 1974, and a line of credit for small and medium scale industry approved in 1978. Other projects are under consideration by IFC. 31. In the absence of adequate project preparation and of clear invest- ment priorities, the Dominican Republic has failed in the past to make full use of official long-term external assistance. Total lending of this type amounted to US$335 million during 1970-77. The present Government has approved a three year public investment program which should make it possible to increase  - 8 - tne contribution of external development agencies to the financing of develop- mlent. Assistance from IDB has included agriculture (credit programs and irrigation); power (two multipurpose hydroelectric projects and rural electrifi- cation); water supply and sewerage; and education. U.S. long-term assistance consisted mainly of food (PL480) and loans for agriculture, health, and education. Assistance from IDB for the next three years is expected to include agriculture (with a major emphasis on agrarian settlement programs and credit), education, potable water, irrigation and power. AI) assistance would concen- trate on agricultural credit, integrated rural development and rural road maintenance. 32. Bank Group lending to the Dominican Republic has aimed at strengtll- ening the balance of payments; improving social services available to the lower income groups, particularly in rural areas; improving agricultural pro- duction and land distribution; and strengthening institutions responsible for major economic sectors. We have, in the aftermath of hurricanes David and Frederick, reviewed Bank lending operations in the light of urgent reconstruc- tion requirements. A reconstruction package consisting of am emergency road reconstruction project and a proposed loan to finance urgent import requirements have been submitted to the Executive Directors. This Second Road Maintenance and Reconstruction Project is part of the Government's long-term highway rehabilitation program. It remains of high priority. Other projects under consideration are an industrial credit operation, a coffee and cocoa rehabilita- tion program and a low income housing project with emphasis on the provision of sites and services. 33. The Bank Group's share in the D)ominican Republic's external public debt outstanding and disbursed was estimated at 5.5 percent at the end of 1978. Tthe Bank Group's share of external public debt service in 1978 was 5 percent. Its share of outstanding public external debt would rise to about 12 by 1985, while its share of external public debt service would increase to about 6 percent. PART III - THE TRANSPORT SECTOR AND THE HIGHWAY SUB-SECTOR The Transport Sector 3/4. The Dominican Republic relies for its transportation upon an exten- sive road network, nine international ports, two operating international airports and nine domestic airports, a publicly owned-railway line and several private lines. International freight traffic is concentrated in the Santo Domingo and Haina ports in the South, and Puerto Plata in the North, whiclh handle almost 60 percent of all imports and exports excluding petroleum. Hlaina port handles most of the country's petroleum imports of about 1.7 million tons. International air traffic, which expanded rapidly since 1970, is almost exclu- sively handled at Santo Domingo international airport. Minor tourism traffic aind some cargo for export is handled at La Romana international airport. A new airport is being constructed in the tourist area of Puerto Plata. Inter- national road traffic between Haiti and the Dominican Republic is negligible.  - 9 - 35. Because of the small size of the country, the location of its resources and its economnic structure, internal transport distances are short. The main exports--sugar and minerals--normally require hauls of less than 100 km. Average hauling distances do not exceed 125 km. This has made highway transport the most widely used mode, accounting for almost 99 percent of total domestic transport of goods (excluding sugarcane and sugar products') and passengers. The railway network, which encompasses about 1,600 km, provides freight transport for sugarcane and sugar products. 36. The transport system in the country is broadly adequate, and although the road network is not dense, it provides access to all major producing areas. However, with a decline of transport sector investments in recent years, and inadequate funding for operations and maintenance of physical facilities, thle present condition of the system is poor. This has been exacerbated by hurri- cane damages, which have rendered acute the need for road rehabilitation, in particular. Planning and Coordination 37. Investment decisions for public transport expenditures are made by the Office of the Presidency in its National Planning Office (ONAPLUN). ONAPLAN is responsible for sectoral planning, taking into account the plans prepared by the relevant agencies. The Secretariat of Public Works (SEOPC), which is responsible for the transport system, has in the past lacked adequate capa- bility to conduct sector planning and coordination. It has therefore had to seek the assistance of foreign consultants. In 1973, a Highway Rehabilitation and Administration Study (under UNDP financing) was prepared with the Bank acting as executing agency. In 1978, a Technical-Economic Transport Sector Study (TSS) was prepared with IDB assistance. These studies, particularly the second, contained a survey of the sector and identified high priority studies needed to provide a basis for adequate planning. Implementation of the recommendations of these studies has been curtailed by lack of adequate institutional arrangements, informality of the project selection process, absence of statistics and systematized data collection for transport: planning, and, until recently, failure to include economic feasibility considerations in the formulation of investment programs. Furthermore, the capacity of SEOPC to carry out these tasks has been limited by its inability to attract and retain qualified staff, caused, in part, by the low salaries paid. More recently, SEOPC has forMnulated a program to reorganize and strengthen its administrative and planning capabilities. In this context, it has negotiated with IDB a two year technical assistance program. 38. The transport sector does not present major issues of intermodal coordination and planning, and the lack of overall sectoral planning has not resulted in any major misallocation of resources. For the future, Lhe attitude of the present administration, which recognized the problem and intends to begin implementation of a modern personnel administration system and to strengthen planning--particularly in the highway mode--is a positive development. The establislhment by SEOPC of a Road Reconstruction Planning Unit and the formula- tion of the road rehabilitation and maintenance programs, both integral parts of this project, would provide the basis for the improvement of planning in the highway mode, which at this time constitutes an urgent need, in view of  - 10 - SEOPC's ambitious public investment program and the tight fiscal situation. SEOPC's capacity would be supplemented by a Special Construction Management Unit responsible for the execution of civil works under the Emergency Road Reconstruction Project. Recent Sector Improvements and Developments 39. The administration which took office in August 1978 is in the pro- cess of formulating its goals for the sector. The TSS is obviously the strongest background document for Government followup. From its recommenda- tions for studies, policies and preliminary project investment identification, the Government is selecting a few for early implementation. The vehicle axle load and dimension regulations and the administrative reorganization of SEOPC are the most important. Among the investments identified, the countrywide list of road rehabilitation priorities is being used as a base for the Government's 1980-1984 five-year reconstruction program. In the port subsector, the recom- mendations for the construction of a new port at Haina and expansion works at Puerto Plata are also being followed. 40. A public sector investment plan for 1980-1982 has recently been approved. It contains recommendations for transport project investments, with a total cost estimated at $362 million, including highway reconstruction, strengthening of maintenance capacity and improvement of the feeder road network; continuation of the Haina Port construction and expansion (breakwater) of the Puerto Plata Port; and purchase of aircraft for the Dominican flag carrier (Dominicana de Aviacion). This investment plan is now under revision to include urgent investments needed for hurricane reconstruction. In addition to the 150 km of emergency road reconstruction included in the Emergency Road Reconstruction Project, other urgent investments for roads, bridges and rural road would be included. The proposed project constitutes the starting point for the implementation of a first phase of the Road Reconstruction and Mainte- nance Program proposed in the plan. The Highway Subsector 41. The basic road network consists of three trunk highways radiating from Santo Domingo: the Duarte Highway to the north (263 km), the Sanchez Highway to the west (193 km) and the Mella Highway to the east (75 km). The size of the national system is adequate for the present level of economic activity, and construction of additional highways is therefore not of high priority. However, the condition of the network is not satisfactory. Some 2,000 km or 45 percent of the paved roads have reached a degree of obsolescence and deteriorated to the point where preventive maintenance is no longer mea- ningful. Such roads need reconstruction/rehabilitation on the basis of full engineering studies and modern pavement design. This situation has been exacerbated by damages to the road network caused by Hurricanes David and Frederick, particularly in the northwest and south. Emergency road recon- struction is essential to the transport of produce to urban areas for domestic consumption and for export. 42. The need to improve road maintenance has been recognized as one of the major requirements in the highway subsector. The present administra- tion declared this to be one of its high priority objectives. The Bank has  - 11 - supported since 1977 (Loan 1316T-DO) the initation of a highway maintenance program. As a result, the level of road maintenance has increased markedly while institutional improvements have been achieved. The maintenance of the network is now under the responsibility of a new Sub-Directorate of Maintenance created within SEOPC as a result of the technical assistance provided under the First Road Maintenance and Reconstruction Project. Also, a new Training Section responsible for personnel training has been organized. At the same time, the infrastructural support to carry out maintenance activities has been substantially improved. Continuation of the ongoing works is essential to bring maintenance activities to a more adequate level, as planned in the Five Year Maintenance Program for 1980-1984. 43. Estimated contributions from road user charges (US$52.2 million p.a.) have been substantially above total highway expenditures. It is estimated that, over the next years, proceeds from road user charges would be adequate to support planned expenditures for implementing the reconstruc- tion and maintenance programs as well as future outlays for construction. The most important revenue source is the motor fuel tax, which accounts for about 50 percent of the road user charges. The other two important revenue sources are vehicle fees and import duties on vehicles. 44. Future economic groth of the country depends upon facilitating access to arable areas in order to increase agricultural production. The need to improve and expand the feeder roads system has been recognized by the Government. The General Directorate of Feeder Roads of SEOPC was given more authority in the area of feeder roads. It has two projects currently under preparation which would be financed by IDB and by USAID. Given this relatively strong external support for construction of fe,eder roads, the role of the Bank should be to develop planning and construction methods and to test the potential of labor-based technologies, which appear prima facie to be suitable in the context of high levels of unemployment. Road Traffic and Vehicle Fleet 45. About one half of the principal products in the country and almost all passengers are carried by road. This is reflected in the relatively high traffic density which shows that some 10 percent of the national net:work carries over 3,000 vehicles per day and about 35 percent carries over 1,000 vehicles per day. Vehicle registration, which between 1967 and 1974 grew by 14 percent, has slowed to 9 percent since 1975. The composition of the vehicle fleet is 64 percent passenger cars, 34 percent trucks and 2 percent buses. About 30 percent of passenger cars perform public services and about 63 percent of all trucks are of a pickup type. About 60 percent of the whole fleet is registered in the cities of Santo Domingo and Santiago. The Road Transport Industry 46. The trucking industry is divided into a large number of single- vehicle owners. These account for 98 percent of the medium and heavy trucking fleet, which totals 17,000 units. There are five multi-vehicle companies with six to 40 vehicles. Single-vehicle owners transport products from rural areas to cities, and multi-vehicle companies provide intercity transport.  - 12 - Rates and tariffs are regulated by SEOPC's General Directorate of Transporta- tion. In practice, however, the enforcement of tariff regulation is lax, and charges are about 25 percent higher than official ones. Single-vehicle owners, who are generally ready to operate with low profit margins, have created a highly competitive environment. Vehicle Weight and Dimension Regulations 47. Three weighing stations were installed by SEOPC in 1972 and two are under construction. When all the weighing stations are operational, it will be possible to monitor the majority of trucks in the country for weight control. At present, trucks are inspected for compliance of weight regulatons, but not for axle load or vehicle dimensions, in the absence of a clearly defined axle load policy. To remedy this, a covenant was included in Loan Agreement No. 1316-DO which stipulates that the Government would, by December, 1976, enact regulations defining maximum vehicle axle loads and dimensions. This, however, was not done because the government felt it needed additional time to carry out a comprehensive study on vehicle axle loads and dimensions. SEOPC has under- taken the preparation of such a study, with financing from IDB. It is expected to be completed by December 1980. SEOPC has agreed to complete the study and to subsequently enact vehicle axle load and dimension regulations in accordance with a timetable agreed with the Bank (Section 3.12 of the draft L.oan Agreement). Bank Role in the Highway Subsector 48. The Bank's previous involvement in the highway subsector consists of the provision of technical assistance as executing agency under the UNI)P- financed Highway Rehabilitation and Administration Study (1973), and the First Road Maintenance and Reconstruction Project (Loan 1316T-DO, US$5.0 million, August 1976), which, initiated highway reconstruction and maintenance programs. The Highway Rehabilitation and Administration Study provided the first highway inventory and carried out the first systematic traffic data collection in the Dominican Republic and was the first attempt to use economic evaluation for the selection of projects and the formulation of a road rehabilitation program. In addition, it reviewed the need for workshops and workshop equipment and tools and road maintenance equipment and parts, all of which served as a base for the formulation of the First Road Maintenance and Reconstruction Project. 49. The Bank's First Road Maintenance and Reconstruction Project in- cluded (a) the initiation of a highway maintenance program, including the purchase of highway maintenance equipment, spare parts and workshop rehabili- tation, and improvement of road maintenance procedures and planning; (b) the reconstruction of a 19-km road section; and (c) technical assistance for the maintenance program and, consulting services for supervision of road recon- struction. The limited objectives of the project were broadly achieved. The level of road maintenance has increased markedly, and improvements in the methods of design and supervision of road reconstruction works have been applied. At the same time, the infrastructural support indispensable for successful maintenance has been laid out: 18 new workshops have been built and equipped, and a number of maintenance equipment units have been purchlased to increase the grossly inadequate existing fleet. The reconstruction of the 19-km Puente Camu-San Francisco de Macoris road is scheduled for completion  - 13 - by the end of 1979; that is with a 15 month delay resulting from the failure of the initial contractor, and subsequent decision by SEOPC to complete the works by force account. PART IV - THE PROJECT 50. The project was appraised in April - May 1979. A report entitled Staff Appraisal Report Second Road Maintenance and Reconstruction Project Dominican Republic (Report No. 2698b-DO dated November 27, 1979) is being distributed separately. Negotiations were held in Washington on November 21, 1979. The Dominican Delegation was headed by Ing. Arsenio Fernandez, Under- Secretary of State of Public Works and Communications. Project Objectives and Description 51. The development of adequate maintenance capacity and the reconstruc- tion of the road network are long-term endeavors requiring policies and programs extending beyond the four- to five-year implementation period of a single project. This factor has been recognized in the preparation of the proposed project, which is based on a broadly defined maintenance and recon- struction program covering the 1980-1989 period. The long-term program is defined in terms of key aggregates determining the scope of annual programs and provides a basis to assess capacity requirements, trained manpower and logistical support, and to set institutional objectives. The full realization of the long-term objectives pursued through the project would extend beyond its implementation period. However, the objectives of the project and the resulting requirements are defined with sufficient precision to allow assess- ment of progress. 52. The long-term maintenance and reconstruction program adopted by the Government for 1980-1989 would provide for the cumulative reconst:ruction of nearly 2,000 km of roads and the maintenance of a network of 5,500 kmn, at a rate which corresponds to the financial capacity of the Government. Specific annual programs were prepared and adopted by SEOPC for the first five years, 1980-1984. These programs include the works under the proposed project as well as the reconstruction of road sections damaged by the recent hurricanes. The latter include the Emergency Road Reconstruction Project, which has been submitted to the Executive Directors. The Government has confirmed that it would provide adequate funds through its budget for its 1980-1984 maintenance and reconstruction program and that it would exchange views with the Bank annually, at the time of preparation of the budget, on implementation and financing (Section 3.06 of the draft Loan Agreemenat). 53. In the context of the Government's commitment to pursue long-term maintenance and reconstruction programs, the project would: - strengthen and expand maintenance capacity undertaken under the First Road Maintenance and Reconstruction Project;  - 14 - - initiate a high priority road reconstruction program for primary and secondary roads with obsolete pavements; - assess the feasibility of applying labor-based techniques to the improvement and maintenance of rural roads; - upgrade SEOPC's maintenance personnel through functional and skill training; and build up SEOPC's capacity to plan and program road reconstruction works through the establishment of a special unit entrusted with that work. The institutional objectives have been kept simple and directly related to the project. The establishment of a capacity to plan reconstruction works effectively would have a demonstration effect and would lead at a later stage to the strengthening of the planning function of SEOPC. Reconstruction Program 54. SEOPC's reconstruction program for the 1980-1984 period covers some 800 km, of whlich 150 km. are under the proposed project. Engineering studies for about 317 km of roads programmed for 1983-1985, are included in the project. The selection of roads included in SEOPC's reconstruction program was based on the TSS (1978) and on the inventory analysis developed for the preparation of the maintenance program under the First Road Maintenance and Reconstruction Project. Engineering for the 150 km of roads selected for the project has been completed. SEOPC also retained consultants to carry out the economic study of the reconstruction program and to coordinate and oversee the technical work of local consultants. 55. The proposed reconstruction would consist of raising and widening the platform along existing alignments and improvements of cross drainage. Pavement structure would include selected gravel or crusher run covered with an asphaltic carpet or a double bituminous surface treatment. The execution of the works would be under the authority of SEOPC's General Directorate of Highways. Supervision would be entrusted to a joint venture of an interna- tional consulting firm and local consultants. Local consultants have the capacity to handle most of the field work, but would need assistance and guidance on specialized technical matters and construction management. Detailed terms of reference have been agreed with SEOPC. The hiring of the consultants for supervision would be a condition of disbursement for road reconstruction works (Sections 3.02(a) and para. 4(b) of Schedule I of the draft Loan Agreement). 56. The engineering of 317 km of reconstruction would be entrusted to local consultants under the General Directorate of Highways. A special Unit would be established within SEOPC's General Directorate of Planning and Programming to plan, program and study the economic feasibility of road reconstruction projects. The terms of reference, staffing and institutional arrangements for the Unit have been discussed and agreed with the Government. The Government has confirmed that the Reconstruction Planning Unit would be dtuly established, funded and equipped by June 30, 1980 and fully staffed by Decemher 31, 1980. (Section 3.10 of the draft Loan Agreement).  - 15 - Highway Maintenance Program 57. Over the last three years, SEOPC's General Directorate of Highways has developed a systematic approach to the planning, scheduling and control of its annual program of maintenance activities. The improved procedures have been tested in two districts and are now being introduced countrywide. The project would support the consolidation of the system throughout SEOPC's organization. The system establishes ground rules for the formulation of an annual program of activities which are closely interrelated with the recon- struction program, since roads in need of reconstruction require temporary maintenance. The Government has confirmed that it would pursue the country- wide implementation of the five year maintenance program and prepare and adopt an annual maintenance plan based on SEOPC's Final Report on Planning for Highway Maintenance and Rehabilitation of January 1979 (Section 3.08 of the draft Loan Agreement). 58. The implementation of annual maintenance programs would require the level of government funding indicated in paragraph 65. In addition, improvements would be introduced in budgeting practices to establish a rigorous definition and separation of maintenance activities from construction and reconstruction works. The Government has indicated that SEOPC would adopt a budgeting system beginning in its fiscal year 1980, by which: (a) the highway maintenance budget would be separated from other SEOPC activities; and (b) the maintenance budget would contain specific allocations for various components, in particular labor, materials, equipment, fuel, administration and contracts for periodic maintenance (Section 3.05 of the draft Loan Agree- ment). The project would include a set of coordinated measures to pursue the buildup of SEOPC maintenance capacity in line with the long term program. A major element would be the expansion and renewal of the equipment fleet, including the equipment to be purchased under the Emergency Road Reconstruc- tion Project. The project would also provide the spare parts necessary to set up adequate stocks to generalize preventive maintenance procedures arid to carry out the overhaul of some 52 salvageable equipment units. The equip- ment list and the schedule for procurement have been reviewed and agreed upon with SEOPC. The Government has confirmed that the availability and utiliza- tion of its equipment fleet would be monitored and assessed annually and that improvements in equipment management would also include the systematic plan- ning of renewal, overhaul and scrapping. SEOPC would adopt adequate proced- ures by June 30, 1981, and the resulting plans for equipment overhaul and renewal would be consulted with the Bank at the time of the review of the annual maintenance program (Section 3.11(a) of the draft Loan Agreement). The improvements introduced over the last two years and the implementation of the measures to build up SEOPC's maintenance capacity would require technical assistance during the first two years of the project. SEOPC would contract this technical assistance no later than March 31, 1980 and would review requirements for technical assistance by December 31, 1980 in consult:ation with the Bank (Section 3.03 of the draft Loan Agreement). Training of Maintenance Personnel 59. The highway maintenance personnel training component would continue the program initiated under the First Road Maintenance and Reconstruction Project and would be addressed to supervisors, equipment operators, mechanics,  - 16 - accountanits and administrative personnel. The program, aimed at improving the productivity of some 900 staff, would include organization and operation of a field production unit, strengthening of SEOPC's fraining Unit, purchasing of training equipment and materials, organization of workshops and training abroad of some senior maintenance engineers. Training of foremen/overseers and operators/drivers will be carried out in the field. A Production Training Unit (PTU) will be set up to carry out rehabilitation/maintenance operations on specific road sections within SEOPC's annual maintenance program. Training of mechanics will be conducted mostly at the Sanchez workshop where physical facili- ties already exist but which require modest rehabilitation and expansion. Repairing worn and broken equipment will form the basis of mechanical staff training. Seminars will also be conducted for equipment supervisors, store- keepers, maintenance engineers and accountants, both in Santo Dotningo and in the districts. 60. The four-year training program would require technical assistance by thlree expatriate training specialists provided by a finn of consultants, one of whom would act as the senior training advisor to SEOPC's staff responsible for planning, coordinating and monitoring all training activities. Dominican trainers would also be financed under the Bank loan, together with per diem for trainiees. The Government has confirmed that it would establish and equip the PTU, provide adequate funds for its operation, and arrange for the recruit- ment of Dominican trainers following the beginning of technical assistance services (Section 3.04 of the draft Loan Agreement). Pilot Rural Roads Program 61. The pilot rural roads program, including the construction of 200 kin of roads, would provide an assessment of appropriate labor-equipment mixes and the institutional arrangements to implement such programs. The 200 km of roads were selected on the basis of a preliminary economic assessment, taking into account the geographical distribution and the availability of surplus labor. The feasibitity studies carried out jointly by SEOPC and Bank consul- tants have identified the first 50 km of rural roads to be built under Phase I of the program. Reconnaissance-type engineering for the proposed works is now in progress so that construction could be initiated as soon as the program gets under way. The project would include the acquisition of equipment to supplement labor-based techniques. Laborers would be selected from unemployed and under employed rural workers in each rural area where rural roads are constructed. Phase II covers 150 km to be studied and constructed following the metthodology developed in Phase I. 62. The review of the reconnaissance-type engineering designs for Phase I showed the need for flexibility in the application of geometric design stanld- ards antd the necessary revisions have been introduced. This sample engineer- ing was used to estimate costs for the whole 200-km rural roads pilot program. The cost estimates are tentative, which is acceptable given the small rela- tive size and the nature of the pilot program. SEOPC would establish a Depart- ment of Labor-Based Construction in its Directorate of Rural Roads. The piLot project would be executed by this department which would be assisted by specialized externial consultants to establislh basic design standards, estab- lish procedures for labor recruitment and payment, staff training and cost accounting (Section 3.13 of the draft Loan Agreement). Tenns of reference for the specialized consultants have been agreed with SEOPC.  - 17 - 63. Labor costs are critical for the economic feasibility of labor-based road construction techniques. Recent research suggests that labor-based methods are cost-effective for daily wage rates of up to RD$ 2. The economic analysis of the project shows that at the shadow wage rate of RD$ 2/day, which corresponds to the shadow wage rate for rural unskilled labor in the Dominican Republic, the economic cost is similar for labor-based techniques and for conventional labor-equipment mixes. At the current minimum wage for rural labor of RD$ 3.50/day, the financial cost of a given road section is up to 20 percent higher applying labor-based techniques rather than conventional labor-equipment mixes. The Government is prepared to incur this additional cost to test the feasibility of labor-based techniques for the construction of rural roads. In the Government's view the additional cost is justified by the benefits from employment and income generation in selected rural areas. The mix of labor and equipment would be evaluated and adjusted throughout the period of execution of the project with a view to achieve cost effectiveness considering the shadow price of wages. The results would be applicable to other projects, including the rural road projects financed by USAID and IDB. Project Costs and Financing 64. The total project cost is estimated at US$49.0 million, of which about $35 million, or 72 percent of total costs, represent foreign exchange requirements. The baseline project costs amount to US$40.3 million on the basis of mid-1979 prices. Physical and price contingencies amount to US$2.6 million and US$6.1 million respectively. Physical contingencies have been estimated at 10 percent and price contingencies at 14 percent. The project would require about 557 man-months of specialized services, including 173 man-months of expatriate consultants. The average man-month cost for consult- ants has been estimated at US$3,800. 65. The proposed loan of US$35 million would finance the foreign exchange cost of the project. The Government would finance the local cost component, estimated at US$14 million, including taxes, and the recurrent expenditures for the Five-Year Maintenance Program (Section 3.01(b) of the draft Loan Agree- ment). The total Bank contribution to the Road Reconstruction Program for the years 1980-1982 under the Emergency Road Reconstruction Project and the present project is about US$38.0 million. Engineering studies for the roads programmed for the subsequent years, 1983-1985, some 317 km, are included in the proposed project. The provision by Government of adequate funds through its recurrent budget to implement the 1980-1984 maintenance program, amounting to RD$ 46.0 million (at 1979 RD$ values) has been agreed. Disbursements 66. Project expenditures eligible for disbursement under the Bank loan would be as follows: (a) 63 percent of the total expenditures for civil works for road recon- struction, rural road improvements and campsites; and, supervision of the construction and engineering of road reconstruction works;  - 18 - (b) 80 percent of the total expenditures for technical assistance services to the reconstruction planning unit; technical assistance for highway maintenance and training; and technical assistance for rural road construction and for supervision thereof; (c) 95 percent of the total expenditures for locally procured imported equipment, spare parts and tools; (d) 100 percent of the foreign expenditures for direct imports of equip- ment, spare parts and tools; and for training abroad; and (e) 100 percent of total expenditure for per diem of SEOPC trainees. Disbursement of loan funds would be made against normal documentation for all items except for civil works for rural road improvements to be carried out by force account in which case disbursement would be made against a statement of expenditures, verified by the heads of the consultant team retained for technical assistance for the rural road and training programs. The project account, including the pilot rural road program which is to be carried out by force account, would be audited by independent external auditors acceptable to the Bank (Section 4.03 of the draft Loan Agreement). Project Execution 67. SEOPC will be responsible for project execution through the following departments and divisions: - the General Directorate of Planning and Programing will be in charge of the planning of future reconstruction; - the General Directorate of Highways will be responsible for reconstruction works, including engineering of future works, and for the Maintenance Program, the latter being handled by the Assistant Director of Maintenance; - SEOPC's Training Unit under the direct authority of the Director General of Highways will be responsible for the training program; and, finally, - the General Directorate of Rural Roads will be responsible for the rural roads program. These units would have adequate capacity to carry out the project. The project is large, however, in relation to SEOPC's absorptive capacity particularly as seen in connection with the Emergency Road Reconstruction Project, and the situation would have to be kept under close review. The Government has confirmed that the number and qualifications of the staff of SEOPC directly responsible for the implementation of various project components would be reviewed from time to time, together with arrangements for coordination among units (Section 3.09 of the draft Loan Agreement). Consultants for supervision of the reconstruc- tion works would assume a leading role in program coordination. The employ- ment of these consultants is a condition for disbursement for the civil works under the road construction component.  - 19 - Procurement 68. Procurement under the project would be in accordance with the Bank's "Guidelines for Procurement." Contracts for equipment and parts with estimated costs over US$50,000 would be awarded through international competitive bidding. Lots with an estimated cost below US$50,000 and within an overall ceiling of US$500,000 would be advertized locally. Spare parts for specific makes of equipment would be procured directly from established dealers under the same regulations for individual orders of less than US$50,000 within an overall ceiling of US$500,000. Reconstruction works would be carried out through unit price contracts awarded to prequalified firms on the basis of international competitive bidding. For bidding purposes, the reconstruction program has been divided into five lots ranging from 25 to 32.2 km. Firms would be pre- qualified to tender for one or more lots according to their capacity. Project Benefits 69. The quantifiable benefits for the road reconstruction component are measured by the direct savings to be derived by highway users, namely vehicle operating cost savings. These savings were determined by comparing the operating costs of three types of vehicles (light vehicles, including pickups, buses and trucks) traveling on the network before and after various road reconstruction and maintenance alternatives were implemented. The benefits resulting from savings in vehicle operating costs are ultimately expected to be transferred in large part to the producers and consumers of the goods which are transported. This is expected as a result of the highly competitive nature of the transport industry (both for passengers and cargo) in the Dominican Republic. 70. The proposed project is well justified with an overall economic rate of return (ERR) of over 50 percent. Considered independently, the ERR of the road maintenance program is estimated at over 100 percent. This h:Lgh ERR is caused by the relatively low investment required to preserve the productive capacity of the large investments made in highway construction. ThLe ERR for the reconstruction program is estimated at about 23 percent. The ERR of the proposed pilot rural road program, based on the results of the analysis of 50 km of roads included in the first phase of implementation is 27 percent. Since the criteria and methodology applied to the first phase would be extended to the remaining 150 kmn, the above ERR could be considered representative of the whole program. Project Risks 71. The main risk arises from the fact that the programs which would be pursued or initiated under the project and the concurrent Emergency Reconstruction Project are large in relation to SEOPC's capacity. It was felt that the urgency and magnitude of the task faced by SEOPC in maintenance and especially in re- construction (2,000 km of its main network) justified setting relaLtively ambitious objectives. The Pilot Rural Roads Program has been prepared with adequate depth and is strongly supported by the Government. Giveri its experi- mental nature it has a somewhat higher level of risk than the other project components.  - 20 - PART V - LEGAL INSTRUMENTS AND AUTHORITY 72. The Loan Agreement between the Dominican Republic 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 sepa- rately. Special conditions of the project are listed in Section III of Annex III. Condition of disbursement for the road reconstruction component would be the hiring of consultants to carry out the supervision of reconstruction works. 73. I am satisfied that the proposed loan would comply with the articles of Agreement of the Bank. PART VI - RECOMMENDATION 74. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President Attachments November 29, 1979  - 21 - TNTlEX I Page 1 of 5 TA3LE 3A DOMINICAN RE?'JBL:C - SOCIAL 2NDICATORS :ATA SHEE- 4WERRS-lCE ORO'?s AD3.JLOTI0 AE,ERAI0 .tN2 AEA (-ROUD SC . x.; iDOMINICAN DEPO3LI - iEh .gCOLP 1JE' E a : .'AL 4d.7 S.A?1 SA;E NEXT -iKGHER l,Gll0' L. -RI 24.7 'OST 3ZZINT IEOGRAPHIC '4C0M *INCZM 1960 '4 1970 /b ESTI.ATE /b REC.ON c .ROUP 'd .ROUP e GNP PER CAPITA ILSS) 240.0 390.0 910.0 124.4 1097.7 194Z.6 ENERGI TObSUOLIO6 PER C.PITA 'EIL0SRANS OF COAL EOUIVALEN-) 157.0 3Z1.0 653.0 943.1 730.7 1646.7 POPULLATION AND VITAL STATISTICS POPULATION, XID-YT.AR (M iLLIONS) 3.0 3 .1 5.0 CLhAN POPULATION (PERCENT OF TOTAL) 30.3 39.8 45.9 59.3 49.0 51.2 POPULATION PRO.TCTIONS POPULATION IN YEAR 20CO (MILLIONS) 9.0 STATIONAR7 POPULATION (KILLIONS) 15.0 TEAR S-ATIONARY POPULATION IS RLACNRD 2075 POPULATION DENSITY PER SO. n. 63.0 83.0 103.0 23.5 44.6 28.2 PEP. SO. KM. AGERICLL7URAL LANE 166.0 174.0 204.0 10.5 140.7 100.5 POPULATTION ACE S3.RCTUlRE (PERCENT) 0-14 YRS. 46.8 48.2 47.0 S0.9 41.3 35.4 15-64 YRS. 50.3 49.1 50.0 S4.4 55.3 56.3 65 YRS. AlD AJOVE 2.9 2.7 3.0 3.9 3.5 5.1 POPULATION OEOI43 RATE (PERCEOT) TQTAL 3.6 2.9 2.9 2.4 2.4 1.7 UR.AN 6.1 5.8 5.4 3.7 4.5 3.0 CR101E RIR-H RA-E (PER TII3SAND) 50.0 45.0 37.0 32.8 31.1 27.5 CRLDE DEA-H RATE (PER THOUSAND) 16.0 12.0 9.0 8.5 9.2 9.1 GROSS REPRODUCT!ON ATE .. 3.5 3.4 2.4 2.2 1.8 FAHI-LY PLANNTNG ACCEPTORS, AI.NIAL T-HOOSANDS) .. 17.2 61.5 USERS (PERCENT OF MARRIED W%IEN) .. .. 30.3 17.7 34.7 OOD AND STR7ITJON INDEX OF FOOD P?ODUCTI0N PER CAPITA (1969-71-100) 121.3 101.0 39.0 99.4 104.4 102.0 PER CAP ITA SUPPLY OF CALORIES (PERCENT OF REQUTREM.NTS) 92.0 88.0 98.0 107.0 105.0 120.E PRO-EtNS (GP,AMS PEE DAY) 46.0 50.0 .5.4 60.4 64.4 80.9 OF A18CH ANLMAh AND PUESE .. 29.0 23.3 28.3 :3.5 31.: CHILD (AGES 1-4) h0R-ALI-Y RATE 23.0 15.3 10.0 6.7 8.6 5.1 HEAL T LITF EC CY AT SIRTH (YEARS) 51.0 57.3 60.0 63.6 60.2 65.6 INFANT MORTALITY R_ATr (PER r30GCSAND) .. 96.0/J .. 76.: 46.7 45.' ACCESS TO SAFE CA.ER (PERCENT OF POPULATION) T-TAL .. 37.1 55.0 63.4 60.8 69.- URAIN .. 72.0 88.0 79.5 75.7 85.1 RURT9AL .. 14.0 27.0 38.6 40.0 43.3 A_CESS TV E7CRETA t'SPOSAL (PERCENT OF ?OPUL-T'ON) TOTAL .. 58.0 42.0 58.8 46.0 70.1 UR3A.N .. 63.0 7..0 77.8 46.0 88.3 kURAL .. 54.3 16.0 24.5 22.5 33.2 POp'GPTI0N PER ?HYSICIAN .. 2100.0 1870.0 1 1841.9 2262.4 1343.2 ?OPC'!A-'ON ?ER rURSING PERSON .. 3930.0 1330 . 0L. 933.7 1195.4 76S.2 ?0P'J.AITON ?ER HOSPITAL SED TOTAL 400.0 350.0 350.0/h 563-. 453.. 197.4 uRSM' .. 150.0 220.2 279.4 253.1 260.2 RU .A:. 2680.Oih 3580.i0/ 1140.9 2732.4 - 055.D ADMISSICNS PER HOSP'-AL RED . .. 30.0/h 25.7 22.1i 7.3 E- .0 2SIE CF aouSEHioLD TITAL 5.0 .. 5.-7 .. JR3AN 4.8 5.2 .. .. 8 5.2 .4 ?F.5 S.l1 '.* .. 5.3 5. 5L AVi-ACE NM.Y5E 3F ?ERSONS PER ROOM 2.0 . . 1. . 1.9 .R341 ~~~ ~~1.6 .. .. :.3 1.l 12 2.2 .. .. ..5 AC=SS' 7C -C7-R:CITY PESC2E:7 IF D3E! .L:7101 .-O.L 10.2 .. .. 54.3 ,2..1n: ASBAN '7. .. .. 30. :. 45.: RLRP- 3.Z .. .. 1- 17.3  - 22 - AJiET I Pa2e 2 c f DOV;N::Ay LEsP;:S: - SO':oc. :,:.CA:.0RS :CA-.A Sh OMTlNSCAN RZtL322 -1n'S- R_:ZS._ '- SAKE SAx.nE 'iEC7 3GFEi; voS5 RECZXN. ZZCGRA?P4 12NsCE :'iCZc'z. 1960 'b 1970 'b S LI:MA? /b OZION c CROLP 'd =8ROUP ;e AirCS.;C LNROLI.3N iD RA.;OS PRIXARY: 07AL 98.0 101i. 110.0 107.3 102.5 101.7 XALE 99.0 1O0.2 109.u 109.1 .08.6 6 10.0 FEMALE 98.0 ,02.0C I1i.3 107.4 97 .1 92.8 SECONDARY: 70a: 7.0 19.C 24.2 40.5 33.5 51.2 MAUL 7.0 19.0 24.0 40.4 38.' 56.. MALE 7.0 29.0 24.G 39.0 30.7 .3.7 VOCAIOKAN. 'SROL. (: or SECsJDARY) .. 8.0 9.0 18.5 11.5 18.3 rJ?IL-lAMEl RAO?G ?ID RY 58.0 5 . 0 .. 37.1 35.8 27.1 SECONDARY 16.0 2r.0 . 17.9 Z 9 25.3 AXL'7 L:ERAZY LATE (PERCfltV) 66. 5 67.2 67 . 7 7.' * 4. D 86.1 _C'SSION PASSESC'F' CARS PV R OUSA