Papua New Guinea - Primary Education Project

Document of The World Bank FILE Copy FOR OFFICIAL USE ONLY Repoa No.P-2912-PNG REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN AND CREDIT TO INDEPENDENT STATE OF PAPUA NEW GUINEA FOR A PRIMARY EDUCATION PROJECT December 1, 1980 This doument ks a restriced distbution and may be used by recipients only in the performnce Of their Oficial duties. Its Contents May not otherwise be disclosed witot World Bank authorition.  CURRENCY EQUIVALENTS Currency Unit - Kina US$1.00 = K 0.67 K 1.00 - US$1.50 ABBREVIATIONS CDC - Curriculum Development Center ERC - Educational Resource Centers NDOE - National Department of Education NPEP - National Public Expenditures Plan NPO - National Planning Office NDWS - National Department of Works and Supply OPC - Office of Project Coordination PMC - Project Management Committee POMITC - Port Moresby In-service Teachers College Provincial Fund - Provincial Primary Education Fund UPNG - University of Papua New Guinea GOVERNMENT OF PAPUA NEW GUINEA FISCAL YEAR January 1 - December 31 SCHOOL YEAR January - December  FOR OFFICIAL USE ONLY PAPUA NEW GUINEA PRIMARY EDUCATION PROJECT Credit/Loan and Project Summary Borrower: Papua New Guinea Beneficiary: National Department of Education (NDOE) Amount: Credit: US$12.0 million (SDR 9.4 million) Loan: US$ 6.0 million Total: US$18.0 million Terms: Credit: Standard Loan: For a period of 20 years, including a grace period of 5 years, with an interest rate of 9.25% p.a. Project Depcription: The proposed project aims at improving management of educa- tional resources, upgrading the quality of primary educa- tion, and increasing enrollments by supporting government efforts to extend access to primary education in the prov- inces. The project consists of: (a) strengthening local planning and administrative capacity by financing in-service training programs for senior educational administrators and planners; (b) assisting in preparation of provincial educational plans; (c) improving primary teaching materials, including textbooks; (d) improving and expanding physical facilities of an in-service training college to help train teaching staff in the use of media, including textbooks; and (e) assisting provinces to extend access to and improve quality of primary education through financing provincial education programs. Gross enrollment ratios are expected to increase from 58% to 68% by the end of the project. Two thirds of this enrollment increase would be females. Some 150,000 children would receive improved textbooks and other instructional materials and about 430 poorly qualified teachers and headmasters would be trained annually. Increased class size would improve the efficiency of the system and the dropout rate is expected to fall from 30% to about 25%. The project faces implementation risks regarding the provincial program, through which assistance will be provided to the provinces. The provincial programs which the project supports have only been in operation for a year and evaluation of provincial proposals for financing of capital and recurrent costs have proven difficult because strategies and targets have not yet been specified. The project includes specific features (technical assistance and preparation of education plans) to minimize these risks. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contenst may not otherwise be disclosed without World Bank authorization.  - ii - Estimated Costs: Local ro e i, oLal (US$ M) ------ Administration training 0.4 0.8 1.1 Curriculum development 1.4 4.1 5.4 Teacher training (in-service) 0.9 1.4 2.3 Provincial primary education 14.5 6.2 20.7 Staff housing 0.4 0.2 0.6 Preparation of future projects - 0.2 0.2 Evaluation and management 0.2 1.6 1.8 Baseline costs 17.4 14.5 31.9 Contingencies 1.3 Total Project Cost 19.6 18.0 37.7 Financing Plan: Local World commu- Bank nities Gov't Group Total --------- (US$ M) --------- Civil works at POMITC and CDC - 0.9 1.7 2.6 Comraunity-financed civil works and furniture 5.8 - - 5.8 Equipment, paper, printing, furniture and materials - 0.2 -- 2.0 Technical Assistance Expert services including professional services - 2.0 4.6 6.6 Training programs - 0.6 1.2 1.8 The Provincial Fund Cost of sectoral programs incurred during calendar years 1983 - 1.2 2.3 3.5 1984 - 2.6 2.7 5.3 1985 - 4.8 2.5 7.3 Unallocated - 1.6 1.2 2.8 Total 5.8 13.9 18.0 37.7  - iii - Estimated Bank Group FY: 1982 1983 1984 1985 1986 1987 1988 Disbursements: --- (US$ mln.) ------------ Annual 0.2 1.6 4.4 4.4 4.4 2.0 1.0 Cumulative 0.2 1.8 6.2 10.6 15.0 17.0 18.0 Rate of Return: n.a. Staff Appraisal Report No. 3027(b)-PNG, dated November 18, 1980. Report:   REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN AND CREDIT TO INDEPENDENT STATE OF PAPUA NEW GUINEA FOR A PRIMARY EDUCATION PROJECT 1. I submit the following report and recommendation on a proposed Development Credit and a Loan to the Independent State of Papua New Guinea for a Second Education Project for the equivalent of US$18.0 million of which SDR 9.4 million (US$12.0 million) would be a credit on standard IDA terms and US$6.0 million would be a loan for a period of 20 years with 5 years of grace at 9.25% interest p.a. to help finance primary education. PART I - THE ECONOMY 2. The last economic report, "Papua New Guinea: Economic Situation and Prospects" (Report No. 2157-PNG), was distributed to the Executive Directors in December 1978. Updated information was obtained in October 1979 and June 1980. The following discussion of the economy of PNG is based on this work. Details of recent economic data can be found in Annex I. Structure of the Economy 3. Papua New Guinea is a land of rugged and sometimes impenetrable mountains, rich valleys and coastal plains, and numerous widely scattered islands. It is favored with abundant rainfall, considerable mineral resources, and forestry and fishery resources of good commercial potential. The capital city, Port Moresby, with a population of about 100,000, is an enclave, with no road links to other parts of the country, and is the largest urban settlement in what remains an overwhelmingly rural society. The most striking feature of PNG's economy is the dualism reflected in the relatively small employment in the modern monetary sector and the large proportion of the population engaged in the traditional agricultural sector. The modern sector is dominated by the Bougainville copper mine and by the expatriate community which was previously part of the Australian administration and which still contributes significantly to both the public administration and the private sector. Mining contributes 20-25% of GDP, and the government sector and a variety of small manufacturing and service establishments contribute about half of GDP. Agriculture, forestry, and fishery, which employ about 85% of the labor force, provide the remaining 25-30% of GDP, with half of the sectoral output coming from subsistence agriculture.  - 2 - 4. Per capita GNP in 1978 was US$560, but this average includes the Bougainville copper mine, an enclave operation located on an island, as well as the nonnationals, less than 1% of the population, whose incomes average roughly 20 times those of nationals. When only nationals are considered, economic dualism in PNG is not as significant an issue as encountered in other countries with a similar economic structure. The average government salary, excluding nonnationals, is only about five times the estimated income of a subsistence household. While this difference does indicate the presence of inequalities, they are less extreme than, for example, in many African countries. The Government's development objectives call for a further reduction in disparities. At the same time, the Government has developed policies to minimize the impact of dualism in specific areas. For example, the renegotiation of the agreement with Bougainville Copper Ltd., ensured that the Government would get the bulk of profits over a certain level. Since the remainder of the profits accruing to the company and much of the expenditure incurred in the operations of the mine are paid overseas, they have little impact on local incomes. 5. PNG faced a critical period before and immediately following independence when, for three consecutive years (FY75-77), the economy failed to grow significantly. This resulted from the international recession as much as from conditions in PNG, but it compounded the difficulties faced by an emerging nation. In 1978, GDP rose by nearly 6.5% in real terms, but preliminary figures show a decline in 1979, due mainly to declining production of copper concentrates and a fall in investment. Of continuing concern is the slow growth of the agricultural sector, particularly the major agricultural exports. Because of rising world prices for most of PNG-s major agricultural and mineral exports, however, the purchasing power of real GDP, adjusted for changes in the terms of trade, rose an estimated 5% in 1979 compared to a small decline in 1978. Until the Ok Tedi copper and gold mine begins production (in 1984), growth rates of GDP are unlikely to reach the high levels of the past (an average of 8% during 1968-74, largely due to the Bougainville copper mine), but there is still much room for improvement, particularly in the agricultural sector. 6. The large fluctuations in the growth of PNG-s economy result partly from its vulnerability to international economic conditions. Imports are high, and international inflation is quickly passed on. Exports are dominated by four commodities - copper concentrate, coffee, cocoa, and copra which contribute about 85% of total export earnings. Price fluctuations can thus have a severe impact on the economy. In addition, PNG runs a substantial structural deficit on its current account, the counterpart of the large budgetary grant from Australia, equivalent to about one-third of exports. 7. The Government has taken a number of steps to reduce the impact of variations in the international economy. A Mineral Resources Stabilization Fund smooths the impact of fluctuating copper prices on the budget, and  - 3 - stabilization funds for coffee, cocoa, and copra are designed to reduce the oscillations in incomes of producers, thereby also dampening price-induced supply responses and contributing to the stability of government revenue. To date the management of these funds has been very disciplined and has reduced the fluctuations in government spending that would otherwise have occurred. A three-year wage agreement limited the rise of both public and private sector wages to that of the consumer price index, thus ending the sharp upward spiral of real wages that occurred during 1972-75, and this principle has since been extended for another three years, with a maximum allowed increase of 11.75%. The hard currency policy followed by the Government has helped to cut down inflation to an average of 6% p.a. in the last three years, compared to an average of more than 12% in earlier years. In the area of foreign aid, the Government negotiated a four-year agreement with Australia, the major donor, and is currently negotiating an extension of that agreement for the years following 1980. These agreements have helped the Government to proceed in an orderly manner with its development planning. Development Issues 8. The major issues which will affect the Government's ability to promote economic development are the formulation of a national development strategy and planning mechanism, the decentralization of government activi- ties, and the ability to achieve self-reliance, both in staffing and in public financing. In tile immediate post-independence period a concerted effort has been undertaken to define a set of economic and social policies and to establish the means by which decisions in allocating government resources will be taken in a disciplined and consistent manner. More weight has been given to developing a viable economic strategy and a decisionmaking process for the use of government resources than to the preparation of a comprehensive development plan. Three major steps have been taken in PNG in the last three years: (i) a national development strategy has been defined; (ii) a set of sectoral programs and strategic objectives/criteria has been identified to provide the basis for resource allocations; and (iii) a process for evaluating new investment proposals based upon (ii) has been established. 9. The national development strategy places a high priority on im- proving the quality of life of the rural population. Its thrust focuses on rural development, emphasizing the less developed areas of the country. It includes the development of a few large natural resource projects aimed at reducing the present very heavy reliance on aid and leading towards economic self-reliance. The first objective recognizes not only the agricultural potential of the country, but also the fact that the agricultural sector will be for quite a few generations the main source of income generation and employment. The second objective, while not directly benefitting the vast majority of the population, is intended to provide a resource base, thus  allowing the implementation of development programs. The implementation of the second objective clearly entails the import of foreign capital and expertise. PNG has developed a policy of encouraging private investment for the exploitation of the country-s resources, while attempting to minimize its own investment in these areas and to maximize the revenues it would obtain from such developments. 10. To carry out its development strategy, the Government established the annual National Public Expenditure Plan (NPEP), a rolling four-year plan for the public sector which focuses political decision-making on the relative size of the allocations to each program or objective and therefore on the tradeoffs between them. Government departments are then assigned portions of each category to be achieved through specific projects. While the basic aims of the NPEP are to link the planning process with overall macro-economic policy and to direct public spending to the activities that have the highest national priority, its impact is limited by its coverage of new projects only. The first NPEP accounted for only 4% of the 1978 expenditures (K 20 million), but future plans will cover increasing portions of the budget as government revenues grow, ongoing projects are completed and a continuing review of existing expenditures leads either to their elimination or their reformulation and inclusion in the NPEP. In the 1980 budget, the NPEP encompasses over one-fifth of total expenditures. Implementation of NPEP projects has been delayed by lack of staff and experience, but it appears that the 1979 Plan was nearly on target. 11. Implementation of the NPEP is also affected by the decentralization process now taking place, since greater provincial control over spending will reduce the Central Government-s ability to pursue its priorities, while inadequate staffing will interfere with the ability of the provinces to follow their own plans. PNG's topography made it a country of scattered tribes, with no great sense of national unity, and a degree of political decentralization was a necessary response to secessionist pressures. Provincial governments are gradually assuming regulatory and financial control in some areas and will share power with the Central Government in others. Provincial governments are financed through Central Government conditional and unconditional grants, Central Government refunds of certain revenues, and their own taxation measures. Unconditional grants, which allow provinces to spend according to their own priorities, are by far the most important source of finance; but while in the 1980 budget they comprised over 80% of Central Government payments to the provinces, they amounted to less than one-quarter of total Central Government revenues. One of the most serious problems facing provincial governments is the shortage of trained and experienced staff, and their most urgent priority is to develop the capability for budgeting, planning, and project identification and preparation. The Central Government and other organizations assisting the provinces must make a concerted effort to orient inputs toward that goal.  12. Self-reliance in PNG involves both staff and financial resources. The Government has made substantial progress in replacing nonnationals with nationals, especially considering that the University of Papua New Guinea (UPNG) produced its first graduates as recently as 1972. However, the country still relies heavily on nonnationals for many necessary services. In the public sector, localization has reached an overall level of 90%, compared to 80% in 1971, but at the higher levels of skill requiring post-secondary education, the proportion of nationals is still only around 40%. This situation has created a relatively high cost Government and a dependence on foreign aid to help meet these costs. The shortage of qualified staff is reflected in the existing vacancies in Government, and in some departments the shortage of professionals is critical. The establishment of provincial governments is adding to the pressures on existing staff, as the Central Government intends to staff provincial governments with no increases in the overall size of the F. blic service. The Government's response to these problems is a localization effort directed at replacing nonnationals and meeting increased manpower requirements through recruitment of local personnel. 13. Training courses are given by the private sector and by most government departments and statutory authorities to meet their own needs. A centralized training scheme is under study. The Public Service Commission has also launched a Senior Executive Training Program to prepare Papua New Guineans to take over high level positions in the Government. 14. The Government's efforts to attain financial self-reliance empha- size modest but steady and sustainable growth in real public expenditure accompanied by a reduction of reliance on foreign aid (particularly from Australia). The Government has worked successfully to increase domestic revenue which has grown from 10% of GDP in FY68 to 21% in 1978. Domestic revenue, which accounted for only about 36% of government receipts in FY68, supplied 60% of the total in 1979. Tax revenue accounts for about four fifths of domestic revenue. Over the past seven years, the Bougainville copper mine has been a major source of domestic revenue, averaging 18% of the total and reaching a peak of 27% in FY76, and another large gold and copper mine is expected to start production in 1984. 15. PNG is heavily dependent on Australian aid, which still provides close to 40% of government revenue. However, this ratio has fallen from nearly 60% in the early 1970s, and the Government expects to continue to reduce its reliance on the Australian grants. It will do this in part by raising additional domestic revenue but, in addition, it will continue its efforts to diversify the sources of foreign financial assistance, although none of this assistance will be on terms as beneficial as the unconditional Australian grant to the budget. Recent sources of assistance have included New Zealand and Japan, as well as the World Bank and the Asian Development Bank. The Government insists that all projects proposed for foreign aid be accepted in the National Public Expenditures Plan, thereby ensuring that they will accord with Government priorities.  - 6 - 16. Capital expenditures have grown faster than current expenditures in the last two years, but the estimated share of capital expenditures in the 1980 budget is still only 14%. In order to increase investment and at the same time raise the level of self-reliance, the Government realizes that it must contain the growth of current expenditures, over 40% of which go toward paying salaries and wages. The Government is attempting to limit the growth of wages and of the public service while finding less expensive sources for expatriate recruitment. External Sector 17. PNG experienced huge trade deficits prior to the introduction of copper exports in FY73. The current account deficit was around one fourth of GDP in the early 1970s. Imports were over 50% of GDP, whereas exports were only about one third as high. Since FY73, however, earnings from copper exports have dwarfed those from other commodities, and, except for small deficits in FY75/76 when copper and copra prices fell, the balance on current account, which includes the large Australian grant remained positive despite large service payments. Because of the favorable balance of payments situation in recent years, PNG's foreign exchange reserves, are now equivalent to about seven months of imports, down from the ten months worth in mid-1979. The dependence of the balance of payments on four main commodities and its consequent vulnerability to fluctuations in international prices make this a reasonable level for reserves in good years, particularly since it is in part the counterpart to the stabilization funds for the four major exports. 18. The country is likely to require a net capital inflow of around US$70 million p.a. during the next few years. About one-third of this amount will be in the form of private debt and direct investment, while the rest represents public borrowing, of which roughly one-half is likely to come from bilateral sources and one-half from international organizations. These funds are in addition to the large Australian grant, equal to US$260 million in 1980, and will have to grow in relative importance over time as the grant falls in real terms. Total external public debt outstanding as of December 31, 1979, amounted to US$472 million, of which US$135 million was owed to the Bank Group. Public debt service payments in 1979 were about 4% of exports; they are expected to rise to nearly 8% in the next few years and then to decline slowly. Debt payments to the Bank Group are only about 13% of total debt service payments. The debt service ratio, including net investment income payments (which are largely self-financing), is about 15% of exports and will rise to a peak of 19% in 1981. PART II - BANK GROUP OPERATIONS 19. As of October 31, 1980, Bank Group assistance to Papua New Guinea consisted of seven loans, eight development credits, and one loan/credit, totalling US$169.2 million. The first operation was a telecommunications  loan of US$7.0 million approved in 1968; the most recent, a US$30.0 million highway loan/credit (US$17.0 million IBRD, US$13.0 million IDA) approved in May 1980. In the early years of lending, emphasis was on infrastructure and six of the seven loans and three of the eight credits were for power, telecommunications, ports and highway projects. Project implementation has been satisfactory even with the more complicated rural development projects. The rapid turnover of expatriate staff and the transitional problems of recruiting and training their replacements have led to delays in project monitoring and auditing but physical implementation has progressed approximately on schedule. As of October 31, 1980, 5 credits and 5 loans were fully disbursed and the effective loans and credits to Papua New Guinea held by the Bank and IDA amounted to US$59.3 million. Annex II contains a summary statement of Bank loans and IDA credits as well as notes on the execution of ongoing projects. 20. In more recent years, Bank Group lending has shifted to the agriculture and social sectors. Three of the seven outstanding loans and credits and five of the next six planned operations are in agriculture, rural development, and education. Furthermore, in view of the Government-s decentralization policy and the fact that the greatest constraints to development efforts are at the provincial level, it is proposed that the thrust of Bank Group lending be directed towards a provincial orientation with the additional explicit objectives of institution-building and human resource development at the provincial level. 21. Past Bank Group operations have averaged about one per year and this is expected to increase to two operations per year from FY81 onward. This level of activity will allow continuous emphasis on agriculture, rural development, and education and further support of infrastructure development in selected areas, especially rural transportation. For FY81, this project together with a proposed agricultural credit project will be presented to the Board. For FY82, the current plan is to present a rural development project and a rural transport project. The Transport Sector Review dated January 29, 1980 (Report No. 2819a-PNG) and the forthcoming review of agricultural services will provide direction for operations in these areas. Project design and implementation will continue to be constrained by the unavailability of technical staff, local and expatriate, and the decentrali- zation of power to provincial government levels will probably exacerbate the problem. These risks will be mitigated, to the extent possible, by explicit institution building elements such as those contained in this project, but the process is of recessity a long-term one that will require a sustained effort and the acceptance of more uncertainty than would be the case with the type of projects that were initially supported by the Bank Group in PNG. PART III - THE EDUCATION SECTOR 22. The Education System. Papua New Guinea has built a complete education system within a short period - its first senior high school was  - 8 - opened only about 20 years ago. The system has serious constraints which can be traced to inadequacies in primary education. Any expansion of the upper education levels should be preceded by quality improvements in and expansion of primary education. 23. Bank Participation. The Bank has been involved in one previous education project (Credit 661-PNG, 1977), which is primarily concerned with satisfying immediate manpower needs. This project assists in training agricultural extension workers, health inspectors, primary and secondary- level teachers and middle-level industrial technicians. Project implemen- tation is generally progressing well, but difficulties associated with reaching enrollment targets for females indicate a socio-cultural constraint, which should be taken into account in future project design. All project- financed facilities are operational and the project is expected to be completed on time in June 1981. Issues in Primary Education 24. Significant progress was made prior to 1970 in expanding primary education in PNG, but the primary enrollment ratio stagnated in the 1970s and serious quality problems developed. Concerted efforts are needed to improve access and quality in the 1980s. Problems in the subsector fall into four broad categories, namely management deficiency, quality decline, enrollment stagnation and financial constraints. 25. Management. The Organic Law which, controls PNG's decentraliza- tion policy, became effective in 1979. In the education system the National Government retains exclusive control over tertiary education and school inspectorates at all levels. Control over upper secondary and primary school curricula is shared between the central and provincial governments; planning and management of primary and lower secondary education rests pri- marily with the provinces. The Organic Law delegated much of the decision- making power to the 20 provinces, but the manpower to exercise this autho- rity is not available. Definition of responsibility is also often lacking, particularly in the areas of shared control. An example is the development and production of teaching materials and textbooks in social sciences. This activity is a provincial responsibility, but the "critical mass" of a text- book program requires a major national involvement. Anomalies also exist in the present staffing structure where administration and supervision are sep- arated organizationally rather than placed under a single authority. A coordinated program is needed to resolve issues arising from the decentrali- zation process. Such a program should include: (a) technical assistance for the preparation of provincial plans and definition of responsibilities; and (b) intensive training of local staff to assume managerial responsibilities. 26. Quality. Education standards are low and have been falling during the 1970s. Lack of qualified teachers and instructional materials were major causes of this decline. Concentrated efforts, particularly in teacher training and provision of textbooks, are needed to reverse the trend. Systematic, objective primary school achievement measurements to identify  - 9 - and quantify decline in primary education standards over time are not available in PNG, but results of grade six examinations at the end of the primary education cycle showed that in 1977 the typical child could correctly answer less than half of the examination items in the vital subjects of arithmetic and English. The 1977 study also indicates that scores in rural areas are significantly lower than in urban areas. There is statistical evidence of a downward trend in achievement scores for the lower secondary grades where a persistent 25% decline over a decade is indicative of quality problems at the primary level. 27. The decline in primary education standards during the 1970s resulted from several factors: (a) during the middle of the decade expatriate managers and teachers were replaced by local staff, half of whom had (in 1979) a level of schooling of less than grade 10; (b) an annual 10% erosion of funds available for pupils to purchase te. books and teaching materials; and (c) required teaching methods were frequer.sly beyond the capability of the newly appointed staff. As a consequence of the low quality at the primary level, output and quality suffered at upper levels. 28. In terms of numbers, no shortages of primary teachers are expected in the 1980s, but the Government recognizes that there are qualitative shortcomings in teacher training, curricula, and materials. An initial constructive step towards making better use of well-qualified teacher trainers was taken in 1979 by consolidating all in-service teacher training, including six-month and shorter courses for headmasters at a former pre-service teacher training college in Port H4oresby (POMITC). However, the institution is handicapped by lack of facilities, equipment and staff. 29. The Curriculum Development Center (CDC) of the Ministry of Education has also received special attention in recent years. The number of professional staff has been expanded from 10 in 1974 to 25 in 1979, and the organizational structure has been altered to place the entire unit under a single administration. However, much remains to be accomplished in the CDC which is now scattered in three locations around Port lMoresby. Of particular importance are: (a) coordinating curriculum and materials development with teacher training through staff and facilities sharing; (b) developing curricula more relevant to village life; and (c) expanding the availability of printed and other simple teaching aids to pupils and teachers. 30. Language is closely associated with quality standards. English is the official language of instruction in the absence of a viable alternative. English is spoken, however, in less than 3% of the homes, the remainder use one of the estimated 700 local vernaculars. Pidgin and, to a lesser extent, Hiri 14otu are widely used as lingua franca. When possible, teachers of children in the lower primary grades use local vernacular as the language of instruction although they receive no particular training in bridging language communication gaps which often exist between teachers and pupils. The language problem is likely to remain a long term issue.  - 10 - 31. Enrollment Stagnation. During the immediate post-war period, enrollment grew rapidly and reached 208,400 in 1970, or about 55% of the age group. The enrollment has remained at about this ratio over the last decade. The overall enrollment ratio was 58% in 1979, but five provinces (all in the Highlands) remained at less than 50% while most of the New Guinea off-shore island provinces were above 80%. During the 1970s, enrollment increased only moderately to 277,500 in 1979 and enrollment ratios of the 1970s remained constant, both for grade 1 and for grades 1-6. In 1978, the Government announced its target of achieving universal (95%) enrollment in grades 1-6 by the end of this century. Little can be done to achieve this target until the following causes of enrollment stagnation have been removed: (a) Educational - Children react to low quality with poor attendance leading to dropout. (b) Social and Economic. In the late 1960s, the number of primary school graduates grew rapidly and children, parents and community leaders began to observe that grade 6 completion did not necessarily lead to employment or entry into the monetized economy. Also, since places in grade 7 are limited to only about one-third of those who finish grade 6, the temptation to drop out became great for those students who knew they were behind their peers in their studies. Enrollment of girls lagged behind that of boys at a rate of about 2:3 because parents need girls at home to care for younger children and other tasks. Miany parents in the rural areas of the highland provinces do not wish their daughters to be educated because of perceived negative effects on matrimonial eligibility of educated girls. Lack of communications between parents and school is also a factor. (c) Geographical - About 20% of the primary school-age population resides too far from an existing school to enroll or attend. Dropout in rural areas is also high. 32. Enrollment stagnation means that over 40% of primary school-age children (203,000) are not receiving basic education. These children may be divided into two categories: (a) those who live near an existing school and are not enrolled; and (b) those who live beyond a reasonable travel distance or time to an existing school. Full enrollment of children who live within commuting distance of existing schools could hypothetically raise the enrollment ratio from the current 58% to 82%. High priority should there- fore be given to addressing the causes of nonenrollment and dropout. 33. A twofold approach is needed to raise enrollment ratios above the present 55-60% plateau towards the Government's 95% target by the end of the century (and an interim 68% target by 1987). A partial solution can be provided through existing schools by: (a) improved teaching methods and parental guidance; and (b) concentration on special programs to identify and enroll children, especially girls, living within comnmuting distance of the  - 11 - school area. With the addition of about 2,000 new classrooms and teachers, existing school locations could accommodate over 100,000 children living within easy travel distance, and reach an enrollment ratio of about 80%. New schools would be required for the remaining 20% of the children who reside too far from any existing school. School maps and related data should be prepared and plans developed to determine the need for expansion and establishment of new schools. 34. Financial Constraints. The Government has for the past decade been faced with a continued shortage of domestic revenue which is typically only about 60% of expenditures. The Government, therefore, has limited the annual growth rate of public expenditure to 3% p.a. in most sectors, but as a priority sector, primary education will be allowed a growth rate of 5%. At the provincial level there are also financial constraints and provincial governments are cautious in introducing items likely to remain a long-term financial liability, such as new teaching posts. 35. Unit costs of all levels of education, especially post-primary, are above world and Asian median. Two factors in PNG account for this differ- ence: low teacher/pupil ratio (1:31) and high primary teacher salaries./l Additional causes of the especially high unit costs at post-primary levels include: (a) use of expensive expatriate teachers (slightly under 30%); (b) continuation of residential programs at nearly all upper secondary schools; and (c) low tuition and boarding fees paid by students or parents. 36. The high cost of education must be taken into account when assess- ing the Government-s ability to achieve its targets in primary education. A budget simulation exercise reveals that the nation would be able to provide primary education for about 95% of its primary school-age population by the year 2000 without significantly raising the recurrent costs share of education from the present 16.4% of government revenue. The simulation is based on Government plans to: (a) increase the primary pupil/teacher ratio from current 31:1 to 35:1; and (b) introducing economies at the upper secondary and higher levels through localization of staff, reduced boarding, and charging of higher tuition fees. 37. Government Plans. The National Public Expenditures Plan (NPEP) is the National Government s chief instrument to direct incremental budgetary support to priority sectors and to underprivileged provinces. Under the NPEP sectoral program in primary education, the provinces submit to the National Government their proposals for subprojects to improve quality of and access to primary education. Evaluation of the provincial proposals by the National Government has been difficult because provincial strategies and targets have not been specified. The primary education sectoral programs /1 Primary teacher salary in PNG is about eleven times higher than GNP/ capita. Comparable median for developing countries is at four times GNP/capita.  - 12 - are expected to play an important role in future years and to become the principal instrument in reaching the Government's target of full enrollment by the end of this century. In view of the growing importance of the sectoral programs, the need for preparing plans and strategies in the sector is becoming increasingly important. PART IV - THE PROJECT 38. The proposed project was prepared by the Government with Unesco assistance in September 1979; preappraised in November/December 1979; and appraised in July 1980. Negotiations were held in Washington from November 6 to November 7, 1980, with the PNG delegation led by Mr. Eliakim Bobolton, First Assistant Secretary. A staff appraisal report dated November 18, 1980 (No. 3027(b)-PNG) is being circulated separately. Supplementary project data are provided in Section III of Annex III. Objectives 39. The proposed project would help strengthen management of educational resources, improve the quality of primary education and increase enrollment by supporting government efforts to extend access to primary education in the provinces and to expand existing schools. It would assist in training educational administrators, planners and teachers to: (a) make better use of human resources; (b) help implement the Government's decentralization policy; (c) accelerate the introduction of indigenous staff; and (d) retard the growth of recurrent costs. The project would seek to reduce dropout rate, from the current 30% to 25%; raise pupil learning achievements from a score of 40-50% to about 60%; and improve teaching efficiency through a multifaceted attack on low quality in primary education. The project would also support the Government's efforts to extend educational opportunities to hitherto underserved areas through the setting up of a financial program, called the Provincial Primary Education Fund. The Provincial Fund would finance a series of small projects to be developed during implementation and designed to address expansion constraints and quality issues in primary education. Project Description 40. Administration (Proposed outlay US$1.1 million, excluding contin- gencies). The project would: (a) strengthen local planning and adminis- trative capacity by financing local and overseas in-service training programs for PNG's educational administrators and planners; and (b) help prepare provincial education plans. Overseas training would be provided in two ways: (a) Study tours of 10 weeks duration for 20 provincial superintendents and about 10 selected staff from the National Department of Education (NDOE)  - 13 - coupled with six to eight weeks of predeparture and poststudy tour seminars; and (b) Fellowships in educational planning would be arranged for NDOE staff and provincial superintendents. To supplement the training, the project would finance the services of educational planners to assist the provinces in preparing provincial medium-range educational plans. 41. Curriculum, Textbooks and Evaluation (Proposed outlay US$5.4 mil- lion, excluding contingencies). A central objective of the proposed project is to improve primary teaching materials. The curriculum, textbooks and examination components of the proposed project would play a major role in this respect. The curriculum and textbook program would develop institutional capacity for maintaining a continuous supply of improved textbooks suitable for PNG's primary education system relevant to PNG and facilities for trial printing of texts. Fellowships and specialist services would be provided. 42. CDC would expand and improve its development of simple audiovisual aids such as wall charts and maps to complement improved textbooks. Staff would be trained to instruct teachers in the use of diversified media. Fellowships and specialist services would be provided. 43. The examination test and measurement component would improve the present weak examination programs, promote greater use of measurements in diagnosis of learning and teaching problems and produce meaningful test results for student placement. During negotiations, the Government provided assurances that it would gather, on a sample basis, test results from grades 4-6 and submit for Bank Group review: (a) baseline data by December 31, 1982; and (b) annual evaluation of data on the impact of textbooks and curricula during 1984-87 (Section 3.06 of the Development Credit Agreement). 44. Teacher Training. (Proposed outlay US$2.3 million, excluding con- tingencies.) This project component would convert, improve and expand the physical facilities of POMITC and train teaching staff in the use of media. The renovated POMITC facilities would complement the new, contiguous CDC facilities. 45. The proposed project would assist in retarding the growth of recurrent education costs by increasing the proportion of indigenous teacher trainers of all PNG's primary education teacher training colleges from the current 28% to 50% through fellowships and training. The training of teacher trainers would be a combination of local/overseas and degree/nondegree training. At least half of the program would be conducted by the University of Papua New Guinea (UPNG). 46. Provincial Primary Education Fund (Proposed size of Bank Group financing US$7.5 million.) The objective of the "Provincial Fund" is to assist the provinces in improving quality of and access to primary education. The Provincial Fund would help accommodate more pupils, especially girls, in existing schools, assist in opening new schools in hitherto underserved  - 14 - areas and improve educational quality. This objective is similar to that of the Governiment's sectoral programs in primary education. Therefore, the proposed project element would finance a share of the NPEP sectoral programs in pri-mary education during 1983-85 when provincial education plans have been substantially completed. 47. The Provincial Fund would finance a variety of items identified as constraints to enrollment expansion or improved education quality in each province. These would include incremental recurrent costs for teaching posts at new or enlarged schools, materials needed to build new schools or teacher housing; equipment and materials for new or expanded schools; and experiments/studies to improve quality of and access to education. Over 50% of the items to be financed by the Provincial Fund are expected to be incremental operating costs because the provision of finances for new teaching posts is the greatest constraint to increased access. 48. A national enrollment ratio target of 68% of the primary age population has been established for the final year of the project, 1987. If the estimated population increase is taken into account, an increase of 45% in enrollment, from 277,000 in 1979 to 400,000 in 1987 would be needed to achieve this target. The proposed project would develop provincial education plans for the years 1983-87, including detailed strategies and means needed to achieve the enrollment targets. The National Government would assist the provinces in formulating their plans before the Provincial Fund becomes operational in 1983. During negotiations the Government agreed to submit for Bank Group review by December 31, 1982, its consolidated plan for enrollment expansion by province or groups of provinces during 1983-87 (Section 3.07 of the Development Credit Agreement). 49. Project Evaluation and Management (Proposed outlay US$1.8 million). The Government is in the process of establishing a unit for systematic evaluation of the project. This unit would become the core of a permanent management information system within the NDOE. Specialist services and fellowships would be provided to staff the unit. A national advisory committee on evaluation would be established to provide policy guidelines and set priorities in evaluation activities. Project management would also be strengthened with specialist services. 50. Other Components (Proposed outlay US$0.8 million, excluding contingencies). The project would include US$600,000 for staff houses for project specialists. The proposed project would also provide US$200,000 for preparation of future education projects including a study of problems in secondary education. During negotiations the Government agreed to complete this study by December 31, 1983 (Section 3.08 of the Development Credit Agreement). Management and Implementation 51. The project would be implemented by existing line agencies at national and provincial levels and coordinated by staff in the National  - 15 - Department of Education (NDOE). At the national level, overall respon- sibility for coordinated project implementation would rest with a Project Management Committee (PMC). Committee members would be the Secretaries from the Departments of Education, Finance, and the National Department of Works and Supply (NDWS). The PMC would be a policy-implementing and decision- making body, reporting directly to the National Executive Council. It would be staffed with five executive officers and be responsible for overall project coordination. 52. Then NDOE (together with the National Planning Office (NPO) and the Department of Finance) would be responsible for ensuring that the Provincial Fund would be used in accordance with implementation procedures mutually agreed between the Bank Group and the Government. Appropriate campus school sketch designs have been prepared by the NDWS. Preparation of tender documents and supervision for the joint POMITC and CDC campus will be done by the NDWS and supplemented by engineering design consultants available in the country. Two man-years of specialist services in low-cost school construction technology would also be provided. 53. Provincial Fund Implementation Procedures. The Provinncial Fund is defined as the Bank Group financing of the Community (Primary) Education Sectoral Program of the NPEP. The Provincial Fund would be limited to financing subprojects in provincial primary education during PNG fiscal years 1983, 1984 and 1985, the incremental cost of which has been estimated at US$16.5 million over the 1981 allocation./l Subproject appraisal and supervision would be the responsibility of the NDOE. Responsibility for identification and implementation of provincial subprojects rests with the provinces. The NPO would monitor overall implementation progress and act as an arbitrator between national and provincial education authorities in cases of disagreement over conformity of provincial project proposals with agreed criteria and policy directives. NDWS would monitor all NPEP capital works projects through their provincial offices. 54. The Provincial Education Offices would be responsible for preparing the medium-range plans for increasing access to primary education. Technical assistance would be provided by the National Government to assist the provinces in preparing their own plans. Annual NPEP subproject proposals, prepared by the same parties, would dovetail with the provincial plans. There would be about 60 provincial Bank Group-financed subprojects during the 1983-85 period. During negotiations the Government provided assurances that: it would send for Bank Group review and comments a representative subproject from each region (a) prior to the first year of Provincial fund operations; and (b) in subsequent years (Section 3.10 of the Development Credit Agreement). /1 The total amount for sectoral programs in provincial primary education is estimated at US$30.7 million. The latter figure forms the basis for disbursement calculations.  - 16 - 55. Criteria for Use of the Provincial Fund. During the first year of NPEP sectoral operations (1980), primary education sectoral projects in the provinces were identified and implemented in accordance with loosely defined criteria. Improved project criteria have been prepared and would be followed in 1983-1985 budget periods when the NPEP sectoral projects would be financed from the Provincial Fund. The criteria consist of: (a) general guidelines for allocation of funds; and (b) approval criteria of provincial projects. These criteria would ensure that assistance provided under the Provincial Fund would direct provincial primary education projects towards their objectives: improved access to, and quality of, primary education. During negotiations the Government provided assurances that it would: (a) allocate sectoral program funds to the provinces in accordance with agreed distri- bution criteria; and (b) review Provincial Fund-assisted subprojects in conformity with agreed criteria (Sections 3.09 and 3.10 of the Development Credit Agreement). 56. About two thirds of the annual allocation for sectoral programs in primary education is allocated for provincially administered projects. All provinces would receive a portion of the provincial allocation, but interprovincial differentiation is steeply pitched in favor of the dis- advantaged provinces. Criteria for determining allocations to each pro- vince will be based on a recently revised (September 1980) index of pro- vincial population and primary enrollment ratios. The NDOE would review and approve subprojects on the basis of their relevance, feasibility and efficiency. Relevance would mean the degree to which a subproject encourages improvement in primary enrollment. Subprojects financed by the Fund would therefore need to: (a) support a component of primary education; (b) support the provincial education plan to increase access and reduce dropout of primary school children; or (c) be designed to make a measurable contribution to increasing methods and means. Feasibility would mean the ability of a province to undertake and support a project on a continuous basis. Topics that would be reviewed include: (a) suitability of school location; (b) availability of staff; (c) availability of school facilities and staff housing; and (d) recurrent cost implications and ability of the province to sustain these expenditures upon project completion. Efficiency would include such aspects as the reasonableness of investment and recurrent costs, and attention to appropriate class and school sizes. 57. The project would be implemented over a seven-year period. The Government has completed the following: (a) preparation of sketch plans, equipment lists and specifications; (b) plan and schedule for textbook development and production; (c) start of recruitment of technical specialists; (d) preparation of final plans for project evaluation; (e) initial provincial plans and criteria for use of the Provincial Fund; and (f) final plans for project management. Of special importance in the initial project phase is the date for preparation of provincial plans for universal primary education (December 31, 1982), which links the use of the Provincial Fund in 1983-85 to specific provincial targets. The last project item would be completed by June 1987.  - 17 - Cost Estimates 58. Total project cost is estimated at US$37.7 million. Project costs based on unit costs of December 1980 are defined as the sum of: (a) the costs of identifiable project items (US$16.9 million); (b) the incremental cost from the start of the proposed project (1981) of NPEP sectoral projects in provincial primary education during the 1983-85 period (the Provincial Fund), (US$16.1 million); and (c) the estimated cost of school construction financed by local communities during the 1983-85 period (US$4.7 million) as a matching contribution to the Provincial Fund. These costs include the following contingency allowances: (a) physical contingencies (US$1.1 million) estimated at 7% of the base cost of all project items; and (b) price contingencies (US$4.3 million) calculated on the December 1980 base cost plus physical contingencies ir. accordance with price escalation which is expected to decline from 9% in 1981 to 6% in 1987. T_'hnical assistance costs including salaries, allowances and international aifares have been estimated on the basis of recent contracts at US$4,400/man-month. The foreign exchange component is estimated at about US$18.0 million or 48% of total project costs. Local customs duties and taxes are estimated at about US$0.4 million. The proposed loan/credit would finance the equivalent of the foreign exchange component of the project. 59. Recurrent costs for primary education would increase during the project period due to school-age population growth and higher enrollment ratios. Analysis of the cost increases shows that if government-endorsed compensating policies are adopted,/l overall education expenditures can be held near their present level of 5.47% of GNP. Procurement 60. The main US$3.0 million civil works contract for US$3.0 million at POMITC/CDC would be awarded on the basis of international competitive bidding in accordance with Bank Group Guidelines. Civil works and furniture contracts estimated to cost less than US$300,000 and contracts for goods to be financed through the Provincial Fund would be awarded on the basis of government procedures acceptable to the Bank Group. These procedures include locally advertised bidding and force account. These procedures are appropriate in view of the large number of geographically dispersed small contracts that would be financed in this fashion. Equipment, paper and materials bid packages over US$100,000 equivalent would be awarded on the basis of international competitive bidding in accordance with Bank Group Guidelines. Domestic manufacturers would be allowed a preferential margin of 15% or the existing customs duty, whichever is the lower, over the c.i.f. price of competing imports. Equipment and furniture purchases which cannot be reasonably grouped to form packages in excess of US$100,000 equivalent. /1 This includes increasing the share of the budget for primary education from 39% to 56%; reducing boarding and reliance on expatriate teachers; and charging tuition fees at higher levels of education.  - 18 - and aggregating less than US$1,300,000 could be made on the basis of: (a) contract awards following competitive bidding advertised locally; or (b) from existing government stores contracts. A small printing press (US$250,000) would be procured, after negotiations from a supplier in PNG that provides maintenance. Books (total cost estimated at US$300,000) would be purchased directly from authorized distributors. In addition, miscellaneous items, not exceeding US$10,000 in each contract and aggregating less than US$250,000 could be purchased on the basis of a minimum of three price quotations. Printing of textbooks subject to a maximum of US$250,000 could be done by the government printer. Disbursements 61. Disbursements under the proposed project would be made as follows: (a) 70% of local expenditures on civil works at POMITC/CDC and staff housing; (b) 100% of foreign expenditures for directly imported equipment, furniture, paper, books and materials; 100% of ex-factory costs of locally manufactured goods; and 70% of local expenditures for goods procured locally; (c) 100% of technical assistance costs (less housing and recruitment costs); and (d) sliding scale percentages of local expenditures incurred in respect of NPEP sectoral programs for provincial primary education during the following calendar years: 30% in 1983; 25% in 1984; and 20% in 1985. Disbursement is expected to be completed by December 31, 1987. Disbursements against expenditures incurred for the Provincial Fund would be made on the basis of a consolidated summary of quarterly statements of expenditure prepared by each province and audited annually by the Government. Disbursement against various other small local expenditures, each less than US$1,000 and aggregating less than US$500,000, could also be made against statements of expenditures. During negotiations the Government provided assurances that: (a) project accounts would be maintained in accord with sound accounting procedures; and (b) national and provincial auditing procedures acceptable to the Bank Group would be applied annually during implementation (Section 4.01 of the Development Credit Agreement). Benefits 62. The basic justification for the project is two-fold: (a) it would improve literacy and numeracy (and hence health, nutrition and population control); and (b) it would foster institution building in the sector. An ongoing study of girls underenrollment in Papua New Guinea would identify constraints in this respect and propose remedial strategies to be supported by the project. As a result of implementing the recommendations of this study and other project strategies, overall gross enrollment ratios are expected to increase from 58% to 68% by the end of the project period. About two- thirds (6%) of this increase would be female. The proposed project would assist in improving education quality by supplying about 150,000 children with textbooks and other instructional materials. In-service teacher train- ing would annually upgrade about 430 poorly qualified teachers and  - 19 - headmasters. Efficiency of the system would improve through increased class size (from an average of 31 to 35) and reduction in dropout rate (from 30% to an estimated 25%). 63. The proposed project would promote institution building through administrative staff development and institutional enrichment. Ten national headquarters staff, 40 provincial educational management staff, 100 inspectors and over 2,000 headmasters would receive administrative training during the project period. In-service teacher training and curriculum development would be consolidated on one campus to encourage continuous interaction between teachers and curricula developers. The proposed project would support the Government-s decentralization policy by helping improve institutional capacity in the provinces. Systematic school mapping would precede the preparation of provincial education plans with specific enrollment targets and criteria for preparing project-financed subprojects. These measures would support the Government-s target of providing universal primary education by the end of this century. Risks 64. The project faces an implementation risk regarding assistance to the provinces through the Provincial Fund. The sectoral programs which the Provincial Fund would support have only been in operation for a year, and evaluation of the provincial proposals for financing a variety of capital and recurrent costs has proven difficult because provincial strategies and targets have not been specified. There is a risk that items selected for funding assistance by the provinces would not be high priority items in terms of project objectives: namely expansion and improvement of primary education. To reduce this risk, implementation plans for the years 1982-87, including detailed strategies and means to achieve enrollment targets, would be prepared. Technical assistance would be provided under the project to strengthen implementation capacity in this respect. 65. Selection and release of about 65 individuals for nearly 1,900 man-months of fellowship training will be difficult for two reasons: lack of candidates and problems of operating government entities during absence of fellows. The project includes two specific elements to overcome this risk: (a) the project duration has been extended to seven years to permit the fellowship program to be extended over a feasible period; and (b) specialist services have been provided on a large scale as replacements for fellows. PART V - LEGAL INSTRUMENTS AND AUTHORITY 66. The draft Loan and Development Credit Agreements between the Independent State of Papua New Guinea and the Bank and the Association  - 20 - respectively, the report of the Committee provided for in Article III, Section 4 (iii) of the Articles of Agreement of the Bank and the Recommendation of the Committee provided for in Article V, Section 1(d), of the Articles of Agreement of the Association, are being distributed separately to the Executive Directors. 67. Special conditions of this project are listed in Section III of Annex III. 68. I am satisfied that the proposed Loan and Credit would comply with the Articles of Agreement of the Bank and the Association respectively. PART VI - RECOMMENDATION 69. I recommend that the Executive Directors approve the proposed loan and credit. Robert S. McNamara President By Moeen A. Qureshi Attachments Washington, D. C. December 1, 1980  -21- ANNEX 1 Page 1 of 5 PAPUA llE OWIAF mrlCet CWoUTS (WRIU 1rD AV aXQS LAI4 AD (TNOV86 SQ. E. - IDSI CENTUTNE)VN TOTAL 461. 7 IRICULTlAL 19.5 MST UtNT MIDLE IICCIM haDDLE INCQlIt 1940 /b 1970 h 8UnTE A AilA & PACIFIC LATIN AIMMICA * CARIRDEAN GM? PEA CAPITA (US) 140.0 280.0 560.0 894.8 1384.1 G! cousumnTa0 tu CAFl (AILOGEJS OF COAL EQUIIVALENT) 51.0 138.0 292.0 842.4 1055.9 POPL g AND VITAL STATISTICS POPMLATIM, KID-TR (MILLIONS) 1.9 2.4 2.9 maB8 PONUATION (P8CUET OF TOTAL) 2.7 9.8 15.5 39.1 63.4 POPULATIOU FJECTIOtS POPULATIO IS YEAR 2000 (MILLIOIS) 5.0 STATIONARY POPLATION (MILLIONS) 9.0 YER STATIONRY POPULATION IS REACHED 2120 POPULATION IDESITT PU SQ. 151. 4.0 5.0 6.0 376.1 28.1 PR SQ. DI. ARICULTURAL LAIND 98.0 124.0 149.0 2350. . 81.7 POPULATION AGE STRUCTURE (PERCENT) 0-14 YES. 39.7 42.0 42.0 40.4 41.4 15-64 YES. 57.4 55.0 .54.8 56.2 54.7 65 YRS. AND ABOVE 2.9 3.0 3.2 3.4 3.9 POPULATION GROWTII LATE (PERCENT) TOTAL 1.7 2.3 2.4/c 2.4 2.7 URBAN 12.6 15.3 8.5 4.1 4.1 CRUDE BLRTN RATE (PER THOUSAND) 44.0 42.0 41.0 28.7 34.8 CRUDE DEATH RATE (PER THOUSAND) 23.0 18.0 16.0 7.9 8.9 GROSS REPRODUCTION RATE .. 2.9 3.0 1.9 2.5 FAMILY PLAINING ACCEPTORS, A9NUAL (THOUSANDS) .. .. USERS (P8CENT OF HARRIED WOMEN) .. .. 3.0 39.0 FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 100.0 100.0 105.0 116.9 106.9 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 76.0) 83.0 85.0 108.9 107.4 PROTEINS (GRAMS PER DAY) 40.0 46.0 46.0 60.3 65.6 OF WHICH ANIKAL AND PULSE 22.0 20.0 20.0 18.8 33.7 CHILD (AGES 1-4) MORTALITY RATE 32.0 24.0 19.0 5.3 8.4 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 41.0 46.0 50.0 63.0 63.1 INFANT MORTALITY RATE (PER THOUSAND) .. 106.0 .. 52.8 66.5 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. .. 20.0 42.4 65.9 URBAN .. .. 30.0 62.1 80.4 RURAL .. .. 19.0 29.7 44.0 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. 14.0 18.0 52.8 62.3 URBAN .. .. .. 71.1 79.4 RURAL .. 5.0 5.0 42.4 29.6 POPULATION PER PHYSICIAN 14390.O0d 11630.0 11797.0 4120.1 1849.2 POPULATION PER NURSING PERSON 2450.0/d 2370.0 1934.0 2213.6 1227.5 POPULATION PER HOSPITAL BED TOTAL 170.0jd 150.0/e 218.0 819.4 480.3 URBAN .. .. RURAL .. .. ADMISSIONS PER HOSPITAL BED .. .. .. 28.8 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL .. .. 5.0 URBAN RURAL AVERAGE NUMBER OF PERSONS PER ROOM TOTAL . . URBAN RURAL .. .. ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL .. .. URBAN RURAL ..  - 22 - ANNEX 1 Page 2 of 5 TABLE 3A PAPUA NEW GUINEA - SOCIAL INDICATORS DATA SHEET PAPUA NEW GUINEA REFERENCE GROUPS (WEIGHTED AV GS - MOST RECENT ESTIMATE) MOST RECENT MIDDLE INCOME MIDDLE INCOME 1960 fb 1970 fb ESTIMATE fb ASIA 5 PACIFIC LATIN AMERICA & CARIBBEAN EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 32.0 52.0 60.0 98.6 99.7 MALE 59.0 63.0 70.0 99.2 101.0 FEMALE 7.0 39.0 49.0 97.7 99.4 SECONDARY: TOTAL 1.0 8.0 12.0 55.5 34.4 MALE 2.0 11.0 16.0 60.7 33.5 FEMALE 0.5 4.0 7.0 49.9 34.7 VOCATIONAL ENROL. (2 OF SECONDARY) 16.0 19.0 22.0 13.7 38.2 PUPIL-TEACHER RATIO PRI1IARY 35.0 33.0 31.0 34.6 30.5 SECONDARY 18.0 23.0 23.0 28.5 14.5 ADULT LITERACY RATE (PERCENT) 29.4 32.0 32.0 85.8 76.3 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 2.0 7.0 6.4 9.0 43.0 RADIO RECEIVERS PER THOUSAND POPULATION .. .. ,. 118.9 245.3 TV RECEIVERS PER THOUSAND POPULATION .. .. .. 39.4 84.2 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION *- *- 7.0 *- 63.3 CINEMA ANNUAL ATTENDANCE PER CAPITA .. 1.0 .. 4.9 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 1052.0 1255.0 1466.4 FEMALE (PERCENT) 41.4 41.3 41.1 36.8 22.2 AGRICULTURE (PERCENT) 89.0 86.0 82.0 51.9 37.1 INDUSTRY (PERCENT) 4.3 5.8 7.0 21.9 23.5 PARTICIPATION RATE (PERCENT) TOTAL 54.8 52.1 50.9 39.1 31.5 MALE 61.2 58.4 57.6 48.5 48.9 FEMALE 47.7 44.9 43.6 29.6 14.0 ECONOMIC DEPENDENCY RATIO 0.8 0.9 0.9 1.1 1.4 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS HIGHEST 20 PERCENT OF HOUSEHOLDS .. .. LOWEST 20 PERCENT OF HOUSEHOLDS .. .. LOWEST 40 PERCENT OF HOUSEHOLDS .. .. POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN .. .. 400.0 RURAL .. .. 275.0 192.1 190.i ESTIMATED RELATIVE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN .. .. .. ,. 474.0 RURAL .. .. .. 182.5 332.5 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN *. .. 10.0 RURAL .. .. 75.0 33.2. Not available Not applicable. NOTES /a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among the indicators depends on availability of date and is noc uniform. /b Unless othervise noted, data for 1960 refer to any year between 1959 and 1961; for 1970. between 1969 and 1971; and for Most Recent Estimate, between 1974 and 1978. /c indigenous population grovth rate is 2.32; /d 1964; /e 1966. April. 1980  -- 23-ANNEX 1 Page 3 of 5 DEFINITIONS_OF SOCIAL INIIICATORS rat.: Alnthogh rihe data are drow fre soa-Ze genralyjodgd the netathantnesadreibe Sn ahool also be n-ed that they nay not be inte- aetornlte royorahh Steana of na trekrE an-dan~dlrddeilnsad -o_eyn ose by dIffen nrtrrae In nlenttiog the data. The data are, ra-- theleat otafolno ornelhn ordrs of ngeiltde, indinan treda, and oh--eeri-e -remInna dlff--ene Senenronr- o Chrr-ftr.s.e.g.rope e III th sw ear gtro of tbe aohj et nosanrty and (21 aIoo-ay fro inS --haSe SIger -orag inoos tSar the n--ty g-rp ottohsS eon' e.antry(eep for "aItal S-rpla 0il fapo-te-" grooprohere `M11IIddeane Nort Sllics and Middl e-- toan to -sr Senat of arranger arelonaleaol silohnls) .In ohe reraegr-op data the a-erges see 'yAoatSo slhted anith-etf nears lee ear tadianr end sheen -n1y whew at leat Slt s the roanies Ito ger F hat data r- that iedieetne. Sln- the -erge ef .ra... e e, egtheIdnrr deyr-d: or the eotlahf1htay of of on Irdotor at a tineI_ e tghn ...oatry and refere-t groopa. AhOO Alto (thsasoed aqm)rLoe on te re yeste or -ettae-tg ono- TorltI ntl taFfere area romFinsig load ato and in,1ard asea in -o -oo,1f-nd no nd-a s---o annort S-- leech. Ag Eatri-ftime_ of egriolna-e area a-d teaForanily or pertaetl Oahtion Perborixo F a - FrFo1ot- di-nded by -arher of_p-atlofa lee erepa, poarres, earher at Snenber gardes rr no lIe falow; 1970 date mole cad fenoe gradnote tores, FraftiI oh-oeset,-end atii tart--ara_s f.r P--., -k- -d k-h- S.td- t. Iirsitlo.Fe Ooahro te - ota. ora97j, ort - FFoftir (esel ONF Ff5 CAFIOA (US11 - 1S nryt a 'ee tNarr ahrpic,el orba, ad toah)dirded ytteirkeapeth caber of he,tOta beds eahatd by sn n -neionrthd as W-r1d OreS Os1rs ~~1197-78 hel) 90, reiol sybhir and prinete geea r ynerdSsia e 19)1, ad 1918 dots. hahlhltelerne-t-ens .ifi.isFos are l etihttots p -rrtrlp staffed batlaterPbyslhes flteIhiit pmee . ptndtag Frhetiptly nastadia1 tOINECG CONSUMFTION Ff0 C TfI - A'rs . oaa. l s I...er..a .sryt(rot rare are -aas Seesihdrd. lana I hotFilselt ha_esIr, Oselde heelth ad medical an_ ant,Ftrem ee a o yr- ohe edtgohrs ie- rsesa pe--sessy tsefted hy ophystntee (bet bye ceaal et tnioityf kehlagra- of -ral eqoiayern Pee naFita; 19Sf, 1970, ard 1978 tote didwfe, err.) hbteb offee r-Fel nenda rsd petide deto. esdrneo eha E-ilitries. Pre stetittinol P_P_ee artas .:tPi- 'ULAT .. ...~~~~~~~~~~~~~~rpiea ealo iIl - istno,s a_d red_II andmt_ti_nsr.. TorahFoynotis fon-fea (wihtors - h of hol 1; 1960. 1970, ear 190 Aafthr e.raie e Tonl- ne af- drtf rsta an d isehargee d-t. free ho-pitels dietdrd it ynth so he of Sods. Ore r Fb etrr(-rentrof ota-l - t.tos aSnn tern1 Fopahatiro; dfeetdfff firon ofoba _ra map af-et -aperohlifty of dons yio-U tIN eogonnna;19ff. 1900, oad 1970 deto. AeaeSite nI Hls-hrld ietm ne sIho1d)-tte,wir,sdwe- Frrolatloa Frofeetfots R II - 9~D A h.teose'Itdnsts of a graaP af edfnidoels aha share lIfeg I.asters Panletor a ysr 000- emet npe]noo Frjsnhot oe lsmdan 900 er the' nrmin .ri. - heerderor_lagger nay - nay -tt be enaded hr, ntal 'I oitlnby eg a-d .. end Ie mralt er etility r-tes. nhs . iteahl o I. atisia psye. leg 1sf~ a-saynta-Y at iti-hni- I-ritg sitS --oan 'a Pee neitaI .n..w Sen of Fermen Pm ros i,, nil onba, endrshreaedrsatas lee, n fmh IifOr esyornasy -obhilietg as 70.5 year. The pane- golilag9a, -epenie-ly. rei -nmrnldrrnprsarttstes aeea1o etiliy .rt Dm bar three leech tess ing d-ni-e Or sa--piFd parts. ferilinyen--d-ag ta i...r. Ie.eIsod Fetfsly plooriag -ferorare ors.n.lF.lnn lee-n-o odslfga-ntl.oItm, ead esa Cant esasy is hen srogad on of hesetir roiiair frwttt arsina eltg fh eneonir ity Or Ilirg. '1want- asP~Xt, E-h fer..tity i.th-dafo p- ejttid isooes oftta,oha,en oaldelia rae eF aea- ..n.n-t. ISis St arhiened wale after lentilit ern derllr to AitdE-I.t .. the Irylanme hee of rain ne -Frd-tnill rate, h-m -ho g.e.. lr dete-tnoir- eno wrmrnrrplooes tself rosen Ib a sire art Fimamy sf0001 - renal, sale end fe erhstttl,ml r e of ly~~-1 . . sl, h ,tarlor.eny pOrF"ist I Ierlilmer of all oger an the orz!imar_lneta Fe sgr of reapertine -sti-tnd no the Seal irf the projensed-ntrnritn si neprsain priwas1y oithrol-ege papohenha; arrealy ir,lwdes nthldr- aged 6-11 t. the year 2000, sad the rate of delif- wf fFrthiiy rats no replet- yasSa dosr o diflena lash frlarewsin mean henrI. nror~h y.f~h. .i- ppati t_ Im iS riere edansttr e fflset way erreed10 perea .nee has.Seer-o--ehrd Frpoherint Ilersiny neewndernseSorl-twtwl.aeieeodFeaale-Crmpatsd as abort; sanosgeer~~~~~~~~~~~ Fin as fn. tfd-eeoFaFlaiosyensqaneinfontee010 hntata ofedsasorrqsiett lastferIyarsof-ypoo..pimay i.t...r. asoll ef 1l to 17 years of Age;rns _odar ore era grely Fer Os. Am. egrnolnaral hard -Coeponed as abtn- for 1rnntra -ed -anlded. orly. frneriotrherrrtlwest (re...recar of- seokiradary) - iTfooselt.rel- l-stirstisass FoFoisntr Age Onrrnore (rrneor) - hOdres 0-lA yeas), rentig-age R O- irriod s-oatraI, irdatrfe1, -r other p-ogsr wI S ohpert I adepe- 64 years, and reIred 165years sd Pie)a ere ae fsd-ya- Fp,,p. den>at a depaFtmeatm rf -enodardnrtwfo aiw;1900, 1900, ead 1900 dora. Foa--ahrnrw-elty r eodr oa ndeosere-lled I PrnsltlooOrreh goe lorreo) - ots A- ..Ise growth rates of tar1 rid- prIr e eodr eesdcddh obr of t...ro hrt CIteh year Fepoitirns foehOOF-SI, 165-00, to 1970-70. nrrtp -sg ed.. Peshatws rowit ats(peera) -rba-Ar..waI gronrth rates of rber .P,p- Adalt lIne-ieeferr)-Laraeaat al wsdawtte CrodsNorthnate ree tossatf - Anoal Ire- bi-hSs Per thosod of mid-yearp .O..ftt. .tp...i 5 - .d- ypnplatioe; 1960, 1970, ard h978 date. COflSDMThfO Nf Cs_do Death Rae pe ro -d) - Aos... Idr-he per the...s.d rf nid-y... Fasse os(e boedpoltr)-PsegrrF opri-e mos prysJ.istl; 1560, 1900, aed 1908don.. ~. -. . her na-ma rep-edootl period if she artaepDeeteg-Fnfn 7liey eils ..... t a"awiwlerirr (errhaasd-onlt-r)-All ye frnieefrrd tittfy rears; ....lly f fre-pra onraet diag ir, 1960, 1970,.ad 1970. iodan ognrlpbl e iwsn flptyplarff-sneode dca l- rf blst-eortrl deries ande anspins of rriorel amIlytleorio ..iFdFa. -a Is eff-o; ds.. foe -e-et year y not hr noparabl. sIsne most owne of- ild -beaIo 000 15-5 yer)woeshehnorlgne o I sron rFtosr sorln VFrtrsfrSsdnes to ahi marrid wares r tens af OFO5P. eneral pit per tha....nd pepnlieni; e-niades soles TV esf issn fOOl AND1 NUTRITIOfN inrronnie ead in ye-ar ohm. rgirt-ti- of TV mets a ~is eflt. lodn f oodFrdonio er apta 199-i=lf)- rde o pr epis rrel errser-irslntn lesrhesed rrhatth -Shws..easrag eeria prodantion ~~~~~~--t. ..~d d . f. .d lina-l- de...ted prIrFily to --oodisg geres1 saws ft is osdrs is or eleode year eals.C ......ir nra P"'ser g'oods (.g sagana-re. no be"daily" if itapoe-rsIt least fre ntmes aIes tes are- -1.ided) .Agg-egan podonti-r of eonS hnoosty ft beardEnoLoren A rddnrnt er rldradtsIr odSsi ira retirra.f -r-rag ynrdn-r prOn ara.ghts; 0961-65. 1900, asd 1900 data.. . bl .- Far noio sepi ofrairie lornet r reoinmers I- Crmpsted frotr rbi ois eregy qsioies o se lod sppirsecolo .e.t.rtrny Pm -spito LAO OC Per day. AVoilsSie -ppli-s Oerpsiasdtasi pf.dnti-rw, -rp-rts let Tnlh-FerIirtrs enonlyerOspnra nldr soon,ad rhange ten.Net sappli-e eslade atnal find, -cedI, erdfee n amhydStonaighaeie,soet,en q.. tislet ward In fond P-r-oing, org losse is dimtribstiwn. Seqotre- fsinltios So ree o- Ierener e-s -oparbir; 1960, 1900 add _rtnI wer _snortted by PAC Sbe or. d pitysiohooal needs Per --m1 errs- 170 se yity asd heolnih -woideriog eorne lterperorate, hody weights 1g9 Fral etent - Fres1o ohor Isome or p-retsage sO otol laitre fre. SwearSold Iloneh; 1961-65, 1970, ard 1907 data. Fm nette typly et -fishla Is p--eng fino se re; 90 91ad1978 dsta. ofpesi be s do) Fr-fronnno penoho oristyIter)-Lao ine In eh -irf rratotrr masfoars ne sF I'o ferd per dry. hnt saPply of food Is def ined am ohms. OR- anLhnrnn,wtredg spr lg frrllbor ferns; 1900,.-t-t -oPe protean, ority,b 50 nears.shoo-d-be arir,,tprotein.Ife-e sto0d Aerid Fond Sonry; 1961-Oh Elf sod 190 de, tda. 9. f-.l- 19Sf,.. 1978.ogIosdn. hesraIlspnrpsiretstfntm roed fer hoiras en pies- So .I grar ye day; 19t61-5 Th9 ..e. 197 aa. nne pef_rnniol wre .rd- It. 1-1 th- Ih... f 75 g- ~ ~ ~ loonfat.tey1sdp-t.asto-rat23ofgFoDlennrf rder 05ard -65 tid-are Chid l( p-et 1-) -nnln tet --yen. thosa1d) Antepl _dreby perI thoosheod So": WrI 1dor donnd Iron life65 nobes 095 1920 andi97 dne 19C60fDIIT 70ITIO 95Sh- IO. -ii.t. .. .f.t. ,PITO .-P,t-P I - Feortag o Pisn - tron (ht ahad 1 iad) t- teosneed by r.inies sn barIth;100 1-91 or. 1901 dor.bl;16,17 97dI.ICM ITI O of ogo pmrtho....rd line Soeths. OsiaodAaioetersro-ra1s,wa - lechr olmerl totl, elar,ard oralf .f. nr.o. hr.. es.O al otninionollynIdrqo- dirt yles r-stini ran-food neqsi-r r I o rater soyply let lodno teaned serf er retain or otreaned Sen rnrnoamlnar d wffoFdahlf -rsoorbri nrnoodIsp_ sod h thcesf rnehr Ptcleshl alatdFrhne nolorAhnoete fner_ io ro ferrert) - enha - Onobor nO elle intel,erhar, oarlaroll,odrr-,'0f-eanrnn on p ,,-dnsore hi enno tlor eonlttrd. -orn don-i~ fermredheSSlreltae en I:ne..snno.mnt..aodron..netnnhtaormrbn .. .......E~..~~- Spril, D- i80 i rn-tn -d onjim I...rL.'ti-e d`- _'AI .-  -24 - ANNEX 1 Page 4 of 5 COUNTRY DATA - PAPUA NEW GUINEA GROSS DOMESTIC PRODUCT IN 1978 /a ANNUAL RATE OF GROWTH (at current prices) FY68-73 FY73-1978 1978 US$ (T, FY69) (%, FY73) (%, FY73) Million % --------(Constant prices) -------- GNP at Market Prices 1,853.6 100.0 7.8/b 0.2/b 6.4/b Gross Domestic Investment 355.5 19.2 10.7 2.2 -5.1 Gross National Saving 365.0 19.7 Current Account Balance 9.5 0.5 Exports of Goods, NFS 838.2 45.2 24.6 1.5 13.5 Imports of Goods, NFS 886.3 47.8 10.9 3.7 1.7 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1972 Value Added /c Labor Force V.A. Per Worker US$ Million 000