Romania - Caracal - Titu Irrigation Project

Document of The World Bank FOR OFFICIAL USE ONLY FILE Copy Report No. P-3006-R0 REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE BANK FOR AGRICULTURE AND FOOD INDUSTRY WITH THE GUARANTEE OF THE SOCIALIST REPUBLIC OF ROMANIA FOR A CARACAL - TITU IRRIGATION PROJECT April 1, 1981 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit: Leu (Plural Lei) 1. Conversion Rate for Traded Goods Lei 15.00 = US$1.00 Leu 1.00 = US$0.07 2. Tourist Rate Lei 11.00 = US$1.00 Leu 1.00 5 US$0.09 Fiscal Year January 1 to December 31 GLOSSARY OF ABBREVIATIONS BAFI Bank for Agriculture and Food Industry (Banca pentru Agricultura si Industrie Alimentara) CAP - Agricultural Production Cooperative (Cooperative Farm) ERR - Economic Rate of Return ICA - Inter-Cooperative Association IAS - State Agricultural Enterprise (State Farm) MAFI - Ministry of Agriculture and Food Industry SMA - Agricultural Mechanization Stations (State Mechanization Units) UAC - Unified Agro-Industrial Councils  FOR OFFICIAL USE ONLY ROMANIA CARACAL - TITU IRRIGATION PROJECT Loan and Project Summary Borrower: Bank for Agriculture and Food Industry (BAFI) Guarantor: Socialist Republic of Romania Beneficiary: State enterprises and cooperatives Loan Amount: US$80.0 million Terms: Repayable in 15 years, including 3-year grace period, through semi-annual installments. Interest at 9.6 percent per annum. Relending Terms: The loan from BAFI to Agricultural Production Cooperatives (CAPs) for buried pipelines would be for 25 years including 5 years grace, and for on-farm irrigation equipment 12 years including 3 years grace. The interest rate would be 3 percent for CAPs with a penalty rate of an additional 3 percent for late payments. The Government would bear the exchange risk. Project Description: The main objectives of the project would be to increase and stabilize crop production and to raise productivity in a gross area of 130,677 ha (127,173 ha net) consisting of two separate subprojects in the areas of Caracal and Titu located in the south central part of Romania. This would be accomplished through construction of irrigation and drainage systems and related facilities. The project works would include construction and improvement of irrigation facilities and surface drainage systems, soil erosion control, sandy area reclamation, construction of four flood retention dams and valley training. Equipment for operation and maintenance and farm machinery would also be provided under the project. Benefits from crop production in the project areas would increase from a fluctuating annual average of about $342 million to a relatively stable annual average of about $693 million. Yield increases in various crops in the newly irrigated areas would range from about 100 percent for wheat to about 175 percent for maize and alfalfa and the | 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.  cropping intensity would increase by about 17 percent. The project would more than double labor productivity. The economy at large would be the main beneficiary of the project. However, it would also somewhat increase the income of the 73,700 active members of CAPs and the 4,300 employees of the lAbs in the project area, and is expected to create about 5,000 new jobs during construction and 1,200 thereafter. The project faces no special risks. Estimated Cost Local Foreign Total ----------US Million--------- Caracal Subproject 155.6 40.1 195.7 Titu Subproject 93.8 27.2 121.0 Base Cost 249.4 67.3 316.7 Physical Contingencies 18.7 5.0 23.7 Price Contingencies 18.0 20.9 38.9 Total Cost 286.1 93.2 379.3 1' Financing Plan Local Foreign Total ---------US ,Million-------- BAFI 32.0 - 32.0 State Budget including cofinanciers (foreign commercial banks) 243.4 13.2 256.6 Sub-borrowers 10.7 - 10.7 IBRD - 80.0 80.0 Total 286.1 93.2 379.3 Estimated Disbursement Bank FY 1982 1983 1984 1985 1986 Annual 2.0 22.0 21.0 21.0 14.0 Cumulative 2.0 24.0 45.0 66.0 80.0 Rate of Return; About 20 percent Appraisal Report: Report No. 3294-RO dated April 1, 1981 EMENA Projects Department / Net of taxes and duties.  REPORT AND RECOMNENDATION OF THE PRESIDENT OF THE IBRD TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE BANK FOR AGRICULTURE AND FOOD INDUSTRY OF ROMANIA FOR A CARACAL-TITU IRRIGATION PROJECT 1. I submit the following report and recommendation on a proposed loan to the Bank for Agriculture and Food Industry of Romania, with the guarantee of the Socialist Republic of Romania, for the equivalent of US$80 million to help finance a Caracal and Titu Irrigation Project. The loan would have a term of 15 years, including 3 years of grace, with interest at 9.6 percent per annum. Cofinancing of up to US$100 million is being sought, all from foreign commercial lending institutions. PART I. THE ECONOMY 2. The first basic report on Romania (Report No. 1601-RO, "The Industrialization of an Agrarian Economy under Socialist Planning") was circulated to the Executive Directors on April 20, 1978. An updating Country Economic Memorandum (CEM) discussing the New Economic Measures introduced in January 1979 was circulated to the Executive Directors on August 20, 1980 (Report No. 2757-RO). Country social and economic data are given in Annex 1. A. Long-term Trends and Development Strategy 3. Over the past three decades, Romania has pursued a development strategy designed to industrialize a primarily agrarian economy. The main features of this strategy have been (a) a high rate of investment; (b) development of a broad industrial base, with priority given to heavy industry; (c) development of local natural resources, including the reorganization and modernization of agriculture; (d) balanced regional distribution of production and incomes; and (e) training of a skilled labor force. This strategy had been carried out through a system of comprehensive central planning and management, guided by central party and government authorities. 4. As a result, Romania's economic development since 1950 has been impressive, characterized by a rapid economic growth and considerable structural change. According to official statistics, national income has grown in real terms at an annual average rate of about 9 percent. Per capita GNP in 1979 is estimated to have been US$1,900, according to the Bank Atlas methodology. Since 1950, investment has grown at an average annual rate of 13 percent, as a result of which the share of gross investment in GNP has risen to about 30 percent in 1978. Industry, which grew at 11.3 percent per annum  over 1970-1979, has been the driving force of economic growth, receiving around 50 percent of investment, most of which has been allocated to the capital goods industry. As a result, industry has become the leading sector, accounting in 1978 for about 50 percent of GDP and for 34 percent of the labor force, compared with agriculture's 14 percent share of GDP and 33 percent of the labor force. With the transfer of labor from agriculture to industry, the population has become increasingly urbanized. Standards of living have increased substantially, partly because of the growth of personal incomes and partly because of provision through the state budget of expanded and improved education, medical services, housing and social expenditures of other kinds. Furthermore, Romania's integration into the world economy has increased, as the level of trade has grown and its composition altered. B. Recent Economic Developments 5. During the first four years of the last Plan period (1976-80), the expansion of the Romanian economy has slowed down perceptibly. The average annual rate of national income growth of 8.4 percent was below the planned growth rate of 11 percent, and growth has been decelerating, falling annually from 10.5 percent in 1976 to 6.2 percent in 1979. These changes reflect the emergence of a number of internal and external constraints, notably the pace at which improvements in productivity and efficiency can be attained; the ability of the economy to bring new capacity into operation as planned; a deterioration in the terms of trade; and trade restrictions in important export markets. 6. Industry continued to be the leading sector of the economy. However, the growth of industrial production also slowed down from an average of 12 percent per annum during 1976 and 1977, to 9.0 percent in 1978 and 8.1 percent in 1979. As in the past, the growth of capital goods exceeded that of consumer goods and the fastest growing subsectors were metallurgy, machine-building, chemicals and construction materials. Agricultural production grew at a respectable average rate of 6.3 percent between 1976 and 1979, displaying however, large annual variations due to changing weather conditions. 7. As elsewhere, energy has become a critical sector for the Romanian economy. In the aftermath of the 1973 fuel price increase, an emergency decree was issued, fostering domestic energy production and imposing cuts and stringent restrictions on industrial energy consumption. These steps were followed by further measures in 1977 and 1979, designed to conserve domestic oil and gas resources and expand use of domestic coal and hydropower resources. Although small increases in domestic oil production were originally planned in the present plan period, production has in fact fallen while natural gas production has stabilized. Coal production increased only 8 percent in the first three years of the plan, but jumped by 12 percent in 1979 and strenuous efforts are being made to expand it further. In spite of the campaign to restrain the growth of energy consumption, the difficulties in bringing new coal mines into operation on schedule has resulted in a tripling of oil imports between 1975 and 1979. The comprehensive directives for the preparation of the energy development program for the period 1980-2000,  - 3 - published in July 1979, is designed to make Romania self-sufficient in energy by 1990, through further development of coal and hydropower resources, through the introduction of nuclear power and through investment in energy saving industrial equipment. This may be optimistic, given the rapid pace of coal and nuclear power development required to meet the target, but the vigorous adjustment of policies and priorities by Romania to the changed energy situation is expected to result in striking changes in the pattern of energy production by 1990, and further improvements in the efficiency of energy use by consumer. 8. Between 1976 and 1979 investment fell about 6 percent short of planned levels. The shortfalls occurred chiefly in industry where the planned annual growth rate of investments of over 20 percent could not be met, partly because of the diversion of resources in 1977 to the repair of earthquake damage. Industrial investment, in fact, grew by 13 percent a year--in itself a very respectable achievement. The shortfall in investment does not reflect difficulties in mobilizing internal financial resources, but a number of supply-related factors, in particular, capacity constraints of design institutes, shortfalls in the production of construction materials, capacity constraints in the construction sector, production shortfalls for some domestic equipment and more restrictive foreign exchange allocations for imported capital goods. 9. Changes in the level and distribution of employment accompanied the growth and structural change of production. The total labor force increased by only 0.3 percent per year between 1976 and 1979, but large intersectoral shifts in the labor force continued. Between 1976 and 1979, the agricultural labor force fell from 36 percent to 31 percent of the total. The outflow from agriculture, which is determined chiefly by the needs of non-agriculture sectors rather than the ability of agriculture to compensate for the loss through mechanization, appears to be leading to some seasonal labor shortages; recourse has been necessary to students and other groups to meet short term labor needs. The Government recognizes that the transfer of labor has to slow down to avoid adverse effects on agriculture output, and is thus giving greater emphasis to increases in labor productivity. C. New Economic Measures 10. The slow-down of growth during the 1976-80 Plan period reflects to some extent the increasing maturity and complexity of the economy and the difficulties of moving from a development strategy emphasizing growth through increases in capacity to growth from using existing capacity more efficiently. As part of its efforts to improve productivity and efficiency, the Government introduced in January 1979 a number of changes in the planning and management system, commonly referred to as the "New Economic Measures". Their main purpose is to increase the responsibility of enterprises for implementing plan targets by extending the scope of enterprise autonomy and by sharpening the impact of financial rewards for success and financial penalties for failure.  -4- 11. The centerpiece of the New Economic Measures is the replacement of gross production by net production as the major performance indicator complemented by physical output targets. The change from gross to net production is to heighten the inducement for reducing inputs. To reinforce concerns about net production at the enterprise level, a new system of enterprise revenue and expenditure budgeting has been introduced which combines evaluation criteria, computation of income bonuses and penalties for over and under-fulfillment of net production targets, and the tax assessment of enterprises. The second major element of the New Measures is the modification of the planning system. The changes introduced have two components; first, the greater involvement of enterprises in the resolution of inconsistencies and constraints in the planning process. Second, the measures increase the use of purchasing and delivery contracts. Whereas, in the past enterprises could make annual contracts only after the finalization of the plan, they are now able to make multi-year contracts which will form the basis for the first draft of the annual plan. Both of these changes are intended to bring greater reality to plans. 12. The New Measures also involve important changes in financial flows between the enterprises and the state budget. In the past, enterprises retained very little of their profits, and transferred most, in the form of taxes and other payments to the state budget. In future, enterprises will retain a greater share of profits. The major payment to the budget will be a "prelevation tax", which is calculated on the value of net production and paid from profits, but the enterprise will retain a greater part of its profits for distribution between funds for investment, working capital, housing, socio-cultural activities and profit-sharing fund. The New Measures, however, are explicitly not intended as a step towards "decentralization". Central planning remains the foundation of the system and will not be relegated merely to determining major macro-economic ratios and setting price or policy parameters, on the basis of which enterprises would autonomously prepare their own output plans. The New Measures are, in fact, a conservative attempt to strike a balance between extended enterprise autonomy dictated by the growing complexity of the economy on the one hand and a firm belief in centralized planning and control as the means of obtaining high growth rates and structural change on the other. D. External Trade and Foreign Borrowing 13. In foreign trade, developments have in the 1976-1980 Plan period been substantially different from and decidedly less favorable than those planned. The five-year plan for 1976-1980 envisaged growth rates of 13 percent per annum for imports and 18 percent for exports in real terms aiming at a trade surplus which would allow the country to repay some of its foreign debt. Between 1976 and 1979, in fact, imports increased at an annual average rate of 16.4 percent and exports of 13.1 percent in current prices. This resulted in a sharply growing trade deficit which in 1979 reached $1.3 billion, virtually all of it in the convertible currency area. On the import side, the deteriorating trade balance reflects rapidly rising international prices, especially for petroleum. Export growth has been unable to keep pace with import requirements, partly because of less favorable price movements in  Romania's principal export markets. The insufficient growth of exports is also explained by the vulnerability of Romanian exports to import demand fluctuations and import policies of the receiving countries, and to difficulties in meeting design and quality standards and establishing marketing policies essential to extend the foothold in highly competitive product markets. 14. The large trade gap together with rising interest payment has led to a current account deficit of US$1.7 billion by 1979. The deficit has been financed through increased capital inflows, with total medium and long-term debts rising from US$2.8 billion in 1975 to about US$5.6 billion at the end of 1979. Most of the inflows have been suppliers' credits and eurocurrency borrowings; Romania has borrowed almost US$1.1 billion on the eurocurrency market since 1975, and has been able to lengthen maturities and reduce the spread over LIBOR considerably during the period. The scale of term borrowing available to Romania has not been sufficient, however, to finance the current account deficit fully and the Government had to resort to substantial short-term borrowing between 1977 and 1979. The net inflow of short-term capital was particularly large in 1979, about US$1 billion, and by the end of 1979, outstanding short-term debt had increased to US$1.8 billion. E. Development Prospects 15. In November 1979 the Twelfth Congress of the Romanian Communist Party approved the Directives for the preparation of the new five-year plan 1981-85 which has not yet been finalized. Although they suggest the continuation in broad terms of the past development strategy, they project lower growth rates than envisaged in earlier drafts of the Directives and than those achieved during the 1976-1980 Plan period. They also call for lower investment rates. These changes indicate government recognition that a major issue underlying the development path of the economy in the 1980s is the allocation of resources between consumption and investment. In our view, this planned slowdown of growth momentum is commendable for three particular reasons. First, there is a need to allow Romanian consumers, who compare their economic position increasingly with that in Western European economies, to share more fully in the fruits of economic growth than the high investment levels of the past have permitted. Second, due to the growing complexity of the economy, its rate of growth is increasingly influenced not only by the rate of investment but also by improvement of productivity and efficiency, and, as is now widely recognized within COMECON countries--this cannot be accomplished without tangible incentives translating into higher consumption. And third, as the more recent empirical evidence suggests, the Romanian growth path is approaching the margin of absorptive capacity. It remains to be seen whether the consumer goods industries have the capacity to increase production and to improve their output mix sufficiently, and whether the investment goods industries can provide for the investment requirements of the consumer goods industries.  - 6 - 16. The directives and back-up documents prepared for the Twelfth Congress make clear, that the economy is becoming more dependent upon imported raw materials and--at least temporarily--energy, and more vulnerable to sudden changes in the terms of trade. The Romanian authorities, recognizing the need to economize on the use of energy and imported raw materials, have been reexamining the composition of investment in a number of sectors prior to finalizing the new five-year plan for 1981-1985. It is clear that to contain the growth of imports to manageable proportions, domestic production must be stimulated in certain areas (i.e. energy, investment goods) and the efficiency of input use improved. E. Creditworthiness 17. With the large increase in the current account deficit and the associated increases in external borrowing described in paragraphs 13 and 14 above, the debt service payments (including interest on short-term credits) rose to $1.24 billion in 1979 or the equivalent of 12.3 percent of gross foreign exchange earnings. In the convertible currency area where most of Romania's debts were incurred, the debt service ratio was 20.6 percent compared with 17.4 percent in 1978 and 18.6 percent in 1977. For 1980, another large current account deficit is expected reflecting in part the sharp increase in oil prices. To contain future deficits and to keep the service burden manageable, the Government has recently adopted a series of measures aimed at increasing exports and restraining imports. The most important one has been the introduction of a new exchange rate mechanism in early 1981 which allows world prices to be reflected more directly to users of imports and producers of exports. This will provide strong incentives to economize on imported goods, to substitute domestic products for imported ones, and to produce for export markets where better prices could be obtained. At the same time, the government has stated that prices for locally produced raw materials will be increased so as to bring them closer to world prices. Other steps taken include a directive giving priority to export production over production for the domestic market; renewed emphasis in offsetting trade arrangements; a consolidation of the investment program which will result in lower imports of investment goods; and increased recycling of raw materials. Given Romania's strenuous development efforts within the context of well articulated plans, these measures and possible future steps aimed at enhancing exports and economizing the use of imported inputs, are likely to succeed in keeping the country's debt burden within manageable limits, thus preserving its creditworthiness for medium and long-term borrowing. PART II. BANK GROUP OPERATIONS IN ROMANIA 18. The proposed loan would bring total Bank commitments to Romania to $1,862.6 million for 30 loans in agriculture, industry, power and transport. Disbursements under the Bank's initial loans were slow during 1975, but this situation has improved considerably since 1976. Annex II contains a summary statement of Bank loans to Romania and notes on the execution of ongoing projects as of February 28, 1981.  -7- 19. Foreign exchange, especially in convertible currencies, continues to be a major constraint. It remains one of the major objectives of Bank lending to help alleviate the country's shortage of foreign exchange by providing long-term external capital and by financing projects which will expand foreign exchange earnings or savings. The Bank has also assisted the Government to mobilize cofinancing for appropriate projects. The Bank helped to attract foreign commercial banks to provide $100 million cofinancing in August 1979 for the Second Livestock Project for which a Bank loan of $75 million was made in April 1979. Also, syndicated cofinancing loans of $200 million in total were concluded for the Mostistea and Calmatui Irrigation and Drainage Project for which a Bank loan of $70 million was made in April 1979 and the Third Livestock Project for which a Bank loan of $85 million was made in January 1980. More recently, another $200 million syndicated cofinancing loan from commercial banks was concluded in January 1981 for the Danube-Black Sea Canal project for which a Bank loan of $100 million was approved in April 1980. Through their contacts and subsequent negotiations with commercial banks, the Romanian authorities now appear convinced of the positive value of cofinancing in the form of financial credits, and have indicated their intention to seek similar arrangements for future Bank assisted projects. Bank lending also aims at supporting the steps being taken by the Government to introduce new industrial technologies, to improve the quality of products and production efficiency, to reduce production costs and to provide for necessary electric power development. Marketing, especially for export goods, is also emphasized. Special attention is given to agriculture where production is still unnecessarily dependent upon weather and where productivity levels are still comparatively low. 20. A number of further loans are under consideration, including loans for irrigation, industry, power, road and rail transport and regional development. The Government has also proposed and the Bank is considering lending for a port project and for the development of additional petroleum resources. 21. In addition to lending, the Bank (through EDI) has assisted Romania by conducting training courses on economic and financial evaluation and methods of analysis in various sectors, including industry and transportation, for 169 Romanian officials in Belgrade in 1973 and in Bucharest annually since 1975 in collaboration with a Romanian academic institution. Additional courses, including one for agricultural project appraisal, are under discussion with the Government. The methodologies taught in these courses are becoming more widely known in Romania and are expected for some projects to begin to supplement the methodology normally used by the Romanian planning authorities. 22. The projects, for which assistance has been committed or is being considered, represent only a small portion of Romania's total need for external financing. However, they will provide a substantial net addition to the inflow of convertible currency, and are helping to set a pattern for obtaining longer-term convertible finance from other sources. The disbursed debt outstanding to the Bank constituted about 13 percent of Romania's total projected convertible currency debt in 1980; the Bank's share in Romania's debt service payments in 1980 was about 6.7.  -8- PART III. THE AGRICULTURAL SECTOR IN ROMANIA 23. Agriculture continues to be a key sector in the Romanian economy, providing almost all of the nation's food, the raw materials required for agricultural processing industries and significant foreign exchange earnings. In 1979 agriculture accounted for 15 percent of GDP, 31 percent of the labor force and 12 percent of export earnings. The proportion of the total labor force employed in agriculture declined from 74 percent in 1950 to 31 percent in 1979, thereby releasing a large number of people for employment elsewhere in the rapidly growing Romanian economy. National income increased at an average rate of about 9 percent from 1951 to 1979. During this period national income in agriculture grew at a rate of 3.5 percent per annum. Agriculture's share of national income declined from 28 percent in 1950 to 15 percent in 1979. 24. About 14.9 million ha, or 63 percent of Romania's land area, are used for agriculture. Of this area, 66 percent is arable, 29 percent is grassland and 5 percent is used for orchards and vineyards. There are three principal agro-climatic zones; the Plains Zone, the Foothills Zone and the Mountain and Tableland Zone. The Plains Zone which is the richest agricultural area, including all of the land in the Danube plains, includes 53 percent of Romania's arable land. About 64 percent of all arable land is devoted to production of grain (mostly wheat and maize). Other crops include sunflower, sugarbeet, soybeans, potatoes, vegetables, fodder crops, grapes and fruit. In 1979 crop production accounted for 56 percent of total agricultural output, while livestock accounted for 44 percent. Sector Organization 25. Romanian agriculture has undergone a major transformation following the collectivization measures introduced since the Second World War. Today agricultural production, especially crop production, is dominated by state agricultural enterprises (IASs) and agricultural production cooperatives (CAPs). For example, in 1979, 87 percent of cereal production was in the socialist sector. Production by individual farmers and from small private plots of cooperative members is important for fruit and livestock but not for field crops. Agricultural mechanization stations (SMAs) play a major role in providing machinery hire services. Recently a number of Inter-Cooperative Associations (ICAs) have been formed through combining the activities of a number of individual cooperatives. These ICAs are engaged in various large scale agricultural operations such as pig and poultry production. 26. In 1979 Romania had 396 IASs with an average size of 5,100 ha and an average labor force of 550. They farmed 2.0 million ha, equivalent to 14 percent of all agricultural land. Other state agricultural units, including research and experimental stations and farms belonging to Popular Councils (local administration bodies), covered 2.5 million hectares, or 16 percent of agricultural land. In the same year, there were 4,400 CAPs, with an average size of 2,080 ha and 530 members.  - 9 - The total area of land under CAPs was 9.1 million ha, equivalent to 61 percent of all agricultural land. There were 709 SMAs which provide machinery services to producers. Each SMA had an average of 194 tractors plus a wide range of other equipment. Each working member of a CAP is allocated a small plot (normally 0.15 ha) which he can use for production of crops. Members are also allowed to keep limited numbers of livestock on CAP land. About 10 percent of the land controlled by CAPs is used for individual members' plots. Individual farmers number almost half a million and own about 9 percent of total agricultural land. Most of their farms are in the more mountainous regions. They use only 5 percent of the nation's arable land, although they have 19 percent of the grasslands and 21 percent of the orchards. They own 16 percent of all cattle, 14 percent of sheep, 12 percent of poultry and 7 percent of pigs. Together with CAP plotholders they produced 55 percent of all milk, 60 percent of eggs, 42 percent of wool, 47 percent of poultry and 63 percent of fruit in 1979. 27. At the national level, the major State institution in the agricultural sector is the Ministry of Agriculture and Food Industry (MAFI). MAFI plays a major role in preparing the Five Year Plan for the sector and is the supervisory institution for plan implementation. In each district, the Ministry is represented by a general directorate, which is responsible for all agricultural activity in the district including both IASs and CAPs. Marketing is organized nationally under MAFI, with general economic directorates responsible for processing and marketing specified commodities. Foreign trade companies are responsible for the exports of the general economic directorates. Performance in the Agricultural Sector 28. Although considerable progress has been made in developing agriculture in Romania, the sector remains relatively undeveloped. Between 1951 and 1979 gross agricultural output increased at an average rate of 4.5 percent. During this period the area of arable land has remained about the same but crop yields have increased markedly. For example, the average yield of wheat increased from 1.1 tons per ha in 1951-1955 to 2.6 tons per ha in 1977-1979, while maize yields increased from 1.3 tons per ha to 3.3 tons per ha over the same period. Livestock yields have increased while there have also been significant increases in the numbers of all types of livestock. Milk yields for instance, increased from 867 litres per cow in 1950 to 1,961 litres per cow in 1979. Nevertheless, crop and livestock yields in Romania are still appreciably lower than those obtained in a number of other countries. While agricultural production has been increasing, the labor force in agriculture has been falling. Labor productivity has thus increased much faster than agricultural output. In 1979 gross agricultural output per worker was more than six times the level in 1950. Despite this substantial improvement, the absolute level of labor productivity is still relatively low. Labor intensive methods of production, such as hand harvesting of maize and the use of animal-drawn carts, are still common, especially on cooperatives.  - 10 - Sector Issues and Development Strategy 29. The growth of Romanian agriculture has been constrained by several factors, especially rainfall, lack of machinery and farm inputs and problems concerned with organization and incentives. Rainfall in Romania is both low and erratic, especially in the main cropping areas in the Plains Zone. Flooding has also been serious in many low lying areas. Fortunately the soils in the Plains Zone are good while there are excellent sources of water in the Danube and its tributaries. Romania has therefore given high priority to development of irrigation and drainage. The total area under irrigation has increased from 200,000 ha in 1960 to 2.2 million ha in 1979. Government plans to increase this to 3.7 million ha by 1985. By then 38 percent of arable land would be irrigated. 30. Serious shortages of machinery and farm inputs, especially fertilizers, insecticides and herbicides have been experienced. These shortages have been aggravated by Romania's foreign exchange needs, for Government has sometimes exported fertilizers or restricted imports of other inputs needed by the agricultural sector. Hitherto, Government policy has given much greater emphasis to development of IASs rather than CAPs. IASs have been provided with the best managers and have received much higher levels of investment and supplies of tractors, machinery and fertilizers, while CAPs have been neglected. In 1979 the level of investment per ha of IASs was about fivetimes that of CAPs and they were therefore more productive than CAPs. This neglect of CAPs has been one of the key weaknesses of Romanian agriculture, for CAPs control more than 60 percent of all agricultural land. In 1978 Government decided to accord equal treatment to IASs and CAPs. This new policy is to be implemented through the creation of Unified Agro- industrial Councils (UACs) which are responsible for providing equal levels of service and material inputs to IASs and CAPs. About 700 UACs have been established, and for each one there is an SMA. Each UAC will be responsible for coordinating all agricultural activities undertaken by the IASs and CAPs for which it is responsible. On average each UAC will be responsible for about 20,000 ha of land. Implementation of this new policy is still underway and it is too early to assess the effectiveness of the UACs. These organizational changes are being complemented by changes in the structure of wages and incentive bonuses. These changes, which link payments to workers to achievement of profit targets, were introduced in 1978 under the "New Economic Measures". These changes have already been introduced on IASs and their extension to cooperatives is planned. 31. Agricultural policy is formulated within the framework of a national plan approved by Government and the Romanian Communist Party. For the 1981-85 plan, the guidelines forecast that national income will increase between 6.7 and 7.4 percent p.a., gross industrial production will increase in the range 8.0 to 9.0 percent p.a. and gross agricultural production at 4.5 to 5.0 percent p.a. Investment in agriculture in this period will amount to 155 billion lei (US$10 billion), equivalent to 12.7 percent of total national investment for the plan period. The main thrust of agricultural development strategy will be to increase crop and livestock yields through improved  - 11 - organization, the use of more efficient techniques, especially greater mechanization, increased use of fertilizers and other inputs, and further large investments in irrigation. The Need for Irrigation Infrastructure 32. Instability in agricultural production results from vulnerability to erraLic weather conditions and the lack of infrastructure to mitigate their iiiipact. Excessive precipitation and flooding during planting and harvest seasons, and inadequate rainfall during summer growing seasons, have resulted in year to year fluctuations in national output of the order of 10 to 20 percent. Fluctuations of production in particular regions can be even gk:f..ter. Only production of vegetables has increased steadily, reflecting the TUllatively more controlled conditions under which they are produced. The Gcvernment is well aware of this problem and has placed high priority within Lhe agricultural sector on solving it. Forty percent of agricultural inivestment in the 1971-75 Five-Year Plan was for land reclamation, irrigation and drainage; the comparable figures for the 1976-80 Five-Year Plan and the 1981-85 Five-Year Plan are about 20 percent and 18 percent, respectively, reflecting a relative decline in infrastructure investment and increasing eiphasis on investments to make productive use of irrigation facilities already established. Since 1960, total irrigated land has been increased from about 0.2 million hectares to 2.2 million hectares in 1979, and, the relative reduction in the share of the agricultural budget allocated for irrigation notwithsLanding, another 700,000 hectares are expected to be brought under irrigation by the end of 1980. The Government plans to irrigate about 3.7 million ha by 1985. Irrigation works to date have concentrated on large schemes using waters pumped from the Danube. Six such projects have already been financed by the Bank since 1975; execution of these projects, which also include drainage, soil erosion control and farm mechanization components, is proceeding satisfactorily (see Annex II). The Bucsani-Buzau-Siret-Prut Irrigation (BBSP) Project for which a Bank loan of $75 million was made in December 1980 was the first Bank financed irrigation project in Romania to take water not directly from the Danube but tributaries of the Danube. The proposed project would also take water from the Danube tributaries of Olt and Arges. In this and in the previous irrigation projects, the Romanians have accepted a number of the Bank's suggestions which improved project design, particularly in canal alignment, location of pumping stations, the design of canals in loess soils, the design of drainage works and methods of soil reclamation. Also close understanding on technical and policy matters in this ,asic sub-sector has been attained by continuous dialogue with the Romanian authorities through missions and negotiations. This has enabled the Bank to become more involved in recent years in detailed discussions of projects at an early stage in their preparation which has increased the Bank's influence on project formulation. Agricultural Investment Financing 33. The Bank for Agriculture and Food Industry (BAFI) is the Government's specialized agency for financing projects in agriculture, irrigation and food processing. As such, BAFI has been the Borrower for all Bank loans in support  - 12 - of agriculture and would be the Borrower for the proposed loan. BAFI was established in 1968 as a channel for, and administrator of, all investment funds provided under the State plan for the agricultural sector. It lends to both IASs and CAPs and repays the Government as it receives repayments of subloans. BAFI is involved in all phases of project appraisal, execution and supervision, and it has a large technical and economic staff located in Bucharest, in 39 district (judet) branch offices and in 92 sub-branches throughout the country. BAFI has thorough review and approval procedures for all investment projects. In addition to BAFI's review, all agricultural investments for more than lei 10,000,000 ($66,667) are reviewed and approved by MAFI and those greater than lei 70,000,000 ($4.7 million) must be approved by the Council of Ministers. BAFI also provides short-term credit to, and maintains settlement accounts for, all cooperative and State agricultural enterprises; and acts as fiscal agent for the Government for collection of State revenues from these enterprises. As the Government's channel for investment financing in agriculture, BAFI's primary source of funds is the State budget; the Guarantee Agreement therefore includes a provision that the Guarantor shall provide all necessary funds for the implementation and operation of the project. Bank Contributions in the Agricultural Sector 34. The Bank's lending strategy is based on the findings of various reports, including the Agricultural Sector Survey of October 1976 (No. 953a-RO), the Basic Economic Report of March 1978 (No. 1601-RO) and a number of recent appraisal reports. A cattle and sheep survey was also carried out during 1979 and its report is under preparation. Beyond the provision of foreign exchange, the main objectives of Bank lending remain to assist the Government in addressing the problems of production instability and low productivity. In addition, in appropriate cases, foreign exchange earnings or savings are an objective. Attainment of these objectives will help to raise the level and quality of domestic food consumption. 35. With increasing experience in the agricultural sector and a greatly improved relationship with the Romanian authorities, the Bank has been able to make other significant contributions. Technical improvements in project concept and design have been attained in a number of fields including irrigation, poultry, pig and cattle production and horticulture. Additionally, BAFI has introduced the Bank methodology in its economic evaluation of subprojects. The Bank has made fourteen loans for agriculture totalling $896.5 million since 1975. The Giurgiu-Razmiresti Irrigation Project, the first agricultural project financed by the Bank in Romania, has been successfully completed with cost overrun and higher yields growing at a faster rate than the appraisal estimates, and a completion report on this project has been prepared. No reports of the Bank's Operations Evaluation Department have yet been prepared on agricultural projects in Romania.  - 13 - PART IV. THE PROJECT 36. The project, which is included in the Government's Sixth Five-Year Development Plan, was originally discussed with an identification mission in February 1979 for possible Bank financing. After two preparation missions, a preliminary preparation report was provided to the Bank at the end of July 1979. After the Bank's request for additional data and information, the preparation report was revised in August 1980. Through these stages of preparation, the Bank has made significant contributions to improving the technical aspects of the project design. The project was appraised in October 1980, and negotiations were held in Washington in March 1981. The Romanian delegation was headed by Mr. Ion Rusinaru, President of BAFI and included representatives from BAFI and the Ministry of Agriculture and Food Industry. A report entitled "Staff Appraisal Report - Caracal-Titu Irrigation Project" No. 3294-RO dated April 1, 1981 is being distributed separately to the Executive Directors. The main features of the project are mentioned in the Loan and Project Summary and in Annex III. Project Objectives 37. The project addresses the two major problems in the Romanian agriculture sector, namely production instability and low productivity. In particular the project addresses the production instability resulting from erratic weather conditions and the shortage of facilities and management skills to mitigate their impact. The project would aim to increase and stabilize crop production and also to raise labor productivity in a gross area of 130,677 ha (127,173 ha net) consisting of two separate subproject areas located in the south central and south eastern part of Romania (see Maps); this would be accomplished through the construction of irrigation and drainage systems and related facilities. The cropping patterns for the project areas have been related to domestic needs and foreign markets. These cropping patterns include a range of crops with varying growing seasons which together cover the entire summer period ensuring an almost continuous use of labor and farm implements. The area under major crops would be maize (51 percent), wheat (17 percent), alfalfa (5 percent), sunflower (7 percent), fruit and vegetables (5 percent), sugarbeet (6 percent) and soybeans (6 percent). Project Description 38. The project would consist of two distinct and geographically separate subprojects in the south central and south eastern areas of Caracal and Titu. Water sources for these subprojects are the Olt and Arges rivers respectively, which are tributaries of the Danube river. Project works consist of construction of new irrigation facilities for about 121,900 ha, improvement of existing irrigation facilities for 8,800 ha, construction of new surface drainage systems for 63,400 ha, improvement of existing surface draining systems for 9,400 ha, soil erosion control for 1,700 ha, sandy area reclcamation for 4,000 ha, construction of four flood detention dams and 55 km valley training. The project would also provide equipment for operation and maintenance of irrigation and drainage works and farm machinery to intensify  - 14 - agriculture on the area to be irrigated by the project. The existing capacities for processing and storing cereals, vegetables, fruits, sunflowers, soybeans, sugarbeet and other project products are considered sufficient to absorb the incremental production. 39. Water availability for the irrigation systems would depend on the timely completion of the multi-purpose dams now under an advanced stage of construction by the Government outside the project. Assurances have been obtained from the Government that Draganesti dam on the Olt river be completed by December 31, 1984 to permit timely irrigation of Caracal subproject (Loan Agreement, Section 4.01(d) and Guarantee Agreement, Section 2.03). Assurances have also been obtained from the Government that the Golesti and Riusor dams on the Arges river would be completed by December 31, 1983 and December 31, 1984, respectively to enable irrigation in the Titu subproject (Loan Agreement, Section 4.01(e) and Guarantee Agreement, Section 2.03). Since some of the drainage works under the project would be more successfully carried out if the works that the Government is now undertaking are completed on time, assurances have been obtained from the Government that the flood diversion channels to the Arges river from the adjacent Dimbovita river be completed by December 31, 1982 (Loan Agreement, Section 4.01(f) and Guarantee Agreement, Section 2.03). These diversion channels would crosscut the Sabar flow which would have the dual function of a canal and a drain under the Titu subproject. Project Implementation and Operation 40. The Ministry of Agriculture and Food Industry, through its various departments and trusts, would be responsible for planning, designing, construction, supervision and operation and maintenance of the project. Planning and design of all project works would be carried out by the Institute of Land Reclamation and Design, and construction by the Construction Trust for Land Reclamation Works. Both organizations are part of the Ministry's General Economic Directorate for Land Reclamation and Agricultural Construction. The irrigation, drainage and soil erosion control works would be operated and maintained by the Ministry's Directorate for Exploitation of Land Reclamation Works. The Ministry of Electrical Energy, through its subordinate enterprises and their units, would be responsible for construction, operation and maintenance of power transmission facilities and for supplying energy to the project area. BAFI would serve as financing agency for all project works under the arrangements noted in para. 33 above. All agencies are competent to carry out the proposed works and have undertaken previous Bank financed works satisfactorily. A panel of independent qualified experts would review the design of the dams involved in the project and the associated structures and construction of these facilities, and that after completion of the construction of these facilities, they would be periodically inspected according to procedures to be established between the Bank and the Romanian authorities concerned (Loan Agreement, Section 4.01(g) and Guarantee Agreement, Section 2.03).  - 15 - Cost Estimates 41. The total project cost, including physical and price contingencies, is estimated at lei 5,689.9 million ($379.3 million). The foreign exchange component is estimated at $93.2 million or 24.6 percent of total cost. The cost estimates are based on unit rates of work that are prevailing in Romania under the system of regulated prices of materials and wages. Cost of equipment and spare parts expected to be procured from foreign suppliers, has been calculated at the international prices likely to prevail at the end of 1980 and is estimated at $4.0 million net of duties and taxes. Because detailed designing has already been carried out, physical contingencies have been provided at 7.5 percent of irrigation, drainage, soil erosion control works and other minor items. Price contingencies on foreign costs are compounded annually at 9 percent (1981), 8.5 percent (1982), and 7.5 percent (1983-85). Price contingencies on local costs are compounded at 2 percent per annum. In the past the Romanian domestic prices have increased less than one percent per annum. However, since there are signs that there may be some minor price adjustments during the project implementation, local price contingencies have been raised from the usual one percent to two percent. This corresponds to the Romanian assumption on the rise of the retail price index for the 1981 annual plan. Financing 42. The proposed Bank Loan of $80.0 million, representing about 21 percent of total project cost, net of taxes, and about 86 percent of foreign exchange costs would be made to BAFI for fifteen years including three years grace. The Government of Romania would bear the foreign exchange risk. The State budget would contribute about lei 3,849.2 million ($256.6 million) or 68 percent of total project costs through budgetary allocations to the General Economic Directorate for Land Reclamation and Agricultural Construction, Central for Exploitation of Land Reclamation Works, and agricultural mechanization stations (SMAs), for which funds would be channelled through BAFI. BAFI credits of lei 479.7 million ($32.0 million) to CAPs would contribute about 8 percent of total costs, with the remaining 3 percent or lei 161.0 million ($10.7 million) contributed from subborrowers' own resources. The Government has, in principle, agreed to seek cofinancing of up to $100 million for this proposed project. Judging by the response of cofinanciers to other Bank-financed projects in Romania it is expected that offers of cofinancing will be obtained. The amount and timing of cofinancing will depend on market conditions and amounts being raised by Romania on other Bank-financed projects. It is likely that for this project cofinancing will be in the range of US$50-100 million equivalent. 43. About 25 percent of the costs for buried pipeline, on-farm sprinkler and furrow equipment and small secondary open drainage canals serving CAP-owned lands would come from CAPs' own funds with the remaining 75 percent financed through BAFI loans. These loans would be recovered in accordance with BAFI's standard on-lending terms. For on-farm buried pipelines, the loans would be for 25 years including 5 years grace, and for on-farm irrigation equipment, 12 years including 3 years grace. The interest rate  - 16 - would be 3 percent with a penalty rate of an additional 3 percent for late payments. As in earlier projects, these rates result in a positive spread over BAFI's financial and administrative costs in providing the loans. As a result of Government controls on domestic prices, Romania is expected to maintain its domestic inflation rate at less than 2 percent per annum during the project implementation, and no significant further increase is expected in the future. Thus BAFI loans under the project would be made at positive real interest rates, on the same terms and conditions as are extended to other borrowers in the agricultural sector. Investments in IASs subprojects would be made directly by the State budget and channelled through BAFI and the Directorate for Exploration and Land Reclamation Works. Audit 44. BAFI would keep separate accounts for all project expenditures and its transactions are subject to continuous control by internal auditors and an annual audit by inspectors appointed by the Ministry of Finance and from the Court of Superior Control which reports directly to the Council of Ministers and the President. BAFI's accounting system and the audit of its transactions are satisfactory and BAFI's audited operating and financing results would be sent to the Bank not later than six months after the end of BAFI's fiscal year. Recovery of Costs 45. The project investment and annual operations and maintenance (O&M) costs would be recovered through both direct and indirect mechanisms. The direct mechanism consists of water charges levied on all CAPs and IASs using the irrigation water. The resulting recovery from this direct mechanism would amount to about 7 percent of total project costs (including OEM) discounted at 9 percent. The State also recovers a part of the project costs from IASs and CAPs through the compulsory portions of income paid into various funds and through the recovery of BAFI loans, to ensure future investments. The cost of farm machinery would be recovered by the State through unit rates paid by CAPs and IASs to SMAs for mechanization services and through contributions to the Depreciation Fund for machinery. In addition, profits made by the State from the purchase of tradeable commodities at administered low farmgate prices and subsequent export at higher world prices are also indirect cost recoveries. Since the State is the main beneficiary, the revenues accruing to the State from these various cost recoveries are very high and could result in the combined direct and indirect cost recovery index of 100 percent or more. Markets 46. Market prospects for internal consumption and export of project output indicate that no marketing problems need be expected. It is expected that Romania will remain a net exporter of grains (wheat, maize) and sunflower oil, and a net importer of soybean, feed concentrates, and sugar. The incremental production from the implementation of the project for major  - 1 7 - crops would be: maize 387.4 thousand tons, wheat 28.1 thousand tons, vegetables 107.5 thousand tons, sugar beet 243.9 thousand tons and soybeans 16.3 thousand tons. These represent increases of 300 percent, 35 percent, 1500 percent, 150 percent and 300 percent respectively of the present production in the project area. An estimated 80 percent of maize, the major commodity under the project, would be used as animal feed, with the remainder used for human consumption, industrial purposes, and export. Maize and sunflower by-products would be purchased by paper and housing material factories, used as combustibles, or turned back into the soil as fertilizer. Exports of maize amounted to 2 million tons during 1976-1979. Despite increases in incremental domestic feedgrain requirements, the grain balance is expected to remain positive, and prospects for continued exports are favorable. Areas under alfalfa, and double crop (maize silage) would also serve the growing feed demand. Most of the sunflower production would be processed into oil, for which demand is increasing, with cake used for feed. Imports of soybean have averaged 100,000 tons per year, and project output would contribute to the goal of self-sufficiency in this product. The incremental output of sugar and vegetables under the project are intended to contribute to planned increases in domestic per capita consumption, and a portion of vegetable production could also be exported. Incremental project output would be handled by the appropriate marketing Centrals and their enterprises and collection centers in the project areas. Procurement Arrangements 47. Equipment and materials equivalent in cost to the proposed Bank Loan ($80.0 million) would be procured following international competitive bidding procedures in accordance with the "Guidelines for Procurement under World Bank Loans and IDA Credits - March 1977". Romanian manufacturers would be allowed a preference of 15 percent or the applicable customs duty, whichever is lower. With a few exceptions, the application of the preference has not affected so far the outcome of bidding on previous irrigation projects, and is not expected to significantly affect the result of bidding on the proposed project. It is expected that foreign suppliers would win contracts estimated to cost about $4.0 million for some of the construction and maintenance equipment (mobile concrete pumps, truck cranes, and canal trimming and lining machines). Other items to be procured through international competitive bidding (about $76.0 million) are available domestically and, based on experience with previous Bank-financed irrigation projects, it is expected that the Romanian manufacturers would be successful in bidding for most of these items. Cost estimates are based on the conversion rate of US$l-lei 15. The remaining equipment and materials, all domestically produced, would be procured under Romanian procedures and would not be eligible for disbursement under the proposed Bank loan. The Bank would not be financing construction works under the project which would be carried out by the Romanian Construction Trusts which are familiar with local conditions, methods and regulations.  - 18 - Disbursements 48. The proposed Bank loan of $80.0 million would be disbursed for 100 percent of foreign expenditures and 100 percent of the ex-factory price of equipment, spare parts and materials procured through international competitive bidding. International Water Rights 49. During the irrigation season, the contribution by the Olt river which is a tributary of the Danube is less than 100 m3/sec for about 50 percent of the time. The Danube minimum flow being about 2,000 m3/sec, complete diversion of flow for irrigation would mean a reduction of less than 5 percent which will not affect navigation. However, for the proposed project, the Government has furnished a letter of representation to the Bank, assuring that withdrawals from the Olt river would not cause problems with other riparian countries. Although the Arges river is also a tributary of the Danube, taking water for irrigation would have little effect on the Danube and therefore the Government was not required to furnish a letter of representation on the Arges river. Environment and Health 50. The project area is free of endemic diseases such as malaria and bilharzia. The project would not adversely affect the environment or public health. Construction of irrigation works, with variable water flows in lined canals, a storage lake and a piped distribution network would not promote mosquito breeding and spread of malaria. Drainage of several areas and training of 55 km of stream courses would promote healthier conditions. Benefits and Risks 51. The quantifiable benefits from the proposed project derive mainly from the increase in the value of production. This would be mainly achieved through increases in the yields of main crops ranging from 35 percent to over 300 percent and through an increase in cropping intensity of about 17 percent made possible by irrigation. Benefits from the crop production in the project areas would increase from a fluctuating annual average of about $341.7 million to a relatively stable annual average of about $692.9 million, based on the same input and output prices as used for the economic rate of return calculations. The project would more than double labor productivity, and is expected to create about 5,000 new jobs during construction and 1,200 thereafter. About 73,700 cooperative workers and about 4,300 State farm employees would participate in the project.. The return from the project is mainly to the economy as a whole but some indirectly goes to beneficiaries through general wage increases, better public services and better availability of goods. In addition, there would be benefits derived from private plots in CAPs and bonuses. Foreign exchange earnings are expected to accrue to the economy mainly from grain exports, while increased self-sufficiency in crops like soybean will help to save foreign exchange. The project would also result in general linkage benefits to the economy by ensuring increased and stable raw material supplies to processing and marketing channels. The overall economic rate of return for the whole  - 19 - project is estimated to be about 20 percent. The economic rates of return for Caracal and Titu subprojects whose costs are $234.8 million and $144.5 million, are 20 percent and 18 percent, respectively. 52. The risk of not attaining project objectives due to construction delays, cost overruns, or inadequate supply of inputs or services is considered low. Experience with other Bank-financed irrigation projects to date confirms this assumption. The design institutes and construction trusts have experience with similar successful schemes. Project costs are based on officially regulated prices which are relatively stable. Assurances have been obtained that MAFI and competent electric power enterprises would respectively operate and maintain all project irrigation and drainage and electric power facilities and that the supply of adequate agricultural inputs and services would be secured (Loan Agreement, Section 4.01(a), (b) and (c) and Guarantee Agreement, Section 2.03). Projected yields and their development are based on applied research and experience in comparable areas and are considered reasonable. Sensitivity analysis using switching values shows that the project is moderately sensitive to adverse variations in benetits, but is not sensitive to other variables. A decrease of 40 percent in benefits will, other things remaining as expected, make the net present value zero at 9 percent discount rate. Since both ecological and soil factors are favorable, and the proposed technologies are relatively simple, aggregate output should not go below its crossover value, even with some bad agricultural years. PART V. LEGAL INSTRUMENTS AND AUTHORITY 53. The draft Loan Agreement between the Bank and the Bank for Agriculture and Food Industry of Romania, the draft Guarantee Agreement between the Socialist Republic of Romania and the Bank, and the report of the Committee provided for in Article III, Section 4 (iii) of the Articles of Agreement are being distributed to the Executive Directors separately. 54. Features of the project of special interest are listed in Section III of Annex III. 55. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI. RECOMMENDATIONS 56. I recommend that the Executive Directors approve this proposed Loan. Robert S. McNamara President By Ernest Stern Attachments April 1, 1981. Washington, D.C.  - 20 - ANW I Page 1 Of 5 Paes TABLE 3A ROMANIA - SOCIAL INDICATORS DATA SHEET RCBIANLA REFERENCE GROUPS (WEIGHTED AVF.ES LAND AREA (THOUSAND SQ. KM.) - MDST RECENT ESTIMATE)t TOTAL 237.5 MOST RECENT CENTRALLY PLANNED INDUSTRIA'L12ED AGR:CULTLRAL 149.6 1960 /b 1970 ib ESTIMATE /b ECONOMIES COUNTRIES GNP PER CAPITA (US$1 .. .. 1900.0 9499. 2 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 1342.0 3013.0 4042.0 2116.2 7021. 1 POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (MILLIONS) 18.4 20.4 21.9 URBAN POPULATION (PERCENT OF TOTAL) 34. 1 40. 8 46.5 35. 5 76.0 POP'LAT1ON PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 26.0 STATIONARY POPULATION (MILLIONS) 30.0 YEAR STATIONARY POPULATION IS REACHED 2090 POPULATION DENSITY PER SQ. KM. 77.0 85. 0 92.0 83.6 142. P PER SQ. KM. AGRICULTURAL LAND 126.0 135.0 146.0 22F.0 523.3 POP'JLATION AGE STRUCTURE (PERCENT) 0-14 YRS. 28.2 25.9 25.9 30.8 23.5 15-64 YRS. 65. 1 65.5 64.1 62.1 65.1 65 YRS. AND ABOVE 6. 7 8.6 10.0 7. 1 11.4 POPULATION GROWTH RATE (PERCENT) TOTAL 1.2 1.0 0.9 1.4 0.7 URBAN 3.8 2.8 2.5 2.9 1.3 CRUDE BIRTH RATE (PER THOUSAND) 20.0 20.0 19.0 18.2 13. 8 CRUDE DEATH RATE (PER THOUSAND) 9.0 10.0 9.0 7. 1 9. 1 GROSS REPRODUCTION RATE 1.2 1.3 1. 2 1. 3 0.9 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) USERS (PERCENT OF MARRIED WOMEN) .. .. FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 89.0 89.0 152.0 1O8.5 110.8 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMEN1TS) 108.0 115.0 130.0 113. 7 131. 6 PROTEINS (GRAMS PER DAY) 86.0 90.0 103.0 75. 1 98.0 OF WHICH ANIMAL AND PULSE 30.0 34.0 43.0 28.6 62.1 CHILI (AGES 1-4) MORTALITY RATE 3.0 2.4 1.0 1. 1 0.8 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 66.0 68.0 70.0 70. 1 73. 5 INFANT MORTALITY RATE (PER THOUSAND) 75.7 49.4 31.0 22.4 13.2 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. .. UREAN .. .. RURAL .. .. ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. .. URBAN .. .. RURAL .. .. POPILATION PER PHYSICIAN 780. 0/c 840. 0/d 734.0 2070. 8 624.e POPCLATION PER NURSING PERSON 620. 0/c .. 638.0 240. 1 218. 9 POPULATION PER HOSPITAL BED TOTAL 130. 0/c 120.0 109.0 96. 7 121.2 URBAN 50. /c 50. 0 60.0 RURAL 620. 0/c 770.0 730. 0 ADMISSIONS PER HOSPITAL BED .. 23.0 .. .. 17.0 HOUS INC AVERAGE SLZE OF HOUSEHOLD TOTAL .. 3. 2/e URBAN .. 2.8/e RBRAL .. 3. 4/e AVERACE NUMBER OF PERSONS PER ROOM TOTAL 1. 4/c URBAN .. 1. 3/e RURAL .. 1. 4/e .. ACCESS TO ELECTRICITY (PERCENT OF DWELLlNGS) TO.AL .. 49.0/e URBAN .. 86. /e . RURAL .. 27.0/e  - 21 - ANM 1 Page 2 of 5 pages TABLE 3A ROMANIA - SOCIAL INDICATORS DATA SHEET ROMANIA REFERENCE GROUPS (WEIGHTED AVER4