Document of The World Bank 21 ii :1 FOR OFFICIAL USE ONLY Report No. P-3416-PE REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO US$30 MILLION TO THE REPUBLIC OF PERU FOR THE ALTO MAYO RURAL DEVELOPMENT PROJECT November 19, 1982 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 The exchange rate is being adjusted daily roughly in line with the differen- tial between domestic and international inflation. The exchange rate and currency equivalents in 1981 and as of November 15, 1982 were as follows: Currency Unit = Sol (S/.) Calendar 1981 November 15, 1982 US$1 S/. 426.60 S/. 883.75 S/. 1 US$0.0023 US$0.0011 S/. 1,000 US$2.34 US$1.13 FISCAL YEAR January 1 to December 31 ABBREVIATIONS BAP - Banco Agrario del Peru (Agrarian Bank of Peru) bpd - barrels per day ERP - Economic Recovery Program HCBM - Huallaga Central and Bajo Mayo Office (Project Execution Unit) IDB - Inter-American Development Bank IFAD - International Fund for Agricultural Development INIPA - Instituto Nacional de Investigacion y Promocion Agropecuaria (National Institute for Agricultural and Livestock Research and Extension) MA - Ministerio de Agricultura (Ministry of Agriculture) ONERN - Oficina Nacional de Evaluacion de Recursos Naturales (National Resources Agency) PPF - Project Preparation Facility USAID - United States Agency for International Development FOR OFFICIAL USE ONLY - i - REPUBLIC OF PERU ALTO MAYO RURAL DEVELOPMENT PROJECT LOAN AND PROJECT SUMMARY Borrower: Republic of Peru. Amount: US$30.0 million equivalent, including a capitalized front-end fee. Terms: Repayable in 17 years, including four years of grace, at the standard variable interest rate. Project Description: The objectives of this project -- which would be carried out in the northeastern Peruvian jungle highlands near the Mayo Valley -- are to improve productivity, income and general living conditions for about 12,800 families, including 200 native Indian families, living in the area. Principal components of the project would be: (i) provision of extension, credit, irrigation and other agricultural support services; (ii) construction and improvement of about 180 km of rural roads and provision of associated maintenance equipment; (iii) provision of land titles and local mapping; (iv) improvement of health and education infrastructure; and (v) support for project management, studies and technical assistance in various fields, including forestry management, project monitoring and preparation of a national topographic and resource map of Peru using satellite imagery. The International Fund for Agricultural Development (IFAD) would cofinance the credit and project monitoring components. Special Risks: The complexity of the project and the number of components to be implemented pose the risk of delays in implementation. However, the executing agency has experience in successfully carrying out a similar project and technical assistance would be provided to assist this unit with project implementation. The fact that the project involves development of an environmentally sensitive area encompassing indigenous settlements also raises the risk of adverse environmental and social effects. Special care has been taken with its design to protect against this. In addition, the project's environmental and social impact would be carefully monitored during execution. 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 autoiaon Estimated Costs Local Foreign Total US$ million (a) Agricultural Credit 13.0 11.3 24.3 (b) Road Construction and Maintenance 9.1 6.6 15.7 (c) Other Agricultural Support Activities 5.5 5.4 10.9 (d) Land Titling 1.8 0.5 2.3 (e) Health and Education Infrastructure 2.2 2.4 4.6 (f) Project Management, Studies and Technical Assistance 2.5 2.3 4.8 Base Cost 34.1 28.5 62.6 Contingencies: Physical 3.3 2.5 5.8 Price 8.5 6.6 15.1 TOTAL PROJECT COST 1/ 45.9 37.6 83.5 Front-End Fee on Bank Loan - 0.44 0.44 TOTAL FINANCING REQUIRED 45.9 38.1 84.0 Financing Plan Local Foreign Total --- US$ million World Bank 7.6 22.4 30.0 Government and Beneficiaries 35.0 - 35.0 Cofinancing (IFAD) 3.3 15.7 19.0 TOTAL 45.9 38.1 84.0 Estimated Disbursements Bank FY 1983 1984 1985 1986 1987 1988 1989 --- US$ million Annual 2.0 5.4 8.8 5.0 4.0 3.4 1.4 Cumulative 2.0 7.4 16.2 21.2 25.2 28.6 30.0 1/ Project expenditures are exempt from taxes and duties. - iii - Rate of Return: The economic rate of return is estimated at 18 percent for those components of the project with directly quantifiable benefits. These represent 89 percent of total project costs. Staff Appraisal Report: Report No. 4058-PE, dated November 17, 1982. REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE IBRD TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF PERU FOR THE ALTO MAYO RURAL DEVELOPMENT PROJECT 1. I submit the following report and recommendation on a proposed loan to the Republic of Peru for the equivalent of US$30 million to help finance the Alto Mayo rural development project. The proposed loan would have a term of 17 years, including four years of grace, at the standard variable interest rate. PART I - THE ECONOMY _ 2. An economic report entitled "Peru-Major Development Policy Issues and Recommendations" (Report No. 3438-PE) was distributed to the Executive Directors on May 4, 1981. This part is based on the report's findings and on those of economic missions to Peru in June and September 1981 as well as in July/August 1982. Country data sheets are attached as Annex I. Natural and Human Resources 3. Peru, the fourth largest country in Latin America, is divided by the Andes mountains into three distinct regions: the coastal region (Costa), with 46 percent of the population and most of the country's modern economic activity; the mountain region (Sierra) with 44 percent of the country's population; and the sparsely populated tropical rain forests east of the Andes (Selva). The country's rugged topography limits trade between the three regions. 4. Peru's natural resources include large deposits of minerals-- particularly copper, iron, silver, and zinc-located mainly in the Sierra and the southern Costa. There are also large phosphate deposits, located in the northern Costa. Petroleum resources found in the jungle areas and offshore are also substantial, but their full extent has not yet been ascertained. Another major natural resource is the large fishing potential in coastal waters, although the magnitude of the catch is subject to sharp fluctua- tions. Only a small portion of Peru's total land area is arable, and most of the soils suitable for intensive agriculture are already being farmed. 5. Although Peru's energy resource base is relatively diverse, with scope for expanding hydro and coal based power generation, petroleum is expected to remain the major energy source in Peru through the rest of this century. Peru's domestic oil production more than doubled between 1977 and 1981 to over 190,000 barrels per day (bpd), and it became a net exporter of about 60,000 bpd. To enable Peru to remain a net petroleum exporter, the Government has embarked on a strategy of accelerated secondary recovery and exploration efforts to increase production and of rational pricing policies to contain demand growth. Prices for domestically consumed petroleum products have been increased at regular intervals. In addition, new legislation was enacted offering special tax incentives to domestic and 1/ This part is substantially unchanged from Part I of the Primary Health Project President's Report of November 5, 1982 (Report No. P-3400-PE). foreign investors, and the response has been positive. The Government strategy is already bearing fruit with petroleum output expected to increase in 1982 to an average level of 207,000 bpd. 6. As a result of three decades of rapidly falling mortality rates, Peru's population growth accelerated during the 1930-1960 period. Since the early 1960s, birth rates have fallen gradually, mainly caused by the urbani- zation process and improved education. But with declining death rates, popu- lation continued to grow at about 2.5 percent p.a. between 1972 and 1981 and is currently estimated at about 17 million. The 1981 census indicates that fertility declined by 20 percent during the past decade and that the current rate of population growth has dropped to 2.2 percent p.a. The census also indicates that the reduction in population growth is most marked among the 65 percent of the population living in urban areas. The census information has only recently become available and is still being confirmed but it indicates a dramatic improvement in population prospects. The Government is conscious of the need to continue to slow down Peru's population growth rate and is supporting a family planning program. 2/ Past Development Policies and Performance (1968-80) 7. Two successive military Governments, in office from October 1968 until July 1980, followed a development strategy aimed at promoting economic growth and improving distribution of income and wealth. The pattern of asset ownership in the economy changed drastically through nationalization and a sweeping land reform, but many of the policies carried out after 1968 had an excessive cost, and their implementation was inefficient. 8. Expansionary fiscal and credit policies between 1968 and 1977 produced strong inflationary pressures and widening external gaps. The current account deficit averaged US$1.1 billion per year in 1974-77, equiv- alent to nearly nine percent of GNP. To finance this deficit, Peru accum- ulated a massive external debt, which at year-end 1977 stood at almost US$8.4 billion (including short-term indebtedness), equivalent to two-thirds of GDP. In 1977-78 GDP per capita dropped by over six percent and under- unemployment rose from less than 50 percent during the early 1970s, to almost 60 percent of the labor force. 9. Between 1975 and 1977, several unsuccessful attempts were made to cope with Peru's deteriorating economic situation. By mid-1978 the economic crisis had reached grave proportions, with a drop in real GDP and inflation approaching 100 percent on an annual basis. Moreover, the private sector was finding it increasingly difficult to open letters of credit for new imports, and the banking system's net international reserves had dropped to a negative level of US$800 million. 10. Beginning in May 1978, the Government adopted a number of important measures aimed at strengthening public finances, improving the balance of payments and curbing inflation. The Government also negotiated a stand-by arrangement with the IMF in support of the stabilization program. 11. Major debt-relief operations carried out through the Paris Club and with the Soviet Union and commercial banks in 1978 enabled Peru to reduce the debt service burden for 1979 and 1980 by postponing repayment of about US$1 billion to the 1982-1986 period. In view of the strong balance of payments performance in 1979 and 1980 (para. 15), the Government decided to forego parts of the rescheduling options in exchange for slightly better conditions for new loans from commercial sources. 2/ Population data presented in Annex I will be updated when confirmed figures are available from the census. -3- 12. To overcome the economic recession, in late 1978 the Government adopted a comprehensive Economic Recovery Program (ERP), which, in addition to the above-mentioned stabilization actions, included measures to open up the economy, promote non-traditional exports, strengthen the tax system by broadening its base, and generally improve the efficiency of resource alloca- tion in the private and public sectors. These policy changes--together with a declining domestic market because of the recession--resulted in a major reorientation of industrial development, with a large increase in the value of manufactured exports from about US$200 million in 1977 to the US$750-800 million range in 1980-81 (equivalent to about eight percent of output). The Government also drew up a public sector investment program that aimed at redirecting investment towards projects of clear economic priority and with positive effects on production and employment. In support of the ERP, the Bank approved a US$115 million Program Loan in May 1979. 13. The Government's stabilization-cum-economic recovery program resulted in a strong improvement in public sector finances in 1979. Public sector current account savings rose from -0.5 percent of GDP in 1978 to about 3.7 percent of GDP in 1979, and the overall deficit was reduced from 5.7 percent of GDP in 1978 to 1.7 percent in 1979. In spite of Peru's improved fiscal performance, inflationary pressures remained strong with a consumer price increase of 67 percent in 1979. The more careful management of public finances also had a positive impact on the balance of payments. Moreover, an increase in petroleum exports and a substantial improvement of Peru's terms of trade contributed to high overall surpluses of the balance of payments in 1979 and 1980. At year--end 1980, the net reserve position had improved to about US$1.3 billion, equivalent to about four months of imports. Peru also made greater use of assistance from official bilateral and international sources, thus improving the structure of its external debt. Real GDP growth rebounded to 3.7 percent in 1979; in 1980, however, growth dropped to 3.1 percent owing, in part, to a drought which affected the agricultural sector. Because of a relaxation in fiscal discipline, the public sector deficit increased in 1980 to six percent of GDP, keeping inflation for the year at a high level--59 percent. Recent Developments and Outlook 14. In July 1979, the military Government promulgated a new constitu- tion, written by a popularly elected constituent assembly. Elections were held in May 1980, and following his electoral victory, President Fernando Belaunde was inaugurated on July 28, 1980. His Government faced a challenging economic and social situation with a number of acute problems which had been disguised by the apparently solid financial situation. These included: high levels of under- and unemployment, particularly in urban areas; higher underlying inflation than had been reported because of price controls and deferred price adjustments for public goods and services; a public sector deficit that had been reduced by freezing expenditures for economic and social services (including education, health and housing); a balance of payments with a substantial surplus, which, however, was partly due to unusually high commodity prices and to the fact that import levels were depressed and manufacturing exports high owing to the recession; and, finally, deteriorated income distribution over the past several years resulting in increased social unrest. This unrest has been manifested in a growing terrorist movement which, if it continues, may threaten political stability. -4- 15. The Government named an economic team committed to economic effi- ciency, decontrol of the economy (including divestiture of some of the State-owned enterprises), promotion of the private sector (including foreign investment), and policies aiming at a more equitable sharing of the benefits of development through job creation and specifically targeted social programs. Its reliance on, and promotion of, private initiative, in parti- cular, distinguish the present Government's philosophy and economic program from that of its immediate predecessors. 16. The Government has made important headway in a number of areas. It was successful in accelerating import liberalization by eliminating non- tariff barriers and lowering tariffs. At the same time, export incentives were streamlined and revised to eliminate abuse and make the system more responsive to exports of products with high manufactured content. The Government also enacted new legislation for the agricultural, mining and petroleum sectors offering greater financial incentives to investors. Finally, it made significant institutional changes in the financial sector, revised the interest rate structure through substantial upward adjustments, and is preparing a new banking law which would allow further rationalization and liberalization of the financial system. 17. In an effort to improve resource use, the Government made progress in correcting major price distortions. Food subsidies were greatly reduced and most controlled agricultural prices were adjusted to international levels. The marketing of agricultural products was liberalized, and public utility and petroleum prices were adjusted at regular intervals. Moreover, the Government endeavored to rationalize public investment and its financing -- an effort that was supported by a Bank sponsored Consultative Group meeting in May 1981. 18. The above efforts were complemented by measures to strengthen public sector institutions. The important public enterprise sector, for example, was granted greater autonomy by transforming these enterprises into State-owned limited liability corporations operating under private law. This measure gives these companies, inter alia, greater freedom in fixing staff compensation and, thus, helps them to recruit or to retain capable personnel. Many of the above measures have already had positive short-term effects, and they have laid the ground for medium-term structural adjustments of the Peruvian economy. 19. In 1981, GDP grew at about four percent. The balance of payments, however,deteriorated substantially as a result of declining export prices, high interest rates on the country's debt with commercial banks, and a rapid expansion of imports. The loss in net reserves amounted to about US$580 million, equivalent to about 2.5 percent of GDP. A major factor in the deterioration of the balance of payments was the large public sector deficit which reached about eight percent of GDP. On the positive side, some progress was achieved in reducing inflation: while inflation on a December 1980-December 1981 basis reached 73 percent, during May-December 1981 it decelerated to an annual rate of about 50 percent, mostly because of the openness of the economy, the price dampening effects of an increase in imports, and--to some extent--to a deceleration of the mini-devaluations. During 1982, inflation is expected to reach 60-65 percent (which was also the average rate during the first five months of the year). The Government is aware that this level is still too high, however, and is following restrictive demand management which it expects will result in a further drop in inflation. 20. Reducing the public sector deficit has, once again, become the major challenge facing Peru's economic managers. While the deteriorated export situation has had a negative impact on tax revenues, the 1981 deficit was mostly the result of steep increases in expenditures and somewhat lagging adjustments of petroleum and rice prices. Excess expenditures over initial budget allocations were incurred mostly for investment projects of lesser priority. To tackle the difficult public finance situation, the Government is following a restrictive financial program for 1982 with tight credit ceilings and limits to foreign indebtedness. The Government also trimmed the public investment program in line with its investment priorities. The Bank has an ongoing and frank dialogue with the Peruvian Government on these issues. Moreover, in June, 1982 the IMF approved an SDR850 million compensatory-cum-EFF arrangement to support Peru's stabilization efforts. In spite of the difficult world economic environment, a slowdown in economic growth (projected to be about two percent in 1982) and increasing social tension, the Government is striving to adhere to the agreed-upon program and to make the necessary adjustments in fiscal management to keep the economy viable over the medium term. Peru's total debt outstanding to the IMF as of June 30, 1982 amounted to SDR776.8 million. 21. Based on cautiously optimistic assumptions with regard to economic management, in the medium term the country is expected to have economic growth of about 4-5 percent per year and a manageable balance of payments situation. Peru's balance of payments could, however, become precarious if the exportable surplus of oil declines. While measures are being undertaken to speed up petroleum exploration and to increase manufactured exports, the results of these endeavors may not come in time to countervail the potential foreign exchange shortfalls. Against this background, there is a continuing need for official development assistance, including local cost financing. Taking the above factors into account, considering an expected debt service ratio hovering around 35 percent of exports (which are relatively diversified) and assuming that the authorities continue the initiated course of economic policies, Peru is creditworthy for Bank lending. PART II - BANK GROUP OPERATIONS IN PERU 3/ 22. The Bank has approved 52 loans to Peru for a total amount of US$1,329.8 million, net of cancellations. About 28 percent of the Bank's lending to Peru has been for transportation (mainly highways and ports), 16 percent for agriculture, 25 percent for the energy sector, 13 percent for mining and industry, about eight percent for education and urban development, nine percent for a program loan in support of the ERP in 1979 and one percent for technical assistance. 23. Annex II contains a summary statement of Bank loans and their disbursement status as of September 30, 1982 and notes on the execution of ongoing projects. As of this date, US$661 million was undisbursed. Disbursements on Bank-financed projects moved slowly in the late 1970s, primarily because of weak project execution capacity and a shortage of counterpart funds that worsened as the economy deteriorated during this period. Disbursements have improved, however, with vigorous efforts by the Bank and Government to correct the situation by, inter alia, (i) opening a Bank resident mission in Peru; (ii) restructuring a number of slow moving projects; (iii) Government provision of adequate counterpart funds; and 3/ This part is substantially unchanged from Part II of the Primary Health Project President's Report of November 5, 1982 (Report No. P-3400-PE). - 6 - (iv) Government creation of a special commission to monitor loan execution and resolve administrative problems. These actions are bearing fruit. Disbursements on project loans amounted to US$44 million in FY80, US$70.5 million in FY81 and US$75.8 million in FY82. This compares with average yearly disbursements of US$27.5 million during FY77-79. 24. The main objectives of Bank lending to Peru are to assist in (i) the creation of the physical infrastructure needed to sustain and foster economic development; (ii) the expansion of productive capacity in crucial sectors, i.e., petroleum, agriculture and mining; (iii) the strengthening, through technical assistance loans and regular operations, of public sector management and of local capacity to prepare, implement a-nd operate projects effectively; and (iv) the improvement of living conditions for the urban and rural poor. In the past, Bank lending concentrated on infrastructure in the transportation and power sectors. More recently, the Bank's emphasis has shifted to more directly productive fields--mining, petroleum, agriculture and industry--to help Peru to strengthen its balance of payments. Lending for social sector projects has also grown and will be further stepped up in the future. The next operations that would be ready for the Executive Directors' consideration include projects in health, agricultural credit and primary education. As part of its assistance strategy, the Bank convened a Consultative Group Meeting for Peru on May 25-26, 1981 to help the Government arrange financing for its public investment program. 25. Bank loans constituted an estimated 6.4 percent of Peru's total public external debt outstanding and disbursed at the end of 1981, and absorbed about 3 percent of the country's public external debt service in 1981. Assuming increased recourse to long-term bilateral and multilateral aid by Peru, the Bank's share in the country's outstanding public foreign debt by 1985 could reach about 10 percent, and its share of debt-service would be around 4.5 percent. 26. IFC commitments as of September 30, 1982 were US$55.8 million (including US$15 million to the Southern Peru Copper Corporation for the Cuajone Copper Mining Project) of which US$35.5 million is held by the Corporation. A summary statement of IFC investments as of September 30, 1982 is presented in Annex II. In addition, investments in a mining project and a venture capital company are now being considered. 27. The other principal lending agencies active in Peru are the Inter- American Development Bank (IDB) and the United States Agency for Inter- national Development (USAID). Their total commitments as of December 31, 1981 were US$849 million and US$348.8 million, respectively, and their shares of public debt service as of end-1980 were estimated at 0.6 percent and 0.5 percent, respectively. In its future lending, IDB is expected to emphasize lending for agriculture, industry, mining, roads, and small scale irriga- tion. USAID is expected to stress rural development and health. PART III - THE AGRICULTURE SECTOR Land and Water Resources 28. Peru has a limited natural resource base for agriculture. Of the country's total land area of 1,285,000 km2, only about 3.7 million ha or 2.9 percent is arable and another 17 percent is natural pastureland. Additional land could be brought into production, either by expensive new coastal irrigation schemes or by providing basic infrastructure for more remote areas, mainly in the Ceja de Selva, the jungle highlands in the Amazon region east of the Andes. The proposed project would be located in this area. 29. Of the country's three principal regions, the 130,000 km2 Costa, which consists mainly of desert terrain, is the major agricultural area. Agriculture in the Costa is limited to river valleys, and most of Peru's one million irrigated hectares are located in this zone. Most irrigation and drainage systems, however, are old and inefficient, and the Bank is currently financing two irrigation rehabilitation projects designed to help deal with this problem (Lns. 1403-PE of 1977 and 1771-PE of 1980 -- see para. 46). Where water is available, conditions are generally favorable for crop production because of good soils and near optimal solar radiation and temperatures. As a result, productivity and farm incomes in this region are relatively high. The Costa produces over 40 percent of the country's crops, including the major export crops--sugar and cotton--as well as rice, maize, potatoes, citrus crops, olives and grapes. 30. The Sierra consists of rugged mountains and high valleys. Of the zone's 335,000 km2, about seven percent are farmed and 43 percent are used for grazing. The Sierra has about half the arable crop land in Peru, but-- because of the difficult topography, the severe climate and generally primitive farming techniques--producti-vity is low and there is little scope for putting new land into production. Most agricultural production is for subsistence, and there is little use of fertilizers or other inputs. There is a potential, however, for improving crop and livestock productivity through research, extension and the increased use of production inputs. 31. The sparsely settled Selva east of the Andes accounts for 64 per- cent of Peru's total land area (about 81 million ha). The region comprises two quite different sub-zones: the Ceja de Selva -- the highlands on the eastern slopes of the Andes; and the Selva Baja -- the jungle area around the Amazon and its tributaries. Most of the soils in the Selva Baja are clas- sified as marginal and are suitable only for grazing and forestry. However, soils in the Ceja de Selva are of better quality and can be used for crop- ping. Arable land in this zone is estimated at 4.5 million ha of which 600,000 ha are currently being exploited. Fruits, coffee and tea are the main crops, although there is good potential for livestock, rice and oil palm in some areas. Development has been hampered, however, by poor transport and other infrastructure. The Government has given priority to development projects in this area, since they constitute some of the best prospects for expanding Peru's agricultural frontier (paras. 37-40). Agricultural Sector Performance and Government Policies 32. The agricultural sector in Peru underwent a major decline during the 1970s. In part, this was due to a serious drought from 1978-80, but the sector's poor performance was brought about primarily by negative Government policies. These included: (i) an agricultural pricing policy which did not provide adequate incentives to producers; (ii) imposition of an inefficient State-run marketing system; (iii) failure to effectively organize and manage agrarian reform enterprises; (iv) insufficient credit and the dismantling of the extension and research support services for the sector; (v) a requirement - 8 - that food crops be grown in place of non-food export crops, primarily cotton, for which Peru enjoys a comparative advantage; (vi) the concentration of public investment in large-scale coastal irrigation projects with very long gestation periods; (vii) insecurity of land tenure owing to a far-reaching land reform; and (viii) failure to support agriculture sector educational and training institutions, so as to insure that they had the teaching staffs and equipment necessary to produce an adequate supply of well-trained profes- sionals. 33. In 1981, agriculture contributed about 9 percent to Peru's GDP and employed about 40 percent of the labor force, as compared with 17 and 48 per- cent, respectively, in 1970. The value of food production in constant prices increased by an average of 0.7 percent per annum during this period. The value of crop production actually declined at an average annual rate of -0.6 percent in the 1970s, while livestock production increased at 3.3 percent, largely because of the rapid growth of the poultry industry. During the same period, population grew at an average of 2.9 percent per annum. As a result, nutritional standards suffered, and the country's dependence on imported foodstuffs increased. 34. The volume of food imports--consisting mainly of wheat, rice and other grains, dairy products and vegetable oils--increased by a total of over 20 percent between the early 1970s and 1980. At the same time, agriculture's contribution to exports--mainly sugar, cotton and coffee--fell dramatically. By 1980, the volume of major agricultural exports stood at only about 22 per- cent of the 1970 level. In spite of these trends, Peru continued to maintain a positive though shrinking balance of trade in agriculture through the 1970s. The combined deficit in 1980 and 1981, however, totaled about US$300 million. 35. By the late 1970s, the military Government had recognized the gravity of the problems facing the agricultural sector and the potential long term economic and social impact of its decline. It began, therefore, intro- ducing measures to reverse this trend. Consumer price subsidies on most products were reduced or eliminated so as to make higher farmgate prices possible, the requirement that food crops be grown was eased, and the rebuilding of agricultural service agencies began. The Belaunde Government has accelerated this effort. It has eliminated remaining consumer subsidies except for a subsidy on rice which is now being phased out. Export taxes have been reduced substantially and are scheduled to be fully phased-out by 1983. An agricultural promotion law was passed in 1980, which: (i) concludes the agrarian reform expropriation process; (ii) permits some mortgaging of agricultural land to facilitate increased commercial credit; (iii) provides selected tax incentives to investment; (iv) permits the private import and export of most agricultural products and inputs; and (v) opens up marketing to private participation. Finally, the Government has reorganized and strengthened sectoral institutions to improve the provision of services and the execution of projects. The Bank is actively assisting in this effort and has recently made loans to support improvements in agricultural research and extension activities (para. 45) and to help the National Agrarian University. 36. These policy improvements, together with better weather conditions, have had a significant beneficial impact on agricultural production. Between 1980 and 1981, agricultural output grew by over 12 percent, with production increases of 67 percent in rice, 38 percent in corn and 21 percent in potatoes. A further increase in output of about five percent is expected in 1982. However, there is a limit to how much can be achieved through improving productivity in the traditional agricultural areas in the Costa and the Sierra. Because of this, Peru's agricultural frontier needs to be expanded. -9- Rural Development in the Ceja de Selva 37. Because it is one of the few areas with good, arable land which is relatively unexploited, one of Peru's highest priorities is to develop the Ceja de Selva. In order to further this effort, the Government is supporting a number of rural development projects and some of these are already under- way. These rural development efforts are concentrated in two areas: the Mayo valley in northern Peru and the Selva Central, east of Lima. 38. The Mayo valley, which has an area of about 770,000 ha, is about 800 km north of Lima and is being developed rapidly by settlers from the Costa and the Sierra. The area's population has now reached about 70,000 and production comes mainly from small-scale farmers. This region is seen as having good potential for production of rice, fruits, coffee, tea, beef and oil palm, some of which may be exported. Part of the area --around the lower reaches of the Huallaga valley -- is currently being developed with financial assistance from USAID. A special unit has been formed in the Prime Minister's Office to oversee development of this area. This unit -- the Huallaga Central and Bajo Mayo Office (HCBM) -- has been responsible for preparation of the proposed Alto Mayo project. 39. Development of the second area mentioned in paragraph 37, the Selva Central, is important because it is relatively close to Lima and its climate, soils and topography allow it to be used for a range of agricultural purposes. The area already produces over 25 percent of Peru's output of coffee, oranges, bananas and avocados. The long range development plan for the Selva Central envisages a large expansion in this production. The devel- opment would involve six major valleys which ultimately would open over 3 million hectares of agricultural land to production and permit settlement of over 700,000 people. As a first step, USAID is assisting the Government with the execution of a rural development project in the Pichis Palcazu valleys. A project unit in the Prime Minister's office is responsible for this effort. This unit is also working -- with assistance from IDB as well as a nummber of countries, including Canada and Germany -- to prepare other rural development projects in the Selva Central, which are expected to get underway shortly. In addition, the Bank is assisting in the preparation of a project in this area with funds from its eighth highway project (Ln. 2091-PE of 1982). 40. Development of the Ceja de Selva is also being supported through a series of projects designed to improve transportation links with the rest of the country. The first of these operations was the Bank-financed Lima-Amazon transport corridor project (Ln. 1196-PE of 1976), which financed the first all-weather road connecting the Sierra with the Selva. Linked with this, the Government is gradually constructing the "Marginal de la Selva", which would be an all-weather road running from the north to the south of the Selva on the eastern slope of the Andes. The Bank is supporting the improvement of some priority sections of the Marginal de la Selva under its eighth highway project (para. 39). IDB is also helping to improve road access to the Selva under a recent highway project. Finally, the Bank-financed aviation develop- ment project (Ln. 1963-PE of 1981) is supporting the improvement of four airports at important regional centers in the Selva. Institutional Framework 41. The Ministry of Agriculture (MA) is generally responsible for formulating the Government's sectoral policies and programs. Under a 1981 - 10 - reorganization, the task of carrying out public sector agricultural and rural development programs was made the responsibility of: (i) four administra- tively autonomous institutes under the MA -- the most important of which is the National Institute for Agricultural and Livestock Research and Extension (INIPA); (ii) a number of independent project authorities which administer major irrigation projects; (iii) departmental development corporations which are responsible for small-scale local projects; and (iv) special project units located in the Prime Minister's office -- like HCBM -- which prepare and carry out rural development projects in the Ceja de Selva. 42. Specialized services to the sector are provided by a public market- ing company and the Agrarian Bank of Peru (BAP), which is the main source of agricultural credit. Until recently, the marketing company had a monopoly on marketing rice, cotton and fertilizers and on importing grains and powdered milk. These monopoly operations are being phased out however, although the Government will retain a presence in marketing as a check on private traders. BAP is a Government-owned institution with branches in all parts of the country. It provides about 85 percent of the institutional credit to the agriculture sector with the balance coming mostly from commercial banks and State development banks. In 1981, BAP's loan portfolio was about US$524 mil- lion, but this represented only 90 percent of the 1975 portfolio in real terms and was not sufficient to meet the sector's needs. Between 80 and 90 percent of BAP annual lending is short term production credit, and--in 1981--48 percent of its new loans went to cooperatives, 43 percent to farmers with more than 20 ha and nine percent to small farmers. 43. Since 1980, BAP's lending has been expanding, reflecting the increased Government priority for the sector. BAP has also begun to give more attention to small farmers. A problem affecting the Bank's operations, however, has been the continued use of subsidized interest rates for BAP's lending. Using a low-cost discount line from the Central Bank and capital transfers from the Government, BAP has been lending at effective interest rates averaging 45 percent while recent inflation has averaged about 65 per- cent on an annual basis. BAP's reliance on subsidies from the Central Government has constrained the funds available for agricultural lending. The Bank's dissatisfaction with this policy has meant that we have not been able to finance agricultural credit in Peru. The Bank has maintained a dialogue aimed at resolving this issue with the Government in the context of discus- sions on a possible agricultural credit project for Bank financing. This dialogue has recently had some success. In November 1982 the Government increased BAP's effective rates to about 53 percent, on average, with a view to moving to commercial rates (i.e. over 70 percent) by mid-1983. In view of this progress, the Bank recently appraised a possible sixth agricultural credit project. Sectoral Investment Strategy 44. The Government's sectoral investment strategy, as reflected in its 1981-1985 public investment program, is (i) to continue development and rehabilitation of irrigated coastal areas where there is a large sunk invest- ment in deteriorated, inefficient irrigation infrastructure; (ii) to develop the potentially rich Ceja de Selva; and (iii) to assist the rural poor, particularly in the Sierra, through rural development projects. The Government is also committed to building up its agricultural credit and research and extension programs to provide better support to the agriculture sector. - 11 - Previous Bank Operations 45. In order to help spur Peru's agricultural development, the Bank has made 13 loans to Peru totalling US$219.0 million. Five of them, in the 1954-1973 period and totalling US$55.0 million, were for agricultural credit and were channelled through BAP (105-PE, 162-PE, 257-PE, 415-PE and 933-PE). In general, BAP's performance in executing these operations was good. The Performance Audit Report (Sec M81-465 of June 2, 1981) for the fifth project (Ln. 933-PE of 1973) concluded that the project's rate of return exceeded that estimated in the appraisal report (30 percent vs 26 percent). It noted, however, that the Bank failed to use the loan as an effective instrument in credit policy issue discussions (e.g., interest rate levels) with the Government. Processing of a sixth loan was held in abeyance until recently when a mutually satisfactory agreement on interest rates was reached (para. 43). Also, the fifth project suffered from the deterioration of the research and extension services in the 1970s. The research and extension project approved earlier this year (Ln. 2150-PE of 1982) will finance the rebuilding of these services. 46. Two loans (67-PE of 1952 and 98-PE of 1954), totalling US$3 mil- lion, were for farm machinery imports. Another two (Loans 114-PE of 1955 and 418-PE of 1965), totalling US$24.4 million, financed irrigation works and land settlement in the San Lorenzo area within the Chira-Piura basin. The Performance Audit Report (Sec M78-43 of January 18, 1978) for the San Lorenzo project financed by Ln. 418-PE concluded that the project achieved its basic goals of increasing agricultural production and the incomes of rural poor. The audit noted, however, the need for provision of better maintenance of works, of a strong project unit, and agricultural support programs for irri- gation projects. These findings were taken into account in the design of the two most recent Bank-financed irrigation rehabilitation operations: the First Irrigation Rehabilitation project and the Lower Piura project (Loans 1403-PE of 1977 and 1771-PE of 1979 for US$25 and US$56 million, respec- tively). In addition, in 1980 the Bank approved its first rural development loan, a US$15 million operation for the Puno zone in the Sierra. Finally, in 1982 the Bank provided a US$40.6 million loan to support re-establishing the agricultural research and extension system. The status of Bank-financed agricultural projects currently in execution is discussed in Annex II. PART IV - THE PROJECT 47. This would be the first Bank-financed rural development project in the Ceja de Selva. The project was prepared by HCBM in conjunction with representatives of the various regional agencies expected to participate in the project. A feasibility study of the proposed project was completed in early 1982 with the assistance of the FAO/IBRD cooperative program. The Bank helped finance this preparation work with a US$500,000 PPF advance. A Bank mission visited Peru to appraise the project in March 1982. The appraisal mission's report entitled "Staff Appraisal Report, Alto Mayo Rural Development Project" (No. 4058-PE, dated November 17, 1982) is being distributed separately to the Executive Directors. Annex III contains a Supplementary Project Data Sheet. Negotiations were held in Washington from November 10, 1982 to November 12, 1982 and the Peruvian Delegation was headed by Mr. Luis Reategui of the Ministry of Economy. The Project Area 48. The project area consists of 120,000 ha in the upper Mayo valley in northern Peru (see the attached map). The area to be developed lies in a - 12 - valley located about 800-900 meters above sea level in the eastern foothills of the Andes. The two main towns in the project area are Moyobamba and Rioja. The population of the area amounts to about 73,000 and has grown rapidly during the seventies as transportation links have been established and spontaneous migration has accelerated. Many of the settlers are farmers with prior experience in other parts of the country; these hard-working indi- viduals have made an immediate impact on increasing agricultural production in the area. 49. Nearly 50 percent of the project area contains relatively good land suitable for cropping while another 20 percent is suitable for grazing. The climate is subtropical and semi-humid; although there is substantial annual rainfall (about 1,500 mm), the local famers use the tributaries of the Mayo river to provide supplemental irrigation. The main crops produced in the area are rice, maize, beans, yuca and plantain; about 50,000 tons of these were produced in 1981. Average farm size of the settler families is about 13 ha and average income in the area is about US$300 per capita. A large number of these families have incomes below this level and about 60 percent of the settlers have incomes below the absolute poverty level. There are nine communities of native Indians from the Aguaruna tribe living in the valley. These communities comprise about 200 families in total, with an average land holding per family of just over 300 hectares. Although these tracts are large in comparison with the holdings of the average settler, they are needed for the Indians to protect their life style -- which depends on having an adequate area for hunting and foraging. The project has been designed to ensure that the Indian communities benefit from the development of the area, through direct participation in the project components, while still preserving their cultural identity. 50. Living conditions in the project area are poor. Although 70 per- cent of the population own their own houses, these tend to be primitive wood and mud structures -- often with palm leaf roofing -- which lack floors, water and sanitary facilities and are not protected against insects, rodents and other animals. Dysentery and other internal and respiratory diseases are common. Development of the area has been so rapid that social infrastructure is needed -- water supply and sewerage facilities are inadequate and popula- tion growth has outstripped the capacity of local health facilities and the schools in the area. Project Objectives and Description 51. The objectives of the project are to improve incomes and living conditions for the 12,800 rural families in the project area by expanding local agricultural production and improving the region's physical and social infrastructure base. Eight thousand seven hundred farming families -- including the 200 families living in native Indian communities -- would participate directly in the agricultural development components of the project. All families would benefit from the infrastructure improvements in the area. The project would coordinate area development carefully so that (i) the physical environment would be protected; and (ii) local native communities would be incorporated into area development. If successful, the project would provide a model for a development approach which could be expanded to other areas of the Ceja de Selva. 52. The project would consist of: (a) an agricultural credit program for the farmers in the area; (b) construction and improvement of access roads in the project area and support for establishment of a road maintenance program; - 13 - (c) provision of complementary productive support activities including agricultural extension and research services, irrigation, land clearing equipment, storage and fisheries facilities and forestry services; (d) local mapping and land titling; (e) construction and improvement of health centers, health posts and primary schools; and (f) support for project management as well as studies and technical assistance -- including project monitoring, preparation of a follow-up project and preparation of a national topographic and resource map of Peru using satellite imagery. 53. Agricultural credit, the project's single largest component, would absorb about 39 percent of project costs. Because current credit interest rate policies are not satisfatory (para. 43), the Bank would not finance this component. The International Fund for Agricultural Development (IFAD) would provide co-financing for this component under an SDR 17.9 million loan (US$19.0 million equivalent) for which negotiations with the Government have been completed. The execution of the IFAD Loan Agreement and the appointment of the Bank, by IFAD, as cooperating institution to administer the IFAD loan would be conditions of loan effectiveness (Section 7.01(c) of the draft Loan Agreement). Most of IFAD's loan ($18.6 million equivalent) would be channeled through BAP to finance production inputs and on-farm investments including small irrigation works, storage facilities, land clearing and levelling, pasture establishment, farm machinery, cattle, draft animals and on-farm operating expenditures. BAP would carry out the credit component on behalf of the Government; it would lend at its normal terms and would receive a four percent management fee. The Government would enter into a Subsidiary Agreement with BAP, satisfactory to the Bank and IFAD, defining: (i) the terms under which IFAD funds and the Government's counterpart funds would be provided to BAP; and (ii) the policies and procedures to be followed in implementing this component of the project (Section 4.02 (a) of the draft Loan Agreement). BAP would establish credit by-laws, in accordance with the Subsidiary Agreement, covering the policies to be followed in executing this component. Signing of the Subsidiary Agreement and approval of the by-laws would be conditions of effectiveness of the Bank loan (Section 7.01(b) of the draft Loan Agreement). In addition, for the purpose of reviewing credit policies and monitoring this component, a credit committee, made up of representatives of HCBM, INIPA, BAP and area farmers, would be established within six months of the first IFAD disbursement. This committee would meet at least quarterly and would provide the Bank with a report on its findings and recommendations (Section 4.01 (d) of the draft Loan Agreement). 54. The access road component would represent 25 percent of total costs. HCBM would construct about 86 km of new roads and would upgrade about 95 km of existing roads (which are little more than dirt tracks). All roads would be constructed or upgraded to an all-weather, gravel standard in order to provide year-round access to the main towns in the area, the principal farm communities and the main production areas. The project also includes engineering services for final design and supervision of construction of these roads. Design engineering for about 90 percent of the roads has been completed and was financed by a PPF advance (para. 47). Designs for the remaining road sections would be carried out once their economic jlistificrtionr has been confirmed. HCBM would present this evaluation - 14 - to the Bank for review by June 30, 1985 and the Bank would not disburse funds against these remaining sections until their economic justification has been shown (Section 4.05 and Schedule 1, para. 4(b) of the draft Loan Agreement). Civil works under this component would also include construction of three small boat landings in the Mayo river which could be used to move cargo in and out of the area. 55. Satisfactory maintenance of these roads is important and, there- fore, the Government has agreed to ensure that roads in the project area would be maintained and repaired. This maintenance would be the responsi- bility of the local government authorities -- with help from a maintenance support unit (see below). To assure this, agreements have been signed by local authorities committing them to maintain roads under their responsibility (Section 5.06(a) and (b) of the draft Loan Agreement). The road maintenance support unit would be established under HCBM. The project would also provide for: (i) purchase of road maintenance tools and equipment; (ii) construction and outfitting of a small equipment repair shop; and (iii) technical assistance and training for road maintenance staff. HCBM would present to the Bank for comment, by June 30, 1985, a program to transfer the maintenance support unit to an appropriate local authority, and this transfer would then be carried out by January 1, 1986 (Sections 5.06(c)(v) and 5.07(c) of the draft Loan Agreement). In addition, from 1983 onwards, the maintenance support unit's annual program for the forthcoming year and the next year's budget for road maintenance in the project area, would be presented to the Bank for comment (Section 5.07(a) and (b) of the draft Loan Agreement). 56. Other production support activities included in the project would represent 17 percent of total costs. The most important of these, represent- ing nine percent of total costs, would strengthen INIPA's agricultural exten- sion and research services in the area. More specifically, it would provide for construction of a local office for INIPA at Rioja and seven additional facilities needed to support extension work in the area. The project would also provide support for equipping and staffing these facilities, vehicles for INIPA staff and in-service and external training programs. The design of this extension component follows the lines of the extension activities being supported in other regions of Peru under the Bank-financed agricultural research and extension project (para. 45). As with that project, the aim is to support the training and visit system of extension, which has been successful in other countries in Latin America. INIPA's agricultural research activities in the area would also be supported through the construc- tion and equipping of two research stations which would carry out studies on improving both crop and livestock production in the area. The project also includes INIPA's incremental operational costs, including tteaining. The site for one of the two research stations is not yet finalized. The contract for construction of this center would not be awarded until the Bank has been consulted on the proposed site (Section 4.07 of the draft Loan Agreement). 57. The irrigation works under the production support component would consist of construction of a small dam and a main canal to divert water from the Tonchima river to creeks and small irrigation canals financed under the credit component. The area to be served by these works would be about 1,500 ha. The feasibility study of this component indicates that it would have a base cost of US$1.5 million. Prior to construction, however, further study of river flows would be done and this might yield a cheaper solution. After this further study, HCBM would submit final designs to the Bank for review before September 30, 1984 (Section 4.06 of the draft Loan Agreement). The water charges for these works would be maintained at a level sufficient to - 15 - fully cover operating and maintenance costs and as much as practicable of investment costs in view of the users' ability to pay. In this respect, HCBM would submit a proposed system of charges to the Bank for review within three months of the award of the contract for construction of the works. After giving due consideration to the Bank's views, the system for water charges would be implemented within three months of completion of the works. Finally, charges would be reviewed annually by MA's regional irrigation office -- and adjusted as warranted thereafter -- to take account of the effects of inflation and any changes in the users' ability to pay (Sections 5.04 (a) to (c) of the draft Loan Agreement). The project would also include provision of additional staff, office space, vehicles and equipment for the district office responsible for irrigation works in the area. 58. The land clearing equipment to be purchased by HCBM under the project would consist of ten crawler tractors with associated equipment and spare parts. These would be used by HCBM or rented to individual farmers. Because the soil in the project area is fragile in places, special equipment would be provided so that land clearing could be done carefully. In addition: (i) operators would be trained in the use of the equipment before it is put into operation; and (ii) HCBM would obtain full cost recovery on its rental operations (Sections 4.04 (a) and 5.04 (d) (i) of the draft Loan Agreement). 59. The storage facilities built by HCBM under the project would provide sufficient capacity for about 3,000 tons of maize seed and fertil- izers. These facilities would be tranisferred to an appropriate Government agency on completion of the project (para. 71). 60. Under the fisheries sub-component, HCBM would construct facilities for fish farming. Once completed, these would produce fish for consumption and young fish (fingerlings) which would be sold to local farmers for growing in their own ponds. Fingerlings produced in the facilities would be sold, by the Ministry of Fisheries, at prices sufficient to recover the full cost of of production (Section 5.04 (d) (ii) of the draft Loan Agreement). 61. The forestry sub-component would be aimed at strengthening the effectiveness of forestry management and conservation efforts in the area. In order to do this, the project would provide for construction, equipping and incremental staffing of three local offices for the national forestry agency as well as two forestry police control points. It would also include the purchase of the necessary vehicles to help with forestry control and funds for a public awareness program aimed at educating the local population on the need to protect forestry resources. Finally, under this component the MA's forestry department would carry out an inventory of forestry resources in the project area and prepare a development plan for them. 62. The local mapping and titling component -- representing four per- cent of total costs -- would cover the preparation, by MA, of detailed maps of the project area, which are necessary so that titling can be completed. MA would also prepare less detailed maps of the entire Alto Mayo valley, which would provide the basic information for cadastral, land preparation, land protection and conservation work. The project would support a program designed to provide titles to almost all settlers in the project area, as well as the one native Indian community that does not yet have title. This is important if settlers are to have the security to use long-term credit to improve the productivity of their holdings. - 16 - 63. The project would include a social infrastructure component which would represent seven percent of total project costs. The health sub- component would introduce a primary health system into the area using the same basic concept -- i.e., preventive health care promoted through increased use of health aides -- whic- 1-s being introduced into four other regions of Peru under the Bank's propoced Primary Health Care project. 4/ More specifically, the health subcomponent would provide for constructing and equipping four health centers and 11 health posts in the project area, as well as training of some of the health staff who would be assigned to these facilities. Training of the remaining medical staff for these - many of whom currently work in the local hospitals -- would be done under the primary health care project. In addition to improving health standards, the project would provide water supply to some of the communities and install latrines in these areas. 64. The education sub-component would cover construction and/or comple- tion of primary school buildings and housing for teachers in about 40 commun- ities. While there is, currently, a shortage of teachers for the schools in the area, this is expected to be overcome using graduates from three regional training facilities which have recently been opened up. This component also includes funds for school equipment and teaching materials (including bilin- gual materials for native communities). 65. Support for project management as well as studies and other technical assistance would represent eight percent of total costs. It would include assistance for HCBM's local office in Moyobamba through construction and equipping of offices, housing and dormitories for staff and construction of a small field office in Nueva Cajamarca. It also includes vehicles, contracting of additional staff and incremental operating and maintenance costs. In addition to the studies mentioned elsewhere in this report covering forestry (para. 61), river flows (para. 57) and agricultural research (para. 56), the project would include a semi-detailed soil survey and a land classification of the project area (which would be used to guide future development), studies of the impact of the project on the native communities (para. 72) and a feasibility study for a possible follow-up project. The terms of reference for all studies would be approved by the Bank (Section 4.08 of the draft Loan Agreement). 66. Finally, the technical assistance component of the project includes funds for the preparation of a national map of Peru using satellite imagery. Peru has urgent need of improved map coverage since resource maps of the country are limited and basic topographical maps -- at scales useful for planning, engineering or development purposes -- cover only the western third of the country. Improved mapping of the country would permit more effective regional and development planning and hence improve design of future develop- ment projects for the country. 67. Technical assistance provided under the project would require about 55 staff months of expatriate support and 84 staff months of local consultant support. The average monthly cost of consultants, including travel and subsistence is estimated to be about US$10,000 for foreign experts and US$2,000 for local experts. All consultants financed under the loan would have qualifications acceptable to the Bank and would be hired in accordance with Bank guidelines under terms and conditions acceptable to the Bank (Section 4.04 (b) of the draft Loan Agreement). 4/ See the Primary Health Project President's Report (No. 3400-PE) dated November 5, 1982. - 17 - Project Cost and Financing 68. Total project cost is estimated at US$83.5 million. This does not include taxes and duties as investments in this area are, by law, tax exempt. The foreign exchange component of the project is estimated at US$37.6 million, or about 45 percent of total project costs. US$5.8 million has been included for physical contingencies, reflecting an average of nine percent of the base cost of the project. Price contingencies are based on projected international and local price increases (in dollar terms) of eight percent in 1982 and 1983, seven and a half percent in 1984, seven percent in 1985 and 1986 and six percent thereafter. Local cost contingencies were calculated in US dollar equivalents on the assumption that variations in the exchange rate would compensate for the difference between local and international inflation. 69. Total financing required for the project is US$84 million includ- ing a US$443,350 front-end fee. The proposed Bank loan of US$30 million equivalent would represent about 35 percent of the estimated financial requirements for the project, including $21.9 million in foreign costs, the front-end fee and US$7.6 million in local costs. Bank financing of local costs is justified by: (i) the importance of the project in developing a potentially highly productive frontier region in Peru; (ii) the need to improve social conditions in the project area; And (iii) the current fiscal and balance-of-payments difficulties faced by Peru. IFAD would finance US$15.7 million of foreign costs and US$3.3 million of local costs, for the credit and monitoring components. IFAD's loan would be made to the Government and would have a 20 year term with interest at four percent. The remaining US$35.0 million equivalent in local costs would be provided by the Government and beneficiaries. A total of US$900,000 of the proposed loan would finance retroactive expenditures for project start-up incurred since March 1982. The main uses of these funds would be for providing office facilities, vehicles and equipment for the HCBM unit in Moyabamba. Project Execution 70. HCBM would be directly responsible for executing most components of the project except for the agricultural credit, research and extension and mapping components which will be carried out with the assistance of specialized agencies (see para. 71). Assignment of executing responsibility to a project unit of this type -- i.e. one which reports to the Prime Minister -- has proved to be the most effective way of executing rural development projects in Peru. HCBM already has experience in the successful management of the USAID-financed Huallaga Central project, which should help ensure that the proposed Alto Mayo project would be implemented smoothly. HCBM has established a technical directorate in Moyobamba which would have responsibility for day-to-day execution of the project and HCBM would continue to maintain a liason office in Lima (Section 4.01 (b) of the draft Loan Agreement) because experience with similar projects has shown that this is needed to ensure that the project is properly coordinated with other ministries. The project would be managed by the Technical Director who would be located in Moyobamba. He would be under the general supervision of the Executive Director of HCBM in Lima. Suitable directors, who are fully satisfactory to the Bank, have already been appointed, but assurances would be obtained at negotiations that the Bank would be consulted on the qualifications and experience of any proposed replacement for these positions (Section 4.01 (c) of the draft Loan Agreement). - 18 - 71. HCBM would consult with officials of the various government agencies normally responsible for the activities (e.g. the Ministries of Transport, Agriculture, Education and Health) regarding issues (such as design changes) which might arise during project implementation and would turn over the facilities to these ministries once they are completed (Section 4.12 of the draft Loan Agreement). In addition, two components of the project depend on the active participation of legally autonomous agencies. In these cases, HCBM would sign formal agreements with these agencies covering their responsibilities, as follows: (i) INIPA -- which would provide research and extension services and execute certain studies; (ii) the National Mapping Institute (ONERN) -- to carry out the soil survey and classification and the national mapping component. The agreements with INIPA and ONERN would be signed by June 30, 1983 (Section 4.03(a)(i) and (ii) of the draft Loan Agreement) and would have to be satisfactory to the Bank. 72. During execution, special care would be taken with project monitor- ing to ensure that project's objectives are being achieved (para. 77). The IFAD loan would provide US$400,000 equivalent to help finance project monitoring. The Technical Directorate would set up a monitoring unit within six months of the signing of the IFAD loan agreement (Section 4.10(a)(i) of the draft Loan Agreement). The unit would work with INIPA in monitoring not only the execution of the physical components of the project but also the success of the agricultural development activities and the social and environmental impact of the project. The funds would be used to finance the studies of the native communities, technical assistance and salaries for the monitoring unit. The terms of reference of these studies would be agreed with IFAD. Disbursements and Procurement 73. The proposed loan would be disbursed over six years against the following eligible expeditures: (i) 85 percent of expenditures on civil works; (ii) 100 percent of foreign expenditures for imported vehicles and equipment; (iii) 90 percent of total expenditures for locally-procured vehicles and equipment; and (iv) 100 percent of total expenditures for cartography, aerial photography, technical assistance, training and studies. Road works, with a total value of about US$17 million would be procured under international competitive bidding (ICB) procedures satisfactory to the Bank. Land clearing equipment, except for two units to be financed retroactively, with a total value of US$1.8 million would also be under ICB procedures in accordance with Bank guidelines. In ICB, local suppliers and those from Cartagena Agreement member countries (or any other regional trade agreement acceptable to the Bank of which Peru is or may become a member) would be accorded a preference representing the difference between the prevailing duty actually applicable and the duty applicable to goods imported from non-member countries, or 15 percent on the c.i.f. price, whichever is lower. The regional preference would not be applied, however, if a domestic manufacturer was determined to be the lower bidder after application of the domestic preference. Most of the remaining vehicles and equipment and civil works, with a total value of about US$3.1 million would be too diverse to be packaged for ICB and would therefore be procured through local competitive bidding procedures acceptable to the Bank. The Bank would - 19 - retain the option of permitting some civil works to be done under force account. Equipment which cannot be grouped into packages exceeding US$50,000 would be purchased through local shopping, up to a value of US$200,000. 74. Government agencies in Peru have had difficulty in executing civil works components of Bank projects in the past because they sometimes have not had the funds needed to pay civil works contractors promptly while waiting to be reimbursed by the Bank. In order to permit more rapid provision of funds for the roads component of the project, the Borrower would establish, on terms and conditions satisfactory to the Bank, a dollar-denominated special account in the Banco de la Nacion into which funds from the proposed Bank loan would be advanced (Sections 3.07 (a) through (e) of the draft Loan Agreement). This account is expected to consist of an estimated three months Bank disbursements for road works at any time. By March 31, 1983, the Government would also, for its part, establish a revolving fund -- in the Banco de la Nacion and on terms and conditions satisfactory to the Bank -- which would be used to pay the contractors. This second fund would consist of not less than two months payment needs and would be replenished by the Government with its counterpart funds -- and withdrawals from the special account each time a payment is made (Section 4.01 (e) of the draft Loan Agreement). The Bank's initial deposit in the special account would not be made until the revolving fund was established and the Government's initial deposit made (Section 3.07 (b) of the draft Loan Agreement). Project Benefits 75. The rate of return for the F;9 percent of the project with quantifi- able benefits is conservatively estimated at 18 percent. The main quantifi- able benefits would be the additional agricultural production in the area that would occur as a result of the project. Sensitivity analysis shows that project benefits could be reduced by about 50 percent, or costs increased by about 50 percent and the economic rate of return would still be over 12 per- cent. 76. The main agricultural development investments (credit, etc.) would benefit about 8,500 farm families (50,000 people) in the area. Through these investments, the area under crops and pasture would be expanded from about 26,000 ha to about 52,000 ha, and agricultural production would increase by nearly 80,000 tons per year. The main product, rice, would increase by about 55,000, tons thus saving foreign exchange of about US$9.1 million annually. In addition, production of maize, cassava, beans, milk and beef would increase. As a result, average incomes of the farming families in the area would double. The project would also provide about 12,800 families (73,000 people) -- about 60 percent of whom live in absolute poverty -- with urgently needed access roads and social services which, because of the recent rapid development of the area, are grossly inadequate. Improved management and technical support in the areas of forestry and soil conservation would help guard against environmental damage, which often is a result of spontaneous development of agricultural frontier areas of this type. The native Indian communities in the area would also participate directly in the agricultural development components of the project and these communities have been consulted fully on all aspects of project design (para. 77). This should improve their incomes considerably and help gradually integrate these families into the local economy, while helping to preserve their cultural identity. Finally, the project would help further strengthen a key regional development agency (HCBM) and would serve as a prototype for future development activities in the Ceja de Selva. - 20 - Project Risks 77. The complexity of the project raises a risk that delays could occur with project implementation. However, the fact that HCBM has previous experience in successfully carrying out a similar project -- which was completed ahead of schedule -- should reduce this risk. Furthermore, technical assistance would be provided for a number of specialized aspects of project execution. The fact that the project involves development of an environmentally sensitive area encompassing indigenous settlements, raises the risk of adverse environmental or social effects. Special care has been taken in designing the project to protect against environmental damage and to plan development in a way which will protect the interests of the Indian communities. Under the monitoring activity, the project's environmental and social impact will be carefully watched during project execution so that any problems which do arise can be promptly identified and acted upon (para. 72). PART V - LEGAL INSTRUMENTS AND AUTHORITY 78. The (i) draft Loan Agreement between the Republic of Peru, the Banco de la Nacion (which under Peruvian law must be a signatory to all external loans to the Government) and the Bank; and (ii) Report of the Committee provided for in Article III, Section 4 (iii) of the Bank's Articles of Agreement are being distributed to the Executive Directors separately. 79. Special features of the project are referred to in the text of this report and in Annex III. Special conditions of effectiveness of the loan would be the signing of the IFAD Loan Agreement, the appointment of the Bank as co-operating institution to administer the IFAD loan and the signing of the subsidiary agreement with BAP and approval, by BAP, of the credit by-laws relating to the project. Disbursements against the final 20 km of roads to be constructed would be conditioned upon the Bank's review of an analysis of the economic benefits of these. 80. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 81. I recommend that the Executive Directors approve the proposed loan. A. W. Clausen President Washington, D.C. November 19, 1982 - 21 - AiSNEX I Page 1 of 5 TABLE 3A PERU - SOCIAL INDICATORS DATA SHEET PERU REFERENCE GROUPS (WEIGHTED AVE5GES AREA (THOUSAND SQ. KM.) - MDST RECENT ESTIMATE)- TOTAL 1285.2 MOST RECENT MIDDLE INCOME MIDDLE INCOME AGRICULTURAL 305.5 1960 /b 1970 /b ESTIMATE /b LATIN AMERICA & CARIBBEAN EUROPE GNP PER CAPITA (US$) 290.0 470.0 930.0 1902.0 2323.9 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 417.3 662.7 716.1 1259.9 2107.4 POPULATION AND VITAL STATISTICS TOPULATION, KID-YEAR (THOUSANDS) 10181.0 13461.0 17379.0 URBAN POPULATION (PERCENT OF TOTAL) 46.3 57.4 67.4 65.7 47.9 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 27.3 STATIONARY POPULATION (MILLIONS) 48.8 YEAR STATIONARY POPULATION IS REACHED 2080 POPULATION DENSITY PER SQ. KM. 7.9 10.5 13.2 35.2 83.3 PER SQ. KM. AGRICULTURAL LAND 33.3 45.0 55.5 92.5 155.4 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 43.6 44.3 42.9 39.7 31.1 15-64 YRS. 52.0 51.7 53.8 56.1 61.2 65 YRS. AND ABOVE 4.4 3.9 3.5 4.2 7.7 POPULATION GROWTH RATE (PERCENT) TOTAL 2.4 2.8 2.6 2.4 1.6 URBAN 5.1 4.9 4.2 3.8 3.5 CRUDE BIRTH RATE (PER THOUSAND) 46.5 41.5 35.9 31.4 23.6 CRUDE DEATH RATE (PER THOUSAND) 20.0 14.8 10.9 8.4 9.2 GROSS REPRODUCTION RATE 3.3 3.0 2.4 2.1 1.6 FARILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) USERS (PERCENT OF MARRIED WOMEN) .. .. POOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 96.0 102.0 77.0 110.0 116.0 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 98.3 97.2 97.5/c 108.4 125.1 PROTEINS (GRAMS PER DAY) 64.0 60.1 59.2/c 66.0 92.7 OF WHICH ANIMAL AND PULSE 28.0 25.1 24.0/c 34.0 35.9 CHILD (AGES 1-4) MORTALITY RATE 37.8 20.2 9.5 5.6 9.2 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 47.4 53.1 58.1 64.2 67.6 INFANT MORTALITY RATE (PER THOUSAND) 162.9 119.7 87.7 64.2 65.1 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL 14.6 35.0 48.3 65.6 URBAN 30.2 58.0 60.0 78.9 RURAL 0.8 8.0 25.0 43.9 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. 36.0 34.0 59.3 URBAN .. 52.0 51.0 75.3 RURAL .. 16.0 .. 30.0 POPULATION PER PHYSICIAN 2011.7 1904.9 1532.4/c 1617.3 1105.4 POPULATION PER NURSING PERSON 2205.Od 1000.5 676.177 1063.5 634.4 POPULATION PER HOSPITAL BED TOTAL 425.1 469.6 538.3/c 477.4 286.8 URBAN 273.8/e 524.9 426.47c 679.8 192.0 RURAL .. 3055.2 5705.2/c 1903.4 ADMISSIONS PER HOSPITAL BED .. 19.0 23.0/c 27.3 20.0 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL 4.9 4.8/f URBAN 4.8 4.97 . RURAL 4.9 4.67T AVERAGE NUMBER OF PERSONS PER ROOM TOTAL 2.3 1.9/f URBAN 2.0 1.77?. RURAL 2.7 2.47?. ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL 26.0 32.0/f URBAN 50.7 54.3/f . RURAL 4.2 2.77r - 22 - ANNEX I Page 2 of 5 TABLE 3A PERU - SOCIAL INDICATORS DATA SHEET PERU REFERENCE GROUPS (WEIGHTED AVERA9ES - MOST RECENT ESTIMATE) MOST RECENT MIDDLE INCOME MIDDLE INCOME 1960 /b 1970 /b ESTIMATE /b LATIN AMERICA & CARIBBEAN EUROPE EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 83.0 103.0 112.0 104.3 102.4 MALE 95.0 111.0 115.0/c 106.4 107.1 FEMALE 71.0 96.0 108.0o h 103.3 99.0 SECONDARY: TOTAL 15.0 30.0 50.0/c 41.3 60.2 MALE 18.0 34.0 53.0o7 40.4 66.4 FEMALE 13.0 26.0 46.0/c 41.8 54.0 VOCATIONAL ENROL. (X OF SECONDARY) 19.9 17.1 18.3/c 33.7 31.6 PUPIL-TEACHER RATIO PRIMARY 33.6 35.5 40.2 29.9 25.8 SECONDARY 12.3 17.3 29.2 16.7 22.2 ADULT LITERACY RATE (PERCENT) 61.0 72.5/f 79.7 79.1 75.9 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 7.8 17.1 18.6/c 42.8 51.0 RADIO RECEIVERS PER THOUSAND POPULATION 108.0 135.1 147.5 270.5 157.2 TV RECEIVERS PER THOUSAND POPULATION 3.2 29.3 50.2 107.7 123.7 NEWSPAPER ('DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION .. 123.3 51.4/c 63.7 112.3 CINEMA ANNUAL ATTENDANCE PER CAPITA 6.4 .. .. 2.7 4.0 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 3186.8 3891.8 5149.2 FEMALE (PERCENT) 21.2 20.8 23.2 24.4 36.6 AGRICULTURE (PERCENT) 52.5 48.0 40.0 31.3 38.7 INDUSTRY (PERCENT) 19.6 18.4 18.5 23.9 25.9 PARTICIPATION RATE (PERCENT) TOTAL 31.3 28.9 29.6 33.6 44.5 MALE 49.6 45.8 45.5 50.4 56.3 FEMALE 13.2 12.0 13.7 16.8 32.8 ECONOMIC DEPENDENCY RATIO 1.5 1.7 1.6 1.3 0.9 INCOME DISTRIBUTION PERCENT Of PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS 39.0/S HIGHEST 20 PERCENT OF HOUSEHOLDS 64.4Th 61.0J/f LOWEST 20 PERCENT OF HOUSEHOLDS 2 57s 1.97 . LOWEST 40 PERCENT OF HOUSEHOLDS 8.07j 7.07 . POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 235.0/c RURAL .. .. 18O.07E 184.1 ESTIMATED RELATIVE POVERTY INCOME LEVEL (USs PER CAPITA) URBAN .. .. 293.0/c 518.0 RURAL .. .. 200.7/c 371.1 406.6 ESTIMATED POPULATION BELOW POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 49.0/c RURAL .. Not available Not applicable. NOTES la The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among the indicators depends on availability of data and is not uniform. /b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1978 and 1980. /c 1977; /d 1964; /e 1962; /f 1972; /g Personal income within labor force. May, 1982 - 23 - ANNEX I D7TIIOF scow. 1rooams Page 3 of 5 Notes; tloftogh rtel ars are dreos frs torens ate..rally jotssd rite me ioitto a -c l"Iale, i etood also ht notd tet they ey hto - ote-- -aloslyco rteites of rio 1tok of etaderdise d fit1tcio tad co..cepts 050 by di,ffeetto- reoo aleto the tote T. i. da Itta.. os theIsts,. o.olol to dt-t.rh orde. o nr. I.Ai..t. iteds, aa hitareTrie iterat etior differ t heeL _ oatts ri.otesessrut r (i) the s-a c-,ty 5rotp of the eubjeor -cotaty and (i) a c-ttr getw emit s-t-e higher ae-ragetoe thIt the t--er stoop of the _bj_c i--ttr (excpt for "015it boon oil epo-rare" stoop there "Iiddlt I.c. . North Afri-t an Middle dor it ite- btsoeo of ares tod It to toLtee, ceoioo ea h -oriesd to r -o .S nta.. of ttIndicato to Tnathe. -Thet Ioete .o ar ..i.osftl in, coePeto the volt- of too L.iod -cco tro iha a s the _itoe Ily tedrferoc proo..F. Otto tittoosont eq...) Poroletlan tot oeticel set - total orbon . thercocci- Poyplat itt total Tot-l - Total t_rf- aIta oorii .od ares od iloladetae 1979 data. ota.cd oa)0lotei tpthi=sp tics ta-sro hospital rode OAri-olira .. ett. tso tItiolrealrca so teprar-tilp or p- -an Iy cotal nrtlcodrbt eta o rctue oeIolaOe foI rpe - attes seret cad kitohote gard-o or to lie falloe; 1979 dat,tailrttn err. btoettas_ae ee helie ters sraaotI= otef fd hy dt I..e. ore phy. 1015. poeiihet todr rrci-pal lyceo GNP Pin CAPITA (tail GNIP per cap iote ar.a orreot takr ,pcic-. -o- dial -ore ace oa oaaa trl htoepital., - ioes . tlode health c-lated cy -se cerlt ehad as World teakAtlee (197940 beeiei; l1960. aod -etoL cntt o ereerl s _ = Y-fed tyaIptesii' hot 'Ip 170, dat18 aa sedlclatl rot toe,eirie.acl ih otfar It-patient toom EtERGY COtSUtQFTION PEt CAPITA - oool oooeio f -coetial tons (co clc-1 porposes oteb heirl WHloe uO. potil- l p ter Ihoeitl ted 1,It.ot.ytrbo.vc,a a ....tydro . -tclo artad o oa I zIro- aI earsl h.octt le loca or total eite tad tedro- iod.L earcir itririty I I..eooico qto pe capita; 1960. 1970, tot 19l9 eter. Stec-cl ted'hospital. e c ~LtcIdsd .oly totrd otL. date. oteleics- Per Htapital tod - Totl- seo dseit oo di-h-fec5e foo hospitals dlorde4 hbisy e a ofta. Pc'PILACIOt AND V1ITAL STATISTICS Tocal Pocplalito , fid-fear. (thooetodr) -aof Jaly 1; 19611, 1915,. ad 19110 110119190 dardI An'r.a Sieo2roeod cea.cotathl -ttl arise. ard toce- di yrer. defhitco- of -rac Irsde tay etffe tco tr-ilitt of oar art thea cab e-I.. A ioa,rdero lte -y or-y tot he intioded in eag otoc;19it. 970fO. ted 1960 data etc hedertld forec. irclp.ep.s.. tosioProtct- or Arerep ootar of PIrTc oar coos-Iota rboc-s. and 1-e1-trpava Po a iati teat100 - Cacre.. papo,lariat etoJlnciao rce hatd 00 1980 hoc of porene per roa in aTL e . V -dace occapiat -on.tt-el total popolatto hy age ed see cod their eetality seafertlIty ese.telige epaotileiy. dtllnaetld.'-poenaoee- otoestd Prlctc ptesteea for -rtllty ctetterripe of hthre level tatsLWnopedpe. lag I tie ropecteoy s tf ilaraen atcttt a a aspire brace acest tlecriaeI"rcert of delli,oseI -bool,oro, otO toed - les a easll I P-csr rbItin at 77.5 years. Th. pars- Cot.to ioa a.tlpotiaec-aip11 cipqtaneea percentage ase, -o fertiItIy ost aleo -ee thrs Itol aaaia slo i of t-ti, otbot. tot tool d..ell ineerti-elv. tact EoaDUatCasltdota he vn abatat iorclp IIATION at etltyic oefrProj tatto tparyea. Adi-bere lEtl11eot tatL- Plocro 1-ootlv - r.cotetlotarp popolalior there Lc to groh iaa- Poeay tioo - -otltl tnd tea-Ic- Crat ca.tl heftl er's t otitree Itetoalto te dtelt are. tt dce te ag Orrolorees- craleert f el a ge att he riscp lesl O paccetoge ofoteprtiy 1,Its choctac. iThq'Ia ie ecive al ftrftt Iapttn el o to1 rIatpsho-p oaale;tr_lolcoe tte pa6I -tt n-e oeh,t b.ele of the pra7ectad chceoartrit of the ootoc otet popil t lt rsoecte official eccoal g 10crYeeelS0O.lideh. tIaof d-Iiofetiktrtetarrpace-S-cdatoataol -at.l.aclte.d f.sl-Coq"tt_dos-it"lt:oeco daty too-at -1 ..tr Ypoeulr la Is rta...hd - The pee nba -recototy papocartoen pro-c4sa teotrl. -aerbe -hr-esin tot nho lortrc Love for yPis 010011 itleosacted. onalof ia -'7 years oft ge; cateontact. .er 5eoeralytp Pco do. '2.- Md-y... popolorit per aqtar rottc(100 hectaces) Iof V_cocIdol_ or-leo (-.r-atotos-oed'rv - V-c-t.o-a lestot o... focl de1 190 1P ahe 1979 dare. .ecoo ceheitol ,ledsttO. or octet te-gra echopnr It4epad- Per 09 t. I-ltloolla - Coe-ott setlee faI ptoloa Ice at pora I'ldl,eat o cttddpiehtae cr1 16, 1970 the 1979 dera. IPool-reo erc eta rio y and deote - T,:If edeteroldIn ?patolatit- Ste S-t-ocot Ipercne - _ChIldren 10-14 ysc.e.. entkhing-ap 115- -rsytd stoonsy levels dIiMdedbp ~ o s ce oriths ha (dre .dd rstcd (itS psore ad ...c de I easres of nod-pea PoPo- cato-p-tdinglaa. Latoo ;16.1970. and19110 dera. hal 2c 5Iterstooat (cerafze 1- - Littsdtlte Ilaetredod.a.it.. to"PI,"" t, et rc G reccee - rate --Iata &-oh oars of coral sIt- .t.retgto oIaol aaait go1 erS h ovr ycd- popoetloc fcc 195000 190TO dh lyToS pcctotlo Ocotit eer coravt. -r... .....eaetttae of -".e poet.- CONiSUMPTION loas Irt ta-n Iost .hoaoa - datoal live hirtch per thoas...d of old-pee Ioe ...i le the tight pt....re;Isacloa taclorcee. itero-..t poplatoc;196 . 970 ac 19110 d-.a. rc Ioy !cil e.. Crate DeaL lt tots , 17cchoosa) - htadol deoce per thoto..nd. ai d-pea...l tcLost (Pee thotao" vltae(-oltpt cci eftIPdol ,popIoletin; 1961. 1970. aIt1990dat. btr-ettos to geerltpl. c e hote of paple tt;et dltt f-' boos tprd_iat al _-Ave_an vots- of doaghitersI ote atll hear It 1!,:cetsed rseor Iatontn eti pecy atr elecr oo.i her tasa -op -Oaelo paciod it sc op. eae prteor is-ep- if lae- notc nrfa; aaitrco Yeert tap -a oe coeperbleett clIcy otteep ...ll II las-pa -ocgsrdacgtL Ia 160 1970, sod 1990 tola.rrieshol eee I icate,R, reallyPlatcts-Cstr ceccer of -c tat ssoc) Peln .ro or eandltorieadI nc bnIegtrra - a of I- nets ..s Itefea. oaas ofceil-iscinaoge115-4 pace)ohoonei.-ith-cotrcol doicespco ptolat Ier CIrcala Ia etc t ad .. p pal-Lat tool - casIC eaaecate Ilr tIl eateted vase It.` MOI. so..ntag.o gcarap. ncalarir af d ''daiy.9eare ioaarcnepc..df odcpe ois potli-titia dtvotd priseily to reorie ger-a veg. i It otdet..t F00) AND tNtTITION to is "Sa.lly" if it appeare .estt. rtaseeI . lodroo toot oadoahoe ee Ctctt (196-71-101 - tdoo of per -spitaantol L-- loe ..Iota Oce narsye C.pica per tea-tost n he o.ahbr of ptoooctiao l oo o lie Pradacio toto-t eted. ar fst.a.icossd dotlg the year. Inlac inle oesttedrive-inlve ineteod of eta hiba dr ldble" oooeooteoe(..cft a -e r a laded). grgt trdtao f eaIt ttt Is ..e. 00 CAtWP tRCE collard1 testat pttocr price- l s 1991~~-6.1970, and 1989 data. Toa Lbp ot (hosre - ti-ot-ale do ptts loc.itig Par -sr It oply of c"aIotl prtedL of too ari owrd Iros armed foresth toep ype itt ro loota toosasiese steaa. tc. teey ecita-a of _s load -aP' lie avilbl _tat.r per canto -avringpoooca o llaseI elli_te oaron ate c pee day. Available soPpplie. api. Ot-teL praduatein. Iote late oat -Np .a.abIe; 1960. 1970en 19110 dane. soparte. ahe obope in stak. 9s- atyplise stIteoisal last,rest. Psl oell-Psl ao focosa .. rascape. of coral labo rloe.. to-rtlo tod It foad pro-esai. cod se in dotrbai. "eqice aicloe(Iec- Lbrfara alceag ,frerc.hootienta eetanrentarot by 7A0 bes .. 0. piryinasl dload far ..,-sl tcL- flbe - tit of tota L labo 'fore 19'I97 Ot 99 t ctr te ealh ontdttneatrantl oepcaor. htyneght. gslocety erontIh Laa foc tsna.ae-ec o.svf Lociep and ee tartboiaoofppatt. ea llig 0peer far a at.at sad eett t.atrah aeae ..pepaeasn of roest labor force it..o.hoId leve; 1961-15, .970 sod 1977 dan. 16.17 t19 as teet ccpic .tpply .i prtttel (at,- car torI - Prorlei coarser of per c-pi-otri P- icer tooPc ceca= tarn, -els, td fed. -Tcti ls too "et torey af load p-t dap OsreorPply of faod Le daflod sa sit"'. t`- aativittraraetC.oa I.rst t cat. -ale. oct fcsele 1abar forcea qoircettetsI for al rtotrio-s J ee i sad by USDA proide for llsis -p-rceo.o.ee of tta, l ah fettle potcro f all .g.. .e.e. tiol elocts ofi ct of "tota protei per day the 00 area of laed dh 1960. 1970'..an 19Sf dt.c. Those ar ..sed or ILI.s p-ctc ttit cite poa Iroeo f tac 0ga 6ol eaislpott ee te-cfga t p-at:totc of It. poalra tit Id" tILe tetod.AI :,Ide are Ite thl chos of 75 gra-a rof t rrt h 1 0L""'' g Ir ffiretetett ftr- oat totl eac actea proaivasan aerep f hetcd. -pro..ee by .h to tot mItt T,oeoi Otesdnect RLa - tottofa poItciv toter 15 codl 65 citove Oar Id Food lo-e,; 19t1-.65. 19Pf et 197 aa,t the toa .. t hobt force P., caPtlt potein toppLy ftosoio ar rles -retrain sPpyly of food do- oleed frctlaeea-oeei greet pea dy, 196I-65. 1970 aed 1977 Sara. 1011090 IESTtIIfTtSf Childaese -4) atte dte (cr chotoodi - Aaol teeh. per h..oa... dePreaso Ioitte nta (bath Itcob n dl" -Rttees op richest Y---oo .1Ayers t cchinlidr leag gaa,fo at eelpig 00ritpotet,cch-c10pccrtIpare 1 p40rt.ar pore A pcte tcleooI decit- free lfe cale 1960 1970 oa t990 tetLe. of ho...ehotde. 4EaLTH 700117Y TARGEf GROUPS LIfe E-tElvy rbrt yep( vrtr. et-e of years of life osatieg -h olet et e r aery oppco- .el a ..... f oeovaes 01 itireh 90 17 a 19 90dos.dd eh-id te oesopretedl chil on- loarbi lacau o. lotao trol'htt (e cooadl - -a.-a teehe of lofoor. andeeto pear -inll-rd Ahe_lote P_ot Iota L-te 111 tre$ P cplel-dra t-t .rot ofatpe loeo Ie tic;160 90 v 96 aa.tcloepone oc eelliatlctelvl o n hya ite occeestoS l.Otr(eet of1. "'W'oio I-Otl 'W ce.aotrl-vn roritralp d1tos Ie hposesoio-l .. roefod tt-iceat Is at1 tat of people total. ortcv. ahe octet) totelt pecsodaile access.t..eelsIof-fordshl osteropplp int ldas tretsd oc-aa isreh orotsee a attat.ts atttt esto 'ooe ls ly Il e elIa:thlddd5 p .trtoeeo cit cl teepeI ct. e pcpi.. .... ia. ie.looethzoctr pohtrd pe----dRolIct o Pi.-tty tt I rr- t laoS1 Is doctor lea. the focl to at eestooped sdiproocentae arr01 tt .depI f-ltc-e clita toa-t'-p. toreeto rtror Ictesal ~c oeva r -oploilel -Ioto--atita.rheIcrali peretrge ofther eepoc vep'ph a tans h' to "ei tpos sep laal.oldsadrrlpp11.C,: ~. tI aLlec .i.det draposal, nieb c t. .-tfp droes.yo hi aocera a'::!e'Y' yots-dt eea rtatso tttits a la lAr oteI ros rootitptPiteiia -bPrlta ito paoe fpatIelgpp -Ioat o o dDt l.cb o tteqo -lt!dfotateie boola dcctyInvl.Iodl tleaotPolo oeDrce ofoeia t tt.ri ..a Peoa- t apala to EOvdo r ctto dpof. preyt -ingSOd16 vorsiog.... stahor..l..taci,oIis 9172 77713 79 72 19715 1976 197 2978 2979 2940 -l- 192 1 722777, 7177774279 973) 2252.~~~~~~~~~~~9 lI: I37I 222.7I W 27. 1 1722.9 2117.9 2799.9 4266.4 439.9. 42 I7 79. 1923727 (777274279 9767 1272.9 1222.7 ~~~~~~~~~~~~~2262. 30222-7 2925.7 269. 227.2 9292I 92 I 4952.0 52. 30.770772 9. ~~~~~~ 72.7 27UU--1 5~~~~0.2 -5.9 -64. -237.9 -887 .2 -559.6 329.8 19471.2 675.7 -04.8 -227 .3 -1229 -79U.9 -26. -4U. 392 -U. 57. 973 -U. -9U. 2687.9 27972772~~~~~~0 P.7..7U. ~~~~-7-. 227 -7. -2.7 IU4. 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Группа Всемирного банка · Memorandum & Recommendation of the President
Peru - Alto Mayo Rural Development Project
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