Ecuador - National Low Income Housing Project

Document of F i,PY The World Bank FOR OFFICIAL USE ONLY Report No. P-3272-EC REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF ECUADOR FOR A NATIONAL LOW-INCOME HOUSING PROJECT April 15, 1982 This document has a restricted distribution and may be used by recipients only in the performane of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Ecuador implemented a system of multiple exchange rates on March 3, 1982. The exchange rate for the petroleum sector remains at US$1 = S/. 25, that for non-oil exports is US$1 = SI. 30. The exchange rates for non-oil imports are US$1 = SI. 28 for essential imports (e.g., food and raw materials) and US$1 = SI. 30 for all other imports. There is also a free market rate that has been fluctuating around US$1 = S/. 35. Currency Unit: Sucre (SI.) Calendar 1981 April 1, 1982 (Official Market) (Most Non-Oil Trade) US$1 = S/. 25 S/. 30 SI. 1 = US$0.04 US$0.03 S/. 1,000 = US$40.00 US$33.33 FISCAL YEAR January 1 to December 31 ABBREVIATIONS BEV - Banco Ecuatoriano de la Vivienda (Ecuadorian Housing Bank) IDB - Inter-American Development Bank JNV - Junta Nacional de Vivienda (National Housing Board) USAID - United States Agency for International Development  ECUADOR FOR OFFICIAL USE ONLY NATIONAL LOW - INCOME HOUSING PROJECT LOAN AND PROJECT SUMMARY Borrower: Republic of Ecuador Beneficiary: Banco Ecuatoriano de la Vivienda (BEV) Amount: US$35.7 million equivalent -- this amount includes about US$528,000 to cover the capitalized front-end fee. Terms: Repayable in 17 years, including four years of grace, at 11.6 percent interest per annum with a front-end fee of 1.5 percent. Relending Terms: The Government would onlend the loan's proceeds to BEV, in sucres, on the same terms as the Bank's loan and it would absorb the foreign exchange risk on the loan. Project Description: The project's three objectives are: (i) to support the Government's policy of providing affordable housing to low-income families; (ii) to strengthen BEV and the junta National de Vivienda (JNV) which are the two major institutions in the housing sector; and (iii) to support the expansion of low-cost housing in secondary cities. About 50 percent of project investments would. directly benefit families with incomes below the absolute poverty level and most of the estimated 81,000 beneficiaries are individuals who have previously not owned housing. The project includes four major components: new housing, urban upgrading, community facilities and home improvement loans. The project also includes funds for project management and some technical assistance for the implementing institutions. Project Risks: Because of extensive in-house preparation by BEV/JNV and because of the institutional and technical simplicity of the project, the risk of difficulties during implementation should be kept to a minimum. However, since this type of project is relatively new to Ecuador, there is a risk that management problems might occur due to inexperience. Technical assistance during execution should reduce this risk. There are also risks that repayment problems might develop among the low-income beneficiaries thus prejudicing BEV's financial soundness. These risks should be offset by the fact that BEV has a good record of repayments, is well-equipped to keep arrears low and earns a sufficient margin on the loan. This document has a restricted distribution and may be used by recipients only in the performance of their ofhcial duties. Its contents may not otherwise be disclosed without Wo3rld Bank authorization.  - ii - Estimated Cost: (These cost figures do not include local duties and taxes from which BEV is exempt.) Local Foreign Total --------------US$ Millions---------- A. New Housing 29.4 9.0 38.4 B. Urban Upgrading 2.1 0.8 2.9 C. Community Facilities 2.8 1.5 4.3 D. Home Improvement Loans 7.9 5.8 13.7 E. Project Management 4.3 0.8 5.1 F. Technical Assistance 0.6 0.9 1.5 Base Costs 47.1 18.8 65.9 G. Physical Contingencies 4.3 1.7 6.0 H. Price Contingencies 24.2 4.3 28.5 Total Project Costs 75.6 24.8 100.4 I. Front-end Fee on Bank Loan - 0.5 0.5 Total Financing Required 75.6 25.3 100.9 Financing Plan: Local Foreign Total --------------