Mexico - Manpower Training Project

Document of The World Bank FOR OFFICIAL USE ONLY ./ 1A/ )d'Al Report No. 6838-ME MEXICO MANPOWER TRAINING PROJECT STAFF APPRAISAL REPORT August 28, 1987 Country Department II Latin America and Caribbean Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit Mexican Peso IMex$) Mex$1.00 = US$0.000824,/ US$1.00 = Mex$1,214.00'/ FISCAL YEAR January 1 - December 31 UNITS AND MEASURES The International System of Units of Measurements (SI) is used throughout the report. GLOSSARY OF ACRONYMS AND ABBREVIATIONS CCECA State Training Council CECAP or Vocational School CECATI CEO Crafts Training Center CET Council for Employment and Training (Consejo Consultivo de Empleo, Capacitaci6n y Adiestramiento) CONACAP National Training Board CONALEP National Council for Professional Technical Education COPLADE State Development Planning Commission CUD Annual Agreement on Development DEPE Directorate of Employment Studies and Policies DGCP Directorate General of Training and Productivity DGE Directorate General of Employment DGPPC Directorate General of Programming, Budgeting and Accounting DOA Directorate of Occupational Analysis GATE Technical Support Group for Enterprises ICB International Competitive Bidding IMSS Social Security Institute INEA National Institute for Adult Education LCB Local Competitive Bidding NAFIN The Government's Financial Agent SEE State Employment Service SEP Ministry of Education SHCP Ministry of Finance SIP Productivity Information Service SME Small or Medium-Scale Enterprise SNE Directorate of Employment Services SPP Ministry of Planning and Budget STPS Ministry of Labor and Social Welfare 1/ At the time of appraisal (May 1987).  FOR OFFICMAL USE ONLY UNITED MEXICAN STATES MANPOWER TRAINING PROJECT Table of Contents Page No. I. LOAN AND PROJECT SUMMARY .................... 1 II. THE SECTOR: HUMAN RESOURCES ISSUES AND STRATEGY .......... 4 Development Context ................................ 4 The Manpower Training and Allocation System . 4 Sector Issues . ... 5 Government Policies for Improvement of Training .... 7 Bank Assistance .Arategy and Experience of Past Lending ... 8 III. THE PROJECT .................... 9 Origin of the Project ............. 9 Project Objectives .... 9 Rationale for Bank Involvement .... 10 Project Components and Description ......... 10 Alte_natives to Proposed Pro0ect Interventions .... 14 Project Costs and Financing ......... 14 Project Implementation .... 16 Status of Project Preparation .... 17 Accounting and Auditing Procedures ... .. . 19 Benefits ...19 Risks ... .. ..... . 20 IV. AGREEMENTS REACHED AND RECOMMENDATIONS .................... 21 This report reflects the findings of an appraisal mission which visited Mexico May 18-23, 1987. The mission comprised Mossrs./Mme*. 8. Dahlborg, (Technical Educator, Mission Leader, LCPED); R. Dryodal- (Deputy Chlof, LCPED); A. Artaza (Operations Assistant, WAPUR); and E. Schreiber (Planner, Consultant). Several other persons, Including the Mexican project preparation team In SIPS, contributed oubstantially to the report. Those persons are listed In Annex 10. 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 authoration.  List of Annexes 1. Comparative Education Indicators 2. Labor Market Setting and Training Needs 3. Technical and Vocational Training in Mexico 4. Component Design and Implementation 4a. Project Matrix 4b. Employment Services and Labor Retraining Component 4c. Demonstration Inservice Training and Productivity Component 4d. STPS Institutional Strength.ening Component 4e. Training Institutions Upgrading Component 5. Project Costs 5a. Estimated Project Cost by Project Component 5b. Estimated Project Cost by Component and Category of Expenditure 5c. Unit Costs 5d. Contingency A.alowances 5e. Project Financing by Component and by Source 6. Project Management and Implementation 6a. Project Management and Implementation 6b. Implementation Schedule 6c. Activities Financed under the Project Preparation Facility 7. Procurement Arrangewents 8. Disbursements 8a. Allocations of Loan Proceeds 8b. Disbursement Projection 9. Key Indicators for Project Monitoring and Evaluation 10. List of Persons Involved in Project Preparation 11. Related Documents and Data Available in the Project File  - 1 - UNITED MEXICAN STATES MANPOWER TRAINING PROJECT I. LOAN AND PROJECT SUNMARY Borrowers Nacional Financiera, S.N.C. (NAFIN) Guarantor: United Mexican States Beneficiarys Ministry of Labor and Social Welfare (STPS) Loan Amount: US$80.0 million equivalent Terms: Repayable over 15 years, including three years of grace, at the standard variable interest rate. Prolect Description: The project would complement Bank assistance for economic restructuring and policy reform, and would aim to reduce human resource constraints to growch, improve labor productivity, and lessen the social impact of adjustment. It would: (a) strengthen state employment services and the STPS retraining program for displaced and unemployed skilled and semiskilled workers, and implement a retraining program for 160,000 displaced and unemployed workers over the next four to five years, during which the labor market effects of restructuring are expected to be at their peak; (b) establish a system to assist small and medl.um- scale enterprises in strategically selected sectors and geographical areas in upgrading the skills of employed workers through a demonstration progrim for promotion and support of inservice training and related advisory services for 5,000 targetted enterprises and productivity information services for 20,000 enterprises; (c) strengthen the STPS to guide effective development of training by improving staff capacity for labor market monitoring, introducing revised labor market and manpower information systems and conducting key policy studies; and (d) increase and better distribute training capacity by upgrading selected public and private training institutions that contract with the STPS and firms to provide training.  -2- Project Risks: No significant risks are associated with the capacity of preject management entities to implement the proposed project. However, despite the priority given to the project by the Government in the context of the current restructuring effort, some implementation lags could result from shortfalls in Government provision of co1nterpart funds and/or from the change of administration in 1988. There is clso some risk that an insufficient number of employers would be motivated to participate in the inservice training provided under the project and that some graauates of th' retraining program would fail to find productive employment. Project design takes account of these risks and includes measures to minimize each of them, including decentralized decision-making mechanisms and close involvement of enterprises in decisions regarding both inservice training and retraining programs. Also, the4 Bank would have the right to reduce its share of project financing, should adeTuatae counterpart funds not be forthcoming. Budgetary counterpart allocations for the project have been made for 1987 in line with appraisal estimates. A mid- term review would be carried out after the change of administration. Employment of retraining graduates would be further assured through preparatory studies to select priority sectors and regions for intervention, new criteria for selection of trainees based on recent evaluations, and ca:eful arrangements for monitoring of the retraining program.  -3- Estimated Cost: el Cost (USS million) Local Foreain Total Prolect Component Employment Services and Retraining 74-1 1.8 75.9 Demonstration Inservice Training and Productivity 40,4 2.3 42.7 STPS Institutional Strengthening 2.0 0.6 2.6 Training Institutions Upgrading 1.7 8.3 10.0 Base Cost (May 1987) 118.2 13.0 131.2 Physical Continge:.ies 11.8 1.3 13.1 Price Contingencies 11.0 0.7 11.7 TOTAL PROJECT COST 141.0 15.0 156.0 a/ Net of taxes and duties estimated at US$12.3 million. Financing Plan Cost (US$ Million) Local Foreign Total Enterprises 40.3 0.0 40.3 Governmert 35.7 0.0 35.7 Bank 65.0 15.0 80.0 TOTAL 141.0 15.0 156.0 % of Total 90% 102 100% Disbursement Forecast: (US$ Million) Bank FY 1988 1989 1990 1991 1992 1993 Annual 10.0 10.0 16.0 16.0 16.0 12.0 Cumulative 1C.0 20.0 36.0 52.0 66.0 80.0 (% of Total) (12.5) (25.0) (45.0) (65.0) (85.0) (100.0) Rate of Return: Not applicable.  II. THE SECTOR: HUMAN RESOURCES ISSUES AND STRATEGY Development Context 2.1 Mexico's development strategy -- as embodied in the National Development Plan, the 1986 Trade Policy Program, and the Growth-Oriented Adjustment Program (PAC, 19868 -- emphasizes that sustained growth requires far-reaching reforms, including restructuring of key industrial sectors and public enterprises, opening of the economy to international competition, expanding non-oil exports, and accelerating technological modernization. Reforms already initiated have led to significant closings of inefficient plants, the consolidation and upgrading of productive facilities, and a rapid increase in non-oil exports in a process of adjustment which is expected to peak during the next few years as the trade regime is further liberalized. These measures have affected the labor force. Total employment grew by only 2.5 percent in 1985 (Annex 2). Irformal sector employment, which represents about one-third of the work force, is currently growing raster than employment in the formal sector. As part of a strategy to restore growth, facilitate the redeployment of manpower to more productive activities, particularly during the major restructuring expected during the next few years, and lessen the social cost of adjustment, employment services and retraining programs need to be strengthened and redirected to serve better the poorest of those displaced and unemployad. Substantial further gains in productivity will also require more effective provision of inservice training of large numbers of employed workers, particularly for middle-level technicians and skilled workers employed in Mexico's 380,000 small-and medium-scale enterprises (SMEs). Such enterprises in the industrial sector, with less than 250 workers, employ 51% of the industrial workforce and produce 40S of industrial value added. SMEs will be particularly affected by the economic adjustment measures but, at the same time, will need to play an increasingly important role under the liberalized trade regime. The Manpower Training and Job Placement System (Annex 3) 2.2 Preservice and Inservice Training. Mexico has a complex vocational and techrical training structure. Regular preservice training is primarily the responsibility of the formal education system over. en by the Federal Ministry of Education (SEP). This system includes stat- and municipal institutions, semi-autonomous agencies such as the National Council for Professional Technical Education (CONALEP), and private schools. Inservice training, to the limited extent that it exists, is implemented and financed by employers. It is supported and monitored by the Ministry of Labor and Social Welfare (STPS) as part of its responsibilities to promote higher labor productivity. 2.3 Employment Services and Retraining. Registration of job-seekers and va ancies, career counselling, referral, and placement in jobs or trainilLg are the responsibilities of the State Employment Services (SEEs) set up in 1983 under the Federal States. The SEE system comprises offices (assisted by STPS) in more than 80 locations around the country and registers over 200,000 persons a year. With the objective of linking labor supply and demand, and depending on each individual's characteristics and needs, the SEEs refer job-seekers to a variety of adult training programs,  Including those of the vocational schools in SEP's CECAP/CEO (vocational and crafts training) system (Annex 3), courses offered by the Adult Education Institute (INEA), and to STPS-sponsored retraining. These programs operated with a total enrollment of about 250,000 in 1985. They are tailored to regional requirements on the basis of labor market information, including employers' information on investment plans. The STPS retraining program, guided by the Council for Employment and Tralning (CET), has operated since 1984 providing intensive courses of study of between three and six months' duration. The courses emphasize basic skills in trades such as bookkeeping, carpentry, auto mechanics, electrical installation and maintenance, and are designed for self-employment as well as for employment in the formal sector. Courses are conducted in training facilities (public and private) contracted for the program or, in some cases, operated jointly with enterprises. The STPS retraining program is intended as a temporary complement to permanent adult training programs during the present period of concentrated restructuring. It targets a small group (about 15 percert of overall adult training enrollments) among the economically most disadvantaged of those displaced and judged retrainable for skilled or semiskilled jobs projected to be in increasing demand. To enable these persons to participate in retraining, the STPS program provides a cost-of-living stipend during retraining equivalent to the general minimum salary (approximately US$90 equivalent per month). All other candidates for retraining, notably younger workers without dependents who are not eligible for the STPS program, are referred to other adult training programs. 2.4 Training Finance. Resources for training are mobilized from public and private souarces, including individuals and enterprises. The largest source of finance is the Federal Government's allocation to general education and universities (in the order of US$5 billion equivalent annually, or about 4 percent of GDP). By comparison, the flow of funds to vocational training is small -- about US$150 million equivalent of public funds in 1986 (or 0.1 percent of GDP) for preservice training and retraining of skilled or semiskilled workers and middle-level technicians; and an estimated US$120 million in 1986, mainly from enterprises, for inservice training. 2.5 Financing arrangements for inservice training in Mexico contrast with those in place in many countries of the region, where payroll taxes are used as a stable source of funding for national training systems operated by centralized organizations. Mexico has instead depended on a potentially more efficient combination of market forces and tax allowances for funding of training expenses, and a decentralized system of management relying on individual encerprises and employers' organizations to organize training programs. This approach has the advantage of flexibility in response to employers' changing requirements. In a protected industrial environment without a strong training tradition, however, it has also resulted in under-investment in traini-ng. Sector Issues 2.6 The main issues affecting manpower training and job placement have been identified through a subsector study carried out in 1985 (para. 3.1) and in the course of subsequent project identification and  - 6 - preparation missions. They aret (a) limitations of the state services for employment registration, counselling, referral, and placement, and inadequate retraining programs for displaced and unemployed workersa (h) insufficient inservice training, particularly in small and medium-scale enterprises (SMEs); (c) inadequate monitoring of labor market supply and demand and limited institutional capacity for related technical and policy analysis by the Directorate General of Employment in STPS; and (d) inadequate distribution of capacity (by types of training offered) in existing training institutions to deliver required retraining and inservice training programs. 2.7 EmRloyment Services and Retraining. The capacity of SEEs in some states Is still limited due largely to a shortage of trained staff and inadequate information processing equipment at the SEEs. As a consequence of the ongoing structural adjustment process, a large and growing number of unemployed seek employment registration and retraining for entry into new, productive activities. However, budgetary constraints have reduced the number of places in STPS' retraining program from 56,000 in 1984 to 19,000 in 1986; and the program needs some improvements, including measures to target better the poorest of the unemployed. 2.8 Evaluations of the STPS retraining program, including a rectent study of the program's outcomes for a 25 percent sample of trainees in five states in 1986 (a total of 670 ex-trainees interviewed), showed favorable results in terms of training efficiency and employment of graduates (Annex 3, paras. 19-21). The average dropout rate was less than 10 percent. Between 40 and 50 percent of graduates surveyed immediately found jobs tied directly to their training specialization; another 40 to 50 percent entered productive employment in other activities where the benefit of training was less direct but still tangible. Less than 10 percent remained unemployed. Althcugh a controlled experiment was not feasible, this rate of placement was more than double that for the unemployed generally during the same period. The evaluations also helped to identify measures needed to make the program more effective, including measures to concentrate courses in specializations and regions where effective demand is robust; improve monitoring and evaluation; adjust criteria for selection of trainees to ensure that the program attracts those most in need among the trainable unemployed, in particular to limit use of the training stipend to those with dependents; and increase the proportion cf trainees enrolled in courses operated jointly with enterprises, whete the average rate of placement is particularly high. 2.9 Inservice Training. Inservice training is, by law, promoted by the STPS and guided by sectoral or regional training boards (CONACAPsj and local training committees, which include representatives of employers and labor. Training is provided largely in training centers (public and private). In practice, only large firms carry out inservice training systematically. Small and medium-scale enterprises, which employ the majority of workers, do not regularly provide inservice training. With notable exceptions, including some courses arranged by the national construction and manufacturing associations, the training provided is not directed to resolving key productivity constraints. As a result of new policies for trade liberalization and industrial restructuring, major enterprises increased allocations for training by about 15 percent per year during 1986-87. Over the same period, firms' demand for training places in  - 7 - public and private institutions rose by about 10 percent per year, particularly in management and technical fieAds. To begin to support the regular provision of effective inservice training, particularly in SMEs, promotienal activities of the STPS need to be strengthened and combined with technical support to decentralized training committees and firms. Inservice training also needs to be broadened to Incorporate more irilant courses. 2.10 STPS Institutional Capacity. Structural ad4ustment and rapid technological change are placing new and more stringent demands on STPS as a promoter of human resources development. In this context, policies and procedures for guiding, monitoring and evaluating training programs need to be strengthened. At present, STPS staff in the Directorates General for Employment and for Training and Productivity (DGE and DGCP), who are mainly responsible for training support, possess adequate formal qualifications to effect these improvements. However, their experience is limited in selected areas including, notably, program and system design and evaluation, and application of the sophisticated analytical techniques increasingly required. The current labor market, employment and training information systems are also inadequate for supporting early adjustments to changing labor market needs; and related support for local analysis by the SEEs is limited. Long-term analysis and studies needed to guide the future development and financing of the training system have also been limited. Selective staff upgrading is therefore needed within STPS to strengthen technical and analytical capabilities, and the Ministry's labor market and manpower information systems need to be reinforced. 2.11 Capacity of Existing Training Institutions. Existing training institutions and centers, puolic and private, are contracted by the STPS and enterprises to deliver retraining and inservice ttaining. The capacity of these institutions is generaily adequate for both types of programs and the numbers of trainees anticipated over the next five years. However, the geographical and occupational distribution of training capacity does not fully correspond to shifting needs, and some institutions do not have the administrative capacity or equipment required to undertake new or revised courses. Consequently, a need exists for the selective adaptation and reequipment of training facilities, as well as for upgrading of administrative capacity. Government Policies for Improvement of Training 2.12 The Government's policies for manpower development and allocation are embedded in the current National Development Plan and the economic reform program. In view of the need to raise productivity across the economy, these policies include decisions to improve employment services and increase and broaden the distribution of training opportunities in response to regional or local requirements. Other policy objectives are to improve and standardize training quality, and make the content of training programs more flexible to meet new requirements. The Government also seeks to increase utilization and improve maintenance of existing training facilities (rather than to create new ones), and to increase private sector participation in financing as well as in implementation of training. 2.13 The Government recognizes that improved manpower training and allocation are necessary for economic restrueturing to succeed. It  - 8 - proposes to address this challenge through a strategy designed to: (a) improve and expand preservice training, including the CONALEP system; (b) upgrade training institutions on a selective basis; (c) strengthen employment services and labor retraining, in particular the STPS retraining program, during the present period of restructuring; (d) promote and assist the provision of inservice training by enterprises; (e) strengthen labor market and manpower monitoring; and (f) improve adult education and training programa with an emphasis on agriculture and rural areas. Except for development of praservice training (a, ubove), which is being addressed in part through two loans to CONALEP (para. 2.14), the timely implementation of this strategy is constrained by a financial gap as well as by technical and institutional shortcomings. Bank Assistance Stratexy and Experience of Past Lending 2.14 The Bank supports the Government's economic growth and restructuring efforts, including programs designed to create a wider distribution of the benefits of growth. The proposed project would address the Government's objectives (b, c, d and e in para. 2.13) focussing specifically on training for employment in urban areas in the industry, commerce and services sectors, with significant cost-sharing by enterprises. The Bank has been, and is currently supporting preservic-, training directly, and inserv'ce training and retraining programs indirectly, through the CONALEP I and II projects (Loans 2042-ME and 2559-ME totalling US$171 million). These two projects are the first Bank- assisted operations in the sector in Mexico and experience is favorable. The CONALEP I project was essentially completed in 3.4 years. The Project Completion Report (No. 3469b-ME, issued on March 31, 1986) assessed the project as highly successful. Implementation of the CONALEP II project, approved on May 28, 1985, is also proceeding satisfactorily. The proposed project would complement the CONALEP II p-oject. Separate operations are anticipated to strengthen adult education and training in rural areas, and to draw on experience gained through collaboration with CONALEP to expand Improvements to preservice training more broadly. The ongolng and proposed operations described above, combined with antizipated studies of agricultural training and adult education (within a more general appreciation of the entire education sector), and substantial sectoral training components included in other operations (in agriculture, transport5 industry) would reduce human resource constraints in Mexico on a broad front and would be an essential complement to an array of Bank- assisted projects aimed at economic restructuring and policy reform.  -9- III. THE PROJECT Origin of the Prolect 3.1 In July 1984, the Government requested Bank assistance for planning a ecuntrywide subsector study of supply and demand for training. This study was completed in 19851 by STPS and seven other Government agencies. Based on the study, a project was identified in May 1986. With the agreement of the Ministry of Finance (SHCP) and the Ministry of Planning and Budget (SPP), project preparation began in September 1986. A Project Preparation Facility (PPF) was approved on November 12, 1986 and appraisal took place May 13-23, 1987. The project was negotiated on August 10-14, 1987. The Mexican delegation was headed by Mr. Luis Nava Hernandez of NAFIN. Project Oblectives 3.2 To support the Government's strategy for restructuring and growth, the project aims to: reduce human resource constraints to growth and increase productivity of labor through improved employment services and skills training; and improve the distribution of training and employment opportunities through more equitable provision of training across regions and social strata (Annex 4a). Specifically, the project would: (a) strengthen employment services provided through the SEEs by upgrading staff and providing essential equipment, including computers, for the SEEs, and make retraining for displaced and unemployed workers more effective by implementing an expanded and improved retraining program, using existing training institutions, as a temporary effort over the next few years during which the adverse labor market effects of restructuring are expected to be at their peak; (b) assist private enterprises, especially SMEs in strategically selected sectors and geographical areas, in upgrading the skills of employed skilled workers and middle-level technicians by introducing a demonstration, promotion and assistance program for inservice training; (c) strengthen STPS labor market and manpower monitoring by upgrading staff, introducing revised information systems and supporting policy analysis required to link training more effectively to labor market needs and guide future developmeut of the training system; and (d) increase training capacity in critically needed specialties by upgrading selected training institutions through staff training and provision of complementary equipment. I/ The results were published in the STPS Report "Oferta y Necesidades de Capacitaci;n 1985-88" and were summarized by the Bank in a Subsector Memorandum dated March 14, 1986 entitled "Technical Education in Mexico: A Subsector Study of Training and Skill Development".  - 10 - Rationale for Bank Involvement 3.3 The proposed project would support the Bank's strategy to promote economic restructuring and trade liberalizatioii by removing human resources constraints and raising productivity through better training and allocation of human resources in response to changing labor market requirements, and by reducing the social cost of adjustment. The project would complement the Second Technical Training Project (CONALEP II) and is designed to support other Bank-assisted operations for industrial recovery and trade policy adjustments, and_ promotion of small- and medium-scale enterprises. Proiect Components a-d Dese-iption 3.4 The Employment Services and Labor Retraining Component (US$90.3 million, 58 percent of project cost; Annex 4b) would seek to raise the professional and technical quality of employment services, including local labor market monitoring and referral of job seekers to a broad range of training and retraining programs, and to expand and strengthen the existing STPS retraining program. It is designed to: (a) improve and expand employment services provided through the SEEs by upgrading 400 staff in skills required for analysis of local labor markets and for effective implementation of procedures for registration of job seekers and openings, career counselling and job and training placement or referral (Annex 4b, Attachment 1), and by providing financing for data processing equipment and related technical assistance; (b) strengthen the planning, content and implementation of the STPS retraining program and establish systematic arrangements for monitoring and evaluation of effectiveness. Improved planning would be linked to early detection of changes in the labor market and training demand by the STPS and SEEs. A revised system for annual planning, monitoring and evaluation of the retraining program for skilled and semiskilled workers has been prepared by consultants to the DGE financed under the PPF. This system combines a macro-model of the Mexican economy with regional labor market information. It would be used to develop estimates of manpower demand as the basis for course selection and to assess training efficiency and employment results, and includes a graduate follow-up system. The CET (para. 2.3) would be the advisory body for the retraining program (as well as ror the inservice training programs, para. 3.5); the Government has agreed to adhere to the CET's recommendations and to make them available to the Bank on a regular basis; and (c) provide improved retraining on an expanded basis for approximately 160,000 economically disadvantaged and displaced or unemployed workers as a transitional measure over four and a half years. The training would be implemented in accordance with current procedures for STPS retraining under contracts with existing training institutions, public and private (Annex 4b, Attachment 2). In accordance with recent evaluation findings, employer- assisted retraining would be increased to cover about 15 percent  - 11 - of trainees over the implementation period. The project would provide financing for trainee stipends to be awarded in aecordance with revised criteria established jointly with the Bank (Annex 4b, Attachment 3) and for other training costs (training materials, Instructors' salaries). All recipients of training stipends, beginning with the 1987 annual program, would be selected in accordance with criteria acceptable to the Bank, and selection of participants for the 1987 program would be completed by September 30, 1987. All training institutions to supply retraining services from 1988 onward would be selected in accordance with criteria acceptable to the Bank, and an agreement with each such Institution would be signed, for each year's retraining program, before March 31 of the respective year.2 3.5 The Demonstratior. Inservice Training and Productivity Component (US$51.1 million, 33 percent of project cost; Annex 4c) would introduce, on a pilot basis, a system for promoting and supporting inservice training and related services among enterprises, especially SMEs, in priority economic sectors and regions. The component comprises measures to: (a) assist selected employers' associations, under agreements to be made between STPS and each association, in the establishment and staffing of 20 small inservice training support service centers called Technical Support Groups for Enterprises (GATEs). The GATEs would work with employers to promote and support inservice training particularly in SMsH, and the 20 pilot GATEs formed under the Project would specifically target 5,000 selected SMEs (out of a total of 380,000 in the formal economic sector). A small central inservice training group would be established in STPS called the Productivity Information Service (SIP), which would have a coordinating and promotional role under the general guidance of the CET. The locations for the GATEs would be selected on the basis of criteria which emphasize local interest by employers' associations and training boards and committees, industrial concentration in key economic sectors, and employment potential as identified through surveys initiated under the PPF (Annex 4c, para. 2). The SIP and each GATE would be staffed by three to six training and productivity specialists engaged as consultants under time-limited contracts. The project includes financing for the staffing and administrative costs of the SIP and the GATEs for the duration of the project, with Government financing covering 502 of cost for the GATEs and 1002 of cvsts for the SIP. Loan funds would finance an average of 67% oi the Government's share on a declining scale providing for 1002 disbursement during the first two years, 802 during the third year, and 60%, 402, and 202 respectively during the fourth, fifth, and sixth years of project implementation. Additional consultant services to assist with orientation of GATEs staff and general development and evaluation of the system are also included in this component. The SIP would be established before March 31, 1988. One pilot GATE is already in operation with PPF financing; four more would be established before June 30, 1988 and the remaining 15 by March 31, 1989. 21 Institutions have been selected for the 1987 program. Retraining courses start in April of each year.  - 12 - (b) provide direct support for the organization and delivery of intensive, short-term training for about 75,000 employees in 5,000 specifically targetted SMEs (employing about 200,000 workers in total). This assistance, to be provided by the decentralized GATEs, would take the form of analysis (with firms) of training needs, and preparation of training plans and proposals. The firms would normally finance the direct training costs (instruction, materials, utilities). Training in general skill areas, such as financial management and mechanical maintenance, would be provided in existing training centers. Firm-specific training and related advisory services would be conducted inplant. The training would be provided mainly under contract arrangements between firms and local training institutions (public and private) and management and productivity consultants. Initially, if required to promote employer interest, GATE staff would help to organize inplant training courses on a demonstration basis. Financing is included under the project for training equipment and materials on a selective basis and for consultants to provide guidance on in-plant training techniques. (c) initiate promotion services for inservice training in SMEs. These services would be based on assessment of regional labor markets and training needs in the designated sectors, utilizing existing information and sample surveys to be carried out by the SIP and the GATEs. Promotional services would be developed in collaboration with local employment and labor associations as well as with local training committees and sectoral training boards. These services would typically include dissemination of information (e.g., bulletins, case studies) on the labor market, training opportunities and productivity issues related to training in a particular region or sector. Based on regional information prepared by the GATEs, SIP would assemble and disseminate information on inservice training of general interest, including a monthly bulletin, to 20,000 additional, selected SMEs distributed throughout the country and employing about 800,000 workers. The project includes financing, on a declining scale identical to that for the Government's share of financing for the GATEs, for preparation, reproduction and dissemination of promotional and informational materials by the GATEs and SIP and for the organization of regional and sectoral meetings, seminars and conferences to promote traini.g among employers and workers. 3.6 The inservice training component aims to promote the expanded provision of inservice training by firms countrywide by demonstrating the value of such training to employers in terms of increased worker productivity. The pilot nature of the component is illustrated by the fact that it expects to reach 25,000 enterprises with one million workers, and to train 75,000 of these workers (out of eight million workers in 380,000 SMEs). The 50 percent cost-sharing provided by Government is intended as an incentive to creating the 20 pilot GATEs with the necessary "critical mass" of competent and experienced staff to have an impact on inservice training in their respective areas. The remaining 50 percent of costs would be financed by the participating employers' associations and individual enterprises. The cost-sharing arrangements would be set out in  - 13 - formal agreements for each GATE between STPS and the participating employers" association (a Chamber of Industry or similar). STPS expects that as a result of the project, a growing number of employers would be convinced of the benefits of inservice training and therefore would be willing to assume full financing of the project-supported GATEs at the end of the project, as well as to form and finance additional GATEs for other sectors and regions. The promotional and advisory services of the GATEs and the SIP would be coordinated w4th the industrial extension services provided under the Fourth Small- and Medium Scale Industry Project through formal STPS/NAFIN coordination and existing close contacts at the local levels. 3.7 The STPS Institutional Strengthening Component (US$3.1 million, 2 percent of project costs; Annex 4d) would strengthen capabilities of STPS directorates responsible for guiding national employment and training policies, and related programs. It >.;:ludes support to: (a) upgrade about 100 staff, mainly employed in the DGE ana the DGCP,in the areas of project and program design and evaluation, statistical analysis related to labor markets and manpower, and training topics related to labor productivity and occupational structures. Financing includes short-teru staff training, including participation in relevant seminars; (b) develop, for use at the central and state levels, improved labor market and manpower information systems to be introduced in stages from 1987 to 1989. Initial work on the systems has been carried out by the DGE with consultant assistance financed under the PPF. They comprise four computerized subsystems for monitoring of: the labor market; the effectiveness of manpower training programs, with special reference to the STPS retraining and demonstration inservice programs; training capacity; and the compatibility of occupational requirements and training available. The project includes financing for consultant services for the further development and introduction of the systems, including background surveys and studies; for computer equipment and software for the DGE; and orientation and training for SEE stafi on use of the new systems to be introduced by the DGE; and (c) ur.dertake priority studies to assess the long-term options for the management and financing of training in Mexico and evaluate the costs and benefits of retraining and inservice training programs. Financing is also included for studies related to the preparation of future programs and projects. 3.8 The Training Institutions Upgrading Component (US$11.5 million, 7 percent of project costs; Annex 4e) would aim to increase training capacity in critically needed specialties by enhancing the utilization of existin& training institutions and the relevance of training provided. Specifically, it would help some 500 institutions adapt to changing training requirements by providing financing for modification or upgrading of equipment for a total of about 10,000 trainee places in existing facilities, and staff upgrading in facility management and general administration of training programs. Beneficiary training institutions  - 14 - would be selected on the basis of agreed criteria which include presentation of institutional plans for the strengthening af course management and equipment maintenance, availability of suitably qualified instructors and a history of providing priority lnservice training and retraining courses under contracts with firms and Government (Annex 4e, page 2). The about 500 institutions to participate in the upgrading component have been selected and a list of these has been received by the Bank. Based on submissions from those institutions, STPS is now identifying those 150 institutions which will participate in the first phase of the upgrading, and their equipment requirements. During negotiations, the Government agreed to complete selection of and commence equipment procurement for the first phase of 150 training institutions to participate in the training institutions upgrading program, in accordance with criteria acceptable to the Bank, by December 31, 1987; complete selection of about 200 additional institutions by December 31, 1988; and complete selection of remaining institutions (about 150) by December 31, 1989. Alternatives to Proposed Project Interventions 3.9 Alternative strategies for achieving the necessary development of human resources have been studied, and include: (a) expanding SEP's preservice vocational training system (CECAPs/CEOs; Annex 3) and (b) developing sectoral centers for inservice training, as has been done by the construction industry. In comparison with these and the other options studied, the proposed project has the following major advantagest lower unit capital and recurrent costs, and less time required to produce the required manpower. These savings are attributed to the planned use of existing training institutions, facilities and instructors, with only marginal investments in new equipment; the emphasis on accelerated training in short courses for adults with working experience, and on related inplant training in close liaison with enterprises; and the focus on cost-sharing between Government and firms. Alternatives to the stipends for retraining for displaced and unemployed workers with dependents were also considered. One option would be to count the future benefits of training as a sufficient incentive for trainees to bear the immediate costs; another would be to recover costs by means of loans to trainees. However, these alternatives were ruled out. The first option would be unrealistic: the target group lacks savings and carries continuing obligations for dependents, both of which serve as financial barriers to enrollment in training. The second would have high administrative cnd recovery costs due to the large number (160,000) of geographically dispersed, small stipends (on the order of US$90 equivalent per person and month), which would offset potential advantages. Recent experience under the STPS retraining program provides evidence on the necessity of providing the full stipend to achieve employment and productivity objectives: with stipends less than the minimuAm wage, the dropout rate was as high as 45 percert, compared to a 10 percent dropout rate with stipends amounting to a full general minimum wage. Prolect Costs and Financing 3.10 Costs. Tables showing estimated project costs by component and by category of expenditure appear as Annexes 5a and b. Total project cost,  - 15 - net of taxes, is estimated at US$156.0 million3 equivalent, with a foreign exchange component of US$15.0 million (or 10 percent of total cost). The baseline cost is estimated at US$131.2 million in May 1987 prices. Project cost estimates are based on recent experience with trainin; and stipend costs, as well as costs for technical assistance and consultants. For training equipment, estimates are based on recent SEP experience with selective upgrading of training workshops in existing institutions. Annexes 5c and 5d provide details on unit cost estimates and contingency allovances. A physical contingency of 10 percent has been applied uniformly for all project components. Price contingencies for both the foreign exchange and local components have been calculated as 1.0 percent annually for 1988-1990, and 3.5 percent annually thereafter, except that price -contingencies for the local cost component have been adjusted to 4.0 percent annually for 1988-1989 to account for the current undervaluation of the local currency. 3.11 Financing Plan. Project costs estimated at US$156.0 million total (net of taxes and duties) would be financed by the Bank, Government and enterprises (Annex 5e). The proposed Bank loan of US$80 million would cover 51% of total costs net of taxes and duties. For the Bank's participation in the project to be meaningful, and because of the high proportion (90%) of local costs in total costs, the Bank would finance 100 percent of foreign costs and 46 percent of local costs. The Government would provide US$35.7 million of project costs, or 23 percent of total costs. The remaining US$40.3 million, or 26 percent of total costs, would be financed by public and private enterprises participating in retraining and inservice train&ng provided under the project. 3.12 Incremental Recurrent Costs. Owing to the use of existing institutions and training capacity, the incremental recurrent costs to the Government incurred as a result of the project would be limited. Strengthening of employment services and administration of the expanded STPS retraining program would be achieved through upgrading of existing staff. The large-scale operation of the improved system of inservice training would be financed by enterprises. To the extent that the GATEs would continue in operation after project completion, they would also be financed entirely by private enterprises. The institutional development activities for the STPS would take the form of training for existing staff, and improved manpower and labor market information systems which would be installed with the help of temporary technical assistance. Complementary training equipment to be provided under the project would be installed in existing training institutions and these institutions would be responsible for future maintenance and replacement costs. After project completion, additional recurrent costs to the CDvernment as a result of the project would be limited to the cost of gradual strengthening of SEE staff and the costs of centrally operated promotion services (SIP) and information materials. Those costs are difficult to estimate but should not exceed US$2 million annually. An estimate of total expenditure on inservice training and retraining before, during and after the project, is included in Annex 5e (page 2). 3/ Net of taxes and duties estimated at US$12.3 million.  - 16 - Prolect Implementation 3.13 Implementatlon Responsibilities and Procedures. The STPS has developed a detailed organizational structure and an appropriate staffing plan for project implementation (Annex 6a). An underlying principle is to support the development of a permanent capacity for the implementation, monitoring and evaluation of projects or programs, regardless of financing sources. Therefore, the present internal structure of the Ministry will be used for project Implementation (Annex 6a, Attachment 1). The Government has designated the Directorate General of Employment (DGE) as the STPS agency responsible for overall implementation of the project (Annex 6a, Attachment 2). The Director General of Employment has been appointed project director, reporting through the appropriate Vice-Minister to the Minister. The project director would be supported by a core team drawn from the DGE directorates, the DGCP, and STPS administrative units. This team, already appointed, comprises seven members on a full-time equivalent basis and includes staff experienced in retraining, inservice training and labor market analysis. A full-time STPS accountant and a procurement officer are included on the team and would be supplemented, as needed, by other staff or specialist consultants. Each participating agency would be directly responsible for implementing the relevant project subcomponents (Annex 6a, Attachment 3). The Government has agreed to maintain the organization structure for project implementation during the implementation period. Project funds would be expended under the direct control of STPS for all components except the employment services and retraining component; for that component, the Government has established procedures, acceptable to the Bank, for the transfer of project funds from the federal to the state level and for related financial control. 3.14 Physical implementation procedures coincide with regular STPS practices and are satisfactory. These procedures and criteria for approval, where relevant, are described in relation to each component in Annex 4. The Bank would share supervision responsibilities with the project management team through annual reviews. These reviews would be scheduled to monitor implementation progress, including the timely provision of local financing. In addition, the project management team would carry out a mid-term review at the end of 1989. This review would focus on assessment of the retraining and demonstration inservice training components, and of progress towards improving employment services and labor market and policy analysis. Implementation achievements and outcomes would be reviewed with a view to introducing adjustments as needed to improve effectiveness. The Government has agreed to carry out the mid-term review on the basis of the agreed monitoring indicators and report to the Bank on findings and recommendations by January 1, 1990 and, if appropriate, prepare a plan of action to implement the recommendations of the review, taking into account the views of the Bank. 3.15 Implementation Schedule. The project would be implemented over a period of about five years during 1987-92. (A detailed implementation schedule is shown in Annex 6b). This schedule is consistent with STPS implementation capacity based on recent experience with the labor retraining component.  - 17 - Status of Pro sct Proparation 3.16 Project preparation, supported through a PPF approved in November 1986, is well advanced (activities financed under the PPF are listed in Annex 6c). Contracts for providing additional STPS retraining for 1987 are signed and ready to be implemented during October-December, in line with the regular schedule for STPS retraining. Designs for the inservice training component and for the monitoring and evaluation of both the retraining and inservice training components have also been completed, as has work on the improved STPS manpower information systems and surveys to identify key regions and sectors for establishing the GATEs. Based on the results of these surveys, the first GATE was established, with PPF financing, in Jalisco in July 1987 and locations for four additional GATEs, to be established by June 1988, have been tentatively selected. The PPF-financed studies have been completed and the Bank has received the required reports on sectors and regions affected by trade liberalization, the demonstration inservice training and productivity promotion system and the design of the new STPS labor market and manpower information systms. Standard contracts for participation of training institutions under the upgrading component, and draft bidding documents for equipment and related standard equipment lists were reviewed during negotiations and are acceptable to the Bank. 3.17 Procurement. The project would include procurement of complementary training equipment and furniture for existing training centers (US$1C.9 million), computer equipment4 (US$0.4 million) and supplies and reproduction services for providing information to SMEs (about US$7.0 million). Equipment, supplies and services would be procured under the following procedures acceptable to the Bank. Contracts for goods in excess of US$250,000 would be procured through ICB procedures (total expected value US$7.0 million). Contracts for goods valued between US$40,000 and US$250,000, in an aggregate amount not to exceed US$5.0 million, would be procured through LCB procedures which would allow participation of foreign suppliers. These procedures have been reviewed and found acceptable by the Bank. Small items or groups of items, or contracts estimated to cost US$40,000 or less, not to exceed a total of US$4.0 million, would be procured through local shopping after receiving at least three quotations. Prior review by the Bank would be limited to contracts procured under ICB and the tirst three contracts procured under LCB, including at least one for computer equipment, and would cover 45 percent of the total estimated value of equipment, supplies and associated services to oe procured. A contract for specialist services for equipment procurement was reviewed and agreed upon during Negotiations. Consultants would be hired in accordance with the Bank's Guidelines for the Use of Consultants, as in the case for consultant services procured under the PPF. Bidding documents have been prepared and are acceptable to the Bank (para. 3.16); procurement of equipment will commence by December 31, 1987 (para. 3.8). (Annex 7 sunmmarizes procurement arrangements by component and by category of expenditure). 4/ With the concurrence of the Director General for Government Informatics Policy and Acquisitions, it is planned that all computer equipment would be procured through LCB with foreign companies eligible to participate. Given the relatively low contract values, however, foreign bidders are not expected to be interested.  - 18 - 3.18 Disbursements. The proposed Bank loan would be disbursed as follows: (a) 100% of expenditures for consultant services and staff upgrading and travel, except for incremental Government expenditures for staffing and operation of the SIP and the GATEs where disbursements would be on a declining basis as follows: 1988s 100%; 1989: 1002; 191'): 80%; 1991: 60%; 1992: 40%; 1993: 20%; (b) 1002 of foreign expenditures for equipment; 852 of local expenditures; (c) 60% of stipend costs for retraining; and (d) 100% of costs of promotion services and information materials during 1988 and 1989; 80% during 1990; 60% during 1991; 40% during 1992; and 20% during 1993. Annex 8a shows disbursement percentages and the allocation of loan funds by categories of expenditure. The Bank would have the right to reduce disbursement percentages in the event of a shortfall in the Government's budgetary allocation to the project. Retroactive financing, in an amount not exceeding US$4.0 million, would be provided for expenditures incurred between appraisal and loan effectiveness for technical assistance and training programs included in the project. 3.19 In order to facilitate loan disbursements, a Special Account would be opened in NAFIN with an initial deposit of US$5.0 million representing an estimated four months of Bank financed expenditures. The Special Account would be audited annually in accordance with Bank guidelines. Disbursements would be fully documented except for expenditures under contracts or purchase orders valued at less than US$250,000, for which statements of expenditure would be accepted. The documentation for these expenditures would not be sent to the Bank but would be retained by NAFIN and made available for periodic inspection by Bank staff. 3.20 The proceeds of the loan would be disbursed over a period of six years (1988-93). The Closing Date for the loan would be December 31, 1993. The projected disbursement period (Annex 8b) is shorter than the historical average of about eight years for the LAC Region for the following reasons: The project, especially the large, already ongoing retraining component, is designed to support economic restructuring measures planned over the short and medium term. The scale and types of investments involved do not require protracted procurement periods; no land purchases or civil works are included. The equipment component is limited in scope (7% of total project cost) and any procurement delays would not substantially delay other components. Ehe two previous training loans to Mexico, while not strictly comparable, nave disbursed much more rapidly than the Regional average. 3.21 Reporting, Monitoring and Evaluation. The Project Director would be responsible for preparing periodic progress reports on quantitative and qualitative aspects of the project. STPS would prepare the reports to be  - 19 - sent to the Bank for review and comment on a quarterly basis during the first 18 months of implementation and each semester thereafter. Annex 9 provides a list of key indicators for project monitoring and evaluation. Knowledge and insights gained from the monitoring and evaluation systems developed for the labor retraining and the inservice training components would be fed back into the respective systems for the periodic upgrading of training program content and training procedures. In addition, independent studies would be undertaken to evaluate the training programs (para. 3.7), together with on-site inspections of training institutions and sample testing of graduates. Because of the change of Government scheduled for late 1988, and the probability of significant changes in personnel in the principal project management team, the mid-term review of the project would be carried out and a report on the review would be submitted to the Bank before January 1, 1990. A project completion report would be prepared by the Government within six months of project completion. Accounting and Auditing Procedures 3.22 Accounting. Separate recording and reporting of financial transactions related to the project would be carried out by STPS' Directorate General of Programming, Budgeting and Accounting (DGPPC). The DGPPC is adequately staffed with experienced accounting personnel to accomplish this task, and a fully qualified accountant from the Directorate General, responsible for all project accounts, has been assigned to the project management team (para. 3.13). DGPPC would arrange with the federal Government unit in charge of establishing accounting and administrative manuals to include specific accounts or sub-accounts and proper administrative procedures for the accounting of project expenditures in each participating State and in STPS. A chart of accounts for the project, linked to the general accounting plan of the DGPPC, has been prepared by DGPPC's technical staff. 3.23 Audit. Auditing arrangements for the project would be made in accordanice with the current agreement between the Mexican Government and the Bank signed in November 1986, which specifies the procedure and scope of the audit: the content of the audit report, and the audit of the Special Account and statements of expenditure (SOE). The Special Account audit would cover the examination of the transactions recorded in the account and the availability of funds, the evaluation of the system of authorizations and the supporting evidence for fund withdrawals, the quality of the files and financial records utilized in the maintenance of the account, the correctness of the exchange rates applied, the internal administrative control exercised over the account and the compliance with procedures for use of the Special Account provided in the Loan Agreement. Under the above agreement on auditing, the Secretariat of the Federal Controller is considered independent and qualified. Certified copies of these audits would be submitted to the Bank no later than six months after the close of each fiscal year.  - 20 - Benefits 3.24 The main, direct benefits expected from the proposed project are: (a) Reduction of human resource constraints to growth through better adapting the supply of trained manpower to market demand, improving labor market monitoring and management, and strengthening planning and evaluation of training nationwide by the STPS; (b) Increased trainint oRportunities and more equitable access to training and employment across regions and social strata through provision of expanded retraining for the poorest of the unemployed (including a relAtively high proportion, 27 percent, of women), development and expansion of inservice training for employed workers, and improvement of employment services and upgrading of existing training institutions; and (c) Higher productivity and product quality in the formal economic sector through an increased supply of trained/retrained middle- level technicians and skilled and semiskilled workers. 3.25 These benefits would complement and facilitate the Government's efforts to restructure and open the economy by making Mexican enterprises more efficient and competitive and, at the same time* ease the economic and social strains caused by restructuring. The project would have no negative environmental effects; rather, by contributing to higher efficiency and better operation of industrial processes, it would bring marginal environmental improvements. Risks 3.26 Possible risks are as follows: (a) Inability of the Government to Finance Counterpart Funds. This risk would be reduced through (i) the high percentage of Government expenditures to be financed by the Bank and the contributions of enterprises, both of which provide a strong incentive for the Government to provide the remaining counterpart funds; (ii) the high proportion of funds allocated to the STPS retraining program which is politically very attractive; and (iii) an agreed legal provision giving the Bank a right to reduce disbursements, should adequate counterparts not be forthcoming. (For 1987, the Government has approved budget allocations4in line with SAR estimates, and has made an extraordinary allocation to meet its counterpart commitments related to the PPF). In addition, the counterpart funding problem will be treated in a more systematic way for all ongoing and new projects in all sectors in the semi-annual, high level Country Programming and Project Implementation Review (CPIR) consultations between the Bank and Mexico. This initiative, which started with the July 1987 semi-annual review meeting, is expected to improve the timeliness and adequacy of budgetary provisions.  - 21 - (b) Change of Government priorities in connection with the change of administration in 1988. This risk would be minimized by (i) project objectives and design, which should make it attractive for any new government to continue supporting it; (ii) expressed strong interest on the part of state governments and local interest groups for the new administration to continue project- supported activities; and (iii) the possibility provided through the mid-term review of adapting the project, within the agreed objectives, in response to new requirements (including improvements based on evaluated experience). (c) Failure of graduates of the retraining programs to find productive employmer.t. This risk would be reduced through (i) selection of occupational and geographic areas in accordance with studies of industrial restructuring and development included in the project; (ii) selection of trainees in accordance with objective criteria to ensure that the most suitable candidates are trained; (iii) direct involvement of enterprises in the retraining programs; (iv) efforts to monitor and manage the program at the local level, in part through graduate tracer studies; and (v) monitoring at the macroeconomic level, and periodic Z~jtment of the program to the needs of the economy. (d) Failure of the project's efforts to reach and motivate an adequate number of employers to undertake inservice training, particularly in small enterprises. This risk would be reduced through promotion, outreach, and training efforts, and, in particular, by the close involvement of firms and employers' organizations in the planning and implementation of inservice training. IV. AGREEMENTS REACHED AND RECOMMENDATIONS 4.1 During Negotiations, the Mexican Government provided assurances that it will: (a) maintain, throughout the project implementation period, the CET as the advisory body for the retraining and inservice training programs included in the project, and ensure that the CET's recommendations regarding the programs would be adhered to and would be made available to the Bank (para. 3.4(b)); (b) select all recipients of training stipends, beginning with the 1987 annual program, in accordance with criteria acceptable to the Bank, and complete selection of participants for the 1987 program by September 30, 1987 (para. 3.4(c)); (c) select all training institutions to deliver retraining services under the project from 1988 onward in accordance with criteria acceptable to the Bank, and sign an agreement with such institutions for each year's retraining program before March 31 of the respective year (para. 3.4(c)); 5 5/ Institutions have been selected for the 1987 program. Retraining courses start in April of each year.  - 22 - (d) establish and staff the SIP by March 31, 1988, the first five GATEs y June 30, 1988, and the remaining 15 GATEs by March 31, 1989 (para. 3.5(a)); (e) complete identification, in accordance with criteria agreed with the Bank, among 500 training institutions already selected for participation in the training institutions program, of 150 institutions to participate in the first phase of the program, and comence procurement of equipment for those 150 institutions by Dezember 31, 1987; complete selection of anotu.er 200 institutions by D7cember 31, 1988, and complete selection of remaining institutions (about 150) by December 31, 1989 (para. 3.8); (f) maintain arrangements for project management and implementation unless the Bank otherwise agrees (para. 3.13); (g) undertake a mid-term review of the project and report to the Bank on findings and recommendations by January 1, 1990; and if appropriate, prepare a plan of action to implement the recommendations of the review, taking into account the views of the Bank (para. 3.14); (h) monitor project implementation and performance periodically against key indicators acceptable to the Bank, and make the results of such monitoring available to the Bank (para. 3.21). 4.2 Subject to the above assurances, the proposed Manpower Training Project constitutes a suitable basis for a Bank loan of US$$80.0 million equivalent to Nacional Financiera, S.N.C. *- th the guarantee of the United Mexican States, on standard terms for Mexico.  -23 - COMPARATIVE EDUCATION INDICATORS Annexl August 29, 1987 page CLNISAI. 038 IIMICT1OI 31338vNI 4403?LATh 70 0817 GISt 8k361J "St4 PO. CAPtu A c PV C38 li 30AL3 C89*AL AL30A?A33) ID: 5*11 niUOLL. 048603 MOMS61 354)04114 951341*V 10 SOMLL. M?UEMT INSLL. WEA MLLS. CUSS 0370140 TO3 60V3*13? PSl NOC PI1 (3) 5*130 cvc 01033 AS U POSCIUT A3C1 T0 0A1t0 133 SAM "(3929) (1919) SouIcal0u