Bolivia - La Paz Municipal Development Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 6769-BO STAFF APPRAISAL REPORT BOLIVIA LA PAZ MUNICIPAL DEVELOPMENT PROJECT July 8, 1987 Urban Projects Division Latin America and the Caribbean Regional Office Ihis document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its c'nmtents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALES Currency Unit = Boliviano ($B) 1 Boliviano - US.50 US$1.00 2.00 Bolivianos SDRI.00 US$1.286 US$1.00 V SDR 0.777 FISCAL TEAM January 1 - December 31 ABBREVIATIONS AND ACCRONYN BANVI Housing Bank CONAVI National Housing Council E.E.V.V. Municipal Enterprise for Urban Services (Medellin) GTZ German Technical Cooperation Agency MLP Municipality of La Paz IIAP International Institute for Public Administration (Paris) ICI Iberoamerican Cooperation Institute (Madrid) IMP Investment and Modernization Program of La Paz Municipality IVA Value Added Tax MUv Ministry of Urbanism and Housing NEP New Economic Policy PFM Project Office  FOR OFFICIAL USE ONLY BOLIVIA LA PAZ IMlICIPAL DEVEOPNT PROJECT Table of Contents Page No. CREDIT AN) PROJECT SUNMARY *a.o.............,.......... iii I. THE URBO SECTOR *** ****a******aO***4**@@ 1 Recent Urbanization Pattern ........o...e.............,.... 1 Urban Sector Organization I...................... * .. 1 Urban Development Issues ...........2........... 2 New Policy Measures ................. a . 3 The City of La Paz . ......a...a............. 3 Bank Experience in the Sector ............................ 3 Sector Lending Strategy and Rationale for IDA Involvement .. 4 II. PROJECT FORfUL&TION AND PRKPARATION ......... ..... o......... o 6 Project Origin ...................... . . 6 The Municipality of La Paz aaaaaaaaaa,aaaaaaaaaaaaaaaaaa. 6 Objectives and Strategy 6 Project Description .... a a........... ....... ... a a... 7 Execution of the Project and the IMPaoaa0aaaaaaa*00*0*00aaaa 9 Procurement 11 Disbursement 11 Audit 12 Costs and Financing Plan aaa.aaaa.aaaaaaa.a.aaa 12 Financial Impact .....aaaaaaaaaaaa. a 13 Cost Recovery 14 Benefits and Economic Analysis aaaaaaaoaaaaaaaaaaaaaaaaaa 15 Environmental Impact .... a a a ...aa. a a 16 Poverty Impact 16 Risks and Safeguards aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa. 16 IIIo.SGRSEZDSTS REACHED AND RECONEEDATION a . - . - 17 LIST OF 1. Basic Infrastructure Deficit in the Project Area in La Paz 2. Municipal Finances: Recent Trends and Projections 3. Municipal Organizational Chart 4. The First Urban Development Project 5. Investment and Modernization Program Indicators 6. Detailed Project Description 7. Indicative Procurement Distribution 8. Disbursement Schedule 9. Implementation Schedule 10. Detailed Cost Estimates 11. Project Financing Plan 12. Economic and Sensitivity Analysis This document has a restricted distribution and may be used by recipients only in the performance nf their nffieil Adtitp, It. enntAnte mow nnt ^th^rwvaA ka A;.-h --A ,;--A'-I Wr- n_*-.*  BOLIVIA LA PAZ MUNICIPAL DEVELOPMENT PROJECT CREDIT AND PROJECT SUMMARY Borrower: Republic of Bolivia Beneficiary Municipality of La Paz Amount: SDR 11.7 million (US$15 million equivalent) Terms: Payable in 35 years, including 10 years' grace in semi-annual installments of 1-1/4% of the principal amount from the eleventh year through the twentieth year, and of 2-1/2% from the twenty-first year until final maturity. Relending Terms: The Borrower would onlend about 75% of the proceeds of the credit, denominated in US dollars, to the Municipality of La Paz at a fixed interest rate of 8-1/2% per annum. The amounts onlent would be repaid in national currency at the official rate of exchange on the payment date. Repayment would be made over 20 years, from the date of on-lending, with no grace period. The other 25% of the credit proceeds (US$3.8 million equivalent) would be provided to the Municipality as a grant. The French Government, the German Technical Cooperation Agency, the Netherlands Government, and the Spanish Government would cofinance the project. Project Objectives and Description: The proposed project, which would incorporate certain components of the Municipal Investment and Modernization Program (IMP), is designed to assist the Municipality of La Paz in strengthening its institutional capacity to discharge service, administrative and fiscal functions while addressing critical shortcomings in the city's infrastructure. It would help in alleviating the impact of the current economic adjustment process on the population of the capital city by providing temporary employment opportunities through public works needed to arrest the deterioration of municipal services and urban infrastructure. Other major objectives of the project are: a) strengthening municipal financial and investment planning; b) raising revenues through better tax administration and updating the cadastre; c) a more rational management of human resources and  - ii - improvements in operations and maintenance. The progress of the project would be the subject of an exchange of views with IDA, and IDA would annually review with the Municipality the pace of execution of the IMP and monitor performance indicators. The project would consist of: (a) low cost urban transport improvements, including construction a.id equipping of a maintenance workshop, primary streets rehabilitation, and traffic control systems; (b) labor intensive urban upgrading works in low income areas; (c) civil works to prevent and control landslides; (d) civil works and equipment to improve solid waste collection and disposal, and sanitation works; (e) equipment needed to modernize municipal administration, particularly the cadastre; and (f) technical assistance for: (i) administrative reorganization; (ii) development of a personnel management system and training program; (iii) improvement of financial management and planning; and (iv) updating and modernizing the municipal cadastre. Benefits: The project would result in more efficient delivery of urban services and better resource management, with a positive fiscal and financial impact on the Municipality. The improvement in the quality and level of urban services and infrastructure maintenance would benefit city residents, and particularly the urban poor. Project works would also provide temporary employment. Transport investments would strengthen the functional efficiency of the city and reduce vehicle operating costs, thereby saving scarce foreign exchange. Also, by preventing and controlling landslides, the project would reduce the loss of life, and of publio and private property. Finally, the project would establish a model for operations which would be replicated in other cities of the country. Risks and Safeguards: Given Bolivia's history, the main risk is political: changes in government and mutnicipal administration, strikes and social disruptions may lead to delays in, or to partial achievement only, of the project's objectives. This risk has been addressed by simplifying the project design. Also, institutional reforms were put into effect before and during project preparation to ensure the full commitment of the Municipality to project objectives. Another risk is the shortage of counterpart funds; therefore, the project has been sized conservatively, No Government contribution would be required and the Municipality should be able to raise the funds needed for the project through improved tax collection and more efficient use of resources.  Ssmmary of Project Costs (in USS thousands of June 1987) Component Local Foreign Total A. Project Preparation Facility 1247 253 1500 B. Municipal Maniagement 3596 1186 4782 Administrative Reorganization 540 0 540 Personnel Management and Training 1004 70 1075 Financial Systems 522 345 867 Cadastre 1530 770 2300 C. Urban Transport 3714 1346 5060 Infrastructure 1640 553 2193 Traffic Management 1722 461 2183 Equipment 351 332 684 D. Urban Development 475- 2786 7538 Upgrading 1512 738 2250 Landslide Control 2146 799 2945 River Basin Control 886 591 1476 Drainage 1260 208 1469 Sanitation 644 1249 1893 Collection and Disposition 250 600 850 Street Cleaning 180 257 437 Sanitary Control 214 392 606 Community Education 450 0 450 Total Base Cost 13309 5571 18880 Physical Contingencies 1237 518 1755 Price Escalation 476 199 675 Subcotal Contingencies 1713 717 2430 TOTAL PROJECT COST 15022 6288 21310 Financing Plan US$ million IDA 11.7 3.3 15.0 MLP 3.3 0 3.3 GTZ 0 1.4 1.4 French Government (IIAP) 0 0.6 0.6 Netherlands Government 0 0.6 0.6 Spanish Government (ICI) 0 0.4 0.4 15.0 6.3 21.3 Estimated Disbursements: FY 1988 1989 1990 1991 1992 1993 1994 1995 Annual 1.4 1.4 2.1 2.4 2.6 2.3 1.8 1.0 Cummulative 1.4 2.8 4.9 7.3 9.9 12.2 14.0 15.0  I. THE URBAN SECTOR Recent Urbanization Pattern 1.01 About 2.8 million of Bolivia's population (6e4 million in 1985) live in urban centers. The recent pattern of urbanization in Bolivia has developed as a function of historical factors, employment opportunities, and the unusually difficult climatic and geographic conditions of the Altiplano and Valles regions where nearly 80% of the population live. Previous migration to the once flourishing mining centers has given way to increasing flows of migrants from rural areas and from mining towns, such as Oruro and Potosi, primarily to the three larger cities of La Paz (the capital), Cochabamba and Santa Cruz. 1.02 The city of La Paz, with about 1.2 million inhabitants, is the largest of the three main cities, and accounts for about 20% of Bolivia's population. La Paz has grown tenfold in the past fifty years, and has roughly doubled in size during the last decade. The city's population growth of about 2.8% p.a. is not unusual by Latin American standards, but represents a challenge because of its difficult physical environment and its strained capacity to absorb more migrants in a productive manner. Cochabamba and Santa Crus, which have together about half of La Paz's population, are faced with much less complex development issues. Both these cities serve as commercial oenters for well endowed agricultural regions and have a potential for further growth. Urban Sector Organization 1 .03 Administration of the urban sector in Bolivia is conducted at the Central, Regional and Local levels, with responsibilitles often overlapping, and important areas such as urban planning and infrastructure maintenance rematining practically unattended. The Ministry of Urbanism and Housing (MUV) is formally responsible for the definition of general goals and objectives in the urban sector, while the Ministry of Planning and Coordination controls the development of sectoral plans and programs. MNU's activity has been concentrated mainly in housing, through the coordination of a large number of local trade councils which provide housing for their workers, but it has not developed a strategy or provided effective leadership in the housing sector. There are nine Regional Corporations (originally public works committees) that promote economic activities in their respective Departments, but they do not have specific urban development functions. However, in three Departments where mineral and gas extraction provide revenues and where the urban economy is more developed (Santa Cruz, Chuquisaca and Tarija), the Regional Corporations have been active in planning, executing and maintaining major urban infrastructure, thereby offsetting the chronic weakness of municipal governments. 1.04 Bolivia has a total of 252 municipalities which are legally autonomous and have a wide range of responsibilities including planning, provision of infrastructure, administration of cadastres, construction and administration of markets and storage facilities, control of hygiene,  preservation of the environment, and promotion of cultural and touristic activities. Most municipal governments (except those of the three larger cities) lack the capacity to carry out these responsibilities, and, in the absence of support from MUV, often request technical and legal assistance from La Paz. The Municipality of La Paz therefore provides technical assi'tance to the other municipalities, and assumes, de facto, the normative role of MUV in the country. Urban Development Issues 1.05 Some critical urban development issues are evident in the larger cities, as a result of the inadequate economic policies and political instability which prevailed in the country between 1980 and 1985. In La Paz, the main issues are: a) Deficient infrastructure and services: The lack of maintenance of the street and drainage network and erosion control system between 1982 and 1985 resulted in rapid erosion, and extensive and destructive landslides, because of the difficult topography of La Paz and the inclement weather. Urban services worsened, especially those related to sanitation, the registration and titling of property, and public transport (Annex 1). The public bus company was operating in 1986 at a third of its capacity offering limited and inadequate service. Virtually no new investments were made after 1982, except for upgrading works carried out by community participa';ion: investments dropped from an average of over US$20 equivalent per capita during the second half of the 1970s to about US$3.5 thereafter (less than one dollar in 1984). As a result there are today in La Paz about 150,000 more persons not served with basic infrastructure than a decade ago. Finally, lack of planning and programming preventtA the identification of investment projects; b) Poor financial condition: Although the Municipality was able to maintain its revenues during some years of high inflation, dramatic deficits on current account occurred after 1982. By 1984, the deficit had reached 50% of total expenditures, own source revenues had contracted to one fourth the 1981 level in real terms, and personnel costs exceeded total municipal receipts. To partially conver these deficits, the Municipality, which had depended in the past primarily on its own resources, iicreasingly relied on Central Government transfers and on borrowings (45% of total receipts in 1984) (Annex 2, Table 1); c) Weak administration: Municipal administration deteriorated between 1980 and 1985, particularly in the area of personnel policy and management which adversely affected efficiency and service capacity of the Municipality. The rumber of municipal employees swelled by 33% without corresponding productivity increase or improvement in the quality of services. On the other hand, municipal real wages dropped from an already log level, causing the loss of experienced and qualified employees; and  -3- New Policy Measures 1.06 The new Gcvernmernt, which took office in August 1985, adopted a stabilization and economic adjustment program as part of its New Economic Poliey (NEP). The policy changes and reforms included in this program have already helped to improve the efficiency of the urban sector and the measures noted below should provide the necessary framework for development: (a) Tighter control over public sector revenues and expenditures has had a positive impact on municipal finance; it also brought about a reduction in the national fiscal deficit. In La Paz it led to the generation of a surplus in the current account. Discretionary transfers to municipalities from Central Government have been banned; (b) Revision of the structure of public sector salaries has permitted improved control of recurrent expenditure and increased staff efficiency. In particular, a ceiling has been set on payroll expenditures of public sector entities; this should have a positive impact on municipalities; (c) Reform of the tax system adopted by Congress in May 1986 is expected to have a positive impact on municipal budgets and particularly that of La Paz because half of national taxes are generated in its jurisdiction. The reform would replace the municipal business tax and some other local revenues through sharing in the national value added tax and custom duties. Although the reform is not yet fully implemented and some uncertainty remains about the ultimate yield of the major taxes, it would provide an adequate framework for the strengthening of municipal finances (Annex 2); (d) The Municipal Law of January 10, 1985, defining the technical and financial responsibilities of local governments, was amended during project preparation to expand the responsibilities of La Paz by including traffic management, public transport regulation, and administration of cadastre. This should help enhance the role of La Paz and rationalize the use of municipal resources; (e) Biannual elections of Mayors and Municipal Councils should improvs accountability of local governments, particularly the larger ones. The City of La Paz 1.07 Located in the western slope of the Andean mountains at an altitude ranging between 3,500 and 4,000 meters, the city of La Paz provides a most difficult environment for human settlement because of its harsh climatic conditions and unusually difficult topography. The city itself, including most of its residential areas, business district and Government offices, is located in a valley surrounded by steep slopes that fall off the eastern edge of the Altiplano plateau. Most of the slopes consist of extremely unstable soil which, when saturated by the water  - 4 - carried by more than 200 rivers and streams that crisscross the city, erodes and causes mud flows and landslides. About half of the valley slopes represent areas where development should be forbidden or strictly controlled. However, the city has been unable to enforce any land use regulation. Lower income rsighborhoods which house about half of the city's population have developed rapidly on these slopes, and the lack of an adequate storm water drainage system further endangers their stability (Annex 1). Some resources have been allocated by the Municipality to control and prevent erosion and landslides, but further efforts and resources are required. Also, lack of services and difficult access have worsened the living conditions of the urban poor whose commuting time to the city center often exceeds five hours. 1.08 The physical and economic development pattern of La Paz is strongly influenced by the rural tradition of a large number of its dwellers who maintain strong links with their villages of origin. This situation is prevalent among almost 90% of the population of El Alto and more than half of the settlers on the slopes, who are recent migrants mostly originating from the Altiplano. The distinctive cultural characteristics of this population represent a substantial positive asset for the city's development, because of their participatory approach to community development. However, unless the Municipality pays adequate attention to these positive attributes by tailoring community education and seeking community participation in areas such as land use regulation, environmental management, etc., uncontrolled development in unsuitable areas will continue, causing deforestation and serious soil management problems. Bank Experience in the Sector 1.09 The First Urban Development Project (Loan 1489-BO) was successfully completed in June 1986, despite the extraordinarily difficult political, financial and economic circumstances which prevailed during its execution. The project benefitted directly over 30,000 families, through upgrading of low income neighborhoods, new sites and services schemes, home improvement loans, local markets, a primary health facility and a credit program for small scale enterprises. The outstanding feature of the project was to utilize local tradition of community participation in the implementation of the upgrading and credit components, and to achieve full cost recovery. A special implementation unit created for the project has acquired some administrative and planning capacity and earned a noteworthy credibility with the population of the low income neighborhoods (Annex 4). Sector Lending Strategy and Rationale for IDA Involvement 1.10 IDA's lending strategy in the urban secto- in Bolivia is to consolidate the Government's economic adjustment effort in La Paz, by supporting its development objectives, and strengthening municipal management and the provision of urban services. IDA support is focussed on the Municipality of La Paz because of the prominent role of the city in the sector, its stronger technical capacity relative to other local governments, and because its population has been greatly affected by the economic adjustment measures undertaken by the Government. Also, La Paz could set an example to be followed by other cities. In this respect, the  project seeks to support decentralization of investment decisions in the capital city where identification and prioritization of works would be done more effioiently, thereby enhancing existing institutional capacity without the need for a Government contribution. Future urban sector support would consist of development assistance to the rapidly growing market towns.  -6- II. PROJECT FORMJLATION AND PREPARATION Project Origin 2.01 The positive experience of the First Urban Development Project (Loan 1489-BO) led to the identification of a possible second urban prrjeot as early ati 1982. The project concept was revived and transformed through dialogue with the Government in the conteyt of its stabilization and economic adjustment program. Project identification was carried out by a mission which visited La Paz in April, 1986. A Project Preparation Facility advance (PPF) amounting to US$500,000 was approved as a result of a follow-up mission in August 1986, and has been disbursed on schedule; it was subsequently increased by U2$i1,000,000 in June 1987 to finance completion of project preparation. The Municipality of La Paz 2.02 The Municipal Government, which took office in 1985, has begun to transform the Municipality into a more efficient, financially viable and equiitable provider of urban services. In line with Central Government polioy, the Municipality has taken measures to adjust its administrative structure and recover financial autonomy. The organization of the Municipality, with a staff exceeding 5,200 in 1985, was characterized by excessive layering, overlapping responsibilities, lack of accountability and i technical support to the Mayor, and deficient planning and administrative procedures. During 1986, the number of employees was reduced by over 1,500, wages were raised, and a reorganization of the Municipality was initiated, which included streamlining procedures, enhancing the planning function, and rationalizing services and other operational activities (Annex 3). Policies and operational objectives and procedures for each functional area were establ shed, computerization was initiated, the personnel management system overhauled and systematic staff training instituted. Financial management was strengthened by setting up monitoring and control system, leading to the reduction of recurrent expenditures by 26% in real terms and the increase of current revenues by 70% (Annex 2). Coordination between the fiuancial and technical directorates improved investment planning and budgetary control. 2.03 Thix technical capacity of the Municipality, weakened by lack of qualified staff and absence of adequate operational procedures, has been strengthened during the preparation of the proposed project, which also helped develop a comprehensive Investment and Modernization Program (IMP) for the Municipality. Furthermore, the core staff of highly qualified professionals on the project preparation team would be largely absorbed into the new municipal structure and salary scale by the end of 1988, as part of a personnel strengthening program (para. 2.07). Objectives and Strategy 2.04 The proposed project is designed to support the above mentioned efforts of the Munici-pality of La Paz in strengthening its institutional capacity to fulfill its service and administrative functions and to  - 7 - discharge its new finanUial and fiscal responsibilities while addressing critical shortcomings in the city's infrastructure. It also builds upon the achievements of Loan 1489-BO. The project would seek to promote the recovery of historical adequate levels of annual municipal investment and to arrest the deterioration of the basic municipal services and urban infrastructure. This entails improving administrative procedures, personnel policies, financial management, and planning and programming capabilities, and the management of the physical assets. The project would also help alleviate the social impact of the current economic adjustment process in the capital city, by providing temporary employment opportunities through public works, 2.05 The proposed credit would help finance the priority elements of the five-year Investment and Modernization Program (IMP) of La Paz Municipality. The IMP has been formulated on the basis of the progress of the Municipality's financial recovery, the institutional reforms undertaken during 1986, and the projected municipal fiscal and managerial capacity. Its execution would be reviewed annually by IDA; key performance irdicators have been developed for the purpose of assessing progress (para. 2.08 and Annex 5). Project Description 2.06 The proposed project would include the following components: (a) municipal management; (b) urban transport; and (c) urban development, including specific actions in: (i) urban upgrading in marginal areas; (ii) civil works to control landslides; (iii) solid waste management; and (iv) community education. (Annex 6 provides further details). These components are further described below: (a) Munieipal Management Improvement. (i) Administrative Reorganization Program (US$0.6 million). Reducing and consolidating functions to increase efficiency of municipal operations in planning and provision of services, while further reducing municipal staff from 3,500 to 2,500 employees by the end of 1992. Privatization of several services to the extent possible. Computerization of records and accounts. Greater responsiveness and improved service levels to the public. IDA would provide technical assistance, and project data management and office equipment for this component, which would be further assisted by the Spanish Government through parallel cofinancing; (ii) Personnel Management System and Training Program (US$1.2 million). Implementing a new and strengthened personnel management system and instituting in-house training capacity. Particular attention would be given to: sanitation and handling of emergencies; improved property and vehicle registration; community participation; financial management; urban land use planning; infrastructure programming; municipal regulations; operation and maintenance of services; and public relations. The credit would finance technical assistance and related equipment, and would be complemented  -8- by assistance from the French Government through parallel cofinancing. It would also finance incremental salary costs of key municipal staff in accordance with the implementation of the new salary structure (para. 2.08); funds would be disbursed on a lump sum basis at the end of 1987 and of 1988 conditioned on the progress of the IMP (see Annex 5); (iii) Financial Management Improvement Program (US$0.9 million). Implementation of computerized accounting systems to improve: budgeting; financial and investment planning; and management 4nformation and control, including setting up cost and revenue centers for services and direct user charges. The project would provide technical assistance, equipment and training of municipal staff, complemented by assistance from the French Government through parallel cofinancing; (iv) Multipurpose Cadastre (US$2.6 million). Updating and maintaining current municipal cadastre to increase revenues from property taxes, and improve development planning and management of urban services. This would involve: updating and improving the registration of urban property, revising assessment procedures and adjusting the tax rate, and implementing a rigorous billing and collection system. The project would provide professional services to update aerial photography and produce maps, equipment for recording and maintenance of cadastral data, and related training of staff. Technical assistance by the Netherlands Government would support this component. (b) Urban Transport (US$5.9 million). Rehabilitation of main thoroughfares, improvements to the street network, traffic lights, design and enforcement of traffic and parking systems, and construction of bus terminals. Also, cstablishment of a maintenance system for municipal equipment, including provision of maintenance facilities, equipment and spare parts. The project would provide professional services, civil works, and equipment and spare parts. (c) Urban Development and Infrastructure Improvement. (i) Urban Upgrading in Marginal Areas (US$2.6 million). The project would provide basic infrastructure in about nineteen selected neighborhoods (with an average of about 3,100 households) implemented with community participation, including water, drainage, and pedestrian walkways. The project would include technical services, construction materials and equipment for carrying out the works. (ii) Civil Works to Control Landslides (US$3.4 million). Flood and erosion control works along drainage basins, including landslide prevention works, land use regulations and procedures to prevent irregular settlement, and an early warning system and emergency assistance for victims.  9- The project would provide technical services, special equipment and civil works, and would be complemented by assistance from the German Technical Cooperation Agency (GTZ) through parallel cofinancing. (iii) Solid Waste Management (US$2.2 million). Design and implementation of: garbage collect.on and disposal system; street cleaning system; and a laboratory of bromatology and sanitation control. Part of the solid waste and management system would be decentralized and privatized. Also, included would be the repair and maintenance of trash collection and compaction vehicles, including provision of spare parts. IDA would provide professional services, technical assistance for staff training, equipment and spare parts, and civil works. It would also finance the costs of a technical twinning arrangement with the Municipal Enterprise for Urban Services of Medellin (E.E.V.V.) to ensure transfer of experience from a successful company working in a comparable environment. (iv) Community Education (US$0.5 million). A pilot community education program covering urban services, civic duties and responsibilities, and community participation, through use of radio campaigns, to dupport each major municipal action and civil works program under the project. Also an experimental curriculum would be introduced in five pilot elementary schools on community education. The project would provide professional services, equipment and materials. Execution of the Project and the IMP 2.07 The Municipality of La Paz would be responsible for project implementation. Its newly created Planning Office would be responsible for overall coordination and monitoring of progress and for liaison with IDA (Annex 3). The Director of Planning would have direct aocess to the Mayor; the Planning Office would serve as an advisory body to the Mayor and also provide technical assistance to the Municipality of El Alto (with which a coordination and cooperation agreement would be signed) and to other municipalities in Bolivia. The key local staff of the project preparation unit would be absorbed either by the various municipal directorates in charge of projeot implementation or by the Planning Office. All works would be contracted to private construction firms, except for routine maintenance, some specialized drainage control works and emergency interventions (Annex 7). 2.08 The progress of the IMP would be reviewed annually (para. 3.01a) using performance indicators and targets acceptable to IDA (Annex 5). The salient elements of the IMP are presented below: (is The institutional reorganization program would be consistent with efficiency objectives and available resources, and would include streamlining the organizational structure; in particular it would include decentralizing a series of activities, for which the Municipality has no comparative advantage, and creating  - 10 - autonomous enterprises (garbage disposal and public hygiene, pipe factory, slaughterhouse, and bus company), and whenever justified, contracting out certain works to private enterp-.ises. (ii) The new personnel management system would consist of matching job requirements with the human resources in each of the newly defined functional units including establishment of an appropriate salary structure. A reduction in the number of staff of certain units is envisaged while other activities would be strengthened. Overall, it is expected that municipal staff would be further reduced by from 3,500 to about 3,200 by the end of 1988 and gradually to about 2,500 by the end of 1992. Staff produotivity and efficiency would be monitored in all service areas. Salaries, to be complemented for key staff through project financing, would be reflected in the new salary structure to ensure reasonable competitiveness of the Municipality in the national labor market. Overall expenditures for salaries are not expected to increase by more than 20% in real terms and would remain well within the legally authorized limits of 50% of municipal revenues. The Municipality would exchange views with IDA on the implementation and application of its personnel policy, including management and compensation systems. The Project Coordinator heading the municipal Project Office would have to be acceptable to IDA and prior to any replacement of a Project Specialist, IDA would be provided with the curriculum vitae of the prospective auccessor (para. 3.Olc); (iii) The Municipal Training Institute, governed by representatives of the various municipal departments, which is being established, would receive technical assistance financed by the French Government from the International Institute for Public Administration (IIAP) (para. 3.02g); (iv) Municipal administrative procedures would be improved and staffing strengthened in coordination with the Munici, l Training Institute, through technical assistance from the Iberoamerican Cooperation Institute (ICI) financed by the Spanish Government (para. 3.02g); (v) The improvement of financial and fiscal management would be achieved through training and technical assistance for accounting procedures, management of municipal assets, financial planning and programming. Updating and maintaining current the cadastre would result in a higher ratio of current revenues to current expenditures and a better debt service ratio; and (vi) Physical investments would be carried out using streamlined bidding procedures, and force account would be used only for a minimum of infrastructure maintenance and landslide prevention works. 2.09 A technical twinning arrangement would be formalized between the City of La Paz and the Municipal Enterprise for Urban Services of Medellin, Colombia (E.E.V.V.). E.E.V.V., specializing in particular in the  collection and disposition of garbage, has acquired over more than twenty years a successful experience of providing efficient and self financing urban service in a topographic situation comparable to that of La Paz. It would not only provide technical assistance to La Paz but also provide on-the-job training through visits of key Bolivian personnel to Medellin, in accordance with an agreed training program. This technical twinning arrangement would be critical not only for the technical assistance aspects of initiating and implementing a comprehensive solid waste managemenx system in La Paz, but it would also provide guidance for the creation of a similar enterprise. Procurement 2.10 Contracts for the procurement of civil works estimated to cost US$250,000 or more, and for the purchase of goods costing US$100,000 or more would be awarded through international competitive bidding in accordance with the Guidelines for Procurement under IBRD Loans and IDA Credits. Prequalification would be used for line works contracts estimated to cost more than US$1 million. Contracts for goods estimated to cost the equivalent of less than US$100,000 each, would be awarded to suppliers on the basis of comparison of price quotations from at least three suppliers eligible under the guidelines. Contracts for goods for which there is a sole source of supply, or that are proprietary goods, may be purchased by direct contracting with ths supplier or manufacturer, in accordance with procedures acceptable to IDA. Civil works of less than US$250,000 would be procured, because of their small size, through local competitive bidding in accordance with procedures acceptable to the Association. Small and scattered works such as specialized sewer works and minor infrastructure upgrading which would involve a large number of very low value works, not exceeding US$1.0 million, in the aggregate may be executed by force account in accordance with procedures acceptable to IDA. Technical assistance and consultant services would be procured in accordance with IDA's Guidelines. The indicative procurement distribution schedule is provided in Annex 7. Prior IDA review and approval would be required for all procurement documents and contracts for a) goods over US$100,000, and b) all civil works invited on ICB basis, plus the first two LCB and local shopping contracts for each project component. All other procurement would be reviewed ex-post on a sample basis. The Municipality will prepare, issue and put into effect a Procurement Manual, satisfactory to IDA, to be followed in the procurement of works, goods and services for the proposed project (para. 3.02a). Disbursement 2.11 A Special Account would be established in US dollars with an initial deposit of US$0.9 million equal to four months of estimated disbursements (Annex 8). A Project Account in national currency would be established by the Municipality (para. 3.O1d). 2.12 IDA would disburse against certified statements of expenditures for goods and works whose contract value would be less than US$100,000. No disbursements would be made against works carried out by for