Rwanda - Sectoral and Preinvestment Studies Project

Doum Of The World Bank FOR OFFICiAL USE ONLY Ce ~~~~Le Report No. P-4442-RW REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 5.9 MILLION TO THE REPUBLIC OF RWANDA FOR A SECTORAL AND PREINVESTMENT STUDIES PROJECT April 23, 1987 IThis document has a restricted distribution and mkay bc used by recipients only in the performance l of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.|  CURRENCY EgUIVALENTS Currency Unit = Rwanda Franc (RWF) US$ 1.00 - RWF 89.90 (average first 8 months 1986) WEIGHTS AND MEASURES 1 meter (m) = 3.28 feet 1 kilometer (km) 0 0.62 miles 1 square kilometer (km2) = 0.386 square miles 1 square meter (m2) = 10.76 square feet 1 cubic meter (m3) = 1.13 cubic yards 1 metric ton (ton) = 2,204 pounds FISCAL YEAR Government of Rwanda : January 1 - December 31 GLOSSARY OF ABBREVIATIONS AND ACRONYMS ADETEF Association for the Development of Technical Exchange in Economics and Finance BNR National Bank of Rwanda BUNEP National Bank for the Study of Projects CEM Country Economic Memorandum CIC Interministerial Coordinating Committee IMF International Monetary Fund MINIFINECO Ministry of Finance and Economy MINIPLAN Planning Ministry MINIPRISEC Ministry of Primary and Secondary Education NGO Non-Government Organization PE Public Enterprise PEP Public Expediture Program PIP Public Investment Program SOE Statement of Expenditures SOMIRWA Mining Corporation of Rwanda TA Technical Assistance UN United Nations UNDP United Nations Development Program  FOR oMCUL USE ONLY REPUBLIC OF RWANDA Sectoral and Preinvestment Studles Project Credit and Prolect Summary Borrower: Republic of Rwanda Implementing Agency: Ministry of Planning IDA Credit amount: SDR 5.9 million (US$ 7.4 million) Term: Standard IDA Terms Proiect Description: The project consists of assistance to: a) carry out the identification, preparation and execution of sectoral and preinvestment studies; b) train selected staff in (i) the preparation, implementation and monitoring of a rolling Public Investment Program; and (ii) project preparation and appraisal; c) complete installation of a Documentation Center; and d) provide logistical support related to the above. Benefits: The project would result in preparation of sector strategies, production of a portfolio of well prepared projects ready for submission to financing sources and avoidance of unviable investments. More importantly, through its formal training component reinforced by systematic on-the-job training, the project would improve local capabilities for preparation and appraisal of investment projects and for investment programming so that after project completion, only highly specialized short term expertise would oceLsionally be required. The mechanisms set up to prepare new projects under the Credit would help strengthen the institutions involved across Government, better equip the Ministry of Planning to perform its coordinating functions, and should improve, in the long run, the institutional framework for overall investment programming. This would give Rwanda the capacity and technical competence necessary to translate its planned priorities into coherent investment programs. Risks: There are risks that some of these benefits will not fully materialize if the work of the General Directorate of Planning and the General Directorate of Projects within the Ministry of Planning is not well coordinated. These risks were minimized through provision of assistance to the Programs Directorate, which should help improve its specific This document has a restcted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclmsd without World Bank authorization.  contribution to the planning and programming process, and through strengthening of the procedures for handling preinvestment studies, which should provide a reasonable framework for integrating the work of the two Directorates. Moreover, these risks are expected to diminish over the life of the project as procedures are further tested, modified and accepted. Estimated Costl (in US$ thousands) Local Foreign TOTAL a. Preinvestment Studies 1,079.0 6,765.0 7,844.0 b. Training 100.0 150.0 250.0 c. Documentation Center 10.0 40.0 50.0 d. Vehicles and Equipment 10.0 80.0 90.0 TOTAL BASE COST 1,199.0 7,035.0 8,234.0 e. Contingencies Of Which: Physical 2.0 14.0 16.0 TOTAL PROJECT COST 1,201.0 7,049.0 8,250.0 (15Z) (85Z) (100%) Financing Plan Local Foreign Total (in USS thousands) Government 854.0 854.0 (10%) IDA 347.0 7,049.0 7,396.0 (90%) Total 1,201.0 7,049.0 8,250.0 (100%) (15%) (85%) (100%) Disbursements (US$ millions) IDA FY 1988 1989 1990 1991 1992 1993 1994 Annual 2.0 1.5 1.5 1.0 0.8 0.5 0.1 Cumulative 2.0 3.5 5.0 6.0 6.8 7.3 7.4 Rate of Return: NIA Staff Appraisal Report: No separate Staff Appraisal Report has been prepared for this project. 11 All items would be exempt from import duties and local taxes.  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF RWANDA FOR A SECTORAL AND PREINVESTMENT STUDIES PROJECT 1. .1 submit the following report and recommendation on a proposed development credit to the Rwandese Republic for the equivalent of SDR 5.9 million (US$ 7.4 million) on standard IDA terms to help improve Rwanda's preinvestment capabilities. PART I - THE ECONOMY 2. A Country Economic Memorandum (Report No. 6191-RW) was distributed to the Executive Directors on November 21, 1986. Country data are provided in Annex I. A. Background 3. Rwanda's salient characteristics include its small size, an annual population growth rate of 3.5 percent (ranking among the highest in Africa), a population density (in terms of arable land) of up to 500 per square km in some regions (ranking among the highest in the world), hilly terrain and high average altitude, a landlocked position, lack of natural resources (including a serious shortage of arable land), underdeveloped physical and institutional infrastructure, and a very low level of development as measured by a variety of social as well as economic indicators. These indicators include a per capita income of about US$ 270 (19B4), among the lowest in the world; an average life expectancy of 47 years; and an adult literacy rate of 37 percent. 4. The country is heavily dependent on agricultural exports (coffee, tea, pyrethrum, cinchona), which provide 75 percent of its foreign exchange earnings. Rwanda's manufacturing base is narrow, and the growth of modern manufacturing is limited by the small size of the market and the lack of raw materials, marketing facilities, entrepreneurial skills, and skilled manpower. The country, consequently, imports capital goods, steel, petroleum products, cement and other construction materials, and virtually every modern consumer product. Its merchandise trade is hampered by high transportation costs and dependence on neighboring countries for access to the sea ports of Mombasa and Dar-es-Salaam.  -2- 5. Despite these constraints, Rwanda has wade a creditable effort toward economic and social development. During the 1976-80 period, the country managed to satisfy its subsistence needs and to make important advances not only in agriculture but in other fields such &A education, health, water supply, and small-scale industry. It succeeded in building basic transport and communication infrastructure, and set in place a state administrative apparatus serious about development. These achievements reflect the Government's commitment to economic and social progress, as well as its prudent fiscal, balance of payments and debt management policies. At the same time, Rwanda has been able to attract substantial volumes of external aid from a great diversity of sources, confirming donor perceptions that Government is indeed development-oriented and is pursuing generally appropriate objectives. The Government's efforts during this period were significantly helped by favorable weather conditions and the coffee boom of the late 1970's. 6. Achievement and good fortune notwithstanding, development efforts in Rwanda have not alleviated the fundamental problems which continue to compromise development prospects: population growth, increasingly at odds with land availability, an undiversified economic structure, Government's limited capacity to provide social services, and the economy's inability to generate jobs either outside or within the rural sector. Though foodcrop output has, at least, kept pace with population growth, it has apparently done so at a cost to the land's long-term fertility. Agricultural land use in Rwanda has reached a point where there is little fallow or grazing area left. The rapidly growing population has resulted in serious deforestation, accompanying erosion, and has required the cultivation of marginal lands with a fragile ecology. Concomitant with these adverse trends has been a deterioration of nutritional standards induced by the shift to traditional high-yield, high-calorie, but low-protein crops. The limited success of Government's efforts has been largely due to the country's structural constraints (among them the critical population problem), institutional weaknesses (stemming largely from a shortage of skilled personnel), and an insufficiency of domestic financial resources. At the same time, the shortage of skilled personnel, fragmentation of institutional responsibilities, and relatively poor interagency coordination limited the country's capacity to absorb external resources. 7. The Rwandese authorities have taken steps to address these problems. The Government established in 19B1 the National Population Office in order to formulate a national population policy and monitor developments. IDA- assisted Family Health Project is a full-scale effort to assist the Government to respond to its pressing population realities. To address the problem of lack of education and training, the Government introduced an education reform in 1979 which -- after subsequent adjustment -- was responsive to the country's needs, but whose implementation has been hampered by financial constraints and the lack of teachers. In the agricultural sector, the Government has undertaken a comprehensive evaluation of research efforts to date. This has now been translated into a detailed action program through an IDA assisted Agriculture Research Project.  -3- B. A quantitative assessment of Rwanda's recent economic performance can only be tentative, as the national account statistics have serious shortcomings. These estimates suggest that, compared to the period of 1978-1980, during which the GDP grew by about 6 percent annually, economic growth in Rwanda slowed down during 1983-1984 -- GDP grew on average by about 1 percent p.a. -- mainly on account of a downswing in tertiary sector activities, and the sluggish performance of food crop production following the 1984 drought. Notwithstanding this domestic recession, the manufacturing sector expanded its productive capacity and improved its capacity utilization due, in part, to the import restrictions which limited foreign competition. Mining continued the decline that started in 1980 due to persistent financial and management problems of the major mixed- ownership company (SOMIRWA), which ceased its operations in late 1985. However, 1985 witnessed high growth after the economic slump of the preceding 3 years, mainly on account of an increase in agricultural production. Preliminary data for 1986 also indicate a buoyant year due to an increase in world coffee demand and prices. 9. Rwanda's external position came under strong pressure, as the volume of imports continued to expand at a time when export earnings were declining. Since 1981, the total value of exports has been consistently below their 1977-80 levels, reflecting the decline in world coffee prices rather than a shortfall in export volume. The terms of trade deteriorated by about 24 percent between 1979 and 1984. In an attempt to arrest the deterioration of the balance of payments, the Government adopted -- beginning in 1983 -- what they expected would be temporary measures, including licensing, prior deposit import requirements and increased import tariffs. The restrictions aimed mainly at curtailing imports of non- essential consumer goods as well as those of locally-produced commodities. The Rwandese authorities also shifted the peg of the kwandese franc (in September 1983) from the US dollar to the SDR, entailing a 5.2 percent depreciation vis-a-vis the US dollar. These measures, coupled with some improvement in the terms of trade in 1984 and 1985 (with respect to the 1981-1983 period) helped to reduce the current account deficit to about 9 percent of GDP both in 1984 and in 1985 as compared to 12 and 11 percent, respectively, in 1982 and 1983. Due to the coffee "boom" in much of 1986, the current account deficit is expected to decline further to about 72 of GDP. 10. On the budgetary side, the authorities did not realize that the high level of tax revenues recorded in 1979 and 1980 was a temporary phenomenon not justifying a permanent increa!;e in expenditures. As a result, the sharp decline in revenues from coffee export taxes beginning in 1981, together with increases in current outlays (in order to achieve the social objectives of the Plan), resulted in an overall budgetary deficit equivalent to about 2 percent of GDP in both 1982 and 1983 (as compared to a surplus of 0.9 percent in 1980.) Concern over the worsening budgetary situation led Government to introduce corrective fiscal measures. The growth of public sector employment was held under 0.5 percent -- the education sector was exempted in order to achieve the revised targets of the 1979 Education Reform. This represented a major break from Government's past policy of practically "guaranteeing" employment to every secondary-school graduate. Large reductions were also decided in net transfers to parastatals. Thanks to the austerity measures and increased  -4- revenues from taxes on international trade both in 1984 and 1985, the Government has been successful in reducing the budgetary deficit to about 1 percent of GDP. The Government is likely to experience a small budgetary surplus in 1986 mainly because of the increase in world coffee prices. 11. Government has been traditionally conservative in its monetary and credit policies. Inflationary pressures have arisen mainly from supply shortages caused by frequent disruptions of supply routes through neighboring countries, high international transport costs, and increased prices of imports and seasonal fluctuations in the price of domestic foodstuffs. Inflation averaged 10.6 percent per annum during 1977-82, it peaked at 12.6 percent in 1982, reflecting mainly the substantial increases in electricity and water tariffs and educational fees. In 1983 and 1984 inflation was down to 6.6 and 5.4 percent, respectively. In 1985, inflation declined further to less than 2 percent. 12. Rwanda has been one of the most favored beneficiaries of foreign aid in recent years. Per capita disbursements of net official development assistance (ODA) have been above US$30, much larger than the average for Sub-Sahara Africa. During the period 1981-85, grants comprised about 75 percent of total external aid flows, and were provided mainly by Belgium, the Federal Republic of Germany, and France. In view of its level of development, however, Rwanda will need external assistance for a long time to come. While the world coffee price increase in 1986 has already provided temporary balance-of-payments relief, this is unlikely to continue beyond 1987. Foreign assistance would have to continue at least at the current level, given population growth and export constraints. 13. Rwanda's medium- and long-term external public debt is relatively small, estimated at US$304 million at end-1985, equivalent to about 16 percent of GD?. Most of Rwanda's external debt was contracted on highly concessionary terms; the grant element was over 70 percent on average during the 1972-84 period. Due to the concessionary nature of these loans, the debt service payments on medium- and long-term debt are relatively low: about 8 percent of exports of goods and nonfactor services in 1985. Hence, there remains scope for further borrowing. However, given the poverty of the country, its overwhelming constraints and vulnerability, and its long- term unfavorable terms of trade prospects, external funds should continue to be provided in the form of grants or loans at highly concessionary terms, and include a high proportion of local cost financing and non- project assistance. PART II - THE BANK GROUP OPERATIONS AND STRATEGY 14. Bank Group assistance to Rwanda started in 1970, and was initially focused on the improvement of the road network and the strengthening of agricultural production. As of September 20, 1986, Rwanda has received twenty-nine IDA credits totalling US$ 304.6 million: eight for agriculture (34 percent); six for roads (30 percent); four for DFC's (10 percent); two for power (9 percent); two for education (6 percent); one for water supply (5 percent); two for technical assistance (4 percent); and one for telecommunications (3 percent). In addition, Rwanda has also received a  -5- Special African Facility Credit of US$15.0 million for the Sixth Highway project. There have been no Bank loans. Three IFC investments (one of US$535,000 for a tea factory; a second of US$226,000 with contingent equity commitment of up to US$60,000 to expand the tea factory; a third of US$249,000 also to expand the tea factory) were signed in 1976, 1980 and 1985, respectively. Annex II contains a summary statement of IDA credits and IFC investments as of September 30, 1986. 15. In fiscal years 1982-85, disbursements for Rwanda totalled LUS$49.1 million, compared to new commitments of US$86.2 million. The annual disbursement rate increased steadily over this period, to reach about 25 percent in FY85 which is above the average for countries of the Eastern and Southern Africa Region. There are no problem projects in Rwanda. Country Assistance Strategy 16. The Bank Group lending has been based on a country strategy which has emphasized: (i) agriculture and rural development, the main objective being to increase food production as well as export crops, while maintaining soil fertility; (ii) human resources development, focusing on support to basic education and skills training to improve agricultural productivity, provide skilled manpower, and influence attitudes on the population issue, and, more recently, on family planning programs per se; (iii) infrastructure development, particularly roads, to reduce the country's isolation and to provide incentives to further intensification of agriculture as well as increased specialization and diversification through better marketing; (iv) energy, to lessen the country's demand for fuel imports; and (v) development of small and medium-size enterprises in manufacturing and other sectors. 17. One of the major constraints to Rwanda's development is the shortage of administrative and technicalimanagerial capacity. This affects all sectors and inhibits project preparation and implementation. Institutional and human resource development through intensive technical assistance and on-the-job training of Rwandes-e staff have, therefore, been a salient feature of the Bank Group program for Rwanda, both under individual projects in various sectors, and through free-standing technical assistance projects (a second Credit 1565-RW became effective January 10, 1986). These projects have helped strengthen inter-ministerial coordination, provided training to staff in the studies units of concerned agencies, and contributed to improve the preparation of the next five-year plan (1987- 1991). 18. The Bank Group program has been pursued in a climate of good relations with the Government. In all nine sectors in which we are active, there exists a general willingness to take action where required. In agriculture, improved sector management as well as more rigorous project planning and financial controls have been attained, with a shift away from integrated rural development schemes towards more directly productive projects and the strengthening of institutional linkages between central Government and local levels. In the highway sector, our active dialogue with the Ministry of Public Works and Energy is now focusing on the ways to  -6- reduce reliance upon expatriate expertise and develop a national road maintenance capacity. In industrial development, we have gained Government's commitment to promote small-scale enterprises while starting to focus as well on rehabilitation and restructuring needs of some public enterprises. In the education sector, we had difficulties due to two misprocurements (some six years ago) and an overly ambitious education reform proposal at the primary level. However, a positive dialogue with the Ministry of Primary and Secondary Education (MINIPRISEC) has emerged in the past three years; the Ministry has since adopted a less costly and lengthy primary cycle. A third education project was approved last spring (Cr. 1683-RW). On population, our initially cautious approach to Government has developed into cooperative efforts to promote suitable family health and planning programs (Cr. 1679-RW signed in May 1986). 19. The Bank Group strategy continues to center on the five sectors mentioned above (para. 16), with special emphasis on agriculture and population. For the former, we give priority to: (i) promoting intensification by developing and strengthening Rwanda's agricultural adaptive research and extension capabilities; and (ii) reinforcing the key sector institutions -- the Rwandese Research Institute (ISAR) and the Ministry of Agriculture. 20. In addition, our dialogue with the Government has also had a macro- e conomic dimension and Rwandese authorities have recently received very positively the grey cover Economic Memorandum recommendations. PART III - SECTOR BACKGROUND A. General 21. Overall economic management in Rwanda has generally been sound and prudent. There are nevertheless a number of important areas in which improvements in macroeconomic management will be necessary if Rwanda is to return to the healthier growth path which characterized its development until the early 1980s. Some of these issues have been identified by the Government in its 1985 Economic Recovery Program. Particular areas of reform, on which the Government has discussed World Bank and other donor assistance, include: (i) overall restructuring of the industrial sector; (ii) support for rehabilitation of the mining sector; and (iii) technical assistance in the preparation of a rolling public investment programming system, and its perioO..c updating; (iv) strengthening of the agricultural services; and (v) management of Public Enterprises (PEs) in the energy, water supply, transport, education, telecommunications and agricultural sectors. These subjects, all related to issues of medium and long-term economic management, have been addressed in recent Bank sector reports, the 1986 Economic Memorandum, and are also part of the continuing dialogue between the Government and the Bank. Government has responded positively to the Bank's advice and is addressing these issues within the framework of several Bank-financed projects, UNDP-financed studies, and with support from bilateral donors.  -7- 22. Bank assistance strategy to Rwanda aims at supporting continued economic growth by: improving the country's ability to modify macro- economic policies in response to changes in external conditions; improvements in domestic resource mobilization; development of appropriate public expenditure programs; and promoting the financial autonomy of parnstatals and mixed enterprises while increasing their accountability. 23. To achieve these goals, it is necessary to strengthen the institutions in charge of implementing the economic Development Plan and, more generally, to improve economic and financial management capabilities and processes. A first Technical Assistance project (Credit 1217-RW), now almost completed, launched the improvement strategy by providing Technical Assistance to the Ministry of Planning and setting up a preinvestment approval and financing mechanism. A second Technical Assistance project (Credit 1565-RW), approved in March 1985, addressed the needs for structural and staffing improvements in the Ministry of Finance. 24. Regarding macro economic management, one of the principal recommendations of the World Bank Economic Report (1986) was that the Government give priority to preparing a rolling Public Investment Program (PIP) covering a three-year period. The CEM also underlined the urgent need for an Intensive effort through coordination between the Planning and Finance Ministries to develop a Public Expenditure Program (PEP). This is further discussed in Section D below. B. Available Technical Assistance for Rwanda 25. Rwanda is receiving substantial Technical Assistance (TA) from both bilateral and multilateral sources. It was estimated that, in 1985, such assistance amounted to about USS 70 million, including about US$ 16.0 million for Economic Management, mostly financed by the BankIUNDP. In addition to the assistance funded by bilateral donors (mostly Belgium, U.S.A., Canada, Germany, Switzerland, France and China), NGO's play an important role in Rwanda's development. 26. There is a particularly close collaboration and complementarity between UNDP and IDA across sectors of lending in Rwanda: in many cases IDA-financed projects are complemented by UNDP-financed technical assistance as a result of Government policy to obtain grant assistance wherever possible. C. Previous IDA Technical Assistance First and Second Technical Assistance Projects 27. When IDA made its first technical assistance credit in 1982, one of the major constraints on Rwanda's development was the shortage of a national technical and managerial capacity. This affected all sectors and inhibited project preparation and implementation. Activities financed under the first technical assistance project (Credit 1217-RW of US$ 5.0 million granted in April 1982) covered project preparation and related staff training. The second technical assistance project (Credit 1565-RW, of US$ 4.8 million granted in May 1985) covered a broad range of needs, primarily related to public finance, including training of Ministry of  Finance staff, budgeting systems, financial managoment of Public Enterprises and strengthening of Goverrnment capabilities for economic policy making. By responding to pressing neods, Bank Group-financed technical assistance (along with UNDP-financed, Bank executed technical assistance) has proven useful. The experience gained under the Association's first credit is extensively reviewed below in view of Its special relevance to the proposed project. 28. Assistance to the Planning Ministry. The objectives of the first IDA Technical Assistance project (and of the parallel UNDP TA "Study Fund" project, RWA/80O009, for which the Bank is Executing Agency) were to increase the number and improve the quality of projr;ts submitted for outside financing; to strengthen local project preparation capabilities; and to establish better coordination between technical ministries and MINIPLAN. Together the projects consisted of: a) the financing of prefeasibility, feasibility, and detailed engineering studies; b) training seminars in Rwanda on project preparation and implementation; and c) the services of four UNDP-financed long term advisors: (a) a project economist assigned to MINIPLAN primarily to provide assistance for all activities related to preinvestment financing; (b) a financial analyst assigned to the National Studies Bureau (BUNEP) to help it carry out studies financed under the project and/or by other donors; (c) an investment programming specialist; and (d) a documentalist assigned to MINIPLAN, to help organize and put into operation the Documentation Center. 29. A Tripartite (Government/UNDP/Bank) evaluation of the performance of the UNDP-financed TA in August 1985, concluded that it had helped the Ministry of Planning initiate a new process for selecting and preparing new projects through better coordination with the line ministries. At the same time, the evaluation observed that IDA-financing of preinvestment studies under the first TA project had increased the country's absorptive capacity, qualitatively and quantitatively, by identifying projects and producing 27 studiesl which otherwise might not have been proposed for external financing (see Annex VI). At the present time, 23 of the studies carried out have confirmed or probable external financing for the subsequent project execution phase. IDA is the likely source of financing in eight such cases. Four studies demonstrated that proposed investments were not feasible and thus saved Government from wasting resources in their financing. 1/ The sectoral distribution of these studies is as follows: Transportation (6), Industry (4), Agriculture (5), Urban and Water (6), Telecommunica- tions (2), Eleciricity (3) and Financial (1).  -9- 30. This joint assistance also helped to create the first Interministerial Advisory Committee for Planning (C.I.C.). The Committee, essentially composed of national staff, has performed its tasks very well and demonstrated the value of effective coordination at both the working and the policy making levels. The Planning Committee has served as a model for the other six committees subsequently established by Government for improving coordination in economic management (see para. 36). 31. A number of factors have contributed to the success of the IDA- financed Project: (i) sound administrative management of the preinvestment mechanism by MINIPLAN; (ii) an open consultative process involving the participation of the line ministries concerned with the studies as well as MINIPLAN staff (see para. 36); (iii) organization of well-targeted, practical training seminars on various aspects of planning; (iv) close IDA supervision and a collaborative problem-solving approach with Government -- both from headquarters staff and the Bank's Resident Representative in the field; and (v) a positive external environment exemplified by the emergence of an effective field-level coordination process among external aid agencies and Government, under the leadership of UNDP and the Bank. The National Studies Bureau (BUNEP)2 32. At the Government's request and in order to strengthen local capabilities to prepare and monitor projects, BUNEP was to carry out studies financed under the first IDA credit. After BUNEP's technical and financial proposals to MINIPLAN and the technical ministry concerned were accepted by the CIC and approved by IDA, BUNEP was given the responsibility to conduct the study. BUNEP executed four studies under this arrangement, but its performance was mixed. This is due to staffing weaknesses (e.g., lack of financial expertise) and poor management. IDA has advised the Minister of Planning to carry out a financial and management audit of BUNEP (which is still to be done) and to request BUNEP to implement the following recommendations: (i) set up a new management structure; (ii) use the critical path method to manage studies being carried out; (iii) enforce completion of timesheets by its staff; (iv) work out a staff training plan; (v) prepare a periodic work program; and (vi) introduce a cost accounting system. Under the proposed credit, and in addition to the above efforts to be made by Government to develop their capabilities, Rwandese consulting firms including BUNEP will continue, in accordance with the IDA guidelines on the selection of consultants, to be included in the short lists in cases where they have the required qualifications. 33. Assistance to the Ministry of Finance. Following Bank and IMF studies of the fiscal and budgetary systems, and a Government reorganization in January 1984, which significantly broadened the Finance Ministry's responsibilities, Government obtained Bank assistance for a second TA project (Cr. 1565-RW), essentially directed to the Ministry of Finance and consisting of the following: 21 BUNEP is a state enterprise, with administrative and financial autonomy, placed under the control and supervision of MINIPLAN.  - 10 - (a) training for HINIFINECO staff and for financial managers in other ministries and selected parastatal agencies through establishment of a Training Center in MINIFINECO and provision of remedial on- the-job training for current staff; (b) improvement of tax, customs, budgetary procedures (multi-year programming and budgeting) and accounting practice3 through: (i) long-ternm technical assistance (one budgetary procedures and budget management specialist and one public accounting specialist) and short backstopping missions; (ii) phased introduction of automated data processing; (c) improvement of financial management of the parastatal sector portfolio through the services of a business management specialist; and (d) improvement of economic policy-making through provision of short term consultant services. 34. An innovative feature of this project is the delivery system for technical assistance which involved a twinning arrangement with the Ministry of Finance of a European country. Progress in the launching of the projet, however, has been slow. Measures have now been taken to improve the situation; as a result, the needed specialists are now in post, accelerated training is being provided to local staff, and the Ministry's training center is about to start operations. D. Economic Management 35. A series of country economic memoranda (the latest in 1986) addressed a wide range of policy issues and formulated a number of recommendations for actions including, inter alia, the need for: (i) pursuing more active policy-making with respect to the appropriate setting and monitoring of exchange, tax, tariff, interest and public sector wage rates; (ii) preparing a realistic public investment program; (iii) applying more rigorous controls on public sector employment; and (iv) improving institutional and procedural arrangements to facilitate inter-governmental communication and policy coordination. A number of these recommendations were subsequently followed up with concrete action. 36. Since 1982, Rwanda has taken Important institutional steps in order to improve its development planning and public sector management. These include: (a) streamlining of ministerial responsibilities along clear sectoral lines requiring that key sectoral ministries undertake formulation of sectoral strategies and programs; (b) broadening of MINIPLAN responsibilities for: (i) the overall planning process (mainly the preparation of the Fourth Development Plan 1987-1991); (ii) investment progrnmming and its monitoring which includes alse the management of the pre-investment program and the operation of the preinvestment mechanism supported by IDA; (iii) harmonization of sectoral strategies; and (iv) the preparation and updating of economic and social statistics, including national accounts; (c) creation of seven interministerial coordination  - 11 - committees (CICs) to foster intersectoral coordination among institutions dealing with development policy. These seven CICs are the following: (i) Rural Development and Health (Ministry of Agriculture as chair); (iL) Economic Policy (Ministry of Finance and Economy as chair); (iii) Industrial Policy (Ministry of Industries, Hines, and Crafts as chair); (iv) Housing, Urbanism, and Regional Development (Ministry of Public Works and Energy as chair); (v) Political and Security Matters (Ministry of Interior and Communal Development as chair); (vi) Training, Employment, and Youth Promotion (Ministry of Public Administration and Training as chair); and (vii) Planning and International Cooperation (Ministry of Planning as chair); (d) the establishment of a preinvestment mechanism, under the Ministry of Planning, which has resulted in an improvement in the pre- investment study capacity of the country (para. 29); and (e) Government has committed itself to the introduction of multi-year programming of Public Expenditure and it has already launched a complementary program, financed by IDA (Credit 1565-RW), to strengthen its Public Finance management. 37. Nevertheless, a few key deficiencies in the planning process remain. Namely, (a) the uneven design of sectoral strategies whose comprehensive- ness and quality 'ary from one sector to another in relation to the Ministry's technical capabilities; (b) MINIPLAN has not yet developed the processes and the data base needed for the preparation of medium term macroeconomic projections for the economy and still needs to improve its internal organization so as to perform its role as the leading institution in developing planning; and (c) a lack of technical capacity in the Planning, the Finance and the line ministries to link the planningl programming/budgeting process. 38. To remedy these deficiencies, Government needs to strengthen (a) the capabilities of technical ministries to prepare sectoral plans, define sectoral objectives and determine appropriate strategies to achieve them; (b) coordination between MINIPLAN and MINIFINECO in the preparation and execution of the progranninglbudgeting process; and (c) its capability to prepare adequate statistical data for economic menagement. 39. To that end, Government has called on both UNDP and IDA to finance coordinated projects of assistance to the Planning Ministry. They consist of the following: (a) continuation for three years of UNDP assistance for economic analysis of projects, investment programming and other assistance as described in para. 28; in addition, UNDP would finance assistance for the design and implementation of a three-year rolling investment program as an indispensable tool for linking sectoral strategies and budget planning. The estimated cost of this project is $ 1.6 million. (b) continuation for three years of UNDP assistance for the strengthening of Rwanda's macro-economic planning capacity; and planning organization. The first of these objectives would be met by helping Government to improve (i) the preparation of its medium-term economic development plan 1987-91; (ii) the collection and analysis of economic data; and (iii) the preparation of national accounts. The second objective would  - 12 - be met by helping the Government to redesign, to the extent needed, the structure, organization and functions of MINIPLAN. The cost of this UNDP project would be US$ 2.6 million and it would finance the following: (i) long-term experts; (ii) training and fellowships; and (iii) vehicles and equipment; (c) the proposed IDA project to replenish the "Study Fund", focussing on the practical aspects of decision-making in performing the sectoral planning, preinvestment review and financing functions, building upon its earlier successful experience with the Credit 1217-RW (see para. 29 and Part IV, paras. 47 and 48). The cost of the IDA-financed project would be about $ 8.3 million. 40. To ensure consistency among these three operations, Government and UNDP have approached the Bank to become the Executing Agency responsible for implementing the two UNDP projects for a period of three years by which time it is hoped that Government would take over their management. 41. The above program of three coordinated projects would address comprehensively the requirements of the Ministry of Planning and would complement other on-going efforts by Government in association with UNDP and IDA to improve its planning and programming function across sectors, and to strengthen its linkages with the budget process, namely under: (a) the IDA-financed TA project to the Ministry of Finance (Credit 1565-RW) in the area of Public Expenditure; (b) the UNDP-financed project "Institutional Strengthenaing of the Agricultural Ministry" in the area of agricultural planning; (c) the UNDP-financed Bank executed project "Planning and Management in the Transport Sector" in the area of transportation planning; and (d) the UNDP-financed project "Assistance to the Banque Rwandaise du Developpement" in the area of industrial project appraisal. 42. To ensure success of this whole program of improvements, by the end of 1988 at the latest, Government will confirm to IDA the elements of its institutional framework for the planning, programing and budgeting of its investments (see Annex IV). These arrangements will include (a) the methodology and procedures for Public Expenditure Programming (which are being improved under the ongoing IDA project "TA to the Finance Ministry", Credit 1565-RW); (b) the linkages between the core economic ministries and the line ministries (with an indication of the further support needed by the latter to develop their project preparation capabilities, especially in the industrial field); (c) the arrangements for coordination between the Ministries of Planning and Finance; and (d) the arrangements initiated by Government to ensure that all preinvestment proposals are reviewed by the appropriate interministerial committee (CIC). 43. Success of the program will also require the active cooperation of the Government agencies concerned and of the donors providing TA or other resources in support of the continuum between macroeconomic, sector and project management. To that end, Government has agreed that its MINIPLAN,  - 13 - MINIFINECO and the technical ministries undertake jointly with IDA an annual assessment of progress in implementing the framework (in relation with the proposed project) and in the coordination of all projects in place related to planning and programming. To the extent feasible such review will be made in coordination with UNDP and relevant bilateral donors. IV - THE PROJECT A. Project Origin 44. In May 1985, the Ministry of Planning indicated to IDA their interest in obtaining further support for strengthening Government's preinvestment capacity, which had been previously assisted through Credit 1217-RW and its complementary UNDP-financed TA project with the Bank as Executing Agency. Project preparation started in October 1985, followed by appraisal in May 1986. Negotiations were held in Washington D.C. from March 27 to March 31, 1987. The Government delegation was led by H.E. Ambroise Mulindangabo, Minister of Planning. A Credit and Project Summary is provided at the beginning of this report. Supplementary project data are contained in Annex III. B. Prolect Objective 45. The purpose of the IDA project is to support Government's objective to improve its investment/planning process by financing sector! subsector studies and feasibility studies for development projects so as to help Government to (i) better define its development objectives and determine appropriate strategies to achieve them; (ii) continue to improve the quality of projects submitted for outside financing; and (iii) strengthen local project preparation capabilities. These improvements are expected to reinforce the decision-making process in matters of planning and international cooperation by building upon procedures established for selection of preinvestment studies under the first credit (see para. 48). C. Project Description 46. The project would consist of the following: a) assistance to carry out the identification, preparation and execution of sectoral and preinvestment studies; b) training of selected staff in (i) the preparation, implementation and monitoring of a rolling Public Investment Program and (ii) project preparation and appraisal; c) completion of the installation of a Documentation Center; and d) logistical support (including vehicles) related to the above.  - 14 - 47. To coordinate review of the design of sectoral, subsectoral, prefeasibility, feasibility and detailed engineering studies and the approval of their financing, Government has established a mechanism called "Fonds d'Etudes". Under the project, this mechanism would continue to be a focal point for coordinating the preparation of new studies and investment projects, and to finance the services of national and foreign consultants. 48. The preinvestmxent mechanism would continue to be managed by MINIPLAN according to procedures set up, under the first project and revised on the basis of experience acquired. These procedures are represented in graph form in Annex V. They include: (a) preparation of a half-yearly "study program" consisting of study proposals made by the line ministries, ranked according to priority, and to be considered for financing; (b) review of such proposals by the Interministerial Conmittee for Planning (CIC); (c) issuance of standard letters of invitation, and processing of consultant selection according to a manual of instructions. To accelerate decision-making, MINIPLAN tonfirmed during negotiations the following: (a) it would prepare the "study program" every four months (instead of every six months); (b) the Planning and the Projects Directorates of MINIPLAN (see chart of the Planning Ministry in Annex VIII) would review these proposals and submit them to the technical level of the "Planning Committee" (CIC) for further review and recommendation to the Minister of Planning; (c) the technical level of the CIC would be convened as often as necessary, but at least three times a year to consider the proposals submitted by the line ministries; (d) after receiving the technical CIC's advice, the Minister of Planring would select the proposals to be included every four months in the "study program"; (e) each "study program" would be submitted to IDA, starting no later than September 1, 1988, for its prompt comments and agreement. 49. Selection Criteria. To be approved for financing, Government also confirmed during negotiations that the studies would need to meet the following criteria:  - 15 - (a) They should be sector studies, feasibility studies or deta.;led engineering studies, consistent with the priorities of the Public Investment Program objectives. In addition, the following specific study criteria would need to be met: (i) in the case of feasibility studies, only those intended for projects included in the PIP or in sector programs and for which a source of financing (national or external) has been identified; (ii) in the case of detailed engineering studies, only those related to projects the soundness of which has been demonstrated by a feasibility study; and (iii) in the case of rehabilitation studies, only those existing public enterprises for which their potential economic and/or financial viability have been demonstrated; (b) Their cost should be estimated at no more than US$ 250,000 (1987 prices) unless otherwise agreed with the Association. A tentative list of 19 studies for an amount of USS 4.7 million is already available (see Annex VII for details). 50. To manage the preinvestment mechanism and ensure its administrative sustainability, Government has already designated the Director of Projects Evaluation of its MINIPLAN as national manager to be responsible full-time for the work of the concerned expatriate and national staff. Further organizational arrangements may be required as a result of (a) the need to broaden use of the preinvestment mechanism procedures to all preinvestment studies irrespective of the sources of financing (para. 51, below); and (b) the UNDP financed organization study (para. 39). 51. Reinforcement of procedures related to planning and investment decisions. The decision-making path established for studies financed by IDA under the first project (see para. 4B and Annex V) proved the usefulness of the CIC as a mechanism for consultation and coordination of investment decisions between the Planning ad line ministries. Government has therefore decided that for the preparation of the next Development Plan a unified decision-making path based on this experience and that with other donors would be applied not only for all preinvestment studies, regardless of the source of financing, but also to all activities related to the planning process itself. This decision would be set out in a set of regulations ("Code de Conduite") already being drafted by MINIPLAN instructing the line ministries that all proposals made regarding sectoral plans and strategies, preinvestment studies, investment programming, financing of projects and their execution, and negotiation proposals for all projects would be reviewed by the technical level of the CIC "Planning and International Cooperation" before being submitted for approval to the ministerial level of the CIC. Government has already provided IDA with a satisfactory draft of these regulations and progress in their implementation would be reviewed with IDA as part of the periodic evaluation of project impact. (paras. 42, 43).  _ 16 - 52. Financial sustainability. Measures are needed to enhance the financial sustainability of the preinvestment mechanism. To that end, Government agreed to increase the proportion of its present contribution to the financing of studies under the project from an average of 3% at present to 10 percent of each signed contract during the first three years of implementation and to 20% from the fourth year until the end of the project. In addition Government and IDA discussed the possibility of jointly looking for other ways to achieve that objective, including converting the preinvestment mechanism into a revolving fund replenished by resources generated by studies which have led to investment (as necessary, consideration would be given to measures concerning the fund's organization, the size of the Government's contributions, accounting and auditing provisions and how to interest other donors to contribute to this revolving fund). 53. Staff Training. Government and IDA have agreed on arrangements for coordinating the key economic management processes, macroeconomic planning, sector studies, public investment planning, budgeting and monitoring (Annex IV). In addition, a Government Task Force, assisted in part by UNDP, has prepared a detailed plan for improving the organization of the Ministry of Planning, which is acceptable to IDA. To develop local capabilities, the credit would finance an integrated training program in public investment planning and project preparation and appraisal focusing on: (i) local seminars for the national staff (see Annex VIII); and (ii) work placements abroad for "on-the-job' training in planning institutions. The training program for the first year of implementation is already available and further programs will be periodically reviewed with IDA (para. 67). The program is expected to provide about 30 staff months of training. 54. Documentation Center. The project would provide technical materials (books, specialized periodicals, studies and other reference materials) to the documentation center attached to the Ministry of Planning and constructed under credit 1217-RW. A list of such materials is being finalized by the Planning Ministry and its approval by IDA, together with that of the procurement schedule for such materials, will be a condition of disbursement of the funds related to this component. 55. Logistical Support. The project would also finance vehicles and essential equipment for the Planning, Projects and Statistics Directorates of the Planning Ministry for a maximum of $ 90,000. D. Project Implementation 56. The Director of Proje.%ts Evaluation of the Planning Ministry would be responsible for administering the project. All technical ministries have already been informed by the Planning Minister of the procedures for administering the preinvestment mechanism.  - 17 - E. Project Cost 57. Project costs have been estimated at U.S. $ 8.3 million equivalent, net of taxes, of which about 85 percent are foreign costs (S 7.1 million equivalent) and 15 percent local costs ($ 1.2 million equivalent). Items imported for the project would be exempt from taxes and duties. Project costs are expressed in March 1987 prices. A contingency allowance is not necessary for the study fund in view of the fact that this is an open-ended financing facility: sub-projects will be added as long as funds are available. A small physical contingency is provided for the purchase of vehicles and equipment. The project would finance approximately 750 staff months of consultant services; an indicative distribution being as follows: 75 during the first year, 135 during the second year, 190 during the third year, 200 during the fourth year and 150 during the fifth year. National consultants are expected to provide about a third of the expertise to be financed under the project. 58. The following table shows the project cost: Proiect Cost (by category, in U.S. $ thousands) Local Foreign TOTAL Percent a. Sector and Preinvestment 1,079.0 6,765.0 7,844.0 95.7 Studies b. Training 100.0 150.0 250.0 3.0 c. Materials for 20.0 40.0 50.0 0.3 Documentation Center d. Vehicles & Equipment 10.0 80.0 90.0 1.0 TOTAL BASE COSTS3 1,199.0 7,035.0 8,234.0 100.0 e. Contingencies (for c and d) 2.0 14.0 16.0 (Physical only) TOTAL PROJECT COSTS 1,201.0 7,049.0 8,250.0 (15%) (85%) (100%) 59. Financing Plan. IDA would finance about U.S. $ 7.4 million equivalent ($ 7.0 million of foreign costs and 0.4 million of local costs) or 90% of total cost, and Government would provide the remaining U.S. 0.9 million equivalent in local currency, making a total cost for the project of $ 8.3 million. Procurement, Disbursement, Accounting and Audits 60. The Government will recruit directly under individual contracts or through consulting firms, all consultants to be funded under the project. The qualifications, experience and terms and conditions of employment of all consultants would be satisfactory to the Association. A form letter of 31 All items would be exempt from import duties and local taxes.  - 18 - invitation has been agreed with Government and a short-list of consulting firms will be cleared with IDA before inviting proposals for particular studies. 61. Contracts for equipment and related items are expected to cost less than US$ 20,000 per contract and would be awarded following one of the following procedures: (a) local competitive bidding (LCB); (b) international or local shopping; or (c) direct contracting in accordance with Bank Group guidelines for procurement. Local procurement procedures were reviewed and found satisfactory. Government would submit to the Association for prior review, the tender documents indicating the method of procurement proposed. Bid evaluations, awards and signed contracts would also be submitted to the Association. Items would be grouped to the extent practical to encourage competitive bidding (see also Annex IX). 62. In order to expedite disbursement and give the Government improved control over the timing of payments due under the credit, the Government will establish a Special Account in the BNR under terms and conditions satisfactory to the Association. Upon credit effectiveness and receipt of withdrawal application, the Association would make an advance deposit of US$ 200,000 into this account. The Association would periodically replenish this account upon receipt and approval of withdrawal applications together with satisfactory evidence that the expenditures paid out of the Special Account were eligible for financing out of this project. 63. Funds from the credit would be disbursed on the following basis: a) 90 percent of foreign and 75 percent of local expenditures for the studies contracted during the first three years and 802 of foreign and 75% of local expenditures for the next five years; b) 5 percent of total expenditures for vehicles, equipment and technical materials; c) 100 percent of foreign and local expenditures for seminars. 64. All disbursements would be fully documented except those for short term consultants, local training and payments against contracts of less than US$20,000 equivalent which would be made against statements of expendicure, documentation for which would not be submitted for review, but the Planning Ministry would make these documents available for IDA representatives during project supervision. The standard disbursement profile for Technical Assistance projects in the Eastern and Southern Africa Region has been retained (assuming commencement of project activities in 1987). 65. Auditing would be required on a yearly basis for expenditures related to the project with particular attention to expenditures reimbursed against statements of expenditure and the Special Account. Auditing would be performed by an independent auditor acceptable to the Association after the end of each fiscal year of the borrower and the auditor's report should be received by the Association withia. six months following the audit.  - 19 - 66. To ensure that Government counterpart funds would be made available when needed, the Government would establish a Counterpart Fund Account within the National Bank of Rwanda to finance expenditures incurred by the project. Government would deposit at the beginning of each quarter US$ 21,000 equivalent. The first Government deposit of US$ 21,000 equivalent would be a condition of effectiveness of the credit. 67. Work Plans and Project Reviews. Government agreed during negotiations that it would prepare staff training plans every year to be updated every six months and reviewed with IDA. The plans would be linked with progress reviews of the assignment of Government staff and their advisers. 68. Proiect Implementation Schedule. The first list of studies to be financed by the project is available (Annex VII). Facilities for the Documentation Center built under Credit 1217-RW have been completed. Training seminars on project preparation, appraisal and monitoring, and investment programming are expected to start in Fall 1987. The project is expected to be completed by June 30, 1994. The closing date would be December 31, 1994. 69. Benefits and Risks. The project would result in preparation of sector strategies, production of a portfolio of well prepared projects ready for submission to financing sources and avoidance of unviable investments. More importantly, through its formal training component reinforced by systematic on-the-job training, the project would improve local capabilities for preparation and appraisal of investment projects and for investment programming so that after project completion, only highly specialized short term expertise would occasionally be required. The mechanisms set up to prepare new projects under the Credit would help strengthen the institutions involved across Government, better equip the Ministry of Planning to perform its coordinating functions, and should improve, in the long run, the institutional framework for overall investment programming. This would give Rwanda the capacity and technical competence necessary to translate its planned priorities into coherent investment programs. 70. There are risks that some of these benefits will not fully materialize if the work of the General Directorate of Planning and the General Directorate of Projects within the Ministry of Planning is not well coordinated. These risks were minimized through provision of assistance to the Programs Directorate, which should help improve its specific contri'jution to the planning and programming process, and through strengthening of the procedures for handling preinvestment studies, which should provide a reasonable framework for integrating the work of the two Directorates. Moreover, these risks are expected to diminish over the life of the project as procedures are further tested, modified and accepted. PART V - LEGAL INSTRUMENTS AND AUTHORITY 71. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association.  - 20 - PART VI - RECOMMENDATION 72. I rocomnend that the Executive Directors approve the proposed Credit. Barber B. Conable ProsLdent Washington, D.C. April 23, 1987  Annex I - 21 - Page 1 of 2 COUNMRh DATA - RWANDA (Ml IlIe-ne Ref Outtend in4g fnd Periodl) let. CREDfl AM PRICES 1960 t661 2962 2983 1914 1965 .. ._..... __... _.............--- ..... ____ _,__ .__ Money SuAPI ./ 14117 1931 1825Ub 1ow4 sou1 23308 Sank Crudit to Ooaern.nt (net) -n391 -2aea -o 20D9 1912 1731 Blnk Credit to Privste Sector 6179 7724 6027 USd6 13e 6 l6S407 laink Credit to Putbl Entorpriene 210 147 410 68 618 78 (percentege or Inde Nunbera) Money aa t of CDP' 1.2 11.0 12.2 12.7 11.8 12.7 CPI Avreram 2nd Qubtr 1982-100 65.0 900. 101.9 LO6.8 214.16 116.5 Annuat Percentage Changes in4 Consommer Prica Index 7.3 J .5 12.6 6.6 5.4 1.7 ferk Credit to Oowernent (not) 170.4 26.7 76.6 164.5 -4.9 -9.5 Bank Credit to Priwate Sector 41.5 25.0 3.9 4.0 23.0 10.6 Dunk Credit to Public Ennterpries -9.8 31.2 49.9 10J.3 -17.6 -3.1 BALANCE OF PAWOENS 198D 1981 1q92 1981 1914 10s NRCIND6 I E BDWS (AVWIACE 198-lW9 --- --- ----- -- - ---- -- --- -- ---------- --- -- --- ---.. ... .. ... ... ..--- (US6 MILLIONS) WI3 Min. Perc nt Ewarte (ge.fs) 165.7 110.7 142.0 162.2 174.6 161.2 Coffee 80.7 52.8 Imports (g.nfo) 322. 331.9 336 6 312.4 312.3 336.1 Tee 14.9 11.1 Cn-iterit,TFin 19.0 14.8 Resource Coa (deficit--) -157.1 -181.2 -196.6 -160.2 -137.7 -174.9 Wohfrer- 3.2 2.5 Other 10.7 6.3 Factor Services (net) 5.0 11.5 0.0 -6.3 -S.0 -S.7 Total 126.5 100.0 Private Transfere (not) -3.2 -J.0 4.7 5.5 1.6 4.3 Setance on Current Account -153.3 -172.7 -161.0 -161.0 -140.0 -276.3 EXTENAL OET AS Oe ODt. 31. 1* 8 USit kin. Offlcial Grants 107,4 105.8 108.2 112.3 90.3 112.1 Pekl;c Debt. Ircl. c ".ermnteed 324.4 Direct Private Foreign Inveatment 17.0 18.6 20.7 11.1 15,1 14.6 Mon Gueranteed Private Debt -- Net MLT Loans J1.0 2n.1 21.6 24.3 36.0 55.2 Total Dutetandino and Da-bhrnd 324.4 Other Capital (net) 0.6 -2.1 -0.7 1.1 -0.1 2.8 Short Term Capital (net) 21.8 19.9 8.6 -6 0 4.7 -6.0 DEBT S50VICE RATIO FDR 146i b/ Percent Allocation of SORe 3.1 2.7 0.0 0.0 0.0 0.0 --------------------- - ---- Errors A Omision -12.4 10.4 -0.1 1.2 -0.6 -0.3 Public Debt. Inel. Cu_ranteed 9.5 Incr see in Reervee( ) -1.32 -11.6 36.6 17.0 -13.6 -0.2 Non Guareateed Private Debt -- Total Outatanding and Disbursed 9.5 Petroleum Imports 29.1 3J.5 39.1 44.3 51.1 51.5 IDA LEWNG AS OF ST. 10.296 US5 "In. _ ___-- - --------------- RATE OF EXCHANOE Annual Avernags ------------- ----- ------------------------------O utstanding end Diabure 168 19e0 1961 1982 1983 168 1965 Undisbursed 112.9 Outstand;in Inl. Undiehureed 316.6 L56 1.00 - Ref 92.84 92.84 92.64 94.34 100.17 101.26 a:/ inc ludee eoney and euaa-foney. e:/ Debt servie- a a percentage of oeporta of goods and non-feetr re Ies.  Annex I -22 -Page 2o cOeMR DATA-ANAW AM (Thomand aq. bim.) POPULATION WOZTY (I"!) ....................... ........". ........... K.' 0.5 IIIIen CnlJ-Ie2 210 par square km. Rln of orouthi .63 303 per equaere lm. 1 arable lend. (fre 1976 t. 1962) POPILATION CHAIACTEMIS7ICS (1076) WALT" (100) a"! "... . . .. . . .. . . .. . . . - " " X 9 9 * *-^ . . . . . . . . ......................... .......- - Crude birth rate (per lO0) 82 Popuistlen per phyicalen 31840 Crud, denth rets CPAr 3000) to Populatlon sar hosital bud "0 Percent urba INCOME OZEThIUIUTIE gOem CEUT EN mP CAPITA ----------........... .. .^........... S of natluel incene hih-lat qlutlia -- (KIllgreme o1f1 elalValeon 16 forest uinbles -- ACC$ a TO MM WATER (1 im) ACCE To IaI cmTRT ----------- ................................ .. 3-. populatlon - hotel 54 3 of ppltllon - tot al - rural FM0 & NJTRITION fJCATION (10) = ._____ ---- ............ __._.. chalrie intaoe an S d requiremanta 11.0 Melt Ilito eray rte I a/ 7 Per Capita PrOlsf Intae (on/day) 50.0 PrImary school enrollment I GW PM CAPITA IN 1064 b/: 1270 OISS OISfTIC PRMJT IN 1W14 ANAIPIL NATE OF COW (I. CNSTAIr IMW tRCI) us lN S 1979-US 1964.00 MP et mrket Prices 15680.7 100.0 a.6 0.5 Cross domestic investment 195.6 11.6 11.0 10.6 Crose notional savinga 106.2 6.3 -0.3 -2B6. Currdnt aCcount bhmence -140.6 -6.4 Expoets (g.nfs) 174.5 10.4 0.3 -0.9 ImPorts (antsf) 200.6 17.3 6.4 11.1 CDP at fector coat 1449.4 100.0 6.0 -4.3 Primary sector 621.4 42,0 4.1 -14.7 Secondary sector 305.6 21.1 3.7 4.1 Tertiary sector 522.6 26.1 7.0 2.0 CDvEdT FINANCE (Contral Covarnuent) (faf i a.) 2 .r CDP .- - - - - - - - - - - - - ........ . , . -- - -- - -- - - - - - -- 19n 19e6 1979 Current roverul 9.10 10.6 12.7 Currant ewpond ;Lure 19,102 10.6 6.7 Current surpils 3 0.0 4.0 Oaelawp_nt appenditure 3.J00 c/ 2.0 2.2 o s According to eatimtes by the Ministry of Primary and Secondsry Educetion. b:/ The per cuplts W est;imte calculated by the emme conversen technique as the world Bank Atlas. All other cenersiona to dollarm in thia table are a the average sachenms rate prev*;I lg during the period iered. * c:/ Ua~Mdgeb ost I metes. c / mat availahle. .4 not spaleublIs.  -23- ANSX XII Pae1 ot2 THE SAT OF BANK GMiP ORATIWSN RWAND A. Statent of mA Credits (As of September 30, 1986) Amnrt Is$ tilima Ccedit No. Fiscal Year Borroer Purpose (less csnoollatioo) mA Urdisbarswl5/ (Ten credits tav been fully disbursel/ 77.49 937-g W2 31 1979 IEnda Mitara AgricultLral & Livestodc lrekqp'.t 8.75 0.40 1039-i 1980 Ig restry Livestock Dvelopmnt 21.00 0.14 1057-R 1981 TPein Catlws 7.50 1.46 1126-i 1981 D COffee/FoOdCezpe 15.00 3.48 1217-W 19B2 Teclical Assistance 5.00 2.65 15-i 1982 Fifth FIgiay 25.90 8.62 1263-i 1982 - Second Fducatim 10.00 7.43 1283-W 1982 - Phase II Bugesera/ tsIaikaJHIgongo 16.30 6.42 344WI 1983 a In 7.00 4.25 1345-iW 1983 Water Supply 13.00 2.65 1420D- 1984 azizi II Hydroeletric 15.00 10.28 1495-IR* 1984 Paer 9.00 3.86 1546-if 1985 R Agricu Research 11.50 12.45 1565- 1985 - Tbeciical Assistance II 4.80 5.46 1641-i 1986 -sixth HIW 11.00 12.98 AO1-IW 1986 - Sit Hglga 15.00 17.59 1650-w 4/ 196 Fourth ERD 9.00 10.31 1669-l 1986 - itarama Agriculature & 12.70 14.20 14ngri Devt. Project 1678-W 4h 1986 Fauly Health 10.80 11.89 1683-w V/ 1986 t Third Aruation 15.60 16.38 Total 321.34 152.92 of which has bem repaid 1.71 Total rw outstaxlig 319.63 Amhnt sold 4.10 of which has bem repaid 4.10 Total nw beld by MI 319.63 Total undisbursed 152.92 1J Rwanda bas received no Bank loan. 21 The DA credit was cmcxplrted by an EEC Special Artion Credit of U5$1.7 utUon. 31 Ielrngirg a D Grant P of 4.4 mdl.lo. 4/ Not yet effective. 5/ Thmept Credits 937, 1039, 1057-M, th lisbursed lance of IDA 6 & 7 In USS w calculated at the SE rate of 9/3D/86.  - 24 - AMEX 11 Pqt 2 of 2 S. 9aterat of IFC INwest= in iamda (as cf 3ime.30, 1986) - I;C's edstiIg iMestments in Rlrda oOuip the tw inesmtents previoisy mde ln SoratbL a-d 1is predecessor cC1pwes, SIM and flE1. DIetais are as follws. Total Immstzmt PJ.scFLL Type of Held by mer Year OSs Ln lt3 la btal _C Udisbursed 337-4I 1975 S&rnatbg) Tea pro- - 0.54 0.54 0.16 - ) essrg 470-I:D 1979 SDrWathE) ard 0.06 al 0.23 0.29 0.11 - 764-1 1985 !art) - 0.25 0.25 - 0.25 Total 0.06 1.02 1.08 0.27 0.25 a/ Cacelled In July 1984  Annex III -25- Page 1 of 2 RWANDA Sectoral and Preinvestment Studies Proiect Supplementary Project Data Sheet I. Timetable of Key Events a) Identification: May 1985 b) Preparation: October 1985 - April 1986 c) Appraisal: May 1986 d) Negotiation: March 1987 e) Planned date of effectiveness: November 1987 II. Special Bank Implementation Action None III. Special Conditions b) Condition of Effectiveness (i) The deposit of US$ 21,000 equivalent into a Counterpart Fund Account established at the National Bank of Rwanda (para. 66). c) Condition of Disbursement (i) Receipt of an acceptable list of technical materials, and a procurement schedule, would be a condition of disbursement of the funds related to the Documentation Center (para.54). d) Other Conditions (i) By December 31, 1988 at the latest, Government will provide IDA with a description of its institutional framework for the planning, programming and budgeting of its investments. Annually thereafter it will evaluate in association with IDA the impact of the methods and procedures adopted to carry out the studies financed under the project on the functioning of the above framework and implement all necessary measures arising out of such evaluation (paras. 42, 43, 51);  Annex III -26- Page 2 of 2 (ii) Government will follow procedures agreeable to IDA for selecting and financing preinvestment studies and will prepare and review preinvestment study proposals on a four monthly basis with the first program to be submitted to IDA no later than September 1, 1988 (para. 48). Selection criteria for the studies should be acceptable to IDA as provided under para. 49; (iii) Every six months Government will review with IDA, its staff training plans for the Ministry of Planning (para. 67).  -27 -ANNEX TV Page l of 1 M~~~~Mi jjr^tSTIC} r oPERIOIC ODEUNITIOw OF MaM SEVELWMVG pib * g. Consltattoe lmZlUTXS mDe G Presses MACR ECUKMIC PRANECK OECEIA q. \ P P-SNT Pr~ ~ ~ ~ ~~~~~~~~~r PIP Crelling) PE (roW I I no) rCCNNICAL ~ ~ ~ ~ ~ ~~~~1 2f L '. 2 i 3ear TO& ._ PLrR mEAN OIREC T PRtOJECT MEuuIr I U MoTDIST 51131 |II>OOF PRJT SIS - MMIU AL. Submit Project for approerni- .Prject luple nescti _E 1. Estahlish Plan ohjoctiweos S. Corersy otody. tL Evoluot. projocuto sod sctokr end crsoss e..pesft* adjust osconseic sector priorities. Dwl lna 7. butter pregrem of devele peon pas sod oconosic peE Isln stais ewise methodelegila foe. roqaji red. project preperotes seed S. APprotoe ond oppreve eppraisl. 2. Prosoro sector otrtotglee Projejt te late " g mnd identify project occemet recurrent cts). 14. |M ovoitohie to idese. Docuenotation Cantre, 0. Ester project ftote PIP copies of sector S. Ricord ond mpdete prjet sod ecmtodee Its starstog proejos idee s contrest tiles Impleentation. ctudis. oppreteel (incledlog Cost. ,rsndm%w tisetobbo.'progrome In It. P qropere i PeW islogIcal pepors. isplmatatios). ~Expenditure Progas (PEP) sad propos 4. Scido to study project Ftnoeclsl plea to Ms. Fl. Ides oftoW ceseeltettos Note: Components of reform alte lntorolntouriol IL. Eosoro estorel finoocing program are identified d uebt).by capital letters, A, 5. Roteod project Woe into B, C, D, E, F, Fa and Fb. PIP End periodically 12. Mon tor sod ea bePl revlee portfolio of pre oclt epie etetihn *dlp;. (end adjeot p edgeto, PZP/PU).  THE PREINVESTMENT PROCESS OTHER ENITIES * ACTIVITIES TIME TECHNICAL STUDI DIR. PRGPAR. I DIX. . PERIOD HINISTRY FUND PROJECTS STDIESIIVAL.1 MINISTER I PROPOSE STUDY IDIA "IN. *_ DECISION SUBMIT TO PLAN 1 DATY TO EXAMINE IDEA MAX. I CARRT OUT CONSULT HIN. TECH 3 MONTHS X- STUDT SUBHIT IDEA TO CIC UNTIL -TCHNICAL CIC1 (1 NEtTINO PREPARE REPORT AND RZCOHH. NEXT CIC _AGs qCARXTE) DECIDE (APPROVE OR NOT) NECTING TRANSMIT DOSSIER ALL MINISTRIES PREPARE DOSSIER ADVISE Z - 3 11 CONSULT POSSIBLE SOURCESS-X POTTIAL AiD DOPOI PREPARATION OF FINANCE FOR EVENTUAL OF TOR AND PROJECT INVITATION TERIF" TOR, BUDGET, LIST OF TENDERS OF CONSULTANTS DECIDE TO OFFICIALLY TRANSMIT RECEIVE DOSSIER SUBMIT TO IBRD I -I-D (KCIALKJMASRINGTON) M REfCEIVE OPINION OF SRID X (01 OCAER S OFRCE OP IANCE) c AUTHORISE FINANCING BY STUDY FUND CALL FOR PROPOSALS IIX I RECEICtl PROP05ALS _IIFINECO SELECTION EVALUATE PRDPOSALS X-- -- -- - - XnDEN CCmIIs4 AND SELECT CONSULTANrT RhllINO OBTAIN APPROVAL FROH AID DMIS or AID DONORS. CONSULTANTS PREPARE CDONTRCT NEGOTIATE CONTRACT . SIGN COINTRA It MAKE PAThENTS IMPLEMENT ENSURE FOLLOW-U? STUDY APPROVt RESULTS I mm HlR IINl S 20 members (16 minist., 4 parastat.) Z/ Temporary function 3/ or Dir. Synthesis and Interministerial Technical Consulting Committee Strategy (Sectorel Studies) (CIC), responsible for reviewing project studies 4 Tender Committee - Ministry of Finance -------- indicates two-vay consultations Cs Ministry of Planning Technical Ministry concerned 0 c .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.  Annex VI -29 Page 1 of 2 LIST OF STUDIES FINANCED UNDER CREDIT 1217-iW (by sector) Amounts Possible financed sources of or to bq financing financed by for Cost the project execution (in US$) (in US$) Transportation Route (Kigali-Nyameta-Nemba)* 215,870 211,142 Route (Bugarama-Mashyuza)* 158,593 146,197 BAD Creation d'un reseau d'auto-ecoles 36,285 36,285 Private Sector Centre de controle technique automobile 128,895 86,052 Private Sector Centre &changes routiers 137,845 75,411 Fonds Routier 115,618 115,618 IDA Industry Zones Industrielles Kigali Nord* 222,830 222,830 Usine d'allumettes de Butare* 29,288 29,288 Private Sector D&veloppement d'activit;s de Konfigi* 25,745 25,745 GRET (France) Panneaux en bois 25,000 10,500 Private Sector Agriculture Amenagement Basse Valle Akagera* 374,777 299,444 Several Donors Plan Directeur Nyabarongo* 41,498 41,498 IDA Amenagement des marais Mwogo* 338,941 71,015 FED D3veloppement de la peche 443,360 211,198 Belgium Urban and Water Urban Sectoral Plan* 176,679 176,679 IDA Chantier des jeunes* 69,526 47,130 Programme de logements economiques 208,092 Z05,092 Saudi Arabia Restructuration des quartiers spontanes 306,432 207,717 FENUP/IDA a Kigali Rehabilitation des adductions d'eau en 350,000 350,000 IDAIONG milieu rural Systemes d'assainissement 111,961 108,686 BADIIDAIRAF Telecommunications Preparation du projet Communications II* 88,389 88,389 IDA Daveloppement institutionnel des postes 250,000 250,000 IDA et communications  Annex VI -30- Page 2 of 2 Amounts Possible financed sources of or to be financing financed by for Cost the proiect execution (in US$) (in US$) Electricity and Power Mini-centrales Rukarara - Mukungura II 611,804 608,392 BAD Plan Directeur Electrification Kigali - - an 2000 230,000 230,000 RAFIBAD Gaz Methane - Lac Kivu* 131,343 131,343 IDAlBelgium/CEPGL Hydrologie Lac Bulera 120,000 120,000 (currently being negotiated) Financial Craation d'un systue Epargne-Logement 17,700 17.700 Rwanda Banking system 4,115,9001 * Completed studies 1/ At January 16, 1987, US$ 3.0 million of this total had been disbursed.  - 31 - Annex VII PRELIMINARY LIST OF STUDIES Agricultural Sector - Management of Agricultural Industries * - National Coffee Policy * - Leather and Animal Skins ** - Livestock and Dairy Produce * - Pyrethrum ** - Essential Oils ** - Edible Oils Production ** Power and Energy Sector - Methane Gas at Lake Kivu ** - Peat ** - Energy requirements of Cement Factory at Mashyuza ** - Energy Saving * Education Sector - National Training Center * Urban Sector - Construction Materials ** - Market Improvement ** Industry Sector - Textiles ** - Cardboard Production ** Other Studies - Rehabilitation of the P.E. "Rwanda Paper Factory *** - Rehabilitation of the P.E. "SONAFRUITS" * - Environmental National Policy * - * Sectoral Study -** Preinvestment Study *** Public Enterprise Rehabilitation Study  - 32 - ANNEX VIII Page 1 of 1 TRAINING PROGRAM The credit will finance the following residential seminars: 1. Sectoral Planning 2. Regional Planning 3. The Project Cycle 4. Project Appraisal 5. Investment Programming 6. Public Expenditure Programning 7. Honitoring and follow-up of projects  - 33 - Annex IX Page 1 of 1 PROCUREMENT TABLE Item Amount Method (US$ thousands) 1. Preinvestment Studies 7,133.0 IDA Guidelines 2. Training 250.0 IDA Guidelines 3. Documentation Center 2.5 Direct from publisher (technical material) 4. Vehicles & Equipment 4.5 LCB, price quotation, or direct contracting TOTAL IDA Financing 7,390.0  AnnexX 34 I- Pge of I mImrIHIRY OF PLANNINGa - ORCANrZATIONAL CHART DrRECTION DIVISION BUREAU G ONT DES I i u] | COIIPTES DE Lr ~ENTREPRISES ET _ M B t ~~LA NATION E QUWTES-lDE UL 1 ggo PRODUCTION RURAUE| z E_. |STAT. FlNd@NC. o S _lST^TISTZqUES _ ICltED~~~IT$. COM1. TRANSP._ EZ: ICOURAtlTES U~~~~~~~STATISTICS L) F;GS^ITQE DEMOCR, ET SERVTCES _ - ~~~~~~~~~~~~~INFORMATIONET ET lOUINAIN D1OCUMENTATI0 r AIDE MULTIIsTERALE I FINANCEMENT _ _ AIL U8IIAT RE . i1 o X ELABORATIOH U a~~~IEURE 3NC ; Fs | BUOS;ETAIRE