Zambia - Economic Recovery Program Project

Doci=nt of The World Bank FOR OFFICIAL USE ONlY Report No. 12437 PROJECT COMPLETION REPORT ZAMBIA SECONI) ECONOMIC RECOVERY CREDIT (CREDIT 2214-ZA) (SUPPLFMENTAL CREI)]TS 2214-1-ZA AND 2214-2-ZA) NOVFMBER 2, 1993 M^F<l 7FjFH 74-N CIS }1 Type: rtNc. Country Operations Division Southern Africa Department Africa Region This document has a restricted distribution and man be used b, recipients onlN in the performance of their official duties. Its contents may not otherwise be disclosed without Vorld Bank authorization.  CURRENCY EQUIVALENTS Currency Unit = Kwacha (K) Initial Year (March 1991) Completion Year (June 1992) US$1 = K 53.3 USS1 = K 1'4&.9 ABBREVIATIONS AND ACRONYMS BOZ - Bank of Zambia CG - Consultative Group Meeting DBZ - Development Bank of Zambia DCA - Development Credit Agrecment ERC - Economic Recovery Credit ERP - Economic Recovcry Program ESAF - Extended Structural Adjustment Facility GDP - Gross Domestic Product GNP - Gross National Product IDA - International Development Association IMF - International Monctary Fund MMD - Movement for Multi-Party Democracy NAMBOARD - National Agricultural Marketing Board NGO - Non-Goverment Organization ODA - Overseas Development Administration of the UK OGL - Open General License PER - Public Expenditure Review PFP - Policy Framework Paper RPA - Regional Procurenient Advisor ZCCM - Zambia Consolidated Coppci Mines ZESCO - Zambia Electricity Supply Corporation FISCAL YEAR OF THE BORROWER January 1 - December 31  FOR OFFiCIAL USE ONLY THE WORLD BANK Wahimngton, D.C. 20433 U.S.A Office of Director-General Operions EvaluaJon November 2, 1993 MEMQRANDUM TO THE EXECUTIVE DIRECTl'ORS AND THE PRESIDENT SUTBJECT: Project Completion Report on Zambia - Second Economic Recovery Credit (Credit 2214-ZA. Supplemental Credits 2214-1-ZA and 2214-2-ZA) Attached is the Project Completion Report on Zambia - Second Economic Recovery Credit (ERC) (Credit 2214-ZA and Supplemental Credits 2214-1-ZA and 2214-2-ZA) prepared by the Africa Regional Office. Part II, consisting of a brief Government endorsement of PCR findings, is included at the end of the PCR. The Second ERC was initiated in February, 1991, upon completion of the First ERC (Credit 1720-ZA) which had a difficult history. By the time of effectiveness, the reform program supported by the First ERC was not credible for three basic reasonis (1) the Government's attitude toward "excessive' profits; (2) the perception that the program was externally imposed; and (3) powerful interests opposed to change. The Second ERC was to support economic reform s aimed at macroeconomic stabilization, agriculture and trade liberalization, private sector development and publiz sector restructuring. The operation also supported the Government's Social Action Program. This PCR contends that the program was implemented as planned, with the exception of the maize price component. Achievements have been mixed. The main shortcoming has been the failure to control inflation. Progress on public sector reform and the social action agenda has also been slower than expected. Overall, the operation is rated marginally satisfactory, with uncertain sustainability and limited impact on institutional development. The PCR provi- _s an adequate summary of program implementation. In the planned audit, OED will focus on the various constraints on formal sector adjustment policy initiatives. OED will also look at the extent to which problems in the First ERC (noted above) were addressed. Attachment This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authon.ation.  FOR OFFICIAL USE ONLY ZAMBL4 SECOND ECONOMIC RECOVER% CREDIT (Credit 2214-ZA and Supplemental Credits 2214-1-ZA, 2214-2-ZA) PROJECI COMPLETION REPORT Table of Contents Page No. Preface Evaluation Summary i PART I - PROJECT REVIEW FROM BANK'S PERSPECMIVE A The Economic Recoverv Program (ERP) I B.ackg.-ound 1 Mac;roeconomic and Sectoral Objectives of the ERP 2 Other Adjustment Programs and Complementarity with the ERP 2 B. Role of IDA 2 C. Performance and Accomplishments of the ERP 3 Design of the Operation 4 Assessment of Risks 5 Lessons Learned for Subsequent Adjustment Programs 6 D. lmplementation and Monitoring of Credit 7 Compliance with Conditions for Second Tranche Release 7 Sustainability of Reforms and Remaining Policy Agenda 7 Disbursements 8 Audits 9 Procurement 9 Bank Supervision 9 ANNEX 1 - Second Tranche Release Memorandum 11 ANNEX 2 - Borrower's Comments 17 PART II - REVIEW FROM BORROWER'S PERSPECTIVE (Not submitted) PART III - STATISTICAL DATA SUMMARY 19 This document has a restricted distribution and may be used by recipients only in the performance of their ofFicial duties. Its contents may not otherwise be disclosed without World Bank authorization.  ZAMBIA SECOND ECONOMIC RECOVERY CREDIT (Credit 2214-ZA and Supplemental Credits 2214-1-ZA, 2214-2-ZA) PROJECT COMPLETION REPORT PREFACE This is the Project Completion Report (PCR) for the Second Economic Recovery operation in Zambia, for which Credit 2214-ZA in the original amount of SDR 149.6 million was approved on March 5, 1991. In addition, through the reflows program two supplemental amounts, SDR 19.4 million (Cr. 2214-1-ZA) and SDR 7.6 million (Cr. 2214-2-ZA) were approved in support of the program. Credits 2214, 2214-1, and 2214-2 have been fully disbursed. Under the original Credit, cofinancing was provided by Finland (grant agreement signed on February 26, 1992, in the amount of FM 9.5 million), Norway (grant agreement signed on January 13, 1992, in the amount of US$1.2 million), and the Netherlands (grant agreement signed on March 13, 1991, in the amount of DG 10.0 million). The original Credit and the two Supplemental Credits closed on June 30, 1992, as estimated at appraisal. Parts I and III of this PCR were prepared by the Countrv Operations Division of the Southern Africa Department. Part II (Review from Borrower's Perspective) has not been received. Parts I and III were sent to the Govemment with a request for their comments, which were received and attached at the end of this report as Annex 2. Preparation of this PCR began during a mission in October 1992 and is based, inter a, on the President's Report, the Development Credit Agreement, internal IDA and Government documentation, and discussions with some of the key participants during the implementation of the operation. This Project Completion Report was prepared by John Todd, Principal Economist, and Carolina Machado, Operations Analyst, from the managing division, AF6CO. The Task Manager at the time of project appraisal and throughout implementation was John Todd. The managing Division Chief and Country Director are Praful Patel (AF6CO) and Stephen Denning (AF6DR).  ZAMBIA SECOND ECONOMIC RECOVERY CREDIT (Credit 2214-ZA and Stipplemental Credits 2214-1-ZA, 2214-2-7ZA) PROJECr COMPLETION REPORT EVALUATION SUMMARY 1. The Economic Recovery Credit (ERC) addressed the macroeconomic and sectoral objectives of the Economic Recovery Program (ERP) in Zambia for the period 1991-93, developed by the Government in collaboration with IDA and the IMF. On the macroeconomic level, the key objectives of the ERP were to: (a) achieve an average annual real GDP growth of at least three percent, with positive real per capita GDP growth in the later years; (b) reduce progressively the rate of irnfation from 75 percent in 1990 to ten percent or less in 1993; and (c) increase non-traditional exports by 20 percent in 1991 and by at least ten percent per annum in real terms thereafter. On the sectoral side the ERP aimed at (a) reducing the role and increasing the efficiency of the public sector; (b) removing constraints to private sector growth; and (c) alleviating the burdens on the poor by enhanced social services and special safety net programs. 2. On May 1, 1987, IDA had suspended operations in Zambia due to non-payment of debt service. An early objective of the ERC was the clearance of Zambia's arrears to the World Bank, to regularize its debt relations with other creditors and to bring Zambia back into the international financial community. This would help in getting the adjustment program back on track and promoting the structural changes needed in the economy. Clearance of arrears took place on March 13, 1991, about a week after Board's contingent approval of the ERC, with the help of a bridge loan from the Bank of England. This was immediately repaid with the proceeds from IDA disbursements, including the first tranche of the ERC. Beyond this clearance, the financial support was aimed at permitting a modest growth in imports while meeting Zambia's high debt service obligations. 3. The main objective of the ERC was to support economic reforms aimed at: (a) macroeconomic stabilization implemented under IMF monitoring; (b) liberalization of the agricultural sector; (c) implementation of measures to support the Government's Social Action Program; (d) trade liberalizatiG.,; (e) expansion of the role of the private sector in the economy; and (f) restructuring the public sector, with particular emphasis on civil service and parastatal reform. IMPLEMENTATION EXPERIENCE 4. In general the program and the operation were implemented as planned, except for the maize price component. IDA supervision was done on a regular basis with continuous monitoring of key macroeconomic areas by the Resident Mission staff. Release of the second  - ii tranche was delayed from August '1991 to January 1992, as required policy actions concerning maize pricing were only implemented after a new government took office in November 1991. As expected with this type of operation, the Credit disbursed quickly and in accordance with relevant procurement guidelines. RESULTS 5. Achievements under the credit have been mixed. Overall, the measures it implemented have been sustained, except in controlling inflation. Results can be reen in structural reform with steady liberalization of the -econd window and OGL system; markcet determination of the official exchange rate; ready access to foreign exchange for sma;l transactions; launching of an ambitious privatization program; and an end to price conitrols. 6. Progress in parastatal and civil service reform and on the social action side has been slower, but reforms are underway. Many parastatals have improved their efficiency and are operating on a more commercial basis, but the privatization program only achieved its final sales in June 1993, and the modality for attracting private capital to ZCCM (the copper sector) is stil under cdvelopment. The retrenchment part of civil service reform remains on track, but Cabinet only approved the management improvement proposal in March 1993. On the social action side, there has been little improvement in the quantity or quaiity of basic social services so far. FINDINGS AND LESSONS LEARNED 7. Implementation of the ERC has shown that: (a) program design and degree of specificity in conditionality were appropriate; and (b) the program gave a boost to the economic reform effort, while at the same time bringing other donors to fully participate in the Zambia program. 8. By demonstrating its commitment to the policy reforms and the conditionalities attached to release of the second tranche, the Bank became stronger in its dealings with the Government and increased its credibility with the donors. 9. The innovative (and risky) approach to arrears clearance (by which the IDA Board was asked to consider the credit before the arrears were actually cleared) was in the end justified as it got the Zambia program restarted, both from a policy and a financial support point of view. This enabled the new Movement for Multi-Party Dermlocracy (MMD) govemment to move quickly in reaffirming and intensifying the existing policy direction, and it allowed the Bank and the donors to move quickly in providing the necessary financial support to that renewed program, including the extra support required by the 1992 drought.  ZAMBIA SECOND ECONOMIC RECOVERY CREOIT (COrdit 2214-ZA and Supplemental Credits 22141-ZA, 2214-2-ZA) PROTECT COMPLMION REPORT PAT I - W BANICS PERSPE A. 3IUo ic ecoveiy PrrMM (ERPJ Backffound 1. The Zambian economy suffers from severe and long standing distortions requiring a major structural adjustment effort. Its dominant characteristic is the heavy dependence on a single commodity -- copper -- and the dualistic economic structure that has evolved around this dependence. The vulnerability of the Zambian economy due to its heavy dependence on copper was vividly demonstrated in the mid-1970s, when the commodities boom of the previous decade came to an end. 2. During most of the 1970s and early 1980s, economic policy was aimed at trying to maintain consumption levels and living standards, despite declining real resource availability. Subsidies were increased sharply and when combined with declining budgetary revenues resulted in growing fiscal deficits. External borrowing increased, and when new loans became difficult to obtain from abroad, increasing reliance was placed on domestic banks to finance the fiscal deficits. Price controls were tightened, and the exchange rate adjustment was resisted in an effort to contain inflation. 3. Zambia's real per capita GNP fell by an average of 2.3 percent per annum during the 1970s. In the following decade, real growth exceeded the rate of population growth in only two years (1981 and 1988). As a result, GNP per capita declined by a further 50 percent during the 1980s. A number of factors account for the low growth in this past decade, but the two most important causes were: (a) the foreign exchange shortage, associated with the drop in mineral exports and the depressed copper prices, adversely affected all sectors of the economy and (b) inappropriate economic policies, including excessive public sector controls, resulting in misdirection of resources and poorly conceived public investments. 4. Several attempts at reforning the economy were made by the Government during the 1970s and 1980s, some with support froin the Bank, the IMF, and bilateral donors, but none was sufficiently comprehensive to bring about the structural changes required in the economy. Probably the most ambitious attempt at reform was the Bank-IMF supported program in 1985-87, the main pillars of which were adoption of a foreign exchange auction to establish a market based exchange rate and a substantial liberalization of trade. Poor implementation of this auction in an environment of continuing fiscal deficits and monetary growth and insufficient donor support led to a collapse of this effort in May 1987.  - 2 - macronoomc nd Sectoral Objectives of the ERP 5. The main macroeconomic targets for the period 1991-93 included: (a) achieving an average annual re.,! GDP growth of at least 3 percent. with positive real per capita GDP growth in the later years; (b) reducing progressively the rate of inflation from 75 percent in 1990 to 10 percent or less in 1993; and (c) increasing non-tradiuonal exports bv 20 percent in 1991 and by at least 10 percent per annum in reai terms thereafter. 6. Sectoral objectives of the ERP were to reduce the role and increase the efficiency of the public sector, to remove constraints to private sector growth, and to alleviate the burdens on the poor by enhanced social services and special safety net programs. Reducing the role of the public sector involved initiating a program of privatization and reducing government regulatory controls, esnecially in setting prices. Increasing efficiency within government involved reducing the sn of the civil service (to permit a rationalization of salaries), improving government operating procedures, and enhancing high level capacities through technical assistance in the short-term and training and salary enhancement in the longer-term. The private sector would benefit from the increased reliance on markets to set prices, a more appropriate exchange rate, elimination of most import and export licenses, less domination by parastatals, less credit requirements from the public sector, and improved infrastructure. Other Adjustment Programs and Complementarity v 'th the ERP 7. The Economic Recovery Credit (ERC) was expected to be the first in a series of adjustment operations. Subsequent operations include the first Privatization and Industrial Reform Credit (PIRC I) in FY92, PIRC II in FY93, and a multi-sector adjustment operation, Social Service and Economic Policy Reform Credit (SSEPRC), scheduled for FY94. 8. A Fund-monitored program was approved by the IMF Board in June 1990. In April of 1991, the Fund Board approved the first ever rights accumulation program with Zambia which established conditions under which Zambia would gradually accumulate rights to withdraw IMF resources such that after three years, the accumulated rights could be used to withdraw sufficient resources to clear completely Zambia's arrears to the IMF, which were over US$1 billion in mid-1990. Due to poor fiscal performance, Zambia did not qualify to accumulate rights in 1991. A revised rights accumulation program was approved by the IMF Board in July 1992. The end-1992 benchmarks were subsequently revised and approved by the Fund Board in December 1992. The Board approved the first rights accumulation in April 1993. B. Role of IDA 9. After May 1, 1987, when Zambia abandoned the previous adjustment program and IDA suspended operations due to non-payment of debt service, economic and sector work  was focussed almost exc'usively on the macroxconomic policy dialoguc The objective during this period was to get the adjustment program back on track so that the structural changes required in the economy could go ahead. On the ;na2roeconomic side, this earlier work included the design of the adjustment program, particular, the undertak,:ng of studies related to the development of the foreign exchange systlm, and completion of a Public Expenditure Review. On the sector side, it included the development of a muster plan for agricultural research and extension, plus considerahle policy anal,1sii (e.g., on producer prices) and an institutional review (e.g., stru 'e and functions of tie Mlinistry of Agriculture) in the agricultural sector. It also intluded a studyr of various operations for protecting the poor from the adverse effects of the adj'ustment process, which event .al,- led to the adoption of the maize meai coupon systein. An energy sector assessment was completed, as was an in-depth review of the industrial sector, both of which contained considerable material of use in designing the Economic Recovery Credit. 10. The Bank has worked closely with the Government and the Fund to assess the needs for improved publi sector capacity and to arrangc financing for technical assistance in economic management and program implementation. A first Policy Framework Paper was agreed by mid-1989 and approved by the Bank Board in September 1989. Considerable attention was then given to working out ways to manage the debt service arrears, to get Zambia back on a bath of meeting the debt service obligations, and to resume external support from the Bank and other donors. Consultative Group meetings were held in April and July 1990 where the broad outlines of an external financing package were agreed. This enabled the work on the Economic Recovery Credit to go forward, and by November 1990 the policies were largely agreed. It took until February 1991, to work out the final details, largely because additional external resources were required. It was agreed to add $35 million to the size of the ERC, along with a deferral of $35 million in arrears clearance by the IMF, and on that basis the external financing gap was closed, and the Memorandum of the President was finally released. 11. In addition to the macro-economic work and the Pubiic Expenditure Review (PER), sector work resources were allocated to trade policy, parastatal reform, civil service reform, social safety nets, and maize policy prior to the development of the Economic Recovery Credit. This work helped the government to articulate specific policy objectives in these areas which the ERC could support. The government established a negotiating team under the Minister of Finance consisting of the Governor of the Central Bank, the senior advisor to the Minister of Finance, and t} Permanent Secretary of the National Commission for Development Planning. This group ccordinated government inter-action with the Bank on the economic and sectDr work program. C, Performance and Accomplishments of the ERP 12. In designing the economic recovery program during the 1989/1990 period, the government was hoping to make rapid progress across a broad front in order to change the atmosphere in the Zambian economy, but they were also mindful of the constraints on the speed of reform represented by the limited implementation capacity of the government and by the political/social opposition that could paralyze the program's implementation and seriously damage the economy. Tlhe result was a series of compromises about how broad the initial program should be and of how fast some reforms should be made. For example, fast progress on privatization was not expected, and it was  - 4 - decided not to pursue rc6ormn% ia the finaiv ia; sector at the outset. Sirm..Jarly, the introduction cf an open gene-ral license system was to be on a gradual hasis as d'inor funds becanme available (remenbnU-irng th_ collapse of t;re previr.us Foreign exchange auttion systLm caused in part by the slow arrival of dorn.*r fur.ds). 1t was also decided to phase out maize siubsidWs gradual!y over tt- e period of the Pr . 13. At the same time, goverrn.mepv had cec,ded ito huld a xeferenduir, on the queation of one pay rmle versus multi-party democraciy. Later this rcfereodum was abandoneJ as government decided to move direc,tcy lJ rmulti-party elecuons on October 31, 1991. The campaigning for this electior consi;erab!y compli] ated government's economic decision- making and ultimately proved the uiudci!ng of the program as the government decided not to phase out maize subsidies as originally agreed, leading to a delay in release of the second tranche, equivalent delays in other support, inability to pay debt service, and eventually to suspension of Bank disbursements in September 1991. Design of the Operation 14. The major policy reforms to be supported by the ERC were: (a) the macroeconomic stabilization program implemented under IMF monitoring; (b) the liberalization in the agricultural sector; (c) the implementation of measures to support the Government's Social Action Program; (d) trade liberalization; (e) expansion of the role of the private sector in the economy; and (f) restructuring of the public sector, with particular emphasis on civil service and parastatal reform. 15. Macro stability is an essential ingredient for any adjustment program, particularly in Zambia where the flexibility of price and wage adjustments has been limited. In addition, the Government strategy was to remnove the bias against agriculture by freeing prices and removing the public sector from most commerciai activities, followed by trade and foreign exchange market reforms to increase the incentives for non-traditional exports and to improve the allocation of imports. Government felt that the plimary source of growth should be the private sector, *vith the public sector reoriented to more complementary activities (such as infrastructure and the delivery of vital social service). 16. Before the ERC could become effective, however, it was essential to clear Zambia's arrears to the World Bank. This would then have the added benefit of helping Zambia to regularize its debt relations with other creditors and thus to permit Zambia to rejoin the international financial community. This was not an easy task because Zambia's arrears to the Bank were approaching $300 million and to the IMF were over $1 billion. The strategy that was adopted was two-fold. For the IMF, the level of arrears would be  brought down to the level as of January 1, 1990, (later changed to June 30, 1990). The remaining arrears would be handled through a rights au-umulation program under which Zambia would gradually accumulate the right to withdraw IMF resourr- until (afier about three years) enough rights would be accumulated to repay the arrears a; which time Zambia's arrears would be replaced by new IMF resources (prima. ily on ESAF terms). For clearing the arrears to the World Bank, funds would be from three sources. First donor funds would be accumulated in trust funds. Second, a bridge loan would be arranged (with the Bank of England as it turned out) against the potential IDA disbursements. Third, government would accumulate its own funds. Once the sum of these three sources was equal to the total arrears to the Bank, the sequence would be for the Board to approve the adjustment operation contingent on actual clearance of arrears, the donor and government funds would be made available for payment, the bridge loan granted, arrears cleared, suspension waived, credit effectiveness declared, disbursement by IDA, and repayment of the bridge loan. These arrangements were discussed first in the Operating Committee on January 25, 1991 and by the Joint Audit Committee on February 20, 1991. The Board approved the ERC on March 5, 1991, and the arr;ars clearance sequence described above took place on March 13, 1991. The bridge loan from the Bank of England was repaid 42 minutes after it was disbursed. The approximate financial amounts involved were as follows: ZAMB3L- Fimal Bank Clearance (Milions of US$) Amount Owed (3/13/91) 319 Zambia paid (before 3/5/91) 22 Donor funds available 97 Recent Zambia Deposits 16 Available 135 Left to pay 184 Bridge Loan 200 Excess Available 16 Assssment of Risks 17. At the time of appraisal, the ERC was considered an unusually risky operation, with a high possibility of political setbacks. Other risks were that the :eform program might not be managed effectively or that there could be a lack of sufficient financial support for the program, due to lower donor disbursements or unforeseen extemal shocks such as another oil crisis.  - 6 - 18. In the event, one of the anticipated risks, specifically that domestic political considerations would cause important parts of the program to be delayed, did occur, and the result was a significant interruption in the program and eventually the suspension of Bank disbursements. Most of the program was being implemented as agreed, but government was unwilling to increase domestic mealie meal prices fast enough to reduce maize subsides to agreed levels. After extersive discussions in June and July (including two meetings with the country's President), the government would not make the required changes, citing the possible domestic unrest that could result which they felt could imperil the transition to multi-party democracy. The Bank was not willing to recommend a waiver of this condition, however, and the policy impasse was reported to an informal donor meeting in Paris in July 1991. Very little donor funds were disbursed after that, the government was unable to meet its debt service obligations, and Bank disbursements were suspended again on September 13, 1991. 19. Unlike the May 1987 episode, however, the program was not repudiated. The Government kept on with all but the maize and fiscal elements of the program. None of the steps already taken were reversed. As a result, when the new Government came to power in November 1991 and set abut improving the fiscal balance and increasing the maize price, it was possible to release the second tranche of the ERC in January 1992, with a smaller version of the Bank of England bridge loan (this time from Citicorp), making possible the clearance of the approximately $40 million in debt service arrears that had arisen over the previous six months. Lessons Learned for Subsequent Adjustment Programs 20. The design of the program was appropriate in terms of the topics covered and the speed of reforms. The degree of specificity in the conditions was also appropriate. When government resisted the price increases needed for the second tranche, there was no ambiguity that those policies would hold up second tranche release. The clarifying letter which was made part of the agreed minutes of the negotiations spelled out this condition in even more detail. The program gave a boost to the economic reform effort and brought the donors fully into the Zambia program. The Consultative Group (CG) meeting in March of 1991 marked the real beginning of donor support for the program. Unfortunately, the Minister's death immediately after the CG and the growing political pressure leading up to the elections brought an interruption in some aspects of the reform and a corresponding interruption in donor support, but without this beginning in early 1991, support for the renewed reform efforts by the new government in early 1992 would have been much more difficult. 21. The process of arrears clearance was very complicated and time consuming, but the basic logic worked. Even when a country has substantial arrears, the Bret,:)n Woods institutions were shown to have sufficient flexibility to enable international support to resume, provided the country has an acceptable reform program and strong donor support. This model has been useful in subsequent arrears clearing efforts. 22. The delay in releasing the second tranche and the resulting suspension shouild not be viewed as a sign of failure in the design or the implementation of the credit. On the contrary, the Bank's unwillingness to release the second tranche affirmed our commitment to these reforms and our unwillingness to support a program with fundamental  - 7 - weaknesses. This experience strengthened our hand in dealing with the Zambians and increased our credibility with the donors. D. Implementation and Monitoring of Credit Compfiance with Conditions for Second Tranche Release 23. The conditions for second tranche release were to be met in the summer of 1991, and the government and donors were informed that the Bank would not be releasing the tranche until significant actions were taken in the area of increasing maize prices and decreasing maize subsidies. These actions were not taken until after the new government took office in November 1991. The tranche was released in January 1992. The second tranche release memorandum, dated January 21, 1992, is attached as Annex 1. Sustainabilitv of Reforms and Remaining Policy Agenda 24. The measures implemented under the Economic Recovery Credit have been sustained except for the control of inflation, which continued at near 100% in 1991 and increased to over 200% in 1992. Fiscal and monetary discipline (especially control of public sector wages and parastatal losses) have been a weakness of the Zambia program for many years. Fiscal control has been good for periods but not for long enough to show a significant turnaround in inflation. This will be a major test of the program in 1993. 25. Far better progress has been made on the structural reforms. Progress in these areas has been steady and in several cases ahead of schedule. The second window/OGL system has been steadily liberalized. Now the official exchange rate is fully market determined. The OGL covers 95 percent of base period imports on a negative list basis. The export retention system permits 100 percent retention, and a bureaux de change system has been introduced, with virtually unrestricted access to foreign exchange for small transactions. All price controls have been abolished. (Even the Prices and Income Commission is gone.) Fertilizer importation and marketing are fully liberalized. Private traders can buy and sell all agricultural products with no public monopolies. The NAMBOARD structures have been disbanded. Producer prices for all crops are set by supply and demand (although there is still a producer floor price for maize). For maize, Government was forced to buy up much of the crop this past year because the drought meant that it had a near monopoly position as the recipient of all the donor maize. Nonetheless, the price Government paid was consistent with world market prices and plantings in 1992 remained good. As a result, the good rains of 1993 have produced what appears to be a solid crop in 1993. The privatization progiam has made steady progress after a delay caused by the new government's decision to seek a mandate from Parliament for the program (which it received) and the setting up of a quasi-autonomous Zambia Privatization Agency. 26. The record on parastatal reform is mixed. Many parastatals have improved their efficiency and are ornerating on a more commercial basis (e.g, ZESCO) while others have been slow to move (e.g., Posts and Telecommunications). The new management of ZCCM (copper) has discontinued their involvement with nearly all of the non-mining activities and improved the efficiency of copper production. However, less progress has been made toward clarifying the manner of attracting private capital to this vital sector.  - 8 - Losses at Zambia Airways have been reduced, but until a way can be found to restructure the composition and financing arrangements for the airplanes, even a break-even outcome is unlikely. 27. The retrenchment part of civil service reform remains on track with over 12,000 employees retrenched in 1992, but the more important management improvement part has been slower in coming despite two successful workshops in 1991 that seemed to generate a genuine commitment to some management reforms. In March 1993, Cabinet approved a Public Service Reform Program designed to begin a process of management reform. Work on a full package of retrenchment benefits, including counseling and retraining services where appropriate, has also lagged behind schedule but should be in place this year. 28. On the social action side, the Government has tried to increase budget allocations for these critical areas and has had some success in that regard, but there has been little improvement in the quantity or quality of basic social services so far. There have been some notable successes in this area, however. With the very generous assistance from the international community, the government succeeded in avoiding food shortages during the recent drought. A portion of the funds generated by the sale of donor maize was used to assist with village improvement schemes related to water supply and food storage. Through the Programme to P event Malnutrition, maize has been distributed free or at high discount to vulnerable groups, and a labor-intensive Food for Work Programme has been effective in feeding people, providing employment, and helping to rebuild roads, schools, and clinics. The government made very constructive use of the NGO community in designing and implementing those programs. In a related area, the Bank-assisted Social Recovery Fund has assisted local communities in the building and rehabilitation of social infrastructure. Efforts in 1993 will need to focus on improving the delivery of health, eduction, water, and sanitation services where improvements have been slower in coming. Disbursements 29. The credit was disbursed in two tranches. The first one was disbursed in full on the same day the credit was declared effective. The second tranche was released late in January 1992 and also disbursed quickly, due to the fact that most of the Credit and its two reflows were used for retroactive financing. Not all of the supporting documentation could be found at BOZ. These documents, mostly in the case of imports by the Zambia Consolidated Copper Mines (ZCCM), were in the offices of a procurement agent in London. To expedite matters and to allow for quick disbursing under the Credit, the documents were sent to the Disbursement Division at the World Bank directly from London. 30. Disbursements were made in accordance with Bank procurrment guidelines and Schedules 1 and 4 (Special Accounts) of the DCA. Some exceptions to these rules were sought and obtained from the Regional Procurement Advisor (RPA), in order to disburse US$70 million immediately upon release of the second tranche on January 31, 1992. A waiver from using international competitive bidding (ICB) procedures in favor of more simplified procedures (limited international bidding and selective bidding) was granted by the RPA for various contracts.  -9 - Audits 31. In accordance with the DCA, the credit's linancial rccords, including thc special account and statements of expenditures, were to be audited annually by independent auditors and a certified copy of their report submitted to IDA not later than nine months after the end of each year. 32. As several IDA credits in Zambia were late with their audits, it was agreed that an independent firm of auditors be hired by the Government to do all the overdue audits. An auditing firm was hired by Government on June 15, 1992, and started work soon afterwards. As regards the ERC, draft audit reports have been submitted to the Bank, for comments, for the first and second tranche and covering the years 1991 and 1992. In this draft reports, the auditors have indicated that there are funds disbursed under the credit in 1992 which have not yet been audited due to unavailability of the supporting documentation. The 1991 audits are clean and carry an unqualified opinion on the part of the auditors, which has been accepted bY the Bank. The final audit report for 1992 is expected on July 23, 1993. Procurement 33. Procurement was limited to eligible imports on the basis of a negative list in accordance with Schedule 2 of the Developpment Crcdit Agreement and in accordanrce with IDA procurement guidelines. 34. Bank of Zambia staff was in charge of issuing irnport licenses to prospcctive importers, of advising them of procurement procedures, and of keeping track of ensuing disbursements. There was no lack of counterpart monev for obtaining import licenses and covering import fees; under the OGI, system the demand for funds to finance imports averaged US$5 million per week. 35. Procurement activities and related disbursements under the Credit were managed by staff at the Bank of Zambia (BOZ), but there was no formal monitoring system in place during credit implementation. Although Zambia had been the recipient of IDA financing for many years and procured goods and scr-vices in accordance with IDA's guidelines, there had been little procurement activity for the years preceding the ERC, as a result of the suspension of disbursements. In addition, staff at BOZ were relatively new and were to a certain extent unfamiliar with IDA's procurement guidelines. All this explained some of the delays in the utilization of funds, particularly for the second tranche. ]ank Supervision 36. Supervision missions were conductcd in April, June, August, and November of 1991 in addition to meetings held in Washington in December. The Resident Mission also provided continuous monitoring of the key macro-economic areas. It was usually quite clear to both sides what was intended, what was actually happening, and what would need to happen to keep the program on track. In addition to the Consultative Group meeting in March 1992, informal donor consultations took place in June and July to keep donors abreast of developments concerning release of the ERC's second tranche.  - ii - Sec M92- January 21, 1992 From: The President ZAMBIA: Economic Recovery Credit (2214-ZA) Release of Second Tranche* I. Introduction 1. Zambia is currently under suspensicn because the Government owes US$51 million in debt service arrears to the Bank dating back to July 15. As discussed with the Joint Audit Committee on December 18, 1991, we are issuing this second tranche release memorandum prior to our arrears being cleared because this indication of Bank management support of the policies and actions of the new government will be critical in securing the donor support necessary for Zambia to clear its arrears with the Bank. We will not disburse any funds until our arrears are cleared and the suspension lifted. II. Background 2. Credit 2214-ZA, in the amount of US$210 million equivalent, was approved by the Board on March 5, 1991, and was declared effective on March 13, 1991, at which time the first tranche of US$130 million was disbursed. This credit is designed to provide import financLng in support of Zambia's economic adjustment program, and, in particular, to assist Zambia with the foreign exchange cash flow during the year in which the arrears to the World Bank were being paid. 3. As outlined in the Policy Framework Paper (PFP) 1991-93, the overall aims of the adjustment program are to stabilize the economy through fiscal and monetary restraint and to restore sustainable growth Distribution Executive Directors and Alternates *Questions on this Office of the President document may be Executive Vice Presidents, IFC and MIGA referred to Vice Presidents, Bank, IFC and MIGA Mr. J. Todd (Ext. 3-5056) Directors and Department Heads, Bank IFC and MIGA  - 12- in the medium term through policies of structural realiqnment and improved incentives. The main structural objectives are to reduce the dependence on copper by encouraging non-traditional export growth, to lower the capital and import intensity of production and consumption, to increase savings and investment levels, and to help reduce poverty by expanding employment and income opportunities. Since achieving these objectives will mean substantial restructuring of the economy, a complementary goal is to protect vulnerable groups from the adverse impact of the adjustments. 4. The requirements for release of the second tranche were discussed frequently over this past summer. While policy performance in most structural areas remained good, serious policy slippage was occurring in the reduction of maize subsidies in particular and in budget deficit control in general. The previous Government could not take the remedial actions in these areas which we considered necessary because they felt the public reaction could threaten the process of transition to multi-party democracy. Other donors also refused to disburse balance of payments assistance, and arrears on external debt worsened. Zambia was declared in suspension by the Bank on September 13, 1991. Elections were held on October 31, 1991. They were considered fair. The opposition party won over 80 percent of the vote and captured the Presidency and over 80 percent of Parliament. A new Government was appointed and moved quickly to restore confidence and political stability. The new Government is also eager to restore good relations with the donors, as well as the Bank and Fund, and is strongly comrmitted to the policy agenda of the ERC and the PFP. 5. The staff have continuously reviewed progress under the adjustment program since the ERC was first approved. Supervision missions visited Zambia inl April, June, September, and December, and donor consultations were held in Paris in March and July, with informal briefings in June and December. This memorandum summarizes progress under the program. It concludes that progress in most areas of the program has been satisfactory. Seven of the eight conditions for release of the second tranche have been met. The condition relating to maize meal pricing can no longer be achieved because it was written in terms of containing the 1991 cost of maize-related subsidies below a specific figure long since exceeded. However, the new Government has moved quickly and decisively in this area. It has already increased consumer prices by over 100 percent and has agreed to monthly increases in 1992 that will eliminate all subsidies on breakfast meal by the end of the year and will reduce subsidies on roller meal to 20 percent of production cost. The subsidy on breakfast meal (the higher-cost product) has been reduced from 405 Kwacha per 25Kg bag to 50 Kwacha as a result of the recent price increases. Subsidies on the transport of maize and the sale of fertilizer will also be eliminated by mid-1992. This memorandum concludes that policies now adopted are a reasonable adaptation to current circumstances and, given the overall progress of the program, the condition on maize subsidies should be waived and the second tranche released. Finishing the agenda on maize market liberalization should be included as a specific component of the next structural adjustment credit, scheduled to be appraised in February and presented to the Board later this fiscal year. 6. Other donors have also maintained an interest in monitoring prcgress on this program. Germany and Japan (through OECF) are committed to co--financing the ERC. The German co-financing has been approved by their Parliament and is expected to be disbursed once we have indicated we are prepared to recommend release of this second tranche, subject to the arrears being cleared. The Japanese co-financing is less well advanced, in part because of the broader concerns OECF has had over the applicability of "Trinidad Terms" to their debt. Many other donors have provided balance of payments assistance to Zambia in support of the adjustment program,  - 13- -' including the UK, Sweden, Norway, the USA, the Netherlands, Canada, the EC, Finland and the African Development Bank. III. Proaress Under the ProQram 7. The current reform effort began in late 1988/early 1989. The policies are described in two PFPs, the first of which was reviewed by the Committee of the Whole in September 1989 and the second in March 1991. Because of the high level of arrears to the Bank and the Fund and the continually shifting external environment, an external financing plan was not agreed until early in 1991. With the considerable assistance of the donor community and from Zambia's own resources, the Bank arrears were completely cleared and the Fund arrears were reduced to the agreed level in March of that year. This allowed the Economic Recovery Credit (ERC) to be approvpd by the Board on March 5, 1991. An innovative "rights accumulation program" was approved by the Fund Board in April. 8. In general, progress under the program has been gcod in most structural areas, but there have been serious slippages in fiscal policy, which are being corrected in the 1992 budget, and difficulties were experienced in adjusting maize meal and fertilizer prices fast enough to contain the cost of Government subsidies. Progress in this area has resumed, but the target for total subsidy cost in 1991 will not be reached. 9. The overall program will not succeed unless macroeconomic stability is established and maintained. The original program called for a reduction in the fiscal deficit (on an accrual basis, excluding grants and interest) from 4.3% of GOP in 1990 to 0.7% in 1991. Performance in the first quarter was good, and the IMF target for bank financing of the deficit was met. Fiscal performance deteriorated in the second quarter, however, in part because of the increasing cost of subsidies but also because of lower than expected tax payments from ZCCM. Fiscal performance continued to deteriorate in the second half of 1991 primarily because of continued low ZCCM tax payments, crop financing to the cooperatives, and escalating maize subsidy costs. The final primary deficit (excluding grants) is likely to exceed 6 percent of GDP for 1991. The recent IMF mission worked with the Government on a 1992 budget that would reduce the deficit to 2 percent of GOP. The primary reductions in spending are in maize and fertilizer subsidies and crop financing. The budget will also contain some tax increases; in particular, all fringe benefits, including the housing allowance, will be subject to income tax. As a result of their satisfaction that macro-economic balance is being restored, IMF management has notified Bank management that they have no objections to the Bank releasing the second tranche of the ERC. 10. The liberalization of foreian trade through ending of restrictive import licensing, the closing of FEMAC, and the establishment of the second window on an open general license (OGL) basis has been one of the major accomplishments of the reform program. In April of this year (8 months ahead of schedule), the first and second windows were merged. The percentage of imports available on an OGL basis has been steadily increased to its current level of about 90 percent. We had hoped they would achieve 95 percent by mid-year, but this has not been possible because of the shortage of donor disbursements and consequently the very low level of reserves. The pent-up demand for the still excluded categories would not be sustainable at this time. It was also h<,)ed that the OGL system could be shifted from a positive to a negative list for administrative ease. Clearly this could be done at any level of coverage. However, the Government has decided to wait until they reach the 95-96% level currently available in the export retention market which already uses a negative list system. Then the OGL system can adopt the same negative list as the export retention market. This is now expected in 1992, provided donor flows resume. One other consequence of the nearly non-existent balance of  .\NNEX I -14 - P of 6 payments assistance over the las3t eight months of 1991 has been the periodic accumulation of unsatisfied foreign exchange applications in the OGL. These delays have been the direct result of a shortage of foreign exchange due to lower than expected copper receipts and donor flows. With the anticipated resumption of donor support, the OGL should be able to resume timely clearance of these letters of credit. 11. The trade regime has been liberalized in other ways as well. No-funds import applications can now be processed by commercial banks. A number of exemptions from import tariffs and sales taxes were announced with the 1991 Budget, and the structure of tariffs has been compressed by raising the minimum and lowering the maximum rates, Progress in this area han been steady and on schedule. 12. Good progress has been made in the areas of parastatal reform and privatization. The contract for the study of .1MCO (the parastatal holding companv) has been signed, and work has started. Terms of reference for the study of the major parastatals (e g. PTC, ZESCO, Zambia Airways, and Zambia Railways) have been agreed and funding arranged. Funding has also been secured for the follow-up study of 13 of the ZIMCO parastatals once the preliminary report of the ZIMCO study itself is completed late this year. The announcement of sale of the first seven parastatals appeared in the papers in late July, and 42 requests to bid have been received. The first sales are expected in early 1992. Strategy documents on the medium term privatization plan are being prepared for cabinet review. This is clearly an area that the new Government will emphasize strongly. The 1992 budget will contain a major commitment of local resources to staff the effort. we expect rapid progress in 1992. 13. Early emphasis in the civil service reform program has been on eliminating "ghost workers." After a slow start in getting the personnel inventory questionnaires completed and the necessary consultants in place, progress has been good. The computerlzation of the payroll records and pay system for certified daily employees has already produced considerable savings in many ministries where payments had been done largely in cash. Physical pay parades for the disbursement of checks to employees with proper identification have begun, and early savings are encouraging. Programs to reduce redundancies have not yet borne fruit and will probably not do so until the 1992 budget when the Government hopes to achieve an initial reduction of 10,000 employees through the elimination of redundancies. 14. After a slow start, good progress is also being made in implementing the Social Action Program. Six working groups have been set up with donor involvement to review proposals and to formulate medium-term policy, including budget priorities for 1992. The first implementation report has been prepared. The study of the maize coupon system was completed, and action was taken on some of the recommendations. However, the new Government has decided that the problems of inefficient targeting are endemic to the coupon program, which has therefore been discontinued. In its place, the Government is increasing budget allocations for purchase of medical and educational materials, strengthening the administration of the existing social action program, and providing a block grant of 1 billion Kwacha (compared to a total cost of the coupon program in 1991 of 1.2 billion Kwacha) in 1992 to augment the resources of the social welfare program for aid to the indigent. The micro-projects unit has been expanded and is now being supported by the Social Recovery Credit approved by the Board of Directors in June. This Unit will provide support to smaller projects with significant community involvement. A household survey was recently undertaken to establish a baseline for key social indicators and has submitted a preliminary report.  -15- , 15. The most serious problems have arisen in the area of maize meal subsidies, All prices were decontrolled in 1989, except maize meal and fertilizer prices. The previous Government periodically tried to phase out these remaining price controls, but political pressures prevented this. The program for 1991 called for full decontrol of maize meal prices by mid- year unless ava lable supplies fell short of projected demand, in which case, we were worried that a panic could push the market clearing price well above that needed by suppliers. In the event, supplies have fallen short, and therefore full decontrol was not expected. In that eventuality, however, the program called for increasing the controlled price so as to keep maize-related subsidies to the level agreed with the Fund in the 1991 budget. When that goal was set, the expectation was that the producer price would be 500 Kwacha per 90 Kg bag, and domestic inflation would be 40%. In fact, the producer price was raised to 800 Kwacha, a move we supported given the rapidly increasing price in contiguous countries and the rise in (illegal) maize exports from Zambia. In addition, domestic inflation is now expected to be nearer 100 percent in 1991. Thus the price increases necessary to contain the subsidy bill turned out to be much larger than expected. 16. However, the previous Governmnent found itself unable to increase prices at all. As a result, the new Government inherited a rapidly escalating subsidy bill and consumer prices that were still 20 percent below the levels of June 1990 in nominal terms. After an intensive review of the options, the Cabinet adopted a plan which has increased consumer prices immediately (by 100 percent for roller meal and 165 percent for breakfast meal) and which will increase prices monthly in 1992 in order to end the subsidy on breakfast meal by end-1992 and to bring the subsidy on roller meal to 20 percent of production cost. This final subsidy will be phased out by mid-1993. Although these increases cannot restore the 1991 subsidy cost to the previously agreed level, it does return prices and subsidy amounts to levels previously agreed upon and will contain the total subsidy bill to the original PFP target of 1.9 percent of GDP in 1992. IV. Summary of Second Tranche Release Conditions 1 . All of the conditions have been met in substance, except for the limitation on maize subsidies. A listing of those conditions is attached as Annex A. The present status of those conditions is as follows: (a) The first quarter fiscal performance was satisfactory although problems developed in the rest of the year that have required extensive corrective measures for 1992. The actual figure used in the release condition was taken from the IMF draft memorandum of February 1. When the program was approved by the IMF Board, the benchmark for increase of net banking credit in the first quarter had been changed. It was stated clearly in the minutes of negotiations that the intent of our condition was to reflect the fiscal benchmark of the IMF program (although we would interpret their fulfillment for our purposes). The revised benchmark was met and in fact was well exceeded if we count the ZCCM tax check for March which was not deposited until April 1. Met (see para. 9). (b) The Borrower has made satisfactory progress in expanding the use of the OGL system, covering over 90 percent of imports, other than petroleum and fertilizer. The postponement in adopting a negative list until OGL coverage matches that in the no-funds market is primarily an administrative matter. Given the shortage of donor funds and hence the absence of a reserve cushion, they have expanded this list as quickly as has been prudent. Met (see para. 10).  ANNEX I -16 - Page b *f 6 (c) All export bans have been removed except white maize and maize products, petroleum, fertilizer, and ivory, and no new import duty exemptions have been added since January 1, 1991. Met (d) The Borrower has adopted a satisfactory Public Investment program and has not undertaken any significant public investment projects outside that program. Met (e) The Borrower has carried out a phy'sical survey of public employees to eliminate "ghost worker's" and has also computerized payroll records and completed the initial phase of a physical check pick-up system. Met (see para. 13). (f) The Borrower has offered for sale to the private sector seven parastatals and has done preliminary work to offer five more soon. The first sales are expected in early 1992. Met (see para. 12). (g) The Borrower has completed, under agreed terms of reference, an evaluation of the efficiency of the maize meal coupon system. Met (see para. 14). (h) The maize condition was in two parts. Complete decontrol was not achieved, but the side letter clearly exempts the Borrower from achieving full decontrol if supplies are not adequate, which they were not. However, the Borrower did not contain maize subsidies within the 1991 budget which was the second part of the condition. (Techr cally, the condition refers only to maize handling subsidies. The overrun on maize subsidies will come from a new subsidy given directly to the mills. Renaming the subsidy does not change the logic, however, since the condition refers to adjusting the price of maize and maize meal to contain these subsidies.) Maize meal prices have recently been increased and are scheduled to continue increasing in 1992, but maize subsidies in 1991 will still be well above the level specified in the 1991 budget. Not met (see paras. 15-16). Conclusion 18. The second tranche of the ERC should be released once arrears are cleared even though one condition has not been fully met, because the program is making good progress and because recent actions have brought the subsidy removal operation back on track. The new Government has shown strong commitment to the policies supported by the ERC and described in the PFP and has demonstrated this by implementing early actions. We are scheduled to bring to the Board a second adjustment credit later this year. The completion of maize price decontrol will be handled in that operation.  - I7 - :N .K C"W. ca#1i'V *AO&d" b' atUdio in repuY pec.u qoiw go Ow PeFramr SeCTWa,- TejephooM. LUSAKA 211991, 211M1, 21 ISV, NO 211747, ND0/ i) r ,-9 ~~~~~~~~~~~~~~~~~NCDP,'/6/7/lC0 RFVPlU3C OP ZAMBIA OFFICE OF THE DEPUTY INISER 10th June, 1993 NATIONAL OOMMISSION FOR DEVELOPMENT PLANNING NATIONALISTiNfBilTA ROAD Mr. Stephen Denning, P.O. BOX 50268 Director LUSAKA Southern Africa Department The World Bank WASHINGTON DC. Dear Mr. Denning, RE: SECOND ECONOMIC RECOVERY CREDIT. I wish to inform you that the Government of Zambia has significantly benefitted from the Second Economic Recovery Programme, despite its interrupted history. The Credit provided a focal point for the resumption of the economic dialoguF between the Government of Zambia and the international donor community which occurred during the 1990/1991 period. Beyond this general observation, the Government has no other comments to offer on the pertinent Project Completion Report which states with clarity the issues and problems encountered and addressed. Dean N Ag7omba, MP Deputy inister Planning and Development Cooperation Office of the President LUSAKA.  - 19 - PART III - Statistical Data Summary ZAMBIA: ECONOMIC RECOVERY CREDIT As of: 30-Jun-92 Amounts in SOR Million --- Original ActuaL Disbu;sed Cance;Led Repaid Outstanding IDA Credit 22140-ZA 149.6 149.6 149.6 0.0 149.6 22141-ZA 19.4 19.4 19.4 0.0 - 19.4 22142-ZA 7.6 7.6 0.0 7.6 OriginaL Date Actual Oate Initiating Memorandum 16-Aug-90 16-Aug-90 Negotiations 01-Feb-91 01-Feb-91 Letter of Development Policy 01-Feb-91 01-Feb-91 Board Approval 05-Mar-91 05-Mar-91 Credit Agreement 13-Mar-91 13-Mar-91 Effectiveness 13-Mar-91 13-Mar-91 Second Tranche Release 30-Aug-91 31-Jan-92 Credit Closing 30-Jun-92 30-Jun-92 ACTUAL CUMULATIVE DISBURSEMENTS (SOR Million) FY91 FY92 FY93 C22140-ZA 92.6 149.6 X of total 62X 100X C22141-ZA 19.4 X of total 100% C22142-ZA - 6.9 7.6 X of total 90% 100% MISSION DATES No. of No. of Staff Date of Month/Year Weeks Persons Weeks Report Appraisal Aug-90 2 8 16 19-Sep-90 Supervision I Apr-91 1 2 2 n.a. Supervision il Jun-91 1 2 2 n.a. Supervision III Aug-91 1 2 2 n.a. Supervision IV Nov-91 1 2 2 n.e. Supervision V/CompLetion Jan-93 1 2 2 18-Jun-93