Mexico - Rainfed Areas Development Project

Documnt of The World Bank FOR OFFMCIAL USE OnLY Repot No. P-6210-ME MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTIO14 AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO US$85 MILLION TO NACIONAL FINANCIERA S.N.C. WITH THE GUARANTEE OF THE UNITED MEXICAN STATES FOR A RAINFED AREAS DEVELOPMENT PROJECT JUJE 15, 1994 Mi VCI: i-,1'AHI : This document has a restricted distribution and may be used by recipients only in tbe performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit = Mexican New Peso (N$) US$1 = N$3.10 US$322,581 = N$1 million (June 1994) FISCAL YEAR January 1 - December 31 WEIGIITS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS COPLADE State Planning Committee (Comit6 de Planificaci6n Estatal) DDR Rural Development Distr;ct (Distrito de Desarrollo Rural) ERR Economic Rate of Return FIRCO Trust Fund for Shared Risk (Fideicomiso de Riesgo Compartido) NAFPA North American Free Trade Agreement NAFIN National Finance Bank (Nacional Financiera) NPV Net Present Value PRONASOL National Solidarity Program (Programa Nacional de Solidaridad) SARH Secretariat of Agriculture and Hydraulic Resources (Secretarfa de Agricultura y Recursos Hidraulicos)  MCO FOR OFFICIAL USE ONLY RAINFED AREAS DEVELOPMENT PROJECT LOAN AND PROJECT SIARY Borrower: Nacional Financieca S.N.C. (NAFIN) Guarantor: United Mexican States Executing Agency: Trust Fund for Shared Risk (FIRCO) Beneficiaries: Farmers in 10 states characterized by poor ra,nfed agriculture with a high dependence on corn. Loan Amount: US$85 million equivalent Terms: Repayment in 15 years, including a five-year grace period, at the standard variable rate. Financing Plana/ in US$ niillion) Local Foreign Total IBRD 40.4 44.6 85.0 Federal Government 21.4 0.3 21.7 State Governments 9.0 14.7 23.7 Producers 83.3 11.9 95.2 Total 154.1 71.5 225.6 a/ Excluding duties and taxes. ERR: Subprojects must show ERRs of at least 12 percent for inclusion in the project. The average net present value of a sample of 26 representative investments analyzed at appraisal was estimated to be US$7,000 at a discount rate of 12 percent. Poverty Category: Not applicable. The expected project impact on poverty will be indirect as additional income and employment for small farmers and landless laborers will be generated through incremental crop and livestock production and diversification into high-value crops like fruits and vegetables. Staff Appraisal Report: Report No. 12533-ME, dated June 15, 1994 Map: IBRD No. 25277 This doamt has a restActed distibution and may be used by recipients only in the performanco of their oflicial duties. Its contents may not otherwise be disclosed without World Bank authorizaton.  MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE IBRD TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO NACIONAL FINANCIERA, S.N.C. FOR A RAINFED AREAS DEVELOPMENT PROJECT 1. I submit for your approval the following memorandum and recommendation on a proposed loan to Nacional Financiera, S.N.C. (NAFIN) for US$85.0 million equivalent with the guarantee of the United Mexican States to help finance a project for Rainfed Areas Development. The loan would be repayable at the Bank's standard variable rate with a maturity of 15 years, including five years of grace. The Fideicomiso de Riesgo Compartido (FIRCO), an agency of the Ministry of Agriculture and Water Resources (SARH), would be the executing institution. 2. Background. Rainfed agriculture is important in Mexico. The 1991 census showed rainfed agriculture occupying 26 million hectares of the national total of 31.7 million hectares in annual, perennial, and semi-perennial crops. Irrigated agriculture occupied the remaining 5.7 million hectares. The main rainfed crops -' corn (6.55 million hectares in 199!), beans (1.82 million hectares), sorghum (1.06 million hectares), wheat, forage oats, and barley (all roughly 250,000 hectares). The productivity of those crops is much higher when they are grown with irrigation. Rainfed crop yields were: corn, 1.76 metric tons per hectare (mt/ha); beans 0.56; sorghum, 2.44; wheat, 1.74; forage oats, 5.38; and barley, 1.61. The corresponding yields with irrigation were: corn 3.70 mt/ha; beans, 1.34; sorghum, 4.74; wheat, 4.84; forage oats, 19.23; and barley, 4.04. The value of agricultural output in 1991 dorrestic prices was N$50 billion, of which 45% was from rainfed crops and 55 % from irrigated. The average value of production per hectare from all crops in rainfed agriculture is typically about 50 percent of that in irrigated agriculture. 3. Rainfed agriculture confronts serious difficulties. Rainfed farmers achieve lower crop yields and, as a result, are typically poorer and have lower investment capacity than farmers with irrigation, because they lack the reliable and timely water supply provided by irrigation. Without irrigation and other investments, rainfed areas will fall farther behind. Much of the rainfed area is in the semi-arid tropics, where problems of crop and livestock pests and diseases, soils and weeds are more acute than in arid irrigated zones. Agriculture incurs environmental costs from soil erosion, which will become more severe as land use intensity rises. An additional problem is that much of the rainfed area is sown in corn, a crop that will be severely affected by the North American Free Trade Agreement (NAFTA). As NAFTA is implemented, it is expected that wages, employment and income from corn production will fall and that it will therefore be even more important to seek means of raising the productivity and competitiveness of rainfed agriculture. 4. The Government's agricultural sector strategy is to reduce public sector involvement, to eliminate nearly all trade and price protection, to move to non-distorting income support programs, to cut subsidies to producers and consumers, and to target public spending on public goods and poverty alleviation. The proposed operation is consistent with those objectives as it: (i) targets poor corn- growing areas that will lose from NAFTA; and (ii) promotes productive investment, not consumption. The Government's irrigation sub-sector strategy is to: (i) encourage private sector involvement in new investments through the transfer of the Irrigation Districts to user groups; (ii) transfer costs of capital, operations and maintenance to the user groups; (iii) modify the legal framework of the sub- sector so as to promote private investment and water markets; and (iv) target public investment to priority rehabilitation of existing works, and limited investments in new works, in line with economic and environmental criteria. The rainfed areas strategy has two aspects. First, in the rainfed areas with higher productive potential, the Government seeks to promote development of irrigation where it is economicallv and environmentally feasible, and to re-orient research, extension and credit to those  - 2 - areas with d.ie goal of raising productivity, Second, in the areas with lower productive potential, where irrigation and conventional research and extension are either infeasible or have a very low economic return, the Government seeks to target public poverty alleviation programs, such as the National Solidarity Program (PRONASOL), which are aimed at the most marginal rural producers. S. Project Objectives. The project objective is to raise agricultural productivity in selected rainfed areas. This would be done through: (a) investing in small-scale irrigation and other productive investments; (b) transferring both new and existing agricultural technologies through private sector extension; (c) reducing soil erosion; and (d) strengthening the capacity of the executing agency, FIRCO. The proposed project is targeted to small farmers in the ten states, chiefly in semiarid and temperate zones, with rainfall less than l,Q00 mm annually and where moisture deficit is the main constraint to productivity. 6. Project Description. ThL -oposed operation would have three components: (a) Rural Investment (US$147.2 million total cost) would include: (i) tubewells and related irrigation struc ures (US$21.7 million); (ii) other small-scale irrigation and drainage (US$62.1 million); (iii) soil conservation works (US$ 17.7 million); (iv) other investment, including livestock production facilities and nurseries for reforestation (US$6.4 mi!lion); (v) supervision by FIRCO (IJS$13.5 million); and (v) recurrent costs of operation and maintenance paid by producers (US$25.8 million). (b) Agricultural Technology Transfer (US$61.0 million) is needed for the central corn-producing area of Mexico to reorient agriculture away from the traditional heavily protected corn towards activities that can compete under free trade. The ,ub-components are: (i) agricultural extension services o producers (US$24.1 million); (ii) validation and demonstration plots (US$2.8 million); (iii) soil conservation practices and equipment (US$15.5 million); and (iv) recurrent costs of soil conservation practices paid by producers (US$18.6 million). All extension services and soil and water conservation services provided under the project would be contracted competitively through private firms. The proposed operation would give additional emphabis to the creation of producer organizations to support agricultural extension, to the resolution of site-specific technology transfer problems, and to provision of technical assistance to producers shifting from rainfed to irrigated agriculture, or undertaking new practices. (c) Institutional Developmenit and Trining (US$17.4 million) would strengthen FIRCO's: (i) capacity to design investments so as to improve rural investment sub-projects (US$4.4 million); (ii) staff training (US$3.7 million); (iii) information management (US$3.6 million); (iv) expertise in the areas of soil conservation, livestock production, and monitoring and evaluation of the productivity and environmental impact of the project (US$1.6 million); and (v) project unit (US$4.1 million). 7. Project Costs and Financing. Total project costs are estimated at US$225.6 million including contingencies. The project would be implemented over a five year period, which roughly coincides with the period of initial adjustment to lower corn prices. The Bank would finance  - 3 - 38 percent of total project costs, including up to US$8.5 million for retroactive financing to allow initiation of priority project activities. The rural investment component will be co-financed by the state governments as determined by the annual agreements signed between FIRCO and the state governments. These agreements are an established part of FIRCO's operations and provide an adequate foundation for the additional project activities. State co-financing will be at least 20% of the average incremental costs of the rural investment component. Under the proposed project, the state governments would maintain their contribution to existing costs and would bear about 12% of total project costs. Agreements between FIRCO and the high priority states for 1994 have been signed for 1994; the appraisal mission reviewed these agreements and found them satisfactory. Beneficiaries will finance a minimum of 15% of the incremental costs of the rural investment component. Agreements between producer organizations and FIRCO are an established part of their operations and are required for all activities of FIRCO. 8. Project Coordination and Implementation. Under the proposed project, FIRCO would be principally responsible for evaluating, supervising, monitoring and financing programs and investment projects, but not for implementing them, which would be the responsibility of producer groups and private contractors. Investment p;ojects would be proposed by producers either directly to FIRCO or through the Rural Development Districts (DDR), who would submit them to FIRCO. All projects that meet FIRCO's eligibility criteria including economic rate of return analysis pass through an initial screening process at the DDR level, followed by a field visit by FIRCO staff before a full technical, financial and economic evaluation is carried out. This is done either by FIRCO or by consultants contracted by FIRCO. Approval of the state working group, a technical committee of the state government's executive agencies, and by the State Planning Committee (COPLADE) is required before the project agreement is signed. FIRCO's evaluation is done in accordance with the norms defined in its operation manual. A project unit would be created to oversee the operation within FIRCO and would report directly to the Director General. The project unit would be responsible for managing contacts with the Bank, including on matte-, of procurement, disbursement, audits, and contracting of consultants. 9. Project Sustainability. The project is expected to have a positive effect on sustainable agriculture and on the consolidation of the private sector's role in the agricultural sector. Under the project, the new regulatory and administrative reforms related to water and land use will create an environment conducive to private investments and to more efficient use of land and water resources. In addition, the project will introduce priority-setting mechanisms for public infrastructure cost sharing between the Government and the private sector, as well as for improved water use and better drainage on irrigated land. 10. Lessons from Bank Experience. A major lesson from previous Bank projects is that once the incentive framework is appropriate, ift is difficult to do much for agriculture in the more arid rainfed zones beyond agricultural research, extension, and some environmental measures, such as soil and water conservation, without irrigation. Hence, the project components are limited to small-scale irrigation and drainage, livestock production, agricultural extension, soil and water conservation, and the related institutional development of the executing agency. A second lesson is the need to involve beneficiaries closely in the design and management of the investments. Because the investments are small and dispersed, centralized public management has proven to be unsustainable because it is too costly. Management by the beneficiaries has also been shown necessary to reduce costs and hence increase efficiency. Individual investments will be prepared in close collaboration between the project executing agency and the benefitting producers with adequate financial contribution from the producers. A third lesson is the imnportance of technical assistance to the beneficiaries. Technical assistance, in this case in the form of agricultural extension, can improve productivity on its own and  - 4 - has many positive interactions with investments in small-scale irrigation. Project design incorporates research results from lending operations and sector work in Mexico and elsewhere. Those results include not only technica' recommendations which can be made to producers benefitting from project investments, but institutional arrangements for more efficient transfer of technology to the project area. A fourth lesson is the need for efficient infrastructure operations and maintenance, as seen in many other operations. Poor maintenance has led to inefficient u . of the works and to delays in new construction as the implementing agencies have slowed new works while trying to do better maintenance on the existing ones. The proposed operation requires producers to own and manage project investments, thus creating adequate and sustainable incentives for maintenance. 11. Rationale for Bank Involvement. Bank involvement is justified mainly by the need to bolster productive investment in the areas anticipated to be affected seriously by the fall in corn prices; the government of Mexico, in requesting Bank's assistance for this project, has specifically made this point. While investment funds will eventually become available from fiscal savings arising from changes in producer and consumer prices, palliating the income effects of the new policy on poor producers requires funds more immediately. Bank invo1vement in this project, and in related operations, is also important in helping Mexico channel spending on agriculture toward investment and away from subsidies as it adjusts to free trade. In addition, the Bank has a long history of agricultural operations in Mexico and has established credibility in supporting successful investments of the proposed type. The proposed project is consistent with the Bank's sector strategy, as elaborated in the most recent Country Assistance Strategy (discussed with the Board on June 9, 1994) which promotes: (i) a reduction in Government involvement in agriculture; (ii) an increase in the snare of investment in public agricultural spending; (iii) a reduction in the share of subsidies and transfers; and (iv) targeting public investments to poor areas that are not well served by the private sector. 12. Agreements reached. During negotiations, the Government agreed: (i) to a final list of eligible project states; (ii) to a final list of eligible investment types; (iii) that the investments costs of activities financed under the rural investment component of the project would be shared in a percentage of not less than 15 percent by the producers; (iv) to present the economic analysis for inveatment projects in the rural investment component to the Bank in a format acceptable to the Bank, apply the NPV of the net economic benefits to the project at international input and output prices as the economic return criterion in the project, use a 12 percent real discount rate to estimate the NPV, and accept only investments with a positive NPV in the rural investment component of the project; (v) that there would be no minimum farm size limit on participation in the project; (vi) that eligible producers participating in irrigated crop activities would not own farms larger than 20 hectares, that projects in which any producer participating in irrigated crop activities had more than 10 hectares would be subject to prior review by the Bank and the share of such projects in the total of investments would be monitored as one of the project implementation indicators; (vii) that the eligibility of producers participating in livestock activities would continue to be determined by the DDR Technical Committees; (viii) that beneficiaries would be organized into groups for operating and managing project investments and for obtaining technical assistance; (ix) that beneficiaries would obtain agricultural technology transfer services acceptable to FIRCO; (x) that FIRCO would be required to produce a plan of trials of innovative activities for each project state by April 15, 1995; (xi) to, satisfactory terms of reference for consultancies to be done under the institutional development and training component; (xii) to maintain in FIRCO an organizational structure, functions, and adequate staff, all satisfactory to the Bank, to coordinate and supervise the implementation of the project, to promptly inform the Bank of any proposed change in the organizational structure or functions of FIRCO, to continue to apply FIRCO's Operating Rules and not change those Operating Rules without the consent of the Bank; (xiii) to maintain the Project Unit with appropriate functions, structure and  - 5 - staff; (xiv) to submit the feasibility studies of the first two investment projects to be financed in each state under the project for the Bank's prior review and approval; (xv) that state governments would bear at least 20 percent of the investment costs for activities financed under the project's rural investment component; (xvi) that FIRCO and the state governments would sign annual agreements governing project implementation in each project state; (xvii) that FIRCO would maintain its practice of signing agreements with producer organizations for all rural investments financed under the project; (xviii) to standard terms of reterence for agricultural technology transfer contracts and to make express provision in those agreements to show that producers have been informed adequately of their rights to choose freely extension services under the project; (xix) to contract a consultant on terms and conditions acceptable to the Bank to review the first 50 agricultural extension contracts procured under the project and to make modifications as necessary; (xx) to have the project accounts audited in accordance with the procedures acceptable to the Bank; (xxi) to a set of indicators to assess progress in project implementation; (xxii) to terms of reference for a study of the socioeconomic and environmental impact of the project to be done as part of the midterm review of the proposed operation; (xxi.i) to furnish to the Bank satisfactory semiannual reports covering all project activities of the previous six months no later than April 30 and October 31 of each year; (xxiv) to provide to the Bank a satisfactory annual work plan and budget no later than October 31 of each year; (xxv) to hold an annual project review no later than October 31 of each year to assess project implementation; (xxvi) to review and approve the annual work plan and budget for the following year; (xxvi) to terms of reference for a midterm review of the project to be held no later than October 3i, 1996 to assess project implementation and impact, and to make necessary changes in project implementation as recommended by the midterm review; (xxvii) to apply acceptable environmental screening and eligibility procedures acceptable to the Bank for the project; (xxviii) to app!y national standards and procedures for the utilization of pesticides in connection with research and extension activities that are acceptable to the Bank; (xxix) to require that all extension agents contracted under the operation apply integrated pest management techniques as part of all technology transfer activities involving significant additional use of pesticides; (xxx) to submit to its Congress annual fiscal budgets for the project that provide adequate resources to carry out the agreed annual work plan; and (xxxi) to furnish the Bank by April 30 of each year satisfactory evidence of the approved budget. 13. A condition of effectiveness would be that NAFIN and the Government would have signed a satisfactory agreement for transferring the loan proceeds. There would be no special conditions of disbursement. 14. Project Benefits. The project targets farmers owning fewer than 10 hectares of crop land. Benefits from the project would be increased and sustainable income for project beneficiaries from crop and livestock production, brought about through higher productivity; decreased soil erosion and increased water use efficiency; diversification of production; and improved access to private technical assistance for producer groups. Civil works and soil conservation activities would offer employment, especially to the poorer segments of the targeted population. It is estimated that at least 280,000 people will benefit from the project's rural investment component alone. The ERR of the project is estimated to be at least 12 percent; only investments with an ex-ante ERR above 12 percent would be accepted for financing under the project and the ex-post ERR is expected to be much higher. 15. Environmental Aspects. The project has a "B" environmental rating and the project is expected to produce significant environmental benefits from soil and water conservation and from more efficient irrigation water use. The proposed operation will fortify the institutional capacity of FIRCO to carry out environmental assessments of new investments and to monitor environmental issues in ongoing investments. Environmental issues would be covered as they are identified from the environmental analyses in each investment before they are accepted for financing under the operation.  - 6 - The project area would be in land now cultivated; no land clearing would be done under the project. The project area would exclude all environmentally sensitive wetlands, wildilands, and lands severely affected by salinity. The Bank's Operational Directive on pesticide use wili be applied to activities financed under the project. 16. Program Objective Category. The expected project impact on poverty will be indirect as additional income and employment for small farmers and landless laborers will be generated through incremental crop and livestock production and diversification into high-value crops like fruits and vegetables. 17. Project Risks. There are six principal risks potentially involved in the implementation of the project: (i) lack of counter-part funding; (ii) lack of producer contributions; (iii) lack of appropriate technical packages; (iv) failure of farmers to pay for private extension services; (v) failure to adequately operate and maintain project investments; and (vi) lack of funds from rural banks to supply credit to participating farmers. These risks have been and will be addressed by: (i) receipt of a first- year budget commitment of Federal Government funds as a condition of negotiations; budget commitments in subsequent years would be obtained during the annual project reviews; (ii) requiring cost-sharing commitments by the producers before sub-project implementation; (iii) continuous review by FIRCO's technical staff in order to ensure that unsuitable extension packages are quickly modified to mtet actual requirements; (iv) competition among private extensionists to provide quality services that farmers are willing to pay for; (v) transferring ownership, operation, and maintenance of project investments to producer organizations; and (vi) estimating in the annual plan preparation each year's financial needs and discussing them with commercial banks, to ensure that the needs and available resources correspond. 18. Recommcndation. I am satisfied that the proposed loan would comply with the Articles of the Agreement of the Bank and recommend that the Executive Directors approve it. Lewis T. Preston President Attachments Washington, D.C June 15, 1994  -7 - Schedule A MEICO RAINFAED AREAS DEVELOPMENT PROJECT Estimated Project Costs and Financing Plan' (US$ million) Project Costs Local Foreign Total Rural Investment 67.7 51.5 119.2 nI. Agricultural Technology Transfer 48.4 0.8 49.2 III. Institutional Development and Training 8.2 6.1 14.3 Total Baseline Costs 124.1 58.6 182.7 Physical Contingencies 12.5 5.8 18.3 Price Contingencies 17.5 7.1 24.6 Total Project Costs 154.1 71.5 225.6 Financing Plan IBRD 40.4 44.6 85.0 Federal Government 21.4 0.3 21.7 State Governments 9.0 14.7 23.7 Producers 83.3 11.9 95.2 Total 154.1 71.5 225.6 a/ Excluding duties and taxes.  -8- Schedule B Page I of 2 Procurement Arrangements (US$ million) Category ICR LCB Other" | Non-Bank TOTAL _ _ _ _ _ __ __I_ _ financin _ Civil works - 8.1 72.6 80.7 (3.2) (29.0) (32.2) Goods and equipment 3.9 23.1 - 27.0 (3.1) (18.0) __ (21.1) Technical Assistance _ Agricultural 24.1 - 24.1 extension (12.1) (12.1) Consultants 11.0 11.0 l ___________________ _______ (8.8) (8.8) Project supervision 13.5 - 13.5 services (10.8) (10.8) Government recurrent 2.8 2.8 costs (0.0) Producer recurrent costs - - 66.5 66.5 I-. .. (0r0) Totd 3.9 8.1 144.3 69.3 225.6 (3_1) (3.2) f_ __ 7) ( 0.0) 1 (85.0) l ~~~~~~~~~~~~~~7. * .0 Note: Figures in parenthesis are the amounts, including contingencies, expected to be financed by the Bank. ' Goods, technical assistance, and civil works to be procured through price quotations from at least three contractors or suppliers.  9- Schedule B Page 2 of 2 MEXCO RAINlEI) AREAS DEVELOPMENT PROJECT Allocation of Loan Proceeds (UJS$ million) Category Amount of Loan Percent of Expenditure to Allocated (US$ million) be Financed a/ I Civil Works 26.1 80 2 Goods and Equipment 17.1 80 3 Technical Assistance 25.7 80 5 Unallocated 16.1 n.a. a/ Excluding taxes and duties. Estimated World Bank Disbursements (US$ Million) Bank FY 1995"1 1996 1997 1998 1999 Annual 23 16 16 16 14 Cumulative 23 39 55 71 85 " A special account would be opened in the Central Bank with an initial deposit of US$5.5 million equivalent and retroactive financing of up to US$8.5 million for eligible expenditures incurred after November 3, 1993.  - 10 - Schedule C MEX1CO RAINF'D AREAS DEVELOPMENT PROJECT Timetable of Key Project Processing Events (a) Time taken to prepare: 15 months (b) Prepared by: FIRCO (c) First Bank mission: August, 1992 (d) Appraisal mission departure: November 3, 1993 (e) Negotiations: April 25, 1994 (f) Planned date of effectiveness: September 1, 1994 (g) List of relevant PCRs and PPARs: Loan No. Project Report Date Report No. 2859-ME Agricultural Extension Project (PROCATI) PCR of September forthcoming 30, 1993 1945-ME Rainfed Agriculture Program (PLANAT) PPAR of June Report No. 8875 29,1990  - 11 - Schedule D Page 1 of 3 MEXICO RAINFEI AREAS DEVELOPMENT PROJECT Status of Bank Group Operations in Mexico A. STATEMENT OF BANK LOANS (As of Maroh 31, 1994) Amount in US$ Million (lose carioellation) Credit/ Fiscal Loan No. Year Borrower Purpose Bank IDA Undisbureed 107 loans fully dIsbursed 13,414.72 O which SECALs, SALe, Program Loana, and Intorest Support a> Ln, 1929-ME 1981 BANOBRAS Railway IV 149.88 Ln. 2331-ME 1983 BANCOMEXT Export Developrnent 349.33 Ln. 2882-ME 1988 BANCOMEXT Trade Polioy Loan 11 500.00 Ln. 2918-ME 1988 NAFIN Agricultural Sector Loan 300.00 Ln. 3169-ME 1690 BANCOMEXT Interest Support Loan 1,260.00 Ln. 3207-ME 1990 BANOBRAS Road Transport & Teleowm. 380.00 Ln. 3087-ME 1989 NAFIN Industrial Seotor Polloy 497.51 Ln. 2746-ME 1987 BANCOMEXT Trade Policy Loan I 498.63 Ln. 3088-ME 1989 NAFIN Publio Enterprise Reform 499.39 Ln. 2777-ME 1987 BANCOMEXT Export Developmenrt II 246.37 Ln. 2919-ME 1988 NAFIN Fertilizer Sector 240.20 Ln. 3309-ME 1991 BANCOMEXT Export Sector 25.00 Ln. 3367-ME 1991 NAFIN Agricultural Sector Adj. ll 400.00 Subtotal 6,348.31 Ln. 2526-ME 1985 NAFIN Chiapas Agricultural Dev. 58.00 3.22 Ln. 2575-ME 1985 BANOBRAS Railways V 300.00 3.28 Ln. 2658-ME 1986 NAFIN Agrioultural Dev. Proderith 11 88.30 39.38 Ln. 26ee-ME 1986 BANOBRAS Municipal Strengthening 40.00 17.34 Ln. 2669-ME 1986 BANOBRAS Solid Waste Managernent Pilot 25.00 10.91 Ln. 2824-ME 1987 BANOBRAS Urban Transport 90.98 24.49 Ln. 2868-ME 1987 NAFIN Small/Medium-Sole industry IV 100.00 20.14 Ln. 2875-ME 1987 BANOBRAS Highway Maintenanoe 135.00 2.78 Ln. 2916-ME 1988 NAFIN Steel Sector Restuoturing 321.01 89.27 Ln. 2946-ME 1988 BANOBRAS Ports Rehabilitation 50.00 4.17 Ln. 3047-ME 1989 NAFIN Industrlal Restructurlng 250.00 33.51 Ln. 3083-ME 1989 NAFIN Hydroelectric Development 460.00 89.95 Ln. 3086-ME' 1989 BANOCOMEXT Financial Sector Adjustment 487.14 0.73 Ln. 3116-ME 1990 NAFIN Forestry Developnent 45.50 36.98 Ln. 3140-ME 1990 BANOBRAS Low-Income Housing II 350.00 40.13 Ln. 3141-ME 1990 NAFIN AgrIcultural Marketing 11 100.00 0.49 Ln. 3189-ME 1990 NAFIN TransrmissIon & Distribution 450.00 108.65 Ln. 3208-ME 1990 BANOBRAS Teleoomm. Technioal Assistanoe 22.00 3.60 Ln. 3271 -ME 1991 BANOBRAS Water Supply & Sanittion 300.00 21.27 Ln. 3272-ME 1991 NAFIN Basic Health Care 180.00 94.18 Ln. 3310-ME 1981 NAFIN Decentralization & Regional Develop. 350.00 111.09 Ln. 3358-ME 1991 NAFIN Teohnicel Training III 152.00 101.42 Ln. 3359-ME 1991 NAFIN Mining Seotor RestruoturIng 200.00 114.39 Ln. 3407-ME 1992 NAFIN Primnary Education 260.00 148.29 Ln. 3419-ME 1992 NAFIN Irrigation & Drainage Sector 400.00 234.84 Ln. 3401-ME 1992 BANOBRAS Environerneta/Natural Resouros 50.00 37.84 Ln. 3486-ME 1992 NAFIN Agrioultural Teohnology 150.00 141.21 Ln. 3475-ME 1992 NAFIN Soieno & Teohnology Infrastructure 189.00 167.42 Ln. 3497-ME 1992 BANOBRAS Housing Market Developrent 450.00 231.13 Ln. 3518-ME 1993 NAFIN Initial Education 80.00 71.98 Ln. 3542-ME 1993 NAFIN Labor Market & Prod. Enhanoement 174.00 145.76 Ln. 3643-ME b> 1993 NAFIN Traneport Air Pollution Control 220.00 220.00 Ln. 3559-ME 1993 BANOBRAS Medium Cies Transport 200.00 188.01 Ln. 3628-ME 1993 BANOBRAS Highway Rehab. & Traffic Safety 480.00 4056e5 Ln. 3704-ME b> 1994 NAFIN On-Farm & Minor Irrigation Network 200.00 200.00 Ln. 3722-ME b> 1994 NAFIN Primnry Education 412.00 412.00 Total 21,224.65 3,554.40 Of Whioh has been repaid 6.490.43 Total now held by the Bank 14,734.22 Amount sold : 92.34 Of whioh has been repaid: 92.34 Total Undisbursed 3,654.40 3,554.40 a > Approved during or after FY80 and fully disbursed. *SAL, SECAL, or Program Loan under Imnplementation. b> Not yet effeotive MdeS: LA2C1 File: WB-03-04.xle 14-Apr-94  - 12 - SCHEDULE D MEXICO l'age 2 of 3 SUMMARY OF IFC INVESTMENTS as of March 31, 1994 IUS$ Millions) Original Grooo Commitments Held Held b Undleburee Fiscal Year IFC IFC Parlol- by Partici- (including Committed Company Type of Buelnese Loan Equity ganto Total IFC pants Participants 1968!19 Industnas Perfect Circle S.A. /a Industrial Equipment 0.80 0.80 1968 Bnstol do Mexico S.A. 'a Aircraft Engine Overhaul O.b2 0 b'2 1981 Aceros Solar S.A. la Twist Dnills 0.28 0.28 1962/6/1i8 Fundidora Monterrey S.A. /a Stebl 2 30 21.44 23 74 1983 Tuboa de Acero de Mexico Stainless Steel Pipes 0.71 0 10 0 19 1.00 1963 Quimica del Rey S.A. la Sodium Sulphate 0.07 0.68 0.7b 1964/88 Industna del Hierro S.A. Coristruction Equipment 1.96 1.96 1970 Minera del Norte /a Iron Ore Mining 0.75 - 0.7b lbO 1971 Celanese Mexicana S.A. /a Textiles 8.00 4.00 12.00 1972 Promotora Papal Periodico SACV la Pulp & Paper lb - 0.03 0 03 1973/79 Cementos Veracruz S.A. la Cement 11.36 4 60 15.85r 1974/81 Cancun Aristos Hotel la Tourism 1.00 0.30 1.30 1976/78 Mexinox S.A. /e Stainless Steel 12.00 3.18 1S.18 1978/81/84 Papeles Ponderosa S.A. /a Pulp & Paper 6.18 6.00 4,60 16.66 1978 Tereftalatos Mexicanos, S.A. /a Petrochemicals 19.00 . 19.00 - 1979/81/87 Hotel Camino Real Ixtapa, S.A. Tourism 4.20 - 4.20 4.20 1979/84 Empresas Tolteca. S.A /a Cement 30.00 7.96 138.00 176 95 1979 Conductores Monterrey. S.A. Electrical Wire & Cable 8.41 - 13.00 21.41 2.36 1980 Industrias Resistol, S.A. /a Particle Board 8.00 - 17.00 26.00 1980 Vidrio Piano de Mexico, S.A, a/ Flat Glass 16.00 * 19.90 114.90 1980 Minera Real de Angeles, 8.A. /a Mining 30.00 - 80.00 110.00 1981/88 Celulosicos Centauro, S.A. /a Pulp & Paper 16.60 - 44.00 69.50 1981 Corporacion Agroindustrial, S.A. Agnbusiness 8.30 3.00 S.00 14.30 1984 Capital Goods Facility /a Capital Goods Financing 34.00 - 66.00 100.00 1984/88 Metasa, S.A. Auto Chassis 8.00 1.40 * 9.40 1.88 1986 Proteison, S.A. de C.V. la Agribusinesc 2.00 0.77 - 2.77 1986 Prom. Industriales Mexicanas, S.A. Petrochemicals 32.00 - 4.40 38.40 18.10 1986/88 Celulosa Y Papal de Durango,S.A.C Pulp & Paper 10.00 3.07 13.07 13.06 1987 Agromex (AESAI la Veg. & Fruit Processing 1.50 0.50 - 2.00 1989 Cieasa Constr. Guar. Fac /a Cons't. Guarantee Facility 20.00 - 20.00 1987 Industrias Sulfamex, S.A. DE C.V. a/ Chemicals & Petrochemicals 2.00 0.50 - 2.S0 1988 Sealed Power de Mexico Auto Assembly 9.00 - - 9.00 2.26 1988 Crescent Market Aggreaates Construction Materials 73.00 - - 73.00 46.82 1988 Apaseco, S.A. de C.V. Cement & Const. Materials 46.00 - 46.00 20.08 1991/92193 Apasco, S.A. de C.V. lc Cement & Const. Materials 49.91 - - 49.91 10.00 1994 Apasco. S.A. de C.V. /c Cement & Const. Materials 10.00 - 40.00 50.00 10.00 40.00 40.00 1988 Sigma Alimento6. S.A. de C.V.(Salu Food & Food Processing 20.98 2.00 - 22.98 6.00 1989192 Potimar (ABS), S.A. de C.V. Petrochemicals 19.10 * - 19.10 12.49 1989 Grupo Femea/Visa Consumer Goods Conglomerat 80.00 27.60 * 107.60 69.59 1989 Banca Serfin Development Finance 80.00 * 80.00 66.00 1989 Cementos Mexicanos Cement & Const. Mat 60.00 8.00 68.00 14.29 1990/91 Condumex, S.A. de C.V. /c Electromanufacturing 35.00 9.54 18.00 82.54 28.44 12.60 1990 Indelpro, S.A. de C.V. Petrochemicals 31.00 - 3.00 34.00 29.42 1.88 1990 Banco Nacional de Mexico Development Finance 80.00 * - 60.00 44.82 7.50 2.40 1990 Bancomer Credit Line Development Finance 20.00 - - 20.00 - - 1991 Mexico Fund /a Money & Capital Markets - - 6.57 6.57 1991 Petrocel, S.A. Chemicals & Petrochemicals 32.00 - - 32.00 32.00 1991 Vitro Flotado S.A. de C.V. Glass & Related Manufacturin 25.00 - 101.00 126.00 25.00 88.38 1991 Vitro. S.A. Glass & Related Manufacturin - 10.17 8.04 18.21 10.17 - 1992 Celular de Telefonia, S.A. de C.V. Telecommunications 15.00 1.00 37.00 53.00 16.00 37.00 4.00 1992 Grupo Industrial Simbo.S.A. de C.V. Bakery 25.00 * 75.00 100.00 25.00 75.00  - 13 - SCHEDULE D MEXICO Page 3 of 3 SUMMARY OF IFC INVESTMENTS as of March 31, 1994 (US$ Millions) orignal roes Coommitments Held Held b Undlabures Fiscal Year IFC IFC Partial- by Partnil- (including Commmftted Company Type of Business Loan Equity Banta Total IFC pants Participant, 1992 Aislantes Leon S.A. de C.V. Battery Manufacturing 10.00 7.03 - 17.03 10.00 1992/93 Grupo PoGadas S.A. de C.V. Toufism 20.00 - 37.22 67.22 20.00 33.60 1992 Grupo Financiera Probursa S.A. de C Development Finance - 7.60 7.50 7.60 1992 Banco Mercantil del Norte, S.N.C. Development Finance 20.00 - 20.00 20.00 - 10.3C 1992 Mexico City Toluca Toll Road Transport & Storage 13.75 13.75 9.76 1993 Masterpak S.A. de C.V. Textiles/Packsging 12.00 28.00 40.00 12.00 25.93 2.00 1993 Celulosa y Derivados S.A. de C.V. Textiles/Packaging 11.00 26.00 37.00 11.00 24.07 1.00 1993/94 Grupo Operador de Terminales Maritimas S.A. (GOTMi Industrial Services 4.00 2.00 6.00 12.00 6.00 * 2.24 1994 Gidesa Chemicals & Petrochemicals 15.00 8.00 42.50 65.50 23.00 42.50 67.60 1994 Aurum Heller Financial Services - 0.98 0.98 0.98 - - Less: Cancellations, Terminations, Repayment, & Sales 601.42 74.71 630.17 1,106.30 Pending Comritments: Indelpro, S.A. de C.V. III Chemicals & Petrochemicals - 6.00 6.00 Kapta Development Finance - 9.86 - 9.86 Bancomer Mgt. Development Finance - 0.16 0.16 Metalsa Ilil Auto Chassis 18.00 6800 24.00 48.00 CTAPV Infrastructure 6.00 2.00 * 7.00 interceramkc Ceramic Tiles 21.00 * 17.50 38.60 .~.,;,. a/ Investments which nave been fully cancelled, terminated, written-off, sold, redeemed, or repaid. b/ US$26,OOC. c/ Exciudes placements of $30.0 million (Apasco), S20.0 million (Vitro), and $19.8 million (Condumex) d/ Consists of approved and signed projects (including underwriting, but excluding swap transactions i.e., Banca Serfin US6.5 million,  IBRD 25277 C X W\_ O R M E X I C O Olt -14, C RAINFED AREAS a SNoglt . Juire DEVELOPMENT PROJECT NOiNl / it qf-J1 '.-\'\ 30- *1 0 N A - t F,) <, uo6uo Core .1otedros Nt % NO;OMI ?re National capital Guores State capitals 0 Principal cities or towns CAiiI(iuN