Jamaica - Population Project

LrV - 6 9o-ce RESTRICTED FILE COPY Report No. P-835 This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PR ESID ENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO JAMAICA FOR A POPULATION PROJECT June 4, 1970  INTERNATIONAL. BANK FOR RECONSTRUCTION AND DEVELOPENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO JAMAICA FOR A POPULATION PROJECT 1. I submit the following report and recommendation on a proposed loan in an amount in various currencies equivalent to US$2.0 million to Jamaica for a population project. PART I - HISTORICAL 2. The proposed loan would be the first made by the Bank Group in the field of population planning. A Bank economic mission, which visited Jamaica in mid-1968, noted that the Government was firmly committed to a policy of slowing down the growth of population and was looking for ways and means of making the national family planning program more effective. Towards the end of 1968, the Government requested the Bank to organize a mission that would review the existing family planning program and consider the possibility of Bank assistance for its improvement. A Bank review mission, which visited Jamaica in January/February 1969, identified a project which might be suitable for Bank financing. After further discus- sions, the project was defined more precisely, and the Bank assisted the Government in preparing a detailed proposal which was submitted to the Bank in November 1969 for appraisal. A Bank appraisal mission visited Jamaica in December 1969. 3. Negotiations for the proposed loan were held from Nby 5 to 9, 1970. The Government of Jamaica representatives at these negotiations were headed by Mr. Horace Barber, Deputy Financial Secretary, Ministry of Finance and Planning, and included IMr. Albert Mowatt, Principal Assistant Secretary, Ministry of Health, Dr. Leslie Williams, Senior Medical Officer, itnistry of Health and iYr. D. Marsh, Senior Counsel, Attorney-General's Office. 4. The proposed loan, the sixth to Jaa ca, would increase the Bank's total lending (net of cancellationsW) to US$44 million. No IDA credits have been made to Jamaica. The following is a summary of Bank IJ A telecommunication loan (No. 481-JM) made in 1967 to the Jamaica Telephone Company was cancelled by the Borrower in 1967, follow- ing a change in the ownership of the majority equity holding in the Company. About $13,000 withdrawn under the loan was prepaid in full.  -2- loans as at April 30, 1970: Loan (uS$ million) Number Year Borrower Purpose Amount Undisbursed 408-JM 1965 Jamaica Highways 5.5 4.5 454-JM 1966 Jamaica Public Service Co. Power 22.0 2,1 468-JM 1966 Jamaica Education 9.5 4.6 598-JNmi 1969 Water Commission Water Supply 5.0 5.0 Total (less cancellations) 42.0 of which has been repaid to Bank and others 0.4 Total now outstanding 41.6 Amount sold: 1.3 of which has been repaid 0.3 1.0 Total now held by Bank 40.6 Total undisbursed 16.2 5. The highway project was set back by over two years because of an initial delay in the selection of consultants and a significant increase in the estimated costs, on the basis of which a reduction in the scope of the project was agreed to with the approval of the Executive Directors in August 1968. Contracts for the reduced project, based on new bids, were awarded in July 1969. Since then, construction work has been proceeding satisfactorily. Although the education project is expected to be completed on schedule by mid-1971, the Government has not been submitting withdrawal applications promptly, and this explains the rather large undisbursed loan amount. The matter has recently been discussed in Jamaica and no further delays are anticipated. On the water supply project, same major bids have been received recently, and with the placement of orders in the near future, disbursements are expected to commence later this year. 6. A number of new projects are in various stages of preparation and consideration. The field appraisal of a second education project has just been completed, and an appraisal report is being prepared. An agricultural credit project, prepared under the FAO-IBIiD Cooperative Program, will be appraised in mid-June. Proposals for a sewerage project, and for financing industry and tourism through a Government-  -3- owned development bank, are both under preparation. The Government has also expressed interest in obtaining Bank financing for urban develop- ment, and a reconnaissance/identification mission is visiting Jamaica in early June to discuss plans for the further development of the city of Kingston which contains one of the worst slum areas in the Caribbean. The Government has approached the Bank also for future assistance toward financing additional highways and possibly airports. 7. IFC has so far made two investments totalling US$3.14 million in a hotel (Pegasus Hotel) and a cement manufacturing project. PART II - DESCRIPTION OF THE PROPOSED LOAN 8. Borrower: Jamaica Amount: US$2.0 million Purpose: To finance the foreign exchange component of facilities related to the family planning program, consultancy services, technical assistance and interest and other charges during constraction. Amortization: 20 years, including a 5-year period of grace; amortization in semi-annual installments beginning July 1, 1975 and ending January 1, 1990. Interest Rate: 7 percent per annum Commitment Charge: 3/4 of 1 percent per annum PART III - THE PROJECT 9. An appraisal report entitled "Appraisal of a Population Project, Jamaica" (PP-2a) is attached. 10. The purpose of the proposed project is to help women who might wish to limit the size of their famnilies by avoiding unwanted births. The project is designed to strengthen one of the basic planks of Jamaica's  program of reducing its population growth rate, namely, to incline child-bearing women towards family planning during the post-partum period. After mothers have delivered, or undergone surgery for mater- nity purposes, they are especially receptive to information about family planning programs, which can be given in groups or individually, and relatively inexpensively, in the delivery hospitals themselves, So long as they have confidence in the hospital personnel, the time is ideal to expose them to family planning. The fact that in Jamaica close to one- fourth of all births take place in one single hospital in Kingston, the Victoria Jubilee Hospital (VJH), makes the post-partum approach particu- larly attractive. The same approach, through the creation of adequate maternity centers, is also proposed for rural areas. Besides expanding the maternity facilities for post-partum information purposes, the project aims at strengthening the organization and management components of the country's national family planning program and for periodically evaluating its effectiveness by groups of qualified specialists. 11. The proposed project consists of: (a) construction and equipment at the VJH of a new 150-bed wing, including delivery suite with 33 labor and delivery units and space for midwifery training, and remodelling of the present structure; (b) construction and equipment of ten rural maternity centers (R1lCs ), each with an initial capacity of four to eight beds; (c) consultancy services for the design and supervision of construction, for designing training programs for family planning personnel and for an annual evaluation of the national program's effectiveness; and (d) studies for determining arrangements for an optimum use of health clinics in the Kingston Rhetropolitan Area for family planning purposes and for the most economic utilization of medical, para-medical and non-medical personnel in family planning clinics. 12. The cost of the project, excluding interest and other charges during construction, is estimated at approximately US$3.0 million. W4ith the minor exceptions noted in the following paragraph, the pro- posed loan of US$2.0 million would cover the estimated foreign exchange cost of civil works, equipment and furniture, consultaney services and technical assistance, as well as interest and other charges during construction on the proposed Bank loan.  13. Contracts for civil works and equipment and furniture would be let on the basis of international competitive bidding. Bids would be invited in packages likely to encourage both international and local bids, particularly for civil works. The small civil works contracts for PRqCs are expected to be awarded to local contractors, while the civil works contract for the VJH is likely to arouse wide-spread international interest. Should the civil works contract for the VJH, nevertheless, be awarded to a local contractor, the foreign exchange component would be slightly reduced and the loan, as a result, would cover a nominal amount of local costs not exceeding US$120,000. At the Government's request, a preference of up to 15 percent (or the existing import duties, if lower) is proposed for evaluating bids from local manufacturers of furniture and equipment. The total value of this project component is roughly US$320,000, and a small amount of local costs might be financed under the loan if Jamaican manufacturers should succeed in winning some of the orders. This amount is unlikely to exceed US$25,000 even if as much as one-third of orders are placed on local manufacturers, as the import component of such manufacture is very high. About US$50,000 has been provided in the pro- posed loan for the studies and for a consultant as a Training Adviser of the NFPB. Should the Government succeed in obtaining funds for the studies on a grant basis from USAID and in engaging a Jamaican consultant as the Training Adviser, the Bank financing would not be utilized. 14. The Government has been concerned that rapid population growth has been impeding other aspects of social and economic development, combined lith the fact that this growth is taking place in a densely populated economy with a high level of unemployment, considerable rural under-employment and limited possibilities of creating new jobs in industry or agriculture at any foreseeable time in the future. The availability of land suitable for intensive agricultural development is extremely limited, and the exploitation of other natural resources (notably bauxite and tourist attractions) offers no more than moderate scope for additional employment, requiring, moreover, large inputs of capital. Furthermore, the general level of education and training amongst the present population is still far short of what would be needed to offer Jamaica much of a comparative advantage in manufacturing. These factors gave a strong impetus to the Government of Jamaica's decision to support a voluntary national family planning program. 15. The project would be carried out as part of the Government's family planning program for the whole country. This would be implemented by a statutory authority, the National Family Planning Board (NFPB), which would be reconstituted for the purpose,, The Government has dis- cussed in detail with the Bank the draft of the statute establishing the new NFPB with adequate powers and responsibilities. The Chief  - 6 - Executive Officer of the NFPB, who will be a person of proven adminis- trative and organizational ability, and preferably with suitable back- ground and experience in health administration and family planning, will be responsible for the execution of the policy and programs of NFPB. He will be a member (director) of the Board and might also be its chairman. The establishment of NFPB on these lines and the appoint- ment of a suitable individual as its Chief Executive Officer are condi- tions of making the proposed loan effective. The Government has cove- nanted to provide not only local funds and any cost overruns for the proposed project, but also adequate financing from the annual budget towards NFPB's recurrent expenditures. By 1975,the annual recurrent expenditure on the national program is likely to be in the region of US$1.5 million, as against a figure of about US$0.5 million at the present time. PART IV - LEGAL INSTRUIDJTS AND AUTHORITY 16. The draft Loan Agreement between Jamaica and the Bank, the Report of the Committee provided for in Article III, Section h(iii) of the Articles of Agreement and the text of a Resolution approving the proposed Loan are being distributed to the Executive Directors separately. 17. The following provisions of the draft Loan Agreement are of special interest: (a) Section 5.02 contains the Borrower's undertakings to establish a National Family Planning Board meeting the criteria set forth in Schedule 5 and to provide adequate funds and other resources for the programs developed by the NFPB and approved by the Borrower; (b) Section 5.04 provides that the Borrower will cause the NFPB, as part of its efforts to seek family planning acceptors, to undertake programs of post- partum motivation at the VJH and the RMCs and a program of personal encouragement visits to other potential acceptors in Jamaica. PART V - THE ECONOI4Y 18. An economic report entitled "Current Economic Position and Prospects of Jamaica", (No. WH-187a) was distributed to the Executive Directors on December 26, 1968. The report concluded that, on the whole, the performance of the economy had been satisfactory and that the outlook  - 7 - for further growth was quite favorable. With the expected continu- ance of sound economic and fiscal policies and a more active govern- ment role in fostering agriculture and dealing with the high rate of population growth, Jamacia should be considered creditworthy for further external borrowing on conventional terms. 19. The economy has continued to demonstrate a high degree of vitality in the last two years. Following a slowdown in 1967, a vigor- ous recovery began in mid-1968 mainly as a result of substantial invest- ments in bauxite, manufacturing and tourism. GDP in real terms in 1968 and 1969 expanded at probably close to 6 percent a year, while gross investments rose to 28 percent of GDP. Public investments accounted for about one-fifth of the total. However, despite these investments, prospects for reducing the rather high level of unemployment and the absorption of underemployed agricultural labor are very limited, par- ticularly in view of the large numbers in the younger age groups who will enter the labor market during the next ten to fifteen years. 20. The economic report drew special attention to the virtual stagnation of the agricultural sector in recent years. A severe drought affected agriculture from 1967 through early 1969. By 1968, agriculture's share in GDP had declined to about 9 percent from 13 percent in 1963/64. By the end of the 1960's, the output of sugar, Jamaica's leading agricul- tural crop and agricultural export commodity, was the lowest in almost a decade. Apart from the effects of the drought, this industry was affected by a controversy with sugar producers on the type and schedule of mechanization which should be introduced to increase efficiency. A recent agreement between the Government, the producers and labor should now contribute to some revival of the industry. While Jamaica has been making efforts to raise the quality and productivity of its second major agricultural commodity, bananas, the export marketing arrangement was terminated towards the end of 1969 by the sole exporter of Jamaican bananas. Temporary marketing measures were instituted recently. The Government has now taken an increased interest in strengthening agricul- ture outside of traditional sugar and bananas. It has asked both the Inter-American Development Bank and the World Bank to assist in providing credit to commercially viable farmers, and credit projects prepared for this purpose are likely to be appraised shortly. 21. Fiscal performance on the whole has been good, with public savings continuing at a relatively high level. Current revenues have risen at an average annual rate of over 10 percent since the mid-1960's and are now equal to about 20 percent of GDP, while current expenditure increases have been relatively restrained. However, in good part because of low salary levels, capable administrators and technicians have been moving from the public to the rapidly growing private sectors, creating problems for effective public administration.  - 8 - 22. The balance of payments has remained strong. Exports of bauxite and increasingly of alumina, as well as tourism, have more than offset the sluggish performance of agricultural exports. Rising export earnings, jointly with large private capital inflows associated with investments in bauxite and tourism, have made it possible to main- tain high levels of imports, and to build international reserves to the record high of US$171 million by the end of March 1970. Debt service payments on Jamaica's presently outstanding external public debt are scheduled to increase from about US$15 million a year at the end of the 1960's to around US$20 million a year by the mid-1970's, and to decline thereafter. Even after allowing for the effects of likely new borrowings, they are not expected to amount to more than 6-7 percent of the projected current account earnings in the foreseeable future. PART VI - COPLIANCE WITH THE ARTICLES OF AGREEMENT 23. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VII - RECOIMENDATION 24. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President Attachments June 4, 1970 Washington, D.C.  ANNEX JAMAICA BASIC DATA Area: 10,992 square kilometers Population: (end of 1968) 1.92 million Density per sq. km. 175 Annual rate of natural increase (1960-1968) 3.1 percent 1967 1968 1969 GNP. current market prices (J$ million) 731 807 887 Per capita (US$) .,. ... 554 Sector origin (percent of GDP at factor cost) A:,