Senegal - Dakar International Airport Project

CIRCULATING COPY TO BE RETURNED TO REPORTS DESK DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Not For Public Use FILE CG?Y Report No. P-1141 REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN. TO THE REPUBLIC OF SENEGAL FOR AN AIRPORT PROJECT November 15, 1972 This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the -accuracy or completencss of the report.  RATE OF EXCHLNGE Currency Unit CFAF Francs (CFAF) US$ 1 - CFAF 255.79 CFAF 1 - US$ 0.0039 CFAF 1,000 * US$ 3.91 CFAF 1,000,000 = US$ 3,910  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF SENEGAL FOR AN AIRPORT PROJECT 1. I submit the following report and recommendation on a proposed loan to the Republic of Senegal of US$3.0 million to help finance a project for the expansion of Dakar International Airport. The loan would have a term of 25 years, including 5.years of grace, with interest at 7-1/4 percent per annum. PART I: THE ECONOMY 2. A report on the current economic position and prospects of Senegal was distributed to the Executive Directors on January 10, 1970. A Bank eco- nomic mission visited Senegal in March to assess the current economic situa- tion and prospects. The following paragraphs reflect the findings of that mission. Country data are given in Annex II. Economic Potential 3. Endowed with few natural resources, Senegal has only limited possi- bilities for economic development. Soils are generally light and poor and rainfall is scarce and limited to only three to four months of the year. In the northern half of the country where the bulk of the population lives, mil- let and groundnuts are the only crops that can be grown without irrigation. Irrigation is possible along the Senegal River. In the sparsely populated south and southeast, the rural potential is somewhat greater (rice, cotton and fruit), but lack of feeder roads and other infrastructure has so far hampered development there. In spite of efforts to expand output of other agricultural products, Senegal can still be called a one crop economy, as groundnuts account for the cash income of the majority of the rural popula- tion and for nearly half of the country's export earnings. 4. Outside agriculture, the main possibilities for economic develop- ment are fisheries, tourism and manufacturing. Thanks to rich resources off the coast, fish production has been growing rapidly. International tourism to Senegal has started to develop only in the recent years, but prospects for further expansion of this sector are promising. Senegal developed its industrial sectors earlier than did other West African countries and its industrial labor force is one of the best in Africa. However, although there are certain definite possibilities for development of new crops and new sec- tors, diversification will at best be a lengthy process. For some time the economy will remain affected by the vagaries of the weather and fluctuations in the world market price of groundnuts. -  -2- Past Development 5. During the 1960's, the first decade of independence, Senegal's economy stagnated. GDP growth in real terms was minimal (1.4 percent a year) and per capita income may have declined though at about US$250 it is above that of other African countries. 6. Two factors were responsible for the slow growth. With independ- ence, Senegal lost its privileged position as the center of French West Africa. This resulted in the loss of export markets for manufactures, as domestic industries developed in other West African countries. At the same time, demand for services and locally produced goods was depressed, follow- ing the departure of most French civil and military personnel. In the sec- ond half of the 1960's, a combination of bad weather and falling export prices affected groundnut production which declined by 50 percent. At the same time production of major food crops remained at a level insufficient to cover local demand. 7. In the early years after independence, the government's response to the country's difficult adjustment problems was slow. The heavy adminis- trative apparatus, inherited from colonial times, did not respond quickly to the new situation and government policies stressed administration rather than development. The First Development Plan (1961-64) concentrated on investments for social and transport infrastructure, including housing, urban water sup- ply and administrative buildings. Investments in rural sectors accounted for less than 20 percent of total development outlays. In the modern sec- tor, however, the government succeeded in stimulating import substitution, which partly offset the loss of export markets. Annual growth of manufac- turing output amounted to nearly 6 percent in an otherwise static economy. 8. During the second half of the 1960's, the government's development policy became more energetic. The main aspect of the new government policies has been a considerable increase in-the public investment program, which was made possible by substantial improvements in absorptive capacity of the pub- lic sector. The investment program became more directly development-oriented with the share of investments in productive sectors increasing to 45 percent during the Second and Third Plans. Rural investments more than tripled be- tween 1961-64 and 1968-71 and their quality has improved. Rural diversifi- cation was successfully started, mainly for cotton, rice and tomatoes. 9. The change in the government's development policy came too late to have a significant impact on the economy in the late 1960's, when ground- nut prices were reduced and groundnut output sharply declined. At the begin- ning of 1971, the government took effective measures to stimulate groundnut output. Sharp increases in world market prices after 1968 made possible a 25 percent increase in producer prices which, together with favorable weather helped restore groundnut production in 1971. This was instrumental in bring- ing about a sizable growth of CDP (at current prices) after four years of virtual stagnation. Over the 1968-1971 period, GDP increased by over 8 per- cent per annum.  -3- 10. The slight fall in rural production during 1964-70 had little ef- fect on the modern sector of the economy, which expanded even more rapidly than during the first half of the 1960's. This was mainly the result of a 14 percent annual increase in exports of manufactured products. By 1970, 20 percent of local manufacturing production was exported. This reflects Senegal's improving external competitive position and, to some extent, its relatively more developed industrial base compared to its neighbors. At the time of independence the country was plagued with a high cost structure which seriously hampered economic growth. Since then Government policies aimed at curtailing price and salary increases to about 3 percent per annum allowed such Senegalese industries as textiles and shoes to start competing successfully in export markets. Public Finance and Foreign Aid 11. The public finances reflect these overall economic trends. The condition of public finance deteriorated throughout the 1960's. Public savings slowly but continuously declined to virtually zero by 1968/69. Rev- enues stagnated because of the decline in imports, the most important element of this tax base. Thus, keeping the tax ratio at roughly 20 percent of GDP was quite an achievement. But current expenditures grew, albeit moderately, at some 3 to 4 percent annually thus eroding the current account surplus. 12. After 1968/69, better tax collection, increased tax rates and sub- stantial surpluses of the groundnut stabilization fund following the rise in groundnut export prices led to a recovery of public savings. In 1970/71, public savings represented some 7 percent of current revenues. Yet locally- financed public investment continued, as it had throughout the 1960's, to exceed savings by a wide margin, resulting in a slow but continuous decline of Treasury deposits. 13. Senegal has been benefiting from a large inflow of foreign aid, mostly on concessionary terms. Between 1966 and 1970, foreign aid financed about 65 percent of the public capital program and averaged US$30 million per year. This corresponds to US$8.0 per capita annually, mainly financed by the European Economic Community (40 percent) and France (30 percent). The World Bank Group and Germany contributed, respectively, 13 and 10 per- cent of the total. Foreign aid programs concentrated on infrastructure and on directly productive projects in the rural sector. Of importance also was the technical assistance, mainly in education, which amounted to US$29 mil- lion annually, mostly financed by the French Government. Prospects 14. In the coming years the economy will'probably grow faster than in the past decade, largely as a result of on-going efforts to diversify agri- cultural output and expand fisheries, tourism and industrial exports. Medium term prospects would be more favorable, were it not that groundnut prices were expected to fall from their present level of over E100/long ton to L80/long ton by 1975.  - 4 - 15. In view of the prospective fall in groundnut prices which is ex- pected to wipe out the surplus of the stabilization fund within two or three years, some acceleration of economic growth will be essential to help improve the public finances. The government is determined to keep the expansion of current expenditures to a minimum and to improve the financial performance of public enterprises. However, since tax rates are already relatively high, the urgently needed revenue increases will have to come from a combination of better collection and overall economic growth. 16. Considering the need to diversify the economy, an increase in pub- lic investment from US$60 million annually during the Third Plan (1969/73) to US$80 million during the Fourth Plan appears essential. However,.while such a program is in line with the recent improvement in the government's capacity to prepare and implement projects, the slow increase in public savings, together with the limited possibilities of deficit financing with- out endangering the difficult foreign exchange situation or restricting credit to the private sector, make financing of the Fourth Plan difficult. To offset the expected shortfall in local resources associated with the deterioration of terms of trade, foreign lenders will have to increase their share in the financing of the Fourth Plan to about 85 percent of total development expenditures. Foreign aid is expected to continue to expand rapidly, based on the programs of the European Communities (Third FED), bilateral aid donors (Canada, Italy, Belgium, and oil producing coun- tries in the Arab world) and the World Bank Group. In view of Senegal's improved economic performance and absorptive capacity, increased external assistance is warranted. 17. External aid will have to continue to be on relatively soft terms if it is not to create serious debt service problems. The proportion of grant aid has declined from 85 percent in 1964-66 to 55 percent in 1969-71 and is likely to drop to about 40 percent of total foreign financial aid during the period of the Fourth Plan. Although the foreign debt service ratio is still low at 3-4 percent, financing of the remainder of foreign aid on conventional terms would soon lead to unmanageable balance of pay- ments and budgetary difficulties. Projections indicate that at least half of non-grant aid should be extended on concessionary terms if an excessive increase in the debt service ratio is to be avoided. Budget constraints are even more serious, as debt service charges are already projected to absorb one-half of gross public savings by 1980. Any substantial harden- ing of the blend could result in negative public savings. PART II - BANK GROUP OPERATIONS 18. The Bank Group has had nine operations in Senegal to date. Total lending amounts to US$46.7 million (net of cancellations), including seven IDA credits, one Bank loan and one blend of Bank and IDA funds. The Bank Group is now Senegal's third largest aid donor (after France and the European Economic Communities) providing about 13 percent of Senegal's external capi- tal assistance. IFC has made investments totalling US$3.25 million in two  - 5 - projects in Senegal. Annex I contains a summary statement of Bank loans, IDA credits and IFC investments as of October 31, 1972, and notes on the execution of on-going projects. 19. Initially Bank Group lending in Senegal was limited to the trans- port and groundnut sectors. A railway project financed in 1966 (Credit 96- SE) was delayed and there were shortfalls in the railway's financial per- formance. However, it eventually succeeded in strengthening the railway authority which, with the assistance of a second project approved this year (Credit 314-SE and Loan 835-SE) should soon be showing an operating surplus. A loan for the Dakar port (Loan 493-SE) met with more immediate success and helped improve the finances and administration of the Port Authority. Our first operation in agriculture was an agricultural credit project (Loan 584- SE and Credit 140-SE) which aimed at improving groundnut and millet cultiva- tion. It suffered at first from a sharp fall in groundnut output (paragraph 9) causing a drop in demand for credit which led to the cancellation of the Bank loan. In 1971, the government took strong action which with fair weather permitted the recovery of groundnut production in 1971. The credit is expected to be fully disbursed by the end of 1972 and a second project is being appraised which would complete the institutional improvements which the first project began. A credit made in 1970 for construction and main- tenance of feeder roads in the groundnut basin (Credit 198-SE) has been. satisfactorily implemented. 20; More prominence is now being given by the Government and the Bank to the diversification of agricultural production and development of new pro- ductive sectors. The Casamance Rice project (Credit 252-SE) approved in 1971 is helping stimulate rice production in the southern part of the country, while the Terres Neuves project (Credit 254-SE), also of 1971, is enabling farmers to leave the groundnut basin and cultivate a variety of crops in the less densely populated eastern region of the country. The River Polder project for the production of rice and vegetables in the Northern Delta has just been negotiated with the government and will be presented for consideration by the Executive Directors later in this fiscal year. 21. As Senegal's agricultural potential is limited, we are actively exploring with the government other avenues for diversification. Perhaps the most promising is tourism for which Senegal's pleasant climate and at- tractive beaches constitute important assets. A Bank mission is currently in the field reviewing the prospects of Senegalese tourism within the con- text of overall tourism development of West Africa. The extension of Dakar airport, as proposed in the airport project under consideration, will facil- itate the development of the sector. Other possibilities for diversification currently being examined by the Bank include fisheries and manufacturing. The Government has also asked the Bank to take the lead in assessing the viability of a large tanker repair project and we are considering the pos- sibility of an engineering loan for the preparation of the project. 22. Other sectors in which the Bank is involved are urbanization in which a Site and Services project (Credit 336-SE) was recently approved and education, in which a general education project is being prepared following  - 6 - a credit in 1971 (Credit 253 SE) for technical and agricultural education. Institution building and improvement in the performance of public enterprises and services will continue to be important themes in Bank Group lending in Senegal. Examples include the telecommunication project now under considera- tion, a power project under preparation and a highway rehabilitation project which has been appraised recently and will be submitted to the Executive Directors this fiscal year. PART III: THE AIRPORT SECTOR 23. Senegal has 18 airports of which the largest and most important is Dakar International Airport. The Dakar airport occupies a key position in the regional aviation network, linking a number of,neighbouring countries with international services as well as being an important stopping point for flights between Europe and South America. To retain this key position, the runway and apron facilities need to be improved to be able to serve the new generation of larger aircraft (B-747's and-DC-10's). 24. In 1971, Senegal's airport system handled 347,000 passengers, of which all but 11,000 were travelling on international flights through Dakar. International services to Dakar are provided by six foreign airlines and Air Afrique, a multinational company of which Senegal is a member. Domestic services are provided by Air Senegal to 13 of the country's 18 airports. Air Senegal also undertakes crop spraying, using specialized aircraft. l 25. Dakar's key position in the regional aviation network is an impor- tant element in the Government's long term development strategy of promoting tourism and service industries. Thus in tourism, once the short-term con- straint of a lack of hotel accommodation is overcome, the substantial transit passenger traffic passing through Dakar airport can be exploited. When the larger aircraft are introduced on the routes between Europe and South America this potential market will increase and tbe added aircraft capacity at lower unit operating cost will expand the scope for offering promotional fares and lower air cargo rates. The frequent flights to Dakar would be an important factor favoring Dakar as the site for the proposed ship repair project (para- graph 21). 26. Senegal's airports are managed by Agence pour la Securite de la Navigation en Afrigue et a Madagascar (ASECNA), a multinational corporation set up in 1959 by a treaty between 14 African states, including Senegal, and France. ASECNA's functions are to control air navigation and manage airports in the territories of the African member states. Pursuant to the treaty, ASECNA has entered into an agreement, known as the Contrat Particulier, which governs its relationship with Senegal. Under the Contrat Particulier with Senegal, ASECNA may improve Senegal's airports as agent for Senegal with funds provided by Senegal pursuant to a Contrat Special drawn up for each such improvement. ASECNA maintains a Flight Information Center at Dakar which, with meterological and communications facilities, serves flights not only over Senegal but over other West African countries and flights between Europe and South America.  - 7 - 27. The total cost of ASECNA's operations in its member countries is about CFAF 7 billion (US$27.4 million equivalent) a year. This is financed by receipts from airlines (40 percent) and subsidies from France (34 percent) and other member governments (26 percent). ASECNA's operations require sub- sidies principally because the cost of providing aerial navigation is sub- sidized throughout the world and, in the absence of a change in the univer- sal system of subsidies, ASECNA is not able to charge the airlines for all services provided. Senegal's annual contribution to ASECNA amounts to about CFAF 300 million (US$1.2 million equivalent) of which about half goes to support the cost of aerial navigation. The remainder is used to finance the operation of Senegal's regional airports (excluding Dakar) which owing to the limited traffic are not financially self-supporting despite efficient management by ASECNA. In contrast, Dakar airport, taken in isolation from the rest of ASECNA's operations, is financially self-supporting (paragraph 41). PART IV: THE PROJECT 28. A report entitled "Appraisal of Dakar International Airport Senegal" (PTR-125a) is being circulated separately to the Executive Directors. A Loan and Project Summary is provided in Annex III. 29. In 1970, the Government requested Bank Group financing for a pro- posed extension of the runway of the Dakar airport. The project was prepared by ASECNA and appraised by the Bank in March 1972. Negotiations with the Government's delegation led by the Secretary of State for Planning, Mr. Ousmane Seck, took place in October 1972. 30. The project consists of the facilities necessary to allow large long-range jet aircraft to operate economically from Dakar International Airport. It would comprise: (i) the lengthening of the main runway from 2,900 meters to 3,550 meters, (ii) the provision of lighting for the extended runway, (iii) the construction of two additional aircraft parking positions, and (iv) the relocation of the Instrument Landing System localizer. 31. The total cost of the project is estimated to be US$4.0 million, including duties and taxes of US$0.3 million. The estimated foreign exchange component is US$2.4 million. The Government through ASECNA will contribute US$1.0 million. The proposed loan of US$3 million would cover 80 percent of total expenditures net of taxes. 32. Construction contracts will be awarded after international compe- titive bidding. The runway lighting equipment will be procured at a nego- tiated price from the manufacturer of the existing lighting in order to fa- cilitate operation and maintenance through standardized equipment. The cost of the lighting equipment will be less than US$100,000 equivalent.  - 8 - 33. ASECNA will carry out the project on behalf of the Government. The organization of ASECNA is well conceived and the staff competent and effective. ASECNA employs about 6,000 people, of which about 800 (including its head office staff of 150) are located in Senegal. ASECNA's staff includes about 500 expatriates of which about 60 are employed at headquarters at Dakar and 50 in the remainder of ASECNA's operations in Senegal. ASECNA is conducting a program of africanization and has its own school in Niger to train air traffic controllers, meteorological and radio technicians. The rate of africanization is limited by the shortage of Africans with the high degree of skill which is needed for many of the positions. However, the number of expatriates employed was reduced from 600 in 1970 to 540 in 1971 and to about 500 in 1972. 34. The project has an internal economic return of 15 percent on the basis of immediate quantifiable benefits accruing to Senegal. The benefits taken into account consist of, first, the incremental airport charges accru- ing to the Government through ASECNA, secondly, the surplus derived from the refining and handling additional quantities of aircraft fuel by the local refinery and thirdly, the incremental net income accruing to Senegal from the stay of airline crews. The calculations have been based on the conserva- tive assumption that, in the absence of the project, the present number and type of aircraft would continue to be used on flights to Dakar, whereas a deterioration in flight frequencies might well be expected. Perhaps more important than these quantifiable benefits are the non-quantifiable benefits, particularly the increased potential for tourism. 35. With the project, the net profit from Dakar International Airport is expected to increase from CFAF 38 million in 1972 to CFAF 104 million in, 1980. The revenue calculations have been based on present landing charges and on the planned introduction by the airlines of heavier aircraft. To ensure that revenues cover operating expenses and debt service as well as producing a reasonable surplus, assurances were obtained that landing charges will be set at levels which will ensure that the rate of return on net fixed assets in use at the airport (excluding the air navigation center over wihose extension the Government has little control) shall be not less than 7 percent on completion of the project, shall not fall below 4 percent when the proposed relocation of the airport's industrial facilities has been completed and be not less than 8 percent within three years after completion of the relocation of the industrial facilities. 36. The loan would be made to the Republic of Senegal with a term of 25 years including a grace period of 5 years.. The Government will make the funds available to ASECNA within the frame-work of the Contrat Particulier (paragraph 26). It will be a condition of effectiveness that the Republic of Senegal enter into a Contrat Special in relation to the proposed project on terms and conditions acceptable to the Bank.  -9- PART V: LEGAL INSTRUMENTS AND AUTHORITY 37. A draft Loan Agreement between the Republic of Senegal and the Bank, a draft Project Agreement between the Bank and ASECHA, the Report of the Com- mittee provided for in Article III Section 4 (iii) of the Articles of Agree- ment of the Bank and the text of a draft resolution approving the proposed loan are being distributed to the Executive Directors separately. 38. The agreements would give the Bank the right to premature the loan if the Republic of Senegal gives its consent to the termination of the Contrat Particulier under which ASECNA manages Senegal's airports without having first made arrangements satisfactory with the Bank to carry out the functions and responsibilities assumed by ASECNA under the Contrat Particulier and the Project Agreement. 39. In other respects, the draft agreements conform to the normal pattern for loans for airport projects. 40. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI: RECOMMENDATION 41. I recommend that the Executive Directors approve the proposed loan. Robert S.-McNamara President by J. Burke Knapp Attachment Washington, D. C. November 15, 1972.   ANNEX I Page 1 THE STATUS OF BANK GROUP OPERATIONS IN SENEGAL A. Statement of Bank Loans and IDA Credits (as of October 31, 1972) Loan or Amount (US$ million) Credit Number Year Borrower Purpose Bank IDA Undisbursed 96-SE 1966 Senegal Railway 9.0 1.1 493-SE 1967 Port of Dakar Port 4.0 1.1 140-SE* 1969 Senegal Agricultural 6.0 1.5 credit 198-SE 1970 Senegal Highways 2.1 0.4 252-SE 1971 Senegal Rice 3.7 3.6 Development 253-SE 1971 Senegal Technical and Agri- 2.0 1.9 cultural Education 254-SE 1971 Senegal Settlement 1.3 1.2 Scheme 314-SE 1972 Senegal Railway 6.4 3.2 9.6 835-SE 336-SE 1972 Senegal Site & Services 8.0 8.0 Total, less cancellation 10.4 35.3 28.4 of which has been repaid 0.5 - Total now outstanding 9.9 35.3 Amount sold 0.4 of which has been repaid 0.4 Total now held by Bank and IDA 9.9 35.3 Total undisbursed 7.5 20.9 28.4 * A loan of US$3.5 million for agricultural credit (584-SE) made in 1969 was cancelled on March 25, 1971.  ANNEX I Page 2 B. Statement of IFC Investments (as of October 31, 1972) Amount (US$ million) Type of Equity Year Obligor business Loan Investment Total 1967 Societe Fertilizer 1.7 0.8 2.5 Industrielle Plant d'Engrais au Senegal 1972 Bud Senegal, Vegetable - 0.05 0.05 S. A. Export Total commitments now held by IFC 2.4 0.85 3.25 Total undisbursed - - C. Projects in Execution First Railway Project (FY 1966) - Credit 96-SE 1. The project was designed to put the Railways (Regie) on a sound technical and financial footing. All project items, mainly track material and some rolling stock, have now been delivered and the project will be completed by the end of 1972, about three years behind the original schedule. Due to the Regie's internal administrative difficulties, lack of qualified staff to prepare and issue tender documents and also to labor problems, delivery of materials and equipment was delayed and, as a result, disburse- ments were slow. 2. The financial performance of the Regie during the first project fell considerably short of expectation, principally because traffic did not increase as expected at the time of appraisal. Furthermore, the Regie's effort to cut personnel costs was largely offset by an increase in its material costs. As a result the Regie is still operating at a loss as compared to a target rate of return for 1969/70 of 4 percent as agreed in 1966. The short- falls in the Regie's performance under Credit 96-SE must be viewed in the light of the Senegalese and Malian economies' failure to move ahead as rapidly as expected. The recent economic recovery in both countries will assist in improving the financial situation of the Regie. Port of Dakar (FY 67) Credit 493-SE 3. The first port project, which was approved in 1967, was to improve Dakar port facilities by extending the wharves, reconstructing quay walls and dredging various areas in the port. After slow but satisfactory execution, the project should be completed by the end of 1972. Special loan covenants helped to improve the finances and administration of the Port Authority.  ANNEX I Page 3 The Port Authority, which has recently established a Master Plan for its future development, is presently considering the extension of its fishing port and ship repair facilities. Agricultural Credit Project (FY69) - Credit 140-SE and Loan 584-SE (Cancelled) 4. This project is discussed in paras. 9 and 19 of the President's Report. First Highway Project (FY 1970) - Credit 198-SE 5. The first highway project provided for construction of feeder roads, purchase of highway maintenance equipment and study on road improvement and maintenance. Execution of the project has been satisfactory. Actual costs are within appraisal estimates and surplus funds available are being used for providing additional maintenance equipment. The credit is expected to be fully disbursed by the closing date of December 31, 1972. 6. Implementation of the maintenance program and rehabilitation of existing paved roads as recommended by the road improvement and maintenance study would be financed under a second highway project presently under appraisal. Casamance Rice Project (FY71) - Credit 252-SE 7. Launched in early 1972 the project is about to complete its first campaign. Targets for area under cultivation and production have been met and the construction and marketing programs are on schedule. The quality of management and extension services is good. There are some delays in the channelling of funds to the Project Unit but a new arrangement is now being discussed with the Government. Education Project (FY71) - Credit 253-SE 8. Construction of all Project schools is expected to be completed by January 31, 1975 in accordance with the appraisal schedule. The project is progressing satisfactorily except for the Merchant Marine School at Dakar, where there has been a delay in the selection of a fisheries expert; it is. expected that his appointment will be made within six months. Terres Neuves Resettlement Project (FY71) - Credit 254-SE 9. Despite a late start due to delays in the establishment of the project entities, the 1972 first year targets have generally been achieved: Forty-two families settled in April 1972 and cultivated 100 hectares. Agri- cultural results are satisfactory and the settlers express satisfaction with the project. The preparation of a second phase project is well under way and feasibility study should be ready by the end of 1973.  ANNEX I Page 4 Second Railway Project (FY 1973) - Loan 835-SE and Credit 314-SE 10. This project involves continuation of track renewal towards the Mali border, modernization of workshops to increase efficiency and thus improve availability of rolling stock, the purchase of locomotives, the modernization of freight cars to reduce maintenance costs, technical ser- vices and training. The terminal date for effectiveness of the Loan and Credit has been extended from November 1, 1972 to December 29, 1972 to per- mit the Borrower to furnish the requisite legal opinions. However, specif- ications and tender documents for the main items have already been prepared by the Regie and it may be expected that the project should proceed normally and be completed according to schedule. 11. In order to achieve full potential benefits of the Investment Program and to allow the Regie to reach financial viability by 1975/76 a Plan of Action has been agreed upon with Government and the Regie. This Plan outlines measures to be adopted by the Regie to improve operations, reduce staff and study certain branch lines which appear to be unprofitable. Site and Services Project (FY72) - Credit 336-SE 12. The Credit Agreement was not signed until September 29, 1972 and is not yet effective. However, the executing agency, Office des Habitations a Loyers Moderes is carrying out its reorganization and is about to begin the detailed engineering for the first phase of the project.  21i.,M, ,^n% ol9w igg 01 W N * -~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~- 4-4 OtIC~'k4"+ V #2.0 444~~ '-4 00 040'~~~~~~~~~~C 0'-.~~~ ~ ~~~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~ .4.' 4 44 r. [1 .1 e I 4. | A.1 SMgA gg e <, Q 0 | s < F!~~~~' 4.44 0 . oo~~~~4A 4444 >1-4 .H . u i so a 8 itti i~ hi t |f B  ANNEX II Page 2 COUNTRY BATA - SENEGAL MONEY, CREDIT AND PRICES96
5 1970 1971 (Billions of CFAF 12 mon=sravera6e - Money and Quasi Money 30.5 32.0 34.5 37-9 Bank Credit to Public Sector - 10.8 -1.4 -0.8 - 0.5 Bank Credit to Private Sector 34.8 35.6 38.6 39.0 (Percentages or Index Numbers) toney and Quasi Norey as % of GDP 12.9 15.0 14.7 14.6 General Price Index (1963 . 100) 105.7 119.0 123.6 131.4 Annual Percentage changes in: General Price Index 6 2.1 4.4 3.9 6.3 Government Deposits - - - - Bank credit to Private Sector .4.8 . 2.1 , 8.3 1.0 BALANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 1968-71) 1969 1970 1971 US $ Fn. % (millioWnUS $1 - .roUndnuts and Groundnut Exports of' Goods, BPS 204 26o 222 Prdut a Crt 6,7 40.9 Imports of Goods, NFS 256 275 305 Miscellaneous Manufactured Products 37.4 22.9 Trade deficit -52 -15 Food,beverages, tobacco 24.8 15.3 Interest Payments (net) -12 -15 -16 All other conodities 34.1 20.9 Workers' Remittances ) 19 18 20 TOTAL 163.0 100.0 Other Factor Fayments (net) Net Transfers EXTERNAL DEBT, DECENEBER 31, 1971 Balance on Current Account - 12 -79 (including transfers) Us $ In Private long term capital (net) 10 ) 6 ) 8 Private short term capital (net) - 2 ) - 4 ) Medium and Long-term Credits, Public 167.8 Official Grants 14 ) 1g ) 44 Non-Guaranteed Private MLT, Loans 24 ) 10 ) Total Outstanding and Dtsbursed Amortization - 4 ) - 4 ) Other (net) 2 ) 2 ) DEBT SERVICE RATIO for 1970/fl 5.0 Errors and Omissions -15 5 24 TOTAL 29 35 Increase in reserves (-:increase) 17 -23 3 Gross. Reserves June 30 Net Reserves RATE OP EXCHA1NGE iPE/cIA LEiDT., septecloer 31, 1972 (Millions UT :): t.rough December 71 us 6 1 ' C.Ar 977.7 TERD IDA CiAF 1. O - 0I .3$ Outotanding *I fisbucasO 2 9 15., Jndioiursed 11 9.7 Since Deceber 71 s n l. Undiabud 1.1 21 us $ 1 f CFAF 255.'?9 CPA? 1.0 * '.13 0.0039 n. cot wailable not applicable esterrn Africa Depareeent Ioveb-er 1R. 1972  ANNEX III Page 1 SENEGAL - DAKAR INTERNATIONAL AIRPORT PROJECT Borrower: Republic of Senegal Amount: US$3,000,000 Terms: Interest: 7-1/4 percent per annum Commitment Charge: Standard Term: 25 years including 5 years of grace Project Description: a. the lengthening of the main runway of Dakar airport from 2,900 meters to 3,550 meters; b. the provision of runway lighting for the runway extension c. the construction of additional aircraft parking positions and d. the relocation of the Instrument Landing System localizer.  ANNEX III Page 2 Estimated Cost:* US$ Million Total Foreign Local Extension of runway 2.44 1.46 0.98 Parking aprons 0.35 0.21 0.14 Runway lighting 0.10 0.08 0.02 Relocation of road and ILS 0.38 0.19 0.19 Design and supervision 0.26 0.22 0.04 3.53 2.16 1.37 Contingencies 0.49 0.29 0.20 Total 4.01 2.45 1.57 Financing Plan: Bank 3.00 ASECNA 1.01 Total 4.01 Estimated Disbursements:* Years $ million 1973 1.4 1974 1.4 1975 0.3 * Totals rounded.  ANNEX III Page 3 Procurement Arrangement- Construction contracts will be awarded after international competitive bidding. The procurement of runway lighting equipment at a negotiated price from the manufacturer of the existing lighting will be allowed to facilitate operation and maintenance through standardization of equipment. Rate of Return: 15 percent. (Economic) Appraisal Report: PTR-125a dated November 1.3, 1972. Western Africa Region November 15, t972   IBRD 1 00 55 18 ; SENEGAL I0Jk A TL A N r/ C LOCATION OF AIRPORTS IN SENEGAL 4 -International Airport Paved Roads * Local Airports ,,,..+. Railroads S.g 5$ F,'RlC"A 2 - 7International Boundaries 1 4.~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ij h4 HARD / 2 %TOLL 0 ' O C E A N INT LOUI 16' CAP SKIRRINGOU 0 50 10 /Tiougone* KILOMETERS PORugo > GUESE E R E 9tGU INE * g o/P + cke'~ ockLo\ A g DAKAR-YOFF DIOUR\ K -14. Kf - (4- _ Nejs BCOUNDA BATHIJRS \ _ _ . / (~~~~~~~~~~~~~~\ n.