Morocco - Phosphate Fertilizer Project

CIRCULATING COPY FILE E C O PY .TQ BE RETURNED TO REPORTS DESK DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Not For Public Use Report No. P-1449-MOR REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO MAROC PHOSPHORE WITH THE GUARANTEE OF THE KINGDOM OF MOROCCO FOR A PHOSPHATE FERTILIZER PROJECT May 17, 1974 | 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 It may not be published, quoted | or cited without Bank Group authorization.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 completeness of the report.  Currency Unit I' US$1 = Dh 4.42 Dh 1 = US $ 0.23 lEh 1,000 US $ 230 Dh 1,000,000 US $ 230,000 jJ Adjusted as of Februaxy 1974 EFscal Year: January 1 to December 31 Clearing $ 1 Dh 4.195 I1 = Dh 1 .58 Dh 1 DMo.63 US$1 = DM 2.80  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO MAROC PHOSPHORE WITH THE GUARANTEE OF THE KINGDOM OF MOROCCO FOR A PH0PHATE FERTILIZER PROJECT 1. I submit the following report and recommendation on a proposed loan to Maroc Phosphore, with the Guarantee of the Kingdom of Morocco, for the equivalent of US$50 million to help finance a project for a phosphoric acid and mnono-ammonium phosphate plant. The loan would have a term of 14 years, including 4 years of grace, with interest at 7.25 percent per annum. The Government of Morocco would charge a guarantee fee of 1.75 percent per annum on the outstanding amount of the Bank loan, bringing the cost of the loan to Maroc Phosphore to 9 percent per annum. The project would be financed jointly with Kreditanstalt fur Wiederaufbau (KFW) which, through relending by the Guar- antor, would contribute DM 75 million (US$26.8 million equivalent) on the same terms and conditions as the Bank Loan. Also, the Moroccan Banque Nationale potur le Developpement Economique (BNDE) would lend Maroc Phosphate US$8 mil- lion, on the same terms and conditions as the Bank loan. PART I - THE ECONOMY 2. An economic report entitled "Current Economic Position and Prospects of Morocco" (R329 MOR, dated February 7, 1974) was distributed to the Executive Directors on March 6, 1974. The report is based on the findings of an economic mission which visited Morocco in September 1973 and completed its analytical work in December 1973. The impact on the Moroccan economy of more recent in- creases in the prices of crude oil, which Morocco has to import, and phosphate, which is the country's main export, is assessed in a preliminary way in para. 11. Country data sheets are attached as Annex I. Past Developments 3. The overall performance of the Moroccan economy improved during the Second Five-Year Plan (1968-72), despite difficult political circumstances in 1971 and 1972. Aided by favorable weather conditions and good crops in 1968, 1971 and 1972, real GDP growth accelerated from an average annual rate of about 3 percent in 1960-67 (barely above the rate of population growth) to 5.6 percent in 1968-72, thus exceeding the modest Plan target of 4.3 percent, and permitting real gains in private consumption of about 2 percent a year. At the same time, the implementation of prudent fiscal and monetary policies contributed to a significant improvement in Morocco's domestic and external financial situation, despite shortfalls on planned capital inflows from of- ficial external sources. Government saving and investment exceeded slightly the modest Plan targets, while price stability was maintained. Following a decade of recurring deficits, the balance of payments registered sizeable surpluses in 1969-72, mainly because of sharply rising receipts from merchan- dise exports, tourism and Moroccan workers in Europe. At the end of 1972,  - 2 - MIorocco had accumulated net foreign assets equivalent to 3.5 months' imports of goods and non-factor services. 4. Although the acceleration of GDP growth in 1968-72 was in part cue to generally favorable weather conditions, it appears that the economy has moved onto a path of more rapid long-term growth. Agriculture, export industries, tourism and sectors with derived demand (energy, transportation, communications and modern services) seem to have acquired a capacity for sustained growth, in large part because of past investment and training. In agriculture, expansion of irrigation, increased use of key inputs in rainfed areas (improved seeds, fertilizers and timely ploughing) and a larger number of trained extension personnel have caused faster output growth. In the export sector, the phosphate company (OCP) has regained leadership in the world market as a result of internal reorganization and investment carried out during the Second Plan and the export company (OCE), which has a monopoly over Morocco's exports of fresh and processed foodstuffs, has acquired con- siderable dynamism in management and marketing. Further, a broad range of industries, including sub-contracting companies, have emerged with a good competitive position and sizeable sales on external markets. I) These achievements should not detract attention, however, from the serious difficulties which Morocco still had to overcome at the end of the Second Plan period. There was a need to revive private investment, which had stagnated in 1971 and 1972 mainly because investors took a wait-and-see at- titude in the light of political developments and the expectation of new in- centives and new regulations regarding the association of Moroccan and foreign capital in business ventures (Moroccanization laws). There was also a need to raise private saving which remained at an insufficient level in part because of the relatively low returns on domestic financial assets. Finally, the Government would have to increase investment capacity in the public sector by appropriate changes in staffing and organization. 6. Difficult social problems also had to be tackled. Unemployment relaained at a high level, averaging 9 percent of labor force nationwide and ranging between 12 and 16 percent in large urban centers. The urban popula- tion in substandard housing was large and rising. Wealth and income differ- ences between cities and villages, among regions, and between rich and poor were widening, while about one third of the rural population in the less fer- tile agricultural areas were experiencing a slow decline in real consumption. Lotg-term Development Prospects 7. Recognizing these difficulties and problems, the Government began in 1971 to revise its.development policies, paying increasing attention to social objectives. Reflecting the changed orientations, the Third Five-Year Plan (1973-77) aims at: sustaining real GDP growth of 7.5 percent a year from 1973 to 1977, mainly through a 10 percent a year rise in exports and,a doubling of investment over the Plan period; and  - 3 - improving distribution of growth benefits, mainly through further land distribution to poor farmers and more emphasis on rainfed farming in agriculture, the association of Moroccan nationals with foreigners in services and several industrial sub-sectors, large increases in Government spending on social services and low-cost housing, a more progressive tax system, and appropriate changes in wages and in the prices of basic agricultural commodities. Departing from past financial orthodoxy, the Plan calls for an expansionary fiscal policy and a liberal credit policy, accepting the risk of less price stability. It recognizes that, in spite of faster economic growth, an in- creased public works program and continued emigration, unemployment may rise in absolute, and perhaps also in relative, terms because the growth of the working-age population is accelerating (from 2 percent a year in the 1960's to 4 percent a year in the 1970's). 8. In accordance with its export-oriented strategy, the Plan gives priority to sectors contributing to exports (agriculture, fishing, mining, food processing, sub-contracting industries, transportation and tourism). This priority is reflected in the allocation of Government resources to in- vestment in these sectors, as well as in the new measures taken in August 1973 to encourage industrial exports and private investment. Achievement of the Plan's export target will depend on further improvements in some export sectors (fresh and processed foodstuffs, tourism and sub-contracting), and also on continued external demand. While external demand for phosphate is expected to remain strong, demand for other Moroccan goods and services may weaken over the next few years as a result of the economic slowdown in developed countries following the recent increases in petroleum prices. On balance, real export growth, which exceeded Plan expectations in 1973, will probably be somewhat below Plan targets during most of 1974-77. 9. The Plan proposes significant changes in the investment strategy to increase labor intensity, and improve the situation of less favored groups of society and less developed areas of the country. Education, health and housing, together receive a significantly higher share of planned Government investment (23 percent) than during the Second Plan (11 percent). Among sectors, the main change concerns agriculture, for which the Plan de- emphasizes dam construction, and favors equipment of existing irrigation areas, intensification of rainfed cropping, improvement of animal husbandry and implementation of land reform. New incentives for private investment are less biased in favor of imported equipment than the previous system and en- courage efficient operations and location in less developed areas. 1(. In changing its investment strategy, Morocco is breaking new ground, and significant shortfalls on planned investment could well be experienced in new priority sectors as a result of staffing and organizational constraints, which can only be relieved progressively. Shortfalls will probably affect mainly rainfed cropping, livestock production, low-cost housing and tourism infrastructure. In addition, most of 1973 was lost for the revival of pri- vate investment, since the new incentives were introduced only in August, and  - 4 - the start of new public investment programs was delayed, since the Plan was issued only in July. Finally, measures taken in 1973 to complete the recovery of foreign-owned farms and "marocanise" business imply management changes which may temporarily restrain production and investment. For these reasons, investment may fall short of the Plan's target, and GDP growth may not exceed 7 percent a year in 1974-77. The attainment of the Plan's income distribution objectives will to some extent be compromised by the investment shortfalls affecting programs designed to increase the productive capacity and situation of less favored groups in rural and urban areas. 11. Financial resources are not expected to be a constraint in the medium term provided increased inflows of official assistance are achieved. The strengthening of the balance of payments since 1969 has continued in 1973, and in 1974 Morocco will benefit from a tripling of the price of phosphate rock. Increased earnings from this source will exceed the increase in the country's petroleum import bill due to higher prices by an estimated $300 million in 1974. This net gain may be eroded in later years, since the price of phosphate is likely to level off due to increased world supply while prices of imports and import requirements will keep rising. Nonetheless, until the end of the Plan period, phosphate and other exports, workers' remittances and capital inflows should provide enough foreign exchange to meet import require- ments and maintain reserves at a sufficient level. On the domestic side, the phosphate company (OCP) will be able to make large, additional remittances to tthe Government, which will help finance the planned level of public investment. However, the Government will have to proceed with planned tax measures in order to make the tax system more responsive to economic growth and more equitable, and with planned improvements of the capital market to facilitate the mobilization of private saving and the financing of private investment. 12. The financial situation may become more difficult beyond 1977, if the predicted trends in exports (with no further gains from phosphate prices) and import requirements continue. To prepare for this eventuality, M4orocco needs to increase, as planned, the level of external borrowing on favorable terms from official sources, and this will require improved project prepara- tion. At the end of 1973, Morocco's external debt amounted to an estimated $890 million excluding undisbursed amounts. Service payments represented only 8 percent of goods and non-factor services exports. Although long-term pros- pec ts are for more pressure on the balance of payments than at present and a rise in the debt service ratio, Morocco can service substantial additional debt. PART II - BANK GROUP OPERATIONS IN MOROCCO 13. Bank and IDA lending to Morocco has supported 20 projects with fi- nancing totalling $378.0 million (net of cancellations), of which $146 million was lent over the last two years. Four projects have been financed under IDA credits totalling $36.8 million. IFC investments amount to $2.9 million. Implementation of projects is often slow to start, frequently due to cumber- some Government disbursement procedures, but with time performance usually improves. The Sebou irrigation project (Loan 643-MOR of November 13, 1969  for $46 million) showed little progress for a long time, because of initial management difficulties, slow processing of iecessary land reforms and a flood of unprecedented magnitude in 1970. At present, however, the project is showing satisfactory progress. The water supply project (Loan 850-MOR of July 19, 1972 for $48 million) suffered from initial difficulties and delays in implementing a number of basic measures aimed at reorganizing the major agency in the sector. Following substantial efforts by the Government, pro- gress is now satisfactory. Project implementation by the three autonomous fi- nancial institutions in agriculture, industry and tourism to which the Bank lends, is generally satisfactory. Annex II contains a summary statement of Bank loans, IDA credits and IFC investments as of March 31, 1974, and notes on the execution of on-going projects. 14. The Bank Group strategy is generally to support achievement of selected objectives of the third Five-Year Plan in connection with (a) proj- ects whose primary justification is in terms of their contribution to produc- tion and the balance of payments but through which the Bank can make a major coitribution in terms of institution building and sector development, and (b) programs geared more directly to,attacking the fundamental problems of poverty in Morocco. Particularly in agriculture and urbanization and to a lesser extent in industry, our approach will be to design projects which yield substantial benefits in traditional economic terms and at the same time contribute directly to improving income distribution. The program in- cludes several projects, mostly in agriculture, which might serve as pilot schemes for repeater projects. Because the pace at which Bank Group lending can be carried out will continue to depend largely on the speed at which the Government prepares projects and takes related policy decisions, special efforts will be made to help prepare projects and programs. 15. In the financing of agricultural projects the Bank has up to now helped develop large-scale irrigation schemes and agricultural credit. The Bank now stresses the importance of efficient organization of the ssector, of land reform and of the development of small farms with emphasis on attacking the problem of rural poverty. The Government has recently accelerated land distribution to small-holders and landless laborers and is presently prepar- ing projects for small farmers, mostly in rainfed areas, for which it has sought Bank financing. 16. Education is a critical bottleneck in Morocco's development. Two IDA credits have been made to improve technical and vocational training. A UNESCO project identification mission, in the framework of the Bank UNESCO cooperative program, visited the country in September 1973 to review the sector's development and to help formulate future Bank projects. 17. Industry and tourism development has so far been financed through the two DFC 's (Banque Nationale pour le Developpement Economique and Credit Immobilier et Hotelier). These DFC's are expected to continue to be main channels for Bank lending in these sectors. However, as Executing Agency for a UNDP financed study, the Bank is helping to prepare a tourism infra- structure project which would alleviate the scarcity of improved land for  - 6 - hotel development. Projects in these sectors as well as the project pres- ently prfoposed help Morocco to raise its foreign exchange earnings and provide an opportunity for the Bank to help improve sectoral policies. The Bank supported a study now completed of the interest rate structure in Morocco and the recent enactment of a new investment code. The latest loan to BNDE (Loan 890-MOR) signed in May 1973 also aimE at improving the employment effects of BNDF. financing. 1i. The first transportation loan, a $14.6 million Bank/IDA blend, was for a highway project and included financing of a sector review which served as ca basis for a second loan of $29 million recently approved, as well as recommendations on transport policy. A proposed third loan would permit to continue the dialogue on policy and be a vehicle for further efforts to im- prove maintenance and administration of the highway system. 19. The first Bank financing of public utilities in urban areas was the $48 million Water Supply loan signed in July 1972. A second loan of $25 mil- lion for a power project was signed in October 1973. Both projects try to improve the organization of public utilities. The social problems due to rapid urbanization are also expected to be tackled through a site and services project presently being prepared by the Government, in line with the emphasis on urban housing and infrastructure in the Third Plan. 0.. A consultative group for Morocco was formed in April, 1967 under the chairmanship of the Bank. It includes Belgium, Canada, France, Germany, Italy, Japani, Kuwait, Spain, the U.K., the U.S., IMF, UNDP, OECD/DAC, the African Development Bank and the European Investment Bank. The last meeting of the Grouip, on March 28 and 29, 1974, expressed satisfaction with the improvement in Morocco's economic performance in recent years, and the emphasis in the Third Five-Year Plan (1973-77) on improving the distribution of growth bene- fits. The gross inflow of official loans and grants to Morocco rose from $129 million in 1966 to $159 million (of which $18 million in grants) in 1971, but temporarily fell to $138 million in 1972 and $115 million in 1973. The major sources of aid were the U.S., Germany, the Bank Group and France. 21. At the end of 1973, the Bank Group's share in Morocco's external public debt was estimated at 13.4 percent on a disbursement basis. The share of the Bank Group in debt service was 11.2 percent in 1973. By the encl of the 1970's the Bank Group's share in public debt and debt service is expected to rise to about 20 percent. PART III - MINING AND MINERAL, PROCESSING IN MOROCCO Geimra 1 2h'. Morocco is endowedi with varied1 mineral resources. It possesses the world's largest reserves of phosphate rock (an estimated 40 billion tons) of g,,ood quality that can be easily extracted and are close to the Atlantic coast.  -7- In 1973, it was the world's third main producer of phosphate rock after the USA and the USSR, and the largest exporter with more than one third of world trade. Morocco also has sizeable reserves of coal, iron ore and pyrrhotite, as well as several other minerals, such as lead, zinc, manganese and copper. Dtie to obsolescent mining equipment or depletion of known deposits, their exploitation is often not competitive. 23. Minerals are state property and the Government plays a dominant role in mining and processing since. The Office Cherifien des Phosphates (OCP), a state-owned company, mines and sells phosphate rock, and exercises control over phosphate processing through affiliates (Maroc Chimie and Maroc Phosphore). The Bureau de Recherches et de Participations Minieres (BRPM) is responsible for prospecting, mining and processing other minerals either alone, or in partnership with private firms. The Government grants various fiscal and other incentives to encourage private investment in the mining and processing of minerals other than phosphate. 24. Morocco continued to export most of its minerals in unprocessed forn during the Second Five-Year Plan (1968-72), despite a Plan objective of increasing export value through processing. The growth of mineral exports averaged only 3 percent a year in current prices during the Plan period, and came entirely from phosphate. OCP invested $125 million and underwent an internal reorganization which enabled it to increase phosphate rock exports from 9.3 million tons in 1967 to 13.6 million tons in 1972. However, because of a 10 percent decline in the price of phosphate, its share in total export earnings fell from 25.4 percent in 1967 to 22.8 percent in 1972. Exports of other minerals, stagnated in volume and value mainly because of weak external demand. The Plan's processing objective was implemented in the case of phosphate-based fertilizer production and pelletisation of iron ore. Maroc Chimie, which was set up to produce fertilizer, increased its intake of phos- phate to 600,000 tons in 1972 and raised its fertilizer exports from $10 mil- lion in 1967 to $14 million in 1972, despite serious technical difficulties. Production of high-grade iron ore pellets began in 1972. In 1972, mineral processing was still a small sub-sector, contributing less than 7 percent of value added in the manufacturing sector. While mining and mineral processing continued to be of great importance for the balance of payments (32.2 percent of merchandise exports in 1972), their contribution to GDP (about 5 percent) andl employment (about 2 percent) remained small. lnvestment Program 25. The Third Five-Year Plan (1973-77) puts heavy emphasis on mining and mineral processing for export. To increase exploration, efficiency and domestic processing, it calls for investment totalling about $850 million during 1973-77 for phosphate and other minerals; it expects that the mining sector will grow by 13 percent and mineral exports by 12.5 percent a year, and that mineral processing will become an increasingly important industrial sub-sector. This would represent a considerable improvement over past results, and seems justified on the basis of export prospects for phosphate, other minerals and their derivatives.  - 8 - 26. The investment program of OCP during 1973-77 amounts to an estimated $550 million. This comprises $250 million for expanding and modernizing phos- phate rock mining, $225 million for the production of phosphoric acid and mono-ammonium phosphate (MAP) and $75 million for transport facilities. Maroc Chimie plans to invest about $55 million to expand output and exports of sul- furic acid, phosphoric acid and phosphatic fertilizers, based on local phosphate and pyrrhotite. OCP expects to raise exports of phosphate rock to 26 million tons in 1977 up from 16 million tons in 1973, and to meet the local demand of Maroc Chimie and Maroc Phosphore estimated at about 2.5 million tons in 1977. OCP and its two affiliates have the managerial and technical expertise needed to implement this program. The expansion program seems justified by external demand prospects since over the long run, world demand for phosphate rock is expected to rise by about 7 percent a year. A current shortage, bringing about a sharp price increase (see para 28) and a rise in quantity are estimated tentatively to bring earnings from phosphate rock exports to about $750 million in 1974 as compared to $202 million in 1973. While the high phosphate price may not last for the remainder of the 1970's due to likely increases in world production it will nonetheless provide OCP with ample financial resources to meet investment requirements. 27. The Third Plan calls for investment totalling about $300 million during 1973-77 in minerals other than phosphate, of which $125 million would be for oil exploration. Private participations are expected to be about $200 million. In August 1973, the Government introduced new measures to encourage private investment in mining and mineral processing. Nonetheless, implementa- tion of this program seems less certain as private participations are not yet firmed up. Phosphate and Fertilizer Market 28. World production of phosphate rock rose from 40 to 90 million tons between 1960 and 1972, with the US (42 percent), the t1SSR (22 percent) and Morocco (16 percent) as leading producers. World export trade increased from 29.2 to 43.5 million tons between 1965 and 1972, with about two thirds of the trade going to Western and Eastern Europe; the main exporters were Morocco (31 percent of world exports), the US (29 percent) and the USSR (14 percent). The world rock supply/demand situation moved from a world wide over-supply in the late 1960's and early 1970's to a tight balance in early 1973 and a serious shortage by late 1973 as a result of increased world-wide demand; the same trend applied to phosphoric acid based high grade fertilizers. Prices reflected this development; export prices for 1974 are 2.5 times to more than 3 times higher ($45 for the highest commercial grade) than those prevailing in early 1973. The sharp increase in prices is also explained by a necessary price recovery following a depressed price situation over most of the last decade. World rock prices are expected to remain at their present (early 1974) high levels through late 1975 because of an expected continuing tight supply. The world rock capacity/demand coverage is, however, likely to improve from 1976 onwards; long-v-rm FOB equilibrium prices are therefore forecast to stabilize--by 1976/77- it about 20 percent below the 1974 price levels.  -9- 29. Major structural changes have also occurred in production and trade of phosphate fertilizers in the past 10 years. Increased demand for high grade fertilizers has induced a rapid growth in the production and trade of inter- mediate products, such as phosphoric acid, in which developing countries are more and more participating. The emerging trade pattern will combine increas- ing quantities of intermediate and finished products with raw materials, rock phosphate and sulfur. This new trade pattern favors large units which, as it is the case in Morocco, are close to sources of raw materials and favolably located for exporting. The shortage of phosphoric acid based high grade fer- tilizers in recent years, combined with the increase in rock prices, resulted in a sizeable upward adjustment in prices of finished products, about 50 per- cent for phosphoric acid between mid-1973 and early 1974. However, the supply demand situation is likely to improve from 1976 on, bringing a stabilization in long-term prices at a level somewhat below the current level. PART IV - THE PROJECT 30. A report entitled: "Appraisal of the Maroc Phosphore Phosphoric Acid and Mono-ammonium Project" (No. 351 MOR of April 19, 1974) is being distributed separately. A loan and Project summary is attached as'Annex III. The project was presencted to the Bank in June 1971 and a formal request to help finance the project made in December 1972. The proposed project was appraised in February and October 1973; a follow-up mission took place in March 1974. Negotiations were held in W4ashington beginning January 28, 1974. The Borrower was represented by Mr. Guessous (Financial Director, Office Chierifren des Phosphates), and the Guarantor by Mr. Belghiti, of the Directorate of Economic Affairs, Prime Minister's Office. Description 31. The project consists in the erection of a plant near the port of Safi on the Atlantic coast, about 200 km south of Casablanca, to produce for export 371,250 tons per year of phosphoric acid (P205) and 225,780 tons per year of monoammonium phosphate (MAP) at full capacity. These products are key intermediates in the manufacturing of high grade phosphate fertilizers which are in great and increasing demand in world markets. The project is sponsored by the OCP, and will be implemented by Maroc Phosphore. The proposed project is a key link in the Government's and OCP's strategy to participate in the rapidly emerging world trade in intermediate products used in manufacturing high grade fertilizers. 32. In 1971, the Government of Morocco and OCP requested, and the Bank agreed, that the project be executed as a lump sum turnkey contract. The early conclusion of a turnkey contract was necessary to: (i) increase poteri- tial buyers' confidence in the project; and (ii) obtain firm project costs essential for determining a sales strategy and starting sales negotiations; otlher reasons were the advantages of single responsibility in project execu- tion and the acquisition of technical expertise in phosphoric acid production which was lacking in OCP. OCP signed a first plant construction contract in  - 10 - June 1973 for about two-thirds of the project capacity, and project execution has commenced. This first contract included provisions for project expansion. Following favorable market developments, and to take advantage of an unchanged price offer, OCP, in April 1974, completed negotiations witlh the same supplier for a supplementary contract based on identical terms to cover together with the first contract the overall construction of the project's main facilities andl related infrastructure. 13. International competitive bidding was used to select the consortium which is to execute the project at a fixed lump sum price including an ade- quate escalation formula. OCP invited bids from several consortia of special- ized firms, each under the leadership of one firm (the contractor) who was to have responsibility for the entire project. The Bank agreed to a three-phase selection procedure: (i) prequalification of consortia after international advertising; (ii) invitation to prequalified consortia to submit unpriced technical offers conforming to detailed tender documents; and, (iii) after clarification and technical adjustments of offers; call for a lump sum price for most of the project work which, together with the technical offer, was to serve as the basis for bid evaluation. Out of thirteen responsive bids, five consortia were prequalified and asked to present price proposals. The five contractors were from the US, Belgium, France, Germany, and Japan. The lowest evaluated bid was submitted by a consortium headed by Friedrich Uhde GmbH (Uhde) of Germany. Uhde and the other members of the consortium are well known and qualified firms: Polimex-Cekop (Polimex) of Poland; Lurgi Gesells- chaft fur Chemie and Huttenwesen GmbH (Lurgi); Siemens A.G. (Siemens), Nissan of Japan, and Fisons of the UK. The contract is based on a lump sum price with payments in Dirham for local cost, in clearing dollars for the Polimex part as per a sub-contract between Uhde and Polimex, and in Deutsche mark for the remaining foreign exchange balance. A payment schedule in the three cur- rencies was agreed, and payments are specified at intervals and in amounts proportional to the contractor's expected cash outlays and work progress. Project Execution 34. "Maroc Phosphore" was formed to build and operate the project. The Company functions as a "Societe Anonyme" under Moroccan commercial laws. Its initial authorized share capital is DH 1 million and will be increased to provide for additional equity subscriptions as execution of the project proceeds. OCP will own all of MP's shares. MP sales, finance and accounting functions will be managed by OCP. Plant and production management will be autonomous. OCP's General Manager is also Chairman of the MP board. 35. Engineering, construction, erection and start-up of the plant are the responsibility of the turnkey contractor. Following completion of the first part of the project scheduled for October 1, 1975, cormnercial operations are expected to begin in January 1976, after a 3 months testing period. Fa- cilities corresponding to the second construction contract are expected to stairt operations in Aug.w: 1976. OCP and MP are assisted bv an experienced technical advisor, Ila Jr Topsoe A/S of Denmark. A satisfactory organization for project execution nias been developed and includes: the MP project team, the nucleus of the new company; the various OCP departments involved; the  technical advisor Topsoe; the Contractor's team; and an OCP group of engineers working on future intermediates manufacturing projects. These organizational arrangements are expected to ensure efficient project execution. Furthermore, given the expected difficulties in recruiting Moroccan chemical engineers, Topsoe and the Contractor, as part of their contracts with OCP, will assist in the recruitment and training -- in Morocco and abroad -- of key personnel, including expatriates if needed. 36. Since the plant will be adjacent to an existing chemical plant (Maroc Chimie), the company will benefit from existing infrastructure, with resulting cost savings. Certain additional infrastructure facilities needed for, but not part of, the project and estimated to cost about DH 36 million (US$8 million), will be built by the appropriate Government agencies closely supervised by OCP and MP; the necessary budget allocations have been made. These facilities include: the supply of freslh water through modification of a canal, heightening of a small dam and installation of a conduit or pumping facilities; installations for handling of sulfur at the port; and railroad equipment and siding. Service tariffs, to be paid by MP, have been agreed upon with the agencies involved. Workers' housing will be provided by the regional authorities. A schedule for construction of these facilities to meet the requirements of the project has been agreed upon with the Govern- ment. (Guarantee Agreement Section 2.04 and the Schedule thereto). 37. Of the principal raw materials: (i) phosphate rock will be supplied by train from OCP's Youssoufia mine, under a long-term supply contract with OCP the draft of which was found satisfactory by the Bank and the signature of which is a condition of effectiveness of the proposed loan (Loan Agreement Section 9.01 (e)); (ii) sulfur will be imported in dry lump form under long- term contracts; and (iii) small quantities of ammonia will be bought from various sources on a spot basis. Catalysts and chemicals will all be imported. Known rock reserves at Youssoufia are adequate to supply the project with the same grade over more than its expected economic life of 12.5 years. 38. Phosphoric acid will be shipped from Safi to delivery points in Europe, India and Brazil in three specialized self-unloading, ocean-going ships, equipped with rubber-lined or stainless steel tanks. A shipping company, Marphocean, has been formed -- with an initial share capital of D1 4 million -- to purchase and operate the ships under Moroccan flag; Marphocean is jointly owned by the Moroccan National Shipping Company COMANAV (45 per-- cent) which already owns 11 ships and has a leading role in ship chartering and sea transport of Moroccan goods, and by OCP (25 percent). The balance (30 percent) will be owned by the French ship engineering firm, Gazocean, one of the world's leading firms in the shipping of liquified or pressurized gases and chemicals. The Bank is not financing the shipping facilities, but a condition of effectiveness of the loan, as OCP will enter into a long-term charter agreement with a carrier acceptable to the Bank. (Loan Agreement, Section 9.01 (d)). Cost Estimates 39. Total investment costs for the project, summarized in Annex IIT, aro estimated to be DH 657 million (IJS$148.6 million). Total financing,  - 12 - including interest during construction, is DH 687 million (US$155.5 million). Cost estimates include the lump sum price of DH 405 million (US$91.6 million) for the turnkey contract. Cost estimiates for all major items outside the turnkey contract have been prepared ly OCP and MP were reviewed by the Bank and have been found acceptable. A price escalation clause based on a formula with reasonable estimates for increases of component prices is included in the contract. In addition, an overall contingency (18 percent of project cost excluding working capital and interest during construction) is included to c:over unforeseeable expenditures. This is considered adequate in view of the short construction time. The foreign exchange costs include DH 55 million (USS12.6 million) for goods and services subcontracted and to be paid for in clearing dollars for Polish deliveries. Local costs include DH 18 million for taxes and registration fee. Financing Plan 40. External financing for the project is to come jointly from the Bank and Kreditanstalt fur Wiederaufbau (KfW). While the proposed Bank loan would be made directly to MP, the KfW loan equivalent to $26.8 million will be made to the Government following KfW's usual practice and on-lent to MP. The Bank and the KfW Loan are linked by cross-effectiveness provision (section 9.01(b), Loan Agreement) and cross default provisions (section 8.02(a) and 8.03(a), Loan Agreement). Debt financing for the project would be completed by an $8 million loan from BNDE. The three loan totalling $84.8 million would finance 55 percent of project costs. $70.7 of equity financing would be provided by OCP. The equity would finance the local costs, the costs of Polish supplies (US$12.6 million) which will be paid for in clearing dollars, and also US$2.7 million equivalent convertible foreign exchange costs. MP has agreed to maintain a 55:45 debt equity ratio (Loan Agreemnent Section 5.08). 41. The proposed Bank loan would cover 32 percent of project costs and 57 percent of convertible foreign exchange expenditures. It would be for 14 years with 4 years of grace. NP would pay to the Government a guarantee fee at the rate of 1-3/4 percent (Guarantee Agreement Section 2.05), bringing the total cost of Bank funds for MP to 9 percent. The KFW loan would be made to the Government at 2 percent for 30 years including ten years of grace and would be on-lent to MP for the same maturity and grace period, and at the same ef- fective rate of interest as the Bank loan. The BNDE loan will also be made at the same effective interest rate and conditions as the Bank loan. OCP has agreed to subscribe for, and pay in, the increased share capital of MP accord- ing to an agreed schedule (Shareholders' Guarantee Agreement, Section 2.01). In the event of a cost overrun, OCP and the Government guarantee to provide additional funds, both foreign and local, necessary to complete the project, on terms and conditions acceptable to the Bank (Guarantee Agreement, Section 2.03; Shareholders' Guarantee Agreement Section 2.02). Disbursements 42 Disbursement, of the Bank and KFW portions of the loan financing the turnkey contract will be made pro-r;tta against lump sum invoices submitted  - 13 - by MP and in agreement with the contracts payment schedule. The Bank will not finance goods and services procured in Poland. 43. OCP has so far made US$12.8 million advance payments to the contract- or in convertible foreign exchange. These payments are proposed to be retro- actively financed by the lenders, the BNDE Loan being fully disbursed first. The proportionate Bank share will be US$3.1 million, representing about 6 per- cent of the Bank loan. Financial Position 44. The Company is to maintain a debt service coverage of at least 1.4 and not to incur any debt that would increase its debt equity ratio beyond 55:45 throughout the forecast period of 12 years. The project's financial rate of return would be 16.9 percent after corporate income tax, under con- servative estimates regarding capital, and operating cost and revenue. Tech- nical risks of plant design and operations and risks of substantial delays or major cost overruns are considered low, owing to the contracting procedure followed and the employment of a qualified technical advisor (Topsoe). 45. OCP (shareholders' Guarantee Agreement, Section 2.03) and the Govern- ment (Guarantee Agreement, Section 2.03) will guarantee MP's sound liquidity and financial position through financial covenants. Furthermore, MP has agreed to inform the Bank prior to undertaking any major new capital investment in manufacturing of intermediate and finished phosphate fertilizers (Loan Agreement Section 5.06). Finally, MP has agreed to have its accounts audited independently (Loan Agreement Section 5.02). Marketing Arrangements 46. MP's sales strategy, covering the first five years of the project's operation is to establish itself in key and expanding consumption areas. Sales would concentrate in four major zones: Eastern and Northwestern Europe, India and Brazil. Sales contracts are being finalized that cover virtually the entire plant output during the first two years of operation and about 85 percent thereafter. Sales arrangements satisfactory to the Bank and covering at least 50 percent (in 1976) and 60 percent (in 1977 through 1979) of the estimated annual plant capacity, would be made as a condition of loan effectiveness (Loan Agreement, Section 9.01 (c). The expected average 1976 prices for MP's sales, US$210 per ton of acid and US$150 per ton of MAP FOB Safi, is in line with the forecast long-term equilibrium price in world markets. Economic Rate of Return 47. The economic rate of return of the project is expected to be 21.2 percent. It is highly sensitive to output prices (a 5 percent increase in revenues adds nearly 3 percentage paints) and to phosphate rock prices (a 10 percent drop in rock prices adds 2 percentage points); it, however, remains satisfactory (19.2 percent) if the market price rather than the opportunity cost for rock phosphate is used and if the price of sulfur is increased by more than 5 percent.  - 14 - 43. In addition to its directly quantifiable economic benefits, the proj- ect will generate substantial external benefits. It will: help increase em- ployment levels in the Youssoufia mines which are using labor-intensive tech- niques in a region where employment alternatives are low; develop manufactur- ing activities in line with the Moroccan policy for iTidustrial decentralization and compensate for the decline in fishing activities of the Safi regiQn help OCI participate in the world trade in intermediate fertilizers; provide edu- cation opportunities through training of personnel; and constitute a trainigr center for future siilar projets in Morocco. 49. Appropriate measures to control effluents are provided for in the project. Waste from the sulfuric acid unit will be delivered to the neigh- boring Maroc Chimie plant to be reprccessed; gypsum will be repulped in sea water and disposed of into the ocean. This method, used since 1965, has not created any pollution problem. Storage and handling installations for solids will receive de-dusting equipment. PART V - LEGAL INSTRUMENTS AND AUTHORITY 50. The draft Loan Agreement between the Bank and Maroc Phosphore, the draft Guarantee Agreement between the Kingdom of Morocco and the Bank, the draft Shareholders' Guarantee Agreement, among the Bank, the OCP and Maroc Phosphore, the Report of the Committee provided for in Article III, Section 4(iii) of the Articles of Agreement and the text of a resolution approving the proposed loan are being distributed to the Executive Directors separately. 51. Features of the Agreements of special interest are described in paragraphs 33, 36, 40, 41 and 42 of this report. (Loan Agreement, bection 9.01) 52. Special conditions of effectiveness of the Agreements would be that the effectiveness of the KfW loan and relencding arrangements and the conclusion of long-term contracts by Maroc Phosphore for the sale of its products, for the shipping of products to be exported and for the purchase of phosphate rock. 53. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 54. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President Attacthments  ANNEX I Page 1 of 3 pages rWWURY DATA - MOROCO ARIA POPUIATION MiNSITy 5QO570/. knD 15z llion (mid-1971) 30 Per knt Per ke2of arable land SOCIAL DCDICATORS Refereno Countries M'o-o ,6ethid3d hgse tfChina Tan,a ai GI PER CAPITA US) (ATLAS ReSIS) e 200/b 230 2,430 390 1O CNRAPHIC Crude birth rate (per thoueand) 47 /c 50 18.3 28 47 Crude death rate (per thousand) i 72.r 17 8.4 6 2] In-fnt ortality rate (per thousand live birth.) 149 /dle 150 12.7 18 /f 160-165 /n Life expectancy at birth (yeara) 50 50 74 68 43 Orose reproduction rate 2 . 1.3 2.2 3.2 Population growth rate Q 2.7 1.3 2.9 2.7 Population growth rate - urban 5.3 /A i 2.5 / 7 Age structure (p rcent) 0-14 44 46 /h 27.3 240 44 15-64 52 49 7W 62.6 57 53 65 and oe,r 4 57W 10.2 3 3 De,,endency ratio h 1.7 2.4 7k 1.0 /k 1.3 /k 1.1 /k Urban population ,,s percnt of total 29 /I 35 /h.l 78 /n 61 If 6/g Family planing: No of cceptors cumoulative (thoua.) 67 979 No. of users (S of married woien) 3 4. DWLDCIT Total labor force (thousands) 3,300 L,000 /h 4,700 4,600 5,800 Percentage employed in agriculture 56 55 71 7.2 /n 91 Percentage uneOmplyod 9 9 71 1.2 4 INOCdM DISTRIBUTION Percent of national jocose received by highest 5% 22 I Percent of nationat income received by highesat 20% 49 75 Percent of national iacose received by lowest 20% 3 7e Percent of nationaL income received by los.t 40% 14 7 DISTRIBUTION OF LAND OYZgRS3IP 1 owned by top 10 of owrnrs % owned by smallest 10% of wners HEALTH AND NUTRITION Population per phy icin 9,700 /d 13,160 If 820 If 3,170 If 21,570 Ic Population par nursing person 7,350 7-d 2,760 7p 210 71f 42,170 71 2,980 7? c Population per hospital bed 620 __ 6dO 7j 190 7T 29802 ?7h7t Per capits cslorie upply as % of re-oiresents . 91 It 121 I 111 If 69 Par capita protein supply, total (grass per day) & . 58 7T dS 7 66 7? 43 Of which, animal end puls 14 7t 57 T. 31 7r 23 Death rate 1-4 years /7 0.8 3.3 7? EDUCATION Adjusted /8 primary school enrollmant ratio 49 55 If 102 If 98 37 Adjustod F secondary school enrofl1ent ratio 5 12 7r 71 7? 50 2 Tears of schooling provided, first and second level 12 12 12 12 13 Vnoational enrollment as % of sec. school nrollmsnt 30 3 /f b If 16 6 Adult literacy rote S 17 /Irw 24 7h v.w 99 71f, y 73 - hOUtSING Average No. of persons per roo (urban) 2.1 In 2.8 /h .. 2.6 Iou Percent of occupied units wIthout piped water 41 7Oib 48 7h,b,2 ,d .. 51 ie 20 a Access to electricIty (sa % of total population) 7 7W2 68 7n,a cad - 3 Percent of rural po;louLtion connected to electricity 32 77/ CONSUMPTION Radio re-sinors per 1000 population 46 60 316 If 103 If 1] Passenger cars per i000 population 12 15 200 3 7? 2 /f Electric power consaumption (kwh p.c.) 87 132 3,178 823 77 29 __ Newsprint consumpti-n p.r. kg per year 0.2 0.2 29.1 1.7 7f 0 1 Note-s Fige'es refer either to the lateat periods or to account of environmental temperature, body eights, nd the latent yara. Lateot periods refrr in prinoiple to diatribotion by age nd sa of national populations. the years 1956-60 or l196-7p; the latest year in prin- A Protein standards (requirenents) for all countriae as estab- cipie to 1960 and 1970. Only significantly different lished by USDA Economic Research Service provide for a lmnimom perlodo or years are foctncted aeperately. allowce of 60 graas of total protein per day, and 20 grams of /1 The Per Capita 3NP estimates for pre. other than 1960 anial and pole protein, of which 10 grams should be animal is at ,arket prices, calculated by the name conversion protein. These atandards are soewhat lower than those of 75 techniq.s as the 19'12 irld bnlk Atl.a. grams of total protein and 23 gra of animal protein as an /2 Average number of dughters per noean or reproduotive average for the world, proposed by FAO in the Third World Food age. Survey. /3 Population growth rAte are fbr the dRads endirng in A Soe,e studies have suggested that crude death ratea of children 1960 and 1976. ageo 1 through 4 cay be used as a firat approximation index of A Ratio of under 15 and 65 ad over age brackets to mrlnutrition. tho.s in labor force bracket of age 15 through 64. @ Peroentage enrolled of corresponding population of school age i FhO reference standards represent physiological re- as defined for e ch country. qoiraeente for normial activity and health, taking Ftntl"tv: /b Computed by applying to the 1970 figure the growth rate of the GNP/cap. in real tors fron 1960 to 1970; /' UN nsniiar,e; /d 1962; I Eitimate, based on sample sunny; /f 1969; La 1967; /h 1971; Ai Definition oumoguoeneo with 19iS c Jnsus; /i 175-70; /k Ratio of population undor 15 and 65 and over to totl IaborTorn* /1 Urb-an c-Otern - per onuserution (1960 and 1971 nomenclatures being difforont); /m Over 2,000 population- In An u per- cernige of total ospicyment; /0 Tangunyika only; /p Including nidaie- und unsistant nursn.; /q Including midwives and materoity uoni.tants; /r 7968; /n Goveoroent only; /t 1964-66; /u 1966-68, /v Road and writs; I/ Over 5 years old /c lS yearn Lcd over /y DlnifTtioc of lit.r.cy unknown; /z UN s" tuititol offiTn e istmte; /Ia Trban and rural; /ib bode; /ac Uoan only; /ad Percent of hous.holds; las 1966; 7af P-rcont of dwellings with eleltWtEity. R3 February 21, 1974  ANNEX I Page 2 of 3 pages ""RIICCO - ECOhsoIC 0EV!WPMENT DATA SHEET (Atounts In Million, of US Dolla.-) Actual P-olnoted 1963- 190 194 NATIONAL ACOI3II 1970 1972 173 1974 197 90 197 1979 1963 1970 1979 3-Year Anara-nor1(7-1969 Polo... and EahneRtsA-sroa Annual GrothRae - At Par-at of COY Grss ioos ItPrduct 2561 3249 3535 3691 3877 1436 4.9 5.0 7.0 13 1.5 101.1 192.4 Gan rtTr,o rd . -39 -34 .17 45 42 -129 -2.3 -1 5 -1.1 -2 4 Ina Sosl Ino 13 3214 3518 3736 3919 5307 3.0 3.63 100 100 100 Iors(looludlog NYS) 504 772 932 996 973 1673 8.9 6.6 11.4 20.03 24.0 31.3 turorts (lorludlno NTlllIaaort Cacauttyl 3~18 67 76 89 99 1353 5.3 .8. 6,.6 205 20.9 ;...2. O nsouroe Gap -~~ ~ ~~~~ ~~ ~ ~~~14 101 65 -2 -13 318 . .-os5 3.1 6.0 Cnoptn ondltu-s22198 2800 2995 3191 334 5 4501 4.8 4.6 6.1 .97.9 87.1 94.8 n.t,n oedi Stta(Icuin -ok.) 291 313 568 553 362 1175 12.5 3.4 14.9 11.3 16.0 21.2 Dotatl lacng 301 414 322 5780 607 :007 6.3 11.3 5.9 12.31 12.91 15.2 Nalol aIg 259 432 570 630 661 852 10.9 1.. 2 2 0.3 13. 16.0 MERCAAtDISR TRADE ANDO 87S Aa~nal Data at Current PrIce an...d Ea-hag Ostas As P-..aat of To,tal Eup-ros Phosphaco, fob 113 113 144 203 '22 780 0.0 41.0 1.6 :!1.2 16.2 23.6 Ot her ilooda. 'ob 333 375 490 699 .909 1610 3.0 19.7 14.8 0o. 5 53.7 48.3 oN-f-aoo OStoosa 98 210 296 369 429 9!5 16530!1.483 .Ql .IJ Totnl faporo. ~~~~ ~~~~ ~~~~534 698 930 1271 1960 335 5.3 23.8 11.0 11.0.0 100.0 100.0 Pelrlnie. dr23 37 55 75 269 64 9.9 32.0 19.1 4.5 4.3 15.8 OcherGos- I 406 6449 7'12 1038 1233 26842 9 9.8 16.6 18.0 1..2 76.0 69.4 Non-factor Inrolcas ~~~ ~~~~ ~~~77 148 197 245 21 62 16.9 14.9 15.A1.3 10.7 1. Total loports ~~~~ ~~~~ ~~~~506 054 964 1358 1793 4075 11.0 19.0 17.9 11.0.0 100.0 100.0 rieIndices: A-asan 197-69- 10 foor rIce mdno 102 88 128 13,3 :80 203 -0.8 13.2 1.5 uponPlaIde 118 13 11 27 13 24 -2.8 9.5 5.9 T-ano Trade 8on6 95 109 lO 123 100 2.0 33 -. fopor Vluo_ tndao 90 116 123 139 151 2307 5.2 7.0 9.4 VALUE ADDED BY StCToA Macel Dat an 1967-69 Pric- and Eorhauc laoa Aar.os Annual Gro-th Ratsa - A. Pnroast f Total Agriculture 755 091 980 921 994 1101 3.4 2.9 3.5 29.2 27.4 21.8 Iud.-tr 630 807 903 942 '012 1410 5.1 6.5 9.7 24.3 24.9 29.7 -rlc- 1204 1547 1688 1755 801.3 2635 5.1 5J4 J, 46~.5 47.7 48.6 Total 2389 5245 3571 3610 3884 5426 4.6 3.0 6.9 100.0 100.0 100.0 CE NTRA L AVERONMMF0 rInAiEf Annual Data a-C-rrat ~Pro.s As Pson f GDP Ciirn Reeps374 446 7 31 979 13465 2346 11.A 18.7 11.4 714.4 r 20.1 Curen foediun90 544 684 910 103 250 4.9 16.9 15.0 15.0 16.2 17.8 Budgetary -rpiut 16 102 47 65 533 2466 .. 0.6 3.1 23 Set V oterna I Oorronlng ~~~~ ~~~104 69 98 54 100 350 08.5 12.6 23.0 4.0 2.1 2.6 ocentorot focendi turaa ~~~~ ~~~125 226 255 263 395 1500 12.5 16.4 22.3 4.8 ~ 6.7 9.3 CLOIITN0 EXPENDITURE DETAILS A-tua f.t. " SI"-l T..r..oE Psio La ~Peno- of ~Totl IAn 'E,o Corsl C-r--n tp-ndl.fre-) 1965 1970 1972 1975 1968-72 1973-77 1968-70 1973.77 DETAIL 04 GOEVRNME0OT INVEOSTMENfT aotual PIla-oed actual rla....d f.Iuoatioo ~~~~~ ~~~~~ ~~~24.5 28.2 31.1, 27.4 ___ O..or Soil. r e 11.3 7 . . Social Sec-or 121 635 10.7 22.7 ugriro trure 7.7 7.2 7.1 4.5~~~~~~~~~~~~~~~~~~~~~ 3lrru r 462 79 40.9 28.51 DiVor toananic Sernioss 6.5 ~~ 4.0 4.5 Industry and Miotog5141 2'88 12.5 10. Ad.-icicrti-c agO Secant7 30.7 30.0 31.82 20.9 uia30 67 2.7 2.4 LI 0cr 19.3 10.7 16.6 24.4 ronat4Cansiunoan..s 187 247 10.6 80. Total Corr-on t..npadiltr- 100.0 102.0 100.0 100.5 Othar -188 765 16.7 27.3 Total 1129 2800 100.0 100.0 'ELECTED I9ODICATORS 1960. 1945- 1970- 1973. F, ISACI.NC, (Calu-Ia-d Iron S-Year A-a-gad D.ta) 1965 1970 1925 1970 Current Sur1plus 313 1013 27. 326. A-oroo ICOR 5.1 20 3,2 2.5SontlBrrwn 588 1152 52.1 41.1 Unyrr Elanic Iy 0.05 1.90 I.746 1.50 I.a:Cpta Oeate -126 -279 -11.1 - 9. Marina Domesti Sa1iogs Rate 0.7 0.14 0.15 0.12Toa iaun 1129 2800 10.0 10. Margi-nol 1- SaE -a aing. Rare -00.02 5.24 0.10 0.10 Toa -ao oce Value Added ... Aerker 11967-69 frI.tea and Exthanse tR.,., LABOR cORCF AD OIITPTT PER WORKER in Millio-a Co oa ruhct .. " olr Paret- of Aneraa Ocoth Rate~ %na 1960 1971 1960 1971 1960-71 1960 1971 1960 1971 1960-71 " A-Aoi,,Iu- 2.2 - 55.T 430 .50.3 Indunltry - 0.6 . 5L.. 1410 .165.1 S---uc .- 1.2 . 00.. 1353 .158.4 Tarol 3.3 4.0 100.y 150.0 1.0 - 854 100.0 100.0 nat 0001ilain" 080ENA CP II March 4, 1974  ANNEX I Page 3 of 3 pages f 0DROCCO - L4(CR 07 PA DOTfTS. bErnAI. ASSISTANCE AfM D88T PEDJECrIGS (Affo00t In wIllOon. of U.. dollar a t current prIe.*) AVtAM#ul CGfff7t R-t.. Act"al Ctaitrced Proltetad ProJanttd 1974- 9- 1969 1970 1971 1972 1973 1974 197 197 1977 1978 1979 1989 1979 19f9 30K40RX bALANCE 0 PAY8KETS foponta lInvlodIn8 67S1 667 698 737 930 127. 1960 2044 2126 2139 2883 3301 11220 11.0 13.0 lecort, (incloding 1s0 709 b54 858 964 1357 1793 2036 2388 2882 3342 4074 13220 17.8 12.6 R tourre Belanc- (X-H) -42 -156 -121 -34 U 7 T W -MT w -|7 li In tcros et -63 -52 -56 -71 -79 -64 -0 -48 -52 -65 -82 -873 5.1 26.5 Irot Inocacoent Into.. -23 -25 -25 -29 -36 -37 -38 -40 -43 .47 -52 -135 7.1 10 0 Worloac. R~..lt ntnce. 60 f3 95 137 160 168 176 185 196 205 216 351 5.1 5.0 Content Ican. f.ralp_t) 29 26 30 24 29 31 c 33 2 3 3 0 0 0.0 'alance on ,Cu rcent,,,Alccn 32 '44 -77 . . -l 2615 129 -32 -209 5 5T PrIcatc Dlrect lnve.teent 4 19 20 20 14 19 17 19 24 30 35 142 13.0 14.9 (IltIclal Ceplnal Cram. 27 20 I 17 14 12 12 12 12 12 12 25 0.0 7.6 Public H6LT Loana -DIsb= rcenle 67 129 141 121 101 192 237 268 296 315 458 4566 19 0 25.5 _Rfnroa nt. -36 -35 -49 -49 -67 -74 -62 _90 -99 .114 -135 -1689 12.8 29.0 Eet Di.bura.t ent 30 94 92 72 34 118 155 178 198 20l 32T T Otcht H6LT Lo.n- -0,sbocaennnta - - - - - 10 21 22 23 24 25 82 20.1 12.6 -Ortavonenno - - - - - - - -3 -6 -9 -12 -66 . 18.6~~~~~~~~~~~~~~~~~~~~~~~ 6 9 1 -6 i . Net Dlobocoroaottn - - 1 - 7 10 21 19 17 15 13 54 6 CepItel Traneeci Ion. nor . -I 47 18 -63 40 19 12 2 -I 5 80 Clenuc In Sot Seservre (-.tnor.e^^a -21 -36 -71 -74 .109 -304 -31_ -104 -40 76 266 -416 GRANT A2D LOAN COHOH12KEIt S Offl.i.1 Ccantl and GUnt-like Lo-n 27 20 16 17 14 P.blc 84LT Loan. IR0 53 25 35 87 49 IDA 7 _ 9 10 _ lD:,r Nnltllatccal - 3 - - GDv rnntonta 31 67 74 73 49 SoppI lrr 3 12 2 - Finan- al In..ittiton. 3 25 32 1 donde I To-al Pblit K.LT Loan. 93 253 151 151 98 Actual Debt Ont-.andin- on Deccrbor 31. 1972 ACTUAL AND PROJECTED EXTERNAL DEBT D-ibuceed clyv P-.cent 18RD 85 10.0 20A 15 i8 Dth-r H Itil.terul 3 0.3 Governnents 602 70.6 luppli-ro 49 1.0 Finan--lW I-n.ttution- 65 7.7 -ondo 29 3.4 P.bl:t Debt n i. 4 0,4 Total P.blt H6LT Debt 852 100.0 Noc appllcablt 090190 CI' 1E NIl o- -nRligibl F.ebru-" 208 1974   ANNldE II Page 1 Of 4 pages T'HE STATUS OF BANK GHGUF Q;PERATIONS IN MOROCCO A. bTATIiRENT OF BANE LGANS AND IDA CREDITS (as of March 31, 197 ) Loan or US $ Million Credit Amount (less cancellaticns) Numl;er Year Borroiwer Purpose Bank IDA Undisbursed Six loans fully disbursed 79.1