Mali - Third Highway Project

CIRCULATING COPY COTO BE RETURED TO REPORTS DESK DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Not For Public Use Report No. P-1717-MLI REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF MALI FOR A THIRD HIGHWAY PROJECT November 25, 1975 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 It may not be published, quoted or cited without Bank Group authorization.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 EQUIVALENT Unit = Malian Franc (MF) US$1 = MF 450 MF 1 = US$0.0022 MF 1,000 = US$2.2 MF 1,000,000 = US$2,222 Fiscal Year: January 1 through December 31 REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF MALI FOR A THIRD HIGHWAY PROJECT 1. I submit the following report and recommendation on a proposed development credit to the Republic of Mali for the equivalent of US$10.0 million on standard IDA terms to help finance a Third Highway Project. PART I: THE ECONOMY Background 2. A report on "Recent Economic Developments in Mali" (233a-MLI) was distributed to the Executive Directors on September 27, 1973. Country data are attached as Annex I. The next economic mission is planned for the begin- ning of 1976. 3. With a per capita GDP of less than US$100, Mali is one of the poorest countries in Africa and one of the 25 "least developed" countries identified by the United Nations. It has faced difficult economic problems during most of its existence as an independent nation resulting mainly from its geographical situation and very modest resource position. The Government's policy of hiring all graduates of secondary and higher schools unable to find employment in the private sector has exerted constant upward pressure on public expenditure. The policy to keep essential consumer prices low is implemented through state enterprises, many of which incur heavy financial losses as a result. These losses are financed by bank credit, which explains much of the rapid credit expansion in recent years. Price and credit policies have contributed to Mali's continued balance of payments deficit. The cumulative effects of the recent drought in the Sahel, the sharp rise in energy prices and strong world inflation have dramatically aggravated Mali's economic problem. Recent Economic Developments 4. After growing at an average rate of 5 percent a year in 1970-1972, the economy suffered a major setback in 1973-1974. GDP declined by 6 percent in 1973 and stagnated in 1974 as the contribution of the primary sector de- clined because of the drought. In 1973, cereal production was more than one- third below the 1972 level; there was a slight upturn in 1974, however. Cot- ton and groundnuts, the main cash and export crops, fell comparatively little in 1973, but their decline accelerated in 1974. Livestock production remained relatively high in 1973 because of large-scale emergency slaughtering to mini- mize the effects of the drought, but fell to about 70 percent of its 1972 level in 1974, reflecting the heavy losses in the livestock population. -2- 5. Public savings have remained negative despite considerable improve- ment in tax collection in recent years. Government current expenditures have been rising at a rate of over 11 percent annually between 1970 and 1974, chiefly because of the strong increase of wages and salaries whose share reached 67 percent in 1974. As a result, the overall deficit (excluding investment ex- penditures financed out of foreign aid) rose from MF 2.2 billion in 1970 (9.2 percent of total spending) to MF 7.7 billion in 1974 (21.2 percent). Never- theless, the deficits in the drought years 1973 and 1974 remained below what had been expected earlier for two reasons: (i) Fonds Europeen de Developpement (FED) made up for the loss of revenue from the cattle tax that had been sus- pended to help drought-stricken farmers and herders, and (ii) Government ef- forts to speed up tax collection and improve tax administration led to the collection of over MF 4 billion in back taxes during 1973 and 1974. Further, the introduction of a "taxe conjoncturelle" in mid-1974 was expected to yield another MF 500 million in revenue. Thus, instead of stagnating, revenue in 1973 and 1974 increased faster on average than in the two years before. 6. The balance of payments, which had improved through 1972 despite a continued overall deficit, also deteriorated substantially during the past two years. Although the value of exports of goods and non-factor services continued to grow at healthy rates, this was far from sufficient to prevent the resource gap from expanding. Rising prices for Mali's main export com- modities (cotton, livestock, groundnuts) more than offset the reduction in volume caused by the drought and some secondary items increased in importance, but with the value of food imports nearly quadrupling and that of oil imports more than doubling between 1972 and 1974 total imports of goods and non-factor services rose almost 100 percent, reaching US$206 million (MF 99.2 billion) in 1974, and the resource gap surged from US$39 million (MF 19.9 billion) in 1972 to a record of US$112 million (MF 53.8 billion) in 1974 -- equivalent to 26 percent of GDP against 11 percent in 1972. 7. As in the past, Malian workers' remittances and other private trans- fers helped reduce this deficit. Much more importantly, grant aid to the Government increased from US$21 million (MF 10.6 billion) in 1972 and over US$49 million (MF 21.7 billion) in 1973 to US$70 million (MF 33.9 billion) in 1974. Official borrowing -- including use of the IMF Oil Facility (SDR 4.0 million in 1974) -- also increased considerably. Nevertheless, the overall balance of payments deficit soared from US$3 million (MF 1.5 billion) in 1972 to US$26 million (MF 12.3 billion) in 1974. At the end of 1974, net foreign exchange reserves of the banking system stood at minus US$115 million (MF 55.4 billion). This was made possible by the right to draw on the Operations Account with the French Treasury, an arrangement Mali has relied upon since it rejoined the Franc Zone in 1967. Foreign Aid 8. Public investment is mainly financed by foreign aid. During much of the sixties the USSR and the People's Republic of China were the most important aid donors. At the end of 1973, they held about one-third each of Mali's ex- ternal public debt disbursed and outstanding. Aid disbursements (net) from -3- Development Assistance Committee (DAC) sources increased from US$23 million in 1969 to US$70 million in 1973, averaging US$37 million annually during the five-year period. Roughly half of this amount came from bilateral (France, United States, Germany, Canada), the other half from multilateral sources (EEC Fund, United Nations, IDA). Nearly 95 percent of the inflow during 1969- 1973 consisted of grants. 9. Mali's external public debt outstanding at the end of 1973 was US$368 million, including an undisbursed amount of US$85 million. IDA's share in the total amount disbursed and outstanding was 7.7 percent. Repayments of prin- cipal and interest due in 1973 would have claimed about 19 percent of foreign exchange earnings (15 percent in 1972), but actual debt service payments were small (1.5 percent in 1972, 1.7 percent in 1973) owing to the rescheduling since 1970 of Chinese, Russian and some other debts under short- to medium-term arrangements. Mali received five stand-by credits from the IMF, of which SDR 5.5 million are outstanding. In March 1974 the IMF agreed to reschedule SDR 2.5 million of payments due in 1974 and 1975. A further postponement of payments commitments totaling SDR 2 million was approved in January 1975. Development Prospects 10. With rainfall in the 1974/75 season near the 30-year average, Mali's short-term prospects have improved; harvests are expected to be better than in the preceding two years and economic growth should pick up in 1975. Despite this more favorable outlook the Government requested another 150,000 tons of food aid to make up for local shortages and to rebuild grain reserves. The Bamako area paradoxically suffered considerable flood damage in the Fall of 1974. Prospects for the 1975 balance of payments still appear relatively favorable. Tentative estimates show a sizeable reduction of the resource gap to US$92 million as exports continue to grow while food imports are almost halved compared with 1974; oil import costs increase by a-relatively modest 20 percent. Private transfers should stay at their 1974 level, and grant aid to the Government is expected to fall little from last year's peak, totaling close to US$60 million. Private and official borrowing, taken together, is estimated to be the same as in 1974. As a result, the overall balance of payments deficit in 1975 would be reduced to US$20 million. 11. Over the longer run, Mali's growth prospects will largely depend on the success of the new Five-Year Plan. The Plan covers the period 1974-1978, but it had a slow start. As in the past, the economy will also be greatly influenced by factors beyond the Government's control, such as the weather and changes in the terms of trade. The Plan's GDP growth target is 7.3 percent a year. Total planned expenditures (at 1974 prices) are put at MF 395 billion (US$878 million), of which external sources are expected to finance 85 percent. As during the 1970-1972 Economic and Financial Recovery Program, the rural sector, agro-industry and supporting transport infrastructure receive highest priority, and still greater weight than in the past is given to water resources and hydro-power development. Two large multi-purpose schemes -- for power generation, irrigation and possibly navigation -- are planned. One would involve the construction of a dam at Selingue on the Sankarani River, a tributary of the Niger, upstream from Bamako close to the border with Guinea, the other would consist of the construction of a dam at Manantali on one of the tributaries of the Senegal River in the west of Mali as part of a huge program to develop the Senegal River basin for the benefit of Mali, Senegal and Mauritania under the aegis of OMVS 1/. But complex economic, financial and technical issues raised by these projects and coordination between them are still unresolved. 12. Compared with the actual expenditures under the 1970-1972 Recovery Program, expenditures envisaged by the Five-Year Plan are almost three times as high overall and over four times as high in the rural sector. The Govern- ment hopes that new partners will join the traditional sources of aid to help achieve these very ambitious targets. In view of Mali's low income level, the Government's limited capacity to quickly generate budgetary savings and the size of existing external debt, external aid must be on the most concessionary terms possible and should cover a high proportion of total project costs, including substantial amounts of local expenditures. PART II: BANK GROUP OPERATIONS IN MALI 13. The proposed credit would be IDA's eleventh operation in Mali, bringing the total of IDA funds committed to US$93.2 million, most of them during the past three years. Of the presently outstanding amount (US$83.2 million), US$36.1 million had been disbursed as at September 30, 1975. Annex II contains a summary statement of these Credits as at September 30, 1975, as well as notes on the execution of current projects. 14. Experience with ongoing projects has generally been good, although the extreme shortage of rainfall and reduced flooding of the Niger River have seriously hindered production under the Mopti rice project. An exception, however, should be made for the telecommunications project which has finan- cial difficulties mainly due to the combined effect of an optimistic original cost estimate, a two-year delay, unforeseen inflation, a lack of international competition and currency realignments. Steps have been taken to seek addi- tional sources of financing and the Caisse Centrale de Cooperation Economique appears to be willing to provide some additional financing for this project. 15. Mali has considerable potential for agricultural and livestock development on which the bulk of the population depends for a livelihood. In fact, most of the operations envisaged by the Bank Group in the near future are related in some measure to the rural sector. They include a cotton and cereal project and a second rice project, the former providing cotton process- ing and storage facilities and general support for food crop production in 1/ Organization pour la Mise en Valeur du Fleuve Senegal, the multi-national organization in charge of the coordination of development efforts in the Senegal river valley. -5- the south, the latter providing a follow-up to the Mopti rice project. These two projects are likely to absorb all the remaining funds available for lend- ing to Mali under the Fourth Replenishment. In addition, there are a number of projects in agriculture, transport and other sectors for which the Govern- ment will be seeking Bank Group financing, and if all these projects are to go forward, a major effort to secure financing from other sources will be needed to supplement IDA funds. PART III: THE TRANSPORT SECTOR IN MALI The Transport System 16. Mali's transport system is fairly extensive and consists of the following infrastructure: 13,200 km of roads of which 3,300 km all-weather; a 640 km railway which links Bamako with Koulikoro and Kayes and then via the Senegalese Railway with the port of Dakar; 1,650 km of inland waterways, navigable only about seven months per year; an international airport at Bamako; and about a dozen local airfields. The two main international routes are: (a) the railway from Bamako to the Port of Dakar -- 1,283 km, 640 km of which are in Mali -- which carries excluding drought relief traffic (300,000 tons of grain), about 350,000 tons of international traffic; and (b) a road/rail combination from Bamako to the Port of Abidjan, approximately 1,230 km in length (a paved road leads from Bamako to Ouangolodougou, Ivory Coast, which is on the railway to Abidjan) carrying about 60,000 tons of total international traffic. 17. The Government controls the major transport companies: RAgie des Chemins de Fer du Mali (RCFM) or Mali Railways; Compagnie Malienne de Transport Routier (CMTR), a trucking company carrying about 20 percent of total road freight; Compagnie Malienne de Navigation (Comanav), a navigation company handling about 70 percent of waterway traffic; and Air Mali, the only domestic air carrier which also handles a considerable amount of international traffic to and from Mali. 18. The Government's transport strategy has focused on developing local transport infrastructure in support of overall economic growth, on promoting regional integration, and on building an appropriate international network to link Mali with the coast. The Bank Group's efforts in the transport sector, started in 1966 with a credit (Credit 95-MLI) which helped to rehabili- tate and modernize the railway. In 1969, UNDP financed and the Bank supervised a countrywide transport survey by consultants which has formed the basis of subsequent Bank operations in the sector. These have included: a first highway -6- project (Credit 197-MLI) for improvement of highway maintenance, upgrading of agricultural feeder roads, and preparation of pre-investment studies to re- habilitate Mali's two main trunk roads from Bamako to Bougouni and to Segou; a second highway project (Credit 383-MLI) for rehabilitation of the above two trunk roads and for preparation of pre-investment studies for the Bamako-Kolokani road; and a second railway project (Credit 384-IMLI) for additional equipment and track renewal. The Government now wishes to update this survey and has asked the Association to finance under the proposed third highway project preparation of a new transport plan (para. 29). Road Transport Industry 19. The Government, through the Ministry of Transport and Public Works (MTPW), administers the road industry, controlling tariffs and the distribu- tion of both international as well as important local freight. Trucking or- ganizations are many and range from a big cooperative consisting of some 550 vehicle owners to individual owners. In 1974, the vehicle fleet was estimated at about 19,000, of which 63 percent were passenger cars, 21 percent vans and pick-ups and 16 percent trucks and busses. 20. The trucking industry is faced with such problems as poor managemen and organization and a seasonal work cycle based on the agricultural calendar, all of which have resulted in a low average load factor. Part of the efficiency problem also seems to stem from the low truckers' rates which the Government kept fixed from 1967 until October 1974, when it awarded carriers a 43 percent interim rate increase. Among other objectives, the trucking industry study provided for under the Second Highway Project and scheduled for completion during 1976, will determine how far these fixed low rates have contributed to a situation in which truckers lack incentives for new investments, and to what extent inadequate management, organization, and maintenance are responsible for the difficult trucking situation. During negotiations of t4ig Second Highway Project, the Government agreed to implement as appropriate, and according to a timetable satisfactory to the Association, the study's recommen- dations. Highway Administration 21. The MTPW has overall transport sector responsibilities, and through the Directorate of Public Works (DP1), is responsible for highway planning, design and construction and for maintenance of all roads except local dirt roads and tracks. The Ministry of Plan shares with the above Ministry the responsibility for investment planning. 22. DPW has been extensively reorganized over the past five years, and the responsibility for highway administration is now shared among several divisions, each under the direct control of the Director General of Public Works. The DPW staff includes about 20 Malian engineering graduates, 60 trained technicians, and 1,500 workers with varying degrees of skill and training. Technical assistance for strengthening the organization of DPW and training of -7- its staff was provided under both the First and Second Highway Projects. The results have been most encouraging, but further training of laborers, techni- cians and supervisors is still needed. The Government, with the assistance of the Association, is setting up a Public Works Training Center for supervisors, foremen, timekeepers and workers which will complement the existing mechanics school. The building for the center has been financed under the Second Highway Project with money for overseas training that was reassigned. Equipment and technical assistance will be provided under the proposed third project (para. 29). Road Construction Industry 23. The Central Technical Service of DPW designs minor roads, while major highways are usually designed by consultants. The DPW's own surveying institute and well-equipped National Public Works Laboratory are usually retained as sub-contractors to participate in highway engineering studies. The national laboratory is equipped to perform almost all soil and material tests required for design and supervision. Over the past few years, construc- tion of major highways has been executed primarily by foreign contractors, and to a lesser extent by DPW's own forces and the Malian Army (Bamako-Koulikoro). DPW's forces were equipped under the first and second projects. Maintenance 24. DPW's Roads and Bridges Division maintains all roads except local roads and tracks, and the Highway Equipment Pool maintains the vehicle and equipment fleet. The previous two highway projects considerably strengthened the basic organization of both these services. However, due to a lack of funds caused by factors beyond the Government's control such as expensive and insufficient fuel supply, inflation, the continuous drought between 1969 and 1973 and the heavy traffic resulting from the Sahelian relief operations which further damaged the roads, several roads are in poor condition requir- ing a considerable amount of repair. The Government is unable to carry out this repair without assistance, particularly on the paved roads. This assistance will be provided under the proposed project. Financing 25. The Government finances highway expenditures with funds derived mainly from fuel taxes, which are deposited directly in the Road Fund 1/, while other taxes (import duties on vehicles, equipment and spare parts, and vehicle registration charges) go into the general budget. In the 1971-1974 period, highway expenditures averaged about MF 4 billion (US$9 million) per year of which investment accounts for MF 3 billion and maintenance, including administration, MF 1 billion. According to DPW, estimated road investment expenditures for the Government's new five-year plan period 1974/78 amount 1/ The Road Fund is used to finance road maintenance and construction activities as well as DPW's overhead; the Road Fund is administered by the Director General of Public Works. -8- to about MF 12 billion (US$30 million) per annum. These figures, however, are Planning Office and DPW estimates at underestimated 1974 prices. To reflect real 1974 prices, they have to be increased by as much as 25 to 100 percent depending on the project. 26. The Government will therefore have to find additional highway revenues by increasing fuel taxes or earmarking more or all road user taxes for highway purposes. This suggests furthermore that the Government will also have to scale down its investment program for the current five-year period. The proposed new transport plan will re-evaluate and update the present five-year plan in the light of the traffic needs, the new cost structure and the country's financial position. 27. In order to find a solution to the basic issues raised by these financial constraints, the Association is proposing to continue discussions with the Government on the determination of the level of current and capital resources which can reasonably be set aside for transportation in the light of transport maintenance and investment needs and other priorities which will be determined by the proposed transport plan study. During negotiations Government accepted to give priority to maintenance over investment expendi- tures in the allocation of resources from the Road Fund and to keep a separate accounting system for these expenditures (see Sections 4.03 (d) and 3.05 (c)) of draft Credit Agreement). PART IV: THE PROJECT 28. A report entitled "Appraisal of a Third Highway Project - Mali" (No. 888 MLI) dated November , 1975 is being circulated separately. A credit and project summary, including a breakdown of costs, is contained in Annex III, and the project area is shown on the attached map (IBRD 11682). The project is based on a feeder road feasibility study prepared by French consultants Bureau Central pour les Equipements d'Outre-Mer (BCEOM), and on the findings of an IDA appraisal mission. Field appraisal took place in January/February 1975. Negotiations were held in Washington on October 28-31, 1975. The Malian delegation was led by the Minister of Transport and Public Works. Project Description 29. The proposed Third Highway Project provides essentially for follow- up operations to the improvement of road maintenance and of agricultural feeder roads, efforts which were initiated under the First and Second Highway Projects. The project consists of: (i) continuation over 3-1/2 years of a program for improvement of about 1,200 km of feeder roads in the most pro- ductive cotton and groundnut areas including the purchase of two ferries for river crossing on the two most trafficked feeder roads; (ii) a 3-year program for elimination of the backlog of periodic maintenance on about 944 km of paved roads, as well as procurement of spare parts and the construction and equip- ment of two new DPW maintenance subdivision workshops; (iii) procurement of office equipment, teaching materials, and vehicles for the Training Center of -9- the Department of Public Works (DPW); and (iv) consulting services for (a) technical assistance to DPW for implementation of the feeder road improvement and the backlog maintenance programs, (b) preparation of a training program for the DPW Center and training teaching staff, and (c) preparation of a study to establish a countrywide transport plan. - 30. The total cost of the project (including $2.2 million taxes and duties) is estimated at US$13.4 million. equivalent, of which US$8.4 million in foreign costs (63 percent). The proposed Credit of US$10.0 million would . finance the entire foreign cost of the project and US$1.6 million of the local costs, equivalent to about 89 percent of total project costs net of taxes. The Government would finance the remaining local costs of about US$1.2 million equivalent. Project Execution 31. Execution of the project will be primarily the responsibility of DPW, with its sister department, the National Transport Office (ONT), in charge of transport planning and organization, being responsible for preparation of the transport plan. The feeder road improvement and backlog maintenance works will be executed by DPW's own forces established under the two previous high- way projects. The planned schedule is as follows: improvement of feeder roads, January 1975 - mid-1978; elimination of backlog maintenance, January 1976 - December 1978 with some training in 1975; consulting services for technical assistance and the transport plan study, 1976-78. Since the Government haa kept feeder road improvement works going with its own funds after January 1, 1975, it is recommended that the Association provide retroactive financing for expenditures incurred for this project component prior to Board presenta- tion, in an amount estimated at US$900,000. Retroactive financing should also be provided for about 10-months of technical assistance expected to be pro- vided during 1975, at an estimated cost of US$100,000 and for the purchase of some materials necessary for the training of the bituminous road mainten- ance brigade (maximum US$100,000). All consultants for the proposed project will be employed on terms and conditions satisfactory to the Association. 32. To avoid delays in the progress of work under this project due to lack of liquidity of the Road Fund, a revolving fund of US$500,000 will be opened in a local bank immediately after the date of effectiveness of the credit. The Government will be allowed to use this account for expenditures for the project eligible for financing under the proposed credit. (See Section 2.02, para b) through e) of draft Credit Agreement. Procurement and Disbursement 33. The two ferries (US$0.6 million) which are simple in construction and have to be assembled at the site would not be attractive to suppliers outside those currently established in Mali. They will therefore be procured on the basis of local competitive bidding. Bitumen (US$2.3 million) may be purchased from a refinery in Ivory Coast. This procurement method provides the best transport advantage and will be acceptable to the Association as long as the prices obtained are in line with international price standards. - 10 - Contracts for fuel (US$1 million) and other items estimated to cost less than US$20,000 each (US$0.3 million in total), may be let oii the basis of the Borrower's standard procurement procedures provided these procedures shall continue to be acceptable to the Association. The four vehicles for the training center and the spare parts for the Highway Equipment Pool (US$0.6 million) will be procured from licensed dealers at list prices which are reasonable. Details of these arrangements have been agreed upon with the Government. 34. Disbursements from the proposed Credit will finance 75 percent of expenditures for feeder road improvement and for backlog maintenance operations and will be made on the basis of applications submitted by the Government in- dicating in detail all work carried out and expenditures incurred. The Asso- ciation will also finance 75 percent of the cost of the office equipment, teaching materials and vehicles, for the DPW training center and for consult- ing services. Benefits and Justification 35. Benefits of the feeder road and maintenance elements of the proposed project will be perceived in lower vehicle operating costs and increased agricultural production, and overall improved efficiency of the road trans- port industry. Further, all works will be executed by DPW which will use this opportunity to strengthen the organizational structure built up under previous projects financed by the Association. 36. The economic return on the feeder road component of the project is estimated at almost 17 percent; even with an increase in all costs or a re- duction of benefits of 25 percent, the return is still about 10 percent. The backlog maintenance element of the project has a benefit/cost ratio of more than 3 at 12 percent interest. PART V: LEGAL INSTRUMENTS AND AUTHORITY 37. The draft Development Credit Agreement between the Association and the Republic of Mali, the recommendation of the Committee provided for in Article V, section 1(d) of the Articles of Agreement of the Association and the text of a Resolution approving the proposed Development Credit, are being distributed to the Executive Directors separately. 38. The draft Development Credit Agreement conforms to the normal pattern for credits for highway projects. Features of special interest are referred to in paragraphs 27 and 32. 39. I am satisfied that the proposed development credit would comply with the Articles of Agreement of the Association. - 11- PART VI: RECOIMENDATION 40. I recommend that the Executive Directors approve the proposed credit. Robert S. McNamara President Attachments November 24, 1975 →■■ーーー■園ーーー国■■ーー . . J Annex I Page 1 of 3 pegas DATA - KALI M L POPULATION 1,2h0,000 kel 5.26 -1111M (wid-1972) 43 1_ Per ~of &Pablo lam BOCIAL ~IM )tall NIRer lytu IYTU IYTU om m ^ Ust Bola) 80 4a 90 La 120 /a 260 ~ th reta (Per thoaoend) - 5. /c.d 52 /cd 49 tc,d 46 4ý_d' Gru death rate (per thoug~ 3- 7 =gd 23 å41 .18 c= 23 Infent R~ ty rata (per thmamd llw bi~ 120 19 Ute ~0~ at birth (years) bo Lý u 4r 51 & Oroas reproductian r 3 3 3 5 3 L t 3:0 popalation gro~ 1 8 2:1 e 2:9 2:8 2 1 ropulation gr~ se I - urban Aga etructum (porcaut) 0-14 42 4 ' d 11 1 4' 42 15-64 55 h9 5ý 52 54 65 and over 3 2 d 3 3 4 Aga dpendency mtio4io 0 8 1.0 d 0.9 0.9 0.9 E~ c depandency (5 J£dq'! 0.9 1.0 Li 1. 7 1.2 Urban populåtl-n as pe,ocet of t~ 11 /bj 8 L 13 Lgak 29 Lh F-diy PI~- M- -t 800~9 ~ati- (~9.) Dö. of =ra N of merriod ~ ) I I 9^ 1 for*@ (thonsmie) 2,400 d 2,800 1,900 7~ jajaj: 1,700 ceployed In agriculture 94 ýd 91 d 91 8D d 73 Varoentage u~ yed 7 er, M-ER? ffln.Omål. inoone rocelwd by ~et 5% förcent of national Lao~ received by b~8t 209 ftromt or national Incaen maelved by lowest 20% Féromt of national in~ reoeivad by loswet W9 q~ 07 jiE 0~ » 0~ by t4p 105 of 0~8 0~ by ~lagt 10% of .1. ~ AND ~TIOR ~ ZIOn per ptvelai" 40;9ä. ý1.. 441 IL:520 ,111 59 800 13:660 t. . =uz 5, & 30 Population per =sin person 1530 1 940 2 0 lOpulation per b~ tal bed 1,490 /M.0 1,380 /oz 11M 1,040 0 750 o z Per capita calort. mWly,aö % of.requirweento 90 ýw 92 93 91 97 Per capita protein supplj total (grans per day) L6 66 69 72 63 6L Of -hIch, minal and pulse 23 12 24 jýp 24 28 ýE Death reta 1-4 years L7 cdor;r ..1 =j.tio Wd 1 7 20 11L 25 Li 38 /kq Adjustöd t ratlo 1 2 1 9 Li 15 /kab years of 9 Ung providod, firat and m~ 1~1 12 12 13 12 13 VO..tionål wroll^ t m % of sea. ~ 1 swolleent 15 40 6 1 fi Adult literacy rota % f 17 10 /a.f.t 19 0 M.... ¥a. of para~ per room (urban) 2.5 Nrunt of occupied unlte without piped watier 36 Aconge t? bleatrietty (an % of total population) 26 Phroent of tural population oannootod to alectricyty 2 Iwre Por 1000 p~ tjon 2 IL 36 80 67 ýd Passenger oår. per 1000 population 0.7 1 1 12 1d,ad 2 11 ýJ-d zuctric pover 00~ ion (kik p.c.) 10 La a 18 7ý Neweprint consusphion p. e. kg per ^er 0.1 ad 0.1 e. Not~ Figama refer cithur to th. latast ~ OU or to aooomt of envirom=UI Leepwr*" , ~ v41~ 9 iwý th. lat-t yea- lat.#t poriod. retar in principla to distribution by ag* d NoR -t OffitiOftel POPolAtl- the ynare 1~ r 1966-701 the lat.et ysam In pri- & pm~ @ta~ @ ~ j~ ta) to, all «-~& m wetab ciple to 1960 and 1970. lighed by UW1 Sooncelc augarch 5~ F~ for a ed~ The Per Capita GMP entivatc la at varket pricen ror a2l~ g of 60 gram of t~ protein per day, and 20 rem 01 yeare other thån 1960,calculatod by the how convårsion anleal and page protcin, or TUGh 10 ~ ~ bo an~ t..hniq.e e. th. 1972 World Bank Atl.e. protaln. Thone åta~ ar* w~ t lovw than tb069 Of 75 Averaga numer of daughters per woom of reproductivo gram or total pro~ and 23 grans of ~ protaln oe m acc. avaraga for the ~Id, proponed hy FAO in the ~ World Food Population groyth ratas am for the decadec ~ ng in Survey. Iw and 1970. Som ot~ a havs ~ tad tbat crade death ratas of d~ Ratio of population under 15 and 65 and drar to popula- agas i through 4 way bo used as a ~ app~ tion ~ of tion of agas 15-M for ag* d~ dency ratio and to labor Malnutrition. forve or ageo 15-& for ec~ c de~ cy retio. Pervåntågo ca~ of oorroepw~ ~ ~ of ~ &W FAO referanco stan~ represont ptVetological ve- a* d~ £w mab wantr7. quirweents for norual activiV and bealths ~ 1972; & 196o-61, saffle n~ j le 1965-70; Zd gotimto; ä 1960-72; 4[ Definition not ava~ ei 62 196N Sixty-cight, tovna; Vört roglon md citio, or Saint-louis, Thlen, Uolacko 210~ d Zigonchos; - Ratio of ~ stim unlrC:S-ånd 65 and ower to total 1~ fOmg; & Unadjustad; 92. - 1, Includca assistent numes, and midviveo; ooven~ t 1964-66; ä 11 ,1 & 1970-75, Ull estisatej L, 5ot including privat- mc.tio.al ochcola, Pemonnel in VvernaeOt ~ COM OnlY; 4 UPtm kl 15 y~ and02, ý70 ostieate; IZ Mot Including Lfficher-tPLUILMJ oaln 1961; Lx Amble land and land under P9PIMMffit Crepe; 4 1974 1 1972-73 official ostiffitej ffi. Lover secondary; 4&c Inside or outsida; Led 19738 ål 1965-731 Labor före* in ag. bracket 15-59. son.Caj hm bom chosen m an obJ«tiv* country since Ita per capita GDP (1972) in about threa tima that Of MIL, vettlig m ambitious hut not unreallatic target- Both countrics lic in the ~im &ont, Smågal being HL1149 »stam Dalat have ejell- production patternö (with ~dauta pla~g a oajor rolo) and joilar sonstary arrangaposte with Preac- Thear populatione am roughly of the swo order of sacultude- R3 0.toter 13, IM ANNEX I Page 2 of 3 pages ECONOMIC INDICATORS GROSS DOMESTIC PRODUCT IN 1972 ANNUAL RATE OF GRO'drH ($ constant prices) US$ M1n. a/ % 196 -6 1969 -72 c/ 1972 GDP at Market Prices 350.5 100.0 3.3 5.3 Gross Domestic Investment 55.5 15.8 2.9 1.0 Gross Domestic Saving 39.3 11.2 11.6 12.5 Current Account Balance b/ -10.3 -2.9 Exports of Goods, NFS 90.6 25.9 21.7'd/ 12.6 d/ Imports of Goods, NFS 106.9 30.5 12.3 6/ 1.2 5/ OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1972 1/ Value Added Labor Force- V. A. Per Worker US$ M1n. . Mln. %_us $ % Agriculture 1V9.7 L2.7 Industry and Construction 07.9 13.6 Services e/ 153.0 h3.7 Unallocated - - Total/Average 3U.5 100.0 100.0 100.0 GOVERNMENT FINANCE General Government Central Government S L n.) of GDP in.) o T GP 1972 1972 1970-72 197 197 196 7 Current Receipts 24.7 11.0 Current Expenditure 27.5 17.6 1 Current Surplus --.- . Capital Expenditures fl 3.0 1.7 1.5 External Assistance 2.0 1.1 1 MONEY, CREDIT and PRICES 196) 19709 19 7 19 2 19,3 19, (7illion ! -outstanding end.periodT Money and Quasi Money 26.0 28.1 31.2 35.2 41 L57.3 Bank credit to Public Sector (net) L1.0 b2.2 5 .3 h7.7 59.1 / Bank Credit to Private Sector 7.. 9.6 13.6 1 .9 20.5 Flank Credit to State Enterprises 12.1 15.0 18.1 20.6 23.. 70.8 (Percentages or Index Numbers) Money and Quasi Money as % of GDP 19.2 18.9 18.7 19.9 28 2. General Price Index (1963 = 100) h/ 161.9 169.2 187.6 196.0 213.5 Annual percentage changes ins General Price Index h/ 0.6 L_ 17.9 L.7 (. Bank credit to Public Sector (net) 1b.2 2.9 7.0 5.3 9.6 13.0 Bank credit to Private Sector 30.0 15.1 1L.3 1.7 9.6 37.6 Pank Credit to State Enterprises 33.3 21.0 2C.7 13.3 37.9 63.3 NOTE: All conversions to dollars in this table are at the average exchange rate prevailing during the period covered. 1/ Total labor force; unemployed are allocated to sector of their normal occupation. "Unallocated" consists mainly of unemployed workers seeking their first job. not available not applicable @/ Converted from ?F at the rate of 500.63 per dollar. b/ tNet inports of goods and services plus net private transfers. c/ 1967/68 to 1972. d/ At current prices. e/ Including [overnment services of U3302.2 million (12 percent of total value added). f/ Excluding capital ex*enditures financed out of foreign e4r, info!- mation on which is not available in 'onnarable form. g/ Including consolidated claims on state enterpr] ses deducted from bank credit to state enterprises. h/ Official (cooperatives) retail price index for busic foodstuffs (millet, rice) in lPamako. The unofficial (free market) index for the same commodities sho,:s a substantially higher increase -- 56.6 against 37.9 percent -- in 1969-1973. No comprehensive index exists. A?INFX I Page 3 of 3 pages TRADE PATMENTS AND CAPITAL FLOWS BALANCE OF PAYMENTS PMD1oE EXPORTS (AVERAGE 1971-73) 1972 1973 1/ 19P7 2/ US$ -*,n Millions of 41T Cotton 16..3 35.9 Exports of Goods, NFS 3/ 34.o 37.9 45.4 Live Animals . 20.3 Groundnuts and Products 8.5 1.3.2 Merchandise Exports, f.o.b. 3/ 22.7 25.3 36.1 Fish (dried and smoked) 1.7 3.' Exports of NFS 11.3 12.6 9.3 All Othcr Connodities 10.3 ?2.C Total Recorded Exports T6.3 -O(-.c Imports of Goods, NFS 53.9 67.7 99.2 Unrecorded Exports h/ 20.2 Merchandise rmports, c.i.f. 39.7 51.7 81.p FZTErH!1A:. DFFT7 DEC'l-I 3_ )'.- Foo-4 11.4 25.t L2.0 (Cereals) ( 3.8) (16.7) (32.C) Petroleum Prpducts h.1 L.C 9.0 Other Merchoadise 2h.2 22.3 30.0 Patic Lebt, Disturscd and Pullic Del:t, UndisburFed 1Mports of NFS 1U.2 16.0 13.2 T.t.1 PUbliC Debt Resource Gap -19.9 -29.0 -53.8 3Tg T'"' F, I -I Inve-t.ent fncor.E Pa-ments (net) - 2.7 - 3.9 - L.0 Net Private Transfers 7/ 5.7 3.9 L.C Iet Official Trensfers 10.6 21.7 33.? PuLlic Debt, ic'l Iood 'rants 2.1) (10.3) (22.5: ?:ivatc M:L Capital "net) 3.0 - C.7 - 2.3 JULY 311 Private Short-Term Capital (net) - 3.3 - 3.6 - 0.6 Cfficial Cacpital (net) 6.1 L.9 3.7 Inflow ( 6.2; ( 5.6, Outflow ( 0.1) ( 0.7) ( . jttar:cir and - 1rFCJ. SDRH Allocation 1.3 - - Ln'iso - sc.i( Usc of IF Oil Facility - - 2.3 3utrtan6in., icl. !.ndircc! FrrrF Lnd Omisiions (net)iv 1.A n-5 - 0.5 ChanGe in aeserves (increase r u8/ 1.5 10.c 12.3 Net Reserves (end of period) -33.1 -a3.n -55.1 RATE Of FXCH(JNCE )/ 1971: US$100 C o 05. ..C2 1972- US$1.00 , f-T56L.43 1973: US$~1.00 KYL115.bo IMT: US$1.00 - MF480.99 I/ Preliminary. 2/Estimated. eExcludind unrEcorded exports. Tl Livestock, fish, food grains (estimated). 7/ Includes US$ 29.2 -million principal in arrears, excludes US .02.1 mill11ion interest in arreLjr--. SRatio of debt service to exports of goods and non-factor services. 7/ Including workers' remittances. 7/ Excluding nePium- and long-terl obligations of the bankiD d systen. 3/ Period av.erages. no~t available not applicable September 11, 1975 ANNEX II Page 1 of 5 THE STATUS OF BANK GROUP OPERATIONS IN MALI A. Statement of IDA Credits as at September 30, 1975 (US$ million) Credit Amount (less cancellations) Number Year Borrower Purpose IDA Undisbursed 95-MLI 1966 Republic of Mali Railway 9.1 0.0 197-MLI 1970 Republic of Mali Highway Maintenance 7.7 0.0 277-MLI 1972 Republic of Mali Rice Development 6.9 0.0 277-2 MLI 1975 Republic of Mali Amendment 2.6 1.8 321-MLI 1972 Republic of Mali Telecommuni- cations 3.6 3.5 383-MLI 1973 Republic of Mali Highway Reha- bilitation 9.5 4.1 383-2 MLI 1975 Republic of Mali Amendment 8.3 8.3 384-MLI 1973 Republic of Mali Railway 6.7 3.7 420-MLI 1973 Republic of Mali Education 5.0 4.3 443-MLI 1973 Republic of Mali Drought Relief 2.5 0.8 491-MLI 1974 Republic of Mali Integrated Rural Develop- ment 8.0 7.5 538-MLI 1975 Republic of Mali Livestock Project 13.3 13.1 Total 83.2 47.10 of which has been repaid 0.0 Total now held by IDA* 83.2 Total undisbursed 47.10 * Prior to exchange adjustment. ANNEX II Page 2 of 5 B. Statement of IFC Investments as at July 31, 1975 NIL C. Projects in Execution Credit 197-MLI First Highway Project. US$7.7 million Credit of June 17, 1970; Closing Date March 31, 1976 The Project consists of a 4-year program for highway maintenance and betterment of 1,450 km of feeder roads, and feasibility study and detailed engineering of the FaladiA-S6gou and Bamako-Bougouni roads. The Project started in October 1970, and was scheduled for completion in September 1975, but the Government had already used up all the Credit funds after completion of about 500 km of feeder roads by the end of 1974. The Government also procured all goods and services and improved the organization and execution of road maintenance but did not have enough funds to keep the equipment operational at all times because of the high cost increases resulting from the energy crisis and worldwide inflation. Credit 277-MLI Mopti Rice Development Project. US$9.5 million Credit of January 6, 1972 (as amended on April 11, 1975); Closing Date May 31, 1978 Starting in early 1972 after intial delays, the project is progressing satisfactorily. The construction and disbursements schedules are in line with appraisal estimates, but, following the US dollar devaluations, provisions for some additional works and sharp price increases, estimated total project costs have increased by US$3.6 million equivalent. An amendment to the Credit Agreement, providing supplementary IDA financing of US$2.6 million was approved on January 28, 1975. The amendment became effective on August 7, 1975; all the US$6.9 million under the original credit has been disbursed. Credit 321-MLI Telecommunications Project. US$3.6 Million Credit of June 28, 1972; Closing Date July 1, 1976 The implementation of the project is about 2 years behind schedule mainly due to poor OPTM management. Bids for the two main project components have been recently evaluated by the consultant and ITU (International Tele- communications Union) Headquarters. Based on these evaluations, total pro- ject costs appear to have increased from US$4.3 million (US$3.1 million in foreign exchange) at appraisal time to US$9.3 million (US$7.3 million in foreign exchange); this is mainly due to the combined effect of an optimistic original cost estimate, delays, unforseen inflation, lack of international competition, and currency realignments. ANNEX II Page 3 of 5 Steps have been taken to seek additional sources of financing and the staff is now looking at a possible co-financing arrangement with Caisse Centrale de Cooperation Economique. OPTM's financial position is still weak mainly because of increase of billing delays and Government's arrears in settling its debts to OPTM. However, from recent discussion with Fovern- ment's officials, we expect that measures will be taken to improve OPTM's management and financial situation. Credit 383-NLI Second Highway Project. US$17.8 million Credit of May 23, 1973 (as amended on June 12, 1975); Closing Date July 19, 1977 Two items of the Project, partial rehabilitation of the Bamako- Bougouni road and procurement of highway equipment, are being financed with USAID assistance. The Project portion financed by IDA consists of: (i) re- habilitation of the Faladi4-S6gou road; (ii) consultants' services for super- vision of road construction, additional technical assistance to the DPW for road maintenance and feeder road improvement, and detailed engineering of the Bamako-Kolokani road; (iii) procurement of highway equipment. In October 1974, the Government awarded a US$11.8 million contract for the construction of the Faladi6-Sdgou road, main item of IDA portion of the Project, but the total cost of this road, including contingencies, is now estimated at US$25 million, because of unexpected inflation and the need for total rather than partial strengthening which was foreseen at appraisal time. An amendment to the Credit Agreement providing supplementary IDA financing of US$8.3 million was therefore approved on June 3, 1975 and became effective on October 29, 1975. Construction has started but there are some delays because of late arrival of equipment. Credit 384-MLI Second Railway Project. US$6.7 million Credit of May 23 1973; Closing Date June 30, 1978 The project was expected to cost a total of about US$9.33 million, with IDA participation of US$6.7 million, FAC-financing of US$1.8 equivalent, the rest being provided under Railway's own financing. Bidding results dis- closed a cost overrun of about US$3.5 million in the foreign exchange com- ponent of the project. The cost overrun was caused by (a) low original estimates; (b) sharp increases in world market prices; and (c) the fact that only single bids were received for some items. Additional bilateral financing obtained for part of the freight cars proposed under the project (Germany and France) and of the technical assistance (Canada) partly offset the cost over- run. However, several items included in the project had to be deleted or significantly reduced. ANNEX II Page 4 of 5 Execution of the Second Project is being carried out according to schedule. Operating performance is satisfactory, and operating targets have been met. A training program is well under way. The financial situation of the Railway remained tight because of delays in implementing tariff increases recommended by the Bank. However, rates have now been raised as necessary, and the Railway is expected to meet appraisal financial targets in 1975. Credit 420-MLI First Education Project. US$5.0 million Credit of July 11, 1973; Closing Date December 31, 1979 Preliminary design work has been completed for all construction items. Tender documents for the Central School for Industry and Commerce (middle level technician training) have already been sent to IDA and approved equipment lists are now under review by the Bank. According to mission es- timates, the cost overruns in implementing the original program of the lower secondary science technology centers would be about 70 percent over appraisal estimates on construction and about 50 percent on furniture and equipment. However, a revised plan, based on a smaller number of centers has been pro- posed to the government which must now determine the sites. Curriculum development work for the new science/technology programs has in general pro- ceeded according to schedule but needs to be complemented by teacher training and upgrading, for which few national staff have the training and experience required. The study of alternatives for basic education is off to a promising start with strong support from national staff. Credit 443-MLI Drought Relief Project. US$2.5 million Credit of December 7, 1973; Closing Date June 30, 1976 Despite some delays and procurement difficulties, the project is proceeding satisfactorily. 24 sub-projects have been approved by IDA. Work is well under way on most sub-projects and some are already completed. Some of the sub-projects will have to be reduced due to currency realignments and price increases making the US$2.5 million insufficient to cover all the expenditures originally scheduled. More than 60 percent of the credit amount has already been disbursed. Credit 491-MLI Integrated Rural Development Project. US$8.0 million Credit of July 1, 1974; Closing Date September 30, 1978 The Credit will help improve principal farming activities especially the production of groundnuts and staple cereals in the west central part of Mali. It includes provision for extension and credit services; rural track improvement; agricultural research; functional literacy; medical and veterinary facilities; and an evaluating unit. The project will also finance a study on millet/sorghum price structure and marketing arrangements. Some initial delays have occurred, but the project is now progressing satisfactorily. ANNEX II Page 5 of 5 Credit 538-MLI Livestock Project. US$13.3 million Credit of April 11, 1975; Closing Date December 31, 1979 The Project aims at the rational use of land and water in the Fifth Region and will help rebuilding and improving herds of about 100,000 pastoral families in the Fifth Region to better protect them against future droughts. It includes provision for livestock extension services and grazing control; animal health services; construction of 70 wells and 50 ponds; construction of an abattoir and hide-drying facilities; construction for five livestock markets; functional literacy; and the preparation of a second phase livestock project. This Credit became effective on July 24, 1975. ANNEX III Page 1 of 3 MALI * THIRD HIGHWAY PROJECT Credit and Project Summary Borrower: The Republic of Mali Amount: US$10.0 million equivalent Terms: Standard Project Description: The project would consist of: (a) a three and a half year continuation of the feeder road improvement program initiated under the First Highway Project (about 1200 km should be completed); (b) a three year maintenance program (i) to eliminate the backlog on periodic maintenance on paved roads (ii) to procure spare parts and (iii) to equip the workshops of two new subdivisions. (c) procurement of office equipment, teaching mate- rials and vehicles for the DPW Training Center at Bamako; and (d) consultant services for: (i) technical assistance to DPW for feeder road improvement, road maintenance, and staff training; and (ii) a study of a countrywide transport plan. Estimated Costs: The estimated cost of the project, including taxes and duties, is US$13.4 million equivalent, including a foreign exchange component of US$8.4 million. Details are as follows: ANNEX III Page 2 of 3 Project Cost Estimates Including Taxes at US$1 = MF 450 Foreign ---- US$ thousand --- Component ITEMS Local Foreign Total (%) (1) Feeder Roads Elements 2,249 2,075 4,324 48 (2) Backlog Maintenance 873 2,625 3,498 75 (3) Training Center 31 69 100 69 (4) Consultant Services 356 829 1,185 70 Subtotal 3,509 5,598 9,107 61 Contingencies for quantity increase 324 762 1,086 70 Contingencies for price increase 1,165 1,982 3,147 63 Total 4,998 8P342 13,340 63 Rounded (5,000) (8,400)(13,400) Financing Plan (net of taxes) % of total -----US$ thousand --- Project costs Local Foreign Total. (net of taxes) Association 1.6 8.4 10.0 89 Government 1.2 - 1.2 11 Total 2.8 8.4 11.2 100 Estimated Disbursements: IDA Fiscal Year Cumulative Disbursements ----(in US$ Millions)--- 1976 2.0 1977 5.6 1978 8.4 1979 10.0 ANNEX III Page 3 of 3 Procurement The two ferries (US$0.6 million) which are simple Arrangements: in construction and have to be assembled at the site would not be attractive to suppliers outside those currently established in Mali. They will therefore be procured on the basis of local competitive bid- ding. Bitumen (US$2.3 million) may be purchased from a refinery in Ivory Coast. This procurement method provides the best transport advantage and will be acceptable to the Association as long as the prices obtained are in line with international price standards. Contracts for fuel (US$1 million) and other items estimated to cost less than US$20,000 each (US$0.3 million in total), may be let on the basis of the Borrower's standard procurement proce- dures provided these procedures shall continue to be acceptable to the Association. The four vehicles for the training center and the spare parts for the Highway Equipment Pool (US$0.6 million) will be procured from licensed dealers at list prices which are reasonable. Details of these arrangements have been agreed upon with the Government. Consultants: Consultants for technical assistance would be arranged according to procedures acceptable to IDA 135 man- months of consultants services would be financed under the Credit to assist the DPW and the ONI of the Ministry of Transport and Public Works (see para. 29). Economic Evaluation: The internal economic return of the feeder road com- ponent is estimated at almost 17 percent. The benefit/cost ratio on the backlog maintenance element is estimated at more than 3. This is equivalent to a rate of return of about 120 percent. Appraisal Report: No. 888-MLI Map: IBRD 11682 …■…－－………― . . 』 ( 눠 1国国国日日国日目自国国園園E曲国国園自 r . ’ツい