Bolivia - Agricultural Credit Project

DOCUMENT OF INTERNATIONAL DEVELOPMENT ASSOCIATION Not For Public Use Report No.P-1653-BO REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF BOLIVIA FOR AN AGRICULTURAL CREDIT PROJECT June 9, 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 It may not be published, quoted or cited without Bank Group authorization.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 EQUIVALENTS (As c f April 30, -1i7 ) Currency Unit = Bolivian Peso ($b) US$1 = $b20 $bl = US$0.05 $bl,000 = US$50 $bl,000,000 = US$50,000  REPORTf AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON - A PROPOSED CREDIT TO THE REPUBLIC OF BOLIVIA FOR AN AGRICULTURAL CREDIT PROJECT 1. I submit the following report and recommendation on a proposed Credit to the Republic of Bolivia for the equivalent of US$7.5 million on standard IDA texms, to help finance an Agricultural Credit Project. US$7.1 million will be relent for on-farm investment through the Agricultural Bank and commercial banks. Large and medium size ranchers and farmers would borrow either at 4% with repayments indexed to the La Paz cost of living or at 14% with readjustment of the principal based on the rate of exchange between the dollar and the Bolivian peso. Small farmers would borrow at 12% interest rate without indexing. Subloans to farmers would have repayment and grace periods varying according to the nature of the product. The remaining US$0.4 million of the Credit will be used for project adninistration and agricultural research. PART I - THE ECONOMY Introduction 2. An economic report entitled "Current Economic Position and Prospects of Bolivia" (WH-213a) dated November 9, 1972 was distributed to the Executive Directors in 1972. A new economic report is near completion and will be dis- tributed to the Executive Directors in the near future. Country data sheets are attached as Annex I. Background 3. Despite the increasing importance of petroleum and natural gas exports, as well as significant mineral deposits, Bolivia remains the poorest country in South America. The majority of the population is engaged in tra- ditional agriculture. Only a small part of the labor force participates in salaried activities in the modern sectors. The infrastructure is still very primitive and the road and rail networks cover only a fraction of the country. The combination of strong traditional ties within the Indian communities and geographic, health and educational obstacles to population mobility has per- petuated the demographic concentration on the barren, windswept and dry 10-15 thousand feet plateau lands of Bolivia known as the Altiplano. About half of Bolivia's population lives a physically, culturally and economically isolated subsistence existence in this inhospitable region which is rich in mineral deposits but limited in agricultural resources. 4. The 1952 revolution sought to put an end to the dual economic structure which had characterized Bolivia's economy since colonial times and to deprive the landowning and mining oligarchy of its economic base. This objective was only partially achieved. Progress was made in eradicating fuedal relations, distributing the land and eliminating obstacles to social  -2- mobility. The agrarian reform and the nationalization of large mines, how- ever, were followed by declines in agricultural, mining and manufacturing production. GDP declined in the 1950s and did not recover to its pre-1952 level until 1961. During the subsequent decade, output increased steadily at an average annual rate of around 5%, providing for average annual per capita income increases of 2.5%. As a result, GNP per capita which had fallen by 24% in the 1952-60 period had recovered, by 1970, to the 1952 level and was better distributed. 5. In 1971, the momentum of econoinic growth was again lost because of pulitical instabi7ity and deteriorating public finances. Private invest- ment fell and public investment was unable to fill. the shortfall due to lack of ftnancial resources. The deterioration of public finances reflected a stru-tural flaw in the economy. Since the expropriations of 1952, Bolivia's public sector became proportionatel;y one of the largest in South America and a source of livelihood for a sizeable segment of the population. With the scarcity of emplcymentr opportunities in the private sector, pressures to exoarid the ranks ,Dl public servants proved difficult to resist. Increased expend]itures on wages and salaries, combined with a weak tax system, left few resources for irnvestmnent. Moreover, the inability of the public sector to generate adequate ;3avings limited its capacity to utilize external assist- an e. 6. On coTaing to p,ow :r in 1971, Presiderrt Banzer faced the need to provide jobs for the unemployed and to set the basis for investment growth. This need f;as faced in the context of a sharp deterioration in Bolivia's t_ims of tr-ade wi4ch declirned by about 20% in 1971. In late 1971, the -iove,nrent put into e-ffect an "'Thergency Program" aimed at creating jobs in public works. `o establish a more favorable climaLte for private investment, new law!s offering g-iarantees and incentives to private investors were promul- gated. ITr addition, the Co-venurent settled cla:imas arising from earlier nationali3ations. 4t the same time, the Goverrinent also improved public admiriistration, and the pricing policies of some public undertakings. These policises were successfld in fn r.-easing private investment and in bolstering t`he rate of growth. Th2y ~iLso resulted, however, in a large budgetary deficit and losses of international reserves. Recent Economic DeveloE2ents 7. The most important event affecting recent economic performance has been thd substantial imDroverient in the tenns of trade in 1974 caused by the increases in petroleum and mineral prices. Although GDP growth slowed down to about 5% i4r 1974 --due t;o slower agricultural. growth, stagnant hydrocarbon out put andi a fall in mining, output-- the substant,ial gain in the terms of trade has allowed a simultaneous and large expansion of both consumption and investment. 8. There has been a significant improvement in Central Goverrmnent revenue and in overall public savings. The increase in Central Goverment current revenue in 1974 was close to 20% in real terms. Over one-half of this increase was due to higher export prices. Current expenditures  -3- increased only by about 5%. The Central Government achieved a current surplus --after running current deficits during 1971-73-- equivalent to nearly 50% of its capital expenditures, which were about 17% above the 1973 level. Savings of the public sector as a whole in 1974 increased to nearly 10% of GDP, exceeding the sector's capital expenditures and producing an overall surplus. In contrast to previous years when borrowing from the domestic banking system financed close to 40% of the public sector deficit, outstanding net credit to the public sector has been reduced by one-half between the end of 1973 and August 1974, and public sector deposits with the banking system increased by about $b2.4 billion for the whole of 1974. 9. The strong balance of payments perfonnance in 1974 was the result of sharp price increases for Bolivia's principal export commodities. On average, export prices nearly doubled in 1974, following an increase of 25% during the previous year. The average price of Bolivia's light crude low sulphur petroleum was about US$15 per barrel in 1974 compared to US$4.13 in 1973. Prices of minerals and sugar also nearly doubled in 1974. Natural gas prices increased less. However, a new long-texm contract has been negotiated with Argentina, still Bolivia's sole natural gas customer, which will provide substantially higher prices from 1975 onwards. On the other hand, import price rises approached 30-35% with much higher increases for mining and petroleum drilling equipment, items which are becoming an increasingly important component of Bolivia's imports. Nevertheless, the terms of trade gain in 1974 was equivalent to about 9% of GDP and the trade surplus reached about US$180 million. In spite of the deficit on service account because of higher transport costs and larger factor service payments abroad, there waS a current account surplus of nearly US$80 million. It is estimated that net capital inflows approached US$65 million, nearly four times their 1973 level, primarily as a result of substantially higher dis- bursements of loans to the public sector. The gain in net foreign reserves in 1974 was US$145 million. This brought total reserves to US$176 million, representing over four months of imports. 10. The growth of the Bolivian economy was accompanied by continuing wage-price pressures during 1973-74. As a result, in part, of the openness of the economy, Bolivia in the 1960s enjoyed relatively low rates of infla- tion. The substantial devaluation at the end of 1972, however, unleashed inflationary pressures. These pressures were accentuated by sharply rising international prices during 1973/74, the spillover of excessive credit expansion of past years, and the acceleration of wage increases following the 1972 devaluation. The retail price index for La Paz (the only price index available in Bolivia) rose 31.5% in 1973 and nearly 30% during the first two months of 1974 as prices of basic commodities were sharply in- creased by the Government in an effort to bring them into line with inter- national prices. In addition, some public service tariffs, such as those for railways and electricity, were increased by the Government. Since then price rises have slowed to a monthly average of 1-1.5%. The increase in retail prices for 1974 was about 45%.  -4 - Debt Service and Greditworthineas 11. Bolivia's external public debt outstanding and disbursed at end- 1974 amounted to US$723 million, equivalent to over 41% of that year's GNP. Service on external public clebt amounted to 12.9% of exports of goods and non-factor services net of investment income abroad. This represents a considerable reduction from the debt burden of previous years which fre- quently absorbed 15-20% of net export receipts. Average terms of the external debt outstanding hawe remained soft, reflecting the high proportion of concessionary aid channelled to Bolivia. Average interest in 1973 was 4.4% and average maturity about 26 years, 12. This position is bound to change, howe7ver5 as it can be expected that lending teris will became harder and the slare of loans on convent.ional terms wiil increase. of newi loans attracted during 1974, nearly One-half were from commercial banking soarces. With substantial disbursements envi- saged during the next six years, external public de(bt outstanding by 1980 might be as high as US$1.9 billionx (in current pi-ices) the service of whiLch would absorb some 19% of net export receipts. In view of these heavy cormiD.t- ments, prudence in choosing e-xter,al capital sources nd insistence on utiUiz ing external capital for high prior:-irty purposes will have to become an essen- tial element of Bolivia's external debt management. 13. Bolivia enjoys a substantial resource base in agriculture, minerals and hydrocarbons which has tI'Jo be developed to sustain rapid economic growth and, in particular, rapid expEansion of export earnrings in thle foreseeable future. If production in the export sectors can be increased as plaELMed and prices for the country's major export pI-oduts (cils gas, minerals) stay relatively firm, Bolivia can be considered creditworthy for substanvially increased amounts of external lending on conventiocinal term.s. Nevertheless, some additional lending on soft teras is justified by Bolivia's poverty and its large and continuing external capital requirements Even unLder thie best circumstances, the country pill requi-e substantial external fT_nancing of investment to supplement the domestic savings effort at least unmitil the early 1980s, including some local cost financing. This is justified since, during the past two years, the Government has made a serious effort to mobili;e domestic resources and prepare a development program for Boli3;ia. However, the implementation of this program will require externnal assistance wel' in exceCs of the foreign exchange component of suitable project presently available for international financing. Although substantially increased supplier and finan- cial credits will probably become available, they will at the most meet 45% of the public capital inflow required during 1975-80 for meeting projected grows>h targets. To finance the remaining gap of almost US$650 million, Bolivia wiLl also require international development financing, includeing an expanded Bank lending program.  -5- PART II - THE BANK GROUP OPERATIONS IN BOLIVIA 14. Bolivia is an original member of the Bank but did not receive Bank Group resources until 1964. Bank Group assistance to Bolivia has been limited by the country's tight budgetary situation and its limited capacity to service external debt. Except for one Bank loan to help finance an "enclave" project, and for the Second Railway project lending to Bolivia has been in the form of IDA credits. Because of the narrow scope for private investment, the first IFC investment, amounting to Us$400,000 in a cable and plastic products enterprise, was made only in 1973. 15. Annex II contains a summary statement of Bank loans, IDA credits and IFC investments as of April 30, 1975, and notes on the execution of ongoing projects. IDA has made previously, three credits for livestock development (US$10.2 million), four credits for power generation and dis- tribution (US$28.4 million), one credit to the railways for US$8 million and one for mining (US$6.2 million). The Bank has made a loan (US$23.5 million) to help finance an "enclave" project for the construction of a pipeline to transport natural gas to Argentina and a loan (US$32 million) for the Second Railway project. 16. The proposed credit would be the tenth credit and the thirteenth Bank Group operation in Bolivia. Net of undiSbursed balances,- Bolivia's debt to the Bank and IDA now represents 8.3% of its external public indebted- ness. This ratio might increase to 9.3% by 1980. The share of the Bank Group in total debt service is now about 4% and is expected to increase marginally to about 4.3% in 1980. Although the Bank Group has ranked below the U.S. Government and the IDB as a source of financial assistance to Bolivia, its role has been expanding. In the period 1964-68, the first five years of Bank/IDA lending to Bolivia, IDA credits of US$17 million were made. Additional Bank/IDA loans and credits of US$59.1 million, or more than three times the credits made during the first five years, have been made to Bolivia since then. 17. Future Bank Group activities will give emphasis to supporting Government efforts to remedy imbalances in the distribution of the benefits of economic growth. About half of future Bank lending is planned for agri- culture, where priority will be given to the needs of poor farmers. (See paras. 23-25). The Bank Group's assistance to infrastructure projects will be concentrated in transportation, where we have selected specific areas in which we believe serious constraints to development exist and Bank assistance could be most effectively utilized. Thus, in addition to the second railway project, we are contemplating an eventual third project to complete the planned rehabilitation of the railways. We are also contemplating an airport and air navigation aids equipment project which will permit access to isolated areas of economic activity, where transportation needs are not now adequately served. In the power sector, we contemplate participating in the financing of a national interconnection project, once the difficult issue of tariffs has been resolved.  -6- 18. A common element of constraint in most development activities in Bolivia is institutional capacity. We plan to finance projects in rural development, small scale agro-industries, forestry, fisheries, water supply and rural education which will contain significant elements for technical assistance and focus on developing institutional capacity. We also hope to be able to continue lending in the mining sector, where the existing IDA credit provides for technical assistance. Our future financing to that sector will furnish credit assistance to small and medium producers. 19. In addition to the railway project, which was presented to the Board on June 3, 1975, project preparation is well advanced for two other projects. One is an integratled rural development project for poor farmers in the Altiplano. The project is expected to assist 4,000 families. The second is a project designed to meet the pressing credit needs of medium size mining enterprises. It is also possible that this project might con-taiII 9. component for industrial credit, if the industrial credit needs of the development bank handling mining credit are not adequately met by other external lenders, such as the IDB. PART III: THE AGRICULTURAL SECTOR 20. Overall performance of the agricultural sector during 1968-74 was mixed and according -to some indicators showed a decline in the sector's relative importance. Thus, while GDP growth during 1968-74 averaged about h.8% p.a., that of agriculture grew only at 3.9% p.a. and the sector's share of GDP decreased from a high of 30% (1962) to about 21% in 1974. However, in spite of agriculture's relatively small contribut;ion to total exports (about 7%), the volme of agricultural exports has been increasing rapidly during the past two years. The increase has come from the exceptional expansion in commercial agricultural production of :Livestock, cotton, sugar- cane and soybeans in the Beni and Santa Cruz regions. Some small gains have also beer made in the produc-tion of foods for domestic consumption by the subsistence sector. They were achieved mainly by additional inputs of labor and utilization of improved seeds rather than by any significant increase in the flow of credit, increase in acreage, introduction of improved technology or utilization of improved agricultural -tools. By contrast, the expansion in the commiercial sector stimulated by high prices for cotton, sugarcane and livestock on the world markets, was achieved mainly through bringing additional land under cultivation, a reasonable supply of credit and mechanization. The major expansion has been sustained by credit received from. the Banco Agricola de Bolivia (EAB3). the Central Bank through its rediscount operations and foreign banks operating in Bolivia. In general, medium and long term agricultural credit is scarce and its allocation between subsistence and commercial farmers has been highly skewed in favor of large and medium size farmers. Of all available agricultural credit, about 81% is estimated to have been lent to cormmercial farmers in Santa Cruz and the Beni. Developmoent has been slowest in the Altiplano and the Valles regions which  -7- contain the majority of the rural population and provide most of the output of minerals and staple foods. Yields and production have remained low in these regions, which are inhabitated by the rural poor who live on sub- sistence agriculture and outside the market economy. 21. There is evidence that the living standards of the rural poor could be improved considerably provided the Government takes a number of essential measures. These would consist of the following: (a) preparation and execution of investment programs and the establishment of a proper institutional frame- work to execute such programs in the Altiplano, the Valles and the Yungas; (b) channeling of adequate credit and technical assistance to snall farmers in support of such programs; (c) organizing snall landholders into cooperatives or other functional groups; and (d) research to develop appropriate crop va- rieties for the climatic conditions of the Altiplanos the Valles and the Yungas. 22. The present administration is well aware of the need to adopt such measures and with external assistance has recently begun to reform the relevant institutions and to improve sector management capabilities. Thus, in early 1974, the two previous Ministries of Agriculture and Rural Affairs were merged. USAID is presently considering provision of technical assistance to improve the Ministry's capabilities in the formulation of policies, sector planning and coordination and supervision of investment programs. It is also providing technical and financial assistance to the National Community Development Services (SNCD) in order to help this agency expand its role since, so far, it has mainly been active in financing only infrastructure projects in rural areas. IDB is planning assistance in the field of agricultural research. A reorganization study for the Agricultural Bank of Bolivia (BAB) in order to improve the efficiency of this institution will be financed from IDA's Credit 261-30. While these efforts get uxnderway, the production momentum generated by the commercial sector should be sustained in order to keep established and develop new markets for Bolivia's agricultural exports, including beef. It is our intention to assist the Government also in this aspect. Bank Group Strategy in the Agricultural Sector 23. IDA's efforts since 1967 to foster expansion of beef production in the Beni through the financing of three livestock projects have the following long-range objectives: (i) to improve management of cattle ranchers on the basis of modern technical and economic criteria; (ii) to improve processing and marketing of beef from Beni on the basis of a marketing study financed under the Third Livestock Project (Credit 261-Bo); and (iii) to stimulate other economic activities and encourage the Government to provide better infrastructure for the region.. However, IDA has been discussing with the Government beef price and export controls. Since beef is the most important source of protein in Bolivia, the Government feels that beef must be sold at reasonably stable prices in order to provide Bolivians with an adequate diet and therefore has been reluc- tant to liberalize prices. Present policies, however, have not resulted in serious distortions and continue to provide the necessary incentives to invest in livestock development. The Development Credit Agreement (Section 4.02) provides that the Government maintain a price policy aimed at stimulating agri- cultural production and providing adequate incentives to farmers.  - 8 - 24. The proposed Agricultural Credit Project, while continuing assist- ance to the Beni ranchers, also includes a substantial small farmer component.. In this and subsequent projects, we intend to place increasingly greater emphasis on helping subsistence farmers in the Altiplano, the Valles and the Yungas. To that end, we have begun a dialogue with the Government to encourage the fordulation of appropriate policies and to identify a suitable institution for dealing with small farmers since BAB is likely to concentrate increasingly on providing effective service to ranchers and commercial farmers. We are appraising a first Altiplano integrated rural development project and hope t-his will be followed by other projects assisting small farmers. In addition, there are three subsectors in which Bolivia's potential is good, but develop- ment is lagging: (i) agro-industry; (ii) forestry and (iii) fisheries. We see the Bank's role in these sectors as that of a catalyst in identifying and helping the Government finance high priority projects which would contribute to diversifying Bolivia's exports and at the same time create additional. employment opportunities in poor rural areas. 25. In addition to the d_ialogue concerning small farmers, we will continue active discussions with the Covermnent to encourage further improve- ments in price and interest rate policies, marketing arrangements, and we will also seek ways to help improve extension and research services. PART IV - THE PROJECT 26. The Goverrnment of Bolivia has requested an IDA credit to help finance the expansion of prodiuction of cattle, sheep and crops in selected areas of the lowlands, the ALtiplano and the Valles.. The project was appraised by an IDA mission which visited Bolivia in June 1974. A report, entitled "Appraisal of the Agricultural Credit Project," No. 695a-B0 dated June 6, 1975 is being circulated separately to the Executive Directors. A credit and project sumnary is presented in Annex III. Negotiations took place in Washington from May 5 to May 12. The Government of Bolivia was represented by Messrs. David Blanco, Julio Gamba and Jorge Balcazar, the Bolivian Agricultural Bank (BAB) was represented by Messrs. Carlos Taborga and Fernando Garron and the private banks were represented by Mr. Alberto Valdez. Background 27. The proposed project would be the Bank Group's fourth operation to assist Bolivia's agricultural development. The first two credits for a total of US$3.4 million, signed in 1967 and 1970, financed the development of approximately 300 cattle ranches and provided for the establishment of an autonomous Livestock Project Division (LPD), within BAB to manage and provide technical services for the projects. A third IDA Credit of US$6.8 million to assist further development of the cattle investment programs started under the former two credits was signed in 1971. This project has financed ranch- investment in Alto Beni. and Chapare, sheep breeding in the Altiplano, a meat marketing study and the construction of slaughter and freezing facilities.  -9- 28. Implementation of the Third Livestock Project slowed down in 1974 for several reasons. Extensive areas in the Beni were flooded during early 1974 and disrupted lending operations; lending for sheep has slowed dowm because of delays in formation of farmers cooperatives in the project areas; delays in reaching agreement on a workable form of indexing, and the dete- rioration of BAB's financial position due to lack of management controls. The Government has since taken measures to improve BAB's operations and strengthen it financially, and has appointed a new General Manager. There- fore, it is anticipated that Credit 261-Ba will be fully committed by early 1976 and fully disbursed by the original closing date of June 30, 1977. Project Description 29. The proposed project aims at increasing production of food for domestic and export markets. In addition to complementing the development efforts started under previous IDA operations in the Beni and expanding it to the Santa Cruz region, IDA will finance for the first time in Bolivia cultivation of crops to help improve the economic conditions of about 3,600 poor rural families. This assistance would help the Government to initiate a more balanced regional growth pattern by channeling resources to less privileged agricultural regions. 30. The project would provide credit for the following: a. Livestock (i) continuation of the cattle development program in the Beni by medium and large size ranchers and of sheep breeding by subsistence farmers in the Altiplano; (ii) development of cattle by medium size farmers in Santa Cruz; b. Crops (i) production of sugarcane by small farmers in Santa Cruz; (ii) cultivation of potatoes, wheat and oats by mall farmers in Cochabamba; and (iii) growing of grapes by small farmers in Tarija. In addition, the project will also contribute to financing the cost of agri- cultural research in Saavedra (Santa Cruz). Project Adninistration 31. A project account would be established in the Central Bank through which Government and IDA funds would be onlent to participating institutions; i.e.., BAB and commercial banks. The staff of the Agricultural and Livestock Division (ALPD) in BAB would manage the project and approve the technical and financial aspects of the farm plans including those prepared by commercial banks. The core of ALPD staff would be built up around the former LPD which  - 10 - would be expanded to handle lending for crops and for additional livestock under the proposed project. The proposed Project Agreement provides (Section 2.02) that ALPD will be established within BAB and would be headed by a Director assisted by a deputy. The internationally recruited deputy would be in charge of ALPD's technical and administrative affairs. ALPD would provide technical assistance to project beneficiaries engaged in the development of livestock, sheep, sugarcane and grapes. It would supervise A.S.A.R.'sl/ technical assistance services to small farmers cultivating potatoes, wheat and oats in Cochabamba. A.S.A.R. would help farmers to prepare loan requests for submission to conmercial banks and would assist beneficiaries in selling their harvests. 32. The proposed Development Credit Agreement (Section 4.01) provides that the Government would give priority to granting land titles to project beneficiaries by assigning some of its land titling mobile units to work in the project areas. The Government has also agreed to expand its agricultural experimental programs at the Saavedra station in Santa Cruz by adding to its ongoing research programs experiments in crop/pasture rotation designed to help project beneficiaries increase their productivity. To ensure execution of high priority research programs which are relevant to project needs, the crop rotation study programs will be coordinated with the Director of ALPD. 33. Overall project performance would be measured by a special monitor- ing unit which BAB has agreed to establish within ALPD according to the Project Agreement (Section 2.05). Also, the Project Agreement (Section 3.03) provides that BAB will within 18 months review with IDA the administrative status of AdLPD in the context of overall progress being made in the restructur- ing of BAB's organization. Credit Channels A. The Agricultural Bank of Bolivia (BAB) 34. BAB is a Goverrnent-owned auttonomous entit-y which was established in 1942 and reorganized in 1963 and 1974. Overall supervision of BAB's operations is shared among the Ministry of Peasant and Agricultural Affairs (MPKA.) (technical) the Ministry of Finance (financial) and the Central Bank (cost accounting and legal). BAB has a staff of about 290 and 66 branch offices located throughout the country. Since July 1974, BAB has reduced the number of its operational units from seven to two divisions: Credit and Finance/Administration. 35. by the end of 1973, BAB's total resources amounted to about,$b69O million of which $b614 million were in loans and $b76 million in equity. Between 1970 and 1973, BAB's debt equity ratio increased from 1.2 to 6.5 and its overdue loans represented about 30% of the loan volume outstanding 1/ The Association for Provision,of Technical Assistance to Farmers and Rural AUtisans.  as of March 31, 1974. Over the past few years, BAB has been decapitalized mainly because: (i) it carried the foreign exchange risk on external loans and was severely affected by the devaluation of the Bolivian peso in 1972; (ii) it undertook unprofitable rice marketing activities (another specialized agency has since assumed this task); and (iii) it operated on insufficient margins to cover rising administrative expenditures. The Government is determined to strengthen BAB, the only agricultural credit organization in the country, and has already contributed US$0.5 million for its recapital- ization. In addition, the Development Credit Agreement (Section 3.01(c)) provides that the Government would contribute US$4.3 million to BAB's equity over a period of two years. Moreover, the Government has taken already a number of important measures which are likely to improve BAB's overall performance in the long run. It has appointed a new Board of Directors, a new General Manager, and has dismissed a considerable number of BAB's staff which were found unqualified. Also, BAB is expected to undertake in June 1975 a study, with the assistance of consultants to be financed from Credit 261-BO, of BAB's overall organizational, financial and accounting system as provided in the Project Agreement (Section 3.01(a) and (b)). The study would recommend how to strengthen BAB and would examine its future role within the agricultural sector. Section 3.01(c) provides that BAB will implement its reorganization programs not later than the end of 1977. B. Commercial Banks 36. About 10 Bolivian commercial banks operate in the project area and have agreed in principle to participate in the proposed project by contributing about US$0.9 million equivalent to the project's credit component. The Develop- ment Credit Agreement (Section 3.04) provides that the Government would make up the shortfall on the US$0.9 million should the banks decide not to contribute this amount to the proposed project. Since these banks' lending for agriculture has so far been limited, ALPD's and A.S.A.R.'s staff would provide technical and administrative assistance to borrowing fanners until commercial banks have trained their own agricultural technicians. The participation of commercial banks would have the following advantages: (i) it would introduce private banks' expertise in fields usually left to agencies in the public sector; (ii) it also would introduce more competition in lending to farmers; (iii) it would provide added flexibility; and (iv) it would allow the project to be extended to regions which otherwise would have to be excluded because of staff and resource constraints in DAB. On-Farm Investment 37. About 4,600 families will benefit from the on-farm investment credit available under the project. Approximately 930 families engaged in ranching in the Beni and Santa Cruz, most of whom in the past already have received some assistance from either IDA or IDB, would receive additional loans to cover 65% of on-farm investment. No other medium or long term lines of credit would be available for this purpose over the next few years. In addition, the project would include a new component aiming at about 3,600 small and subsistence farmers who have received hardly any assistance in the past. The amount to  - 12 - be channeled has been estimated on the basis of: (i) the number of loan applications which can reasonably be processed in the next two years through the proposed organizational arTangement; and (ii) the individual farmer's needs, which are generally not very large. To ensure adequate participation of small farmers in the proposed project, the Development Credit Agreement (paragraph 5 (a) of Schedule 1) provides that subloans for cattle will not exceed 55% of the amount of the credit allocated to on-farm investment. Lending to sugarcane and grape farmers will be limited to those having up to 50 ha and 4 ha, respectively (paragraph B.l of Schedule 3). Such limitations are not necessary for farmers breeding sheep in the Altiplano where groups of 20 families would have about 100 ha and 60 sheep on the average, and those growing potatoes in Cochabamba would have about 2 ha. On-farm investment credit would be mainly for purchase of cattle and sheep breeding stock, stakes and wire, vineyard plants, fencing, recurrent inputs, establishment of pasture and the construction of small irrigation canals. Re-Lending Terms 38. The Government would open a Project Account in the Central Bank which would lend the proceeds of the credit to BAB (for ALPD) and commercial banks for re-lending to participating farmers. Repayment and grace periods of subloans would be four and two years, respectively for potato growers, six and three years for sugarcane growers, eight and four years for grape growers and twelve and four years for cattle and sheep raising. The Development Credit Agreement (paragraphs B.5,6 and 7 of Schedule 3) provides that subloans for cattle, sugarcane and grapes would, at the choice of the sub-borrowers, bear either: (i) a 4% interest rate calculated on outstanding balances periodically adjusted on the basis of the La Paz cost of living index or (ii) a 14% interest rate calculated on outstanding balances periodically adjusted according to fluctuations in the foreign exchange rate. Subloans to subsistence farmers breeding sheep in the Altiplano and cultivating potatoes in the Cochabamba area would not be adjusted but carry a nominal 12% interest rate. On-lending terms from the Government to BAB and participating institutions would be either interest-free, under the La Paz cost of living index option, or at 9% under the foreign exchange option for on-lending for cattle, sugarcane and grapes. The Government would charge the intenmediaries 6% nominal. interest for on-lending for potatoes and sheep. Participating institutions vould thus be given the following spreads: 4% for on-lending for cattle, sugarcane and grapes lmder the indexing option; 5% for on-lending for cattle, sugarcane and grapes under the foreign exchange formula and 6% (without indexing) for on-lending for potatoes and sheep. These spreads are necessary to cover the costs and provide adequate renuneration to the participating institutions. The Develo]pment Credit Agreemernt (Section 3.07) provides that repayments of publoans be re-lent for the sane purposes for 15 years. Project Cost and Financing 39. Project costs are estimated at US$12 million equivalent, of which US$5 million would be foreign exchange. The Government would contribute US$2.3 million or 20%; farmers from their own resources US$1.3 million or 11%; commercial banks US$0.9 million or 7%; and IDA would finance the balance of US"7.5  - 13 - million or 62% whiph would include US$2.5 million of local cost financing. As noted in paragraph 13, some local cost financing is justified in Bolivia to enable the Bank to make an adequate contribution to meeting the country's external capital requirements. Pr curement 40. Vehicles estimated to cost about US$200,000 would be purchased following international competitive bidding in accordance with Bank/IDA guidelines for procurement. The purchase of on-farm inputs, together with office and laboratory equipment estimated to cost about US$10,000, would be made through nonmal commercial channels. Several international and local fins. selling farm machinery, wire, fertilizers and seeds are represented in Bolivia. Supplies of the goods and services required are adequate and prices are competitive. Small contracts totalling some US$200, 000 for the construction of housing and other facilities for project personnel would be placed with local firms following Government procedures. Disbursement 41. Commitments for on-farm investments would be completed over two years, while disbursements would be spread over about four years. IDA would, against statements of expenditure, disburse an equivalent of 73% of the amounts disbursed by participating financial institdtions for on-fanm investments. In addition, reimbursement for the salary of ALPD's deputy manager and the cost of vehicles for ALPD and research equipment would be made on the basis of actual foreign exchange costs incurred; disbursements for construction and equipment for project administration would be 40% of the total expenditures. Economic Benefits and Justification 42. It is estimated that the project would provide full employment to some 4,000 smallholders and seasonal employment to no less than 8,000 workers whose present average fanily income is about US$350 per annum. Also, the project would contribute to an increase in exports of sugarcane and beef as well as help to meet increasing demand for food consuned locally. As a result of the project, the participating families would increase their net fanily incomes to the following levels (in US$): At FUll Activity Present Development Beef 1,205 4,625 Sheep _0-i/ 337 / Sugarcane 485 2,855 Potatoes 100 345 Grapes 105 2,040 1/ The contribution of sheep raising to family income only.  -14 - Economic rates of return have been calculated on the basis of farm models for the different types of farming activities that would be financed under the project. These rates range from 13% in the case of small farmers to 34% in the case of cattle ranchers. Financial rates of return are similar to the economic rates. PARE V - LEGAL INSTRUMENTS AND AUTHORITY 43. The draft Credit Agreement between the Republic of Bolivia and IDA, the draft Project Agreement between IDA and BAB, the recommendation of the Committee provided in Article V, Section (1) (d) of the Articles of Agreement, and the text of a draft resolution approving the proposed credit are being distributed to the Executive Directors separately. 44. Special conditions of effectiveness would be that: (i) the Government and BAB have signed a Subsidiary Loan Agreement; (ii) the Government has contributed the equivalent of US$0.25 million to the Project Account in the Central Bank; (iii) the Government has contributed the equivalent of US$0.25 million to BAB in the form of equity; (iv) the Director and the Deputy Director (ALPD) have been appointed; and (v) the Government has issued the Decree authorizing the participating institutions to lend at the interest rate of 14% for project purposes with an adjustment of principal based on the rate of exchange between the Bolivian peso and the do]lar. 45. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association. PARE VI - RECOMMENDATION 46. I recommend that the Executive Directors approve the proposed credit. Robert S. McNamara President Attachments June 9, 1975  ANMEX I Page 1 of 4 8IUNTRT ATA - BVLlIA ARMU PZUI0N 1-,,000 km 2 '29gj ll9 4n (dld-1972) Per im2of arabla lend S0CIAL DINDICATBS Reece outries Bolivia Car.on Rbndur P.or 19_ TM7 1O 190 97 ONP PER CAPITA US4 (ATLAS BASIS) / 200 a 200 / 320 520 Lj DEMOGRAPHIC Mrune birth rat. (per thouasnd) 44 2,c 43 A c 9 aE 42 bc Crude death rate (per thouand) 19 A.. 23 797 17 /bc 11 c Infant mortality rate (per thousand live births) 154 73 6 Life axpactancy at birth (years) 4S 41 b 52 58 Gross rproduction rte t 2 8 33 9 /b Population growth ret 2 2 6 20k 2.0 8 Population groeth rate - urban 3653 Age structure (percent) 0-li.12b~il~ 2U 15-64 42 42 4 56L 41 25 a 65 and "o0r 4 4/ 356 2 32 Dendendncy r,tio A L 5 4 c 15 p 15Z Urban Population as percent of total 27 I 29 I. 20 A 32 /a i 51 /a.k.o Family Planning. No. of acceptors conmultive (thouse . .1.6 j No. of u-srr (S of married -man) Total labor foroe (thousands) 2,000 , 2,300 800 i.,300 Percentage employed in agriculture 67 Li 66 654 15 Peroentage unemployed 11. 16 8.5 IN00O1R DL3TRISUTION Percent of national income received by highest 5% 36 29r 3160 Percent of national inoome recived by highest 20% 36 60 29 Percent of national income received by incest 20% .9 6.32 Percent of national income received by loneet .0% 13 8 r 7t MSTRIBUTION DF LAND 0N1ERSHIP % owned by top 10i of nenero 93 % owned by smallest 10% of owner, 0.1 HEALTH AND NUTRITION Population per physician 3,700 D 2,300 25,960 3,710 / 1,920 hj Population per nursing person 2,730 2,170 9,120 3,200 Population per hospital bed 580 1.90 I 1.80 E 570 1 70 Per capita calorie supply as % of requirements . 70 93 90 88 X Per oapita protein supply, total (glass per day3 /6 59 59 59 5 Of Which, animal and pueie I . L 23a 25 21. Death rate 1-1 yearsL . ESICATICS Ad=ueted /8 primery school enrollment ratio 67 96 108 z 91 /I 115 4n aa Adjueted 9 secondary sihool enrollesnt ratio 11 13 9 10 41 Za Teare of schooling provided, firet and second level 12 13 13/ - 11 ao 12 Vocational enrolment as % of sc. school enrollment 11. 13 22 18 17 /aa Adult literacy rate % S 38 a 92 /a.ad.ae 72 N0USI'M Average No. of persons per room (urban) Percent of occupied units without piped water 89 v eg Accese to electricity (as % of total population) 22 Zr_.g Percent of tural population conncted tu electricity 8 / CONSUMPrION MMdic recoiverper 1000 population 73 /h 2do8 37 /c. 57 131 Passenger care per 1000 population 3 4 6 8 mi 17 Electric poer conumption (keth p.c.) 118 & 148 200 120 392 Newsprint consumption p.c. kg per year 1.0 0.9 0.02 1.0 3.2 L Noose, Figurner refer either to the latest perioda or to acoount of environmeOntal temperature, body weigbts, and the latest years. Latest periods refer in prinoiple to distribution by age aod ae of national populations. the yearn 1956-60 or 1966-70, the latest years in prin- / Protein et"ndard (reqouirmenet) for all o.ntrise as otrb- ciple to 1960 and 1970. lihed by USDA Econonic Research Service provide for a minim A The Per Capita GNP estimate is at merkct pricro for allowance of 60 grams of total protein per day, and 20 gracs Of ye.- other than 1960,calculated by the ease conversion animal and pulse protein, of which 10 grass should be animal * teohoique ae the 1972 World Boek Atlas. protein. Theme etandardr are soaewhat l1-er than these of 75 L2 Average number of daughters per -osan of reproductive gra Of total protein and 23 gr-ec of enita protein ae an age. averag for the world, proposed by PA0 in the Third World Food a POpulation rrowth rates are for the decades ending in Survey. 1960 and 1970. /7 Sore studies have euggeated that crude death rates of children A Ratio Of under 15 and 65 and over age brackets to ages 1 through 4 may be used ae a first approzimation indes of those in laor force bracket of ogen 15 through 61. malnutrition. Li FAO reference stand-rds represent physiological re- / Peroentage enrolled of corresponding popalation Of .chol age quirements for normIl activity and health, taking ae defined for each -oantry. / 1972; A 1965-70; /. E.timate; d 1967; Le 1960-72; If Cities of La Paz, Orura, Potosd, Cochabamba, Sucre, Tarija, Santa Cruz, Trinidad and Cobija; A 1959-60; / Urban etere over 5,000 population; /i localities of 1,000 or more inhabitants having essentially urban characteristice; [ 1961- 72; h Capitalo of dietricts and those populated centere with such urban characteristics as strmets, plazas, water supply systeas, sewerage systems, electric lights, stc; /I 1969; /m Data exclude adjustment for underenuneration, and Indian jungle population; /i Ratio of population under 15 and 65 and over to total labor force; / Excluding Indian jungle population; eatimated at 100,830 in 1961; /P 1971; /q 1965; / 1967-68; / Per capita; /t 1970-71; /u Economicelly activo population; y 1963; / Number on the register, not all working in the country; . 19681 L 196b-66; L . itiate which includes -o-rage otudenot; . Z Indcuding evning schools; Lab East Cameroon; /L West Cnrercon; /ad Definition unknown; /.15 years and over; /af Inside or outside; L. Percentage of house- holds; L 1961; Zi Including government vehicles. * Peru has been selected an objective country because Of similer natural conditions and cospeaMble human and rezource endo-.ento. Ri January 2, 1975  ABNNEX I P.ge 2 of 4 BOLIVIA ECONOMI3C DEV0L0F88098 DATA (A .. at. in 1973 US$ Mil-lio.s 1968 -1971 1973 1975 1977 1985 1968-71 1971-73 1974-77 1978-80 1968 091 97 NATIONAL ACCOUNTS 3-Year A--rge at 1973 Voi... & E-rh.ng. Beat Aver.g. A-nol Co...sth Rate- As VPrce- of GDY- Gross Il-tiosl Prodsst 828.3 921.6 1,035.3 1,149.2 1,296.7 1,617.9 3.7 6.0 7.8 11.7 90.7 98.0 96.3 re-n of Tr-de Efffeot 10.1 19.0 50.7 105.8 49.5 78.6 ... 1.3 2.0 3.7 Gro.. Dom-ti. I.-Oo 836.4 940.6 1,086.0 1.255.0 1,346.2 1,896.5 4.0 7.4 7.4 12.3 100.0 100.0 100.0 I.po-ts (iori. NFVS) 301.4 303.8 347,7 433.4 549.8 676.4 0.3 7.0 16.5 10.9 36.0 37Z.3 40-8 apart'. (iep-rt -P.slty) 265.2 276.2 35914 451.6 641.1I 593 .9 1.4 -17.8 - 14.0 31.7 29.4 32.8 R ..rc - loIo- (-lSs7pl..) 36.2 27.6 -18.2 108.7 82.5 -7 - - -- 4.3 -2.9 8.1 Coo5S..pti.o E.p.aditores 698.2 776.9 896.4 988.6 1,063.4 1,291.8 6.1 7.4 5.8 10.2 82.3 82.6 79.0 Io-t-et boOi-. sto-ks) 164.3 191.3 185.9 248.4 391.6 487.3 1.2 .egatRo- 28.0 11.6 22.0 2015 29.1 D-tit51 S"alsg. 148.1 163.7 189.6 266.6 282.8 404.8 3.4 7.6 14.3 19.7 17.7 17.4 71.0 Narbs.1 I S-i.g. 128.1 146.3 177.9 230.1 258.9 339.5 6.6 10.1 13.3 14.5 15.3 15.6 19.2 MERCHW7fISE TOAE A ...dI Oct. et Correct Pri-~ A. Por--t f Totl1 Ca pt.1 Goods 71.8 71.1 119.0 220.2 414.2 680.9 ssogatfo- 29.0 52.0 28.0 47.0 42.3 58,8 R-w -4tracaa oemdlct Goad, 47.2 02.2 67.1 113.7 169.4 276.6 3.3 13.4 36.0 28.0 31.0 31.0 24.0 F.e1 cod Lorlists 1.6 1.2 2.2 10.3 12.7 17.9 StgOtI- 39.0 36.8 10.7 1.0 0.0 1.8 C.oa_ptlass Goods 52.1 43.5 67.2 99.3 108.3 141.1 10.7 _24.0 17.3 14.1 21.0 25.9 15.4 Torsl 4erhocdls- Icp.rt. (CIF) 152.8 168.0 255.3 443. 5 704.6 1,116.5 3.2 23.5 40.0 26.0 100.0 100.0 100.0 Priss_r Prodost. 145.8 191.4 266.3 4,46. 2 431.1 588.1 9.6 18.4 17.1 16.8 85.1 88.7 99.3 Fuels 24.3 23.9 67.0 197.2 290.8 692.0 ..gatios 67.0 62.0 50.0 11.3 11.1 40.0 ohs Grads Perolsm (24.3) 23.9) (48.9) (189.4) (204.6) (506.7) oes.tle 43.0 61.0 57.0 (14.3) (11.1) (70.15 M-ofaot-rd Goods _0.4 0.6 3.40 3.9 5.4 8.3 23.0 - 22.0 24,0 .2 .2 .7 Totl1 Mleoh. Eoports (fob) 170.5 215.9 338.3 642.3 727.3 1.288.4 8.2 25.0 29.0 33.0 100.0 100.0 000.0 I4-rh.adiss Trede Iodise, Export Fobs. lode, 66.7 76.4 100.0 190.4 194.0 249.0 4.6 14.4 24.8 13.3 21.6 22.7 32.4 I.Port V,lrs ladeo 66.0 73.9 100.0 149.2 173.0 214.9 4.8 14.8 20.0 11.5 21.5 22.6 28.0 Toe- of Trsde ladex 100.1 100.6 100.0 131.1 113.0 109.3 asegtlo- segctloe 4.2 2.8 32.7 30.0 18.8 fopo-ts V.I.c. lodess 75.4 83.5 100.0 107.0 119.7 166.9 3.5 9.4 6.0 18.1 24.4 24.7 20.0 VALUE ADDED BY 1OCT08 - Acc1 Dts.-.t 1973 Prtr-c ccd ftoh-ss. Urear A--roo As.-.! Gr-.th Rates A. Pert-o of T-ls Agrlo-lt.re 186.8 201.6 222.6 249.2 273.0 320.0 2.5 5.1 7.1 8.3 22.5 21.9 21.7 Iod.otry and MiOong 279.7 303.4 338.6 361.9 412.6 534.4 2.7 5.6 6.8 13.0 33.0 33.0 32.0 Service 365.1 414.0 477.7 538.1 604.7 757.2 4.3 7.4 8.2 11.9 43.9 45.1 46.8 Total f(-CDP) 831.6 919.0 1,038.9 1,149.2 1,290.3 1.611.6 - .4 6.3 7.5 11.-8 -000.0 1O00.0 100.0 PUBLIC FINANCE (C'otral Coerso) C'retReeps107.6 112.2 109.2 013.1 040.3 188.0 4.3 -2.4 6.9 10.2 11.9 11.5 10.8 Cu-r-o Eopeodit.ros 103.9 13.4.4 145.3 168.5 190.1 239.9 7.9 6.3 6.9 8.1 01.5 13.6 04.7 Bodget.ry Savings 3.7 -22.2 -36.1 -55.6 -49.8 -31.9 . . . 0.4 2.3 -3.9 Other Pobll, Osotor S-ioRs 29.3 54.4 98.2 129.4 134 .1 219.2 . 3.2 5.b 6.3 P.bOI i~esso. C.aplit1 E.peodltore 108.2 102.6 99.8 147.5 267.7 301.4 9.0 -5.0 28.'2 4.0 12.0 11.6 20.7 CUR ENT DCENITIIR DETAILS Actrod (A . oa C ar t Enpead.) 1968-70 1971-72 DETAIL ON PUBLIC SECTOR INVESTMEONT P10R839L A. Perc-o of Total (1968 -74 - 19)5-80) Cootra1 Adiloistrctioss 28.2 25.9 Agri-tolt. sod 1.iOrlRaOl 3.0 3.8 Dofe.... 13.3 12.8 RicIng cod Hydraosrbons 39.0 61.1 Ed ...ti-s 27.3 26.3 Indostry and Pos-e 14.9 9.0 014er 1-i010 & Cosinety OS-o 9.3 13.5 Transport cod Co.olnlss24.0 17.4 AgriIout.r. 3.0 3.0 Fob,1Ilo Or..cd Social S-rooe 18.3 8.7 Oter 17. 10.3 Other SELOCTED INDICATORS Estiloatd (Calc-laled fr-an 5-Yr, Aver.xdDtat) 1968-70 1970-74 1975-77 1978-80 FINANlCING 1968-73 1974 1975-0 A--rg. ICOR 6.45 3.00 3.67 4.06 ftb1ic Sector 0S-100. 39.8 91.0 44.4 Inpor-t Elasti.Ity 0.91 1.06 1.13 1.03 Do-ostU Ror-oag loer) 14.6 .44.0 16.9 Marginal Daa. .rtiDc tg Rate 64.97. 24.27. 3.67. 37.47. Foreign Doroosslg lost) 46.4 79.1 38.6 M-rgo-1 National S-vigs Rate 20.57. 28.47. .egati-c 22.07. Other --2.9 23.1 ____ LABOR FORCE AND OUTPUT P'ER WORKER DePloyed Labor Pat-5 Value Added Per Woker (1973 PrIces 4 E..hUo.a R.t) in Thousa-ds 7. ofTotal 1970-1974 In 0.0. SaIlor Ve,-nt of A,eraos Ch.ao8 P... 1970 1974 1970 1974 Groeth RAte 1960 1970 1960 1970 1970-74 Agolosslt-r 1,271.0 1.383.1 65.4 64.4 2.1 15.14 170.0 33.8 33.4 2.9 Ind.stry 264.2 300.6 13.6 14.0 3.3 1,067.8 1,147.6 238.4 225.8 2.0 se-ict -407 .1 _463. 0 21.0 2.16 3.3 938.9 1.068,4 209.6 210.2 3.3 Tota1 1,942.3 2,146.7 100.0 100.0 2.5 447.9 508.2 100.0 100.0 3.2 0/ E-olsding t-xe frcu export cot-prur..e 3/75 Not :pplloable- Nil1 or ..e gi~bls  Pa-e 3 of 4 BOLIVIA SUMMARY: BALANCE OF PAYMENTS TCurrent U.S.$ millions) 1972 1973 1974 1975 1976 1977 1978 1979 1980 1985 1. Imports 261 332 509 572 817 910 la135 1,287 1,443 2,521 2. Exports 225 310 606 615 648 714 831 1,058 1,259 2,880 3. Balance of Goods 6 NFS -36 -22 97 43 -169 -196 -304 -229 -184 359 4. Factor Services -22 -25 -32 -29 -37 *44 -53 -102 -133 -197 Profits (-6) (-6) (-8) (-9) (-11) (-12) (-14) (-50) (-69) (-106) Other (Net) (-16) (-19) (-24) (-20) (-26) (-32) (-39) (-52) (-64) (-92) 5. Current Transfers 13 15 14 12 10 8 5 3 3 -- 6. Current Account Balance -44 -32 79 26 -196 -232 -352 -328 -314 162 7. Direct Foreign Investment -13 5 10 18 28 43 64 89 101 30 8. Official Capital Grants 8 10 9 20 25 27 28 26 20 2 9. Public M & LT Loans (Net) 93 5 41 45 130 142 232 219 202 -23 Di bursements (125) (38) (S5) (93) (192' (216) (316) (329) (341) (199) Repayments (32) (33) (4) (-48) (-62) (-74) (-84) (-110) (-139) (-222) 10. Other M & LT Loans (Net) 15 17 21 23 32 39 42 48 50 10 11. IMF Drawings I 12 __ __ __ __ __ __ __ __ 12. Other Short 1Nrmt Errors -42 -20 -15 ~ -20 -10 -5 __ __ _ & Omissions _ 13. Change in Net Reserves -17 15 -145 -112 -9 -14 -14 -53 -59 -181 (-Increase) 14. Total Net Reserves 47 31 176 289 298 312 326 379 438 933 (End of Period) 15. Debt Service Ratio 20.9 16.8 12,9 16. External Public Debt OS v 681 698 723 olv IBRD (23) (23) (21) IDA (26) (30) (39) 17. IBRD-IDA Debt Service 3.1 4.8 4.0 as % of Public Debt Service 18. Debt Service as % of GDP 4.6 4.9 4.5 I/ Includes SDR allocation equivalent to US$4.3 million in 1972.  A?2.EX I Page l of 4 CONTRACTED PUBLIC AND PUBLICLY GUARANTEED EcERNAL DEBT, 1968-73 (U.S.$ Thou3ands) 1968 1969 1970 1971 1972 1973 INTFRNATT0.-i( B CRGANIZATIONS - 30,650 1.400 26,777 11,197 7,211 CAF 2 98 2,047 1,183 IBRD 2 3,250 - IDA 7,400 1,400 6,800 8,000 6,000 IDB - - 19,879 1,150 28 G0VF2.NfNTS 26 814 2 17 202 34 675 65 680 29 861 Argentina51 3,i435 bL3 Czechoslovokia - - - 3,321 _ Germany F.R. _ 1,776 1,366 - - United Kingdom 4,080 1,452 - - 7,082 _ U.S.A. 17,580 22,681 1,515 25,343 39,967 26,460 U.S.S.R. _- - 11,234 - Others 1,000 - 1,701 3,162 - SUPPLIES, CREJ)ITS 114,574 11,692 1,584 3,947 36,h2h 20,168 Argenti3a _ _ - 1,585 5,077 5,725 Belgium _- - 5,487 Canada - - - - 3,695 Donr-ark - 670 1,311 - 791 _ Germany f.R. 308 - 4,147 273 - - Italy 6,450 2,099 - -- 16,644 - Japan 1,477 - - 2,o808 6,32 - Poland .. _ _ - 250 4,2h2 Spain 1,990 3,337 - _ U.S.A. 1,269 - _ 1,146 872 U.S.S.R. - _ - - _4,700 _ Others 3,080 1,439 282 1,384 147 PRIVATE BANKS 1,463 1.264 - 23,330 2 9 738 Brazil - -12,000 7,62 U.S. 500 * 1,264 _ 10,000 12,800 1,500 Others 963 - _ 1,330 2,400 3.488 OTHE 801 lh,216 4,060 - 22,788 93 Nationalization (USA) 78,622 _ .736 TOTAL 1 49,680 1 0. 6 8 8,729 1595 67,807 1/ Net of adjustmenta and cancellations  ANNEX II Page 1 of 3 THE STATUS OF BANK GROUP OPERATIONS IN BOLIVIA A. STATEMENT OF BANK LOANS AND IDA CREDITS (as of April 30, 1975) US$ million Loan or Amount (less cancellations) Credit No. Year Borrower Purpose Bank IDA Undisbursed Fully disbursed loans and credits 23.2 148 1969 Bolivia Power - 7.4 0.3 261 1971 Bolivia Livestock - 6.8 4.3 346 1972 Bolivia Railways - 8.0 1.4 433 1973 Bolivia Power - 60o 2.7 455 1974 Bolivia Mlining - 6.2 5.6 TOTAL 23.2 34.4 14.3 of Which has been repaid 2.5 0.1 Total held by Bank and IDA 20.7 34.3 Total undisbursed 3 B. STATEMENT OF IFC INVESMENTS (as of April 30, 1975) Amount in US$ million Year Obligor Type of Business Loan Equity Total 1973 Plasmar, S.A. Cables and Plastic Products 0.3- 0.1 0.4 Total undisbursed 1/ Of which,,US$O.l million is a standby loan.  ANNEX II Page 2 of 3 C. PROJECTS IN EXECUTION Credit 148 - Second ENDE Power Project, US$7.4 million, April 28, 1969; Closing Date: June 30, 1975 The project has been successfully completed. The undisbursed balance represents contractor payments that will be made upon tenrination of the guarantee period. Credit 261-BO - Third Livestock Development Project, US$6.8 million, June 25, 1971; Closing Date: June 30, 1977 Status of the project is discussed in Part IV of this Report. Credit 346 - Railway Project, us$8 million, December 1, 1972; Closing Date: December 31, 1975 All of the funds under the project have been committed. Due to inflation, however, the funds available under the credit have been insufficient to procure all of the items included in the project. About 50% of the items planned for procurement for the first project, have been deferred for purchasing under the second railway project. Materials and equipment ordered under the project did not begin to arrive in Bolivia until the last quarter of 1974. Although it is therefore premature to measure physical progress under the project, significant improvements have been made in the management, operations, financial condition and tariff structure of the railway. Credit 433 - Third ENDE Power Project, US$6 million, October 17, 1973; Cosing_ Date: December 31, 1976 The Santa Cruz gas turbine was put into service in December 1974. Because of delays in preparing bid documents and possible future delays in equipment delivery, completion of the various transmission line and substation equipment components is expected to be six months to two years behind the appraisal estimate. The project's foreign and total costs are expected to be 40-50% above appraisal estimates. Although the beneficiary's recent financial performance has been satisfactory, it needs tariff increases to maintain its agreed upon 9% rate of return in 1975 and future years. Credit 455 - Mining Credit Project, US$6.2 million, January 18, 1974 Closing Date: June 30, 1978 The project is proceeding as scheduled and the credit should be fully committed by the second quarter of 1976.  ANNEX 1- Page 3 of 3 Largely beeause of increased costs, the average size of mining projects are double the US$200,000 original estimate. A second project for additional lending to medium miners is planned for FY76.  ANNEX III Page 1 of 2 BOLIVIA AGRICULTUJRA CREDIT PROJECT CREDIT AND PROJECT S-JMARY Borrower: Republic of Bolivia Beneficiary: The Agricultural Bank of Bolivia (BAB) Amount: US$7.5 million Terms: Standard IDA terms Relending Terms: The Government would onlend through the Agricultural Bank and commercial banks for on-farm investment by farmers growfing grapes and sugarcane and to livestock ranchers who will have the option to borrow either at 4% with repayments indexed to the La Paz cost of living or at 1L% with readjustment of the principal based on the rate of exchange between the dollar and the Bolivian peso. Subloans to subsistence farmers breeding sheep and cultivating potatoes would bear a 12% interest rate without indexing. Subloans to fanrmers would have repayment and grace periods as follows: Loan Period Grace Period Cattle ranchers 12 4 Sheep 12 4 Sugarcane 6 3 Potatoes 4 2 Grapes 8 4 Project Description: Credit would be provided for the expansion of production of cattle, sheep and crops in selected areas of the lowlands, the Altiplano and the Valles in Bolivia. Cost of Project: Components (US$ million) Local Foreign Total On-Farm Investments Beef 2.27 2.61 4.88 Sieep 0.55 0.33 0.88 Sugarcane O.fi] 0.10 0.91 Potatoes, Oats, Wvheat 0.50 0.23 0.73 Grapes 0.61 0.29 0.90 Total on-farr. 4.74 3.56 8.30  ANNEX III (US$ million) Local Fbreign Total Project Adninistration 0.48 0.22 0.70 Agricultural Research 0.07 0.07 0.14 Total Baseline Costs 5.29 3.85 9.14 Price Contingencies 1.71 1.15 2.86 GRAND TOTAL 7.00 5.00 12.00 Financing Plan: Beneficiaries Commercial Banks Government IDA Total 1.30 0.89 2.30 7.50 12.00 Estimated Disbursements: FY76 Fm77 m178 FY89 (S million) Annually 2.1 3.4 1.5 0.5 Cumulative 2.1 5.5 7.0 7.5 Procurement: Procurement of on-farm inputs together with office and laboratory equipment estimated to cost about US$110,000 would be made through nornal commercial channels. Contracts for the construction of housing and other facilities for project personnel would be placed with local firms following Goverment procedures which would have to be satisfactory to IDA. Each contract is estimated to cost about US$30,000 and the total cost is estimated to be about US$200,000. Vehicles estimated to cost about US$200,000 would be purchased following international competitive bidding in accordance with Bank/IDA guidelines for procurement.  IBRD 11241 R B R A Z I L < ~~~~~~~~~~~~~~~~~8 0 L I V I A B RA ZI L AGRICULTURAL CREDIT PROJECT dBeef 1 Main roads "itIJk See RoIlroads Odd,~.~ COBILTJ~ Sugar cone Rivers "~~* c~~~~~2 P A 0 R~~~~IB L: Pofafo~Viey ,bord 7 -1jrovincial boundaries -A d, D