Dominican Republic - Second Puerto Plata Tourism Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-2501-DO REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE BANCO CENTRAL DE LA REPUBLICA DOMINICANA WITH THE GUARANTEE OF THE DOMINICAN REPUBLIC FOR A SECOND PUERTO PLATA TOURISM DEVELOPMENT PROJECT May 7, 1979 IThis document has a restricted distribution and may be used by recipients only in the performance of - their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  DOMINICAN REPUBLIC SECOND PUERTO PLATA TOURISM PROJECT CURRENCY EQUIVALENTS Currency Unit = Peso (RD$) US$1.00 = RD$1.00 US$1,000,000 = RD$1,000,000 WEIGHTS AND MEASURES 1 meter (m) = 3.28 feet (ft) 1 kilometer (km) = 0.62 mile (mi) 1 kilogram (kg) = 2.2 pounds (lb) 1 hectare (ha) = 2.47 acres ABBREVIATIONS DNTI - Direccion Nacional de Turismo e Informacion (National Tourism and Information Directorate) FDD - Fundacion Dominicana de Desarrollo (Dominican Development Foundation) FIDE - Fondo de Inversiones para el Desarrollo Economico (Investment Fund for Economic Development) INAPA - Instituto Nacional de Aguas Potables e Alcantarillado (National Potable Water and Sewerage Institute) INDRHI - Instituto Dominicano de Recursos Hidraulicos (Dominican Institute of Hydraulic Resources) INFRATUR - Departamento para el Desarrollo de la Infrastructura Turistica (Department for Tourism Infrastructurel Development) LIBOR - London Inter-Bank Rate FISCAL YEAR January 1 - December 31  FOR OFFICIAL USE ONLY DOMINICAN REPUBLIC SECOND PUERTO PLATA TOURISM DEVELOPMENT PROJECT Loan and Project Summary Borrower: The Central Bank of the Dominican Republic Guarantor: The Dominican Republic Amount: US$25.0 million Terms: Repayment in 17 years, including 4 years of grace, with interest at 7.9 percent per annum. Relending Terms: The proceeds of the loan allocated to finance hotels (excluding apart-hotels)would be on-lent by INFRATUR at 9 percent per annum to mortgage and commercial banks for relending to investors on terms of up to 17 years, including up to 4 years of grace, at an interest rate of 12 percent per annum. The proceeds of the proposed loan allocated to finance other sub-projects and apart-hotels would be on-lent by INFRATUR to the financial intermediaries at 9.5 percent per annum and investors at 12 percent per annum. A one-time closing cost of 3-4 percent would be charged to sub-borrowers. The foreign exchange risk of the loan would be assumed by the Central Bank. Project Description: The project includes four components: (a) a line of credit for the construction of tourism facilities of about 1,600 rooms, of which about 1,200 would be in Playa Dorada, 300 in Playa Grande and 100 in the City of Puerto Plata, and for tourism services such as restaurants, shops, tourism transport, and a 30-boat marina; (b) urban works in Puerto Plata; (c) a handi- crafts center where about 50 artisans would be trained each year; (d) a total of about 132 man/months of technical assistance to DNTI for sectoral planning and economic evaluation of projects, and to INFRATUR for land development, hotel construction and equipment. In addition, the project provides for three- instructors for two years for the handicraft center. A major increase in operating costs, unmatched by revenue increases, is the principal project risk. This, however, would imply an unlikely decline in hotel operating efficiency. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - Estimated Costs: Item ------- US$ thousand ----- Local Foreign Total Line of Credit 1/ 36,400 31,600 68.000 Tourist Accommodations 2/ 34,600 28,800 63,400 Tourist Services and Common Facilities 1,800 2,800 4,600 Urban Works 790 450 1,240 Handicraft Center 320 280 600 Technical Assistance 180 400 580 Total Base Cost 37,690 32,730 70,420 Contingencies 3/ 320 270 590 Physical 170 130 300 Price 150 140 290 Total Project Cost 38,010 33,000 71,010 Financing Plan: US$ million World Commercial Central Bank Banks Bank Equity Total Line of Credit 23.6 2/ 12.0 4/ 8.4 24.0 68.0 Urban Works 0.6 - 0.9 - 1.5 Handicrafts Center 0.3 - 0.5 - 0.8 Technical assistance 0.5 - 0.2 - 0.7 Total 25.0 12.0 10.0 24.0 71.0 1/ Includes physical and price contingencies. 2/ Up to US$6 million of the proposed loan could be used by the Central Bank to assist in financing its own hotel projects. 3/ For components other than the Line of Credit. 4/ Includes US$10 million cofinancing from foreign banks and US$2.0 million from local banks.  - iii - Estimated Disbursements: ----------US$ million----------- IBRD FY 1980 1981 1982 1983 ~984 Annual 1.4 4.3 7.3 6.5 5.5 Cumulative 1.4 5.7 13.0 19.5 25.0 Rate of Return: 17.5 percent Staff Appraisal Report: Report No. 2419-DO dated April 30, 1979  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT OF IBRD TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO BANCO CENTRAL OF DE LA REPUBLICA DOMINICANA WITH THE GUARANTEE OF THE DOMINICAN REPUBLIC FOR A SECOND PUERTO PLATA TOURISM PROJECT 1. I submit the following report and recommendation on a proposed loan to the Banco Central de la Republica Dominicana with the guarantee of the Dominican Republic for the equivalent of US$25 million to help finance a Second Tourism Development Project. The loan would have a term of 17 years, including 4 years of grace, with interest at 7.9 percent per annum. The Borrower, through financial intermediaries, would relend to private investors: (a) US$22.25 million for tourist accommodation projects, and (b) US$1.35 million for tourist services and common facilities. The terms to final borrowers would be up to 17 years, including up to 4 years of grace, at an annual interest rate of 12 percent and a one-time closing cost of 3-4 percent of the amount of each sub-loan. The Borrower could, on terms equal to the Bank loan, utilize up to US$6 million to assist in financing its own hotel projects. In addition, the loan would include US$1.4 million to finance urban works in Puerto Plata, a handicrafts center and technical assistance. The Borrower has substantially completed cofinancing arrangements from foreign commercial banks of US$10.0 million, to be repaid in 10 years, including a grace period of 4 years, at an interest rate of 1-1/4 percent per annum above LIBOR for the first four years, and of 1-3/8 percent per annum above LIBOR for the remaining six years. PART I - THE ECONOMY 2. The last economic report on the Dominican Republic, Report No. 1705-DO entitled "Main Problems in the Economic Development of the Dominican Republic," was distributed to the Executive Directors on November 23, 1977. An economic mission visited the country in February/March 1979, and is preparing its report. This section incorporates the preliminary findings of that mission. Relevant social and economic data are presented in Annex I. 3. During 1968-74, the Dominican economy experienced an unprecedented average annual increase in GDP of 10.5 percent. In 1974-1977, however, economic growth slowed to only 5.3 percent per year. In 1978, preliminary estimates indicate a further decline to 3.6 percent. 4. Economic growth during 1968-74 was led by exports of sugar and minerals, by tourism and by a high level of both private and public investment. During that period, the Dominican Republic was able to increase substantially the volume of sugar exports, start the exploitation of ferronickel deposits, undertake vigorous industrial expansion (mostly in import substitution indus- tries), and establish itself in the Caribbean tourism market. The main reasons for slower growth in recent years are poor agricultural performance, partly as a result of droughts in 1975 and 1977, the drop in sugar prices after 1975,  - 2 - which had a strong impact on domestic aggregate demand, and--more recently-- the depressed world market for ferronickel and bauxite. Manufacturing, oriented mainly to the domestic market and heavily dependent on imported intermediate and capital goods, has been particularly affected by the slow growth of the economy and by shortages of electricity. Industrial expansion during 1975-78 averaged 4.7 percent per year, compared with the 1968-74 average rate of 13.7 percent. 5. The country's balance of payments, like that of most energy import- ing, primary products exporting countries, has deteriorated in the latter part of this decade. In 1974 the cost of petroleum imports increased by over US$100 million and was largely responsible for the deficit in the balance of payments in that year--the first in many years. Steep increases in the price of sugar created a surplus in 1975; but since then, sugar prices have fallen drastically, the demand for minerals, ferronickel and bauxite has been weak, and the production of coffee and cocoa has stagnated, with the result that the deficit on current account has widened. The balance of payments has also become sensitive to the inflows of capital from private sources which in turn reflect the perception abroad of factors affecting risk and uncertainty in the Dominican economy. Because of a de facto dual exchange rate system and the openness of the economy, these private funds have proven hard to quantify. 6. An overall balance-of-payments deficit of US$95 million is estimated for 1978, compared with a surplus of US$71.5 million in 1977. The deteriora- tion in the balance of payments is due partly to an estimated increase in the current account deficit from US$264 million in 1977 to US$377 million in 1978 resulting from a continued decline in sugar prices, a drop in coffee and cocoa prices, drop in coffee exports and a substantial reduction of the volume of ferronickel exports; and partly to a decline in net capital inflows. The current account deficit in 1979 is expected to reach US$400 million, which could mean an overall deficit in the balance of payments, unless the Government can obtain medium/long term funds in addition to the US$120 million undrawn balance of a recent US$185 million loan from a consortium of foreign commercial banks, and US$50 million expected from the Venezuelan Trust Fund in the Inter-American Development Bank. 7. Inflation, which was minimal during the 1960s, accelerated in the 1970s. The average annual increase in the Santo Domingo consumer price index during 1971-77 amounted to 11.8 percent. The consumer price index for Santo Domingo indicates a reduction in the rate of inflation during 1978; during the period September 1977-September 1978 the increase was 1.8 percent compared to 15.1 percent during the same period of the previous year. The recovery of domestic food production from the effects of drought in preceding years caused a fall of food prices in 1978. In addition, the cost of housing remained unchanged. These categories account for almost two thirds of the weight in the index, and had been the sources of upward pressure on prices during most of the decade. Recent increases in gasoline prices and electri- city rates, as well as others expected later this year, will likely generate strong upward pressure on prices.  -3- 8. Fiscal policy has been cautious. In 1968-77, current budget surpluses averaged 6.3 percent of GDP (varying between 2.9 percent in 1968 and 10.2 in 1975) and financed, on average, 98.5 percent of the Central Government's capital expenditures. In 1975-77, Government savings exceeded investment. After the sharp drop in sugar prices in 1976, this was only feasible by catting investment drastically to adjust to the decline in current revenues. Although the Government's long-term savings performance was impressive, it was achieved at the expense of extremely low growth of current expenditures, especially wages and salaries. During 1968-77, average annual growth of recurrent expenditures was about 1.6 percent in real terms, and average real salaries of Government employees dropped consider- ably. This austerity limited the Government's ability to operate and maintain the country's economic and social infrastructure as well as to attract and retain capable personnel in government service. 9. In 1978 there was a deterioration in the fiscal situation, with an overall Central Government deficit estimated at RD$95.1 million; mainly as a result of a lower current surplus of RD$117 million, compared with RD$247 million in 1977. The reduction in the current surplus is attributable to wage increases granted to public employees, to a reduction of about RD$40 million in revenues due to lower value of sugar exports, the temporary suspension of export taxes on cocoa and coffee, and subsequent reduction by 50 percent of export taxes on coffee. 10. The Government which took office in August 1978 has announced its intention to adopt measures to strengthen the balance of payments and public sector finances, stimulate export growth and eliminate price distor- tions unfavorable to agriculture and employment creation. Although a compre- hensive package of economic measures has not yet reached the stage of imple- mentation, it is clear that the Government has recognized the need for appropriate adjustments in policy. It has resisted pressure to launch an ad hoc public works program to palliate the country's acute unemployment problem. It has proposed legislation that would legalize the free or parallel foreign exchange market which has long been supplied by receipts from tourism and by emigrant remittances and has financed a growing number of imports. The new legislation would allow certain export activities to sell their foreign exchange earnings at the premium offered by the parallel market over the official exchange rate set by the Central Bank. It is preparing other legislation to provide incentives to exports and to the development of agro-industry. All these are expected to improve export performance in the long term. In addition, the Government is seeking to strengthen the fiscal situation by channelling the plethora of earmarked taxes and special funds, which formerly put a large part of public sector resources beyond the alloca- tion decisions of the annual budget, into a single consolidated fund; and by improved administration of income taxes and customs duties. Also, measures are being taken to strengthen the autonomous agencies such as the electricity company, for which an increase in rates has been announced, and the sugar corporation, which would be relieved of the burden of a subsidy to the electricity company. Insofar as certain components of the economic policy package require legislative action, the Government's ability to secure approval by Congress of the proposed measures will be critical to the success in expanding and diversifying exports and relaxing the balance-of-payments constraint on economic growth.  -4- 11. Prior Bank reports had traced the weakness in administration to the extreme centralization of responsibility for investment program formulation and implementation within the office of the Presidency, and to the low salaries of government administrators compared to their counterparts in the private sector. The new Government has now moved to decentralize by giving to the Secretaries of State greater responsibility for the formulation and implementation of development programs within their sectors, and has sought to attract and retain capable staff by increasing salaries attached to senior positions. 12. The external public debt in relation to GDP was 13.8 percent at the end of 1977 and debt service was 7 percent of exports of goods and non factor services in that year. Indications are that these magnitudes increased in 1978 but that the public debt and debt service burden are still comparatively low. There is scope for the authorities to borrow not only for refinancing to improve the debt profile as they have done recently, but also to finance projects of high e,conomic and social priority. The Dominican Authorities have traditionally followed prudent fiscal, monetary and borrowing policies. The new Government is expected to continue in this tradition and to pursue the implementation of the economic reforms outlined above which are essential to the resumption of GDP growth and to the amelioration of the country's social problems. On this basis, we consider that the Dominican Republic is creditworthy for Bank lending. PART II - BANK OPERATIONS IN THE DOMINICAN REPUBLIC 13. The Bank Group began operations in the Dominican Republic in 1969. Except for an enclave mining project, lending to the Dominican Republic was on IDA terms prior to FY1975. Since then lending has been on Bank terms, including two Third Window operations. Two loans, for a tourism infrastruc- ture project and a second education project, were approved in FY1975 and two loans, both on Third Window terms, for highway rehabilitation and maintenance and population and family health, were approved in FY1977. There was no Bank lending to the Dominican Republic in FY1978 because of delays on the part of the Government in defining its priorities for external borrowing. A loan for irrigation (Nizao Irrigation Project) was approved in FY1979. Total Bank loans and IDA credits outstanding amount to US$101.1 million, of which US$56.8 are undisbursed. Annex II contains a summary statement of the Bank Group loans and credits as of March 31, 1979, and notes on the progress of ongoing projects. 14. IFC has financed two operations in the Dominican Republic, an investment in a cement plant approved in 1974 and a line of credit for small and medium scale industry approved in 1978. Other projects are under consideration by IFC. 15. IDB became the major source of long-term assistance to the Dominican Republic since U.S. budgetary support ended in the late 1960's. Assistance from IDB has included agriculture (credit programs for farmers and irrigation); power (two multipurpose hydroelectric projects and rural  - 5 - electrification); water supply and sewerage; and higher education. U.S. long-term assistance consisted mainly of food (PL480) and loans for agri- culture and health. Long term assistance from IDB for the next three years would include agriculture (with a major emphasis on agrarian settlement programs and credit), potable water, irrigation and power. AID assistance would concentrate on agricultural credit, an integrated rural d!velopment program and rural road maintenance. 16. The Dominican Republic has not had a development plan in the past. However, the new Authorities have prepared a three-year public investment program, in which sector and project priorities are defined. The Authorities have requested the Bank to establish a consultative-type Sub-Group for the Dominican Republic as part of the Caribbean Group for Cooperation in Economic Development, which was created in December 1977. The public investment program and the list of projects for which the Government expects to obtain external financing, would be reviewed by the Sub-Group at a first meeting scheduled for June 1979. The Authorities expect that this mechanism will assist them in their effort to mobilize external financing on terms compatible with the country's balance-of-payments constraints. 17. Bank Group lending to the Dominican Republic has aimed at strength- ening the balance of payments; improving social services available to the lower income groups, particularly in rural areas; improving agricultural production and land distribution; and strengthening institutions responsible for major economic sectors. The principal thrust of the project now under consideration is strengthening the balance of payments and the creation of new employment opportunities. 18. Projects currently under consideration for Bank financing address the country's main economic and social development issues. A Sugar Moderni- zation Project would initiate the rehabilitation of the State Sugar Corpora- tion which is a major earner of foreign exchange and source of employment. A Second Highway project would continue the road rehabilitation and mainten- ance program initiated under the First Highway Project, and would include a pilot component for the use of labor intensive techniques in the construc- tion of rural roads. Further Bank lending is envisaged for education, health and population, and agriculture. New areas for Bank lending are being discussed with the Authorities; they could comprise power, rural development and industrial finance. 19. The Bank Group's share in the Dominican Republic's external public debt outstanding and disbursed was estimated at 5.1 percent at the end of 1977. The Bank Group's share of external public debt service in 1977 was 2.8 percent. Its share of outstanding public external debt would rise to about 8.5 by 1985, while its share of external public debt service would increase to about 5.8 percent.  -6- PART III - THE TOURISM SECTOR Background 20. The Dominican Republic was a late starter in the Caribbean tourism trade despite its varied attractions. Only in the 1970s, with a return to political stability and the introduction of a generous incentives system, did private investors undertake large-scale hotel construction which has more than tripled the country's capacity--bringing it to about 3,600 rooms, two thirds of which is in the capital city of Santo Domingo (located on the southern coast). The abrupt increase in hotel accommodation in the capital city led to excess capacity, price reductions and poor hotel financial results. Occupancy rates are now increasing and it is expected that most hotel establishments will become profitable. The Dominican Republic has only recently started to develop its beaches (the most attractive of which are located on the northern coast). In 1977, Dominican beach hotels had a total of only 780 rooms (beach hotels in the Bahamas and Jamaica had capacities of 4,400 and 7,500 rooms, respectively). These hotels are faring reasonably well, with occupancy rates of about 60 percent. 21. Foreign visitor traffic by air to the Dominican Republic grew by some 18 percent annually over the 1968-77 period to 262,000, as the country's share in total Caribbean traffic tripled, to 3.6 percent. Over the same period, the number of cruise visitors increased at the remarkable annual rate of 52 percent, to reach 133,000 in 1977. As accommodations have expanded and diversified, the share of holiday visitors has increased to account for an estimated 50 percent of foreign arrivals. The US market generates more than 80 percent of all arrivals, one third of whom are Puerto Ricans. The number of visitors from Europe and Canada has doubled since 1975, and together account for 8 percent of all arrivals. 22. Tourism's major economic impact is on the balance of payments and on employment. In 1977, airborne visitors spent on average an estimated US$44 per day and cruise visitors an estimated US$16 per visit. Gross foreign exchange receipts from tourism were about US$77 million in 1977 (or 8% of total exports of goods and non-factor services) and net receipts were about US$58 million. Direct employment in tourism consists primarily of jobs in hotels and other tourism facilities (estimated at 4,000 persons) and self-employment opportunities in transport and the production and sale of handicrafts (another 3,000). Indirect employment is generated in other activities which supply part of their output to the tourism sector. 23. The rapid expansion of tourism accommodation in the country has been encouraged by generous fiscal and credit incentives to hotel investors. The Tourism Incentives Law of 1971 (Law 153) grants exemption from income taxes for up to 10 years (and, under special circumstances, to 15 years). In addition, it provides complete exoneration from construction, registration and capital subscription taxes, as well as duty exemptions for materials and equipment needed by hotel projects in both construction and operation stages. In the past, tourism incentives were granted routinely by the Tourism Develop- ment Board following only a scant review of the proposals submitted. Also. the President's Office granted incentives beyond those provided for in the incentives law, a situation which led to abuses.  - 7- The Organization of the Sector 24. The Direccion Nacional de Turismo e Informacion (DNTI) and the Central Bank have responsibilities in the tourism sector. DNTI is in charge of promoting foreign tourism, formulating tourism policies and regulating tourism devel ?ment. Its resources have been limited--a budget of about RD$ 1 million in 1978 and a staff of 50, including fewer than ten with profes- sional training--and it has been unable to fulfill its mandate. Most of the country's promotion as a tourism destination has resulted from the marketing effort of hotel firms. 25. The Central Bank, originally through its Development Lending Fund (FIDE), has been active in the financing of hotel projects. In September 1971, the Monetary Board decided that the Central Bank should become more deeply involved in the tourism sector and created the Department for the Development of Tourism Infrastructure (INFRATUR). INFRATUR's major project has been the development of infrastructure works in the Puerto Plata area in the Northern Coast of the Dominican Republic. It also became the channel for Central Bank financing of both hotel and handicrafts projects. 26. As in most developing countries, private domestic financing insti- tutions are not able or willing to provide the long-term funds required for hotel construction. The amount of private long-term loan capital obtainable from abroad for hotel investment is severely limited. The Central Bank initially financed small hotels, mainly in Santo Domingo, at terms of up to 12 years and interest rate of 5 percent to the financial intermediaries, and 9 percent to the hotel investors. Subsequently, it concentrated its financing on large hotels in Santo Domingo and provided funds for up to 30 years, including up to 10 years' grace at interest rates of up to 9 percent to the financial intermediaries and up to 11 percent to the hotel investors. In order to provide these generous terms INFRATUR resorted to borrowing on the Eurodollar market at much less favorable terms. In several instances, INFRATUR lending was decided without proper appraisal of the hotel projects. These luxury hotels financed by INFRATUR are still encountering financial difficulties after several years of operation, despite generous financing terms and incentives. 27. The Government has decided to improve the organization and strate- gies of the sector. It is considering legislation to upgrade the status of DNTI to that of a ministry and has substantially increased its budget for 1979. The Dominican authorities will adopt regulations for the granting of incentives based on the recommendations of a study carried out under the First Puerto Plata Tourism Project. These regulations contemplate a reduction in the level of incentives, careful definition of eligible projects on the basis of economic analysis and elimination of import duty exemptions for furniture, fixtures and all items needed for operation. Import duty exemp- tions for construction materials and equipment would not be granted to goods on a list established by the Authorities. The list of goods would include those produced in the Dominican Republic in a sufficient quantity. The regulations would also limit the availability of foreign exchange, at the official rate, to imports which qualify for the duty exemption. Approval of the incentive regulations by the Government would be a condition of Loan  - 8 - Effectiveness (Section 7.01(a) of the Loan Agreement). The regulations would not be materially amended without the Bank's agreement (Section 6.01(b) of the Loan Agreement). 28. The Government has decided to concentrate its tourism development efforts on the Puerto Plata region. The Central Bank, through INFRATUR, would remain in charge of the next stage in the development of Puerto Plata. After the project is completed, it is envisaged that the Central Bank's role in the tourism sector would be largely limited to hotel financing. Past Bank Assistance to the Tourism Sector 29. In November 1974, the Bank approved a $21 million loan (First Puerto Plata Tourism Project, Loan 1051-DO) to the Central Bank to finance infrastruc- ture works (site preparation, roads, water, sewerage, power and telecommunica- tions systems) and common facilities needed to develop the sites of Playa Dorada and Playa Grande, located at 5 and 80 km, respectively, from the city of Puerto Plata. The Bank loan also included funds for the terminal building of the Puerto Plata International Airport. 30. Despite initial delays of about one year, project implementation is progressing satisfactorily. The water supply system has been completed, and sewerage treatment works, storm-water drainage and electricity systems have progressed steadily. The terminal building of the Puerto Plata International Airport is almost completed. Completion of some project compo- nents is likely to be delayed by about one year due to a recent Monetary Board decision to delay construction of works in Playa Grande, until a firm commit- ment from an investor to begin construction of the first hotel in Playa Grande, has been obtained. 31. Although some Dominican investors have already entered into firm commitments for the construction of apartment hotels, the hotel construction program has suffered a delay of approximately 18 months. This has resulted from INFRATUR's decision to delay intensive efforts on investor promotion until the political uncertainties of 1978 were resolved, as well as from the lack of long-term loan finance. 32. INFRATUR's infrastructure investment in Playa Dorada and Playa Grande amounts to RD$26.7 million in 1978 prices. Its revenues will be derived from land sales, leases of the facilities, operation of recreational facilities and service charges levied on accommodation facilities. Its operating costs will include expenses for administration, maintenance, promotion and payment of interest on the Bank loan. INFRATUR is expected to earn a 10.6 percent internal rate of return in real terms on its infrastructure investment that would exceed the 9 percent estimated during appraisal of the First Puerto Plata Tourism Project.  - 9 - PART IV - THE PROJECT Background 33. With the completion of the infrastructure works, scheduled for mid-1979, the Puerto Plata region, already a popular stop for Caribbean cruise ships, will possess the assets required to become a major tourism pole. As indicated in paragraph 26, private domestic financing institutions are not able at this time to provide the long-term funds required for hotel construction. Therefore, in early 1977, the Central Bank sought Bank assist- ance to establish a credit facility for hotel investors in the Puerto Plata area. An identification mission visited the Dominican Republic in May 1977 and recommended Bank financing of the accommmodation development planned through 1983. In subsequent discussions with Dominican authorities, it was agreed to broaden the scope of the project to include works in the city of Puerto Plata to consolidate its position as a major port of call for cruise ships out of Miami, to provide for training in handicrafts, and for technical assistance to DNTI and INFRATUR. The proposed project was appraised in September 1978; a report entitled "Staff Appraisal Report - Dominican Republic-Second Puerto Plata Tourism Project" (Report No. 2419-DO, dated April 30, 1979) is being distributed separately. Negotiations were held in Washington from April 18 to 24, 1979. The Dominican delegation was headed by Mr. Carlos Sanchez, Director of INFRATUR. Project Description 34. The project includes four components: (a) a line of credit to finance tourist accommodations and tourist services in Playa Dorada, Playa Grande and Puerto Plata; (b) urban works in the low-lying area of the city near the tourism pier; (c) an artisan center; and (d) technical assistance to strengthen DNTI and INFRATUR. Line of Credit 35. The line of credit would be used primarily to provide loan funds for the construction of tourist accommodation facilities with a capacity equivalent to 1,200 rooms in Playa Dorada, 300 in Playa Grande and 100 in the city of Puerto Plata to be built between 1979 and 1983. The accommodation capacity in Playa Dorada and Playa Grande would consist of 1,150 rooms in hotels and 350 rooms in apartments, which would be promoted mainly by private investors. The First Puerto Plata Tourism Project includes funds to finance a campaign aimed at attracting Dominican and foreign investors to the project. This campaign, delayed because of political changes which occurred in the Dominican Republic in 1978, began in early 1979 and has received a positive response by potential investors, including an option for the construction of a 250-room hotel in Playa Dorada.  - 10 - 36. The Central Bank has started the development of the first hotels. It is financing a 225-room bungalow hotel due to open in October 1979 and is completing the final design of a 250-room hotel in Playa Dorada. In the event ongoing negotiations with private inivestors do not succeed, the Central Bank plans to go ahead with construction of this hotel. Up to US$6 million of the proposed loan funds allocated to the line of credit, could, if required, be used by the Central Bank to help finance in its hotel projects (about 500 rooms). INFRATUR has received proposals from developers for the apartment complexes. Assurances were obtained from the Central Bank that it would enter into a contract with each developer of the apartment complexes, which would determine the terms and conditions tinder which the developer would be entitled to sell the apartments. This would include a long-term lease-back agreement which would ensure that the apartments will be available for rental to tourists during the major part of the year, and contractual arrangements with a quali- fied operating firm. The lease-back agreement would determine the maximum period during which the owner would be entitled to the use of his apartment, and the minimum return he would be guaranteed (Section 3.02 and Schedule 5, Part B-4 of the Loan Agreement). 37. At present, hotel capacity in the city of Puerto Plata amounts to 150 rooms, catering primarily to Dominicans visiting the beach on weekends and during summer vacations. Local investors have expressed interest in increasing Puerto Plata's accommodation capacity by building new establish- ments, extending existing ones or converting old houses into pensions. These establishments are expected to be used chiefly by those segments of the international market more attracted by the colonial charm of Puerto Plata than by the sport and entertainment facilities of Playa Dorada. Of the 100 rooms in Puerto Plata to be financed under the line of credit, about 60 percent would be in renovated houses. In order to encourage small local investors, the maximum size of the establishments to be financed would not exceed 25 rooms. 38. About 7 percent of the line of credit is earmarked for financing tourism services such as restaurants, cafeterias, shops and tourism transport in the city of Puerto Plata and the two resort areas of Playa Dorada and Playa Grande, and for financing a 30-boat marina in Puerto Plata. Tourism services to be located in buildings of architectural and historical value would be financed with funds from the line of credit only if the exteriors of the buildings were restored, as recommended in the Restoration Plan which was prepared under the First Puerto Plata Tourism Project and is registered with the Office of Cultural Heritage. Urban Works 39. Urban works would be aimed at improving the area between the tourism pier and the city. The waterfront area would be converted into a landscaped park; separate areas would be provided for taxis, buses, motorbikes, and horses offered for rental to the tourists. An old unused railway station at the entrance to the pier would be restored and converted into a tourist information office. Puerto Plata's central square would be restored to its original style and landscaped. The sewerage collection network would be extended to the low-lying area of the city. A separate system for storm-water drainage would be constructed.  - 11 - Handicrafts Center 40. The Puerto Plata region is endowed with some of the world's richest amber mines. Amber is processed mostly in Santo Domingo and Santiago and then shipped back to Puerto Plata to be sold to cruise visitors. The objective of this componenL of the project is to build a center where about 50 artisans, 20 of whom would already have had some experience in the trade, would be trained each year. In addition to acquiring improved workmanship, the trainees would be assisted in developing new designs to appeal to a wider market. Trained artisans would be encouraged to set up cooperatives in Puerto Plata as well as in Santo Domingo and Santiago. The center would also assist the cooperatives in the purchase of materials, as well as the marketing and distribution of their production. The project provides funds for transforming or constructing a house in Puerto Plata's historic center for a training center and for the purchase and installation of the required equipment. Technical Assistance 41. The project includes a total of 132 man/months of technical assist- ance. DNTI would employ an economist and a financial analyst for a period of two years in sectoral planning, carrying out the economic evaluation of proj- ects, and administering the incentives. Technical assistance to the Central Bank would provide INFRATUR with the services of experts in specialized fields, such as land development, hotel construction and equipment. These assignments would amount to 12 man/months spread over a period of three years. In addition, the project provides for three instructors for about two years to assist in the creation of the handicrafts center and in training. Project Costs and Financing 42. Project costs are estimated at US$71 million equivalent including US$4 million equivalent in taxes and duties. The project has an estimated foreign exchange component of US$33 million. The average construction cost per room amounts to US$40,000 including contingencies, and is comparable to costs per room in other destinations. These costs are based on prevailing construction costs for hotel rooms in the Dominican Republic. Civil works costs for the urban works and handicrafts center have been estimated on the basis of prevailing construction unit costs, and on a preliminary analysis of space requirements for buildings and quantities for other works. The cost of furniture and equipment is based on average prices either in the Dominican Republic or abroad. Technical assistance costs will average about US$5,000 per man/month, including subsistence and travel, which is considered acceptable. 43. The proposed loan of US$25 million equivalent would cover 35 percent of total project costs. Retroactive financing of US$0.3 million is recommended under the proposed loan for expenditures incurred on two sub-projects in Playa Dorada. The Central Bank will contribute about US$10 million, or 14 percent of total project costs, and will assume the foreign exchange risk on the Bank loan. Financial intermediaries are expected to participate in the project with US$2 million of their own funds, or 3 percent of the line of credit. Equity investment in the facilities to be financed by the line of credit in the tourism facilities will amount to US$24 million, or 34 percent of the total investment in these facilities. The Central Bank will secure loans amounting to US$10 million or 14 percent of the investment, from foreign commercial banks under the co-financing operation described below.  - 12 - Co-financing with Foreign Commercia'L Banks 44. In connection with the proposed loan, the Central Bank has sub- stantially concluded co-financing arrangements with a foreign commercial bank for a loan of aboiut US$10 million. The loan will have a final maturity of 10 years with repayments starting 48 months after loan signing at an interest rate of 1-1/4 percent above LIBOR (for deposits at 3-6 months) for the first four years, and of 1-3/8 percent above LIBOR for the remaining 6 years. The commercial bank loan would be disbursed over a one year period as part of the INFRATUR line of credit, to finance tourist accommodation facilities. The Central Bank, which would be the borrower, would assume the foreign exchange risk. The execution of the contract with the private foreign bank would be a condition of Loan Effectiveness (Section 7.01(b) of the Loan Agreement). 45. These terms would represeTit an improvement over those obtained recently by the Dominican Republic in the Eurodollar market. In order that the amortization requirements on the Central Bank external borrowings may conform as closely as possible to the payments that it would receive on sub- loans, it is proposed that as soon a final agreement is reached on the con- tract with private banks, the amortization schedule of the proposed Bank loan be adjusted, so as to ensure that repayments on the external borrowings for the project would approximate those which would have obtained if the Central Bank had borrowed the entire amount on Bank terms. Schedule 3 of the draft loan agreement shows the normal amortization schedule; Annex 4 of this report shows how this schedule would be adjusted when the co-financing loan is obtained in the amount and on the terms summarized above. Terms and Conditions of the Proposed Subloans 46. The subloans would be made to financial intermediaries which would onlend the proceeds of such sub-loans (plus loans for working capital) to investors. Accommodation subloans would include grace periods of up to four years with final maturity up to 17 years. Terms for non-accommodation sub- loans are the following: (i) I and 5 years respectively for restaurants and shops; (ii) 0 and 4 years respectively for transport and recreational services; (iii) 2 and 15 years respectively for the marina; (iv) 1 and 10 years respec- tively for restauration of historic buildings. The Central Bank would charge financial intermediaries an interest rate of 9 percent for hotel subloans (excluding apart-hotels) and 9.5 percent for other subloans and apart-hotels. Final borrowers would receive the subloans at an interest rate of 12 percent, plus closing costs expected to be between 3 and 4 percent flat. The proposed interest rate wouLd be positive in real terms, if domestic inflation does not increase beyond projected levels of 8 percent for 1979, and of 9-10 percent for 1980 and beyond. The Bank would review the situation with the Government and the Central Bank by June 1981. At that time, the Central Bank would not submit further sub-loan commitment applications to the Bank, unless the Government, the Central Bank and the Bank have agreed, if needed, on a new suitable interest rate structure taking into account prevailing and prospective rates of inflation (Section 3.04(c) of the Loan Agreement and Section 3.03 of the Guarantee Agreemient). At any rate, in the event that  - 13 - the present legal interest rate ceiling of 12 percent were to be removed, the interest rate to final borrowers on the proceeds of the line of credit would be linked to the rate charged by mortgage banks on loans exceeding 7 years (Section 3.02(b) of the Loan Agreement). Project Implementation 47. The project would be implemented over a period of five years, with a terminal date for submission of subprojects under the loan of December 31, 1982, and a proposed closing date of December 31, 1984. Funds for the line of credit are expected to be fully committed within three years from loan signing, with all construction completed in five years. The urban works and handicrafts center will be completed by the end of the project's second year. 48. INFRATUR would bear the primary responsibility for project imple- mentation. It has modified its organization to carry out effectively its additional responsibilities under the project. Its governing body is a board which is chaired by the Governor, and includes the Manager, and the Legal Counsel of the Central Bank, the Director of INFRATUR, and the Director of DNTI. INFRATUR has two operating divisions. The Infrastructure Division is in charge of completing the work of the First Puerto Plata Tourism Project, supervising the implementation of the urban works and the handicrafts center, enforcing development controls on the north coast, and maintaining the infrastructure works at Playa Dorada and Playa Grande. The Projects Division would be in charge of the line of credit. Its Director has long-standing experience in tourism, and will be assisted by an architect-advisor, and an advisor on land development. The Projects Division includes an investment promotion unit responsible for attracting investors to the project sites, a project analysis unit in charge of appraising the various subprojects, and a technical unit which would supervise their implementation. The head of the project analysis unit is an economist with long experience in the Central Bank. Assurances have been obtained that INFRATUR would consult with the Bank prior to replacing the Directors of either division or the head of the project analysis unit (Section 4.02 of the Loan Agreement). It would also not amend its internal regulations nor its lending policy statement without the prior agreement of the Bank (Section 6.01(a) of the the Loan Agreement). 49. Line of Credit. The line of credit would be managed by INFRATUR. In keeping with the Central Bank policy for lending only to financial institu- tions, the subloans would be channeled through financial intermediaries who would assume full credit risk on subloans and would service their debt to the Central Bank in accordance with fixed amortization schedules. The Central Bank may finance from the proposed loan tourist accommodations promoted by it in the project area up to a maximum of $6 million (see para. 36). Before the Central Bank would sell any of their hotels, it would consult with the Bank on terms and conditions of the sale (Section 4.04 of the Loan Agreement). A typical financing structure would be 35 percent from investors' equity and the remaining 65 percent from loan funds, of which 62 percent would be obtained from INFRATUR (including the proceeds of the proposed Bank loan and of the co-financing with commercial banks), and 3 percent (the working capital) would be obtained from intermediaries from other resources.  - 14 - 50. All of the Central Bank projects and all accommodation subprojects of more than US$300,000 and non-accommodation subprojects in excess of US$100,000 would require prior Bank approval. This would permit the Bank to review all accommodation subprojects in Playa Dorada and Playa Grande, about 50 percent of the accommodation projects in Puerto Plata and about 50 percent of the non- accommodation projects. Other Components 51. INFRATUR would be responsible for implementing the urban works and constructing the handicrafts center. Upon completion, the sewerage system would be owned, operated and maintained by the Water and Sewerage Agency (INAPA) and the other urban works by the Puerto Plata Municipality. The Municipality and :[NAPA would reimburse INFRATUR for the cost of the works. The handicrafts center would be leased by the Central Bank to the Fundacion Dominicana de Desarrollo (FDD), a private organization with long-standing experience in handicrafts training. A condition for disbursing the relevant funds from the loan account would be that INFRATUR enter into agreements satisfactory to the Bank with the Municipality, INAPA and FDD (Section 3.05 and paragraphs (c) through (f) of Part 4 of Schedule 1 of the Loan Agreement). Procurement 52. Line of Credit. Before subloans are made, prospective borrowers would normally be required to submit at least three bids for civil works accompanied by an evaluation report to INFRATUR. Similar procedures would apply to Central Bank hotel investments. INFRATUR's review would take into account the bidder's financial position, previous experience and work capability with respect to personnel and equipment. For contracts for the supply and installation of equip- ment, furniture an,d fixtures amounting to more than US$2,500 equivalent, the borrower would be required to submit at least three quotations from qualified suppliers registered with INFRATUR. Prudent shopping would be allowed for purchases of less than US$2,500 equivalent provided their total amount would not exceed US$10,000 for each project. 53. Other Components. It is unlikely that foreign construction companies would be interested in bidding for such small-scale works as those called for by the remaining components. Contracts for civil works, furniture, materials, fixtures and equipment would be let on the basis of competitive bidding after local advertising. The Bank's prior review and approval of invitations to bid, proposed awards and final contract would be limited to those contracts in excess of US$100,000 equivalent for civil works and US$50,000 equivalent for furniture, materials, fixtures and equipment for each component. Disbursements 54. The following disbursement percentages would be applied: (a) with respect to the line of credit, 54 percent of the amounts disbursed by INFRATUR under each subloan and 35 percent of INFRATUR expenditures on hotel investment sponsored by the Central Bank, which together with co-financing funds, would cover the estimated foreign exchange component; and  - 15 - (b) with respect to all other components: (i) 30 percent of total expenditures for civil works; (ii) 70 percent of total costs of goods procured and of all technical assistance expenses including travel and subsistence costs. The disbursement percentages under (b) are equivalent to the estimated foreign exchange component. Market Prospects 55. After sustained growth (8.4 percent per annum) in the years 1968-73, tourism traffic to the Caribbean stagnated in 1974 and 1975 as a result of the severe recession in Europe and North America. In 1976, traffic growth increased by less than 1 percent; it increased by 7 percent in 1977, to reach 4.9 million arrivals. Partial figures for 1978 indicate an even higher growth rate. The bulk of the traffic consists of North American and European vacationers. The US accounts for 48 percent of total tourist arrivals in the Caribbean, Canada for about 9 percent, and European countries for 6 percent. 56. Travel sources estimate the likely growth in overall tourism to the Caribbean region over the long term at somewhat below the 8.4 percent growth rate observed in the seven years prior to the 1974/75 recession. Growth prospects are, however, particularly favorable for middle-income visitors travelling in groups, whose numbers have increased by a remarkable 80 percent per annum since the US Civil Aviation Board decided to de-regulate charter flights in 1975. This is precisely the market segment for which accommodations at Playa Grande and Playa Dorada are planned. 57. Projected occupancies would require 155,000 international arrivals in 1986 and 260,000 in 1993. These targets are achievable. Even if the country's total capacity outside the Puerto Plata area increases by 1,000 additional rooms and by another 2,000 in 1993, and assuming that all estab- lishments achieve the same occupancy rates as those projected in Puerto Plata, the total number of foreign visitors to the Dominican Republic would have to reach 475,000 in 1986 and 725,000 in 1993, an average annual growth rate of 7 percent. This growth rate is considerably lower than that achieved by the Dominican Republic in the past decade and only slightly higher than that projected by the Caribbean Tourist Association for the Caribbean region as a whole. Financial Results 58. The various types of hotels to be built under the project should attain satisfactory levels of gross operating profits, ranging from 25 to 40 percent of hotel revenues in the fourth year of operation. The finan- cial rate of return after taxes would range accordingly from 9.2 percent to 16.5 percent on total investment and from 15.4 percent to 30.3 percent on equity for hotel types B, C and the apart-hotel. The variations in operating  - 16 - results stem primarily from differences in investment costs, occupancies and tariffs. Financial returns for the type A hotel are less attractive because the higher investment costs are not fully compensated by the higher tariffs. However, the only type A hotel/sub-project envisaged under the credit line would be implement:ed jointly with an apart-hotel, which would allow higher rates of return for the overall sub-project. 59. FDD has forecast annual sales for the handicrafts center at about RD$200,000 and operating expenses at RD$150,000, leaving a surplus sufficient to yield a return of some 8 percent on the investment and to cover the lease of the facility. The investment in the urban works would be recovered from fees paid by cruise ship visitors. At present cruise passengers do not pay fees in Puerto Plata as they do in other Caribbean ports. Once the urban works have been carried out and made the city more attractive to cruise ship passengers, P'uerto Plata could charge US$1.25 per cruise visitor (lower than most competing ports) without running the risk of losing traffic. On the basis of the number of cruise passengers expected for the 1978/79 season (165,000), the fee would generate over US$200,000, enough to recover the investment in the urban works and provide a rate of return of 12 percent. 60. INFRATUR's infrastructure and lending operations show that, for the period 1979-84, its interest income would exceed interest expenses by an average 3 percent margin; this would more than cover its operating expenses. Until 1982, however, INFRATUR would accumulate cash deficits requiring Central Bank contributions of RD$5.4 million. From 1985 on, INFRATUR's annual net cash generation is expected to average around RD$9 million. These funds would be adequate for INFRATUR to continue providing credit for future accommodation deveilopment in Playa Dorada and Playa Grande once the line of credit has been exhausted. Economic Justification 61. The project is part of a regional tourism development program in the Puerto Plata area. The internal economic rate of return for the entire investment programt, including the infrastructure works financed under the First Puerto Plata Tourism Project, is 17.5 percent. The rate of return on the incremental investment in accommodation development financed by the proposed loan is 31.3 percent, while investments in non-hotel tourist acti- vities have an internal rate of return of 40.7 percent. 62. The present value of net benefits of the program would be reduced to zero at the opportunity cost of capital in the Dominican Republic (esti- mated at 11 percent) if there were a 30 percent increase in operating costs; if occupancy rates fell to under 40 percent; if investment costs increased by 50 percent; or if project implementation were delayed by 7 years. The probability of these events is low. Moreover, a major increase in operating costs without a corresponding increase in revenues would imply a large decline in operating efficiency; although management performance may fall short of the level assumed in the hotel financial projections, the likelihood of such a large and persistent shortfall is small.  - 17 - 63. In addition to the nearly four years of continuous employment for a large number of construction workers in infrastructure works, the construction of the various superstructure facilities is expected to generate over 10,000 man/years of employment. Total permanent employment attributable to the program is expected to exceed 8,000 jobs. Of these, 3,800 will be created in hotels once all the accommodation facilities built uader the program are in full operation. Employment for 3,000 persons will be generated in other tourist activities such as restaurants, shops, tour agencies, entertainment and recreational facilities and the production and distribu- tion of handicrafts. Another 1,200 jobs will be created indirectly in activities which supply goods and services to the tourism sector. 64. Total Government budgetary receipts, once the project is in full operation, are estimated to amount to about US$7 million annually. Of these, US$2.2 million will derive from landing and departure fees and bednight taxes. Another US$4.3 million per year will be collected in income taxes once all tourism facilities are paying their full profit taxes. Incremental foreign exchange receipts from the proposed program are projected at about US$65 million in 1985, rising to US$74 million by 1988. About US$20 million of foreign exchange payments, however, will have to be made annually in order to maintain and operate the tourism facilities built under the program. Thus, once these facilities are in full operation, the net foreign exchange inflow (in 1978 prices) is expected to be about US$54 million. 65. The social impact of the tourism investment program on the Puerto Plata region is expected to be largely favorable. Living standards will rise as employment opportunities in tourism enterprises are created, and as self- employment in small tourism-related enterprises becomes widespread. The inclusion in the line of credit of funds especially earmarked for handi- crafts and other tourist services is expected to encourage the participation of local entrepreneurs in the tourism development of the area. Project Risks 66. As indicated in para. 62, the major risk would be a substantial increase in operating costs without a corresponding increase in revenues. This would imply a large and persistent decline in operating efficiency, which does not seem likely. PART V - LEGAL INSTRUMENTS AND AUTHORITY 67. The Guarantee Agreement between the Government of the Dominican Republic and the Bank, the Loan Agreement between the Bank and the Central Bank of the Dominican Republic, and the Report of the Committee provided for in Article III, Section 4(iii) of the Articles of Agreement are being distri- buted to the Executive Directors separately. Special conditions of the project are listed in Section III of Annex III. Conditions of loan effective- ness would be: (a) enactment of a regulating Decree of the Tourism Incentives Law (Law 153); and (b) the execution of a contract by the Borrower for the private bank loan on terms and conditions satisfactory to the Bank.  - 18 - 68. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 69. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President Attachments May 7 , 1979  1.9 ANNEX I Page 1 of 6 DOKINICAN REPUBLIC - SOCIAL INDICATORS DATA SHEET REFERENCE GROUPS (ADJUSTED AVERAGES DOMINICAN REPUBLIC /a LAND AREA (THOUSAND SQ. FM.) - MOST RECENT ESTIMATE) TOTAL 48.7 SAME SAME NEXT HIGHER AGRICULTIRAL 24.5 MOST RECENT GEOGRAPHIC INCOME INCOME 1960 /b 1970 /b ESTIMATE /b REGION /c GROUP /d GROUP /e GNP PER CAPITA (US$) 240.0 390.0 840.0 1066.7 867.2 1796.4 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 157.0 321.0 458.0 911.1 578.3 1525.0 POPULATION AND VITAL STATISTICS TOTAL POPULATION . MID-YEAR (MILLIONS) 3.0 4.1 5.0 URBAN POPULATION (PERCENT OF TOTAL) 30.3 39.8 45.9 57.9 46.2 52.2 POPULATION DENSITY PER SQ. KM. 63.0 83.0 103.0 25.6 50.8 27.6 PER SQ. 104. AGRICULTURAL LAND 166.0 174.0 204.0 77.6 93.3 116.4 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 47.3 47.5 48.0 42.0 42.9 34.8 15-64 YRS. 49.7 49.4 49.4 52.2 53.5 56.0 65 YRS. AND ABOVE 3.0 3.1 2.6 3.7 3.5 5.7 POPULATION GROWTE RATE (PERCENT) TOTAL 3.6 /f 2.9 / 2.9 Ls 2.7 2.5 1.6 URBAN 6.1 5.6 6.6 4.3 4.7 3.4 CRUDE BIRTH RATE (PER THOUSAND) 49.9 47.3 45.8 35.8 37.8 27.0 CRUDE DEATH RATE (PER TEOUSAND) 18.7 13.4 11.0 9.1 10.8 9.9 GROSS REPRODUCTION RATE .. 3.5 3.4 2.6 2.5 1.9 FAMILY PLANNING ACCEPTORS, ANNUAL (TliOUSANDS) .. 17.2 70.9 USERS (PERCENT OF HARRIED WOMEN) .. .. 5.0 15.1 20.0 19.3 FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1970-100) 120.1 100.0 97.0 102.1 107.3 103.8 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 92.0 88.0 98.0 103.9 105.3 110.4 PROTEINS (GRAMS PER DAY) 46.0 50.0 45.4 60.3 63.0 77.7 OF WHICH ANIMAL AND PULSE .. 29.0 23.3 26.7 21.7 22.2 CHILD (AGES 1-4) MORTALITY RATE 11.7 6.0 .. 8.7 8.0 1.9 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 49.3 52.2 57.8 62.6 57.2 63.0 INFANT MORTALITY RATE (PER THOUSAND) 101.0 103.0 104.0 56.9 53.9 38.2 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. 37.0 55.0 60.7 56.8 67.7 URBAN .. 72.0 88.0 78.0 79.0 83.5 RURAL .. 14.0 27.0 34.9 31.8 41.5 ACCESS .O EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. 58.0 42.0 61.1 30.9 70.3 URBAN .. 63.0 74.0 80.3 45.4 90.7 RURAL .. 54.0 16.0 25.4 16.1 38.3 POPULATION PER PHYSICIAN 1520.0 1710.0 1950.0 1899.3 2706.8 1310.8 POPULATION PER NURSING PERSON 15240.0 11720.0 11950.0 1220.1 1462.0 849.2 POPULATION PER HOSPITAL BED TOTAL 440.0 350.0 350.0 422.3 493.9 275.4 URBAN .. 150.0 220.0 258.2 229.6 129.9 RURAL .. 2680.0 3580.0 2281.6 2947.9 965.9 ADMISSIONS PER HOSPITAL BED .. .. 30.0 25.6 22.1 18.9 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL 5.0 5.3 .. 5.2 5.2 3.9 URBAN 4.8 5.2 .. .. 5.0 RULRAL 5.1 5.4 .. .. 5.4 AVERAGE NUX3ER OF PERSONS PER ROOM TOTAL 2.0, .. .. 2.0 2.0 0.9 URBAN 1.6 .. .. 2.1 1.5 0.8 RURAL 2.2 .. .. 2.7 2.7 1.0 ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL 20.0 .. .. 51.2 64.1 59.2 URBAN 57.7 .. .. 77.3 67.8 78.0 RURAL 3.0 .. .. 12.8 34.1 12.5  _20 - ANNEX I Page Z of 6 DOMINICAN REPU1LIC - SOCIAL INDICATORS DATA SHEET REFERENCE GROUPS (ADJUSTED AVERAGES D0FINICAN REPlU8LIC /a - MOST RECENT ESTIMATE) SAME SAME NEXT HIGHER MOST RECENT GEOGRAPHIC INCOME INCOME 1960 b 1970 Lb ESTSMATE lb REGION C GROUP d GROUP /a EDUCATION ADJUSTED ENROLLMENT RATIOS PRIlARY: TOTAL 98.0 103.0 104.0 lh 103.5 99.8 97.6 FENALZ 98.0 102.0 105.0 /h 102.9 93.3 87.4 SECONDARY: TOTAL 7.0 19.0 22.0 37.2 33.8 47.8 PEIALE 7.0 19.0 22.0 37.9 29.8 42.6 VOCATIONAL (PERCENT OF SECONDARY) .. 8.0 9.0 14.7 12.8 22.7 PUPIL-TEACRER RATIO PRIMARY 58.0 54.0 .. 32.8 34.9 25.4 SECONDARY 16.0 24.0 *- 17.8 22.2 24.9 ADULT LITERACY RATE (PERCENT) 64.5 67.2 .. 74.9 71.8 96.3 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 4.0 10.0 15.0 26.9 12.4 32.3 RADIO RECEIVERS PER. TROUSAND POPUiATION 34.0 38.0 41.0 173.5 104.5 201.9 TV RECEIVERS PER THOUSAND POPULATION 6.0 23.0 34.0 69.4 28.1 97.7 NEWSPAPER ('DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 27.0 36.0 43.0 72.8 45.2 70.9 CINEMA ANNUAL ATTENDANCE PER CAPITA 2.0 1.2 .. 4.3 4.6 4.4 EMPLOYMENT TOTAL LABOR FORCE (THOUSANDS) 820.0 1100.0 1200.0 FEMALE (PERCENT) 10.5 11.2 11.9 21.4 25.7 17.4 AGRICULTURE (PERCENT) 61.0 55.5 53.8 37.8 46.2 38.4 INDUSTRY (PERCENT) 12.2 10.6 .. PARTICIPATION RATE (PERCENT) TOTAL 28.6 26.8 26.5 30.8 33.8 33.7 MALE 50.4 47.1 46.3 47.2 48.1 50.8 FEMALE 6.1 6.1 6.3 13.2 17.3 12.6 ECONOMIC DEPENDENCY RATIO 1.9 1.7 2.0 1.7 1.4 1.4 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS .. 26.3 /i .. 28.9 23.6 20.2 HIGHEST 20 PERCENT OF HOUSEHOLDS .. 54.3 /i .. 57.7 52.3 47.9 LOWEST 20 PERCENT OF HOUSEHOLDS *- 4.3 L .. 3.2 4.3 3.2 LOWEST 40 PERCENT OF HOUSEHOLDS .. 1.4 li .. 10.7 13.1 13.7 POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN .. .. .. 251.9 191.9 RURAL .. .. 239.0 200.6 193.1 157.8 ESTIMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPI':A) UTRBAN .. .. 208.0 403.1 319.8 448.8 RURAL .. .. 149.0 258.0 197.7 313.1 ESTIMATED POPULATIONI BELOW POVERTY INCOME LEVEL (PERCEUT) URBAN .. .. 17.0 24.8 19.8 23.2 RURAL .. .. 60.0 65.2 35.1 54.5 Not available Not applicable. NOTES /a The adjusted group averages for each indicator are populacion-weighted geometric means, excluding the extreme values of the indicator and the ost populated country in each group. Coverage of countries among the indicators depends on availability of data and is not uniform. /b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1973 and 1977. /c Latin America & Caribbean; /d Intermediate Middle Income (S551-1135 per capita, 1976); /I Upper Middle Income (51136-2500 per capita. 1976); /f Santo Domingo only; /g Due to emigration, population growth rate in lower than rate of natural increase; /h 1972; /i Santo Domingo (urban). September, 1978  -21 - ANNEX I Page 3 of b REY TO COUNTRIES BY REGION AND INCONI C-ROUP/a oCcval-vurpLua Region/Ireome Group Low Gno-e/b Lower Middle Inter-ediete Middle Upper Middle High Ioco=e/f couocc$oa Inct/c Iocnr/d Inc-me/c Oil BMaia eslewi Angola Chan DGjibhouti G(bso B-rundi Mali BaoesFt Every Coaat Rounion Central Afrioa- R=p. Mooesnique Caneraan Mauritiac Cbad Niger Cape Verde Nowlibl Chro Rd ..nd Conga, P.R. Seyohellee Ethiopia sierra Leone Eqta.rila Gaines AFgICA 50UTH G-abii, The SIo-lia Liberia OF SAHARA Gaiwee Tan.enia MHaritaaia Gainee-Ri...u Toga Nigeria Kanys ugoeda Rhadea.i L.eoiho Upper Volta Gsa Tome & Principe MedgsEar Zaire SEnega SRaailand ZLabi. Egypt Mor.-e Algeria GBhrain Barsal Vuaac NORTH aFRICA Y-en AR. Jordaa Iran orIU I We AND MIDDLE Yen- P.D.R. Ryrio o.. Iraq O Tca EAST ToriBir Lebanon ..-di 0A-rSII U'riled A-sb PrO,-- Afgho-ietan Ma die- SOUTH ASIA Bangl deat Nepal Bu an Sri L-nka India Coebadie N-e Hebhidna China R-p of Fiji kt-ricaw So.o. IodaweaiP Papue NRa Goinoa Tilhori ('abode Hong Xans Gruor lAST ASIA La. P.D.R. Philippiea ioroa, Rep, of -re-ch Poir1eait SalomIo Islands Thailand Maoao CuaC Viet n Tonga Mal-palI NMo Coledonia We-t-rw S-Gan Truat Territory of the Pacific Stegopore Haiti Malivia Antigua Guateonla Arge-tin- Gah,as lI Salvador Malice J-Vnica Rarhadue Heanuds Grenada CtIa Healer BRr-til Ca1nal -cr LATIN AHMRICA IuyaaCCoonhi HcocaFrenh TaaVriiu AND CARIIBBEAN Hnduraa Coata Rica ParaI aoy C.adrcuprG Var.u.a I St. Viwcewt Doninictn Per Nectherl-adt sneills Virgin Itlanda (U.S.) GDlicac HRP. Ge. Ki-c N-neia Paen Ecuador St. Lucia PurtAico Tricidad T. V gagr T anky Cypru. Chawei Is.(soda EUROPE MHat. eibraLta1 Portuosl ('oce- Goet