Nepal - Second Education (Technical and Vocational Training) Project

Document of The World Bank r14V J FOR OFFICIAL USE ONLY Report No P-3158-NEP REPORT AND RECOMNENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE KINGDOM OF NEPAL FOR A SECOND EDUCATION PROJECT (Technical and Vocational Training) December 3, 1981 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  CURRENCY EQUIVALENTS Currency Unit - Nepalese Rupee (NR) Since September 19, 1981 US$1.00 = NRs 13.2 NRs 100 = US$7.58 FINANCIAL YEAR July 16 - July 15 ABBREVIATIONS AND ACRONYMS First Project - Technical Education Project, Credit No. 772-NEP IOE - Institute of Engineering, Tribhuvan University MOE - Ministry of Education and Culture M - Million NESP - New Education System Plan PIU - Project Implementation Unit UNDP - United Nations Development Programme  FOR OFFICIAL USE ONLY NEPAL SECOND EDUCATION (TECHNICAL AND VOCATIONAL TRAINING) PROJECT Credit and Project Summary Borrower: Kingdom of Nepal Amount: Special Drawing Rights (SDR) 12.5 M (US$14.3 M equivalent) Terms: Standard Project The project is designed to increase the supply of skilled Description: craftsmen with basic engineering skills and of civil, elec- trical and mechanical engineering technicians needed to implement Nepal's development programs. The project would also assist the establishment of national skills standards applicable to all training institutions and incorporation of these standards for appointment and promotion in the public service. The IDA credit would help finance facilities and equipment for the Institute of Engineering of Tribhuvan University to establish a new training center at Pokhara in the Western Development Region which would: (a) expand certificate level training programs initiated under the First Project; and (b) intitiate a one-year craft level training program. Related staff training and specialist services would be partially financed by a grant from the United Nations Development Programme. Three studies would also be carried out through the Ministry of Education to develop project proposals for investments in primary, secondary, and non-formal education. The project faces no special risks, although achievement of project objectives will depend on the capacity of the project agencies to execute the construction program, the availability of the required training person- nel, and the tailoring of public service standards and in- centives to the practical needs of the country. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - Estimated Cost of Project: US$ Millions (Equivalent) Local Foreign Total Civil Works & Furniture 3.31 1.90 5.21 Architect Services 0.37 0.04 0.41 Equipment 0.43 2.42 2.85 Staff Salaries & Operating Costs 1.05 0.13 1.18 Specialist Services & Fellowships 0.43 2.47 2.90 Studies 0.45 0.15 0.60 Base Costs 6.04 7.11 13.15 Contingencies Physical 0.54 0.55 1.09 Price 2.01 1.25 3.26 Subtotal 2.55 1.80 4.35 Total 8.59 8.91 17.50 (net of Taxes and Duties) (7.93) (8.91) (16.84) Financing Plan: US$ Millions (Equivalent) Local Foreign Total IDA 7.52 6.78 14.30 UNDP 0.37 2.13 2.50 Kingdom of Nepal 0.70 - 0.70 8.59 8.91 17.50 Estimated IDA Disbursements: US$ Millions (Equivalent) IDA FY 1982 1983 1984 1985 1986 1987 1988 Annual 0.06 0.93 4.13 4.67 3.88 0.28 0.35 Cumulative 0.06 0.99 5.12 9.79 13.67 13.95 14.30 Staff Appraisal Report: No. 3558-NEP, dated November 16, 1981  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND REQO)1ENDATION OF THE PRESIDENT TO TllE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE KINGDOM OF NEPAL FOR A SECOND EDUCATION PROJECT (TECHNICAL AND VOCATIONAL TRAINING) 1. I submit the following report and recommendation on a proposed development credit to the Kingdom of Nepal for Special Drawing Rights (SDR) 12.5 M (US$14.3 M equivalent) on standard IDA terms to help finance a Second Education Project (Technical and Vocational Training). The United Nations Development Programme (UNDP) is expected to provide a grant of US$2.5 M equivalent for related technical assistance and training. PART I - THE ECONOMY 2. The most recent economic report, "Nepal - Policies and Prospects for Accelerated Growth" (Report No. 3577-NEP) was distributed to the Execu- tive Directors on October 15, 1981. The principal findings of the report and recent developments are described below. Country data are shown in Annex I. 3. By almost any standard, Nepal is one of the least developed coun- tries in the world. Per capita income is estimated at $140 (1980) and health and education standards are well below the average for South Asia: life expectancy at birth is about 44 years, infant mortality is 150 per thousand, and adult liberacy is only about 20 percent. The population, estimated to be 14.3 million (1980), is growing at a rate in excess of two percent per year. About 95 percent of the population live in rural areas. 4. Population density with respect to arable land has reached alarming levels and is threatening to overwhelm the resource base of the economy. Cultivation has been extended beyond economically feasible and ecologically safe limits in the Hills, and together with denudation of forests to meet housing and fuel needs, soil erosion has become a critical problem. Firewood and water have become more difficult to obtain as the forests are reduced and springs and streams dry up. This degradation of the agricultural base has made even the present low level of living standards difficult to maintain, and instances of food shortages and malnutrition have become commonplace. 5. Agriculture accounts for nearly 60 percent of Nepal's GDP and 75 percent of merchandise exports, and provides the main source of livelihood to over 90 percent of the population. Crop production accounts for about 60 percent of agricultural output, livestock for 30 percent, and forestry for ten percent. Rice is the predominant food crop (planted on about half the total cropped area), followed by maize, potatoes, wheat and millet; cash crops (oilseeds, jute, sugar and tobacco) are grown on about ten percent of the cropped area. About 25 percent of total rural incomes arise from non- agricultural activities. Cottage industries are one of the more important of these, engaging over one million people on a part time basis, and provid- ing basic consumer goods in the many small isolated markets where such goods would otherwise not be available.  - 2 - 6. Apart from agricultural land, Nepal's only other important exploit- able resources are hydropower and tourism. The exploitation of the vast hydropower resources, however, beyond that required to satisfy the country's own power demand, will depend crucially on Nepal's ability to enter into complex financial, exploitation and export agreements with neighboring coun- tries. The tourism sector, based on Nepal's magnificent landscape and rich cultural heritage, has been dynamic though it still accounts for only about one percent of GDP. 7. When Nepal started its modernization efforts in the early 1950s, there was virtually no economic or administrative infrastructure, and initial development efforts were necessarily concentrated on establishing a foundation for future development. Investments in the transport sector absorbed a large part of development spending. The Fifth Development Plan (1975/76-1979/80) marked a shift in development objectives; acceleration of economic growth, employment creation and raising living standards of the population became major plan objectives. Development expenditures rose fairly rapidly during this period and there were substantial shifts in the composition of spending away from transport to agriculture, power and social services. GDP growth, however, barely kept up with that of population, and while it was inevitable that per capita income growth would remain slow in the early stages of devel- opment, the continued economic stagnation since the mid 1970s is disturbing. 8. Part of the reason for the stagnation lies in factors beyond Nepal's control. The difficult topography and poor resource base are obviously im- portant in retarding growth. Nepal's landlocked position, long open border with India and the dependence of its overseas trade on transit through India create additional disadvantages. While Nepal benefits from the proximity of a vast potential market for Nepalese goods, the ability to pursue inde- pendent economic policy measures is circumscribed. Furthermore, industrial development faces the competition of a far larger and more efficient indus- trial sector in India. 9. At the same time, factors within Nepal's control have also contri- buted to the stagnation. Problems with project implementation have been encountered by Government and donors in most sectors of the economy and have constrained the growth of the development effort; public sector capi- tal formation grew at an average of only 5.5 percent per annum in real terms during the 1970s. In addition, the expected returns on those investments which did take place, often did not materialize because necessary comple- mentary investments or current spending were lacking, and because of mana- gerial deficiencies. A good example is the agriculture sector, where out- put stagnated despite considerable investments in irrigation, a virtual doubling of of the irrigated area and a 40 percent increase in fertilizer use between 1974/75 and 1979/80. In the past, insufficient attention was paid to bringing water down to the farm level and this was compounded by inadequate support services such as extension and research, by the lack of timely supplies of improved seed, fertilizer and other inputs such as credit, and by the lack of farm-to-market roads. Recent major irrigation projects financed by IDA and the Asian Development Bank are now addressing some of these problems by taking more comprehensive and integrated approaches.  10. Although Government revenue efforts have improved considerably over time, revenues have by now only reached the equivalent of about nine per- cent of GDP, which is low by international standards. With limited domestic resources, current expenditures have been squeezed in an effort to generate savings for investment spending, with the result that the efficiency of total spending was lowered. Furthermore, while about one quarter of total budge- tary expenditures (regular and development) was being financed by the rest of the world in 1974/75, this proportion rose to close to 40 percent by 1979/80. 11. The disappointing economic performance has been accompanied by a widening trade deficit. Import payments have grown while the trend in export * earnings has been sluggish due to declining rice exports. The deterioration on the trade account has been partly covered by increased tourism receipts and remittances, which together with foreign assistance in the form of grants and concessionary financing have generally ensured that the overall balance remained in surplus. But even so, foreign exchange reserves have declined from being equivalent to about one year of imports in 1974 to six months in 1980. 12. The poor monsoon in 1979 resulted in foodgrain production falling by 13 percent in 1979/80 and GDP declining by one percent. With the virtual elimination of rice exports at a time when Nepal's oil bill was rising the overall balance of payments surplus declined sharply in that year and Nepal drew SDR 10.5 million (US$13.8 million equivalent) from the IMF under the Compensatory Financing Facility in September 1980. Better weather in 1980 resulted in agricultural production recovering in 1980/81. Together with the favorable impact this had on other sectors of the economy, GDP is esti- mated to have grown by six-seven percent in 1980/81. But the trends remain disappointing; average GDP growth for 1979/80 and 1980/81 combined is likely to be only 2.6 percent, that is, very little increase in per capita terms. 13. On September 19, 1981 Nepal unified its exchange rate with the US dollar at NRs 13.2 = US$1; the exchange rate with the Indian rupee was un- changed at NRs 145 = IRs 100. This is the latest in a series of steps to reform Nepal's exchange rate system, which began when a complex system of multiple exchange rates and trade restrictions for overseas trade was re- placed with a dual exchange system on March 31, 1978. A basic rate of NRs 12 = US$1 applied for invisible and capital transactions as well as for imports of petroleum products, fertilizer, and cement. A second rate ap- plying to all other merchandise trade was set at NRs 16 = US$1, which was * subsequently changed to NRs 14 = US$1 on February 21, 1980. The September 1981 measures devalued the basic rate by nine percent but resulted in a six percent appreciation for most overseas merchandise trade. The latter could adversely affect the balance of overseas trade. 14. During the past two to three years economic policy making has been delayed by political developments. Following disturbances in 1979, a referendum was held in May 1980, which reaffirmed the existing partyless system, with suitable reforms. The constitution was amended in December 1980 to provide, among other things, for direct election of members of parliament; general elections were held in May 1981, though they were boy- cotted by many opposition groups. The previous Prime Minister and Finance Minister have retained their portfolios in the post election government.  - 4 - 15. These political activities slowed down preparation of the Sixth Plan (1980/81-1984/85) and the Plan was only published in January 1981. The Plan reflects Nepal's determination to search for ways to overcome stagnation and as a set of objectives, it was endorsed in draft form by members of the Nepal Aid Group at its January 1980 meeting. The strategy to shift investment into more productive sectors, which was initiated dur- ing the Fifth Plan, is continued and emphasis is given to alleviating some of the factors that limited past growth. The Plan's principal objectives are to increase production at a faster rate, to increase productive employ- ment, and to meet basic minimum needs in food, fuel (firewood), drinking water, health services, primary education and rural transportation. The strategy: (i) accords high priority to developing agriculture, small-scale industries and Nepal's abundant water resources; (ii) stresses soil con- servation and population control; and (iii) emphasizes full utilization of existing infrastructure and alleviation of absorptive capacity constraints. The development strategy also calls for full involvement of- the private sector in agriculture, manufacturing, trade, tourism, construction and transport operations. 16. Achieving the Plan's objectives will require quick-yielding sec- tor programs to generate growth in the short to medium-term as well as human resource development programs to lay the foundation for sustained growth in the longer term. Program targets must also be made consistent with overall financial and implementation capacity, but at the same time vigorous measures are needed to remove administrative and domestic financial constraints. The Government has been considering the actions required to overcome the adminis- trative constraints. A full list would include a slowing down in the growth of government employment and the proliferation of public sector agencies; an overhaul of the present incentive system, including substantial salary increases for senior officials; a reduction in the high rate of turnover in top appointments; and a more professional approach in the management of public enterprises. 17. There also is considerable scope for easing the financial con- straints and the Government plans to improve revenue administration, oper- ate public enterprises more efficiently and to raise public utility charges over a period of years. Selective increases in indirect taxes would also provide substantial additional revenues, while phasing out fertilizer sub- sidies and streamlining rice subsidies could yield substantial savings. 18. Nepal has received substantial external assistance in the past. Aid commitments averaged US$160 million per year during the Fifth Plan, and, according to current indications, could average about US$300 million per year during 1981/82-1983/84. Foreign assistance is expected to account for about 53 percent of total development spending during the Sixth Plan period. However, even this level of foreign assistance would not provide the Government with sufficient resources to meet increasing consumption demands. Additional aid, either through financing a higher proportion of total project costs or in the form of commodity assistance, could provide budgetary support to meet pressing recurrent expenditure requirements, par- ticularly in the social sectors. The Nepal Aid Group was formed in 1976 to  - 5 - assist in the overall coordination of financial and technical assistance efforts; and the Group now accounts for some 70 percent of all aid dis- bursements, The Group has met three times at plenary meetings under the chairmanship of the Bank to discuss overall external assistance needs; local Aid Group meetings in Kathmandu are also held to discuss and coor- dinate sectoral development strategies. The next plenary meeting is to be held in Paris in December 1981. 19. Foreign aid disbursements grew by 29 percent annually during the Fifth Plan period; only about 40 percent of disbursements were from foreign borrowing, the remainder being grants. As of December 31, 1980, official foreign debt outstanding was US$177 million, of which US$144 million was due to multilateral agencies. These loans were obtained on a highly concessional basis and the grant element of total aid remains in excess of 90 percent. As a result, debt service payments were only US$4.0 million during 1980, equivalent to less than two percent of ex- ports of goods and services. PART II - BANK GROUP OPERATIONS IN NEPAL 20. Bank Group operations in Nepal began in FY70 with an IDA credit of US$1.7 M equivalent for a telecommunications project. Since then, 26 additional credits have been approved, bringing total IDA assistance to Nepal to US$303.1 M equivalent, net of cancellations. In view of Nepal's many development needs, this assistance has been for projects in a wide variety of sectors. Six of these sectors account for 87 percent of IDA credits by amount: irrigation/agriculture (US$110.2 M for nine projects); water supply and sewerage (US$46.8 M for three projects), power (US$40.8 M for one project); telecommunications (US$21.7 M for three projects); high- ways (US$19.2 M for two projects); and rural development (US$19.0 M for two projects). The proposed credit would be the second in FY82, bringing the total amount of IDA assistance to Nepal to US$317.4 M equivalent, net of cancellations. No Bank loans have been made to Nepal. IFC made its first investment in Nepal (US$3.1 M) in a hotel project in Kathmandu in FY75. Annex II contains a summary statement of Bank Group operations as of Septem- ber 30, 1981, and notes on the execution of ongoing IDA projects. It shows certain delays in the implementation of these projects, particularly during the initial periods. These delays have been largely due to Nepal's limited technical and managerial capabilities. In order to assist Nepal in coping with this constraint, considerable technical assistance is being given by Bank Group staff, including our Resident Mission in Kathmandu. As a result, improvement in the rate of disbursements is being realized; during FY81, US$27.7 M equivalent were disbursed compared to US$65.1 M equivalent dis- bursed during the entire previous ten years. Project completion reports have been prepared for three projects - First Telecommunications (Credit No. 166, US$1.7 M equivalent), First Highways (Credit No. 223, US$2.2 M equivalent), and Tourism (Credit No. 241, US$3.2 M equivalent). All three projects faced unexpected engineering and design difficulties, delays in implementation of two to four years, and institutional improvements were less than anticipated; however, all three generated acceptable rates of return.  - 6 - 21. Bank Group lending to Nepal has so far been at a modest level compared to the country's need for external assistance. The international community has shown considerable interest in Nepal's economic development and, to date, shortage of funds has not been a bottleneck. The main con- straint on the utilization of increased aid has been Nepal's limited ab- sorptive capacity, affecting the pace of project preparation and imple- mentation. The Bank is assisting the Government in project preparation through the Technical Assistance Credit (Credit No. 659-NEP, US$3.0 M equivalent) and by acting as Executing Agency for a number of technical assistance projects financed by UNDP. The Bank Group has also addressed the problem of absorptive capacity through its role in organizing the Aid Group for Nepal (para 18). 22. The Bank Group's current strategy places major emphasis upon the directly-productive sectors (particularly agriculture) and the development of complementary infrastructure, including feeder roads (particularly con- necting the Hills to the Terai), communications and hydroelectric power. Preparation of projects in irrigation, cash crops, manpower development and hydropower is under way. PART III - THE EDUCATION SECTOR Development Strategy and Manpower Implications 23. Over the past decade, the shortage of trained technical manpower has been an important factor preventing the full implementation of development programs. Due to the slow development of training and education infrastruc- ture, Nepal continues to face severe shortages. The total stock of techni- cians in science, engineering, agriculture, forestry, and health sectors at the beginning of the Sixth Plan period (1980/81-1984/85) was calculated to be about 20,000 persons; projected demand for additional technicians during the Sixth Plan period is estimated at nearly 19,500 positions, calling for a near doubling of technical manpower. Domestic institutions are expected to produce about 15,000 persons and another 1,000 are expected to return from foreign training programs, leaving a position shortfall of about 3,500 tech- nicians. The actual shortfall is likely to be even greater, as the additional technical staff will be added in stages and not be available to work over the course of the full five year program. Given this shortfall, implementation of the Sixth Plan will be constrained, especially in the crucial areas of agriculture, construction and health. 24. In view of these constraints, the Government is giving high prior- ity to expansion and full use of existing technical institutes, as well as to intensifying efforts to send students abroad for training. While the Government has stated its willingness to consider hiring foreign technicians financed by foreign assistance to alleviate some of the shortfall, this is not likely to be fully appropriate for the type of work likely to be most seriously affected--agricultural extension, construction engineers and sup- ervisors, and basic health services.  -7- The Education System 25. The acute manpower shortage in technical fields reflects the his- torical neglect of education in Nepal. At the end of the Rana regime (1951), which opposed schooling of the general population, less than one percent of the school age population (only 10,000 children) were in school. Since then, however, enrollments have expanded rapidly. By 1980, about one million children (80 percent of the relevant age group) were enrolled in primary * schools; enrollments at lower and upper secondary schools increased 97 per- cent and 58 percent, respectively, reaching about 340,000 at lower and about 110,000 at upper secondary levels. About 37,000 students are enrolled at X tertiary levels at Tribhuvan University. The latest literacy figures indi- cate that literacy has now been achieved by about 20 percent of the total population. 26. This significant progress was achieved under the New Education System Plan (NESP) which the Government adopted in 1971 to help overcome the deficiencies in the education system. The major thrusts of the NESP are to enlarge access to basic education, improve teacher training and reorient education away from academic and theoretical subjects toward practical acti- vities more closely related to the needs of development. Under the NESP, the Government assumed greater responsibility for financing of education, providing free textbooks to all primary school children and paying all pri- mary teachers' salaries, and 75 percent of lower secondary and 50 percent of upper secondary teachers' salaries. 27. However, the growth achievements of the NESP were not matched by comparable qualitative progress in the education system. Primary education suffers from excessive dropout and repeater rates, with the result that only about 30 percent of entrants complete the three year primary cycle and com- pletion takes an average of about 6.5 student years. Furthermore, the three year primary cycle has been found to be inadequate to achieve permanent literacy and numeracy, and poorly prepares students for further schooling. In recognition of these problems, the primary cycle has recently been ex- tended to five years. Only about 60 percent of entrants to the secondary cycle complete the course, and even these students are generally deficient in mathematics, science, and English. In recent years, the average success rate in the School Leaving Certificate has been around 30 percent. Signi- ficant disparities also exist in access to education opportunities based on sex and region. In 1979/80, females accounted for only about 27 percent * of total primary enrollments, though this itself represents significant progress over the situation in 1974/75 when females represented only about 17 percent of primary enrollments. The proportion of primary school age children enrolled also varies widely by location, with only about 60 percent enrolled in the Far Western Region compared to 98 percent in the Western Region. Technical Education and Vocational Training 28. Under the NESP, vocational training was to be introduced into all secondary schools and all post secondary technical training assigned to Tribhuvan University. Due to inadequate numbers of trained vocational  - 8 - teachers and shortages of suitable training equipment and materials, the National Education Committee has now reconsidered this policy and is recom- mending that secondary schools revert to general secondary education with vocational training to be concentrated in separate technical schools. The Government is now seeking donor support for about five such schools to help overcome the shortage of staff and equipment. These schools will be managed by a newly established Directorate of Technical Education in the Ministry of Education and Culture. The Department of Cottage and Village Industries and the Department of Labor also provide some semi-skilled training courses. 29. Local capacity in Nepal to train senior engineering technicians has been limited. Almost all of the senior engineering technicians in Nepal were trained abroad, usually under Government or aid scholarships. The num- ber of places available for Nepalese students at foreign institutions has fluctuated widely and has been declining in recent years. In addition, foreign training has not been specifically related to Nepalese conditions and problems, and foreign-trained technicians are generally reluctant to work outside the Kathmandu Valley. Junior engineering technicians are currently being trained locally, but the overall quality of training is generally poor and the numbers insufficient to meet demand. The average annual output of additional trained manpower which would be required over the 1979-86 period has been calculated to be over 600 certificate level civil, electrical and mechanical engineering technicians and over 900 trades level construction, electrical and mechanical craftsmen. The existing training system could meet only about half of the certificate level demand and abouL 25) percenL uf the trades level demand. 30. There are few career development prospects for non-degree technical staff in the civil service. While there is a prospect for these non-gazetted staff to be promoted to the first stage of the gazetted class, any further advancement requires a degree. Skills training programs for craftsmen and for technicians are recognized under public service standards only if they are certified to be equivalent to one of the recognized academic programs which lead to academic qualifications. This equivalence to academic qualifi- cations has permitted and encouraged qualified technicians to pursue higher, more academic studies after their skills training or to seek an office job, thereby losing their technical skills to the workforce. 31. Donors are supporting several programs in Nepal to upgrade the quality of the existing technical and vocational training programs and to expand their output, including overseas training for project implementation staff in development projects in other sectors. The first IDA-assisted project in this sector was the Technical Education Project (US$5.7 M, Credit No. 772-NEP of April 14, 1978). This First Project is strengthening the existing certificate level training program for electrical and civil engineers at the Pulchowk Campus of the Institute of Engineering (IOE), near Kathmandu, and upgrading its programs to include diploma level civil engineering as well. Cofinancing from the United Kingdom is provided for the large staff training and specialist services requirements. Implementation of this project is progressing satisfactorily. The Asian Development Bank is supporting a similar certificate level program for electrical, civil, and mechanical  - 9 - engineers, plus a three year trades level course at the Dharan Campus of IOE. The Association is also assisting with the training of certificate and dip- loma level technical staff for the forestry sector. Under the Community Forestry Development and Training Project (US$17.0 M, Credit No. 1008-NEP of May 22, 1980), the Institute of Forestry Hetauda Campus is being upgraded and a second campus established at Pokhara to deal specifically with Hill fores- try training. The United States Agency for International Development is cofinancing this part of the project and providing technical assistance and staff training, as well as expanding in-service training within the Ministry of Forest. Under the Mahakali Irrigation Project (US$16.0 M, Credit No. 1055-NEP of September 29, 1980) about 80 students are being trained abroad * in civil and mechanical engineering. PART IV - THE PROJECT 32. The proposed project was prepared by the IOE, with the assistance of consultants financed under the First Project. The project was appraised in November, 1980. Negotiations were held in Washington, D.C., in October, 1981; the Nepalese delegation was led by Mr. T. B. Prasai, Secretary, Minis- try of Education and Culture. Annex III of this report contains supplementary project data. A report entitled "Nepal - Staff Appraisal Report for a Second Education Project (Technical and Vocational Training)" (Report No. 3558-NEP, dated November 16, 1981) is being distributed separately to the Executive Directors. Objective 33. The proposed project aims to increase the supply of skilled crafts- men with basic engineering skills and of civil, electrical and mechanical engineering technicians needed to implement Nepal's development programs. Another major objective of the proposed project would be the improvement of the relevance and quality of all trade skills training throughout the country through the establishment of national skills standards, which would be incor- porated into public service standards for appointment and promotion. The career prospects for non-degree technicians in the public service would be enhanced through the introduction of appropriate career structures. Projects for the further development of the education sector would also be prepared. * Description 34. The main components of the project would be: (a) Construction, furnishing and equipping of an IOE training center at Pokhara to provide per annum 160 trained crafts- men and 96 technicians; (b) Establishment and staffing of a National Skills Testing Authority and establishment of revised public service standards and career development structures for non- degree technical staff; and  - 10 - (c) Studies to develop project proposals for investments in primary, secondary and non-formal education. IOE Training Center of Pokhara 35. The proposed project would finance the establishment of a new IOE training center at Pokhara, in the Western Region of Nepal. The site was selected to provide better access to technical training programs for candidates from the relatively less well served areas of the Western and Far Western Regions. In view of the scarcity of accommodation in Pokhara and in order to permit enrollment of students from beyond Pokhara, board- ing for 400 students (90 percent of total full enrollment) and for all 45 teaching staff would be provided on campus. The project components for the establishment of the Pokhara center would be implemented by a Project Imple- mentation Unit (PIU), to be established along lines similar to those used for the First Project (Section 3.06(a) and Schedule 4 of the draft Develop- ment Credit Agreement (DCA). In order to expedite completion of the civil works, the Government has obtained the services of IOE Consultancy Services, which has already completed the detailed design and bidding documents for civil works; this group is also expected to supervise construction. IOE Consultancy Services performed satisfactorily in similar services under the First Project. 36. Teaching Programs. At the certificate level, the civil and elec- trical engineering programs would be modeled after those already designed under the First Project, to which would be added a suitable program for mechanical engineering. The certificate programs would be of two and a half years' duration, including six months remedial teaching in science, mathema- tics and languages. The crafts level courses would be of one year duration and would be designed with the assistance of consultants under the project to minimize the academic nature and maximize practical training. The crafts level program would be made up of 80 percent practical work (workshop and laboratory), and the certificate program would consist of 60 percent prac- tical work. Satisfactory outline curricula have been prepared. About 90 months of specialist services would be provided to assist the PIU and the center staff with curriculum development, procurement, and workshop planning and supervision. To ensure close links with relevant industrial concerns and Government departments which would employ the graduating students, a Center Advisory Committee (including representatives from these bodies as well as the center's teaching staff) would be established within six months of the opening of the center; the Committee would annually review the demand for upgrading skills of practicing craftsmen, advise on curricula and assist in graduate placements (Section 3.07(a) of the draft DCA). 37. Admission Policy. In selecting trainees for entry to both the craft and certificate level programs, the center would employ criteria satis- factory to the Association, including inter alia a system of skills aptitude testing which would be developed in consultation with the Association (Section 3.07(b) of the draft DCA). For entry to craft level programs, the minimum age would be 15 years, with completion of grade seven; entry to the certificate  - 11 - program would require a School Leaving Certificate, which is granted after satisfactory completion of grade ten. The center would also adopt the Gov- ernment's quota system to attempt to increase the number of students from remote areas without lowering the agreed entry requirements. 38. Staff Recruitment. Under the project, the center would need to recruit five senior administrators, 45 teaching staff and 22 technicians for workshop, laboratory and general maintenance. A detailed plan of staff recruitment and training would be prepared and furnished to the Association by March 1, 1982 (Section 3.11(a) of the draft DCA). The IOE would provide adequate renumeration and incentives to all staff employed by the center (Section 3.06(b) of the draft DCA); the pay scales are expected to be those established by the University Service Commission. Suitable senior adminis- trators, with appropriate academic and administrative experience, can be spared and recruited from other IOE campuses, without disrupting the other ongoing activities. Due to the attractive IOE salary scales, supplementary benefits and other conditions, serious difficulties are not anticipated in recruiting the other teaching and technical staff. 39. Staff Training. All teaching staff would be trained overseas in pedagogy and additional trade skills; the 22 lecturers about eight months each, nine senior instructors about 15 months each, and 14 instructors about 12 months each. The 22 technicians would also each receive overseas train- ing of six months each in practical skills and maintenance. The two depart- ment heads and the librarian would need longer training periods of about 22 months each, perhaps leading to fulfillment of academic requirements for higher degrees. The chief of the center and the division chief for property management and procurement would each undertake study tours of institutions similar to the proposed center. 40. Implementation. The project would be implemented over a period of about six and a half years, including a two year period of startup operations after completion of physical facilities. A suitable site has been selected and a topographical survey prepared by IOE Consultancy Services. It would be a condition of credit effectiveness that the land required for the con- struction and operation of the center is available to the project agencies for purposes of the project (Section 6.01(a) of the draft DCA). The Govern- ment would take all action as shall be necessary to acquire title to the land for the project by March 1, 1982 (Section 3.05 of the draft DCA). Power supply for the center would be provided by the 132 Kv grid line passing near * the site, financed under an Asian Development Bank transmission project. The Government would take all steps necessary to ensure that adequate electric power is made available to the center (Section 3.01(b)(ii) of the draft DCA). To ensure proper use of the facilities and equipment, a maintenance and repair workshop would be established with properly trained personnel and funding to carry out the maintenance program (Section 3.12(a) and (b) of the draft DCA). The Government would furnish to the Association by March 1 of each year of implementation beginning March 1, 1982, an estimate of project funds required in the following year (Section 3.01(a) of the draft DCA).  - 12 - National Skill Testing Authority 41. The project would assist with the development of national skill standards and skill tests for skilled craftsmen in the principal electrical, construction and mechanical crafts. The use of uniform and practically- oriented skill tests would help to influence the quality of all skill train- ing throughout the country by establishing a minimum acceptable standard, which would be determined by the actual skill attainment of the trainee, not an evaluation of the curriculum or the duration of the training. A secret- ariat to service a national skill testing authority would be established by January 31, 1983 (Section 3.08(a) of the draft DCA). The staffing and train- ing plan for this office would be prepared and furnished to the Association by August 1, 1982 (Section 3.11(b) of the draft DCA). Suitable skill stan- dards and tests in the principal electrical, construction and mechanical crafts would be developed, in consultation with the Association, by January 31, 1984 (Section 3.08(b) of the draft DCA). About 16 months of study tours to visit other trades programs would be provided to assist in the design and establishment of skill standards and tests. By January 1, 1985, a National Skill Testing Authority would be formally established (Section 3.08(c) of the draft DCA). Public Service Promotion Structure 42. By January 1, 1984, the Government would develop and furnish to the Association for review a plan to improve career opportunities for the craftsmen and technicians in the public service; such a plan would be imple- mented by January 1, 1985 (Section 3.09(b) of the draft DCA). By January 1, 1985, the expected date of the opening of the center, the Government would recognize the skill tests developed by the secretariat of the National Skills Testing Authority for appointment and promotion purposes in the public service (Section 3.09(a) of the draft DCA). About 32 months of study tours to visit other public service commissions and about 12 staff months of specialist assistance would be provided for the development of such a career structure. Related Studies 43. The planning and development arm of the Ministry of Education and Culture (MOE) would continue its efforts to improve programs for nonformal, primary, and secondary education. The project would assist MOE to explore possibilities for expanding nonformal education and introducing new manage- ment and supervision techniques, taking into account communication problems, economic and budgetary constraints, and the need for improved quality and equity of access. The MOE would also utilize the results of an earlier feasibility study for primary education (financed under the First Project) to prepare a primary education project. The two studies and the preparation would be carried out by consultants whose qualifications, experience,and terms of conditions of employment shall be satisfactory to the Association (Section 3.02 of the draft DCA). While most of this work is expected to be done by local consultants, about six months of outside specialist assistance would be provided to assist with this work.  - 13 - Monitoring and Evaluation 44. A joint monitoring and evaluation system would be established for the proposed center as well as for the Pulchowk Campus financed under the First Project. In addition to the straightforward input/output monitoring established for the First Project, this monitoring and evaluation system would assess the socio-economic background and quality of entering students and the internal efficiency of the training programs. A tracer study would o be included to ensure that the training programs are geared to meet indus- try's need and appropriate incentives maintained to keep the trainees em- ployed in their field of specialized training. The IOE would have prime * responsibility for conducting the monitoring for both projects. A detailed plan for the proposed monitoring and evaluation system would be furnished to the Association by January 1, 1984 (Section 3.10(b) of the draft DCA). The results of the annual evaluation exercises would be forwarded to the Asso- ciation promptly upon preparation for five years following the first output of graduates from both centers (Section 3.10(c) of the draft DCA). Technical assistance has been included under the project to assist with the design and implementation of the monitoring and evaluation system. Technical Assistance and Training 45. Implementation of the proposed project would require specialist assistance in a number of fields as well as training for nearly all project staff. The services and training are described in the respective sections of the project description and are summarized below: Consultant Overseas Services Training (months) (months) Pokhara Center 90 709 Trades Tests 12 16 Public Service Structures - 16 Studies 6 - 108 741 The UNDP has indicated agreement in principle to finance most of these activities, for a total of US$2.5 M equivalent. It would be a condition of credit effectiveness that the UNDP project agreement had been signed by all parties (Section 6.01(b) of the draft DCA). Cost and Financing 46. The total project cost is estimated at US$17.5 M equivalent, including contingencies and US$0.66 M equivalent in taxes and duties. The cost estimates are based on October 1981 prices. Foreign exchange costs are estimated at US$8.9 M equivalent or about 51 percent of total project cost. The proposed credit of US$14.3 M equivalent would cover all foreign exchange costs (excluding those to be financed under the  - 14 - UNDP project) and about US$7.5 M equivalent of local costs, amounting to about 85 percent of total project cost excluding taxes and duties. UNDP would provide US$2.5 M equivalent for technical assistance and training programs, about 15 percent of total project cost excluding taxes and duties. The Government would contribute the balance of US$0.7 M equivalent. The cost of individual consultant services is about US$7500 per month, including fees, travel and local allowances. The cost of consultant services under the UNDP program were calculated at standard UNDP proforma costs. 47. The recurrent costs (mainly salaries and consumable training mate- rials) generated by this project when fully operational would amount to about NR 4 M per annum in 1980 prices, which is equivalent to about 3 percent of Tribhuvan University's 1980 budget. The additional expenditures could be accommodated, without undue financial difficulty to the Government, within the feasible growth in education expenditures. The Government would operate, maintain, and repair the facilities and provide adequate and qualified train- ing and support staff as required for the efficient utilization and operation of the facilities in the future (Section 4.03 of the draft DCA). Retroactive financing of up to US$300,000 is proposed to cover the cost of the detailed design work undertaken by the IOE Consultancy Services, which have enabled early startup of the bidding and construction phases of the proposed project. Procurement 48. Total civil works and furniture for the project would cost about US$7.27 M equivalent, including professional services and contingencies. Past experience in Nepal has shown that contracts for this type of civil works below US$800,000 and for furniture below US$250,000 do not attract foreign bidders. Therefore, contracts for civil works and furniture below these values (totalling about US$3.05 M 1/ equivalent) would be awarded on the basis of local competitive bidding, following procedures satisfactory to the Association. Civil works and furniture contracts exceeding these values (totalling about US$4.22 M 1/ equivalent) would be awarded on the basis of international competitive bidding. Only prequalified contractors would be allowed to bid for civil works contracts. There would be a 7-1/2% margin of preference for local civil works contractors in bid evaluation under international competitive bidding. 49. Contracts for equipment which cannot be grouped into packages for bulk procurement of at least US$50,000 equivalent (about US$0.40 M 1/ equivalent) would be procured under local competitive bidding procedures, satisfactory to the Association. Contracts for equipment in excess of US$50,000 equivalent (about US$2.81 M 1/ equivalent) would be awarded on the basis of international competitive bidding. Local equipment and furni- ture manufacturers would receive a margin of preference in bid evaluation under international competitive bidding of 15% of the c.i.f. price of com- peting imports or the actual customs duty, whichever is lower. Since timely delivery of consumable training materials (about US$0.3 M 1/ equivalent) 1/ Including contingencies.  - 15 - is critical, such materials would be procured locally on a regular basis following either local competitive bidding procedures or solicitation of at least three competitive price quotations. Off-the-shelf items of equip- ment, furniture, and consumable training materials not exceeding US$20,000 equivalent for each contract (totalling about US$590,000 1/ equivalent) and direct purchase of books and instructional printed matter (about US$0.25 M 1/ equivalent) would be purchased following solicitation of at least three com- * petitive price quotations. Disbursements 50. The proceeds of the credit would be disbursed on the basis of (i) 100 percent of foreign expenditures and 90 percent of local expenditures for civil works and furniture, including building materials; (ii) 100 per- cent of foreign expenditures, 100 percent of local expenditures ex factory, and 90 percent of other local expenditures for equipment, books, journals, and instructional materials; (iii) 100 percent of professional and consul- tant's services; (iv) 80 percent of staff salaries, allowances and other operating costs; and (v) 100 percent of foreign expenditures, 100 percent of local expenditures ex factory and 80 percent of other local expenditures for consumable training materials. Disbursements against category (iv) and against small local expenditures under category (v) may be made against statements of expenditure. The documentation for such expenditures would be retained by the Government and made available for inspection by Association representatives during the course of project supervision. Requests for disbursement against other categories would be fully documented. Audit 51. Project expenditures would be recorded in accordance with appro- priate accounting practices. Accounts and financial statements for each fiscal year would be audited annually by an independent auditor acceptable to the Association and furnished to the Association not later than nine months after the end of each year (Section 4.02 of the draft DCA). Benefits and Risks 52. The proposed project would help to eliminate one of the critical bottlenecks to implementation of development plans in Nepal--the shortage of technical staff. Under the project, the capacity to train craftsmen and * technicians would be increased so that by 1986 the additional annual output from project institutions would represent about a 68 percent increase for craft level and about a 33 percent increase for certificate level over the * annual output of existing training programs. With these increases, nearly all of the forecast average annual additional demand for electrical and mech- anical engineer certificate holders would be met, but a large gap would still be left for civil engineer certificate holders and for all types of crafts- men. With the establishment of the center, the regional distribution of training opportunities would also be improved. In addition to the expanded capacity, the project would improve the quality of training programs through 1/ Including contingencies.  - 16 - the provision of better trained instructors, improved administration, and the establishment of well designed and equipped workshops and laboratories. The introduction of a one year craft course would represent a significant reduc- tion in the cost of craft training, establishing a model which could be fol- lowed for improving training at other centers. The development of national skills standards and recognition of skills tests would provide a guide post to rationalize the training curricula in other training programs and reinforce improvements in the quality of skill training. By establishing a more promis- ing career structure for technical staff in the public service, the project would enhance the attractiveness of technical careers and reduce some of the incentives now diverting trained technical staff to pursue higher academic qualifications or office work. 53. Achievement of project objectives would depend mainly on the capa- city of the project agencies to execute the construction program, the avail- ability and adequate training of the required personnel, and the tailoring of public service standards and incentives to the practical needs of the country. Since project construction and staff training are to be managed by the same IOE project director, utilizing some of the same PIU staff and the IOE Consultancy Services which have all performed well under the First Project, physical implementation and marshalling of staff for the training program should face no particular difficulties. The existing attractive pay scales for IOE staff enhance the capacity to recruit well-trained staff. To ensure that adequate incentives are given to craftsmen and technicians, the project would assist with the establishment of a National Skills Testing Authority to develop and employ national skills standards and tests and with the improvement of career structures in the public service. PART V - LEGAL INSTRUMENTS AND AUTHORITY 54. The draft Development Credit Agreement between the Kingdom of Nepal and the Association, and the Recommendation of the Committee provided for in Article V, Section l(d) of the Articles of Agreement are being distributed to the Executive Directors separately. 55. Special conditions of the credit are listed in Section III of Annex III. Additional conditions of credit effectiveness would be that: (i) land for the Pokhara center is available to the project agencies for the purposes of the project (para 40); and (ii) the UNDP project agreement for technical assistance had been signed (para 45). 56. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 57. I recommend that the Executive Directors approve the proposed credit. A. W. Clausen President Attachments December 3, 1981  - 17 - ANNEX I Page 1 TABLE 3A NEPAL - SOCIAL INDICATORS DATA SHEET NEPAL REFERENCE GROUPS (WEIGHTED AVXEAGES LAND AREA (THOUSAND SQ. KM.) - MOST RECENT ESTIMATE) TOTAL 140.8 MOST RECENT LOW INCOME MIDDLE INCOME AGRICULTURAL 40.2 1960 /b 1970 /b ESTIMATE /b ASIA & PACIFIC ASIA & PACIFIC GNP PER CAPITA (US$) 50.0 70.0 130.0/h 232.3 1136.1 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 4.7 15.6 13.8 499.4 1150.6 POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (THOUSANDS) 9327.1 11415.8 13963.0/i URBAN POPULATION (PERCENT OF TOTAL) 3.1 3.9 4.9 17.3 40.8 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 21.2 STATIONARY POPULATION (MILLIONS) 44.0 YEAR STATIONARY POPULATION IS REACHED 2130 POPULATION DENSITY PER SQ. KM. 66.2 81.1 99.2 153.6 373.1 PER SQ. KM. AGRICULTURAL LAND 243.5 286.8 339.5 360.3 2382.8 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 39.1 42.0 42.5 37.4 39.8 15-64 YRS. 57.4 55.0 54.5 59.2 56.7 65 YRS. AND ABOVE 3.5 3.0 3.0 3.5 3.5 POPULATION GROWTH RATE (PERCENT) TOTAL 1.2 2.0 2.2/f 2.1 2.3 URBAN 4.2 4.3 4.6 3.4 3.8 CRUDE BIRTH RATE (PER THOUSAND) 45.9 44.8 42.1 27.7 29.7 CRUDE DEATH RATE (PER THOUSAND) 29.0 23.2 19.9 10.2 7.5 GROSS REPRODUCTION RATE 3.0 3.0 3.0 2.5 1.9 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. 37.4 146.0 USERS (PERCENT OF MARRIED WOMEN) .. 0.7/c 4.3/c 20.4 44.1 FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71=100) 106.0 101.0 83.0 107.1 123.7 PER CAPITA SUPPLY OF CALORIES (PERCENT OP REQUIREMENTS) 93.0 96.0 91.0 98.6 112.6 PROTEINS (GRAMS PER DAY) 50.0 51.0 48.0 56.9 62.5 OF WHICH ANIMAL AND PULSE 9.0 9.0 9.0 14.2 19.7 CHILD (AGES 1-4) MORTALITY RATE 34.6 29.1 24.8 14.6 4.8 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 36.9 40.6 44.0 57.7 64.0 INFANT MORTALITY RATE (PER THOUSAND) .. 152.0/d .. 89.1 50.2 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL *- 2.0 9.0 30.1 45.9 URBAN 47.7 53.0 81.0 65.8 68.0 RURAL .. .. 5.0 20.1 34.4 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. 1.0 1.0 17.6 53.4 URBAN *- 14.0 14.0 71.0 71.0 RURAL .. .. .. 4.8 42.4 POPULATION PER PHYSICIAN 72867.9 51655.1/e 35253.2/e 3857.7 4428.7 POPULATION PER NURSING PERSON .. 70905.57i 53538.2 6411.8 2229.7 POPULATION PER HOSPITAL BED TOTAL 8188.8 6951.5 6294.1 1132.8 588.5 * URBAN 283.2 329.8 354.8 322.3 579.6 RURAL .. .. .. 5600.5 1138.5 ADMISSIONS PER HOSPITAL BED .. .. HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL .. 5.5 URBAN 5.4 .. RURAL .. .. AVERAGE NUMBER OF PERSONS PER ROOM TOTAL .. .. URBAN 2.0 .. .. RURAL .. .. .. ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL .. .. .. URBAN 30.2 .. .. RURAL .. .. ..  -18 - ANNEX I TABLE 3A Page 2 NEPAL - SOCIAL INDICATORS DATA SHEET NEPAL REFERENCE GROUPS (WEIGHTED AVE5RAGES - MOST RECENT ESTIMATE)L- MOST RECENT LOW INCOME MIDDLE INCOME 1960 /b 1970 /b ESTIMATE /b ASIA & PACIFIC ASIA & PACIFIC EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 10.0 26.0 69.0 85.9 99.8 MALE 19.0 43.0 104.0 94.4 100.6 FEhALE 1.0 8.0 31.0 64.5 98.8 SECONDARY: TOTAL 6.0 10.0 14.0 38.0/aa 53.5 4 MALE 11.0 16.0 22.0 34.67a 58.4 FgMALE 2.0 3.0 5.0 18.0/'a 48.6 VOCATIONAL ENROL. (X OF SECONDARY) 0.2 6.0 7.0 3.8 21.1 PUPIL-TEACHER RATIO PRIMARY 33.0 22.0 33.0 32.8 34.2 SECONDARY 32.0 21.0 25.0 19.9 31.7 ADULT LITERACY RATE (PERCENT) 9.0/ 14.3 19.2 52.8 86.5 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 0.2 0.4 .. 1.7 12.7 RADIO RECEIVERS PER THOUSAND POPULATION 3.0 4.8 15.0 35.3 174.1 TV RECEIVERS PER THOUSAND POPULATION .. .. .. 3.7 50.6 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 0.8 2.4 7.4 14.6 106.8 CINEMA ANNUAL ATTENDANCE PER CAPITA .. .. .. 3.4 4.3 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 4813.2 5566.2 6678.8 FkiALE (PERCENT) 40.5 39.2 38.5 29.3 37.4 AGRICULTURE (PERCENT) 94.6 93.9 93.2 69.8 50.2 INDUSTRY (PERCENT) 2.0 2.1 2.0 14.1 21.9 PARTICIPATION RATE (PERCENT) TOTAL 51.6 46.8 47.8 39.7 40.2 MALE 61.5 58.8 57.7 51.5 49.8 FEMALE 41.8 38.6 37.6 23.3 31.1 ECONOMiC DEPENDENCY RATIO 0.8 0.9 1.0 1.1 1.1 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS .. .. 35.3 HIGHEST 20 PERCENT OF HOUSEHOLDS .. .. 59.2 LOWEST 20 PERCENT OF HOUSEHOLDS .. .. 4.6 LOWEST 40 PERCENT OF HOUSEHOLDS .. .. 8.0 PUVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 95.0 134.1 248.6 RURAL .. .. 45.0 111.6 193.7 ESTIMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. .. .. 249.8 RURAL .. .. 41.0 .. 234.3 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 55.0 41.7 21.2 RURAL .. .. 61.0 51.7 32.2 Not available Not applicable. NOTES /a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among the indicators depends on availability of data and is not uniform. /aa China included in total only. /b lJnless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Est-imate, between 1976 and 1979. /c Government Programs only; /d 1971-73; /e Personnel in government services only; If Estimated annual 0rowth ratc for 1970-79; /l_ 1962; /h 197910S estimated at 140.0; /i 1979/80 ..ti.atod at 14300.  -19- ANNEX I Page 3 DEFINITIONS OP SOCIAL INDICAISRS Sores Although lth date are drun Iroc scor..Ersgeeriiyjudged the coot tcheitttive and reliable, it shou..o h I. ..IiIld aloe he cored chat tbey may It be inter feieuhytoeprei d lbeooee. h ake eadardid defitir-n end ooe...Pt. coed by differet roottieirs Ic o'eletieg the date. Thr darn ore, cc rhels,i sI-it ecieeder of megoitode, indinto treds teohuroteri-e certain mJer diffPerecoen between counttrie. The t refee- greop arey (1) the some o-_cr gro-p o-f the oobj- roe retry end (2) a reentrY groop with occehat higher average intone then the .e...trp group of thefsebjeo enty(xcp o "Capital Surlu Oil Esperteo" gcoop wher 'Middle Incom torch Afric ond Middle lust iso~ho- hoonono of srno soi-etarl a ffinitins). On che reference: goop dare the verges eve population we.ighted arich.teeinos for suoh eiouo n he nywe I'derit c othe coe-ntrie Sn a greo ha aafrto niao.Snetecvrg f ruItrio. among the indctosdopend nte arnlability of dart anI ontoioe etio cos h teoried Snrlting" average oforincar to -noher. These I argen ore on.lyIueuicsaing the value cf ens indicato atatiesnr the ...o.r en d reference groops. LAME AREA (cho-nad sq.)Peplatioc, peH.ytlOd-cca,ohr n oe-Pplre ttl Tetal - Totl- ecea encmpiin ed -cee and inlend waters. oraP n rr l) diide by t-ic reaperti-e teur -of hpital. hteds1 foel ulcoal - niat fagiot orlurauedcmorrlyc e-asrl vllble Sc poblic end privete general and rpecinhierd h.pita. and re- fer crop pasture , metie end kitchen gerdeon or to lie fallow 1978 dote. h.bilitetlo cntr. Hoepicto reetahlinn-nt Peccaretly troffed GNP PER CAPITA (US$) GNP pel ..pit. hyat lroc rr hyotiiec. Enrohlirhmennn pruvidicg peinoipelly.. oute- ISP PER CAPITA (5$) - lOfP per c pita esniecats at currrot make t picr*a dialcer cr0 c -lelded. cralh- pnn burete, include hmalth related by saecneso cehdc WrdSo Atin (1977-79tasic; 16, dmdclcner o emnnl oteffad hyb pynco (her bya 19 .,ad 1979 fee eio niscer _toe,. mld If err.) which offer in-patient are P ~~~~~~~~~~~~~~~~~~~~~~~~~~~doreen and prov ide e limited cone. of nedico1 f-ciitirn. Per tain ilEtRG COSUNPOPTIONt Pin CAiPITA - eA-..I coososprio of -catriel c_egy (cool tioel lporIer urban hospitals include WHO.ltyittipa1/gensra1 hoepitale, and ligeire, petroleu, naturl1 gs and hydro-, -o'I"e and geothra slr- ed rue1 hespitag loe oc. toruS1 h.rpitle and ordiel1 end mateciry scicity) it tilogr-.ofe 1ee qivalot Pet .. Pita; Sifo, 197t, and 1979 corners Opecialioad bapinals ar iecOndd onyune total. dete. Edteioser pSaita1 Sod - Ten ..he o. f adoinsi.. to o disohergen Proc hospitals divided by the cober of lode. POPUIATION ANl VILdi. STATISTICS Total Perelatio.. Mtld-Y-e (thoosondo) - An of July 1; 19h0, 1970, aed 1979 SlOUING dnts. ~~~~~~~~~~~~~~~~~~Averege Sloe of HS..nehold )rrsaon ,oo huteoi)-L ca, te, n rrl Schan Po pluir tieret of tor..) - Satic of urban to torel populno;Ahueodcrneoo ru firiiul h hr iring qnter dlffo...et defiritio. of ocher uramy affert norper-bility of data rod their mir crab. A hoarder It lodgr map orcy ret be intlodd Is umong _oncirn; 1960, 1970, ard 1979 dnta. the heosehold P. or rtiatirel porPOsOt. "P"patile Pr"Icto.. Average nuber of ...oo per room Ico ohe.b "ePrra - A-verosre Pouain _nve lOP) - Cu-ero ypulotion proJertioro ore bha..d on 1980 bet of pert..r Per rEn icl uhr andrurl: unop,ird corvetieme tonal population by ege aud -c and thrir scotlcyedfriiyrcr d-ellSoge, r;eupati-ly. Dtweitgteorlud pncr -et rnteto..rrtren end ProJoatin Parumetec Per mortalitY corer -ocyi.e of thre, Ieecao-uoeoidpre ing life enpecto...yart btrrh icteule..ig etch o...cry's per rapjtic on A....n to Electticlty (terrot of doelliore) - ntatl. crEb.adcoa leve, aod' f scal life enpecrurcy stehilicieg at 77.5 per. The pact- Ccnvrtictal dwellingsio ei otih cyin livin q_otorn n pctrentoge etor_ Per fert ility rote alto hove nhree leel- nsui decline In of total, orbas, and rorel dwellicgrvon.prnivsly. fertility arording te inoe fee end petfnyplnigeromce Poceuristhenaugd or ithen .ale cbinaticer of motality EUICATION uod fertlt teads e prjcinporpe .Adjusted E-roi...ot hetico ScatumaIr -y coruIetio - In. a tetior.ecy popultian thero is no groth siore Primary chool - tore. male nod femle - Gross total, eels end femal the birch rte In equal to the death race, cod also the ago t-teunr c- enrollent of oil egor at rho prisucy O-rvel onPncartge of cespoetico mains_oon 'rhi. to cotev-d onlY afcr fertilitp runes d.elire tc primary echool-age poplati..; normaly i-olodes abilde- oged 6-il the rylcn -tlee of unit net r_pr_dcio rare, when each gEorrotiee Vra- hut adluntd for diffecent 1engthn of primary d...ntien; fee of woecpl.r.. itself enatly. The.stationarly popult Ir . sir rue. rutrias with onoe-oa ndnnatior ect1iet may ..o..d 155 pe-tet euticated on the basis of She projeoted ohe-ateriurtos of the pupalartce sinc some yp.Pl lur bow or above the off i.i.1 ocuel age. to the yea 20100, acd the rote of dcrlice of fertility rtet to replete- S.eodary nrheol - toral, male and fnle - Computed no ahe9'; noc-dacy moor leve. education requiter tr leant fou yearn of oppro-ed primacy ins..terien; Teer -coinropouatoni teethed - The year ehe. nttioary popolatium provider . ge-ro, nti -l,o t-eh-r taicing irstructiome for pupTh. oiee has bee reaced. usualIly of 12 to 17 y-r of a, go; ..r.. ponds ...ao .eu....ae generlly Poculorioc tosseriy _m dleded Per no. he.- Mid-yea popolariee Per oq.r. kilc..etor (100 hoat.ere) at Ve..etiunl roimet(reract of -scdary) - Venrticnal iateaiteti. total are; lht 1970 and 1979 dote,icud ohnnl industrial,o ocher progr which epeccts iodrpad- pces.t s.urclrrlln - Compoted en ehov for agrioulnu-l lend ealy c ndpo ot fareayinstitutions Illy; 19601, 1970 ard 1978 deca. Pocil-teauherraIo-priar. d seonar - Total stadets e-riIed n ,popletice hen Se pnrre cecet) Childrc (0-14 poets), working-age (lb- pri_ary and e-rcoAcy level divided by numbers of teac.hers is the h4 yearn) . ad ceticed (65 pot an d ovr)a prrnagsof cid-peo Peru- ...tseperdigise.- lotion; 1960, 1970, and 1979 dut,. Adult literay rote (retretd - Litltecredu1to (bIs to road end wits) Peculation Proeh Rate (corect 1- ttcl - Annul grenth rtes. of tota mid- oep-err.rtoge of total edlt pryolatton aged 15 peors and ever. peerppleic P oe 19t00-hP, 1960-70G, and 197 0-709. ?Peclto ec St cret-ra-Ana growth ree fobnpp- CONSUMPTIOt incoe i cc 1910-65' I9H0)0,ard 1970-7-9. P.....nget tare (per rh.....d ppceletio) - Penesger cats . eprise motor Crude Birth hRoL (per th..e.d) _ Annual lIve births Per tho...a.d of eld-peac era seating loss thee eight Pe.se.n; extinden aeben-r, be-re.. end popolorion; 1960, 1970, end 1979 dora. cilitecyvehi'lon. Crude leech aRn "pet theuse..d) - Annual Ideetha p00 thnonod.of ceid-yeor Radio Renivers (per theusand rp-2inro) - All rtpe of rerv fotor radio popolotien; 1960, 1970, an 1979 data. braad_ets to g--rrl public Per thooead of Ppepolarion; ocludee e- tress Reproductier hre - Av-rge nuber of daughters e oa ill bea io lire,ood re...iv-rn in conrisad Sc yearn when -gistrotlo of radio her.- ccl roprd-tci- period if the oporie..... pre....c ego-opecifit P cc - setee in effect; data for recen t yours nay rot be capr .oe rilityrareo;uIs..lly fiv-year. .v..g. en..ding in, 1960, 1970, and 1979. mont countries abolished liremiog. Pam:il'y Ple-nino - Arepoort-, A..ueI (thrsado. AnnualI cubor of ....eptors TVg .i-cover (caP hosndLeuolot - TV rece-ivers fee broadcas.t to of irth-cotroli deices undrensieo e InefoIY pleneing pregros. . gorl peblic per thoasomd popeltien; enaludro unlioeso.d TV receivers Pemily Pl.ianiOL er pecn of nrI.d coer -1 Peretgeo aridinco tisnd in year when registration of TV nets e it ffst. women of child-bentla.g age (15-44 y-er) who non hirth--tr-1 devious to leesoperer Cio lonto (perth ..uua pouoir heen the. ert ir- publicotior devtrd primarily to reocdinggeneral cent. It to eo...ideeod POOP ASD NftTfSITION to he "daily" if itappooroa boat. four tictoaeek laden of Poed Pro,ducio pe ep 1969-;7.1-1100 - edno of Per- capita at-..I Ciem AwoI Atteadar-- per Cpite Per Year- cased anthe obor of produotniao l f oo .d c ciin Pen trirn ecolde nee..d ard feed d tnkr sl duing the pea, includingamnistodvenciro Iseo aedryear heals. C-rmdities coerpimry goods (eg.uarecad mobile orion. tea ael noaoded).Agrat pr-d_tior of each conty Is hosed orLABOR FORCt nationl avrg rdror rcewights; I tl I 1I t- hP. 1R l -Pi961-hi, 19).ad179daa Ttcel laboPrc(hnd) - tocuneically attIve peese, ioloding Percaton ouPpp1 of alre preoof _eurnnsL omae rcamd ocsaduepipdbtrnulg heucenive, tradnts, etc., roregy oqivalent of cot food sopplten urileble in coetry Per raPine r igpopuIlaion of all eges. Definitiom in wart see neon trims aer per dy. Avilable oupplica -ocyrIo dpm i prad-ttic, iports loon out comparable; 1960, 19)0 codf 19)9. dare oports, erd charger in crock. Setoupliten enlode enima ed noodo,Pel troro..or) - Prom labo fresP"rr" Ia t.f cre inho fern.. q_rt itiro used So food pru...s.ing, and looses to dintribetioo. Requir- Aheioultu (eren)- Sobe force Sn iteio,tfcrestrp, hurting urd neote eeoc stimated b PAO basedon phyniologicel IrdsPo ._rmI no- fieig an p.eretage of Itotal lao Peter.; 1960, 1979 and 1979 dote. vity en,d hreith consider.ingcrrumra omooue body weigher, ago Iedstey (portent) - labor force ir imieg, ocrucru-tee, sasfoettaig end 00dintriboro o_f Popuarn cod ul e 10 percet for wanes at rd teiec itycp wutor a d gee s pore enrage of total lobor feces; 1960, houcehold leve; 1961-hi, 197, and177"dote. 1970 endt`19i79 data. a, ~~~~~~~Per caPita _pply ofP prtein (Sten P_t dny)-Per"nroc fprrPita Particirot itnSt teort otl al,cd lcal - Pottlipotios c cot opp o f feed Per day. Net supply of food is dcfi md asaoe c-atvty rate acecoPute en itelmle ad femal lebor foree qiranen tsfrnlaunies ceoublished by USDA prc-idr fer n.inr pOtro.tages uP toruS, male and Pale popltto_ of nllage --pwtvo ellIwence of hij -rc of total protein Per day end 20 gram of erim1 aed 1960, M9O, and 19)9 dots. These are base.d cm ILO's paticipetien cores pulo :.p,otl, at which 10 gram el-ld be urinal protein. Thre ned- reflecting ng.-... .cearrure of the popolutio, and meg time trod. A erde r loe 'he hs of75 grams of total prorcir r 3 rm oP men otimote are fret natioml- -ooo.. ei-al protein an - evrge fr rho norld, propo...d by PAP in the Third Eroes.ictperdercy Satlo - htco uoirudr1 n 5edee Worl..1d Prold Survy; P91961-hi, .:190 -ed.197P7.date, to thetoru lahe force. Prarrprtein apyfa aimaad plr-Pecteio supply of fend do- rivod fIo -=icalo ad pulses ingrcpe day; 1961-hi, 19)0 aod 1977~dota. pINCOE DoISTRIBoTION ibld _oe 4 itraity Sane (ret theusad) A--ua deaths par theerd S Perto-c tc ofPrivor Ite b hth Incath a. ofitd) - Sreived by rich-s ege group 1-4 y-ar, to children In nbio age group; for ar developing non-,peret icet1 proret, o Spretod olret 0peco ttries dta derived fran litfn toblee; 1960, 1970 and 1979 data of bo---oholds, HEAL.TH POVERTY TARGET GOUSPS Lifa Emperteoy en Sirth (yeerni - Avera ge nuber of pnorn of life raining The fo11nIg cettere ore very appronicao ense of poverty level, orbie; 90. 1979 ad 9)9 dta. and should b interpreted wth ...drel eoir iefant MKrtality Sate (pee tho.....d) A ..oual deorhe of infects order cu pac Etimatod Abrolote Povety Ir=m lar (PS) ocorit) - erhe end rurl- If ago per theustd lIve birtho. Aboolutepoverty tiona level i.tObet Inca leve be-o s,hio o miat1 Acme n info ater (ercen oPR P"ucln- te.ta,adrua u-etitienlydequete diet pins ersetie1 ...fo requireat is set her of peaple (rual ubn,ne rrll) with rua.o.b. ...... to oaf rafrdbe wutoc supply (icaladee trmattd sorfoceatero or untreetd bet -nocta-.tad PEtimatdbSlcv oet lcs ee 0$ o apc)-ura-n aa wae ubo hrfromprtece oo n,orre n-senr el)a Rura re-lative povrt ntn lvlior-third of avroge pin capita pcmtgee oPfttheIr. teeptiv- popolatiens. Pr an orb. eaea a public p.....nI inca of the coutry. Urban leve is derived frmthe rural foantai or ttndpcotl.eotod not mar them 200 maer Prom a hbee map be leve with adjuatmet for higher coot of living in eranarna denldedn being withim reasonble access.oftht hece iturl mmnP tird PopulationSlnAslt Peor om ee pr t) - urbe -Isnbeacoswud imply thee the h...enif. or . mebers of the ho...ehaid an ua rta fpplto ohradrr l) b r asl doorhece to spend o dispreportieoate pnrt of che dey in fetching thr peer". Pte':.L Access to ert E- epo.. Iperenor of porulation - rIta l.uban, sd cocc - cner_ ofpeople (roni, orhen, and -Ira aervd by l..r.t dtopuel n pe-eeteges of thelcreperi-e popelinle. Saret diape..simay inclade the celnined diapesl slob or without t-ta...at, of bar macrr Ecnmced tonal Dete Dtinien sad w_ete-wte by _nter-ber_ syta or tho' use of p.it privies end sIe Erornic tA-lyst and S'cjerti... Depacteet Peenlotio -c Physicion - Poplotien divided by nuber of prac.ticing physi- toosqmlfte ru nmdical eehcola-nuoivs-ity lovo. .Penlation Pet Sorsieg Person - Population divided by nme Ppatue male end fair grdmeet acee prectinelloueea, od ceieno crss  - 20 - ANNEX I Page 4 of 5 pages ECONOMIC INDICATORS - NEPAL GNP PER CAPITA IN 1980: US$140 a/ GROSS DOMESTIC PRODUCT IN 1980 ANNUAL RATE OF GROWTH, 1960-1979 (%, constant prices) US$ Mln. GDP at Market Prices 1,989 100.0 3.1 Gross Domestic Investment 268 13.5 Gross Domestic Saving 148 7.4 Current Account Balance (exc. official grants) -72 -3.6 Exports of Goods, NFS 241 12.1 Imports of Goods, NFS 361 18.1 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1979/80 Value Added Value Added Labor Force b/ Per Worker US$ Mln. _ Mln.