Sri Lanka - Forest Resources Development (Forestry I) Project

Document of FIlE COPY The World Bank FOR OFFICIAL USE ONLY Report No. P-3434-CE REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT IN AN AMOUNT EQUIVALENT TO US$9.0 MILLION (SDRs 8.5 MILLION) TO THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA FOR A FOREST RESOURCES DEVELOPMENT PROJECT December 29, 1982 This document has a restricted distribution and may be used by recipients only in th their official duties. Its contents may not otherwise be disclosed without World Bank authorization. j  CURRENCY EQUIVALENTS US$1.00 = SL Rs 20.5 SL Rs 1.00 = US$0.049 SRI LANKA FISCAL YEAR January 1 - Deceimber 31 MEASURES AND EQUIVALENTS I kilometer (km) = 0.62 miles 1 meter (m) - 1.09 yards I hectare (ha) = 10,000 m2 (0.01 km2) 2.471 acres 1 cubic meter (m3) = 35.315 cu ft 1 kilogram (kg) = 2.2 pounds 1 metric ton (t) = 1,000 kg = 2,205 pounds ABBREVIATIONS AND ACRONYMS ADB - Asian Development Bank FAO - Food and Agriculture Organization of the United Nations FD - Forest Department FINNIDA - Finland's Department for International Cooperation - Ministry of Foreign Affairs GOSL - Government of Sri Lanka IDA - International Development Association NORAD - Norwegian Agency for International Development SIDA - Swedish International Developaent Agency UNDP - United Nations Development Programme USAID - United States Agency for International Development  FOR OFFICIAL USE ONLY SRI LANKA Foresty I - Forest Resources Development Project Credit and Project Summary Borrower: The Democratic Socialist Republic of Sri Lanka Amount: Special Drawing Rights (SDRs) 8.5 million (US$9 million equivalent) Terms: Standard. Project Objectives The main objectives of the project are: and Description: (a) strengthening planning capability in the forestry sector; (b) reducing constraint of skilled manpower in the sector; (c) improving the management of exist- ing forest plantations and establishing new plantations on a limited scale to meet projected industrial wood shortages; and (d) strengthening research and trial programs to improve sector productivity. The project would include the following major components: (a) a forestry master plan, including a five-year invest- ment program; (b) forestry training; (c) industrial wood plantations; and (d) technical assistance. The project faces no major risks. The principal risks are a possible lack of improvement in the quality of plantations or damage caused to the plantations by fire and animals. These risks are minimized by the provision of technical assistance and fire and animal protection. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  -ii - Estimated Cost: 1/ (US$ million) Local Foreign Total Master Plan 0.67 1.48 2.15 Professional Training 0.43 0.72 1.15 Technical Training 0.28 0.19 0.47 Industrial Plantations 2.59 0.90 3.49 Management of Teak 0.11 0.04 0.15 Treatment of Young Stands 1.07 - 1.07 Replant Mature Stands 0.19 0.01 0.20 Research and Trials 0.25 0.31 0.56 Base Cost (in mid-1982 prices) 5.59 3.65 9.24 Physical Contingencies 0.27 0.07 0.34 Price Contingencies 4.47 0.98 5.45 Total Project Cost 10.33 4.70 15.03 Financing Plan: (US$ million) Local Foreign Total GOSL 3.59 - 3.59 IDA 6.33 2.67 9.00 FINNIDA 0.41 2.03 2.44 TOTAL 10.33 4.70 15.03 Estimated Disbursement: IDA FY 1984 1985 1986 1987 1988 1989 1990 Annual 0.5 1.5 1.5 1.2 1.5 1L.8 1.0 Cumulative 0.5 2.0 3.5 4.7 6.2 8.0 9.0 Economic Rate of Return: 20% (for industrial plantation - 42% of total project cost) Staff Appraisal Report: No. 4089-CE, dated December 17, 1982 Map: IBRD 16518. 1/ Includes taxes and duties estimated at about US$0.1 million equivialent.  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF SRI LANKA FOR A FOREST RESOURCES DEVELOPMENT PROJECT 1. I submit the following report and recommendation on a proposed development credit to the Democratic Socialist Republic of Sri Lanka in an amount of Special Drawing Rights (SDRs) 8.5 million (US$9 million equivalent) on standard IDA terms to help finance a Forest Resources Development Project. PART I - THE ECONOMY 2. The most recent economic report, "Economic Adjustment in Sri Lanka: Issues and Prospects" (Report No. 3901-CE, May 27, 1982), was distributed to the Executive Directors on June 3, 1982. Country data are provided in Annex I. 3. After several years of relative stagnation, Sri Lanka's economy has experienced sustained growth. This growth has been the direct result of the economic liberalization of 1977, and the development push associated with it. Until 1977, Sri Lanka's growth performance had been below both need and potential. Although GDP growth in the 1960s, at 4.4% per annum, was above the average for low income countries, it slackened sharply in the 1970-77 period to 2.9% per annum, just below the average for low income countries. Through much of this period, the terms of trade deteriorated steadily, erod- ing even these modest gains; as a consequence, per capita gross national income rose by a mere 0.9% per annum during these years. The slowdown in economic growth in the 1970-77 period was attributable to a combination of factors, including inadequate investment, poor management of the economy, and a policy environment not conducive to growth and investment; these factors were compounded by poor weather in some years and a sharp rise in the cost of imported food and petroleum. 4. The three tree crops--tea, rubber and coconuts--which are still the mainstay of the economy, suffered from low replanting and inadequate incen- tives. These problems were exacerbated by a dual exchange rate system, introduced in 1968, that discriminated against these crops, and by the uncer- tainties surrounding a protracted nationalization (1972-75) of the larger estates. After the exceptional output growth of the 1960s, rice yields and cropping intensities declined in the 1970-77 period due to poor institutional support. Investment in manufacturing was also low, and the inefficiency of most public and private sector firms, nurtured in a highly protected environ- ment, resulted in growth of manufacturing of 1% per annum. The only bright spots were subsidiary food crops and industrial exports which benefited from good incentives.  -2- 5. An inadequate public savings effort, caused by inelastic revenues and uncontrolled growth in recurrent expenditures, inhibited public invest- ment. Unfavorable policies further constrained private savings. The slow growth rates and changes in the structure of output provided neither the jobs nor the employment structure for a growing labor force. The low output growth, the excessive capital intensity of investment, the mismatch between the job aspirations of those with post-primary education and the jobs avail- able to them, the post-war demographic bulge, and the rising female par- ticipation rates contributed to a massive increase in unemployment, estimated at over 1 million, or some 18% of the labor force in 1977. 6. In sharp contrast to this poor economic performance, Sri Lanka's social achievements in relation to per capita income have been outstanding. Sri Lanka has about one and one-half times the life expectancy, almost thrice the literacy, one-cuarter the infant mortality, and half the birth rate which would be expected for a country at its per capita income level. Nutrition levels have been adequate, and in the 1960s paralleled gains in income dis- tribution. These improvements in the quality of life, in particular the rise in health standards, the spread of education and the availability of sub- sidized food have been important factors in the decline in mortality. The increasing age of marriage, the spread of female education and employment, and a vigorous family planning program, have also contributed to a sharp decline in fertility. As a consequence, population growth, net of migration, has dropped steadily, from 2.7% per annum in the 1953-63 period to 2.2% per annum in the 1963-71 period, and 1.7% per annum during 1971-81. 7. Favorable initial conditions induced these social gains. Compulsory primary education was introduced as early as 1901. The food ration was introduced in 1942. Thus, at the time of Independence in 1948, Sri Lanka already enjoyed high levels of adult literacy and life expectancy. These initial gains were consolidated and expanded in the post-independence period through large expenditures on social services and the food subsidy, expenditures which accounted for two-fifths to one-half of government revenues in the 1960s and early 1970s. These expenditures were traditionally financed by capturing the surpluses of the three major tree crops, which provided the Government with easy sources of revenue and foreign exchange. These surpluses began to decline in the late 1960s as government policies discriminated against tree crops and export unit prices weakened. As growth in other productive sectors also decelerated in the 1970-77 period, the budgetary resources available for social programs were squeezed between inelastic revenues and rapid inflation. As a consequence, expenditures for social services other than the food subsidy began to decline as a proportion of total current expenditures and of GDP, threatening the hard-won gains in health and education. In short, the economy could no longer generate the resources needed tc, sustain the large program of welfare expenditures. Moreover, the very size of those programs reduced the scope for policy makers to shift resources to development. 8. The policy changes introduced in 1977, following the election of the United National Party, were intended to break this vicious circle. T'he new  -3- Government identified its objectives as the sustained revival and resuscita- tion of the economy and increased employment through (i) increased capacity utilization in the productive sectors, (ii) stimulation of savings and investment, and (iii) efforts to encourage exports, and import substitution in foodgrains. A program of policy reforms was developed in close consult- ation with the IMF. These reforms were supported initially by an IMF standby arrangement covering 1978 for SDR 93 million. On January 26, 1979, the Fund's Executive Board approved an SDR 260 million Extended Arrangement to cover the 1979-81 period. The principal aim of the reform program was to dismantle controls over resource allocation and initiate price adjustments with a view to establishing more realistic relative prices. By 1980, these goals had largely been achieved. 9. The program of reforms comprised a number of major policy initia- tives. The exchange rate was unified 1/ on November 16, 1977, at a depreciated rate of Rs 16 = US$1.00 and allowed to float. This implied a depreciation of 46% against the official rate prevailing prior to unifica- tion, and 11.2% with respect to the Foreign Exchange Entitlement Certificate (FEEC) rate. The trade and payments regime was liberalized. Public sector import monopolies were almost entirely terminated. Prior licensing of imports was abolished for all but a handful of commodities. The tariff structure was revised and simplified. Other budgetary taxes and subsidies were adjusted to reflect the change in trade and exchange rate policies. In particular, rice and sugar rations were confined to the poorer half of the population, and the food subsidy was eliminated through a series of adjust- ments in administered prices. On September 1, 1979, the Government intro- duced a system of food and kerosene stamps for families with monthly incomes of less than Rs 300 to replace specific subsidies and food rationing, and to target benefits to the poor. To help offset the adverse impact of these changes on real incomes, public sector wages were periodically adjusted upwards. Public corporations were asked to pass on cost increases, except for fertilizer, petroleum, milk, and public transport, for which price increases were initially deferred to cushion the impact on consumers. The Government subsequently eliminated the overall subsidy on petroleum products and made sizable adjustments in bus and train fares, electricity and fer- tilizer prices. The burden of selected subsidies and transfers, as a conse- quence, fell from around 10% of GDP in 1977 to around 3% by 1981. These changes, and higher aid receipts, have helped permit a sizable increase in capital expenditures. 10. Agricultural pricing policies have changed dramatically. The domes- tic support price for paddy was increased by 21% in November 1977, by 25% in November 1980, and by a further 15% in the course of 1981 following substan- tial increases in fertilizer prices. With the related increase in flour prices, incentives for paddy and other flour substitutes benefited. At the 1/ Prior to unification, all exports other than tea, rubber, and coconut products and all imports other than food, fertilizers, and drugs were channelled through the certificate market. Since November 1972, the FEEC rate was maintained at a 65% premium over the official rate.  -4- same time, there occurred a large policy-induced decline in the role cf the state in domestic rice trade. Fresh coconut prices were also increased, and in November 1981, the system of fixed and variable duties which had effec- tively insulated the large domestic coconut market from the world market was replaced by a sliding scale export system that allowed some linkage between the two markets. While the unification of the exchange rate ended formal discrimination against tree crops, high export duties, particularly on tea, continued to siphon off most of the operating surplus for the Government. As tea prices fell and production costs rose in 1978-79, the Government responded to the reduced producer margins by lowering taxes on tea exports. The Government also ended most price controls, and reformed the interest rate and tax systems. The burden of company and personal taxation was lowered, and the taxation system was rationalized to increase revenue elasticity; nevertheless, the overall revenue elasticity to economic growth and domestic inflation remains low as taxes on slowly growing tree crop exports still average about 30% of current revenues. Interest rates were also raised sharply to encourage savings and discourage speculative imports. However, inflation eroded these rates and in April 1980 further upward adjustments were made. 11. These economic reforms were accompanied by a major effort to step up public investment. The Government-s capital expenditures jumped from 6% of GDP in 1977 to an average of 13% in 1978 and 1979, and 19% in 1980, as government departments responded to the initial improvement in the budgetary resource position and embarked on long overdue replacement investments and new projects that had been shelved earlier for lack of resources. At the same time, the Government undertook three major new programs which are to be the lead projects in a five-year rolling public investment program. Ihese are: (i) accelerated implementation of the Mahaweli Ganga Development Program, by far the largest multipurpose river basin development program ever undertaken in Sri Lanka; (ii) a 200 square mile free trade zone north of Colombo under a newly constituted Greater Colombo Economic Commission which has established the first of several Investment Promotion Zones near Colombo-s international airport and by end-1981 had signed agreements with 68 investors involving a total investment of US$100 million; and (iii) a massive housing and urban renewal program with its main focus on the Colombo metropolitan region, including the construction of a new capital complex at Kotte, a suburb of Colombo. Budgetary expenditures on these three programs will amount to Rs 34 billion, or 34% of projected budgetary resources over the 1982-86 period. The underlying public investment strategy seeks to balance the large investment requirements of the Government-s high priority programs with the urgent rehabilitation and fresh investment needs in other sectors. The main thrust of the public sector program is to lay the founda- tion for longer-term development by expanding social and economic infrastruc- ture, while also providing for some short-term growth. Private fixed invest- ment has responded well in some areas to the economic reforms, increasing from about 7% of GDP in 1977 to 12% by 1980 and contributing to an overall fixed investment of 31% of GDP in 1980. 12. In response to the policy reforms and the accompanying acceleration in investment, economic growth in 1978-81 averaged an impressive 6.5% per  -5- annum. This growth was shared by almost all sectors of the economy, par- ticularly construction and services. The only major exception has been the tree crop sector. The otherwise impressive performance is due to a number of factors including the improved availability of inputs following import liberalization, an increased role for the private sector in distribution, and the removal of price controls. Although there is little information avail- able on employment, Central Bank estimates suggest that unemployment dropped from 18% of the labor force to 15% between 1977 and 1979. 13. Despite this strong performance, major weaknesses in economic perfor- mance had emerged by 1980. In particular, the national savings effort had not matched the rapid rise in investment. Gross national savings fluctuated around 15% of GDP during the 1978-80 period, while recourse to foreign savings to finance the higher investment rose from 4.5% of GDP in 1978 to 20.0% in 1980. Although the Government has succeeded in containing the costly consumer subsidy and transfer programs, expenditures on which have declined as a percent of GDP (para 9), relatively inelastic revenues combined with steadily rising other recurrent expenditures and declining terms of trade resulted in hardly any public savings over the 1978-80 period. As a result, the Government has financed its rapidly rising capital expenditures through foreign aid, and increased domestic borrowings. Initially the Government met its domestic financing requirements through non-expansionary borrowings from captive financial institutions, which could mobilize increased private savings following the interest rate reform. However, resources raised through these channels have not grown as rapidly as the budgetary deficit, and the Government was increasingly forced to undertake expansionary borrowings from the Central Bank. Between 1978 and 1979, these rose from 0.4% to 1.2% of GDP and in 1980 increased sharply to 10.5% of GDP. It has also resorted to the use of foreign commercial loans to help finance the deficit, borrowing US$50 million in 1980, and US$75 million in 1981. 14. Inflation has also increased sharply since 1977. The exchange rate adjustment, the other policy-induced price increases and related wage increases, the removal of price controls, and the build-up of external assets, which added to the money supply, contributed significantly to infla- tionary pressures in 1978 and 1979. However, these were moderated by bumper paddy harvests, increased capacity utilization in the economy, increased availability of imports, and the beneficial effects of competition from imports and in domestic distribution. Since then, rapid growth in the broad money supply--38% in 1979 and 32% in 1980--added a sizable "built-in" increase to the system. Together with the corrective price increases designed to reduce budgetary subsidies and keep pace with rapid increases in international petroleum, wheat and sugar prices, these pressures caused inflation (as measured by the Colombo Consumer Price Index) to accelerate from an average of 11% in 1978 and 1979, to 26% in 1980. 15. Rapid expansion in economic activity has been reflected most vividly in the balance of payments. Import volume growth since 1978 has averaged 15%. Between 1978 and 1980, the net petroleum import bill more than tripled and increased from 11% to 36% of non-petroleum exports, while capital goods imports more than doubled in response to the acceleration in investment. However, exports have shown barely any volume growth as declining tree crop  -6- export volumes offset the strong growth in garments exports. These adverse trade volume trends were compounded by an 18% terms of trade deterioration over the same period. The rapid growth in tourism receipts and private remittances from abroad in this period failed to offset the deterioration on the trade account and the current account deficit rose from US$124 million (4.5% of GDP) in 1978 to US$805 million in 1980 (20.0% of GDP). In 1978 and 1979, rapidly rising non-monetary capital inflows due mainly to increased net aid disbursements more than offset the current account deficit, and Sri Lanka continued to add to its net international reserves, albeit at a declining rate. In 1980, however, net international reserves fell by US$220 million, and by end-1980 gross international reserves stood at US$377 million, or equivalent to less than nine weeks of imports of goods and non-factor serv- ices. With the rapid drawdown in reserves, the public sector has begun to make significant use of commercial financing. 16. The Government, realizing in early 1981 that continuation of the 1980 trends would risk continued high inflation and unsustainable pressures on the balance of payments, took corrective steps. Budgetary expenditures were held below their 1980 level in nominal terms, implying significant cuts. Capital expenditures declined significantly from 19% of GDP in 1980, to about 14% of GDP, and were held to below their 1980 level in nominal terms. As a result, the overall deficit declined from 23% to 16% of GDP; bank borrowings, from 10.7 to 4.5% of GDP. Similar improvement was achieved in the balance of payments, where the current account deficit declined from 20% to 15% of GDP, and net international reserves declined by only an additional US$33 million over 1980. Due mainly to large disbursements under the IMF Extended Arrange- ment and Compensatory Finance Facility, Sri Lanka's gross international reserves increased to US$451 million, equivalent to about 11 weeks' imports coverage. The stabilization measures also resulted In a significant decline in inflation--the Colombo Consumer Price Index averaged 18% growth during 1981, compared to 26% in 1980. 17. Current indications are that the significant achievements towards stabilization in 1981 are not being sustained in 1982. As a percent of GDP, the budget deficit is expected to increase in 1982 over 1981 and the Govern- ment is, among others, having to rely on substantial external commercial borrowing for budget support. It will be important to reverse these develop- ments. Continued strong measures will be needed throughout the medium term to ensure that budgetary expenditures are consistent with overall economic stability, as many of the large development schemes the Government has initiated are only now beginning to peak. Sri Lanka will also have to care- fully monitor balance of payments developments, commercial borrowings in particular, and accelerate exports growth to ensure longer-run stability in the external sector. 18. Aid donors have responded enthusiastically to the Government's development initiatives. Between 1977 and 1981, aid commitments more than tripled, to a record US$815 million. Most of the growth has come in project aid, reflecting the Government's efforts to increase investment, particularly in the Accelerated Mahaweli Program. Since public investment is now over- programmed, continued high levels of aid will depend upon donors' abilities to shift from project to non-project aid, to finance a sizable portion of  -7- local costs, and provide supplementary financing for ongoing projects where needed. The Government will need to maintain donor confidence in its economic policies and management through a vigorous domestic resource mobi- lization program and continued restraint on government expenditures. Sri Lanka's budgetary situation remains tight. The adverse impact on revenues of slowly rising export prices and volumes, and rapidly rising import prices, has increased budgetary pressures. Local cost financing, in support of Sri Lanka-s own resource mobilization efforts will not only provide valuable relief to these budgetary pressures but also supplement foreign exchange resources needed in support of the balance of payments. 19. External public debt outstanding and disbursed stood at US$1,585 million at the end of 1981, amounting to about 36% of GDP. However, this is mostly long-term concessional debt. As a result, the debt service burden is relatively low; the debt service ratio in 1981 excluding IMF repurchases stood at 8.7% of exports of goods and non-factor services, declining from 16.7% in 1976, primarily as a result of a decline in outstanding short- and medium-term commercial borrowings. Recent resort to commercial finance, however, means that the debt service ratio will begin to rise again. Unless early steps are taken to further reduce the ratio of the current account deficit to GDP, Sri Lanka's reliance on shorter maturity commercial borrow- ings to fill the gap between the current account deficit and likely conces- sional aid flows may grow significantly. In that case, the debt service ratio would increase quickly and substantially. PART II - BANK GROUP OPERATIONS IN SRI LANKA 20. Since the beginning of its operations in Sri Lanka in 1954, the Bank Group has approved nine loans totalling US$115.6 million (net of cancella- tions) and 32 credits totalling US$608.0 million 1/ (net of cancellations) in support of 38 projects. About 48% of Bank Group assistance has been for agriculture (irrigation, agricultural, and dairy development), 18% for power, 11% for transport, and the remainder for development finance company opera- tions, a program credit (mainly involving the import of raw materials for industry), water supply, construction industry, and telecommunications and small and medium industries. Eight loans and eleven credits have been fully disbursed so far. Annex II contains a summary statement of Bank Group operations as of September 30, 1982 together with notes on the execution of ongoing projects. 21. IFC has an equity investment of about US$150,000 equivalent in the Development Finance Corporation of Ceylon (DFCC). Two IFC lines of credit totalling US$7.0 million have been made to the Government-owned Bank of Ceylon (BOC) for term loans to medium industries. IFC has also an investment of US$250,000 in an equipment leasing company. In FY81, IFC approved an 1/ As of September 30, 1982.  investment of about US$0.7 million in equity and about US$19.3 million in loans for a new hotel project in Colombo. 22. The Bank Group-s current strategy focusses on the agricultural sec- tor. It aims to support Government efforts to increase food production and reduce dependence on food imports, and to raise productivity, employment, incomes and living standards of the rural population in Sri Lanka. This strategy includes projects to support basic infrastructure. In addition to providing financing for the Second and Third Mahaweli Ganga Development Projects and the Mahaweli Ganga Technical Assistance Project, the Bank Group is assisting GOSL in implementing the Accelerated Mahaweli Ganga Development Program (Accelerated Mahaweli Program) principally through coordinating external assistance. The Board approved a Tea Rehabilitation and Diver- sification Project on May 4,1982 and a loan of US$42.7 million to Ceylon Electricity Board for a diesel power project on June 7, 1982. Current:Ly under appraisal are an industrial development project and a rural development project. 23. The Bank Group, as of end-1981, accounted for 9.7% (IBRD, 1.8%:; IDA, 7.9%) of Sri Lanka's total debt outstanding and disbursed, and 6.3% (over 80% IBRD) of debt service on medium and long-term debt. The projected Bank Groups share in total existing external debt outstanding and disbursed will increase to 17% by 1985 (with IBRD's share declining to 1.3%). The Bank and IDA portions of this debt service are expected to decline to about 4% by 1985. PART III - THE FORESTRY SECTOR 24. In 1979, the Bank carried out a forestry sector review at the request of the Government. The report identified as the main constraints to the development of the forestry sector lack of basic reliable data and plaining capacity, and a severe shortage of trained manpower. The latest forest inventory dates back to 1960, and is based on an aerial photography carried out in 1956. At that time, a total of 2.9 million ha (44%) out of the country-s total land area of 6.6 million ha was under forests. Since then, the forest area has been substantially reduced and is now estimated at about 1.6 million ha or 24% of the total land area. Urgent measures are required to arrest this trend. 25. Although value added to GDP from forestry is estimated at only 1.5%, this figure does not fully represent the importance of the sector to the economy. Firewood provides about 60% of the energy need of the country. About 70% of the firewood is consumed by the rural people who rely on tradi- tional fuels for cooking and heating. The bulk of the remaining 30% is used by low income urban families and tea factories. The forests also play an important environmental role in the protection of land and soil.  -9- Forestry Institutions 26. The Government owns and manages all forests in Sri Lanka. The Hinistry of Lands and Land Development is the main institution in charge of the development of the sector. The principal sector institutions reporting to this Ministry are the Forest Department (FD) and the State Timber Corpora- tion (STC). 27. The main responsibility of the Forest Department is the management and protection of forest reserves, including plantations and reforestation and development of forest resources. However, FD was unable to carry out this responsibility effectively in the past because it failed to establish the necessary data base. FD's main emphasis has been on increased planting, but the post-planting silvicultural treatment, on which the final yields and economic return depend, has been neglected. The principal constraint has been shortage of trained staff in FD in relation to the level of activities. While plantation establishment has increased by 128% from 3,200 ha in 1961 to 7,300 ha in 1981, the professional and technical staff of FD has been increased by only 29% and 22% respectively. 28. The State Timber Corporation is responsible for felling, extracting, converting and marketing wood. Felling and extracting is mainly done by private contractors for STC. The other organizations operating in the forestry sector include the Ceylon Plywood Corporation and the National Paper Corporation. In addition, agricultural plantations (i.e. tree crops such as rubber and coconut) under various ministries contribute to the total wood supply (almost 20%), particularly to the supply of industrial wood (about 40%). Forest Operations 29. The national forests in Sri Lanka have traditionally been looked upon as an abundant resource which supplied most of the country's wood require- ments. Until recently, they were exploited through a selection felling system. However, with the rapid deforestation now taking place in Sri Lanka, consensus for environmental protection grew increasingly stronger. Lacking a sufficient data base for a selective action based on technical considera- tions, the Government, in 1977, stopped almost all exploitation of the forests in the rich Wet Zone. At present, most of the wood is supplied through clearfellings under the Mahaweli scheme and through salvage opera- tions of about 12,000 ha teak plantations damaged by the 1978 cyclone. The size of operations and the annual production target are determined by the need for land to be released for agricultural development under the Mahaweli scheme and the progress of the salvage operations rather than by timber demand. 30. The increased awareness of the rapid depletion of forest resources had recently led to a continuous increase in plantation targets. However, this trend was broken in 1981 when, due to budgetary constraints, only foreign aid assisted projects were allowed to continue. It appears now that the Government intends to maintain the plantation establishment program at a level of 10-12 thousand ha per year.  -10- Wood Supply and Demand 31. Total wood consumption in Sri Lanka is currently estimated at about 7 million m3. Of this total, about 6 million m3 or about 90% is for firewood and about 0.9 million m3 or 10% for industrial purposes. In addition to domestic production, Sri Lanka imported about 10,000 m3 of industrial plywood and about 3,000 m3 of industrial sawnwood annually between 1979 and 1931. At present, however, Sri Lanka is self-sufficient both in sawnwood and plywood, mainly as a result of reduced industrial demand and the temporary boost in log production from the Mahaweli scheme forest clearing and the salvage operations of cyclone-damaged teak plantations. As the latter tail off, imports of industrial wood are likely to resume by the mid-1980s to help meet a projected increase in demand of about 3% per annum through the 1990s. As regards firewood, it is estimated that the existing resources would be suffi- cient to meet consumption requirements for the next 20 years, although there would be a logistics problem due to the fact that the forests are located in sparesely populated areas of the country. Because the short term firewood resource position is good and in view of the short rotation of firewood plantations, which may be only 3 to 5 years compared to a minimum of 20 years for industrial woods, priority must now be given to the establishment of industrial plantations. Forest Industry 32. Sawmilling dominates the forest industry in Sri Lanka. About 90% of the mills belong to the private sector. Of the Government operated mills, nine sawmills are managed by the State Timber Corporation and two plywood mills by the Ceylon Plywood Corporation. The National Paper Corporation operates two pulp and paper mills. Sri Lanka's forest industry is old and has developed very little over the past decade, although it has been fairly profitable. The growing shortage of industrial wood, which has only tem- porarily been ameliorated by the Mahaweli and cyclone salvage operations, seems to be the reason for the lack of interest in new investment. Forestry Training 33. There is only one forestry training institute in the country which provides in-service training for forest guards. Its capacity is inadequate. Forest rangers and senior professional foresters have traditionally been trained in India. But, because of India's requirements to use its limited facilities to train its own nationals, access to Indian institutes has become increasingly difficult for foreigners. As a result, there is a serious shortage of forestry staff at all levels in Sri Lanka. USAID is presently providing assistance for the introduction of a two-year course for forest rangers at the institute. However, the forest guard training facilities also urgently needs rehabilitation and expansion. Government Plans and Objectives 34. According to the Public Investment Plan of 1982-86, the main long-term objectives of the forestry sector are: conservation, protection  -11l- and management of forests; reforestation of catchment areas; planting of fast-growing firewood species; and development of forest plantations to meet industrial and other requirements. To meet these objectives, staff training and the preparation of a long-term plan for forestry development with opera- tional goals are of the highest priority. External Assistance 35. The proposed project would be the first IDA assistance specifically for forestry. Previous IDA assistance to the forestry sector has been as small components of tree crop diversification and rehabilitation and rural development projects. UNDP/FAO are currently undertaking the preparation of a forest inventory which will be used in the preparation of the Master Plan under the proposed project. USAID, ADB, NORAD, and SIDA are financing firewood plantations. A Swiss Satellite Imagery Project is providing assis- tance for the preparation of a land use map which will provide an essential input for the proposed forest inventory exercise. PART IV - THE PROJECT 36. The proposed project was prepared by the Government with the assis- tance of consultants financed by UNDP. It was appraised by an IDA mission in April-May 1982. A timetable of key events relating to the project and spe- cial conditions of the proposed credit are given in Annex III. Negotiations were held in Washington from November 22 to November 24, 1982. The Sri Lanka delegation was headed by Mr. Nanda Abeywickrema, Secretary, Ministry of Lands and Land Development. A staff appraisal report entitled "Forest Resources Development Project (Forestry I)", (Report No. 4089-CE, dated December 17, 1982) is being distributed separately. Project Objectives and Description 37. The project aims at strengthening planning capability in the forestry sector, reducing manpower constraints through training, improving the manage- ment and development of plantations, and strengthening research and trial programs to improve sector productivity. It would consist of the following components: Master Plan. To remedy the lack of planning in the sector, the project would provide technical assistance for the preparation of a sector master plan. The project would finance the costs of foreign experts and local staff, vehicles and equipment needed for the preparation of the plan and the invest- ment program which would be coordinated by a Planning Unit to be established under the project within the Ministry of Lands and Land Development. The plan would define specific development targets for a period of 20 years. In addition, the plan would include a detailed operational investment program for the first five years. Its preparation would involve an institutional development study, forest inventory, preparation of forest management plans, assessment of non-forest wood resources, establishment of a data bank, and  -12- studies related to wood market and demand, forest industry, wood utilization, logging and transportation, and cost accounting. Forestry Training. The shortage of people with forestry training is probably the most serious constraint to the development of forest resources in Sri Lanka. The requirement of trained forestry staff by the year 2000 is estimated at about 200 professionals, and 613 technicians (foresters and forest rangers) compared to about 40 and 240, respectively, at present. The proposed project would help provide professional and forest guard training; the training of forest rangers is being provided under a USAID project (para 33). The professional training program for 12-15 students annually would be established at the University of Sri Jayewardenepura near Colombo. In addi- tion, some scholarships would be offered to train foresters in fields where no specialists are presently available in Sri Lanka. The University would prepare a training program for the scholarships by December 31, 1983 for IDA-s review (Section 3.07, DCA). Funds have also been included for short (4-6 weeks each) study tours abroad for professional forestry staff. GOSL would prepare a program for such tours by December 31, 1983 for IDA-s review (Section 3.07, DCA). The project would also strengthen training facilities to permit increasing the training of forest guards and rangers from 15 to 30, in total. In addition to the professional and technical training included under the project, considerable in-service training would be provided by the consultants in their respective fields. Plantations. Two general areas have been identified for industrial planta- tions under the project. One is in the Batticaloa and Amparai Districts and the other in the Moneragala and Hambantota Districts (see attached map). Forest protection, ground preparation trials and a socioeconomic study would be carried out in these areas. The climatic and soil conditions are known to be suitable for the species selected for the plantations. The project would establish about 8,000 ha of new industrial plantations. A soil and site survey under the project would provide the basis for site selection. About 75% of the plantings would be with Eucalyptus tereticornis and Eucalyptus citriodora. 15% would be with Albizia odorotissima, Azadirachta indica and Gmelina arborea on a pilot basis because of their promising performance in the Dry Zone. The remaining 10% would be Teak. While Eucalyptus teretcornis and citriodora grow well in the project areas, they are not optimal species for the production of construction grade lumber. During the life of the project, it is intended to develop technical packages which would make it possible in the future to increase the planting of species of proven sawlog quality such as Gmelina, Albizia, Azadiracta and conifers. About 10,000 ha of existing teak plantations would be upgraded mainly through thinning and about 15,000 ha of young stands of teak, pine and mahogany would be improved through applying appropriate silvicultural treatment, identified during the inventory, comprising combinations of clearing, singling and pruning. About 1,000 ha of overmature stands would be harvested and replanted. In addition, species and land clearance trials, and forest protection and socio-economic studies would be carried out to pave the way for future development.  -13- Project Implementation 38. The project would be implemented by three executing agencies over a six-year period, 1983-88. The Planning Unit of the Ministry of Lands and Land Development would be responsible for the Master Plan, the Forest Depart- ment for plantation activities and technical training, and the University of Sri Jayawardenepura for professional training. The Planning Unit and the Forest Department are under the Ministry of Lands while the University is under the Ministry of Higher Education. Overall project implementation and coordination would be the responsibility of the Ministry of Lands, with the Chief of the Planning Unit serving as the Project Director. The Forest Department and the University would each appoint a coordinator for their respective project components. There would be a Project Coordinating Commit- tee chaired by the Project Director. An Inter-ministerial Forestry Master Plan Steering Committee has been set up to permit the involvement of con- cerned agencies in the preparation of the Master Plan. This committee would be chaired by the Secretary of the Ministry of Lands (Section 3.10, DCA). Staffin-0 39. For project implementation, additional staff would be hired for the Planning Unit, the Forest Department and the University of Sri Jayawardenepura. The Planning Unit would require three professionals and the Project Director plus an accountant, an administrative officer and sup- port staff. A project and cost management accountant and an administrative officer would need to be recruited by the Forest Department. Although rely- ing mainly on existing staff and consultants, the University would need to recruit a course director and support staff for the new course. The Ministry of Lands and Land Development has informed IDA that essential staff positions for the Planning Unit, the Forest Department and the University of Sri Jayawardenepura had been included in the 1983 budget request. Because of their importance for project implementation, it is proposed that the follow- ing appointments be undertaken prior to credit effectiveness: appointment of the Project Director and the three professionals for the Planning Unit of the Ministry of Lands and Land Development, and appointment of the Project Coor- dinators for the Forest Department and the University (Section 6.01(b), DCA). Consultancy Services 40. Whenever possible the project would use local consultants and experts to complement project staff. However, in view of the shortage of trained staff in this sector in Sri Lanka, a considerable amount of technical assis- tance, estimated in total at 218 man-months, would be required for the three principal project components, i.e. 125 man-months for the Master Plan, 38 man-months for professional training, and 55 man-months for plantations. It was agreed during negotiations that a consulting firm would be engaged to provide the technical assistance services for the Master Plan and the planta- tion activities. The appointment of such a firm would be a condition of credit effectiveness (Section 6.01 (c), DCA). Technical assistance services for the professional training program would be in the form of visiting professors who would be recruited either individually or through an agreement with an academic institution qualified to provide the services.  -14- Monitoring and Evaluation 41. The Planning Unit would be responsible for monitoring overall project implementation based on information provided by the implementing agencies. Quarterly reports would be prepared and submitted to GOSL and IDA. The monitoring would focus on progress in civil works contracting and construc- tion, procurement of equipment and materials, and consultancy services. In addition, the University of Sri Jayawardenepura would collect and analyze information on various aspects of professional training, the Forest Depart- ment would collect data on plantation activities and technical training, and the Planning Unit would provide key indicators on the progress in the preparation of the Master Plan and the five-year investment program. Project Cost and Financing 42. The total cost of the project including duties and taxes (less than US$0.1 million equivalent) is estimated at US$15.03 million equivalent, of which US$4.7 million is foreign exchange. The cost estimates are based on mid-1982 prices. Physical contingency of 3.7% of base cost and price contin- gency of 59% of base cost are included. Price contingencies have been estimated assuming annual inflation of 20% in 1982 and 1983, 15% in 1984, 12% in 1985 and 10% in 1986 and thereafter for local costs; and 8% in 1982 and 1983, 7.5% in 1984, 7% in 1985 and 6% in 1986 and thereafter for foreign costs. 43. The proposed credit of US$9 million equivalent would finance about 60% of total project costs, including about US$6.33 million of local costs. FINNIDA would contribute a grant of about US$2.44 million equivalent (16%) to finance an estimated total of 168 man months of technical assistance at a cost of US$14,500 per man month for the Master Plan and plantations; and GOSL would contribute US$3.59 million (24%). Co-financing arrangements satisfac- tory to IDA would be a condition of credit effectiveness (Section 6.01 (a), DCA). In the event that FINNIDA's financing is not forthcoming, GOSL would provide alternative financing from either some other donor or its own resources. Procurement and Disbursement 44. Vehicles estimated at US$0.4 million would be procured through inter- national competitive bidding (ICB) in accordance with IDA guidelines. Con- tracts for other equipment and materials totalling US$0.9 million, but not exceeding US$30,000 individually, would be too small to be suitable for ICB and would therefore be procured through prudent shopping (comparing prices from no less than three independent foreign or local suppliers). Proprietary and specialized items, and seeds of special variety, estimated at a vaLue of US$0.2 million would be procured through direct purchase. Where applicable, local manufacturers would be given a preference margin of 15% on the c.i.f. price of internationally offered items, or the relevant import duty, whichever is lower. The civil works involved in the project are small and scattered, and would not interest international bidders. Contracts for these  -15- civil works (US$0.8 million in total) would be awarded on the basis of com- petitive bidding advertized locally according to local procedures satisfac- tory to IDA. Plantation activities (US$6.5 million) would be carried out either under Forest Department force accounts or under contracts let through competitive bidding advertised locally according to Government procedures satisfactory to IDA. Consultant services to be financed by IDA (about US$1.1 million) would be procured in accordance with IDA's guidelines; the services to be financed by FINNIDA (about US$2.4 million) would be procured following FINNIDA's procedures. The experience and capability of the consultants to be employed and their terms and conditions shall be satisfactory to IDA. The balance of project costs would involve scholarships (US$0.2 million), operat- ing costs (US$1.2 million), and salaries (US$1.3 million). 45. Disbursement of the US$9 million credit would take place over a period of seven years against the following items: (a) 100% of foreign expenditure on directly imported vehicles, equip- ment, furniture, books and materials (including plantation inputs) or 100% of ex-factory costs if locally manufactured or 85% of expenditures if procured locally (US$1.4 million); (b) 100% of expenditure on technical assistance, consultants and training abroad (US$1.2 million); (c) 90% of expenditures on civil works construction under the project (US$0.7 million); and (d) 90% of expenditures on plantation establishment and management, and on research and trial plots (US$5.7 million). Project Benefits and Risks 46. The direct quantifiable benefits of the project would be an increase in wood production estimated at 7.3 million m3 over the rotation period (20 years) of plantations established or upgraded under the project. This is equivalent to an increase in the annual wood supply of about 320,000 m3. The market value of the total incremental output due to the project would be about US$420 million in 1982 prices, representing about US$18 million per annum over the rotation period of the crops and an equal amount in foreign exchange savings. The project would also create about 2.7 million man-days of employment for rural families in the project area over the five-year planting period, generating an aggregate income of about US$3.2 million equivalent. Based on four months work during the monsoon, this would provide employment for about 5,000 laborers during the five-year period. The techni- cal assistance program would help transfer the latest forestry technology to Sri Lanka and strengthen the planning machinery for the sector. Domestic training for professional staff is expected to save foreign exchange totall- ing US$450,000 annually. The project would also have a positive environmen- tal impact, e.g. in terms of helping prevent soil erosion. 47. The economic rate of return has been estimated at 20% for the industrial plantations which is the biggest component (42% of project costs).  -16- No attempt has been made to calculate the economic rate of return for planta- tion management activities (18% of project costs) due to the speculative nature of the results. However, the rate of return of these activities would be much higher than for the industrial plantations. The remainder of project costs (40%) are for training, research and technical assistance and have, therefore, not been included in the rate of return calculations. The sen- sitivity analysis shows that the rate of return would not fall below the opportunity cost of capital in Sri Lanka (12%) even if charged with the total project cost or under such unlikely conditions as a 10-year lag in benefits. 48. The project faces no major risks. No particular difficulty is anticipated in finding markets for the increased wood production due to the project. The immediate production would find a market either substituting for imports or supplying building poles, transmission poles or fuelwood. The existing well-developed marketing organizations of the Timber Corporation and the private sector would be able to handle it. The future output from thin- nings and final harvesting in 20-years time of the bulk of plantations that would be established under the project would fill only part of a projected future wood deficit. A wood utilization consultant under the project would provide advice on the utilization of plantation grown woods, particularly on the use of eucalyptus which has not yet been used for timber in Sri Lanka, but which is used elsewhere, e.g. in South Africa and Zambia. The provision of technical assistance and funds for weeding would help ensure improvement in the quality of plantations under the project. The provision of fire protection, the planting of teak outside normal feeding areas and migrating routes of elephants and the provision of guards for young plantations should minimize the risk of damage by fire or animals. PART V - LEGAL INSTRUMENTS AND AUTHORITY 49. The draft Development Credit Agreement between the Republic of Sri Lanka and the Association, and the Recommendation of the Comaittee provided for in Article V, Section l(d) of the Articles of Agreement are being dis- tributed to the Executive Directors separately. 50. Special conditions of the credit are listed in Section III of Annex III. Additional conditions of credit effectiveness would be that: (a) co-financing arrangements are satisfactory to IDA (para 43); (b) the Project Director and the three professional staff for the Planning Unit have been appointed (para 39); (c) the Project Coordinators for the Forest Department and the University have been appointed (para 39); and (d) a consulting firm has been appointed for the Master Plan and plantation activities (para 40). 51. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association.  -17- PART VI - RECOMMENDATION 52. I recommend that the Executive Directors approve the proposed credit. A. W. Clausen President By E, Stern Attachments Date: December 29, 1982 p  -18- Annex I Page I TABLE 3A SRI LANKA - SOCIAL INDICATORS DATA SHEET SRI LANKA REFERENCE GROUPS (WEIGHTED AVERAGES AREA (THOUSAND SQ. KM.) - MOST RECENT ESTIIATE)- TOTAL 65.6 MOST RECENT LOW INCOME MIDDLE INCOME AGRICULTURAL 25.8 1960 /b 1970 /b ESTIMATE /b ASIA & PACIFIC ASIA & PACIFIC GNP PER CAPITA (US5) 60.0 100.0 270.0 261.4 890.1 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 109.6 135.9 135.4 448.7 701.7 POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (THOUSANDS) 9889.0 12514.0 14675.0 URBAN POPULATION (PERCENT OF TOTAL) 17.9 21.9 26.6 17.3 32.4 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 21.1 STATIONARY POPULATION (HILLIONS) 31.1 YEAR STATIONARY POPULATION IS REACHED 2070 POPULATION DENSITY PER SQ. KM. 150.7 190.7 220.0 158.1 255.4 PER SQ. KM. AGRICULTURAL LAND 507.1 517.5 559.4 355.9 1748.0 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 42.1 41.9 36.3 36.8 39.9 15-64 YRS. 54.3 54.5 59.6 59.7 56.8 65 YRS. AND ABOVE 3.6 3.6 4.2 3.5 3.3 POPULATION GROWTH RATE (PERCENT) TOTAL 2.5 2.4 1.6 2.0 2.3 URBAN 4.7 4.3 3.6 3.3 3.9 CRUDE BIRTH RATE (PER THOUSAND) 35.7 30.1 27.6 29.3 31.8 CRUDE DEATH RATE (PER THOUSAND) 9.2 6.9 7.3 11.0 9.8 GROSS REPRODUCTION RATE 2.6 2.2 1.8 2.0 2.0 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. 55.3 113.0/c USERS (PERCENT OF MARRIED WOMEN) .. 8.2 41.0o1 19.3 36.3 FOoD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 93.0 103.0 122.0 108.1 115.6 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 102.0 108.3 96.7/d 97.3 106.4 PROTEINS (GRAMS PER DAY) 46.0 47.1 43.37i 56.9 54.4 OF WHICH ANIMAL AND PULSE 13.1 11.8 7.57;d 20.0 13.9 CHILD (AGES 1-4) MORTALITY RATE 7.1 5.1 3.2 10.9 6.7 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 62.0 63.6 65.7 57.8 59.8 INFANT MORTALITY RATE (PER THOUSAND) 70.6 58.5 44.2 89.1 63.7 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL * 21.0 20.O/c 32.9 32.0 URBAN .. 46.0 45.07 70.7 51.9 RURAL .. 14.0 13.077 22.2 20.5 ACCESS TO EXCRETA DISPOSAL (PERCENT OP POPULATION) TOTAL .. 64.0 59.0/e 18.1 37.7 URBAN .. 76.0 68.071 72.7 65.7 RURAL .. 61.0 55. 7oT 4.7 24.0 POPULATION PER PHYSICIAN 4493.0 5958.5 6700.1 3297.8 8540.4 POPULATION PER NURSING PERSON 4169.0/f 2258.0 2039.3 14929.3 4829.4 POPULATION PER HOSPITAL BED TOTAL 318.6 331.5 340.7 1100.4 1047.5 URBAN 100.9/f 216.0 .. 301.3 651.6 RURAL 1063.877 563.4 .. 5815.7 2597.6 ADMISSIONS PER HOSPITAL BED .. 54.4 51.3'S .. 27.0 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL 5.4/h 5.8 URBAN 6.37h 6.3 RURAL 5.2i/h 5.5 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL 2.0/h 2.5 URBAN 2 .1I/h 2.7 RURAL 2.07K 2.5 ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL 7.5/h 9.0 URBAN 35.971i 34.5 RURAL 2. 3711 3.0  -19- Annex I Page 2 TABLE 3A SRI LANKA - SOCIAL INDICATORS DATA SHEET SRI LANKA REFERENCE GROUPS (WEIGHTED AVERAGES - 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 95.0 99.0 98.0 97.4 96.2 MALE 100.0 104.0 .. 101.0 99.8 FEMALE 90.0 94.0 .. 87.8 92.1 SECONDARY: TOTAL 27.0 47.0 53.0 53.0 37.6 MALE 38.0 46.0 65.0 63.8 41.1 FEMALE 16.0 48.0 41.0 41.3 34.1 VOCATIONAL ENROL. (D OF SECONDARY) .. 0.4 0.4/c 1.7 20.8 PUPIL-TEACHER RATIO PRIMARY 31.0 16.4 32.2 37.7 35.5 SECONDARY .. .. .. 20.2 25.0 ADULT LITERACY RATE (PERCENT) 75.0 If 77.6 85.0 52.1 73.1 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 8.4 7.0 6.8/c 1.5 9.8 RADIO RECEIVERS PER THOUSAND POPULATION 35.8 40.0 48.5 35.4 116.5 TV RECEIVERS PER THOUSAND POPULATION .. .. .. 3.2 37.6 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 36.0 48.9 *- 16.4 53.7 CINEMA ANNUAL ATTENDANCE PER CAPITA 3.0/i 7.8 4.8 3.6 2.8 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 3390.8 4186.9 5066.5 FEMALE (PERCENT) 22.6 23.7 24.7 29.5 33.6 AGRICULTURE (PERCENT) 56.0 55.0 54.0 70.0 52.2 INDUSTRY (PERCENT) 14.0 14.0 14.0 15.0 17.9 PARTICIPATION RATE (PERCENT) TOTAL 34.3 33.5 34.5 40.0 38.5 MALE 50.8 49.1 50.9 51.8 50.5 FEMALE 16.2 16.5 17.4 23.8 26.6 ECONOMIC DEPENDENCY RATIO 1.3 1.4 1.2 1.0 1.1 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECElVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS 26.4/h 18.2 18.6/g HIGHEST 20 PERCENT OF HOUSEHOLDS 52.171; 43.4 42.8/7 LOWEST 20 PERCENT OF HOUSEHOLDS 4.571; 7.5 7.37.- LOWEST 40 PERCENT OF HOUSEHOLDS 13.7/h 19.2 19.3 *- POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URRAN .. .. .. 133.8 194.7 RURAL .. .. .. 111.5 155.1 ESTIMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. .. .. 178.2 RURAL .. .. .. .. 164.9 ESTIMATED POPULATION BELOW POVERTY INCOME LEVEL (PERCENT) URBAN .. .. .. 43.8 24.4 RURAL .. .. .. 51.7 41.1 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. /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 1978 and 1980. /c 1976; /d 1977; /e 1975; /f 1962; /I 1973; /h 1963; /i 1958. May, 1982  - - 0.000, 0 00 00 - .0 0 0 -, 0 '0 .0.  A 00. ,0>ag000.00 .04.0.040.0 00.00.0000 000 . 0000000000000 0000000. .0000000 00 1