Bolivia - Major Cities Water and Sewerage Rehabilitation Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-5280-BO MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 25.2 MILLION TO THE REPUBLIC OF BOLIVIA FOR THE MAJOR CITIES WATER AND SEWERAGE REHABILITATION PROJECT November 6, 1990 Country Department III Infrastructure and Energy Operations Division Latin America and the Caribbean Region This document has a restricted distribution and may be used by recipients only In the performance of their oclal duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Currency Unit = Boliviano (B$) US$1 B$3.1 B$1 US$0.32 US$ SDR 0.72 SDR = US$1.39 WEIGHTS AND MEASURES Km Kilometer (0.62 miles) 1 Liter (0.2642 U.S. gallons) m3 = Cubic meter (264.2 U.S. gallons) Ha = Hectare (2.5 acres) ABBREVIATIONS AND ACRONYMS CORPAGUAS = Corporation of Water and Sanitation (Corporacion de Agua y Saneamiento) FNDR National Fund for Regional Development (Fondo Nacional de Desarrollo Regional) IDB Interamerican Development Bank KfW = Kreditanstalt fur Wiederaufbau (German Assistance Agency) MH Ministry of Health (Ministerio de Provision Social y Salud) MPC = Ministry of Planning and Coordination (Ministerio de Planeamiento y Coordinaci6n) MUA = Ministry of Urban Affairs (Ministerio de Asuntos Urbanos) SAGUAPAC = Santa Cruz Public Services Cooperative (Cooperativa de Servicios Piblicos Santa Cruz Limitada) SAMAPA = La Paz Municipal Water and Sewerage Services Company (Servicio Autonomo Municipal de Agua Potable y Alcantarillado de la Paz) SEMAPA = Cochabamba Municipal Water and Sewerage Services Company (Servicio Autonamo Municipal de Agua Potable y Alcantarillado de Cochabamba) FISCAL YEAR January 1 - December 31 FOR OFFICIAL USE ONLY BOLIVIA MAJOR CITIES WATER AND SEWERAGE REHABILITATION PROJECT CREDIT AND PROJECT SUMARY Borrower: Republic of Bolivia. Intermediary Agogy National Fund for Regional Development (FNDR). Beneficiaries: Servicio Autonomo Municipal de Agua Potable y Alcantarillado de la Paz (SAMAPA), Cooperativa de Servicios Pblicos Santa Crus Limitada (SAGUAPAC) and Servicio Municipal de Agua Potable y Alcantarillado de Cochabamba (SEMAPA). Amount: SDR 25.2 million (US$35 million equivalent). Terms: Standard IDA, with 40-years maturity. Onlending Terms: The Government will on-lend to FNDR and FNDR in turn will relend to the beneficiaries US$33.7 million equivalent to be repaid in 20 years with five years of grace. The Government will charge FNDR a rate one and a half percentage points below the LIBOR rate; FNDR will charge the beneficiaries the LIBOR rate plus one percentage point. The Government will bear the SDR-US Dollar exchange risk; the beneficiaries will bear the US Dollar-Boliviano risk. Financins Plant Beneficiary utilities US$ 14.0 million KfW 8.0 IDA 35.0 Total US$ 57.0 million Economic Rate of Return: 121 with tariff revenues as a proxy for benefits. Staff Appraisal Report: No. 8479-B0 Map: IBRD 22438 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. MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF BOLIVIA FOR A WATER SUPPIY AND SEWERAGE REHABILITATION PROJECT FOR THE MAJOR CITIES OF BOLIVIA The following memorandum and recommendation on a proposed development credit to the Republic of Bolivia for SDR 25.2 million (US$35 million equivalent) is submitted for approval. Part I of the document discusses Bolivia's development problems and prospects, the key priorities of the economic reform program at th-t macroeconomic and sector levels, :Ind the Bank Group's assistance strategy. It draws upon the third Policy Framework Paper covering the period 1988 to 1992, which was consid;.red by the Committee of the Whole on October 23, 1989. Part II of the document describes the proposed credit. I. COUNTRY POLICIES AND BANK GROUP ASSISTANCE STRATEGY Introduction 1.01 Bolivia faces a particularly difficult set of development challenges. Its difficult terrain and landlocked position result in high transport costs and higher costs for its goods, both internally and externally. Endemic political instability had made Bolivia virtually incapable of sustaining development policies and strategies for long. Annual population growth rates of 2.8% have been too high and economic growth too low for sustained improvements in living standards. As a result, Bolivia is one of the poorest countries in Latin America; its 6.8 million inhabitants are poorly educated (functional illiteracy at 50%); its health indicators are among the worst in the continent (infant mortality at 117 per 1000); a large proportion of its population faces poverty (801 of the population earn less than 701 of income required to cover a basic needs basket); and it has extremely poor infrastructural and social services (e.g. only 30% of the urban population is connected to a sewerage system and only 15% of rural population has latrines). About one-half of the economically active population is employed in agriculture, primarily on the highlands of the altiplano where subsistence farming predominates. The investment climate, while improving, remains highly uncertain particularly due to continued dominance of the state in the mineral, hydrocarbons and energy sectors. The economy continues to rely heavily on a few export commodities in hydrocarbon and mining sectors for growth, making it vulnerable to external market fluctuations. 1.02 Bolivia, however, has important assets and advantages which offer hope for its future growth and development. It has abundant supplies of hydrocarbons, primarily gas; minerals such as tin, silver, gold and tungsten; and extensive forests and fertile land for agriculture and livestock production in the eastern lowlands. These resources have not been fully explored or exploited. Bolivia now has direct access to the sea via the Paraguay River, opening the possibility of reducing transport costs -2- for its importlexport goods. While human resources are limited in terms of formal education, a small but well-educated cadre of managers, professionals and technocrats in the public and private sectors are well able to provide responsible and skilled leadership. The efficiency of Bolivia's labor force and peasant farmers is constrained by technological and other factors which could be overcome with investment and good management. The Adlustment Process 1.03 Following several years of declining output, culminating in hyperinflation of over 24,000% in annual terms, the Government in late 1985 launched its New Economic Policy which stopped the hyperinflation and undertook a long-term adjustment program to reduce the role of the state and rebuild a free market economy. The exchange rate was freed and set through an auction system, which resulted in an immediate devaluation of the official rate by 93%; strict budgetary controls were introduced to keep expenditures to the levels of revenues; most price controls were eliminated and specific prices and tariffs increased to bring them close to international levels (for gasoline, electricity, and transport). Far- reaching reform of the tax system reduced the basic tax categories from 400 to nine; trade restrictions were drastically eased, including elimination of most quantitative trade restrictions and reduction of tariff rates; and steps were taken to reorganize some public enterprises and abolish or reduce others (COMIBOL - state mining company - was reduced in size by the termination of 23,000 workers). The financial system was liberalized, removing regulatory constraints on financial transactions and freeing the determination of interest rates. An important start was made to improve public sector administration by establishing the Financial Administration and Control System (SAFCO) for monitoring public expenditures and better data systems for planning and monitoring public investment. In early 1987, the Government launched an ambitious program to alleviate the impact of the economic crisis on the poorest groups through the Emergency Social Fund, which supports small sub-projects to generate productive employment and social assistance efforts (e.g. maternal health care and school feeding). The Government sustained the adjustment program in the face of the collapse of the international tin price in 1985/86 and difficulties caused . delays in payment by Argentina for Bolivian gas shipments. 1.04 The new policy stance succeeded quickly in restoring macroeconomic stability. Immediately following introduction of the NEP, inflation fell dramatically and has generally remained between 10% and 20%. However, resumption of economic growth has been slow. GDP grew for the first time in six years in 1987, albeit at only 2.1%, and by an average of 2.8% in 1988-89. 1.05 Despite the remarkable achievements of the former administration, the new Government which took office in August 1989 faced some initial financial difficulties. Uncertainty over the outcome of the electoral process had reduced bank deposits and reserves. Slowness in adjusting public sector prices and the exchange rate, plus the arrears in Argentina's payments for Bolivian gas, led to some deterioration in fiscal performance. The new Government took decisive actions to raise public sector prices, depreciate the boliviano and reject demands for unrealistic increases in public sector wages. These measures along with the Degree 22407, which - 3 - confirmed the Government'i commitment to the present structure of economic incentives, encouraged a recovery of public confidence. The new Government also made substantial progress in its negotiations with the international financial community, including agreement with the IMF over the second year of the Enhanced Structural Adjustment Facility (ESAF), elimination of Bolivia's debt to Argentina in return for cancelling Argentina's arrears on gas payments, further progress in retiring Bolivia's commercial bank debt, establishing a mechanism for retiring a portion of Bolivia's debt with Brazil, and the receipt of a highly-concessional debt rescheduling agreement from the Paris Club, including the so-called Toronto terms (the first country outside of Sub-Saharan Africa to receive the Toronto terms). As a result Bolivia's public debt by end-1989 was US$3.7 billion, down US$700 million from end-1987. 1.06 To summarize, the Government has maintained macroeconomic stability through tight control of expenditures, tax reform, realistic public sector prices and a market termination of the exchange rate. At the same time, the adjustment program has achicved a comprehensive liberalization of markets, including rules governing trade, wages, employment, interest rates, and capital flow. Although these changes have brought about economic stability and provide a solid foundation from which growth is possible, further effort is required in the areas of (i) creating a more attractive environment for private investment; (ii) continued reduction of Government involvement in the productive sector; (iii) continued reorientation of public sector involvement towards basic infrastructure and social services; and (iv) increased effort in alleviating poverty. BOLIVIA - Basic Economic Indicators Growth Rates (% per annum) 1965-73 1979-80 1980-88 1988 1989 Gross Domestic Product 4.4 3.8 -1.5 2.8 2.7 Total Consumption 3.9 4.1 -1.1 -2.9 1.9 Gross Domestic Investment 6.9 -0.5 -6.6 -6.1 15.9 Exports 4.3 -0.1 -1.2 11.6 7.9 Imports 4.0 0.0 -0.9 -12.3 7.6 Inflation (Consumer Price) 1/ 6.8 16.2 486.8 16.0 15.0 Population 2.4 2.6 2.7 2.8 2.8 1/ period coverage. Medium-Term Strategic Framework 1.07 Since 1986 the Bank, together with IMF, has carried out an intensive policy dialogue with the Government on the design and implementation of the adjustment process. The specific policy measures and strategies were set out in a Policy Framework Paper (PFP) for 1987-89, and have been reaffirmed in second and third PFPs which, in turn have received the support of the Bank through adjustment and investment credits, and the IMF through the ESAF. The economic program adopted by the present Government for the period 1990-92 (the third PFP) aims to consolidate stabilization, to accelerate GDP growth, and to eliminate the worst forms of poverty. Specific targets of the program include (i) GDP growth of - 4 - about 4-5% per annum; (ii) a reduction in inflation to the level in industrial countries; (iii) a fall in overall deficit of the nonfinancial public sector to about 3% of GDP; (iv) an incriase in the level of public savings from 1.1% of GDP in 1989 to about 4.0%; and (v) a monetary and foreign exchange policy aimed at maintaining competitiveness. 1.08 To resume an acceptable rate of economic growth, the Government fully appreciates the additional reforms that need to be undertaken. First, as a prerequisite to growth, macroeconomic stability must be maintained through a flexible exchange rate policy, continued reduction in the fiscal deficit and prudent external debt management. Second, to resume growth, further structural reforms are required to increase investments in the productive sectors by fine-tuning the incentive system for the private sector, and reduction of the role of the state in the productive sectors through privatization. Thirt to improve the efficiency of the Government and to reorient the role of tae state, further improvement is required in public sector administration at a global level, and in sectoral policy administration at the micro level. Fourth, to cr3ate the human capital base for sustained long-term growth, particular attention must be paid to poverty alleviation. 1.09 Macroeconomic Stabilization. Continued maintenance of macroeconomic stability is a prerequisite to an xproved investment environment and hence for growth. Specificall- the present flexible exchange rate policy, which operates through e .y exchange auctions at the Central Bank with unrestricted access, must be intained. Second, the Government must maintain its fiscal and budgetary discipline through limiting the nonfinancial public sector deficit to amounts that could be financed entirely with external sources (the PF!' targets are 5.0% of GDP for 1989 - which was met - and 3.3% from 1990 to :992). Considerable effort has been made in increasing revenues. Through simplification of the tax regime and improved enforcement for tax collection, the Government has succeeded in increasing the tax revenues by over 330% from the level of 1986. The Government intends to make further improvements through fine- tuning the tax system to focus on high revenue potential (such as VAT), improved enforcement mechanisms against delinquent tax payers, further institutional strengthening and reform of the customs administration. On the budgetary reforms, the Government has undertaken to introduce program based budgeting as the main instrument of budget formulation and has introduced a quota system for budget execution. A third area of importance is external debt management. The Government has made substantial progress in this area (para. 1.05), but further effort is required to retire the remaining commercial debt of US$210 million and to refrain from further borrowing on commercial terms. 1.10 Structural Reforms. As the current situation in Bolivia demonstrates, macroeconomic stability, in itself, does not constitute a sufficient basis for sustained growth. As clearly pointed out in the third PFP, there are structural impediments which discourage longer term investments by the private sector. The specific requirements are (i) implementing a legal framework supportive of private investment; (ii) streamlining export procedures and reforming the customs service; (iii) reforming and strengthening the fragile financial sector; and (iv) privatizing or restructuring public enterprises. - 5 - 1.11 In terms of the legal framework, a number of legislative proposals have been prepared which greatly improve the incentives for private Investment. The investment, mining, and banking laws were recently approved by the Congress, with the hydrocarbon law awaiting passage. Many of the provisions included in these laws are already in force and should provide more assurance of stability in the policy regime, encouraging increased in-flow of private investment capital. In terms of the financial sector reform, the Government has undertaken an extensive restructuring of the banking system to assist its recovery: interest rates were freed; the Central Bank was reorganized; and an independent Banking Superintendency was created to strengthen supervision, tighten banking regulation and making auditing of banks mandatory. Despite these re!orms, the banking sector continues to show serious problems, including: (i) high interest rate (22% in dollar terms); (ii) heavy losses by the public sector banks; and (iii) weak financial position of some of the commercial banks. These factors have resulted in widespread misallocation of credit. To alleviate this situation, the Government intends to deepen the reforms in the sector through liquidation or privatization of public sectir banks and non- performing commercial banks, increasing capital requirements, developing non-bank financial institutions to increase competition, and remove various impediments to capital market development. 1.12 In the area of trade policies, the Government has implemented radical reforms including the elimination of nearly all quantitative restrictions on imports, a drastic reduction of tariff rates, and removal of controls on foreign exchange transactions. While the new policy regime is a dramatic improvement over the previous highly distorted incentive structure, further work is necessary to make the current regime more functional. In particular, export procedures need to be simplified, subsidies to non-traditional exporters need to be replaced by a more transparent scheme such as a duty drawback or temporary admission scheme, and the customs administration needs to be reformed to minimise corruption and leakages and to raise tax receipts. Public enterprise reform is also an area of particular concern where the state enterprises continue to dominate the productive sectors and where the pace of reform has significantly slackened. Initial work on the privatization of state enterprises was undertaken by the previous administration. However, the legislation authorizing the program was not passed by Congress, and the effort was abandoned. The Government intends to renew its effort in this area. 1.13 Reorientation of State Role - Public Sector Administration. In parallel to the effort to encourage private sector participation, improving the efficiency and effectiveness of public administration is also a critical area. The Government, thus far, has taken measu,:es to (i) improve basic financial management systems in key ministries and public entities under the SAFCO program; (ii) improve and strengthen the public investment planning and monitoring system; (iii) engage procurement agents as an interim solution to the cumbersome public procurement procedures; and (iv) revise the public service employment compensation policies. These measures have helped to reduce expenditures, improve the control of public sector funds, and generally improve the efficiency of the public sector administration. The recent passage of the SAFCO law has been instrumental in providing the legal foundation for a number of these measures. Continued effort, however, will be required to consolidate the progress; including increased level and quality of the public investment program, - 6 - quicker disbursement administration, improved investment programming particularly at the sectoral levels, and extension of the SAFCO reforms to local governments and the judiciary system. 1.14 Reorientation of State Role - Sectoral Policy Reform and Investment. In the context of a development strategy which relies heavily unon a dominant role played by the private sector, establishment of a balanced development strategy and appropriate policies at the sectoral level are critical. Primary concern of the Government is (i) to shift the relative importance of key export sectors, away from the historical dominance of hydrocarbons and mining (hydrocarbons alone constitutes 312 of foreign exchange earnings and 442 of Government revenues); (ii) to improve the performance of remaining public sector enterpr-.ses through performance contracts; and (iii) to improve the basic infrastructural services to parallel the productive investments of the private sector. The agricultural sector, though offering potential for increased growth, faces significant obstacles. The key constraints include inadequate infrastructure, confused land tenure situation, low levels of investment, weak institutions, and lack of appropriate research. These problems are compounded by the difficult agronomic conditions of the Altiplano, where the majority of the farming population resides, and the ack of population in the fertile lowlands where the greatest potential for agriculture lies. The Government is also aware that the lowlands are ecologically fragile (as ir the Amazon basin of Brazil) and a forward looking environmental protection strategy is required to properly develop the area. Given that Bolivia historically has not emphasized the development of the agricultural sector, much basic work is required not only to establish the environment for private sector investment, but also to improve the administrative apparatus of the Government in this sector. 1.15 Adequacy of the infrastructure sector (water, sewerage, power and transportation services) heavily influences the productive potential of private investment and the functioning of the economy as a whole. In terms of power generation and distribution where a healthy mix of private and public sector involvement has maintained a reasonable quality of service, the Government strategy emphasizes a continued shift towards private ownership of generation and distribution activities, maintenance of a rational tariff policy, and improvement in its policy management. The Government is also devoting particular attention to the export of electricity to Brazil using Bolivian natural gas. This undertaking (a US$610 million project) is forecast to generate about US$130 million in foreign exchange revenues annually. Due to its landlocked position and the mountainous terrain, the internal end external transport cost for Bolivia is much higher than in other countries. The Government's strategy has focused on upgrading existing infrastructure that serves relatively productive areas. Over the next few years, the Government aims to further reduce the transport costs by emphasizing improvements in railway operations; simplification of customs, freight forwarding and export procedures; increased private sector involvement in cargo handling; and improved efficiency in road maintenance activities. The availability of water and sanitation services in Bolivia is among tl,e lowest in the Western hemisphere. As supported by this proposed project, -:.e Government aims to improve the provision of services through (i) introuuction of a consistent financial performance framework to improve cost recovery and to permit an expansion of services; and (ii) decentralization of management to municipal and departmental levels and elimination of overlapping sectoral -7- responsibilities to enhance the efficiency of services and to Improve investment planning. 1.16 Poverty Alleviation. Bolivia's social and poverty indicators are amongst the worst in the Western hemisphere. Poor health services have led to infant mortality and maternal mortality being twice the regional average, malnutrition is widespread, illiteracy rate is high, and access to water and sanitation services, as mentioned above, is extremely poor. The Government attaches high priority to improving social conditions in the country and has started a number of initiatives to both improve the efficiency of existing services and to expand the coverage of public services to the poor (e.g. Social Investment Fund and initial review of the Social Security system). In the health sector the Government intends to focus on the most critical problems caused by the very limited coverage of health care services, and the poor management and ineffective coordination of the Ministry of Health. Particular attention is being paid to coordinating and supporting the role of NGOs which have played an important role in providing health care services. The problem of illiteracy in Bolivia is related not only to limited coverage of the population, but also to significant internal inefficiencies in the education sector. To overcome the worst of the inefficiencies, the Governmert is in the process of devising a plan for education sector reform which emphasizes reallocation of resources from higher education to basic levels, rationalization of expenditures through elimination of "ghost" teachers and increasing the level of student-teacher ratio from its current 17:1 ratio, implementation of a decentralization plan, and closer coordination with, and encouragement of, NGOs active in education. Bank Group Operations 1.17 The Bank has p.ayed and will continue to play an important role in the design and implementation of Bolivia's economic reform program and in the mobilization of reeded financial resources to support the program. The PFP, prepared annually by the Government, the Bank, and the IMF, establishes an appropriate policy umbrella for Bank adjustment and investment operations. The Bank's basic strategy has been to support the objectives of the Government's economic adjustment effort by: (I) carrying out analyses of macroeconomic, structural and sectoral reform programs through economic and sector work; (ii) designing and implementing a lending program through both adjustment operations and investment lending to increase economic growth and strengthen the performance of the public sector; (iii) initiating the development of a longer term strategy for capacity building and poverty alleviation; (iv) improving aid coordination to ensure adequate overall funding for Bolivia's economic program; and (v) improving the delivery of technical assistance to key institutions. 1.18 Composition of Lending Operations through FY90. Total lending from the World Bank Group as of June 30, 1590 stands at US$838.2 million, consisting of 16 loans for US$274.8 million and 33 credits (including two IDA-reflows of US$20.4 million) totalling US$563.4 million. The 16 loans are fully disbursed; 17 credits (including one of the two IDA-reflow credits) have also been fully disbursed. The remaining 16 have US$210.2 million undisbursed as of June 30, 1990. Bolivia has repaid the Bank US$143.3 million and has a total outstanding IBRD debt of US$141.0 million and IDA debt of US$557.1 million. -8- 1.19 Although the Bank Group has been involved in Bolivia since 1964, no new loans were made between 1980-1985 due to poor economic management and lack of creditworthiness. Lending operations were resumed in FY86. Total lending between FY86 and FY90 was US$436.2 million, including three policy-based operations and two Institutional development operations to strengthen public sector management. A summary of operations since FY86 Is given in Table 1. Table 1 Bolivias Distribution of Lending F86-90 * (US$ million) Se2o Amount 2 No. of Projects Agricultures 35.1 8 1 Industry and Finances 16.5 4 1 Transport and Energy: 96.2 22 4 Transport 37.5 9 1 Gas 16.7 4 1 Power 6.9 1 1 Mining 35.1 8 1 Population and Human Resourcess 102.6 24 6 Employment Generation 44.9 10 2 Health 20.8 5 1 Urban 15.4 4 1 Institutional Development 21.5 5 2 Reconstruction Import Credits 109.4 24 3 Adjustment Operations 76.4 18 1 TOTAL 436.2 100 16 * Prior to FY86, 16 loans (US$274.8 million) and 17 credits (US$127.1 million) had been fully disbursed. 1.20 The Bank's recent assistance to Bolivia is focusing on several of the key priorities of the Government's development strategys Macroeconomic Stabilization and Structural Reforms: The Financial Sector Adjustment Credit (FY88) is helping to strengthen Bolivia's banking system by improving banking regulations and supervision; the Mining Sector Rehabilitation Project (FT89) is promoting new private mining investment, supporting the rehabilitation of the state mining company (COMIBOL), strengthening key mining sector institutionsg and assisting the Government in dealing with mining environmental issues; the Private Enterprise Development (PY90) operation will help small and medium industrial enterprises improve their access to the formal credit system and strengthen their marketing, accounting and management skills; - 9 - Public Sector Administration: The Public Financial Naagement Operation (FY88) is designed to strengthen financial management through reform of the tax administration, restructuring of the central bank, and changes in the financial administration and control system over the public entities; the Economic Management Strengthening Operation (FY89) is supporting needed improvements in the management of the public investment program, advancing the process of decentralization, increasing the coverage and quality of statistics, and beginning a pilot program for improving public sector management and eventually reforming the civil service; Sectoral Policy Administration: The Export Corridors (FY89) operation aims to improve Bolivia's railway and road infrastructure, making them more efficient and reliable for developing exports; regional development of the Eastern Lowlands (FY90) will take place through the development of commercial export agriculture in eastern Bolivia and developing a plan for the rational and sustainable development of its renewable natural resources; Poverty Alleviation: The Integrated Health Development (M90) Operation supports improvements in the delivery of health services, institutional strengthening, and training; the Social Investment Fund (FY90) Operation will assist the Government in financing social development projects, building on the successful experience of the Emergency Social Fund. 1.21 Future Co"ntry Lending Operations. The overall level and pace of Bank assistance for Bolivia will take into account the progress made in the implementation of the PFP. The planned lending for the FY91-94 period is expected to be about two to three operations annually. Macroeconomic Stabilization and Structural Reforms: The center piece of IDA lending operations will be the proposed Structural Adjustment Credit which will assist the Government in implementing the next phase of structural reforms (para 1.13-1.16), particularly in the areas of strengthening the financial sector and restructuring/privatizing public enterprises; Public Sector Reform and Investment. The proposed Public Financial Management II will support further improvements in public financial management throegh continued reforms in budgeting, treasury, public credit and accounting. This operation will be vital to the implementation of the SAFCO Law and instrumental in rationalizing the public sector, improving the efficiency of public enterprises and in ensuring improved public investment through greater accountability; Sectoral Policy Administration: The agricultural sector will be supported by two operations- the Agricultural Technology Development Project to improve the research and development capacity in the sector with a view to improving the productivity of farmers in the poverty stricken highlands of Altiplano, and an Agro-Export Development Project to promote increased production and exports of non-traditional products. The hydrocarbons sector will be supported by the proposed Bolivia-Brazil Gaa/Power - 10 - Pipeline Project which aims to develop the facilities necessary for export of electricity to Brazil (enclave IBRD loan). The transport sector will be supported by the proposed Road Maintenance II Project which aims to improve the Government's management of road maintenance activities as well as to further enhance the private sector involvement in road works. The water and sanitation sector will be supported by the proposed Major Cities Water and Sewerage Rehabilitation Project (see section II for more detail); Poverty Alleviations The education sector reforms will be spported by the proposed Primary Education Project (FY94) which will address the issue of improving literacy, provision of education to a higher proportion of the population, and improving efficiency. Inclusive of these operations, the total IDA/IBRD debt outstanding would remain at around 11% of total debt outstanding. Debt service on IDA and IBRD debt would remain around 6% of exports, falling to around 2% in the mid-nineties due to the increasing share of IDA debt. 1.22 Economic and Sector Work. The intellectual underpinnings of our dialogue with the Government on policy issues and macroeconomic and sectoral strategies have been established through our economic and sector work (ESW). In an effort to rebuild our country knowledge and investment pipeline, a major ESW program was carried out in FY88 and FY89. Special attention was given to issues of poverty alleviation, women in development, and public investment (with completion of major reports on each topic). An in-depth assessment of the public sector investment program and analysis of the sustainability of fiscal and monetary policy over the medium term was carried out under the Updating Economic Memorandum completed in FY90. Public sector investment and expenditure reviews have been carried out every year since 1987. A poverty report, which should be distributed in late 1990, will provide an overview of poverty issues and will propose an action plan for poverty alleviation, with special emphasis on the role of women. On the sectoral level, analytical work in the health, education, transport, banking and financial sectors and water supply was completed during the FY87-90 period. These documents formed the basis for a dialogue with the Government on a specific strategy to be followed for each sector, and for IDA investment operations. 1.23 As for the next phase of the ESW program, a general economic review, along with public sector expenditure reviews will continue to be carried out on an annual basis. Over the next two years, the focus will shift towards the productive sectors and the strategy towards privatization efforts. The main area which requires in-depth investigation is the agricultural sector, where issues related to land tenure, rural credit, export promotion, product development and extension services require a clear strategy for future development. Further analytical work will be carried out on restructuring of the banking sector and privatization of public enterprises as part of preparation for the adjustment operation. Special focus will also be given to the issue of environmental protection, with particular emphasis on the agricultural and mining sectors. - 11 - 1.24 Cooperation with the IMF. The Bank has worked closely with the IMF in the design and execution of adjustment operations, in formulating the lending strategy, and in economic and sector work. Since 1987, the Bank and the IMF have carried out joint annual missions to develop with the Government the Policy Framework Papers. There has also been frequent cross-mission support. For example, Bank and Fund staff recently cooperated in the preparation of a financial reform program which would be supported by the proposed Structural Adjustment Credit. Considerable effort is made by staff of each institution to comment on the other's work, to use a common database, and to ensure consistent conditionality in lending operations. 1.25 Aid Coordination and Cofinancing. The Bank has been active in aid coordination in Bolivia over the last few years, with efforts directed at helping ensure that both the amount and composition of donor assistance are appropriate to Bolivia's circumstances. In particular, annual Consultative Group meetings have become an effective mechanism for donor coordination and consultation, as well as for aid mobilization. The most recent Consultative Group meeting was held in October 1989, and was very successful in allowing the new administration in Bolivia to present itself and its policies to the donor community. The meeting focused on continued macroeconomic stability, public investment implementation issues, environmental issues, the impact of the cocaine economy, and issues of poverty alleviation. Donors indicated a potential level of new commitments of about US$600 million a year -- which is sufficient to cover the currently projected financing needs for the period 1990-92. 1.26 A number of investment and adjustment operations have attracted a substantial amount of co-financing (particularly the Financial Sector Adjustment Credit, Emergency Social Fund, Social Investment Fund) and this trend is expected to continue. In addition, Bank reports, particularly the Country Economic Memoranda and the Public Investment and Expenditure Reviews have facilitated improved aid coordination by providing a policy framework and strategy which can be drawn on by other donors. The up- coming Consultative Group meeting, scheduled for November 7 and 8, 1990, will focus on the Government's proposal for the next phase of the adjustment process. The analytical work which the meeting will base its discussion on will be the recently completed Poverty Report, the Updating Economic Memorandum, and presentations by the Government. 1.27 IFC Operations. IFC has been active in Bolivia in the last four years. During this period, IFC has carried out operations as follows: in 1987, a Loan of US$1.2 million to COMCO S.A, a medium-size silver mining company; in 1988, a loan of US$10 million to Banco Industrial S.A (BISA); in 1989, an investment of US$10 million in COMSUR, one of Bolivia's largest private aining companies; and in 1990, a cross currency interest rate swap facility to help BISA hedge against foreign exchange risk and diversify its sources of funding. IFC, moreover, completed the appraisals of the expansion of Puerto Aguirre, a grain terminal, and GENEX S.A., a project to substitute compressed natural gas for gasoline in public transport. Furthermore, IFC is considering providing assistance in the privatization of LLOYD Aereo Boliviano and COMIBOL's assets and substantially increasing its investments in Bolivia over the next four years. It is likely to concentrate its investments in mining, ports, energy, cement and agroindustries which would support the Bank's country assistance objectives by fostering private sector development. - 12 - 1.28 Bolivia was one of the first signatories of the MIGA agreement, which its Congress ratified earlier this year. There are still no MIGA operations in Bolivia. Summary 1.29 Bolivia is now entering its fifth year of economic stabilization without significant growth. The elements required for resumption of real per capita income growth, are first, to maintain stable economic conditions; second, to continue the economic restructuring through enacting and implementing legislation to encourage private sector investments, and moving the state out of the productive and financial sectors through liquidation and privatisation; third, to maintain fiscal discipline and improve the efficiency of state involvement in the social and infrastructural sectors; and, fourth, to move aggressively to alleviate poverty through better focussed invoivement in the health, education, and water sectors. 1.30 Given the recent approval of legislation setting the incentive system for private sector investments, the performance of Bolivia over the next one to two years should be judged on (i) adherence of the Government to the fiscal and monetary targets required to maintain macroeconomic stability (agreed to under the ESAF and PFP); (ii) the pace of public sector reforn (i.e. privatization or liquidation of public enterprises and improvements in the management of enterprises remaining in the public sector); (iii) pace of financial sector reform (liquidation of public sector banks and enforcement of financial sector regulations); and (iv) proper application of the investment, hydrocarbons, and mining laws to entice private sector investments and the SAFCO law to control Government and state enterprise operations. 1.31 The Bank's activity will focus around the continued assistance for (i) structural reforms, particularly in the banking/financial sector, public sector administration and trade procedures; (ii) improved efficiency of public sector administration; (iii) strong emphasis on improving the education, health and infrastructural sectors; and (iv) development of environmental protection legislation in the agricultural and mining sectors. II. THE PROPOSED CREDIT 2.01 The proposed credit would be on standard IDA terms with 40 years maturity and would help finance water supply and sewerage sub-projects for the major cities of Bolivia (La Paz, Santa Cruz and Cochabamba) and a national component for improving sector management by the central sector entities. The project would be cofinanced by the Kreditanstalt fur Wiederaufbau (KfW) of the Federal Republic of Germany for US$ 8 million equivalent. 2.02 Background. With only about 30% of the total population having access to piped water, service levels in Bolivia are the second lowest in the western hemisphere. Even in the largest cities (La Paz, Santa Cruz and Cochabamba), only 70% of the population has a house connection. In sanitation, only 30% of the urban population is connected to a sewerage - 13 - system and only 15% of the rural population has latrines. Poor water and sanitation services contribute to high infant mortality (117 deaths per 1,000 live births - the second highest in the hemisphere) and to making enteric diseases in Bolivia the second among all causes of mortality. Although in some areas, most notably Cochabamba, water resources are scarce and competed for by human and agricultural use, Bolivia can not be considered water poor. Rather, a consistently low level of investments over time has led to the low service coverage levels which now prevail. 2.03 A reasonable target for the 1990s is to improve service coverage levels by some ten percentage points over the decade. To achieve this, the water and sanitation agencies in Bolivia will have to allocate available resources and mobilize internal resources better than in the past. During the 1980s, despite some improvement in service coverage, the quality of services deteriorated in several areas as the sector agencies dragged on preparing projects for the medium-size cities, rushed ill-planned investments with insignificant benefits in some major cities and neglected rehabilitation, maintenance and low-cost technologies. Over the past 20 years, the operating agencies' contribution to investments out of their revenues was about nil. In 1988, the Government defined affordable service standards and eliminated operating subsidies. Of necessity, the water utilities SAMAPA in la Paz, SAGUAPAC in Santa Cruz and SEMAPA in Cochabamba have become financially self-sufficient in covering operating costs, debt service and about 25% of the investment costs from their revenues; but most other utilities still generate insufficient funds even for maintaining existing facilities. Also in 1988, the Government instituted a policy of cost recovery requiring that the utilities of departmental capitals cover operating costs, debt service and maintenance investments out of their revenues. Yet that policy has remained non-operational; it has lacked targets for contribution to investments which are essential to build the capability of the operating agencies for eventually servicing additional debt with the increasing investment levels. Unless sector agencies finance about 20% of investment costs out of their revenues, the annual investment level of US$ 30 million required to achieve the targeted 10% increase in coverage would not be reached. Relying only on donor resources to finance sector investments would constrain service coverage without growth in real terms. 2.04 To upgrade water and sanitation services, Bolivia will also have to improve institutional arrangements in the sector and the performance of its agencies. Currently, the Ministry of Planning (MPC), the Ministry of Urban Affairs (MUA) and the Ministry of Health (MH) share responsibilities for setting and overseeing the sector policy. The Corporation for Water and Sanitation (CORPAGUAS), an agency under MUA, and the National Office of Health and Sanitation (DSA), a Department of MH, are responsible for carrying out investments and overseeing operations in the small cities and in rural areas, respectively. Municipal water companies and cooperatives are responsible for water services in the larger cities. Too many poorly- coordinated and functionally overlapping institutions have cluttered sector management for years. Also, the lack of investment guidelines and management systems have made it difficult for the Government to monitor the performance of the sector operating agencies. Recognizing the need for an apex agency to help prepare and fund projects for agencies lacking the capacity, the Government, in 1988, set up the National Fund for Regional Development (FNDR) directly under the presidency of the Republic. FNDR is now building up to become a capable institution for promoting lending in - 14 - municipal infrastructure. On the operating level, the municipal water utilities of the larger cities have managed to maintain stable and professional management cadres, staving off pressure from an over- politicization by municipal councils. These councils, however, have often delayed passage of the requisite tariff increases, even though by law such increases require approval of only each utility's board and the Government. 2.05 The Government is aware that the abcve shortcomings constrain service coverage and investment levels in water and sanitation. To overcome them, it is willing to undertake a sector reform which will include: (a) introduction of a review and screening procedure for investments to ensure the adoption of modest design parameters and low-cost technologies; (b) introduction of a framework of financial policies including the requirement that the operating agencies contribute to financing investments out of their revenues and that the apex agency make lending conditional on the operating agencies' ability to meet specified performance targets; (c) decentralization of responsibilities for operations and defining clear functions and interrelationships for the regulatory and operating agencies; and (d) undertaking of a program to upgrade the capabilities of these agencies. A strategy paper (June 1990) prepared by IDA is expected to guide the sector reform and facilitate the dialogue with other donors for coordinating assistance to Bolivia to improve the water and sanitation sector. 2.06 Past IDA/Bank involvement in the sector includes the financing of projects for Santa Cruz and CORPAGUAS, which were satisfactorily executed. In 1987, the Government sought IDA's assistance for the water sector, assigning high priority to investments in La Paz, Santa Cruz and Cochabamba (accounting for 30% of the population, where the poor are migrating in search of jobs) and to strengthening the utilities of those cities. In response, IDA authorized a PPF of US$750,000 in late 1988 to prepare the present project within the context of improving water policies and institutions country-wide. The French government gave Bolivia a grant of US$160,000 to study water resources in the Cochabamba area. 2.07 Rationale for IDA Involvement. IDA's strategy for Bolivia places high priority on supporting operations which foster orderly growth and alleviate poverty. Accordingly, the main objective of lending to Bolivia is to finance projects which (i) sustain the current macroeconomic program; (ii) improve the economic and financial management of the.public sector; (iii) restructure key productive sectors; (iv) improve basic infrastructure needed to support those sectors; and (v) attack poverty directly by creating jobs and upgrading social services. The proposed project therefore closely fits IDA's country strategy. Improving water services in the major cities will help maintain an environment conducive to productive activities and directly benefit the poor population. It will also enhance the efficiency of important public service agencies and accelerate the development of the total water supply and sanitation sector. IDA's involvement will help introduce an improved policy and institutional framework for the sector and help obtain the commitment of other donors in support of the framework. Currently, the UNDP/World bank is undertaking a large-scale pilot project financed by a Dutch Government grant of US$4.6 million, to provide water and sanitation services to some 75,000 people in the rural areas of Potosi. IDA is also processing an integrated health project, including a low-cost sanitation component for periurban areas of - 15 - the cities of Santa Cruz and Cochabamba. Complementing the coverage of Bolivia's needs for the water sector, the Interamerican Development Bank (IDB) is considering projects for the mid-size and small cities. 2.08 Project Objectives. The objectives of the proposed project are to: (i) improve and expand water and sanitation services in La Paz, Santa Crus and Cochabamba; (ii) upgrade the water utilities of these cities; (III) assist the Government in defining and introducing the sector financial policies and upgrading its capabilities to regulate and oversee the sector; and (iv) improve coordination between the Bolivian authorities and donors in preparing and financing sectorwide projects. 2.09 Proiect Description. The proposed project, to be executed during 1990-1995, includes the first priority investments of programs (which include some IDB-assisted and other investments) to increase service coverage levels from 70% to 80% in water and from 50% to 60% in severage for the beneficiary cities by 1997. Main project components are as followss (a) investments for SAMAPA in La Paz (35% of total project cost) including: (i) rehabilitation of water production facilities and expansion of distribution infrastructure; (ii) construction of sewerage networks under low-cost technology and a sewage treatment plant; and (iii) the provision of engineering services, technical assistance and training; (b) investments for SAGUAPAC in Santa Cruz (30%), including: (i) drilling of wells and expansion of distribution facilities; (ii) rehabilitation of a sewage treatment plant; (iii) execution of pilot low-cost sanitation investments; and (iv) provision of engineering services, technical assistance and training; (c) investments for SEMAPA in Cochabamba (33%), including: (i) rehabilitation and expansion of water production facilities and expansion of distribution infrastructure; and (ii) provision of engineering services (which include a master plan study for the development of water resources), technical assistance and training; and (d) a national component (2%), including: (i) a study under MPC to prepare guidelines for the analysis of water and sanitation projects; (i) a study under MUA to prepare a framework for approving tariffs and an information system to monitor water operations under its jurisdiction; (iii) technical assistance to help the FNDR improve its operating manuals and introduce models for the technical, economic and financial analysis of projects; (iv) preparation of a follow-up project to address sectorwide issues; and (v) training for the FNDR, water-related central government units and operating agencies throughout the country. Terms of reference for the studies have been agreed. The total cost of the project is estimated at US$57 million equivalent, with a foreign exchange component of US$32 million (56% of total project cost). KfW would cofinance the project. A breakdown of costs and the financial plan for the proposed project are shown in Schedule A. Amounts and methods of procurement and the disbursement schedule are shown in Schedule B. A timetable of key project processing events and the status of IDA operations in Bolivia are given in Schedules C and D, respectively. A map of Bolivia highlighting the project areas is attached. The staff appraisal report No. 8479 dated October 11, 1990 is also attached. 2.10 Project Execution. The Government will be the Borrower. FNDR will manage disbursement of the IDA funds for the national component. It will also be the technical and financial agent for the three city components. Each city utility will be responsible for executing its own components. Both FNDR and the beneficiary utilities are already capable of - 16 - carrying out their respective responsibilities. The utilities will need consultants for preparing final designs, but will supervise project execution with their own staff. The financing arrangements for project execution require that the Government on-lend the IDA credit proceeds to FNDR (at an interest rate of LIBOR minus one and a half percentage points) and that FNDR in turn relend to the beneficiary utilities (at an interest rate of LIBOR plus one percentage point). The Government will assume the SDR-US Dollar exchange risk and the beneficiary utilities, the US Dollar- Boliviano risk. The repayment period for the above sublending arrangements is to be 20 years, including 5 years of grace. Retroactive financing in an amount not exceeding SDR 1.1 million (or US$1.5 million approx.) will be provided in respect of project-related expenditures which comply with IDA guidelines incurred between May 4, 1990 and loan signing. 2.11 Actions Agreed. The Government has agreed that it will: (a) by October 1 each year, review project performance with the beneficiary utilities, FNDR, KfW and IDA, and take actions needed to remedy any shortcomings; (b) by December 31, 1991, discuss with IDA concrete proposals for restructuring the sector institutions to improve their efficiency and effectiveness, and, by June 30, 1992, start implementing the agreed adjustments; (c) by December 31, 1992, discuss with IDA a system to allocate water resources between human consumption needs and agricultural use in the Cochabamba area and, by June 30, 1993, start implementing the agreed system; (d) consider as default of the IDA credit agreement any interference caused by the municipalities or any other agencies except the Government in the autonomy of the beneficiary utilities to set their tariffs; and (e) ensure that no sector agency will undertake any water scheme in the Departments of La Paz, Santa Cruz and Cochabamba costing over US$10 million, unless it establishes to IDA's satisfaction that such scheme is technically and economically justified. 2.12 The beneficiary utilities have agreed that they will: (a) carry out action plans to improve their institutional, financial and operating performance (already agreed) including compliance with targets of operation and financial performance, and review and update them with IDA as needed by October 1 each year; (b) maintain a ratio of cost(excluding depreciation) to revenue of around 0.60; (c) introduce simplified tariff structures by April 1, 1991 and adjust tariffs in line with inflation on a quarterly basis; (d) seek IDA's consent before undertaking investments other than the project costing over US$1.5-2.0 million and contracting additional loans if the debt service ratio falls below 1.3; and (e) by October 1 each year, submit financial projections to IDA for the current and the following five years, and take all action needed to meet the above targets at least for the following year. 2.13 The following would be special conditions of effectiveness: (a) approval by KfW of its loan for this project; and (b) signature of the sub-loan from the Government to FNDR and of the sub-loans from FNDR to the beneficiary utilities, on terms satisfactory to IDA. 2.14 Benefits. Through improved and additional water and sewerage services, the project is expected to benefit a population of about 1.0 million, of whom about 50 % are poor. The economic rate of return of the investment programs for each of the beneficiary utilities is expected to be about 12%. Improving the operational efficiency of those utilities would reduce the need for tariff increases in real terms and thus benefit the - 17 - total population of La Paz, Santa Cruz and Cochabamba. By helping introduce improved financial policies and institutional arrangements, the project would enhance the sector's prospects for increasing investment levels and efficiency and thus the quantity and quality of services countrywide. 2.15 Risks. The main project risks are that: first, the Government could fail to effectively implement the policy and institutional framework to improve sector performance countrywide; second, FNDR could fail to become an effective sector lead agency; and third, the donors could fail to support the policies introduced by the Government. The Government's recent approval of a framework for the sector financial policies and its commitment to implementation will effectively reduce the first risk. IDA's close supervision of the FNDR as the intermediary for the project should reduce the second risk. A coordinated effort to prepare a follow-up sectorwide project cofinanced with main donors should reduce the third risk. The proposed joint annual review of project issues by the beneficiary utilities, FNDR, the Government and KfW is expected to lead to timely plans of action to remedy any identified shortcomings. On the basis of recent experience with Bolivia and continuity of Government commitment to rational macroeconomic and sector policies, we are confident that most project objectives will be substantially met. 2.16 Recommendation. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association and recommend that the Executive Directors approve the proposed credit. Barber B. Conable President by Ibrahim F.I. Shihata Attachments Washington, D. C. November 6, 1990 - 18 - Schedule A BOLIVIA MAJOR CITIES WATER AND SEWERAGE REHABILITATION PROJECT Estimated Costs and Financing klan (US$ million) Component Local Foreign Total La Paz 7.0 7.4 14.4 Water 2.1 4.7 6.8 Sewerage 4.9 2.7 7.6 Santa Crus 4.7 8.0 12.7 Cochabamba 5.1 8.6 13.7 National Component 0.5 0.8 1.3 Total Base Cost 17.3 24.8 42.1 Physical Contingencies 1.7 2.5 4.2 Price Contingencies 2.5 4.0 6.5 Total Prolect Cost 21.5 31.3 5.8 Taxes 3.4 0.0 3.4 PPF-444-BO 0.1 0.7 0.8 Total Investment Cost 25.0 32.0 57.0 Financing Plan SAMAPA (La Pas) 5.1 0.0 5.1 SAGUAPAC (Santa Cruz) 4.1 0.0 4.1 SEMAPA (Cochabamba) 4.8 0.0 4.8 KfW 4.4 3.6 8.0 IDA 6.6 28.4 35.0 Total 25.0 32.0 57.0 -19- Schedule B Page 1 of 2 SOLIVIA MAJOR CITIES WATER AND SEWERAGE RERABILITATION PROJECT Procurement Overview (US$ Million) Procurement by Bank Procuremant by Project Element IC LCS Shopping Other Subtotal Cofloancor Total 1. Civil Works 18.9 8.2 ' 17.1 6.0 28.7 (0.5) (1.5) (8.0) 4.9e (8.0) 2. Materials and Equipment 19.5 1.0 0.0 21.9 4.0 25.9 (17.9) (1.7) (0.5) (26.0) 4.9* (20.0) 8. Technical Aseistance 2.7 2.7 2.7 and Training (2.5) (2.5) (2.5) 4. Engineering Consulting 4.7. 4.7 4.7 Services (4.4) (4.4) (4.4) Total 88.4 5.9 9.6 7.4 46.4 if's 57s (24.4) (8.2) (6.5) (0.9) (85.0) (8.0). (85.0) Notes Figures Include taxes and the PPF; those in parenthesis give respective amounts financed by IDA. * Refers to itms for La Pas sewerage project financed by KfW and procured under KfW procedures. - 20 - Schedule B Page 2 of 2 ESTIMATED DISBURSEMENT 1. By Uatezory Amount Category US$ million Percentage of Cost Civil Works Part A 1.0 25% (of expenditures) Part B 5.5 60% (of expenditures) Part C 4.5 501 (of expenditures) Equipment, Materials 17.5 100% (of expenditures) Techn. Assist. Training 2.5 1001 (of expenditures) Eng. Cons. Services* 4.0 100% (of expenditures) * includes repayment PPF-444-BO 2. By IDA Fiscal Year IDA FY 1990 1991 1992 1993 1994 1995 1996 Annual 0.0 6.1 9.1 9.9 6.7 2.4 0.8 Cummulative 0.0 6.1 15.2 25.1 31.8 34.2 35.0 - 21 - Schedule C BOLIVIA 4AJOR CITIES AND SEWERAGE REHABILITATION PROJECT TUetable of Ke Project Processin Events (a) Time taken to prepare: Two and a half years (b) Prepared by: SAMAPA, SAGUAPAC and SEAPA (c) First IDA missiont May 1987 (d) Appraisal mission departure: September 27, 1989 (e) Post-Appraisal (mainly to include drilling of wells in Cochabamba) July 1990 (f) Date of negotiations: September 1990 (g) Planned date of effectiveness January 1991 (h) List of relevant PCR's and PPAR'as Small Cities Water Supply Project (Ln 1324-80) and Santa Crus Water Supply and Sewerage Project (Cr 948-B0) - 22 - 8MLv11A - STA1US OP Umu SAIh uP DPERAS e 1. Statee~ *f World sank U.an and IDA CdIt.s e f Septeber 30, 19t0) L.es or Aaseum (le.s e.eneellabene) Cr9d1 1l%cal flbenrsed Numbep Yvar Sorrowe Purpos sank 1A Und1sbuteed Total if In 4I11 o at U2 dot forål 18 Loans and 17 credits fully dibursed 274.8 127.1 - 462.0 1703 198 ö olIvia econtrucblon Import Credlt - 61.6 1.6 66.0 1719 1986 golivla Vuglta Grande - 16.6 8.2 16.0 1809 1987 Bolivia Public Financial igu6. - 10.3 1.7 1!.8 1818 19N7 sollvla Power Sector thabill- tatlon - 4.7 2.3 6.8 1828 1987 8oila Reconstruction Ip. Cr.II - 82.9 18.2 47.1 1842 1988 Solivla La Paz Municipal Dv. - 10.9 4.8 16.0 1882 1988 sollvla Emergncy Social Fund II - 22.6 2.2 27.0 *1925 1988 sollvla Financial S$c~r Adjust. - 88.7 8.1 70,0 1977 1989 Bolivla Econ. Ug~l. Strenth. Op. - 2.8 7.0 9.7 2012 1989 solivta Export Corrldorg -- 4.9 34.8 87.0 2815 1989 sollvla Ilning Sector - 88.9 85.# 1925-2 199m lotlvi Financial Sec~or Adjuat. - 9.9 8.7 9.8 2092 199 sollvia Integrated Health Dov. -- 0 21.9 20.8 2119 1998 1otIvla Eastern Lowlands - 8 88.9 n.0 2127 196 sollvla Social Invest~nt Fund - 8 21.6 20.8 2134 19m solivla Private Enterpris Dov. - 8 17.4 18.1 Total 2 !7. 20.5 - 1 Of which has been repald 138.8 9.9 - 146.7 Total now outstanding 13.0 27_1 208.5 84.6 Amount aold 0.05 0.06 Of which has been ropald (0.05) (0.06) Total now held by Bank and IDA 141.0 847.1 2flJ 884.5 Total undisbursed o SECAL Df lecause of variation* In SDR xchange rate, present amount differa from original amount. 2. Statement of IFC nvetoment <as of Septesber 30. 19) La Ege1iY Total. (In MIIITOns of U.S. dollari) Total gross conoitments 26.8 8.9 88.5 L*ss cancellatlon, terminations, repaymente, and sale g.4 8.4 9.8 Total comaltment now held by-WC 17.2 11C5 2.7 Total undlbursd . g.8 右．