Colombia - Medium and Small Size Cities Water Supply and Sewerage Project

Document of The World Bank FILE COPY FOR OFmICIAL USE ONLY Reporl No. P-2572-CO REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE INSTITUTO NACIONAL DE FOMENTO MUNICIPAL WITH THE GUARANTEE OF THE REPUBLIC OF COLOMBIA FOR A THIRD MEDIUM AND SMALL SIZE CITIES WATER SUPPLY AND SEWERAGE PROJECT May 30, 1979 Ths document hs a resiutod daisubuds and may be umd by recIpiets only In the performance of u oir ecla duts. Its coatets may n*t oierwse be dksiood without Word Bnk athoriation.  CURRENCY EQUIVALENTS January 1979 Mid-1979 Estimate Currency Unit = Peso (Col$) US$1 = Col$41.00 43.00 Col$ = US$0.0244 0.0233 WEIGHTS AND MEASURES Metric System GLOSSARY OF ABBREVIATIONS CIDA = Canadian International Development Association DNP = National Planning Department EMPOS = Regional or Municipal Sanitary Works Company EPM = Municipal Public Company IDB = Inter-American Development Bank INAS = Instituto Nacional de Salud (National Institute of Health) INSFOPAL = Instituto Nacional de Fomento Municipal (National Institute for Municipal Development) UDI = Institutional Development Unit USAID = US Agency for International Development GOVERNMENT OF COLOMBIA FISCAL YEAR January 1 to December 31  FOR OFFICIAL USE ONLY COLOMBIA THIRD MEDIUM AND SMALL SIZE CITIES WATER SUPPLY AND SEWERAGE PROJECT LOAN AND PROJECT SUMMARY Borrower: Instituto Nacional de Fomento Municipal (INSFOPAL) Beneficiaries: Regional and municipal water supply and sewerage companies Guarantor: Republic of Colombia Amount: US$31 million equivalent Terms: Repayment in 17 years, including four years of grace at 7.9% interest per annum Relending Terms: As above, with the beneficiaries taking tlhe foreign exchange risk. Project Description: The project would (i) improve sanitary conditions in 23 cities by providing additional water supply and/or sewerage services, as well as improving existing services, and (ii) strengthen the Borrower and the participating water and sewerage regional/ municipal companies. Of the project investments about 35% would be for sewerage works, 20% for distribution pipes, 17% for water production, 11% for engineering and administration, and the remainding 17% for pumping stations, storage tanks, meters and operation equipment, and technical assistance. The project would provide water through house connec- tions to about 473,000 people in 19 cities by 1983, and sewerage services to 654,000 people in 14 cities by 1983; about half of this population belongs to poorest population earning less than one third of the per capita national income. The project presents higher than usual risks in that it may not be implemented in the intended period, principally because the borrower and the partici- pating water and sewerage companies may rnot be able to achieve the forecast institutional andl financial improvements within a short period of time. It is to be expected, however, that the Government's commitment to strengthening the institutions in the water and sewerage sector together with close supervision of the project by the Bank will minimize delays in implementation. This docurnent has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Estimated Cost: Local Foreign Total (US$ million equivalent) Water production 4.68 4.06 8.74 Pumping stations 1.14 1.31 2.45 Storage tanks 1.65 0.96 2.61 Distribution pipes 5.78 4.58 10.36 Meters and Operation Equipment 1.11 1.42 2.53 Sewerage works 10.96 6.64 17.60 Technical assistance and training 0.41 0.65 1.06 Engineering and administration 3.03 2.25 5.28 Base Cost 28.76 21.87 50.63 Physical Contingencies 4.29 3.28 7.57 Price Contingencies 7.85 5.85 13.70 Total Project Cost 40.90 31.00 71.90 Financing Plan: Local Foreign Total (US$ million equivalent) Government contribution 31.7 31.7 Net internal cash generation 9.2 9.2 Bank loan 31.0 31.0 Total 40.9 31.0 71.9 Estimated Disbursements: Bank FY 1980 1981 1982 1983 1984 (US$ million equivalent) Annual 2.1 8.3 11.8 7.1 1.7 Cumulative 2.1 10.4 22.2 29.3 31.0 Rate of Return: The internal rate of return for the project as a whole is estimated to be 13%. Appraisal Report: Report No. 2275a-CO, dated May 18, 1979.  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE INSTITUTO NACIONAL DE FOMENTO MUNICIPAL WITH THE GUARANTEE OF THE REPUBLIC OF COLOMBIA FOR THE PROPOSED THIRD MEDIUM AND SMALL SIZE CITIES WATER SUPPLY AND SEWERAGE PROJECT 1. I submit the following report and recommendation on a proposed loan to the Instituto Nacional de Fomento Municipal (INSFOPAL) with the guarantee of the Republic of Colombia for the equivalent of US$31 million to help finance a Third Medium and Small Size Cities Water Supply and Sewerage Project. The loan would have a term of 17 years, including four years of grace, with interest at 7.9% per annum. PART I: THE ECONOMY I/ 2. An economic report on Colombia (2235-CO) was distributed to the Executive Directors in January 1979. An updating mission visited Colombia during February 1979 and is preparing its report. Its findings are sum- marized below. Country data sheets are provided in Annex I. Background 3. During the past two decades, Colombia has made substantial progress in the transition from a predominantly rural and agricultural economy made up of largely self-contained regions to a more integrated urban-industrial economy. The productive base of the economy has been widened appreciably, and there has been substantial diversification of production in both the agricultural and industrial sectors. These improvements have been accompanied by rapid growth of non-traditional exports and by the development of a modern sector relying to a considerable extent on imported inputs. As a result, the country has become less dependent on coffee as a source of foreign exchange earnings, and fluctuations in domestic economic conditions resulting from unpredictable shifts in world coffee prices, while still considerable, have become more manageable. Although substantial progress has been made during the past two decades, Colombia is still only partially developed with a limited modern sector superimposed on a large, traditional and economically poor base. Per capita income is low by developed world standards, the maintenance of high employment is a persistent problem, and in 1975 an estimated 55.0% of the rural and 24.0% of the urban population had incomes under the relative poverty level as defined by the Bank. 4. Colombia's population growth rate declined sharply in the past two decades; from well over 3% in the 1950s, to about 2.8% in the early 1970s 1/ Unchanged from President's Report, Second (Cartagena) Urban Development Project (Report No. P-2472a-CO dated April 18, 1979).  - 2 - and to an estimated 2.1% at present. 1/ This was in large part the result of a rapid decline in the crude birth rate; one of the most pronounced declines ever recorded in a Latin American country. Rising per capita income, rapid rural/urban migration, expanded economic opportunities for women and increased effectiveness of family planning programs are included among the factors responsible for the lower birth rate. Although rural/urban migration slowed from the early 1960s on as progress was made in eliminating the widespread violence in the countryside, approximately 64% of the current population lives in urban centers and there are now 22 cities with populations exceeding 100,000 persons. Colombia's population is not considered excessive relative to the country's resource base. Economic growth will have to average around 7%, however, especially in the directly productive and service sectors, in order to increase employment at a pace sufficient to keep up with growth of the labor force. 5. Available information--while scanty--suggests that some improvement has occurred in income distribution and welfare of the lowest income groups in Colombia since the 1950s. These gains were probably the consequence of several factors, including migration of surplus labor from rural to urban areas, rapid growth of employment in high productivity jobs in industry and the services and reduced population growth. Policy efforts, particularly since 1967, have been directed increasingly toward improving the welfare of the poorest 50% of the population. These efforts have emphasized both employment generation and greater public investment in health, education, nutrition and urban development. The Bank has strongly supported these efforts. Continued emphasis on growth of the productive sectors of the economy, on industrial decentralization and on programs to encourage small- scale industry and agriculture should provide increased employment oppor- tunities and higher real wages for unskilled and semi-skilled labor in both rural and urban areas. Further improvement in the public services provided to the poor should reinforce these trends and raise the level of welfare of this segment of the population. 6. The Colombian authorities introduced a dramatic change in develop- ment strategy in 1967, shifting emphasis from the then existing protectionist policy of import substitution to measures designed to expand and diversify exports. These policies were highly successful in expanding exports, thereby alleviating the foreign exchange constraint and making possible a substantially higher level of investment. As a consequence, real GDP rose by an average 6.5% annually between 1967-1969 and 1974, well above the historical average. Merchandise exports in current prices expanded nearly threefold during this period, and most significantly, non-traditional exports became an increasingly important source of foreign exchange earnings, in part compensating for slow growth of receipts from coffee exports. By 1974, non-coffee exports comprised 56% of total merchandise exports, up from about 30% in 1967. 1/ Estimated 1978 growth rate. This rate differs from that given as the most recent estimate in the Social Indicators Data Sheet (Annex I) which is an average for early 1970s.  -3- 7. Despite the growth of output and the diversification of exports, the country faced some potentially serious problems at the time the new administration took office in 1974. Weakening balance of payments in part related to the slowdown of growth in the industrial countries, loss of self-sufficiency in petroleum production, deterioration of the public finances, accelerating inflation, and declining investment threatened to reduce growth of output and employment. As a consequence of these develop- ments, the Government introduced an economic stabilization program which combined basic reforms of the fiscal, monetary, and trade systems with measures aimed at accelerating long-term economic growth. 8. In an effort to strengthen the public finances, the Government undertook a comprehensive tax reform designed to improve the progressivity and elasticity of the tax system. Some of the distortions which had deve- loped in the financial system caused by forced investment requirements placed on financial institutions and by differential tax treatment of financial instruments were eliminated. Interest rates were raised in an effort to increase private savings and improve resource allocation. In order to increase the efficiency of the economy through greater reliance on market forces, price controls on a number of industrial and agricultural products were removed, thereby providing greater stimulus for increasing production. Modifications in petroleum pricing policy aimed at regaining self-sufficiency in the production of crude petroleum by improving incen- tives for exploration and exploitation were introduced. Concurrently, the Government initiated policies designed to reduce the subsidy on local consumption of petroleum products, which eventually led to a 220% increase in gasoline prices by 1978. Tariff levels and non-tariff barriers to trade were reduced significantly in order to increase competition and the effi- ciency of domestic firms. While these reforms were successful in improving the public finances and reducing inflation in 1975, they also served to reduce economic growth and the slowdown of domestic economic activity which began in 1974 continued through most of 1975. Recent Economic Developments 9. During the past three years, the Colombian economy has been dominated by developments in the external sector. As the result of a serious frost in late 1975 affecting Brazil's major coffee producing area, coffee exports from that country declined sharply triggering a fourfold increase in the world price of coffee by mid-1977. This caused Colombia's export earnings from coffee to increase to nearly US$1.8 billion in 1977 from US$764 million in 1975, and produced an unprecedented rise in incomes and demand in the country's rural areas. Lagging supply of consumer goods, particularly basic foodstuffs--the production of which was adversely affected by drought conditions in most of the country's interior--failed to keep pace with rising demand and inflation accelerated from 24% in 1975 to 44% in the twelve months ending June 1977. Inflation in Colombia has been moderate relative to that experienced by other countries in the region, seldom exceeding an annual rate of 20%. The acceleration of inflation which took place during the period, therefore, was unprecedented in recent history, and efforts to lower the rate of inflation have dictated economic policy since that time.  - 4 - 10. The authorities responded rapidly by introducing a broad range of fiscal, monetary and trade policies designed to gain control over the explosive increase in prices. Beginning in late 1976 reserve requirements were raised and rediscounting and public sector borrowing from the Central Bank were discouraged. The authorities temporarily suspended their policy of periodically adjusting the exchange rate and prices of petroleum products. In January 1977, a 100% marginal reserve requirement was placed on increases in commercial bank deposits exceeding the December 31, 1976 level. To delay the impact of rising foreign exchange receipts on the monetary base, exporters were required to accept 90-day US dollar denominated certificates of exchange in lieu of cash payment for their exports. In order to sterilize a portion of the increase in foreign exchange earnings from coffee exports, the Coffee Federation agreed to invest a large portion of its receipts in Central Bank bonds, the proceeds of which were frozen in a special account. To increase supplies in the domestic market, a number of measures were taken to liberalize imports. Food imports by the state marketing agency, IDEMA, were increased sharply. In addition, restrictive fiscal measures were introduced to curb growth of aggregate demand and in 1977 the Treasury registered an overall budgetary surplus for the first time in recent years. 11. As a consequence of these measures and a favorable second semester harvest, inflation declined sharply beginning in July 1977. By the end of the year, the annual rate of inflation had fallen to 29%. With inflation subsiding, periodic exchange rate adjustments and gasoline price increases were reintroduced. With few other exceptions, however, the stabilization policies were continued in effect throughout 1978 and by year end inflation had subsided to an annual rate of 17.8%. 12. Because of the lack of dynamism in world markets, slow growth in agricultural production, capacity constraints in the industrial sector and a decline in real investment, the Colombian economy expanded only moderately in 1976 and 1977. Growth of real GDP increased from 3.8% in 1975, to 4.6% and 4.8% respectively in the subsequent two years. The higher growth was a direct result of the expansion of domestic demand brought about by the rise in incomes of coffee producers. Output in the trade and personal services sectors of the economy (including transport and communications) responded strongly to the rising demand, while agricultural output, because of the drought, rose by only 2.2% p.a. on average for the 1976-77 period. Industrial sector output rose by only 5.4% p.a. during this period, despite the strong growth in domestic demand. Because growth occurred in the rela- tively labor intensive sectors of the economy -- personal services, trade, transport and communications and manufacturing -- the urban unemployment rate had declined to an estimated 8% by the end of 1977, from an average 12% during the early 1970s. In addition, there is evidence of labor shortages and rising real wage rates in rural areas during this period, and it is believed that rural unemployment also declined. 13. Preliminary estimates for 1978 show a strong increase in real GDP resulting primarily from continued stimulus to aggregate demand from high coffee receipts and from an expansion of investment. In addition, favorable weather conditions permitted a sharp recovery in agricultural  output. Real GDP growth is estimated at 8% for the year, with agricultural production estimated to have grown by as much as 9% over the low level of 1977. 'Thile coffee prices fell considerably in 1978 from their 1977 levels, this decline was more than offset by expanding export volume as Colombia undertook a more aggressive coffee export policy. Consequently, receipts from coffee exports rose to nearly US$2.1 billion for the year. The accompanying rise in domestic demand and a modest recovery in export markets caused manu- facturing and transport and communications to grow by 8.5% each and trade (including commerce) by 9.0%. Construction activity, which had continued at a low level during the past several years, recovered strongly in 1978, partially as a result of an increase in speculative demand arising from an inflow of funds from contraband activities. Only the mining sector, in which output fell by 2.3% as a result of declining oil production, failed to show signifi- cant growth in 1978. Open unemployment in urban areas is estimated to have fallen to 7.6% by June 1978. 14. Colombia's balance of payments was also highly favorable in 1978, continuing the trend of the previous three years. Largely as a result of the increase in coffee exports, although non-coffee exports rose modestly (7.0%) in real terms also, Colombia's net official international reserves rose by US$664 million, reaching US$2,493 million by the end of the year, equivalent to about nine months imports of goods and non-factor services. This increase in reserves occurred despite a nominal 25% increase in import payments, reflecting the rise in domestic demand, continued overvaluation of the exchange rate and liberal import policies. There were few significant modifications in trade and exchange rate policies in 1978. The slow rate of peso devaluation was continued during the first three quarters of the year, but accelerated in the fourth quarter when the pace of reserve accumu- lation began to slow. In general, trade and exchange rate policies were directed towards reducing the impact on the monetary base of reserve accumula- tion by delaying the monetization of export receipts and advancing import payments. These measures complemented monetary policies which were aimed at restraining growth of the money supply. 15. Colombia's public finances generated a large surplus in 1978 thereby permitting the Government to relax somewhat the policy of fiscal restraint which formed part of its anti-inflationary program during the previous two years. Current savings of the public sector rose to an estimated 6.0% of GDP, compared with 5.5% of GDP in 1977, and covered about 90% of public sector investment. Both the Central Government 1/ and the consolidated decentralized agencies increased their savings in 1978, the former by 29% and the latter by 153%. The strong increase in savings of the decentralized agencies, which rose to 1.4% of GDP from 0.7% in 1977, was the result of increased charges for the services they provide and of restraint on current expenditures. Large increases in customs duties and in sales taxes brought about by the growth in domestic demand were the main factors responsible for the increase in savings of the Central Government. As a consequence of this improved financial situation, public sector fixed 1/ Comprised of the National Government, the National Highway Fund and the Social Security Agencies.  - 6 - investment rose during the year, reaching 6.9% of GDP compared with 6.3% of GDP on average for the 1975-77 period. Some of the heaviest investment took place in the development of hydropower and in the petroleum sector, for both explora- tion and development. 16. Despite continuation of the stabilization programs largely unchanged from last year, the rate of inflation accelerated sharply in early 1979. On an annual basis, inflation had reached 22.7% by the end of April. At the same time, the international price of coffee fell sharply, prompting the Government to take measures to avoid a large financial deficit for the Coffee Federation. In the past, such deficits were financed in part through recourse to the Central Bank. The Federation, an autonomous entity which manages the domestic and external marketing of Colombia's coffee, purchases coffee from producers at a fixed price in pesos and then sells it on the world market. Since the Federation stands ready to purchase all coffee offered at the fixed price, it also bears the financial burden of stock accumulation in periods of declining world prices. After paying taxes and marketing costs equivalent to nearly 25% of the international price, the Federation could not sustain the high domestic purchase price given the lower world coffee price without incurring huge losses. To avoid this, the domestic purchase price of coffee was lowered by 12% and the exchange certificate system was abolished for coffee exports. This latter measure will result in the conversion to cash over the next several months of around Col$10 billion in outstanding exchange certificates. To offset the monetary impact of this measure, reserve requirements on term deposits of commercial banks and financial corporations are to be increased gradually over the next few months, to 25% from 20% at present, and prior import deposit requirements have been raised substantially, to 95% from 40% and 60% previously. In addition, the interest rate on dollar denominated certificates issued by the Central Bank was raised to 14% from 7% in an attempt to absorb some of the funds flowing from the exchange certificates. In a separate measure, retail gasoline prices were increased in mid-March and Sunday sales of gasoline were outlawed. Gasoline prices have been raised by 67% since September 1978. Development Strategy and Prospects 17. The development strategy embodied in the 1975-78 Development Plan aimed at accelerating the rate of growth of GDP and at distributing the benefits of such growth more equitably. This was to be achieved by increasing the allocative efficiency of the economy through greater reliance on market forces, by providing incentives for increasing private sector investment, by expanding economic and social infrastructure, and by improving public services provided to the poorest half of the population. Substantial progress has been made in carrying out this strategy during the past four years. Public sector investments have focused increasingly on projects designed to alleviate rural and urban poverty and on expanding and improving infrastructure. Compre- hensive integrated rural development and nutrition projects aimed at increasing incomes and welfare of the lowest income groups have been introduced. Urban development projects designed to provide improved services and employment opportunities to residents of slum areas in Colombia's major cities have been initiated. These programs have been complemented by policies to encourage the  development of small- and medium-scale enterprises and to decentralize industry away from the three largest cities. This latter policy, together with credit programs aimed at increasing output and employment in agriculture, have been designed to alleviate rural poverty and reduce rural/urban migration. Public sector infrastructure investments have been concentrated on improvement and extension of highway and communications systems. Special priority has been given to the development of domestic energy sources to reduce the country's growing dependence on imported oil. 18. Increased emphasis on provision of improved social services is re- flected in the increased proportion of total National Government expenditure on education, health, and water and sewerage systems, which rose from 33% in 1974 to 38% in 1977. The economic dislocations caused by the coffee boom and the need to concentrate economic policy on short-term management problems have limited expansion of public and private investment and required temporary suspension of some of the measures designed to free the price system and stimulate growth of non-traditional exports. 19. The Government, which took office in August 1978, intends to continue with essentially the same development strategy as the previous administration. Under this strategy, economic growth is to be promoted through expansion of non-coffee exports and through measures to stimulate investment and increase the efficiency of resource allocation. This Government proposes to give greater emphasis to expansion of economic and social infrastructure, however, with particular stress on improving transport and communications networks. Improvement in transport and communications infrastructure is expected to encourage increased inter-regional trade which, together with alleviation of the foreign exchange constraint, should further stimulate investment and economic growth. Measures to encourage industrial decentralization have been introduced to complement the actions taken to unify regional markets. 20. Rapid expansion of domestic energy resources is to be given high priority with the view to regaining self-sufficiency in energy as early as possible. Even under the most optimistic assumptions regarding development of such resources, however, Colombia will continue to rely heavily on energy imports until the mid-1980s when exports of coal and natural gas are expected to reduce the country's net energy deficit. Small scale agriculture and industry will continue to receive strong support through credit, and low income rural areas are to be helped through rural electrification, health and education programs and through expansion of feeder road projects. Innovative programs such as the integrated rural development (DRI) and nutrition projects financed by the Bank are expected to receive continued high priority. Public investment programs in education, health, water and sewerage and urban development (especially those directed at alleviating urban poverty) are to be continued as well. 21. Given the country's strong resource base and its high level of international reserves, Colombia should be able to achieve annual real GDP growth averaging about 7% during the 1979-83 period. Maintenance of this level of growth will require rapid expansion of non-coffee exports and high savings and investment rates. Public sector investment is expected to expand faster than GDP during this period because of the large proposed programs  - 8 - for infrastructure, social services and energy development. Financial require- ments for this higher level of investment will be substantial and public sector savings will have to be sustained at the current high levels. Given the expected decline in coffee revenue, improvements will be required in the administration and collection of non-coffee taxes, and additional tax measures may be required. Of equal importance is the continued upward adjustment in prices charged for the goods and services provided by the public decentralized agencies. Growth of non-coffee exports, especially of manufactured goods, will no doubt be strongly influenced by the rates of economic growth of Colombia's major trading partners, but appropriate domestic incentives will also play an important role. In this regard, it is expected that Colombia will follow an exchange rate policy designed to maintain the competitiveness of Colombian exports and that additional export promotion measures will be adopted to encourage both product and market diversification. 22. Greater efforts to increase efficiency and production in the agricul- tural and industrial sectors will also be needed to complement incentives given to non-traditional exports. Programs to meet these needs in the agricultural sector, including integrated rural development, expansion of farm credit, im- proved research and extension services, and upgraded marketing facilities, are already in place and will need to be strengthened. Further development of the country s capital markets is expected to increase private savings and im- prove the allocation of financial resources, thereby providing the basis for more rapid growth of industry. Ongoing and future infrastructure investments by the public sector should facilitate improvements in economic efficiency and lead to more rapid growth of output and employment in both industry and agriculture. 23. Projections of Colombia's energy balance indicate a rapidly growing deficit that is expected to reach significant proportions in the early 1980s in the absence of an aggressive energy development program. To avoid the con- straint on growth that large scale shortages of energy would entail, high priority is being given to the development of additional energy sources. The strategy which is being pursued is to reduce the nation's dependence on petro- leum as an energy source by developing substitutes such as hydropower, coal and natural gas. Major projects are being executed and others prepared to expand hydroelectric power generation and incentives are being given to pri- vate foreign companies for accelerated exploration and development of the country's petroleum, coal and natural gas potential. Exports of coal and natural gas are expected to offset a large portion of the petroleum imports projected for the mid to late 1980s. Conservation of existing resources resulting from higher energy prices is expected to slow the growth in energy demand. While the total investment cost of future energy development is still being determined, preliminary estimates indicate that the required investment could run as high as US$8.0 billion in current prices over the next decade. Even under the most optimistic assumption regarding foreign private investment, suppliers' credits and domestic resource mobilization, external long-term financing of about US$4.0 billion would be required in this sector alone during this period. Any significant delay in implementing the country's energy development program would most likely have serious adverse repercus- sions on future economic growth.  24. Because of the expected continued decline in world coffee prices, accelerating oil imports and the high import content of future investment projects, the current account of the balance of payments is expected to be in deficit throughout the early to mid-1980s. Increased mineral exports including coal, natural gas, and nickel, and completion of the large invest- ments in energy development are expected to relieve the pressure on the balance of payments by the late 1980s. Colombia is expected, therefore, to continue to be a large net importer of capital for some time to come. Its future external resource requirements reflect the need to supplement domestic savings in order to carry out the public sector investment program and to provide increasing amounts of foreign exchange to finance required imports of capital and intermediate goods. Assuming that the Colombian authorities permit a drawdown of international reserves to the equivalent of three months' imports in the years immediately ahead, gross external capital requirements are projected at US$6.3 billion between 1979 and 1983, or an annual average of about US$1,260 million. About half of Colombia's capital inflow during this period is expected to be provided by official multilateral and lbilateral sources, with commercial financial credits becoming increasingly important. 25. Colombia's public external debt repayable in foreign currency amounted to US$4.2 billion at the end of 1978, of which US$2.7 billion was disbursed and outstanding. The Bank/IDA share of this external ,debt was 29% and is expected to rise to 31% by 1983, before declining to :29% again by 1985. Although the public debt service ratio fell during the past two years as export growth accelerated, this ratio is expected to increase from 10.2% in 1978 to about 14.7% in 1983. Balance of payments prospects beyond 1980 will depend heavily on the timely development of domestic energy sources and on progress made in executing several natural resource- based export oriented projects currently under preparation. Given the expected continuation of sound economic and financial management and timely execution of the country's energy program, it should be possible to prevent the external sector from again becoming a constraint on economic growth and to maintain Colombia's creditworthiness for the required external borrowing. PART II: BANK GROUP OPERATIONS IN COLOMBIA 25. The proposed loan, the 80th to be made to Colombia, would bring the total amount of Bank loans to Colombia to US$2,097.6 million (net of cancella- tions). Of this amount, US$1,593.7 million is now held by the Bank; IDA made one credit of US$19.5 million for highways in 1961. Disbursements have been completed on 47 loans and the IDA credit. IFC has made investments and underwritten commitments of US$53.7 million in 24 enterprises and now holds US$17.94 million. Annex II contains a summary statement of Bank loans, the IDA credit and IFC investments as of March 31, 1979. The Annex also contains summaries on the execution of ongoing projects. 26. Since FY68, Bank lending in Colombia has become more diversified and has been concentrated on production-oriented programs and activities which emphasize social as well as economic benefits. Eight of the eleven agricul- tural loans have been made since then, nine of the twelve loans for industry,  - 10 - all three loans in the education sector, one loan for a nutrition project, two loans for urban development and, including the proposed project, all nine loans for water supply and sewerage. This compares with only ten loans since FY68 in the power and transport sectors. 27. Bank lending to Colombia in FY78, consisted of loans for nutrition improvement, water and sewerage, urban development, power generation and inter- connection, development finance companies and development of an export process- ing zone, totalling US$354.6 million equivalent. In addition to the proposed project, the FY79 program includes the already approved aviation development, Mesitas hydroelectric, and Cartagena urban, and Bogota's water and sewerage projects and proposed loans for power, nickel mining and agricultural credit for land reform beneficiaries. Work is also under way in vocational training, transportation, further mining development, power, including rural electrifica- tion, land settlement, further agricultural credit for commercial and small farmers and small scale industry for possible consideration by the Executive Directors during the next two years. 28. The proposed Bank lending conforms closely with the Government's development strategy. To help Colombia develop domestic sources of energy, a substantial part of the proposed lending would be for hydropower. The Bank intends to assist the development of coal mines and petroleum, which hold potential in helping Colombia meet part of its energy requirements and in diversifying exports. Bank involvement in the energy sector would help mobilize additional external financing as some of the projects would require co-financing. Other future loans would finance agriculture, industry and mining to assist the Government in its efforts to raise overall productivity, income and employment, and to strengthen and diversify exports. Closely related to these objectives would be the proposed Bank lending for transport infrastruc- ture. In this context, we are assisting the Government in preparing a rural and feeder roads project to integrate the more backward areas of the country into the modern economy. Other loans under preparation for highways, ports and railroads are aimed at helping Colombia handle larger volumes of non- traditional exports and the imported inputs on which the modern sector of its economy relies for expansion. Finally, a relatively large number of loans are being prepared in support of the Government's efforts to help the lowest 50% of the Colombian population. The proposed urban development and slum improvement, rural electrification, land settlement, credit for land reform beneficiaries and water supply and sewerage projects are principally designed to improve the standard of living of the poor. PART III: THE WATER SUPPLY AND SEWERAGE SECTOR Water Supply and Sewerage Facilities 29. Colombia's population in mid-1978 was estimated at 25.7 million. It is now growing at a rate of 2.1% per annum, down from 3.3% in the early 1960's. About 64% of the population lives in urban areas, defined here as communities with 2,500 people and over. Urban population is growing at a rate of 4.5%; rural population at about 1%. In contrast with other Latin American countries of comparable size and development, Colombia has several  - 11 - large urban centers. Twenty-two cities have more than 100,000 inhabitants of which eight have more than 300,000. The four largest, Bogota with 3.8 million, Medellin with 1.3 million, Cali with 1.1 million and Barranquilla with 800,000 account for about a quarter of the country's population. The rapid population growth, particularly the rapid urbanization, and rising incomes have created a strong demand for water supply and sewerage services which the Government is placing high priority to meet (for details see paragraph 37 below). 30. Although Colombia compares favorably with other Latin American countries in the coverage of water supply and sewerage services, one-fourth of its urban population still does not have direct access to public water supply and about 40% lack sewerage facilities. Service levels in rural areas are far lower; 40% of rural families had piped water and only 12% had sewerage facilities in 1978. Through different programs, the Government is trying to increase service levels in rural areas as well as to provide other amenities to discourage rural/urban migration. Sector Institutions and Investments 31. The water supply and sewerage sector in Colombia is under the responsibility of the Ministry of Public Health, in charge of establishing sectoral policies under the coordination of the National Planning Department (DNP). Responsibility for implementing those policies is with autonomous public entities responsible to the Ministry: the Instituto Nacional de Fomento Municipal/National Institute for Municipal Development (INSFOPAL) and the Instituto Nacional de Salud/National Institute of Health (INAS). INSFOPAL supervises and finances regional and municipal water companies in towns with populations of 2,500 or more. INAS constructs, finances and operates water supply and sewerage works for communities of up to 2,500 inhabitants. The cities of Bogota, Medellin, Cali and Palmira own independent companies which construct, operate and maintain water supply and sewerage facilities. About 36% of the population of Colombia lives in cities with water supply and sewerage companies under the jurisdiction of INSFOPAL; 38% in cities under the jurisdiction of INAS; and 26% in Bogota, Medellin, Cali and Palmira. 32. INSFOPAL's objective is to promote and assist the orderly develop- ment of the water supply and sewerage systems, solid waste collection and disposal services, slaughterhouses and market places. Since 1975, INSFOPAL has been relinquishing its role of direct operator of water supply and sewerage companies and is becoming a lending institution specialized in the development of these companies. It is now responsible for (i) preparing the public investment program for the sector, (ii) promoting the creation of new water and sewerage companies and the institutional strengthening of existing ones; (iii) assisting such companies in the design, construction and operation of services; (iv) channeling financing to the sector; (v) monitoring the execution of works; (vi) training utilities personnel; (vii) formulating design, construction and operational standards; and (viii) commenting on, and channelling requests for, tariff increases from the water supply and sewerage companies to the National Tariff Board.  - 12 - 33. INSFOPAL is managed by a Board chaired by the Minister of Public Health and composed of five other members appointed by the Government. INSFOPAL's day-to-day management is delegated to a General Director who supervises about 57 management personnel, 102 technical staff and 276 admini- strative and support staff. The General Director is normally replaced every four years with the change of Government; this usually brings about other changes in the hierarchy. Generally, the academic background and the work experience of the staff is below the level required for the institution to fully discharge its responsibilities; this is partly caused by the relatively low level salaries allowed by the Government. INSFOPAL's operations have been handicapped by an accounting system which does not provide timely information, by not well delineated organizational responsibilities and by poor planning. INSFOPAL has been allocating funds to the water supply and sewerage companies on the basis of availability of Government contributions. The flow of these contributions has been often erratic, subjecting the water supply and sewerage companies to continuous uncertainties and unnecessary delays in the execution of works. In the future, the Government intends to maintain a steady flow of funds to INSFOPAL (see paragraph 52(e) below) and with the measures and assistance included under the proposed project, strengthen the institution. 34. Organizationally, there are two types of municipal and regional utilities under the aegis of INSFOPAL: municipal public enterprises (EPMs) and regional or municipal sanitary works companies (EMPOSs). EPMs were created before the EMPOSs structure existed, by a decree of a city's municipal council and are managed by a Board appointed by the council, and a General Manager appointed by the Board. In addition to water supply and sewerage services and solid waste collection and disposal services, they are often in charge of providing electric power and telecommunications services, slaughter- houses, marketplaces and solid wastes collection and disposal services. About 41% of the population of Colombia lives in communities under the jurisdiction of EPMs (15%, if population living in Bogota, Medellin, Cali and Palmira is excluded). EMPOSs were created based by Government decree in 1975; most were formerly INSFOPAL subsidiaries (the last two INSFOPAL subsidiaries are in the process of becoming EMPOSs). EMPOSs provide water supply, sewerage, solid waste collection and disposal services, slaughterhouses and market- places. Each EMPOS is managed by a Board composed of the Government of the department (in regional EMPOSs) or the Mayor of the city (in municipal EMPOSs), a representative from the Ministry of Health, a delegate of the municipalities or the users, and a delegate of the regional (or municipal) development institution. The General Manager is appointed by the Minister of Health, from a shortlist presented by INSFOPAL. In the EMPOSs, the Government has tried to combine local participation with the advantages of centralized planning, financing and technical assistance. About 18% of the population of Colombia lives in communities served by EMPOSs. As it is in the case of INSFOPAL, EPMs and EMPOSs suffer from a shortage of qualified personnel, inade- quate management information systems and lack of planning. INSFOPAL has the authority to intervene in EPMs and EMPOSs which are not performing adequately. INSFOPAL has carried out studies for six EMPOSs, recommending changes in planning, budgeting, accounting, purchasing, information, billing and collec- tion procedures. Studies for other companies are under way. The proposed project would assist INSFOPAL in building up EPMs and EMPOSs.  - 13 - 35. Investment for water supply and sewerage has increased from US$21.6 million equivalent in 1965 to US$55.8 million equivalent in 1975 and is expected to reach nearly US$100 million equivalent by 1980. It has averaged about 5.5% of total public sector investment during the past three years. External assistance to the sector started in 1961; about three quarters of the funds have come from the Bank, and the remainder from the IDB, USAID and the Kredistanstalt fur Wiederaufbau (KfW). Investments during the three-year period 1978-80 are expected to be US$306 million equivalent: US$183 million by the Bogota, Medellin and Cali municipal companies, US$97 million by INSFOPAL- financed companies and US$26 million by INAS. Government Objectives 36. The Government aims at expanding the coverage and improving the quality of water supply and sewerage services and at increasing the sector entities contribution to investment. By 1990, the Government expects to provide piped water to 90% of the urban population and 80% of the rtLral non- dispersed population, and sewerage to 80% and 55%, respectively. Investments are planned to be finlaliced 50% from foreign borrowings, 35% from Governllielt budgetary contributions and 15% from internal cash generations and local borrowings. To make the services affordable to low income families,, progres- sive tariff scales will continue to be used; in rural areas, charges will continue to be based on the communities' ability to pay. Achievement of the Government's objectives will depend heavily upon the water supply and sewerage companies being able to overcome their managerial deficiencies and financial constraints; the latter largely imposed by the local authorities' reluctance to adjust tariffs levels to offset rising costs and provide a reasonaable contribution to investment. As state. earlier, the Government proposes to strerigt1l-r INSFOPAL, since it believes that a national institution is the most effective means of (i) providing managerial, technical and financial assistance to the large number of water supply and sewerage companies res- ponsible for investment in the sector, and (ii) ensuring that the operation of these companies, including the operational an(l technical standards applied and the level an(l structure of tariffs, is in line with national parameters. Bank Role in the Sector 37. Bank involvement in water supply and sewerage has been extensive and has supported the Government objectives referred to in the previous para- graph. Noteworthy is the Bank's coritribution to water and sewerage programs tliaL .1-4st the poor, particularly through components i-n integrated projects. The proposed loan woul.! be the sixth for sewerage and the ninth for water supply (excluding loans for integrated projects with water supply and seweragu omponents). All told, Bank assistance for water supply and sewerage has covered all but one of the major cities, nearly all of the medium-sized urban areas and rtural areas in 14 departments. Including the proposed loan, total Bank lending for water sup)l)ly L.ti 3ewerage which commenced only in 1968 would aqTo,HLi ;:- JS$242.3 million or about 12% of total Bank lending thus far to Colombia Performance under previous loans has been generally satisfactory. The Project Performanice Audit Report for Loan 536-CO (Bogota Water Supply Project), the only one already available for the sector, noted the importance of carefully evaluating the growthl of demand and per capita consumption, and thle aeg-tive impact of cost overruns because of inflation. In the preparation of the proposed project these comments were taken into account.  - 14 - Performance Under Previous Loans to INSFOPAL 38. The Bank has made two loans to INSFOPAL for the expansion of water supply and sewerage services in medium and small size cities (seven cities in the first one and eight cities in the second). The first loan (860-CO of October 1972) for US$9.1 million equivalent is 70% disbursed and the second (1072-CO of January 1975) for US$27 million equivalent is 39% disbursed. 1/ Progress under botth loans h,as heen slower than expected, mainly because there were delays in the preparation of final designs, insufficient and irregular budgetary conitributions to INSFOPAL (in large measure C;t]Lau'd by Government's economic stabilization programs) and slow progress in putting into effecl: required tariff increases. These problems have beern, )r are being, resolved and works under both loanis are sche1lu' 1 .-- ompletion during the first quarter of 1981. 3c9, 1rSFOPAL's performance under both loans has be,ri below expectations. During appraisal of the first project, the Bank, aware of INSFOPAL's organiza- tional weakness and in view of the urgent need to provide water supply and sewerage services to the cities included in the project, opted for setting up a special unit within INSFOPAL to handle project-related matters (bid procure- ments aspects, construction and financial supervision, loan disbursements, and technical assistance to the water supply and sewerage companU-is). The special unit did not receive adequate slupport from the rest of INSFOPAL and performed p,,orly. In the second project, therefore, the foc-ls was on strengthening INSFOPAL. This effort was supported by the Government's own recognition that INSFOPAL had to be converted into an specialized lending institution; a decree reorganizing INSFOPAL along those lines was issued on December 10, 1975 (paragraph 33). Although INSFOPAL carried out the reorganization, strengthenHliy, )F the institution has yet to be accomplished mainly because: (a) during the period following the signing of the second loan and( the reorganization, INSFOPAL suffered from inadequate and highly political management which overextended the institution financially and resulted in the loss of qualified technical personnel, and (b) the technical and financial capabilities of the wal:er supply and sewerage companies continued to slide because of INSFOPAL's declining ability to provide adequate technical assistance and to live up to its finan- cial commitments. An objective of the proposed project, therefore, is to assist INSFOPAL in overcoming these deficiencies. In so aiming the Bank rec(cr1izes the difficulties involved but it is encomuraged by recent steps ta*ken by the Government toward the strengthening of institutions in the water supply and sewerage sector. This, together with the corrective measures included under tlhe proposed project, which are also conditions of a recent Inter-American Development Bank (IDB) loan to INSFOPAL, and INSFOPAI's own desire to improve, should make it possible to reach this project objective. 1/ As of April 30, 1979.  - 15 - PART IV: THE PROJECT Background and Objectives 40. In late 1975, the Government approached the Bank requesting assis- tance for the proposed project. The Bank worked closely with INSFOPAL in project formulation but awaited the Government deciding on ways to strengthen INSFOPAL and the finances of the sector before appraisal. The project was appraised in July-August 1978. A report entitled "Colombia - Third Medium and Small Size Cities Water Supply and Sewerage Project," No. 2275a-CO, dated May 18, 1979 is being circulated separately to the Executive Directors. A supplementary data sheet is presented in Annex III. Negotiations were held in Washington on May 7-9, 1979. The Government delegation was headed by Colombia's Ambassador to the USA, Mr. V. Barco; INSFOPAL delegation was headed by its General Director, Mr. A. Araujo. 41. The project aims at improving health and living conditions in medium and small size cities by (a) providing potable water through house connections to about 472,000 people in 19 cities by 1983; (b) providing sewerage services to approximately 654,000 people in 14 cities by 1983; (c) improving and expand- ing water production and transmission facilities to meet forecast demand through 1990; (d) reducing unaccounted for water; and (e) carrying out urgently needed works to prevent undesirable sewerage discharges into open storm drains and to protect water supply sources from further contamination. The project would also support the Government's objective of strengthening INSFOPAL and of converting the EPMs and EMPOSs into well-run public utilities. Project Description 42. The project consists of the following: (a) the construction of new, or optimization of existing, water treatment facilities for the cities of Cartagena, Neiva, Monteria, Riohacha, Girardot, Copacabana, Rio Negro, Calarca, Aguachica, Magangue, Codazzi, Pamplona, Chiquinquira, and Espinal; (b) the construction of pumping and transmission facilities connect- ing the water production facilities of the city of Barranquilla to the distribution system of the city of Soledad; (c) the improvement of water intakes, pumping stations, and raw water transmission lines in 14 cities; (d) the construction of additional water storage in 16 cities with an aggregate capacity of about 60,000 cubic meters; (e) the extension of water distribution networks in 19 cities, by about 420 km in the aggregate; (f) the construction of about 80,000 metered house water connections in 16 cities and the purchase and installation of about 62,000 residential water meters;  - 16 - (g) the purchase and installation of water production meters; (h) the construction of sewers in 14 cities, with an aggregate length of about 400 km; (i) the construction of interceptors and outfalls in 11 cities with an aggregate length of about 80 km; (j) the construction of about 110,000 domiciliary sewerage connections; (k) the construction of water pumping stations in four cities and sewerage pumping stations in three cities; (1) the construction of stabilization ponds for sewerage treatment in the city of Sabanalarga; and (m) a technical assistance program for: (i) improvements in the organizational structure and operations of INSFOPAL using consultants as needed in the areas of planning, financing, organization, and engineering; and (ii) strengthening the operational capability of EPMs and EMPOSs (including the acquisition of office and laboratory equipment), using the services of consultants under the supervision of INSFOPAL. 43. The proposed project, representing about 26% of INSFOPAL investment program for 1979-83, would support water supply and/or sewerage investments in 23 cities with between 20,000 to 400,000 inhabitants. The cities have a combined population of 1.9 million with agriculture and commerce as their main sources of income; most of them are either departmental or provincial capitals. About 35% of project investments would be for sewerage works, 20% for distribu- tion pipes, 17% for water production works, 11% for engineering and administra- tion and the remainder (17%) for pumping stations, storage tanks, meters, operation equipment and technical assistance. 44. The cities were selected based on Government established priorities in the sector. The following was taken into account to establish priorities: existing coverage of services, city growth prospects, marginal cost of pro- viding services, and readiness of the community to partly finance the expansion of services. Investments in five of the cities would complement those made under the aforementioned Bank loans to INSFOPAL; investment in 11 cities would complement investments to be carried out under the first Urban Develop- ment Project (Loan 1558-CO of April 1978). Other cities, which are not included under the proposed project because they are financially weaker, are being or are expected to be financed with soft loans from the IDB or the Canadian International Development Association (CIDA). In the event that one of the cities included in the proposed project would not comply, with minimum performance requirements, new cities could become eligible or cities already included in the project could obtain additional financing, provided that (i) the city's net internal contribution to project cost is at least 10%, (ii) the sub- project rate of return on revalued fixed assets is satisfactory, and (iii) the proposed engineering works represent the least cost alternative (draft Supple- mental Letter).  - 17 - Cost Estimates and Financing 45. The estimated cost of the project is US$71.9 million equivalent, of which US$31.0 million equivalent is the estimated foreign exchange compo- nent. These estimates are based on January 1979 prices and include US$7.6 million for physical contingencies and US$13.7 million for price contingencies. They were calculated by INSFOPAL with the assistance of consultants, and are based on costs of work recently carried out by INSFOPAL and the companies, and further verified by direct inquiries with civil works contracts and equipment manufactures. 46. The project would be financed from (i) the proposed US$31.0 million Bank loan, (ii) a Government budgetary contribution of US$31.7 mill-ion equi- valent, and (iii) US$9.2 million equivalent from internal cash generation. The Bank loan would be to INSFOPAL and the proceeds relent on the same terms to the companies, which would bear the foreign exchange risk. Government budgetary contribution to INSFOPAL would be relent to the companies for 17 years including four years of grace, at interest of 18% per annum for communi- ties with populations over 35,000, and at 12% per annum for smaller communities, as well as in the city of Tumaco, which has a heavy concentration of low income population; these terms would be subject to periodic review by INSFOPAL and the Bank (Section 3.03(a)(i) and (ii) of the draft Loan Agreement). Project Implementation 47. INSFOPAL would be responsible that the works under the project be efficiently and expeditiously carried out; physical execution of the works would be the direct responsibility of five EPMs serving five cities, and of fifteen EMPOSs, including two companies in the process of becoming EMPOSs, serving eighteen cities. INSFOPAL would supervise the execution of the works, channel Government and Bank financing and provide technical assistance. Construction would take place in 1980-83, while institutional strengthening would start in mid-1979 (see paragraphs 50 through 59 below). INSFOPAL would enter into project agreements with the companies spelling out administrative, technical and financial conditions under which the works would be carried out. The signing of each agreement would be a condition of disbursement for the works under each company. 48. Project preparation for the project works is well advanced. Feasi- bility studies for each subproject were carried out by INSFOPAL with the assistance of consultants, and least cost solutions have been identified. Most companies have qualified consultants already working in the preparation of the final designs and the services of other consultants would be used for project supervision. Consultants would also be retained for the provision of other technical assistance to INSFOPAL and to the water supply and sewerage companies under terms of reference acceptable to the Bank (Sections 3.01(b); 3.03(a)(iii) of the draft Loan Agreement). Total consultant services under the project would be 2,878 man-months at US$2,000 a month for those providing assistance to EPMs and EMPOs and US$4,000 a month for those providing assistance to INSFOPAL. Institutional Strengthening 49. Actions have already been taken or would be taken during execution of the proposed project, to strengthen managerially and financially INSFOPAL, the EPMs and the EMPOSs.  - 18 - 50. INSFOPAL. To strengthen its organizational structure, accounting procedures and long-term planning, INSFOPAL has recently created a special unit, the Institutional Development Unit (UDI). UDI would analyze INSFOPAL's organi- zation and functions and propose improvements, including personnel reallocation, training programs and remuneration levels. The UDI would also prepare guide- lines for budget preparation and control, accrual based accounting and informa- tion systems for INSFOPAL, EPMs and EMPOSs: and would study the establishment of a solid waste unit in INSFOPAL. The project includes assistance to the UDI from full time consultants. INSFOPAL has agreed to give the UDI the responsi- bilities described herein (Section 3.01(c) and Schedule 5 of the draft Loan Agreement). INSFOPAL has also agreed to: (a) initiate not later than December 31, 1979, a training program and to give the Bank an opportunity to comment, not later than September 30, 1979, on the terms of reference (Section 3.01(d) of the draft Loan Agreement); (b) as a condition of loan effectiveness, staff an internal auditing section, reporting to the Director General; and (c) have its financial statements audited annually by auditors acceptable to the Bank and presented to the Bank not later than April 30 of the following year (Section 5.02 of the draft Loan Agreement). The recently created position of Deputy General Director, which is expected to be a career post, should ensure greater management continuity. The staffing of the IDU and the appointment of the Deputy General Director are conditions of loan effectiveness. 51. To facilitate INSFOPAL's planning functions, the Government has advised the Bank that it would prepare specific sector policies and objectives, as part of a National Development Plan. On the basis of these policies and objectives INSFOPAL would prepare a comprehensive water supply and sewerage development program for areas under INSFOPAL's jurisdiction and approve it not later than June 30, 1980 (Section 5.06 of the draft Loan Agreement and Schedule 5 of the Loan Agreement). 52. INSFOPAL has experienced financial losses from: (i) the direct operation of water supply and sewerage services, (ii) charging inadequate fees for the technical assistance it provides, and (iii) assuming the foreign exchange risk on loans. In addition, INSFOPAL has made an excessive number of grants to the water supply and sewerage companies in the form of equity contributions. After 1979, when INSFOPAL will be fully divested from its direct operational responsibilities, its revenues will come from interest and charges for technical assistance. During negotiations agreement was reached that INSFOPAL finances would be strengthened as follows: (a) INSFOPAL would on-lend to the water supply/sewerage companies, and reinvest loan repayments, on adequate terms (paragraph 46 above); (b) INSFOPAL's equity contributions in the water supply and sewerage companies, in the past distributed at the discretion of the General Director, would be made only from specific Government contributions earmarked for this purpose (Section 4.03 of the draft Loan Agreement); (c) INSFOPAL would not exceed, without the agreement of the Bank, its 1979-83 investment program by 5% in any one year (Section 5.04 of the draft Loan Agreement). The 1979-83 Investment  - 19 - Program has been reviewed by the Bank and found to be consistent with forecast sources of funds, after debt service (Annex 6 to the Loan Agreement); (d) INSFOPAL would implement a standard schedule of service and administration changes sufficient to cover its direct cost of lending technical services plus administrative overhead (Section 4.04 of the draft Loan Agreement); and (e) The Government would provide INSOFPAL with budgetary contributions for this project and the two earlier projects in quarterly install- ments, in accordance with a schedule to be reviewed annually with the Bank (draft Supplemental Letter). 53. EPMs and EMPOSs. As a condition of disbursement for each sub- project, the Bank would be furnished with a plan, to be acceptable to the Bank, for the administrative, technical and financial improvement of each EPM or EMPOS, together with a schedule for the carrying out of such a plan. The plan would arise from the studies being carried out by INSFOPAL in EPMs and EMPOSs, including adequate budgets, accrual based accounting, internal audit and a system to collect basic operational data. INSFOPAL has agreed to take the necessary measures to cause the EPMs and EMPOSs to: (i) introduce bookkeeping improvements satisfactory to INSFOPAL and the Bank not later than October 31, 1979, to permit full review of the origin and application of funds for each city by type of public service provided, and (ii) employ external auditors acceptable to the Bank (Section 3.02(b) and 3.03(a)(vi)(5) of the draft Loan Agreement). The EPMs and EMPOSs would rely on local consultants for technical support to ensure that the civil works meet construction standards (Section 3.03(a)(iii) of the draft Loan Agreement). EPMs and EMPOS would take measure to reduce by 1986 unaccounted water supplied to users to 25% (Section 3.03(a)(vi)(10) of the draft Loan Agreement). 54. The recent financial performance of the EPMs and EMPOSs has been generally adequate, but often affected by low tariffs. Cross-subsidization among services is frequent, and occasionally municipal taxes are used to cover deficits. As part of the efforts to improve the finances of the EPMs and EMPOSs, during negotiations INSFOPAL has agreed that in companies which are responsible for more than one city or service, their total revenues from all cities and services would cover all expenses, working capital requirements and debt service beginning in 1980 (Section 3.03(a)(viii) of the draft Loan Agreement), and that companies would refrain from diverting revenues from water supply and sewerage services from one city or service to another (Sec- tion 3.03(a)(vi)(2) of the draft Loan Agreement). 55. Tariff levels and structures are proposed by the EPMs and EMPOSs and submitted through INSFOPAL to the National Tariff Board for approval. Substantial tariff increases would be required in most of the cities to finance their share of investment costs. The Government and INSFOPAL have agreed, therefore, to the following: (a) as a condition of disbursement for each sub-project, EPMs and EMPOSs would raise tariffs for 1979 to levels acceptable to the Bank;  - 20 - (b) financial and tariff studies, to be carried out under terms of reference satisfactory to the Bank and to be completed by October 31, 1979, would recommend appropriate tariff levels taking into account (i) revision of property assessments; (ii) progressivity of tariffs; (iii) cross subsidies between industrial and commercial users, and residential areas; (iv) sewerage charges in accordance with investment costs (Section 3.02 (c) of the draft Loan Agreement); (c) Beginning in 1980, tariff structures would also be based on financial viability criteria pertaining to each EPMs/EMPOS so that operating revenues would cover operating expenses and debt service as well as a reasonable portion of investments (Section 3.02(c)(i) of the draft Loan Agreement); (d) an inventory of assets in operation for the studies referred to in (b) above would be prepared prior to September 30, 1979 and revalued annually (Section 3.02(a) of the draft Loan Agreement); and (e) upon completion of these studies, specific annual rates of return for each city would be agreed upon and included in each subsidiary loan agreement between INSFOPAL and each company (Section 3.02(d) of the draft Loan Agreement). 56. In the city of Monteria tariff increases to meet cash requirements are too large to be implemented during the project period. Therefore, before approval of the project loan agreement for that city, the Bank would be given satisfactory evidence that any cash shortfall would be covered by additional municipal taxes or additional borrowings under terms and conditions acceptable to the Bank (Section 3.03(b) of the draft Loan Agreement). The cities of Ibague and Cartago would partly finance their subproject with betterment levies. Consequently,as a condition of disbursement, the Bank would receive evidence that satisfactory arrangements have been made to collect these levies. As a condition of disbursement for the city of Chiquinquira, evidence would be submitted to the Bank that water supply and sewerage facilities, now owned by the municipality, have been transferred to the EMPOS. 57. Four cities which received financing under the earlier Bank loans to INSFOPAL, are expected to comply with covenanted rates of return for 1979. One city, Neiva, in accordance with its reduced financial requirements, is expected to achieve a 2% rate of return in 1979 instead of the covenanted 6%. From 1980 onwards, all five cities would be required to meet the rates of return to be agreed for the proposed prbject (para 56(e)). 58. INSFOPAL has agreed to provide the Bank annually, with financial projections and cash flows for at least five years for each company and, every six months, with a financial report containing detailed information and comments on the compliance by the companies with the financial viability criteria to monitor financial performance (Section 3.05(c) of the draft Loan Agreement). Procurement and Disbursements 59. All contracts would be awarded through international competitive bidding in accordance with Bank procurement guidelines, except for civil works  - 21 - contracts under US$150,000, not exceeding an aggregate of US$2.5 million equiva- lent, which would be awarded on the basis of local competitive bidding proce- dures satisfactory to the Bank. Foreign suppliers are expected to win most contracts for equipment and pumps, while local manufacturers and contractors those for pipes and civil works. 60. The proposed loan would be disbursed as follows: (a) civil works, 37% of total expenditures; (b) equipment, other than laboratory and office equipment, materials and supplies, 100% of foreign expenditures or 37% of local expenditures; (c) laboratory and office equipment, 100% of foreign expenditures or 30% of local expenditures; (d) consulting services, 100% of foreign expenditures or 40% of local expenditures. In order that the institutional strengthening proceed without delay, retro- active financing of up to US$150,000 for expenditures incurred after February 1, 1979 for consultant services would be provided under the loan. The loan is expected to be fully disbursed before December 31, 1983. Environmental Aspects 61. There would be no adverse effects on the environment stemnming from the project. INSFOPAL has agreed to carry out an evaluation of the environmental impact of sewerage discharged by the city of Soledad on the water sources for the city of Barranquilla before final design of sewerage works (Section 3.03(a)(xii) of the draft Loan Agreement and 2.02(b) of the Guarantee Agreement). In addition, during negotiations INSFOPAL has agreed to give the Bank an opportunity to comment on a study of pollution in the Cartagena Bay now being carried out prior to issuing final recommendations (Section 5.05 of the draft Loan Agreement). Benefits and Risks 62. The proposed project would improve living and health conditions in 23 small and medium size cities. About 473,000 people would benefit directly from the water supply component, 654,000 from the sewerage component. It is estimated that about 47% of the population to be supplied with water and about 50% of that to receive sewerage services are below the poverty line. The proposed project would also support the Government's objective of streng- thening the institutions in the sector. 63. The project works are least cost alternatives and where this is not yet evident (the cities of Dos Quebradas and Soledad) detailed quantitative analysis will be undertaken. Incremental rates of return (IRR) were estimated for water supply/sewerage subprojects using as a proxy tariff levels based on tariffs projected in accordance with financial covenants (no IRR was estimated for subprojects which include sewerage only). On this basis, the IRR of sub- projects which represent 85% of total project costs is 13% (two percentage  - 22 - above the estimated opportunity cost of capital in Colombia). Benefits such as improvements in public health, labor productivity and environment were either excluded or partially reflected in the level of tariffs projected. 64. Project works are conventional in design and well within the capa- bility of local contractors. The project presents higher than usual risks in that it may not be implemented in the intended period, if INSFOPAL, the EPMs and the EMPOSs do not achieve the forecast institutional and financial improve- ments in a short time span. It is expected, however, that the Government's commitment to strengthening the entities in the sector and close supervision by the Bank should ensure that the project is carried out as scheduled. PART V: LEGAL INSTRUMENTS AND AUTHORITY 65. The draft Loan Agreement between the Bank and INSFOPAL, the draft Guarantee Agreement between the Republic of Colombia and the Bank, and the report of the Committee provided for in Article III, Section 4(iii) of the Bank's Articles of Agreement are being distributed to the Executive Directors separately. 66. Special conditions of the loan are listed in Section III of Annex III. A special condition of effectiveness is that INSFOPAL appoints the staff of the UPD the Deputy General Director, and staff the internal auditing section. Conditions of disbursement for each project beneficiary city would be (a) that INSFOPAL has presented to the Bank a plan for the improvement of the respective EPM or EMPOS; (b) that INSFOPAL has signed with the respective EPM or EMPOS a project loan agreement; (c) that for the cities of Ibague and Cartago INSFOPAL has presented to the Bank satisfactory evidence that better- ment levies would be collected on the amounts required; (d) that EPMs and EMPOSs have put into effect the tariff increases required in 1979; and (e) that water supply and sewerage facilities for the city of Chiquinquira have been transferred to the correspondent EMPOS. 67. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI: RECOMMENDATION 68. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President Attachments May 30, 1979  - 23 - ANNEX I Page 1 of 5 COLOMBIA - SOCIAL INDICATORS DATA SHEET REFERENCE GROIPS (ADJUSTED AVERAGES COLOMBIA /a LAND AREA (THOUSAND SQ. KM.) - MOST RECENT ESTIMATE) TOTAL 1138.9 SAME SAME NEXT HICHER AGRICULTURAL 224.8 MOST RECEST GEOGRAPHIC INCOME INCOME 1960 /b 1970 /b ESTIMATE /b REGION /c GROUP /d GROUP /e fNP PER CAPITA (US$) 220.0 370.0 710.0 1066.7 867.2 1796.4 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 491.0 606.0 671.0 911.1 578.3 1525.0 POPULATION AND VITAL. STATISTICS TOTAL POPULATION, MID-YEAR (MILLIONS) 15.4 20.6 25.0 URBAN POPULATION (PERCENT OF TOTAL) 53.0 /f 60.3 64.3 57.9 46.2 52. 2 POPULATION DENSITY PER SQ. KM. 14.0 18.0 22.0 25.6 50.8 27.5 PER SQ. KM. AGRICULTURAL LAND 71.0 93.0 111.0 77.6 93.3 116.4 POPULATION ACE STRUCTURE (PERCENT) 0-14 YRS. 46.6 46.6 44.1 42.0 42.9 34.8 15-64 YRS. 50.4 50.4 52.7 52.2 53.5 56.0 b5 YRS. AND ABOVE 3.0 3.0 3.2 3.7 3.5 5.7 POPULATION GROWTH RATE (PERCENT) TOTAL 2.9 2.9 2.8 2.7 2.5 I.b [IRBAN b.0 / 5.5 /h 4.5 4.3 4.7 3.4 CRUDE BIRTH RATE (PER THOUSAND) 46.1 /i 44.3 /i 40.6 /i 35.8 37.8 27.0 CRUDE DEATH RATE (PER THOUSAND) 14.7 11.0 8.8 9.1 10.8 9.9 GROSS REPRODUCTION RATE 3.2 3.2 3.1 2.6 2.5 1 ,9 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. 115.4 177.3 USERS (PERCENT OP MARRIED WOMEN) .. ., 31.0 15.1 20.0 19.3 FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1970-100) 98.0 100.0 109.1 102.1 107.3 103.8 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 94.0 92.0 94.0 103.9 105.3 110.4 PROTEINS (GRAMS PER DAY) 50.0 51.0 47.0 60.3 63.0 77.7 OF WHICH ANIMAL AND PULSE 28.0 29.0 24.0 26.7 21.7 22.2 CHILD (AGES 1-4) MORTALITY RATE 16.3 .. 12.1 8.7 8.0 1.9 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 54.7 58.5 60.9 62.6 57.2 6'J.0 INFANT MORTALITY RATE (PER THOUSAND) 100.0 /; 70.0 97.1 56.9 53.9 38.2 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. 63.0 64.0 60.7 56.8 67.7 URBAN .. 88.0 86.0 78.0 79.0 83.5 RURAL .. 28.0 33.0 34.9 31.8 41.5 ACCESS To EXCRETA DISPOSAL (PERCENT OP POPULATION) TOTAL .. 47.0 48.0 61.1 30.9 70.3 URBAN .. 75.0 73.0 80.3 45.4 90.7 RURAL '' 8.0 13.0 25.4 16.1 38.3 POPULATION PER PHYSICIAN 2400.0 2170.0 21801.0 1899.3 2706.8 1310.8 POPULATION PER NURSING PERSON 3740.0 2040.0 1920.0 1220.1 1462.0 849.2 POPULATION PER HOSPITAL BED TOTAL 580.0 510.0 530.0 422.3 493.9 275.4 URBAN .. .. 320.0 258.2 229.6 1.!9.9 RURAL .. .. 9670.0 2281.6 2947.9 965.9 ADMISSIONS PER HOSPITAL BED .. 23.0 25.0 25.6 22.1 18.9 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL .. b.0 5.9 5.2 5.2 3.9 URBAN .. .. .. .. 5.0 RURAL .. .. .. .. 5.4 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL .. .. .. 2.0 2.0 0.9 URBAN .. .. .. 2.1 1.5 0.8 RURAL .. .. .. 2.7 2.7 1.0 ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL 47.0 /f .. .. 51.2 64.1 59.2 URBAN 83.0 If .. .. 77.3 67.8 78.0 RURAL 8.0 If .. .. 12.8 34.1 12.5  - 24 - AN EXI Page 2 of 5 COLOMBIA - SOCIAL INDICATORS DATA SHEET REFERENCE GROUPS (ADJUSTED AVERAGES COLOMBIA /a - MOST RECENT ESTIMATE) SAME SAME NEXT HIGHER MOST RECENT GEOGRAPHIC INCOME INCOME 1960 Lb 1970 /b ESTIMATE /b REGION /c GROUP /d GROUP /e EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 77.0 98.0 105.0 103.5 99.8 97.6 FEMALE 77.0 100.0 108.0 102.9 93.3 87.4 SECONDARY: TOTAL 12.0 23.0 36.0 37.2 33.8 47.8 FEMALE 11.0 22.0 36.0 37.9 29.8 42.6 VOCATIONAL (PERCENT OF SECONDARY) 31.0 /k 21.0 17.0 14.7 12.8 22.7 PUPIL-TEACHER RATIO PRIMARY 38.0 38.0 33.0 32.8 34.9 25.4 SECONDARY 11.0 17.0 19.10 17.8 22.2 24.9 ADULT LITERACY RATE (PERCENT) 63.0 73.0 81.0 74.9 71.8 96.3 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 7.0 11.0 15.0 26.9 12.4 32.3 RADIO RECEIVERS PER THOUSAND POPULATION 139.0 105.0 117.0 173.5 104.5 201.9 TV RECEIVERS PER THOUSAND POPULATION 11.0 38.0 .. 69.4 28.1 97.7 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 56.0 109.0 69.0 72.8 45.2 70.9 CINEMA ANNUAL ATTENDANCE PER CAPITA .. .. 6.8 4.3 4.6 4.4 EMPLOYMENT TOTAL LABOR FORCE (THOUSANDS) 5100.0 /f 6200.0 6700.0 FEMALE (PERCENT) 18.9 24.6 24.6 21.4 25.7 17.4 AGRICULTURE (PERCENT) 47.0 /f 39.0 .. 37.8 46.2 38.4 INDUSTRY (PERCENT) 19.2 21.0 .. PARTICIPATION gATE (PERCENT) TOTAL 30.6 29 . 7 29.7 30.8 33.8 33.7 MALE 49.8 44.9 44.7 47.2 48.1 50.8 FEMALE 11.6 14.6 14.6 13.2 17.3 12.6 ECONOMIC DEPENDENCY RATIO 1.8 1.6 1.6 1.7 1.4 1.4 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS 41.2 /f,l 31.9 /1 27.2 28.9 23.6 20.2 HIGHEST 20 PERCENT OF HOUSEHOLDS 67.7 /f,l 60.1 /1 54.4 57.7 52.3 47.9 LOWEST 20 PERCENT OF HOUSEHOLDS 2.1 /f.1 3.5 /1 5.2 3.2 4.3 3.2 LOWEST 40 PERCENT OF HOUSEHOLDS 6.8 /f,l 10.1 /1 14.3 10.7 13.1 13.7 POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. .. 251.9 191.9 RURAL .. .. 145.0 200.6 193.1 157.9 ESTIMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 154.0 403.1 319.8 448.8 RURAL .. .. 153.0 258.0 197.7 313.1 ESTIMATED POPULATION BELOW POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 24.0 24.8 19.8 23.2 RURAL .. .. 55.0 65.2 35.1 54.5 Not available Not applicable. NOTES /a The adjusted group averages for each indicator are population-weighted geometric means, excluding the extrene values of the indicator and the most populated country in each group. Coverage of countries among the indicators depends on availability of data and is not uniform. /b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1973 and 1977. /c Latin America & Caribbean; /d Intermediate Middle Income (5551-1135 per capita, 1976); /e Upper Middle Income ($1136-2500 per capita, 1976); /f 1964; /g 1951-64; /h 1964-70; /i Official estimates based on registration data show crude birth rate for 1960 as 39.0, average 1961-70 as 36.0 and average 1971-76 as 31.0; J Registered only; /k Inclades teacher-training at the third level; /1 Economically active population. September, 1978  - 25 - ANNEX I DEFINITIONS O7 SOCIAL INDICATORS Page 3 of 5 b'L&: The adjusted group averages for each indicator are population-weighted gometric means, excluding the extreme values of the indicator end the most populated country in each group. Coverage of countries among the indicators dspends on ayailability of data and is not uniform. Due to) lack of data, group averages for Capital Surplus Oil Exporters cnd indicators of access to water end excrete disposal, houaisg, income distribution sd poverty are simple population-weighted geometric means without the exclusion of eatrme values. LAND AREA (thousand sq. k.) Population per hospital bed - total, urban. and rural - Population (tota1, Total - Total surface area comprising lend ares and inland wters. urben, and rural) divided by their respective number of hospital bade Agricultural - Most recent estimate of agricultural area used temporarily available in public end private general and specialized hospital and re- or pemanently for crops, pastures, market end kitchen gardens or to habilitation centers. Hospitals are establishments permanently staffed by lie fallow. at leat one physician. Establishtmnts providing principally cuotodial care are not included. Rural hospitals, however, include health and nedi- GNP PER CAPITA (US$) - GNP per capita estimates at current market prices, cal centers not permansntly etaffed by a physician (but by a medical as calculated by same conversion method as World Bank Atlas (1975-77 basis); sistant, nurse, midwife, etc.) which offer in-patient accommodation and 1960, 1970, and 1977 data, provide a limited renge of medical facilities. Admissions per hoepital bed - Total number of edmiasions to or dlachargoo ENERGY CONSUMPTION PER CAPITA - Annual consumption of commercial energy fro hospitals divided by the number of beds. (coal and lignite, petroleum, natural gas and hydro-, nuclear and geo- thermal electricity) in kilograms of coal equivalent per capita. HOUSING Averaee silo of household (persons oar houP euold) - tctal, urban, and rural- POPULATION AND VITAL STATISTICS A household consists of a group of individuals who share living quarters Total population. mid-year (millions) - As of July 1; if not available, and their main meals. A boarder or lodger may or nay not be included in average of two end-year estimates; 1960, 1970, and 1977 data, the household for statistIcal purposes. Statistical definitions of house- Urban population (percent of total) - Ratio of urban to total popula- hold vary. tion; different definitions of urban areas may affect comparability Average number of persons per room - total, urban, and rural - Average num- of data among countries, ber of persons per room in all, urb-n, and rural occupied conventional Population density dwellings, respectively. Dwellings emolude non-permanent structures and Per sq. km. - Mid-year population per square kilometer (100 hectares) unoccupied parts. of total area. Access to electricity (percent of dwellings) - total, urban, and tural - Per q. km. agriculture land - Computed as above for agricultural land Conventional dwellings with eleCtricity in living quarters as percentage only. of total, urban, and rural dwellings respectively. Population age structure (percent) - Children (0-14 yeara), working-age (15-64 years). and retired (65 years and over) as percentages of mid- EDUCATION year population. Adjusted enrollment ratios Population growth rate (percent) - total, and urban - Compound annual Primary school - total, and female - Total and female enrollment of all ages growth rates of total and urban mid-year populations for 1950-60, at the primary level as percentages of respectively pritary school-age 1960-70, and 1970-75. populations; normally includes children aged 6-11 years but adjunted for Crude birth rate (per thousand) - Annual live birth. per thousand of different lengths of primary education; for countries with universal ado- mid-year population; ten-year arithmetic averages ending in 1960 and ration enrollment may exceed 100 percent since some pupils are below or 1970 and five-year average ending in 1975 for msat recent estimate, above the official school age. Crude death rate (per thousand) - Annual deaths per thousand of mid- Secondary school - total, and female - Computed as above; secondary educa- year population; ten-year arithmetic averages ending in 1960 and 1970 tion requires or least four years of approved primary instruction; pro- and fico-year average ending in 1975 for ms.t recent estimate, ides general vocational, or teacher training inst-uctions for pupils Gross reproduction rate - Average number of daughters a woman will bhar usually of 12 to 17 years of age; correspondence cocursec are generally in her normal reproductive period if she experiences present age- excluded. specific fertility rates; usually five-year averages ending in 1960, Vocational enrollment (percent of secondary) - Vocational institutions in- 1970, and 1975. clude technical, industrial, or other programs which operate independently FPeily planning - acceptors, annual (thousands) - Annual number of or as departments of secondary institutions. acceptors of birth-control devices under auspices of national family Pupil-teacher ratio - primary, and secondary - Total students enrolled it planning program, primary and secondary levels divided by oumbern of teachers in the corre- Family planning - users (percent of married women) - Percentage of sponding levels. married women of child-bearing age (15-44 years) who use birth-control Adult literacy rate (percent) - Literate adults (able to read and write) as devices to all married women in same age group, a percentage of total adult population aged 15 years and over. FOOD AND NUTRITION CONSUMPTION Index of food production per capita (1970-100) - lndex number of per Passenger cars (per thousand population) - Passenger cots comprise actor cars capIta annual production of all food cosmiudities. seating less than eight persons; eacludes ambulances, hearses and military Per capita supply of calories (percent of requirements) - Computed from vehicles. energy equivalent of net food supplies available in country per capita Radio receivers (per thousand population) - All types of receivers for radio per day. Available supplies comprise domestic production, imports less broadcasts to general public per thousand of population; encluden unlice-sed exports, and changes in stock. Nat supplies exclude animal feed, seeds, receivers in countries and in years when registrrtion of radio acts vso in quantities used in food processing, and losses in distribution. Re- effect; data for recent years may not be comparable since soot ccuntrieo quirements were estimated by FAO based on physiological needs for nor- abolished licensing. mal activity and health considering enviroumental temperature, body TV receivers (par thousand population) - TV receivers for broad..ct to genera weights, ago and sen distributions of population, and allowing 10 per- public per thousand population; excludes unlicensrd TV receivers iTcoun- cent for waste at household level, tries and in years when registration of TV sets W.IYi effect. Per capita supply of protein (grams per day) - Protein content of per Newspaper circulation (per thousand population) - Shows the overage circula- capita net supply of food per day. Net supply of food is defined as tier of "daily general interest newspaper", defined as a periodical publi- above. Requirements for all countries established by USDA provide for cation devoted primarily to recording general news. It is considered to a minimum allowance of 60 gams of total protein par day and 20 gr-ms be "daily" if it appears at least four tines a week. of animal and pulse protein, of which 10 grams should be animal protein Cinema annual attendance per capita per year - Based on the number of tickets These standards are lower than those of 75 grams of total protein and sold during the year, including admissions to drive-in cinemas and mobile 23 grass of animal protein as an average for the world, proposed by units. PAl in the Third World Food Survey. Per capita protein supply from animal and pulse - Protein supply of food EsPLOYiMNT derived from animals and pulses in grams per day. Total labor force (thousands) - EcPoomically active persons, including armed Child (ages 1-i) mortality rate (per thousand) - Annual deaths per theus- forces and unemployed but excluding housewives, studnts, etc. Defini- and in age group 1-4 years, to children in this age group. tions in various countries are not comparable. Female (percent) - Female labor force as percentage of total labor force. HEALTi Agriculture (percent) - Labor force in farming, forestry, harting end tishing Life eapectancy at birth (years) - Average number of years of life as percentage of total labor force. remaining at birth; usually five-year averages ending in 1960, 1970, Industry (percent) - Labor force in mining, construction, sanuf-cturiug and and 19751 electricity, water and gas as percentage of total labor force. Infant mortality rate (per thousand) - Annual deaths of infants under Participatisn rate (percent) - total, amle., nd female - Total, male, sad one year of age per thousand live birhts. female labor force as percentages of their respertie poplaitios. Access inosafs water (Percent of population) - total, urban, and rural - These are ILOs adjusted participation rates refl-ectin c.-sec Number of people (total, urban, and rural) with reasonable a0000. to otrrcrtre of the population. and iong tine trecd safe water supply (includes treated surface waters or untreated but Efonomic dependency ratio - Ratio of population undor 15 ond o5 and cr000 uncontaminated water such as that from protected boreholes, springs, the labor force in age group of 15-64 years. and sanitary wells) as percentages of their respective populations. In an urban area a public fountain or standpnst located not sore INCOME DISTRIBUTION than 200 meters from a house may be considered as being within rea- Percentage of private income (both in cash and kind) received by richert 5 sonable access of that house In rural areas reasonable access would percent, richest 20 percent, poorest 20 pecr-ot, and po-ront 40 pertent imply that the housewife or members of the househbld do not have to of households. spend a disproportionate part of the day in fetching the family's water needs. POVERTY TARGET GROUPS Access to eosreta disposal (oercent of population) - total, urban, and Estimated absolute poverty income level (uSS per capsita) -urbn and orual - rural - Number of people (total, urban, and rural) served by escreta Absolute poverty income level is that income lesel below which a cdiI disposal as percentages of their respective populatios. ERcreta nutritionally adequate diet plus essential son-food requir.eoonn is sot disypoal may include the collection and disposal, with or without affordable. treatment, of human eacreta and waste-water by water-borne systems Estimated relative poverty income level (US$ per cpl2ia) - burba and cural - or the use of pit prinios and similar installations Relative poverty income level is that income lev,el lass than son-third Pcpulation per physician - Population divided by number of practicing per capita personal income of the country. physicians qualified ftco a redical school at university level. Ustinated population below poverty income level (percest) - urban and rural Population per nursing person - Population divided by number of Percent of population (urban and rural) who ccc eith-e 'abs-lcti pccv" or practicing male and female graduate nurses, practical nurses, and "relative punr" whichever is greater. assistant nurses. Eo-nomic and Sociol Iota 0iviscon iconomic Analysfi and Projectiuns iccactoec  - 26 - EDNiIC D69VELM1T DATA IA. h 4 of S P.". (I Miliso.s of DS Dollars) Notya9 IstleSted Projected Aoeraaeoopo.alAGoq.,hOaoa. As . rceno ... DP A96-_9 1975 1976 1977 1978 1979 1983 (1967-69-74 197 9-78 1979-83 1975 1978 1993 NATIONAL ACCOUNTS 1976 prices atod Eschsasi Rates -Gesoi - (rodOt 9.660 14,567 15,236 15,971 17,249 18,391 13,960 1.5 6.4 6.d 100.0 100.0 100.0 ,.sios foooTrcso of Trado '1 ~~~~ ~~-751 -699 - 697 422 78 -19--4.8 2. ocosr n3 Do_ Tilsmt oof 7ra8 968,909 160 15.236 16,668 21 18,469 23,815 0.4 7.0 6, 95.1 102.4 L3.4 lopOst 'locl. 6F5) 1.491 2,047 0,302 2,410 2,802 3,187 4,259 7.5 11.9 7.1 14.1 Is . 12.4 01170801 lEts). NFS) (Iqp. Capacity) -1.419 -2.29 7 - 782 7822-3 0.9 -3.3368 -I.138 -3.769 6.3 10.0 4.8 15.8 1.5 153, 7s17005a Oso ~~~ ~~~~ ~ ~~~~~72 - 250 -480 -681 -486 49 464 - - 1. 7 2.08 21 csoDouplloo Ospsndlyscsl 7.320 10,908 1 ,57 11,580 13,309 14,216 181,20 6 5 7.2 6.0 74.9 71.2 f2.3 loytoslsool Ooooodltooss CInod. 5tosks) 1,661 2,740 3,177 3,417 3,876 4,302 5,959 11.7 10.3 8.5 18.8 22.5 24.9 "osyi,Ss> ,0 2,0 3,57 4,18 4,96I2 4,253 949 11. .0 2. 25. 22. flocral SoacN 1,509 2,0294 3,3A99 4381 4d3d 2036 4,084 354193 l1.l 11.2 62 129.4 24.4 21 .7 f8080TA8IISE ThADE ooo,al Dots so Osotass Prloss AassoPretoi 760010 CopItol 5a oods 790 503 671 827 1,281 1,464 2,625 10.4 38.2 15.1 40.9 47.4 06 looscoadiols Goods (tool. FoESlo Z54 409 733 79742 8759 1,0253 1,7802 21 A 7 D i6.4 9.5 15.1 42.7 3 FDs-1 sod Dolad a ala 15 29 194 25I3 434 72 470 )(TTOOns Ph dis AOIoT.9(C90II 61 218 214 _335 291 285 399 18.3 16.6 8.8 15. 100 7.1 Total feaoshacdloals,poOy. 3010) t08 1 ,429 1 ,747 2,128 27704 5,0238 5,611 '6.4 24.41 I4. iIT 10.0 100 Off WhTyb. Ploary Orodooyy 489 1,399 1,874 2,415 2,892 2.623 3,728 14. 5 23.4 8.2 . 01 86.5 73.1 00 No1ch~ ToTTee (341) 3764) (1.292) (1,7601 12,084) (11771) (2.044) 111.71 (27.3) 13.61 (A4.3) (63.27 443.46 sooufatotred Goods 117 324 381 381 446 505 986 22.9 8.2 18,2 108. 13.5 20.9 Total __rc_,acdls 8toport (008) 606 1,717 2,255 2,796 3,298 TIh 4,714 16. 2 70.9 10.8 100.0 00.3 100.0 Mec-hatdlte Tads Il - odys Et7or1 FrIst Itday 21.2 73.9 10.G1 141.4 135.0 129.0 154.7 lopocy F21se Today 34.0 95.8 100.0 109.6 110.1 125.9 161.0 Oetos of toads lodto 62,3 77.1 100.13 129.0 114.3 102.5 96.1 dl. 00060 ADD86 *Y o 5877 (Factoc Cost) A=nua3 Data at 1976 - Prlse sod tochantia Rates Ayspa8o Dyyal Oryvty Dates As Pero--t of Total TofaRIt.e 13923 4536 14,022 14,076 63,982 16,932 22,027 5.1 6.5 6.0 120.0 00.0 1400.0 0D8L10 27IN1388G0 Atosl Data at Current Fricsa_ As Fasosot of GDP Ostyosal Ooyeroaaort) Corrart tecelpys 413 1,502 1,670 13,050 2,549 3,335 5,000 20.3 23.5 10.7 10.3 10.7 10.0 Coersot topatdilooee 262 702 751 831 1,197 1,732 2,314 16.1 21.5 7.3 4.8 4,0 5.0 toOgeraca ESaLIage 151 800 919 1,129 1,439 1,623 2,686 2y.2 25.1 19.8 5.5 6.D 5.8 TtSs8 Publc yactoc yacloat 454 167 -31 -80 189 95 -155 - _ - 1.1 PySlIc Sactoc Itorstasco 612 917 1,135 1,123 1,836 2,013 3,278 6.6 20.1 13,1 6.3 6.. 7.1 380E0308 1ND1CAT0E3 1969-70 1797-78 1979-83 1t0