Honduras - Tourism Development Project

Document of The World Bank FILE b!WS P FOR OFFICIAL USE ONLY Report No.P-2479-HO REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF HONDURAS FOR A TOURISM DEVELOPMENT PROJECT March 2, 1979 This docment has a restricted distbtio and may be wed by recipients nly In the performance of their official duties. Its contents may not oherwise be dielosed withot World Bnk acthorization.  HONDURAS TOURISM DEVELOPMENT PROJECT CURRENCY EQUIVALENTS Currency Unit m Lempira (L) US$1.00 - L 2.00 L 1.00 - US$0.50 L 1,000,000 - US$500,000 ABBREVIATIONS CABEI - Central American Bank for Economic Integration COHDEFOR - Forestry Development Corporation CONADI - National Investment Corporation COPINO - Central American Pine Cellulose Company ECCASA - Central American Tannery, Inc. FONDEI - National Industrial Development Fund IDB - Inter-American Development Bank IHT - National Tourism Institute ILO - International Labour Office INFOP - National Institute for Vocational Training SECOPT - Ministry of CommunLications, Public Works and Transport SECTUR - Ministry of Culture and Tourism OECD - Organization for Economic Cooperation and Development SAHSA - Honduran Air Services, Inc. SITCA - Secretariat for Central American Tourist Integration TAN - National Air Transport UNDP - United Nations Development Programme USAID - United States Agency for International Development FISCAL YEAR January 1 - December 31  FOR OFFICIAL USE ONLY HONDURAS TOURISM DEVELOPMENT PROJECT LOAN AND PROJECT SUMMARY BORROWER: Republic of Honduras AMOUNT: US$19.5 million equivalent TERMS: 20 years, including 5 years of grace at 7.0 percent interest per annum. RELENDING TERMS: US$16 million equivalent of the Bank loan will be relent through the Central Bank to financial inter- mediaries at an interest rate of 9.5 percent. These intermediaries will, in turn, be allowed to on-lend the funds to hotel and other tourism enter- prises at no more than 12.0 percent interest. Subloans will be made for terms of up to 17 years, including not more than 4 years of grace. The foreign exchange risk for the line of credit will be divided between the subborrowers and the Central Bank, which will assume the dollar and the cross currency exchange risks respectively. PROJECT DESCRIPTION: The objective of the project is to develop Honduras' tourism potential, thereby diversifying foreign exchange earnings, generating employment especially in regions of the country with few alternative economic activities, increasing Government revenues, and building institutions for tourism planning and implementation. The project comprises a line of credit for hotel and other tourism enterprises, improved air facilities, establishment of a special unit to regularize the land tenure situation on Roatan Island, archeological works at Copan, and technical assistance for (a) the Ministry of Culture and Tourism, (b) hotel training, (c) environmental control on Roatan, (d) tourism marketing and (e) air- port cost accounting studies. About 1,500 direct permanent jobs, as well as additional indirect employment, will be created by the project. Although there is some risk that hotel operating efficiency may fall short of projected levels initially, this is not likely to persist as manage- ment skills and experience are gained. Although a shortfall in traffic is a risk, the tourism growth rates required to achieve viable hotel occupancies are considered modest and reasonably attainable. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - ESTIMATED COST: US$ (Millions) Local Foreign Total Line of Credit /1 16.0 16.0 32.0 Airports 1.0 0.6 1.6 Land Unit 0.1 0.0 /2 0.1 Copan Archaeological Park 0.5 1.0 1.5 Technical Assistance Technical Unit 0.3 0.4 0.7 Hotel Training 0.2 0.4 0.6 Roatan Environmental Control 0.0 /2 0.2 0.2 Marketing - 0.1 0.1 Airport Financing - 0.0 /2 0.0 /2 Project Preparation Facility - 0.1 0.1 Total Base Cost 18.1 18.8 36.9 Contingencies: /3 Physical 0.1 0.1 0.2 Price 0.6 0.6 1.2 Subtotal 0.7 0.7 1.4 Total Project Cost 18.8 19.5 38.3 /1 Includes physical and price contingencies of US$2.3 million and US$6.9 million respectively. /2 Less than US$0.1 million. /3 Excludes line of credit.  - iii - FINANCING PLAN: US$ (Millions) World Central Financial Investors' Bank Bank Government Intermediaries Equity Total Line of credit 16.0 1.6 - 3.2 11.2 32.0 Airports 0.7 - 1.3 - - 2.0 Land Unit 0.0 /1 - 0.1 - - 0.1 Copan Archaeological Park 1.3 - 0.8 - - 2.1 Technical Assistance 1.4 - 0.6 - - 2.0 Project Preparation Facility 0.1 - - - - 0.1 Total 19.5 1.6 2.8 3.2 11.2 38.3 /1 Less than US$0.1 million ESTIMATED US$ Millions by Fiscal Year DISBURSEMENTS: 1980 1981 1982 1983 1984 1985 Annual 0.7 3.3 5.8 5.6 3.2 0.9 Cumulative 0.7 4.0 9.8 15.4 18.6 19.5 RATE OF RETURN: 19 percent STAFF APPRAISAL REPORT: Report No. 2249-HO, dated February 26, 1979.   INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF HONDURAS FOR A TOURISM DEVELOPMENT PROJECT 1. I submit the following report and recommendation on a proposed loan to the Republic of Honduras for the equivalent of US$19.5 million for a Tourism Development Project. The loan would have a term of 20 years, including a grace period of 5 years, with interest at 7.0 percent per annum. US$16.0 million of the Bank loan would be relent through financial inter- mediaries to hotel and other tourism enterprises at an interest rate up to 12.0 percent. PART I - THE ECONOMY 1/ 2. A report entitled "Memorandum on Recent Economic Development and Prospects of Honduras" (1856-HO) was distributed to the Executive Directors on January 10, 1978. The main findings of the Report are summarized below. Country data sheets are attached as Annex I. Long-term Development Trends 3. The long-term growth rate of the Honduran economy has been exceed- ingly low. Between 1950 and 1975, real per capita GNP grew by only 1 percent a year. Honduras' per capita GNP in 1977, US$450, is one of the lowest levels in the Western Hemisphere. Honduras' poverty is also evident from a variety of indicators. Malnutrition is severe: about three-quarters of pre-school children are believed to suffer from protein and caloric deficiencies, and infant mortality is estimated at 118 per thousand live births. Roughly 60 percent of the population has no access to safe water and about 75 percent lives without any form of sanitary waste disposal. Furthermore, these are country averages which conceal substantial regional disparities, as living conditions in the rural areas, which account for about two-thirds of the population, are much poorer than in the cities. 4. A major reason for Honduras' poor growth performance has been the continued dependence of the economy on the production and export of a few agricultural commodities, especially bananas, whose prices depend on a fluctuating world market situation and whose output may be greatly influenced by weather conditions. The latter was dramatically illustrated when extensive 1/ This section is substantially unchanged from the section on the economy in the President's Report for the Industrial Credit Project (P-2444-HO) dated January 11, 1979.  - 2 - destruction of the banana plantations by Hurricane Fifi in 1974 reduced the volume of bananas exported in 1975 to about one-half the level of 1973 and contributed to a drop in per capita income of about 3 perce-:t. 5. There are many reasons for the continued dominance of bananas in the Honduran economy. Known mineral deposits are not extensive. A serious lack of basic infrastructure and deficient development policies in the past have left Honduras' agricultural resources underutilized. In addition, the mountainous topography of the country has made the expansion of the road network slow and costly. There has been progress, however, since 1960, and major achievements include the establishment of a basic transportation net- work connecting the main population centers, and a considerable expansion of electric power service. 6. Much land suitable for agriculture is still unutilized, and the country has sizeable forest resources, but agricultural output only grew at about 2 percent yearly between 1950 and 1975. Uneven land distribution and deficient credit, technical services and development programs have kept agricultural growth far below its potential. Government Development Efforts 7. Since 1972, development efforts have increased substantially and several measures have been taken to lay the basis for the current improved economic outlook over the longer term. A land reform program which began in December 1972 aims at greatly improving land utilization as well as increasing the income and employment of the poorest peasants through the transfer of unutilized or poorly utilized land from large landowners to landless rural families. Another major policy development was the national- ization of timber rights in January 1974. A new forestry law established guidelines for private sector participation in forestry development and created the Corporacion Hondurena de Desarrollo Forestal (COHDEFOR). In the same year, the Government established the Corporacion Nacional de Inversiones (CONADI) to promote and finance industrial projects. Another major achieve- ment was an improvement in Government planning and executing capacity, parti- cularly in infrastructure, which has resulted in a substantial increase in public fixed investment from 3.3 percent of GDP in 1972 to 6.6 percent in 1974 and over 8 percent in 1977. The Government has also made an effort to increase investment in the social and productive sectors and strengthen public finances through tax reforms and better tax administration. A 1975 tax ^ reform made the tax on coffee exports an ad-valorem tax with marginal rates ranging from 10 percent to 20 percent depending on coffee prices, substituted a 3 percent value added tax for the sales tax, and raised the tax rates on beer, cigarettes and liquor. Recent Economic Developments 8. While Honduras was adversely affected by one of the worst hurricanes in its history in 1974, it had also to contend with the oil price rise of that year and the later OECD recession. As a result, during 1974-75, total GDP remained almost stagnant, severe balance of payments difficulties arose and the country's savings capacity was seriously reduced. Import prices rose much  faster than export prices, and the terms of trade deteriorated substantially before recovering in 1976. The resource gap, which was equal to about 1 percent of GDP during 1972-73, averaged 11.6 percent during 1974-75. The rise in consumer prices, which had averaged 2.7 percent a year between 1966 and 1973, accelerated to 13 percent in 1974 before declining to 8 percent in 1975. 9. A high level of public investment, the gradual recovery of banana production and the doubling of coffee export prices were the major factors responsible for an improvement of the economic situation in 1976. Real GDP grew at about 6.6 percent and the price level increased by only 5 percent. Partly as a result of higher coffee prices, merchandise export earnings grew by about 31 percent in current terms over 1975. Government tax revenues increased from 10.8 percent of GDP in 1972-73 to 12.8 percent in 1976 and, while there was a substantial increase in public current expenditures, public savings were estimated at 2.7 percent of GDP in 1976 compared to an average 2.2 percent in 1972-73. However, as investment expenditures for hurricane reconstruction and development purposes were stepped up considerably, the overall deficit of the Central Government increased from 2.5 percent of GDP in 1970 to 4.9 percent in 1976. 10. In 1977, economic expansion continued with real GDP growth estimated at 8 percent, due mainly to the expansion of public investment (about 17 per- cent), and to a doubling of coffee prices from the 1976 level. The rate of inflation accelerated to 8.6 percent owing to: (i) higher liquidity brought about by coffee sales, (ii) rising import prices, (iii) poor domestic crops of basic grains. The balance of payments had a current account deficit of US$121 million, somewhat above the US$109 million recorded in 1976, mainly due to the rapid increase of imports and the retention of coffee sales in the second semester of 1977. Foreign exchange reserves, however, increased by about US$40 million, as a result of greater disbursements of foreign loans. With regard to the public sector, Central Government current revenues reached 16.4 percent of GDP, while public savings increased to 3.3 percent of GDP. The total tax burden increased to 14.5 percent of GDP. Growth Prospects 11. The growth prospects for 1979-82 are good. Real GDP is expected to increase at an annual rate of about 6 percent, barring natural disasters. Real exports should be able to grow at about 7 percent a year, reflecting continued recovery of banana production from the September 1974 hurricane, increased coffee production owing to higher yields and new plantings, expan- sion of sugar production, an increase of lumber exports made possible by the currently planned expansion of sawmill capacity, increased beef production (also the result of an ongoing program), expansion of fruit and vegetable production for export and promotion of tourism. Coffee prices, although they have declined from the unusually high 1977 level, are expected to remain well above 1975 levels in real terms. In addition, the Government plans to accelerate economic growth over the medium-term through an ambitious public investment program designed to alleviate the most significant bottle- necks to the country's development process. The presently designed development  - 4 - strategy calls for large public investments in infrastructure, in export diversification through forestry development, industry and tourism, and in agriculture to implement the agrarian reform program and increase productivity. 12. The expansion of the public sector's investment expenditures together with the necessary increase of complementary current expenditures creates a need for additional increases in taxes and the tariffs of public enterprises in the 1979-82 period as well as for careful control of other current expendi- tures. The Government is considering a series of proposals to mobilize addi- tional domestic resources in support of its development program. However, given the present and foreseeable poverty of the country, even with a greater revenue effort and current outlay control, Honduras needs external assistance in excess of the foreign exchange component of development projects suitable for international finance to enable the Government to implement the public investment program. 13. While real exports are expected to increase at about seven percent a year during 1978-82, Honduras' terms of trade are expected to deteriorate. As the import needs of the economy expand, in particular the imports related to the investment program, the current account deficit is expected to increase to US$200 million by 1981 and US$250 million in 1985, and large capital inflows will be required. The bulk of the external financing requirements will have to be met through public borrowing. Honduras will require an estimated total gross capital inflow of about US$800 million for the five-year period 1978-82, of which about US$350 million will be disbursed from commitments made through the end of 1977. 14. Honduras' public external debt repayable in foreign currency is esti- mated to be US$436 million at the end of 1977, US$787 million if undisbursed commitments are included. In the past, Honduras managed to keep its external debt service ratio fairly low, because foreign loans were almost all on concessionary terms. It is important that the country continue to borrow on reasonably soft average terms, in view of the country's poverty, the fact that it will continue to depend on exports of a few commodities with volatile price prospects, and because, historically, natural disasters have sharply reduced the volume of exports every few years. Even if Honduras is successful in obtaining about two-thirds of the financing it needs for its investment program on terms similar to those offered by the international lending agencies, the debt service ratio is likely to rise from about 7.1 percent in 1977 to about 13 percent by the mid-1980s. Continued maintenance of Honduras' credit- worthiness will depend on the efficiency with which it chooses and implements its major public investment projects; careful, continued demand management, including cautious use of nonconcessionary borrowing; and on export promotion policies. The Bank will be carefully monitoring Honduras' performance in this regard. A mission reviewed Government plans in these fields with the Govern- ment in January 1979, and Honduran officials will be visiting the Bank in March to continue these discussions. 15. The Bank Group holds 27.5 percent of the disbursed public debt outstanding repayable in foreign currency; excluding IDA the Bank's share is about 20 percent. About three-fourths of the IDB's total loans disbursed  and outstanding is repayable in local currency, so that IDB's share of the disbursed public debt repayable in foreign currency is only 5.4 percent. CABEI accounts for 18.5 percent of the total, the US Government for 17.4 per- cent, Venezuela for 12.3 percent, privately held debt for about 15.2 percent and other debt for 3.7 percent. 16. In terms of the sectoral thrust of lending by the principal external agencies apart from the Bank, AID has concentrated on agriculture and educa- tion, IDB on transport, agriculture and forestry, health, education and housing, and CABEI on transport, industry, power, housing and tourism. It is expected that AID and CABEI will continue lending primarily in the same sectors in the future, while IDB would concentrate on agriculture, forestry, transport, industry and power. The lending of the external agencies from 1950-1977 was as follows: IBRD IDA AID IDB CABEI TOTAL Total Gross Lending 1950-1977 177.5 53.2 113.4 294.7 199.2 838.0 Gross Lending 1950-1965 25.9 12.5 26.7 27.2 8.1 100.4 Gross Lending 1966-1977 151.6 40.7 86.7 267.5 191.1 737.6 Sectoral Lending 1966-1977 Transport 88.3 5.0 - 32.1 74.7 200.1 Power 60.3 9.5 - - 20.9 90.7 Telecommunications - - - 14.7 10.1 24.8 Education 3.0 3.0 10.5 17.4 - 33.9 Health - - 2.6 33.2 10.2 46.0 Housing - - 5.0 12.5 16.5 34.0 Agriculture and Forestry - 23.2 48.5 155.4 4.1 231.2 Industry - - 5.0 2.2 33.2 40.4 Other - - 15.1 - 21.4 36.5 PART II - BANK GROUP OPERATIONS IN HONDURAS 1/ 17. Beginning with a loan of US$4.2 million for roads in 1955, Honduras has to date received 19 Bank loans totalling US$233.2 million and ten IDA credits totalling US$60.1 million, both net of cancellations. In 1978-79, the Bank has approved a US$5 million credit for education and loans totalling US$56.0 million for the Guayape Regional Development Project, the Nispero Power Project and an Industrial Credit Project. As of December 31, 1978, a total of US$101.8 million remained to be disbursed on 12 operations for ports, electricity, roads, livestock, education, regional development and 1/ This section is substantially unchanged from the section on Bank Group Operations in the President's Report for the Industrial Credit Project (P-2444-HO) dated January 11, 1979.  -6- agricultural credit. The proposed loan would raise the total of Bank Group assistance from US$293.3 to US$312.8 million. Execution of projects financed by the Bank Group has, on the whole, been satisfactory. Annex II contains a summary statement of Bank loans, IDA credits and IFC investments as of December 31, 1978, as well as notes on the execution of on-going projects. 18. In the past, Bank Group lending was heavily concentrated in trans- port and power, where inadequate facilities hampered the development of the country. The First Livestock Development Credit approved in 1970, how- ever, marked a first step towards the diversification of our lending. Since then, this diversification has continued through operations for a Second Livestock project; a First Education project, which included as major compo- nents primary and secondary teacher training schools, and support for voca- tional training centers and the national agricultural secondary school; a First Agricultural Credit project to finance livestock and crop development with emphasis on assisting agrarian reform settlements through investment credits and a substantial technical assistance program; a Second Education Project to help finance rural primary schools and agricultural vocational education; the Guayape Regional Development Project to assist small farmers and agrarian reform settlements in the Guayape Valley; and an Industrial Credit Project to provide funds primarily to small and medium manufacturing firms and firms proposing priority projects in the wood industry. 19. In future lending to Honduras, we plan to support the priorities of the Government's investment program by giving increased emphasis to investment in agricultural and rural development to support the agrarian reform. We would also help finance activities to strengthen the balance of payments by reducing Honduras' reliance on banana production, while continuing to lend for physical infrastructure where there are still deficiencies to be overcome. The proposed Tourism Development Project will help develop Honduras' tourism potential and contribute to the diversification of the sources of foreign exchange earnings. A follow-on to the First Agricultural Credit Project and additional rural development projects, now being identified, are planned. Bank Group support is also being considered for COHDEFOR's pulp and paper project. In transport, we plan to place emphasis on assisting the construc- tion of a network of feeder and access roads to support the Government's agricultural program. We also hope to continue financing power development, in addition to the recently approved Nispero hydro power project, through participation in the large (about US$460 million) El Cajon hydroelectric project which is scheduled to come on stream in the mid-1980s. It is expected that the Bank, IDB and CABEI will contribute to the El Cajon effort, and the Bank has been helping Honduras contact bilateral sources to seek additional concessional financing. 20. It is expected that the Bank Group share of total external public debt disbursed and outstanding will drop from 27.5 percent in 1977 to 26.4 percent by 1981 because of increasing lending by other external agencies and a slight increase in commercial borrowing. The IBRD share of debt service in 1976 was 23.4 percent and is projected at about 24.3 percent by 1981. 21. IFC's activities in Honduras include a 1964 loan and equity investment, of US$295,00 and US$55,000 respectively, in a tannery, Empresa  -7- de Curtidos Centroamericana, S.A. In 1966 an additional equity investment of US$27,500 was made in this company. In 1968 and 1970 equity investments totalling US$75,000 were made in a pilot company,Compania Pino Celulosa de Centro America, S.A., which was established to develop an industrial project based on timber from the Olancho Forest Reserve. Although this company is no longer involved in this project, IFC continues to assist the Government of Honduras in creating an organizational structure and selecting a technical partner for the project. In 1977 IFC approved a loan of US$9.0 million and an equity investment of US$1.0 million in Textiles Rio Lindo, S.A. de C.V., a locally owned textile company, to help finance an expansion and diversifica- tion project. IFC continues working with CONADI and local private investors in developing other investment opportunities in the country. PART III - THE SECTOR Tourism Potential 22. Honduras has considerable potential for the development of inter- national tourism. Its Caribbean coast has some of the most attractive and extensive beaches (Tela and Trujillo) in Central America, and the Bay Islands, especially Roatan, are ringed with impressive reefs containing a variety of coral and marine life. The ruins of Copan, one of the most important archaeo- logical centers of the Mayan civilization, have excellent potential for attracting the growing culture-oriented tourism market. Another attraction is Lake Yojoa, with its good fishing and water sports. Proximity to the North American market and a favorable cost structure should enable Honduras to offer these diverse assets at competitive prices. Present State of the Sector 23. International tourism to Honduras is still in its infancy. Until recently the Government accorded low priority to the sector, and private enterprise was constrained from developing tourism facilities by lack of access to suitable financial resources. In addition, international air access to Honduras and transportation to tourist sites within the country were inadequate. As a consequence of these factors, tourism flows remained at relatively low levels. In 1977, nearly half of Honduras' 181,000 foreign visitors were classified as "transits" who spent less than 24 hours in the country, and more than 60 percent came from neighboring Central American countries. North Americans numbered about 45,000, most of whom came for business reasons; between 1972 and 1977, their number increased at an average annual rate of 6 percent, in line with the growth of business activity. In 1977, European visitors, also mainly businessmen, totalled less than 10,000. Since most foreign visitors are businessmen, there is no pronounced seasonality in the distribution of arrivals. 24. Total hotel capacity in Honduras is estimated at 2,530 rooms, of which only about 700 are suitable for most international visitors. More than 500 of the rooms in this category are situated in the two main cities of Tegucigalpa and San Pedro Sula and cater primarily to business demand. The  remaining 200 rooms are distributed among several small establishments, more than half on the Bay Islands, and are utilized largely by holiday visitors. Two hotels currently under construction are located in the two major cities and are primarily intended for businessmen. All hotels in Honduras are owned by private entrepreneurs, most of them Honduran nationals. The larger hotels have been financed with funds of small groups of investors, short-term bank loans and, for the hotel under construction in San Pedro Sula, longer-term funds from the Central American Bank for Economic Integration (CABEI). 25. Occupancy rates in major city hotels have stabilized at very high levels because accommodation development has lagged behind the growth of business traffic. Construction costs for these hotels, even in the early 1970s when the newer ones were built, were relatively low. Also, the Honduran hotels have the advantage of low operating costs. Because of the generally low wage structure in Honduras, payroll expenses represent a small proportion of total sales and the cost of food and beverage sales is low despite the relative inexperience of Honduran hoteliers in management. As a result of high occupancies and low investment and operating costs relative to the prices charged, the major city hotels are very profitable. By contrast, smaller hotels on the islands, despite the same low investment and operating costs, have only recently begun to show satisfactory returns, largely due to low occupancies (30-40 percent annually) reflecting poor and unreliable air access from the mainland and deficient marketing. 26. In addition to hotels, several other types of tourism-related activities have been initiated in Honduras. A number of good, moderately- priced restaurants are being successfully operated in Tegucigalpa and San Pedro Sula. Despite a generally limited road network, the rent-a-car business has grown and local air services, both scheduled and chartered, derive part of their traffic from foreign visitors. Travel agencies now arrange to take tourists and businessmen to the Bay Islands and to Copan, where municipal improvements and the initiation of an archaeological program are being undertaken with CABEI assistance. CABEI is also helping finance construction of a road from San Pedro Sula to Copan. Finally, the pro- duction and distribution of handicrafts is emerging as a promising economic activity. 27. Tourism has been the responsibility of the Ministry of Culture and Tourism (SECTUR) since it was established in 1975. The National Tourism Institute (IHT), established in 1972, became the executive staff for tourism within SECTUR in January 1978 and is responsible for promotion, information, regulation and inspection, as well as for recommending which tourism-related projects should be granted Government incentives. Approved projects located in Tegucigalpa and San Pedro Sula benefit from a five-year full exemption from income taxes and a further five-year 50 percent exemption. Projects located outside the two main cities receive a full exemption for the entire ten-year period. Hotel investors are allowed to import free of duty construction equipment and furnishing materials, provided they cannot be produced locally in sufficient quantity and at an acceptable quality standard.  -9- Contribution of Tourism to the Economy 28. The significance of tourism to the Honduran economy has so far been very limited. In 1977, tourism contributed less than 1 percent to the Gross Domestic Product and generated an estimated US$15.0 million in foreign exchange receipts. This was only 2.4 percent of total receipts from exports of goods and services, as compared with 29 percent for coffee exports, 22 percent for bananas and 8 percent for lumber. About 2,000 people earn their living from hotel employment and another 1,500 from other activities that provide goods and services directly to foreign visitors, such as restaurants, transport services and handicrafts. Some indirect employment is also generated in activities supplying part of their output to enterprises catering to foreign visitors. Most workers in the sector are relatively unskilled, and more than half are young women. Wages and overall benefits are generally low, although in tourism they are higher than in other sectors with comparable skill levels. Government tax revenues from tourism are small as the major hotels are still enjoying tax holidays. Tourism Development Strategy 29. The Government has decided, in view of Honduras' lack of experience in promoting, marketing and operating an international tourism industry, to adopt a gradual and pragmatic scenario for developing the country's tourism potential. Such a scenario has two main features: (1) selective hotel devel- opment on the mainland in places where little additional public infrastructure is required or where such infrastructure is already planned for other purposes; and (2) dispersed development on the Bay Islands, primarily Roatan, with small hotels providing their own infrastructure (wells, septic tanks, electric generators and bulldozed access roads) on the basis of a suitable environmental control plan. The main thrust of this investment effort in the next few years would come from the private sector, thus achieving tourism development without major public sector investment. The Government would provide, however, facilities for long-term credit for tourism investors as well as those invest- ments needed to complement hotel construction and assure that tourists are attracted to these new facilities. These latter investments would be for improvements in air access, marketing, hotel training and continued development of the country's archaeological potential. PART IV - THE PROJECT 30. After a Bank project identification mission in March 1976, the Government undertook, with financing from both CABEI and the Bank's project preparation facility, a series of technical, economic, financial and marketing studies of various alternatives for the development of tourism in Honduras. The proposed project was prepared beginning in late 1977 and appraised in June 1978; a report entitled "Staff Appraisal Report - Honduras Tourism Development Project" (Report No. 2249-HO, dated February 26, 1979) is being distributed separately. Negotiations were held in Washington on January 29-February 2, 1979. The Government delegation was led by the Director of IHT.  - 10 - ProJect Objective and Description 31. The proposed project would contribute to the diversification of the sources of Honduras' foreign exchange earnings, generate employment especially in regions of the country with few alternative economic activities, increase Government revenues, and build institutions for tourism planning and implemen- tation, thus laying the groundwork for sustained growth. It would consist of the following components: (a) a line of credit for onward lending to hotel and other tourism enterprises; (b) improved facilities for international traffic at San Pedro Sula Airport; (c) airfield improvements on Roatan; (d) establishment of a special unit to regularize the land tenure situation on Roatan; (e) archaeological park development at Copan; and (f) technical assistance for: (i) the establishment and initial operation of a new Technical Department, and the strengthening of the existing Planning Department, of SECTUR; (ii) the expansion and systematization of hotel training provided by the National Institute for Vocational Training (INFOP); (iii) the preparation of an environmental control plan for Roatan; (iv) the marketing of Honduras' tourist attractions; and (v) the development of an effective airport cost accounting system. Line of Credit 32. To date, hotel development in Honduras has been constrained by lack of long-term funds. Based on discussions with commercial banks, CONADI (the National Investment Corporation) and potential investors, there is considerable interest in obtaining long-term credit for hotel subprojects. The proposed project's line of credit would help finance the establishment of new hotels, with a total capacity of about 700 rooms, extensions to existing hotels, and other tourism-related enterprises (e.g., tour operators, restaurants, sports facilities). The Central Bank would provide a rediscount facility to channel these funds through financial intermediaries (commercial banks and CONADI) to final borrowers. The new National Industrial Development Fund (FONDEI), established by the Central Bank to manage a rediscount facility for small- and  - 11 - medium-sized industries under the recent Bank-financed Industrial Credit Project (approved by the Executive Directors on February 6, 1979), would manage the tourism line of credit. Terms and Conditions of Sublending 33. On average, subprojects would be financed by 35 percent investors' equity and 65 percent loan funds, of which 55 percent would be derived from the rediscount facility and 10 percent would be provided from the intermediaries' own resources. Of the 55 percent from the rediscount facility, 5 percent would be provided by the Central Bank and the remaining 50 percent, equal to the average foreign exchange component, would be financed from the World Bank loan (draft Project Agreement, Sections 2.06 and 2.07). 34. Subloans would have final maturities up to 17 years, including grace periods of up to four years typically to cover two years of construc- tion and the first two years of operations. The foreign exchange risk for the line of credit would be divided between the subborrowers and the Central Bank, which would assume the dollar and the cross currency exchange risks respectively. In order to encourage investments in smaller hotels (less than 150 rooms), the maximum loan for any one subproject, including funds obtained from the rediscount facility as well as those provided by the intermediaries, would be set at US$5.0 million. Furthermore, in order to assure that adequate funds are avail- able for Roatan, in accordance with the Government's scenario for tourism development, at least 25 percent of loan funds would be initially reserved for subprojects on the island, this policy to be reviewed in the light of experience (draft Project Agreement, Sections 2.06 and 3.04, and draft Loan Agreement, Schedule 1, Paragraph 2). 35. Financial intermediaries would be allowed to charge final borrowers up to 12 percent for funds obtained through the rediscount facility. This is consistent with both current interest rates in Honduras and the prospective cash flows of typical hotel operations. The rate of domestic price increase in Honduras was 8.1 percent in 1975, 5.0 percent in 1976, 8.6 percent in 1977 and about 8 percent in 1978, and since inflation rates are projected at 7-8 percent annually for the next few years, the 12 percent final interest rate paid by subborrowers would be positve in real terms. The rediscount rate of interest charged by the Central Bank to the financial intermediaries for FONDEI funds would be 9.5 percent, thus allowing the intermediaries a margin of up to 2.5 percent to cover administrative costs, commercial risk and profit. The difference between the Central Bank's rediscount rate of interest and the cost of the Bank loan would constitute the Central Bank's margin for operating costs and cross currency exchange risk on the Bank loan. It has been agreed to review by July 1, 1980, and periodically thereafter, the adequacy of the proposed relending rates and to revise them, if necessary, in light of such review (draft Project Agreement, Sections 2.04, 2.05 and 2.06). Financial intermediaries would be required to lend subborrowers 10 percent of total subproject costs out of their own resources, with the same maturities and grace periods as those for the financing provided through the rediscount facility. They would not be bound to charge the same interest rate (draft Project Agreement, Section 2.07), but would be subject to Central Bank  - 12 - regulations governing interest rates. All intermediaries would assume full credit risk on subloans. The terms and conditions of lending by intermediaries would be contained in a participation agreement, which would be entered into by the Central Bank with each intermediary and which would be satisfactory to the Bank; receipt of conformed copies of this agreement would be a condition of disbursement for any subloan for the respective intermediary (draft Project Agreement, Sections 2.04 and 2.06, and draft Loan Agreement, Schedule 1, Paragraph 5(d)). San Pedro Sula Airport 36. Much of Honduras' new tourist traffic would arrive at the "gateway" airport at San Pedro Sula. The existing runway and taxiways are adequate to handle the type and frequency of aircraft expected. However, a 4,000 square meter extension to the parking apron is needed to increase its practical capacity from four to five aircraft, and the international arrival facilities at the terminal building need to be augmented to enable handling of 200 passengers at peak hours, consistent with projected traffic. Roatan Airfield 37. Tourism development on Roatan is presently constrained by limited air access. The project would pave the existing gravel runway, taxiway and apron; construct additional sea protection and drainage works; and provide telecommunications, weather and firefighting facilities and equipment, as well as facilities for passenger and baggage handling. The airport would thus be able to serve larger planes, increasing capacity on the route and allowing more economical operation per seat mile. Roatan Land Tenure 38. Another constraint to tourism development on Roatan is the uncertainty concerning land tenure. Property claims of Honduran citizens have usually been based on usage with very little registration of title, and the rights of foreigners to land have been uncertain. The latter has been especially true in recent years when some foreigners have acquired land on the basis of resolutions which attempted to exempt Roatan from the constitutional provision prohibiting ownership by foreigners of border, coastal and island non-urban land. Such resolutions were, however, of questionable validity. Since hotel development on Roatan would be hampered if prospective investors could not clarify their rights to the land, SECTUR has prepared legislation, currently being considered by the Government, to regularize the land tenure situation on the Island. 39. With regard to Hondurans, the proposed legislation would allow the granting of title to claimants without registered titles but with adequate evidence of ownership or long-term occupancy. Land for which ownership cannot be determined would revert to the State, and if subse- quently sold or leased, the proceeds would be applied to community works on the Island. With regard to foreigners, the proposed legislation would restate the Constitution's prohibition against landownership by foreigners, and also disallow very long-term leases which are considered tantamount to ownership. SECTUR's proposal does, however, allow foreigners to obtain  - 13 - leases of up to 25 years (or longer at the discretion of IHT) if they intend to live on the Island, and up to 40 years if they demonstrate the intention and capacity to invest in tourism. It also makes special provisions for applying the Constitutional provision against landownership by foreigners in a manner which deals fairly with those who have already leased or purchased land on Roatan. In this regard, lessees could renegotiate their leases within the limits noted above, and foreigners who had bought land could either resell it to the original owner or request from IHT a lease to the land. Foreigners who do not resell or obtain a lease would be compensated for their property interests in accordance with the normal provisions of local law. 40. In order to assist in the implementation of this legislation, the project would include establishment of a special unit within IHT, including lawyers, surveyors and support personnel, to help Islanders prepare their claims and obtain title and to supervise the arrangements for clarifying the rights of foreigners. Enactment of the proposed legislation, as well as regulations required for its enforcement, in a manner satisfactory to the Bank, and establishment of the special unit would be both a condition of disbursement for the Roatan airport works, and also a condition of credit eligibility for Roatan subprojects, unless evidence can be shown in the latter case to the Bank's satisfaction, that the prospective investor has clear title to the land proposed for development (draft Loan Agreement, Section 3.05 and Schedule 1, Paragraph 5(b), and draft Project Agreement, Section 2.09). Copan Archaeological Park 41. In order to enhance the tourism potential of Copan, the project would include the construction and equipment of a visitors' center and visitors' facilities, training of guides, production of informational material, extension of the park, expansion of a nearby museum, and completion of a six-year archaeological program, the first two years of which have been financed by CABEI. Technical Assistance 42. The project would provide four experts - a chief advisor, an architect/engineer, an economist and a financial analyst - for two years (i) to help establish a new Technical Department in IHT, whose functions would include hotel credit evaluation and overall coordination of the implementation of the project, and (ii) to strengthen the existing economic analysis section of IHT's Planning Department, which would be responsible for sectoral planning. These foreign experts would work with local counterparts, who would later assume full responsibility. 43. At present, INFOP provides limited training for basic hotel skills. With the expansion of the hotel industry, the demand for skilled workers will be substantially increased, and the project therefore includes assistance to INFOP to expand and systematize its activities in this field. This assistance comprises an expatriate chief training advisor to advise on curricula and act as senior instructor, other expatriate instructors, overseas training for  - 14 - local teaching staff and equipment. There would be a total of 57 man/months of instructing assistance and 63 man/months of overseas training. It has been agreed that the chief training adviser would be employed no later than October 1, 1979 (draft Loan Agreement, Section 3.01(e)(iii)). 44. Since substantial tourism development is expected on Roatan, environmental control is essential to conserve the unique qualities of the island. Accordingly, the project would include 23 man/months of technical assistance to prepare a plan indicating tourism zones, their use and build- ing standards and other requirements for environmental protection. It has been agreed that this plan would be completed and presented to the Bank for review and discussion no later than June 30, 1980. Preparation and implemen- tation of the plan would be the responsibility of an interagency coordinating committee, under the chairmanship of SECTUR, whose establishment would be a condition of disbursement for this project component as well as for the Roatan airport works (draft Loan Agreement, Section 3.03 and Schedule 1, Paragraph 5(c)). 45. As the new hotels financed by the loan are constructed and start operations, a coordinated national marketing program would be mounted to acquaint the overseas travel trade with the attractions of Honduras as a tourist destination. The project includes the services of an international travel marketing expert during the third and fourth years of the project to assist with this program (draft Loan Agreement, Schedule 2, Part C(4)). 46. At present, Honduras' airports receive their operating funds through the Government budget, while user charges are payable directly to the Treasury. There is no ready possibility of determining whether receipts cover costs. Fragmentary evidence suggests that they do not. There is also a substantial backlog in the collection of user charges. In order to form a basis for future governmental investment and policy decisions with respect to its airports, the project includes technical assistance (12 man/ months) to study airport user charges and develop a cost accounting system which would provide data needed to rationalize tariffs. It has been agreed that the terms of reference for this study would be presented to the Bank for approval no later than December 31, 1979, and that the study would be presented for review and discussion no later than December 31, 1980 (draft Loan Agreement, Section 3.04). Project Cost and Financing 47. Total project cost is estimated at US$38.3 million equivalent, including US$2.5 million of physical and US$8.1 million of price contingencies. It also includes US$90,000 to repay the Bank's Project Preparation Facility for an advance used to finance economic and marketing studies. Hotel invest- ment costs average US$28,000 per room without contingencies and US$40,000 with contingencies. Civil works cost estimates are based on current construc- tion costs in Honduras, and the estimates for furniture and equipment are based on an average market price. The average cost of the 206 man/months of technical assistance included in the project is estimated at US$5,800 per man/month, including travel and subsistence expenditures, which is considered reasonable.  - 15 - 48. The World Bank loan of US$19.5 million equivalent covers 51 percent of the total project cost, representing the estimated foreign exchange compo- nent of US$19.47 million plus a small amount (US$29,000) of local costs needed to facilitate the prompt initiation of operations by the land tenure unit. The remaining 49 percent would be provided by the Government (US$2.8 million), the Central Bank (US$1.6 million), financial intermediaries (US$3.2 million) and investors (US$11.2 million). It has been agreed that the Central Bank would provide its contribution in two equal installments, the first as a condition of effectiveness and the second 12 months later (draft Project Agreement, Section 2.02(b), and draft Loan Agreement, Sections 3.01(d)(ii) and 6.01(a)). A breakdown of project costs and the financing plan are con- tained in the Loan and Project Summary at the beginning of this report. Implementation 49. The project would be implemented in five years from loan effective- ness, with a proposed completion date of June 30, 1984. Funds in the line of credit are expected to be fully committed within three years from loan effec- tiveness, with all hotel construction completed in five years. The line of credit would be managed by FONDEI, and a separate account has been established within the Central Bank for the tourism rediscount facility (draft Loan Agreement, Section 4.05). The Technical Department of IHT to be established under the project would include a hotel credit evaluation unit responsible for evaluating feasibility studies and the economic viability of each prospective subproject. Only subprojects approved by the Technical Department would be considered by FONDEI for subloan approval. All subloans in excess of US$100,000 would also require prior World Bank approval. 50. In addition to evaluating all subloan applications before consider- ation by FONDEI, the new Technical Department of IHT would have responsibility for the supervision of subloan implementation, as well as the coordination of all other project components. The Honduran Director of the Technical Department has already been contracted, and recruitment of the remainder of the staff, including foreign experts, would be a condition of effectiveness (draft Loan Agreement, Section 6.01(b)). It has been agreed that local staff would be hired as consultants on renewable contracts, in order to assure that they receive salaries adequate to attract experienced, high caliber personnel (draft Loan Agreement, Section 3.02(b)). The Technical Department would work with the various ministries and agencies involved in different project components. INFOP would handle hotel training, and the marketing advisor would work directly with the Promotion and Public Relations Department of IHT. The Copan component would be implemented by SECTUR itself; SECTUR's Institute of Anthro- pology and History would supervise the archaeological works, administer technical assistance funds, train guides and produce informational material, and IHT's Technical Department would oversee construction and equipment of the visitors' center and the museum, as well as installation of visitors' facilities. The airport works would be supervised by the appropriate directorates within the Ministry of Communications, Public Works and Transport (SECOPT), and the study of airport finances by SECOPT's General Directorate of Civil Aviation.  - 16 - The General Directorate of Urban Planning of SECOPT would prepare the environmental control plan for Roatan, under the overall coordination of an interagency committee which would also oversee its implementation. In order to formalize the arrangements for participation of these various agencies and ministries in the project, it would be a condition of effectiveness that SECTUR enter into agreements, satisfactory to the Bank, with INFOP, SECOPT and the Central Bank governing their participation (draft Loan Agreement, Sections 3.01(c) and (e), and 6.01(c), and draft Project Agreement, Section 2.08). Procurement 51. Hotels: Prospective subborrowers would normally be required to submit with loan applications at least three bids for civil works, accompanied by a detailed bid evaluation report. However, in most cases it is expected that investment groups may include contractors who wish to bid for the proposed works, and that this would deter other bidders. Therefore, when three bids cannot be obtained, prospective subborrowers would be required to engage an independent consulting cost engineer acceptable to the Bank to certify that the proposed costs are reasonable. In addition, the experts provided under technical assistance to IHT's Technical Department would help establish, and periodically adjust, construction cost norms for various types of hotels in different parts of Honduras. These norms would be used in subproject evalua- tions. Civil works contracts of more than US$100,000 equivalent would be subject to prior Bank review and approval. For purchase of furniture, equipment and fixtures of more than US$20,000, the subborrower would be required to submit quotations from at least three suppliers and justify the proposed selection. Purchases of less than US$20,000 equivalent could be procured through regular commercial channels, provided their total aggregate amount does not exceed US$50,000 equivalent. Prior review and approval by the Bank would be required for purchases of more than US$20,000 equivalent. 52. Airports and Copan: Since it is unlikely that foreign construction companies would be interested in bidding for small-scale civil works, contracts would be awarded on the basis of local competitive bidding in accordance with procedures satisfactory to the Bank. The Bank's prior review and approval would be required for contracts in excess of US$50,000 equivalent. Contracts for procurement of furniture, fixtures, equipment and vehicles would be awarded on the basis of ICB, except for contracts amounting to less than US$20,000 equivalent, up to a total aggregate amount of US$50,000 equivalent for each project component (the San Pedro Sula Airport, the Roatan airfield, and Copan). In evaluating these bids, domestic manufacturers would be granted a preferential margin of 15 percent or the prevailing level of customs duties, whichever is lower. The Bank's prior review and approval would be required for contracts of more than US$20,000 equivalent. Disbursement 53. The direct and indirect foreign exchange costs of each individual hotel subproject are likely to vary considerably. The Bank would, therefore, reimburse a standard 77 percent of amounts disbursed under subloans, which is equivalent to 50 percent of the investments made by final borrowers and  - 17 - represents the best estimate of average foreign costs. For the other project components, the following disbursement percentages would be applied: (a) 33 percent of total expenditures for civil works; (b) 100 percent of foreign expenditures for imported goods; (c) 70 percent of the cost of locally-procured items; (d) 75 percent of expenditures for technical assistance and professional services; (e) 100 percent of foreign expenditures for fellowships; (f) 100 percent of expenditures for the land tenure unit during calendar year 1979; and (g) 100 percent of the project preparation advance. Prospective Traffic Traffic Growth Rates 54. The achievement of viable occupancy rates for hotels to be financed under the line of credit would entail a 2.6 percent average annual growth rate in all international arrivals in Honduras and a 5.7 percent average annual growth rate in vacation visitors, as distinct from transit, business or other. Assuming that 80 percent of all guests in the new hotels were from North America, this particular market segment would grow at an annual average of 7.8 percent. These growth rates are considered modest and reasonably attainable, particularly since they are below those projected for the Central American and Caribbean region as a whole by both the Secretariat for Central American Tourist Integration and the Caribbean Tourist Association, and since Honduras would enjoy considerable price advantages over competing destinations. 55. Room rates in the new hotels will range from US$30-40 single occupancy to US$36-50 double (in 1978 prices) which compares with ranges of US$25-110 single and US$35-150 double elsewhere in Central America and the Caribbean. The add-on rate for two meals a day will vary between US$12 and US$15 per day according to category as compared with US$11-18 at competing destinations. The package price of an inclusive trip of seven days from New York to a beach hotel either on the mainland or on the Bay Islands would cost US$341-361, a cost which, primarily as a result of lower hotel prices, would be within the range of those for Cancun, Mexico, where package prices in 1978 varied from US$299 to US$425. Honduran resorts will be as well situated as Cancun and Cozumel (Mexico) in terms of accessibility--half-hour additional flight time from North American departure points--and of attractions--tropical beaches together with the possibility of excursions to Mayan ruins. Air Services 56. The Government is now taking steps to remove international air access constraints to tourism development. In addition to the physical improvements being undertaken at the San Pedro Sula and Roatan airports under the project, the two Honduran airlines (SAHSA and TAN) which currently operate services to and from the U.S. through the two gateways of Miami and New Orleans, have recently obtained two new gateways, at New York and Houston. On the basis of reciprocity, a U.S. carrier would be accorded rights to the new routes. In addition, the Government has reaffirmed its existing liberal policies with respect to air charters which are a necessary addition to traffic capacity, particularly during peak seasons.  - 18 - Occupancy Rates 57. Taking into account estimated traffic growth, occupancy rates for hotels to be financed under the line of credit are projected to reach 80 per- cent in the cities (Tegucigalpa and San Pedro Sula) and 65 percent elsewhere. These rates would be attained after a gradual build-up of five years, allowing time for Honduras to become a better known tourism destination, for the new hotels to gain operational experience and for the marketing assistance, provided under the project, to take full effect. In Tegucigalpa, where seasonality of vacation traffic is mitigated by the regularity of business visits, current occupancies of first class accommodations are over 90 percent. This leaves a margin in the event that the build-up of demand in the next several years is slower than projected and is not sufficient, in itself, to achieve occupancy levels projected for the 150-room hotel envisaged in the city. Room occupancy rates projected for hotels outside the cities, which would primarily cater to vacationers, are considered reasonable in view of Honduras' price competitiveness, and as compared with hotel occupancies prevailing elsewhere in the region. Hotel Profitability 58. The various types of hotels to be built under the project should attain satisfactory levels of gross operating profits, ranging from 27 to 34 percent of hotel revenues after the fifth year of operations. The finan- cial internal rate of return would vary considerably according to hotel type, ranging from about 7 to 17 percent on total investment and from about 8 to 24 percent on equity. The variations in operating results stem primarily from differences in investment costs, occupancies, tariffs and franchise arrange- ments. Smaller and less elaborate hotels at locations sought by certain segments of the tourism market, such as those on Roatan, should yield attrac- tive returns to their owners. Also, a large city hotel with international standards catering to both business and vacation visitors, presently in short supply in the country, should be able to achieve high occupancies at tariffs resulting in attractive financial returns. It may be more difficult, however, to achieve similar results with hotels where relatively high investment costs on the one hand and not fully commensurate tariffs on the other may not provide an equally broad safety margin during the first few years. This seems to be the case with hotels to be built on the mainland coast and thus investor interest in this type of hotel may not be high. Nevertheless, investors with interests in other related enterprises, such as land developments, sports facilities, marinas or airlines, may wish to undertake such hotel investment as part of a wider enterprise. Subloans for such hotels would of course only be approved if they could be shown to be in themselves financially acceptable and economically justified. If the demand for funds for this type of hotel were not forthcoming, the funds would be used for other hotel enterprises with at least equally good economic justifications and more attractive financial returns. Project Justification and Risk Analysis 59. The internal economic rate of return for the hotel investment program of the project alone is about 22 percent, or about double the oppor- tunity cost of capital in Honduras (estimated at around 10 percent). This rate  - 19 - of return rises to about 24 percent when the costs and benefits of providing additional goods and services demanded by tourists are included, and drops to about 19 percent for the whole project when the investment costs at the airports and Copan, together with technical assistance expenditures, are added. 60. The internal economic rate of return is highly sensitive to changes in cost and revenue assumptions for the hotel program. A 20 percent increase in operating costs would reduce the economic rate of return from 19 to 13 percent. Although there is some risk that operating efficiency may be low initially, the short-fall is not likely to persist as management skills and experience are gained. Economic returns are also sensitive to changes in hotel occupancy and tariff levels. A drop in both occupancies and hotel tariffs of 10 percent would reduce the rate of return to 14 percent. These results suggest that, although a shortfall in traffic is one of the main risks for the project, it would take a large drop in both occupancies and tariffs to endanger its economic viability. The risk of this happening is relatively small. 61. Annual gross foreign exchange receipts from the project are forecast to exceed US$15 million (in 1978 prices) by the ninth year of project operation. However, due to operating expenditures and loan service between the fifth and 20th years of the project, net foreign exchange receipts would average US$8.6 million annually during these years. By year 30, the net inflow would amount to US$11.6 million annually. 62. The Government is expected to invest about US$6.3 million equiva- lent in the project, US$2.8 million from the budget and US$3.5 million of funds borrowed from the World Bank. When the project is in full operation, the Government is forecast to receive annually more than US$0.5 million from sales taxes on tourism services, US$100,000 in airport charges, US$120,000 from en- trance fees at archaeological sites, US$180,000 from duties on goods imported by tourism establishments, and US$360,000 from income taxes on wages and salaries of tourism employees. After the fifth year of operation for city hotels and the tenth year for all other hotels, the Government would also begin collecting taxes on hotel profits, amounting to maximum annual revenues of US$1.2 million. In summary, total Government receipts arising from the project when fully operational would total US$2.5 million equivalent annually. 63. In addition to the Government, the main beneficiaries of this project would be private sector enterprises investing in tourism facilities and their employees. About 2,500 man/years of employment would be provided during the construction phase of the project. Some 840 permanent jobs would be created once all the hotels built under the program were completed, and about 650 jobs in other tourism activities. In addition, jobs would be created indirectly in activities which supply goods and services to the tourism sector. Unskilled labor would particularly benefit because wages and overall benefits would be appreciably above their maximum earnings in the next best alternative employment opportunity in Honduras' low-wage economy. Also, much of the project's employment and income benefits would go to regions of the country, such as Roatan, with few alternative economic activities, or in regions deprived of their previous livelihood, such as Tela where banana packing and shipping have been severely reduced.  - 20 - Environmental Impact 64. Inclusion in the project of financing for the Roatan environmental control plan would encourage the Hondurans to take an ecology-sensitive approach to tourism and assure that tourism development does not threaten the island's natural beauty. There are no major environmental risks associated with other elements of the project. PART V - LEGAL INSTRUMENTS AND AUTHORITY 65. The draft Loan Agreement between the Republic of Honduras and the Bank, the draft Project Agreement between the Central Bank and the Bank, and the Report of the Committee provided for in Article III, Section 4(iii) of the Articles of Agreement of the Bank are being distributed to the Executive Directors separately. The draft Loan Agreement conforms to the normal pattern of loans for tourism projects and its more important features and special conditions have been included in Part IV and summarized in Section III of Annex III to this report. 66. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 67. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President Attachment March 2, 1979  -~~~~~~~~~~~~~, .1 -5 TAIL 3A N X HONDUpaS - SOCIAL INDICATORS DATA SHEET REFERENCE GROUPS (ADJUSTED AVERAGES HONDURAS la LAND AREA (THOUSAND SQ. K14.) - MOST RECENT ESTIMATE) TOTAL 112.1 SAME SAME NEXT HIGHER AGRICULTURAL 28.7 MOST RECENT GEOGRAPHIC INCOME INCOME 1960 /b 1970 Lb ESTIMATE /b REGION /c GROUP /d GROUP /e GNP PER CAPITA (US$) 170.0 260.0 450.0 1066.7 432.3 867.2 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 155.0 247.0 232.0 911.1 251.7 578.3 POPULATION AND VITAL STATISTICS TOTAL POPULATION, MID-YEAR (MILLIONS) 1.9 2.5 3.0 llRBAN POPULATION (PERCENT OF TOTAL) 23.0 26.8 31.4 57.9 24.2 46.2 POPULATION DENSITY PER SQ. KM. 17.0 22.0 27.0 25.6 42.7 50.8 PER SQ. KM. AGRICULTURAL LAND 69.0 89.0 104.0 77.6 95.0 93.3 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 47.8 48.1 48.1 42.0 44.9 42.9 15-64 YRS. 49.7 49.2 49.1 52.2 52.8 53.5 65 YRS. AND ABOVE 2.5 2.7 2.8 3.7 3.0 3.5 POPULATION GROWTH RATE (PERCENT) TOTAL 3.0 2.7 /f 2.7 /f 2.7 2.7 2.5 URBAN 5.37j ., 5.1 4.3 8.8 4.7 CRUDE BIRTH RATE (PER THOUSAND) 54.0 51.5 49.3 35.8 42.2 37.8 CRUDE DEATH RATE (PER THOUSAND) 26.5 19.1 14.6 9.1 12.4 10.8 GROSS REPRODUCTION RATE .. 3.4 3.3 2.6 3.2 2.5 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. 12.7 23.0 USERS (PERCENT OF MARRIED WOMEN) .. .. .. 15.1 14.2 20.0 FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1970-100) 82.7 100.0 102.1 104.3 107.3 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 84.0 99.0 90.0 103.9 99.5 105.3 PROTEINS (GRAMS PER DAY) 53.0 58.0 56.0 60.3 56.8 63.0 OF WHICH ANIMAL AND PULSE 21.0 25.0 *- 26.7 17.5 21.7 CHILD (AGES 1-4) MORTALITY RATE 14.0 10.0 9.0 8.7 7.5 8.0 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 41.0 49.4 53.5 62.6 53.3 57.2 INFANT MORTALITY RATE (PER THOUSAND) .. .. 118.0 56.9 82.5 53.9 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. 34.0 41.0 60.7 31.1 56.8 URBAN .. 99.0 99.0 78.0 68.5 79.0 RURAL .. 10.0 13.0 34.9 18.2 31.8 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. 24.0 .. 61.1 37.5 30.9 URBAN .. 64.0 .. 80.3 69.5 45.4 RURAL .. 9.0 .. 25.4 25.4 16.1 POPULATION PER PHYSICIAN .. 3600.0 /h 3140.0 1899.3 9359.2 2706.8 POPULATION PER NURSING PERSON 19120.0 /i 8930.0 7680.0 1 1220.1 2762.5 1462.0 POPULATION PER HOSPITAL BED TOTAL 620.0 /i 570.0 630.0 422.3 786.5 493.9 URBAN .. 150.0 .. 258.2 278.4 229.6 RURAL .. 11810.0 .. 2281.6 1358.4 2947.9 ADMISSIONS PER HOSPITAL BED .. .. 24.0 25.6 19.2 22.1 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL 5.7 .. .. 5.2 .. 5.2 URBAN 5.5 .. .. .. .. 5.0 RURAL 5.7 .. .. .. .. 5.4 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL 2.4 .. .. 2.0 .. 2.0 URBAN 1.8 .. .. 2.1 2.3 1.5 RURAL 2.7 .. .. 2.7 .. 2.7 ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL 15.0 .. .. 51.2 28.3 64.1 URBAN 56.7 .. .. 77.3 .. 67.8 RURAI. 2.0 .. .. 12.8 10.3 34.1  - 22 - ANNEX 1 TABLE 3A HONDURAS - SOCIAL INDICATORS DATA SHEET REFERENCE GROUPS (ADJUSTED AVERAGES HONDURAS /a - MOST RECENT ESTIMATE) SAME SAME NEXT HIGHER tlOST RECENT GEOGRAPHIC INCOME INCOME 1960 /b 1970 /b ESTIMATE /b REGION /c GROUP /d GROUP /e EDUCAT ION ADJUSTED ENROLLMENT RATIOS PRINARY: TOTAL 67.0 .. 90.0 103.5 75.8 99.8 FEMALE 67.0 .. 88.0 102.9 67.9 93.3 SECONDARY: TOTAL 8.0 12.0 16.0 37.2 17.7 33.8 FEMALE 7.0 12.0 13.0 37.9 12.9 29.8 VOCATIONAL (PERCENT OF SECONDARY) 24.0 18.0 .. 14.7 7.4 12.8 PUPIL-TFACHER RATIO PRIMARY 32.0 35.0 35.0 32.8 34.3 34.9 SECONDARY 10.0 .. .. 17.8 23.5 22.2 ADUIT LITERACY RATE (PERCENT) 47.0 .. 53.0 74.9 63.7 71.8 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 3.0 5.0 5.0 26.9 7.2 12.4 RADIO RECEIVERS PER THOUSAND POPULATION 68.0 57.0 54.0 173.5 71.1 104.5 TV RECEIVERS PER THOUSAND POPULATION 1.0 8.0 16.0 69.4 14.1 28.1 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 21.0 .. 35.0 72.8 16.3 45.2 CINEMA ANNUAL ATTENDANCE PER CAPITA .. .. .. 4.3 1.6 4.6 EMPLOYMENT TOTAL LABOR FORCE (THOUSANDS) 570.0 700.0 /k 760.0 /k FEMALE (PERCENT) 12.5 12.8 13.3 21.4 28.0 25.7 AGRICULTURE (PERCENT) 67.0 62.3 60.3 37.8 54.1 46.2 INDUSTRY (PERCENT) 10.6 12.5 14.7 PARTICIPATION RATE (PERCENT) TOTAL 31.5 30.6 29.8 30.8 37.8 33.8 MALE 55.3 53.5 51.8 47.2 50.3 48.1 FEMALE 7.8 7.8 7.9 13.2 20.9 17.3 ECONOMIC DEPENDENCY RATIO 1.6 1.5 1.8 1.7 1.3 1.4 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS .. 28.0 /1 .. 28.9 19.5 23.6 HIGHEST 20 PERCENT OF HOUSEHOLDS .. 60.6 /1 .. 57.7 48.9 52.3 LOWEST 20 PERCENT OF HOUSEHOLDS .. 2.5 /1 .. 3.2 5.9 4.3 LOWEST 40 PERCENT OF HOUSEHOLDS .. 8.4 /I .. 10.7 15.7 13.1 POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBA .. .. .. 251.9 155.9 191.9 RURAL .. .. 105.0 200.6 97.9 193.1 ESTIMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 155.0 403.1 143.7 319.8 RURAL .. .. 111.0 258.0 87.3 197.7 ESTIMATED POPULATION BELOW POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 15.0 24.8 22.9 19.8 RURAL .. .. 70.0 65.2 36.7 35.1 Not available Not applicable. NOTES Ia The adjusted group averages fur each indicator are population-weighted geometric mans, excluding the extreme values af 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 Lower Middle Income (5281-550 per capita, 1976); /e Intermediate Middle Income ($551-1135 per capita, 1976); /f Intercensal growth rate (1961 and 1974 censuses; due to emigration of El Salvadorean residents in Honduras. the populEtion growth rate is lower than rate of natural increase; jj 13 important urban centers; /h Registered, not all practicing in the country; /i 1963; Li Personnel in government services only; 7k Aged 10 years and above; /1 1967-68, per capita income. September. 1978  - 23 - DEFINITIONS OF SOCIAL INDICATORS AMNNEX I Nore The adjusted group averages for each indicator are population-weighted geometric means, excluding the extreme Values of the indicator and the mast populated country in each group. Coverage of countries among the indicators depends on availability of data and is not uniform. Due to lack of data, group averages for Capital Surplus Oil Exporcers and indicators of access to water and eucreta disposal, housing. income distribution and poverty are simple population-weighted geometric means without the exclusion of extreme values. LAND AREA (thousand q. kh) Population per hospital bed - total, urban. and rural - Population (total, Total - Total surface ares comprising land area ond inland waters, urban, and rural) divided by their respective number of hospital beds Agricultural - Most recent estimate of agricultural area used temporarily available in public and private general and specialized hospital and re- or permanently for crops, postures, market and kitchen gardens or to habilitation centers. Hospitals are establishments permanently staffed by lie fallow, at least one physician. Establishments providing principally custodial care are not included. Rural hospitals, however, include health and medi- GNP PER CAPITA (US$) - GNP per capita cationtin at torrent oarket prices, cal cecters not permanently staffed by a physician (but by a medical a_ calculated by sase conversion method as World Sank Atlas (1975-77 basis); sistant nurse, midwife, etc .) which offer in-patient accommodation and 1960, 1970, and 1977 data. provide a limited range of medical facilities. Admissions per hospital bed - Total number of admissions to or discharges ENERGY CONSUMPTION PER CAPITA - Annual consumption of commercial energy from 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. HOIUSING Averue sine of household (persons per household) - total, urban, and rural- POPULATION AND VITAL STATISTICS A household consists of a group of individuals who share living quart.rs Total population, mid-year (millioss) - As of July 1; if not available, and their rain meals. A boarder or lodger may or may not be included in average of two end-year estimates; 1960, 1970, and 1977 data, the houoehold for statistical purposes. Statistical definitions of hause- Urban population (percent of total) - Ratio of urban to total popola- hold vary. tion; different definitions of urban areas may affect comparability Average nsmber of persons per roem - total, urban, and rural - Average nun- of data among countries. ber of persons per room in all, urban, and rural occupied conventional Population density dwellings, respectively. Dwellings esclude non-permanent structures and Per sq. k. - Mid-year population per square kilometer (100 hectares) -noccupied parts. of total area. Access to electricity (percent of dwellings) - total, urban, and rural - Per sq. k. agriculture land - Computed as above fot agricultural land Conventional dvellings with electricity in living quarters as percentage only. of total, urban, and rural dwellings respectively. Population age structure (percent) - Children (0-14 years), working-age (15-64 years), and retired (65 years and over) as percentages of mod- EDUCATION year population. Adjusted enrollment ratios Population growth rate (percent) - total, and urban - Compound annual Primary school - total, and female - Total and femals enrollment of a11 ages growth rates of total and urban mid-year populations for 1950-60, at the primary leval as percentages of respectively primary school-age 1960-70, and 1970-75. populatio.s; normally includes children aged 6-11 years but adjusted for Crude birth rate (per thousand) - Annual live births per thousand of different lengths of primary education; for cosuteics with univers-l edu- mid-year population; ten-year arithmetic averages ending in 1960 and cation enrollment nay exceed 100 percent since sane pupils are below or 1970 and five-year aversge ending in 1975 for most 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 arithmetio averages ending in 1960 and 1970 tion requiros at least four years of approved primary instruction; pre- and five-year average ending in 1975 for most recent estimatr. vides general vocational, or teacher training instructions for pupils Gross reproduction rate - Average number of daughters a woman will bear usually of 12 to 17 years of age; correspondence courses are generally in her normal neproductive period if shc esperiences present age- excluded. specific fertility rates; usually five-year averages ending in 1960, Vocational enrollment (percent of secondary) - Vocational institutions in- 1970, and 1975. cude technical., industrial, or other prograns which operate indepemdently Family planning - acceptors. .nnual (thousands) - Annual number of or as departments of secondary institutions. acceptors of birth-control devices under auspices of national family Pupil-teacher ratio - prisry, ad secondary - Total students enrolled in planning program. primary and secondary levels divided by numbers 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 devi.es to all married wamen un 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) - Indec number of per Passenger cars (per thousand population) - Pa.senger cars comprise motor cars capita annual production of all food commodities, seating lens than eight persons; excludes 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 lass broadcasts to general public per thousand of population; encludes unlicensed exports, and changes in stock. Net supplies enclude aniral feed, seeds, receivers in countries and in years when registration of radio sets was in quantities used in food processing, and losses in distribution. Re- effect; data for recent years nay not be comparable since most countries quiresents were estimated by FAO based on physiological needs for nor- abolished licensing. mal activity and health considering -nvironmental temperature, b.dy TV receivers (per thousand population) - TV r.ecivers for broadcast to gamerra weights, age and se. distributions of population, and allowing 10 per- public per thousand population; eocludes unlicensed TV receivers in coun- cent for waste at household level, tries and in yearc when ragistration of TV sets was in effect. Per .spita supply of protein (grams per day) - Protein content of per Newspaper circulation (per thousand pnoplation) - Shown the average circula- capita net supply of food per day. Net supply of food is defined us tion 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 grams of total protein per day and 20 grams be "daily" if it appears at least four times 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 grams of animal prortin as an average for the .onld, proposed by units. FAO in the Third World Food Survey Per capita protein supply from animal and pulsc - Protcin supply of focd EMPLOYMENT derived from animals and pulses in grams per day. Total labor force (thousands) - Economically active persons, including armed Child (ages 1-4) mortality rate (per thcusand) - Annual deaths per thous- forces and unemployed but excluding heosewives, students, etc. Defini- and in age group 1-4 yeors, to children in this age group. tions in various countries are nor comparable. Female (percent) - Pensle labor farce as percentage of total labor force. HEALTH Agriculture (percent) - Labor force in farming, forestry, hunting and fishing Life xpectancy at birth (years) - Average number of years of life as percentage of total labor force. remaining at birth; usually tiOe-year avnrages ending in 1960, 1970, Ind-u-rc (percent) - Labor farce in mining, construction, manufacturing and and 1975. elctricity, water and gas as percentage of total labor force. Infant mortality rate (per thousand) - Annual deaths of infants under Participation rote (percent) - total male, and fesale - Total, sale, and one yaur of age per thousand live birhts. ema'c labor corce as percentages of their respective populoticos Access to oafs water (parcent of population) - total, urban, and reral - Ihse ore 0LO's adjoited participation races re tl-ting ag.-sn Number of people (total, urban, and rural) with reasonable access to tucr. tore ol the popolation. ond last cfie trend. safc water supply (includes treated surface waters or untreoted but Economic dycendeoc- ratio - Ratio of population under 15 ann 65 and over to uncontaminated water such as that from protected boreholes, springs, tho labor toro- in age group of 15-64 years. ond sanitary wells1 as percentage- of their respective populations. is an urban areaa public fountain or standpost located not more INCOME DISTRIBUTION than 200 .eters from a house may be considered as being within rea- Percentage of private income (both in cash and kind) received by richest 5 sonable access nf that house. In rural areas reasonable access could percent, r-ch-st 20 percert, poorest 20 percent, and poorest 40 percent imply that the housewife or =embers of the household do not have to of househclds. spend a disprapocrtionte port of the day in fetching the family's water needs. POVERTY TARGET GROUPS Access to --creta d-sposal E pecent of population) - total, urban, and Estimated absolute poverty income level (USS per capita) - urban and curs- rural - Numbor of pople (total., urban, and rural) sarved by excreta Absolute poverty incoma level is that inc. .eel heslo which a minimal disposal as porcontag-s of their respective populations. Ecreta sutritionally adequate diet plus essential non-food requirements is not disposal nay include the collection and disposal, with or withcut affordabl. treatrent, of human excreta and waste-water by water-borne systems Estimated relative poverty income level (CS$ per capita) - urban and rural - or the ass of pit privies and similar installations. Relative poverty income level is that income level less th-n one-third Population per physician - Populution divided by number of practiciog per capita p .rsonal income cf the country. physicians qualified from a medical school at university level. Eutimated Population below poverty income level (percent) - urban ad rural - Population per nurs.ing person - Population divided by number of Percenc of population (urban and rural) who ore either "absolute poor or practicing sule and female graduate nurses, practical nurses, and "creltice poor" whichever is greater. .Economicand Social P:ao Division Economic Analysis and Pro jections Department  - 24 - ANNEX I HONDtRAS ECONOMIC _EVELDVOPMNT DATA (Amcounts in millions of US dollars) A c t u a l Projected Croeth R te s 1976 Share 1965 1970 1973 1976 1977(p) 1981 1985 1965-1973 1973-1976 1976-1981 1981-1985 of GDP NATIONLL ACCOUFTS (1) (Killions of US8 at 1967-69 Prices) Gross D-o-stic Product 549.2 678.1 764.8 834.8 904.1 1106.7 1345.2 4.2 3.0 5.8 5.0 130.0 Gains from Tens of Trade 8.4 -6.0 -7.9 -15.7 21.1 -27.0 -45.2 -1.9 Gross Domeostic Income 557.6 672.1 756.9 819.1 925.2 1079.7 1300.0 3.9 2.7 5.7 4.8 98.1 Imports 141.9 222.5 210.5 249.7 295.5 342.5 405.0 4.8 5.9 6.5 4.3 29.9 Ftroorts - Volwe -138.9 -184.9 -210.4 -233.1 -2h;1.9 -327.5 -439.8 5.3 8.5 7.0 5.8 27.9 Egports - TT.Adjusted -147.3 -178.9 -202.5 -217.5 -263.0 -300.5 -364.6 411 2.4 6.7 4.9 26.1 hesource Gap - TT.Adjosted -2.4 43.5 8.0 32.2 32.5 42.0 bO.4 3.9 Total Conrmpt-on 472.6 569.1 629.8 688.3 761.4 883.0 1033.4 3.7 3.0 5.1 4.0 82.5 Investment 82.6 146.5 135.1 163.0 196.3 238.7 307.0 5.3 6.5 7.9 6.5 19.5 NatL.eal Savingo 75.1 88.4 108.6 116.2 147.8 163.0 210.0 4.7 2.3 7.0 6.5 13.9 Domestic Savings 85.1 103.0 127.1 130.8 163.8 196.7 266.6 5.1 1.0 8.5 7.9 15.7 0DP at Current US7 528.7 714.8 899.0 1213.6 1470.0 2256.4 3595.1 7.4 10.5 13.2 12.3 Sector Output (Share of GDP at 1967-69 Prices) Agriculure 0.375 0.358 0.360 0.281 0.290 0.290 0.287 Indo-try 0.201 0.218 0.226 0.239 0.239 0.250 0.251 Services 3.424 0.421 0.414 0.459 0.471 0.460 o.462 Nerciardise Trade A c t u a 1 Pr oi8ec t io Mls. of Corrert UsS) 1970 1973 1975 1970 1Y97 1970 1979 1500 1901 19B5 lmnorts 1.1 Food 14.3 21.5 45.0 37.7 39.1 44.6 48.6 52.8 57.5 72.4 1.2 Other Censumes Goods 53.9 42.9 49.8 65.2 92.5 90.3 102.2 113.2 131.1 186.1 2. Petroleur,Oil,Lubrieants 14.7 25.5 68.5 48.2 64.o 77.4 89.0 102.3 117.7 195.4 3. Other Cntermediate Deedc 94.C 100.2 135.0 175.7 100.1 27A., 271.7 30. A 100.1 570.0 4. Capital Goods 55.3 79.5 110.8 138.8 169.6 184.0 223.0 239.2 269.0 443.3 5.1 Total aoods (cof) 222.7 269.6 410.0 465.6 564.3 634.6 734.5 817.3 928.4 1427.2 5.2 Ttcl -oods (fob) 203.4 243.6 377.6 427.0 350.0 591.1 675.7 751.9 054.1 1313.0 M. Non-Factor Services 40.9 62.8 76.7 82.0 85.(0 99.0 108.0 117.3 131.4 208.4 7. Total Goods and NS'S 244.3 306.4 454.3 509.0 6_5.5 690.1 783.7 869.2 985.5 1521.4 Erporto 1.1Bacaas 75.3 91.0 61.5 106.7 125.6 149.3 167.2 181.0 201.5 307.5 1.2 Coffee 25.9 48.5 56.9 190.3 168.0 163.8 146.3 141.9 142.4 343.3 1., Lumber 16.2 39.1 38.8 38.0 47.5 53.7 63.5 87.5 127.1 242.1 1.- Beef, 9.7 21.9 18.3 25.6 22.( 27.8 33.6 bO.4 413.7 84.7 1.5 lugar 1.2 - 7.0 2.2 4.o 12.0 18.2 18.8 20.8 37.4 1.6 Petroles D-erivativ,s 6.2 4.1 12.3 1.1 0.2 7.7 2.9 3.1 3.3 4.3 2. All other goods 43.6 6o.6 113.1 129.6 152.3 171.6 192.0 218.9 249.5 541.5 1. Total 3.ods (fob) 178.1 268.2 307.9 403.5 519.8 58).9 621.7 691.6 788.3 1260.8 4. )Jo-Factor ,er.e.. 18.4 26.3 36.6 39.6 53.0 50.3 57.8 66.5 76.4 0j0.0 5. Total Soods and NFS 1