Argentina - Coal Exploration Project

Document of F" COPY The World Bank FOR OFFICIAL USE ONLY Report No. P-2853-AR REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE ARGENTINE REPUBLIC FOR A COAL EXPLORATION PROJECT November 18, 1980 This document bas a restricted distribution and may be used by recipients only In the perforumnce of their official duties. Its contents may not otherwise be disclosed witout World Bank authorintion.  CURRENCY EQUIVALENTS September 30, 1980 Currency Unit = Argentine Peso ($a) US$1 * $a 1,935 US$1 million $a 1,935 million $a 1 million = US$517 WEIGHTS AND MEASURES Metric System tce - 1 ton of coal equivalent (7,000,000 kcal) tpy - ton per year GLOSSARY OF ABBREVIATIONS GdE - Gas del Estado (State Gas Company) YCF - Yacimientos Carboniferos Fiscales (State Coal Company) YPF - Yacimientos Petroliferos Fiscales (State Oil Company) FISCAL YEAR January 1 to December 31  ARGENTINA FOR OFFICIAL USE ONLY COAL EXPLORATION PROJECT Loan and Project Summary Borrower: The Argentine Republic Beneficiary: Yacimientos Carboniferos Fiscales (YCF) Amount: US$10 million. Terms: 10 years, including 4 years of grace at 9.25% per annum.l/ Projiect The project would evaluate coal reserves in the most Description: promising area of the Austral basin. The project consists of: (a) a drilling program; (b) high resolution seismics; (c) geological reconnaissance; and (d) pre- feasibility studies. The project carries the normal risks associated with coal exploration. Economically viable coal production at a later stage would depend on rational energy pricing policies and improved transport infrastructure. Estimated Cost: Local Foreign Total ----(US$ Million Equivalent)---- Equipment 0.2 1.8 2.0 Drilling contract 1.6 2.9 4.5 YCF operation costs 4.9 - 4.9 Consultants 0.4 2.4 2.8 Base Cost 7.1 7.1 14.2 Physical Contingencies 0.4 0.5 0.9 Price Contingencies 2.5 2.4 4.9 Total Project Cost 10.0 10.0 20.0 Financing Plan: Local Foreign Total ----(US$ Million Equivalent)---- Government 3.0 - 3.0 YCF 7.0 - 7.0 IBRD - 10.0 10.0 Total 10.0 10.0 20.0 Estimated Disbursements: Bank FY 1981 1982 1983 1984 1985 Annual 0.8 2.5 2.1 2.2 2.4 Cumulative 0.8 3.3 5.4 7.6 10.0 Rate of Return: Not applicable. Appraisal Report: No separate report. 1/ This loan would be refinanced if, as a result of this project, a loan were to be made to the Argentine Republic or YCF for a subsequent project. This document ha 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.   REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE IBRD TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE ARGENTINE REPUBLIC FOR A COAL EXPLORATION PROJECT 1. I submit the following report and recommendation on a proposed loan for a coal exploration project. The loan would have a term of 10 years, including 4 years of grace, with interest of at 9.25% per annum. The loan would be refinanced if a Bank loan for a subsequent project were to be made as a result of this exploration project. PART I - THE ECONOMY 1/ Introduction 2. An economic mission visited Argentina in November 1979 and its findings are reported in the Economic Memorandum (No. 2988-AR), distributed to the Executive Directors in August 1980. Country data sheets are attached as Annex I. Background 3. Argentina is a semi-industrialized country with a per capita income of US$2,280 as of 1979, a sizeable middle class and a fairly even distribution of income. Postwar GDP growth has averaged 3.5% in an economy which has been subject to strong cyclical fluctuations. Sharp swings from expansionary fiscal, monetary and wage policies to restrictive stabilization programs have occurred five times since 1950. During the early 1970s when Argentina's external situation was favorable, the Government pursued an ambitious public investment program. Large increases in public expenditures, nominal wages and credit resulted in strong growth of domestic output, while maintenance of fixed exchange rates led to rapidly increasing imports. In mid-1974, poor weather, falling world grain prices, and an EEC ban on beef imports halted export growth. Deterioration of the foreign sector coincided with an intensi- fication of domestic social and political conflict. Acceleration of the wage-price spiral propelled inflation to over 300% in 1975 and an annual rate of about 800% in early 1976. A rapidly increasing foreign debt and a drastic fall in foreign exchange reserves brought the country close to defaulting on its external obligations. Stabilization Efforts 1976-1978 4. The new administration, which took office in March 1976, had as its initial objectives strengthening the balance of payments, restructuring the external debt and preventing hyper-inflation. Policies such as lowering of export taxes and raising interest rates had an immediate positive effect on the balance of payments. Monetary and fiscal policies, supported by wage controls, succeeded in bringing down the rate of inflation from 780% during 1/ Updated and slightly modified version of the section in the President's Report on the Vocational Training and Technical Education Project (No. P-2880-AR), dated September 18, 1980.  the year ending in April 1976 to 150% a year later. No further progress was made, however, in reducing inflation during the remainder of 1977 and 1978. Output fluctuated greatly. After recovering rapidly from the 1975-1976 reces- sion, growth came to a halt in late 1977 when credit restrictions and record high interest rates resulted in a drop in investment. 5. External sector policies introduced in 1976 immediately produced favorable export results while imports were held down by two recessions. As a consequence, the resource balances registered surpluses of US$1.9 billion and US$2.8 billion in 1977 and 1978 respectively. Surpluses on current account were accompanied by substantial net capital inflows. At the begin- ning, the public sector was the primary borrower, but starting in 1977, high domestic interest rates induced the private sector to borrow abroad on an increasing scale. Although the authorities introduced some controls in 1978, long-term capital continued to flow into Argentina, and by the end of that year gross foreign exchange reserves stood at US$5.8 billion, equivalent to 14 months of imports. Net reserves amounted to US$5.0 billion. This reserve growth permitted a new approach to inflation control in the framework of an open economy. The 1979 Program 6. In late December 1978 the Government announced the following program: predetermined schedules for adjustment of (i) exchange rates; (ii) prices of fuels and public sector services; (iii) wages; and (iv) the monetary base of internal origin, combined with a five-year import tariff reduction schedule and the formal reopening of the capital market to inter- national transactions. Most of the adjustments were to follow a declining trend, designed to dampen inflationary expectations and to limit price increases of domestic producers. Foreign competition was to reduce the rate of price increase of domestic tradeable goods to the level determined by: (a) the rate of price increase abroad; and (b) the rate of depreciation of the peso. It was recognized, however, that possible tariff redundancy and lags in the adjustment of imports would delay this "convergence" of domestic and foreign inflation rates. 7. The new import tariff schedule provides for major reductions in tariffs on goods produced in Argentina. By the end of 1983 the level of import tariffs is to be reduced to 20%, compared with 10%-85% at the beginning of 1979. Shortly after the announcement of the 1979-84 liberaliza- tion schedule, the Government started a supplementary program of temporary tariff reductions for goods whose domestic price increases substantially exceeded increases in international prices and the rate of devaluation. In addition, tariffs for all capital goods were eliminated temporarily in order to facilitate the re-equipment and modernization of Argentine industry. 8. One notable feature of the current stabilization strategy is the secondary role of monetary policy. The pre-fixing of the peso/dollar rate, along with the elimination of capital controls, allow the monetary authorities to influence only the monetary resources originating from domestic sources.  - 3 - By setting quarterly targets for this variable, the monetary authorities warted to limit internal public sector borrowing and ensure an adequate supply of credit to borrowers who had no access to foreign credit sources. Fiscal policy is also viewed to be of secondary importance insofar as short-term stabilization objectives are concerned. To mitigate inflationary expectations, however, and to reach the long-run goal of decreased state intervention, the authorities were able to decrease the central government's overall deficit from 2.1% of GDP in 1978 to 1.5% in 1979. The overall public sector deficit was expected to be reduced significantly from its 1978 level of 5.0% of GDP to 3.3% in 1979. Results of the Program 9. Most of the policies outlined above were implemented during the course of 1979. The key variable, the exchange rate, was moved according to plan; the tariff reform was applied; public sector prices and tariffs were adjusted as envisaged; monetary resources of internal origin expanded only slightly more than projected. However, total money supply expanded rapidly, because the elimination of capital controls and the maintenance of the schedule for exchange rate devaluation, despite high internal inflation, led to heavy capital inflows amounting to over US$1.5 billion in the first nine months. With a tight labor market prevailing throughout 1979, nominal wages increased more rapidly than scheduled. As a consequence, the Government eliminated the legal limitations on wage increases in September. 10. Through the first eight months of 1979, the new approach did not affect wholesale and consumer prices, which rose at the same rates on an annual basis as in 1977 and 1978. Among the factors explaining the continued high rate of inflation in the first half of 1979 was the unusually rapid rise in international prices, particularly of primary products exported by Argentina. The external price component of the wholesale price index, important for deter- mining internal prices, increased at about two to three times the average rate of increase during 1978. Another part of the divergence between actual and expected price behavior can be explained by lags in private sector recog- nition of import opportunities, combined with organizational problems and an initial lack of confidence in the durability of the system. As a result, possible excess demand was not fully met by imports, at least in the first three quarters of 1979. Several indicators also point at demand-pull factors. Unemployment was reduced from 2.8% in 1978 to 1.5% in 1979, with labor scarcity occurring both for skilled and unskilled workers. Wages were adjusted more frequently and rose by about 12% in real terms. Similarly, aggregate real consumption expenditure expanded by 10%. 11. Since September 1979, wholesale and consumer price increases have * begun to decelerate. The general wholesale price index, which rose at an average rate of 8.3% per month from January to August, increased by an average of only 3.6% per month from September 1979 to September 1980, the lowest monthly rates since early 1974. The deceleration in inflation led to a real depreciation of the exchange rate, higher real wages and positive real interest rates during the last three months of 1979. While the lowering of domestic price increase in September and October can be attributed in large part to decreasing price rises of primary products, the impact of increasing exposure of manufacturers to international competition became discernible in November and December. As expected, the branches most exposed to foreign competition are those showing price deceleration most clearly.  - 4 - 1980 Developments and Short-term Prospects 12. In accordance with the preannounced schedule, the peso was devalued by 2.8% in January 1980 with a 0.2% decrease in the rate of adjustment in each of the following months. Effects of the past appreciation of the peso in real terms and tariff reductions, which are only now being felt in the economy, have led to a continuous deceleration in inflation as reflected in the wholesale price index. With prices of traded goods decelerating for the reasons mentioned above, the wage transmission mechanism now has a decelerating impact on the prices of non-tradeables as well. 13. With imports booming by the end of 1979 aSxd exports slowing down, the current account surplus of recent years turned into a deficit of US$493 million for the year as a whole. Preliminary projections indicate a deficit on current account of US$2.5 billion for 1980. Some fears have oeen expressed that a growing perception of the peso's being overvalued could trigger expectations of devaluation, resulting in capital outflow. The authorities have reiterated their determination to make whatever internal adjustments in output and employ- ment may be necessary to avoid large-scale devaluation and the new round of inflationary impulses it could start. Moreover, the high level of exchange reserves (close to US$9 billion) provides a strong support for the continuation of the government program. 14. A temporary critical situation arose in April and May 1980 when Argentines shifted deposits from private domestic banks to public and foreign banks after the failure of one of the most important private banks in March. Besides increasing depositors' insurance and providing ample rediscount facilities, the monetary authorities increased the interest rate of Treasury bills and raised reserve requirements by one percentage point. Although the short-term crisis was successfully contained, the weak financial situation of an industrial sector facing serious external competition has affected the portfolios of banks negatively. It is only because of increased support of the Central Bank and the major official banks that in most cases firms were rescued through large scale debt-rescheduling arrangements. 15. During the second semester of 1980 several new measures were announced and implemented, the most important of which affected the exchange rate and with it the incentives for imports and exports. First, the monthly rate of devaluation, which reached 1% in October and was to decrease to zero by March 1981, is to remain at 1% for the coming months. Secondly, a recent change in the tax structure lowers business' labor taxes and increases the rate of the value added tax. The industrial firms will now be reimbursed the value added taxes when exporting, whereas before they did not receive reimburse- ment for labor taxes. As a consequence, the tax change is equivalent to a de facto devaluation for exports equivalent to between 8 and 15%, depending on the relative labor costs of each enterprise. As regards industrial imports, the substitution of domestic payroll taxes by value added taxes, which aro,paid by importers as well as by domestic producers, amounts to a devaluation equivalent to the increase in the value added tax. Medium- and Long-Term Development Prospects 16. With trade liberalization measures beginning to take effect, industrial and overall economic growth are expected to be relatively slow in 1980 and 1981. In addition, business failures of weak or overexpanded  firms may become more widespread and unemployment could increase--albeit from extremely low levels. The scope of readjustment could be reduced if the small real depreciation of the currency continues, reestablishing export and import substitution incentives. Availability of long-term credit for re- equipment and modernization will be a crucial requirement for supporting the restructuring of industry. Since the private sector is also expected to take on a number of tasks previously undertaken by the public sector, considerable flexibility and efficiency will be required of the Argentine financial system. While agricultural-production is expected to decrease in 1980 and 1981 because of unfavorable weather conditions, growth in agricultural output subsequently should continue on the expansion path started in 1976/77. Exports of agricultural products and investment incentives for agriculture should rise given the expected deceleration in domestic industrial price increases and favorable prices of Argentine products in international markets. 17. Exports in current prices have grown over the past three years (1976-79) an average rate of 25% per year, a rate which will be difficult to sustain. Although export prospects have weakened in the short term, they appear to be excellent over the longer term. Since the outlook for world prices of Argentina's export products is favorable, total export earnings are projected to increase by an average of 12% annually during 1982-1987 (5% in real terms). About 85% of that increase would be generated by agriculture and agro- industry and about 15% by the manufacturing sector. Although Argentina is currently supplying 90% of its petroleum domestically and expects to be self-sufficient by the mid 1980s, the ongoing import liberalization process, as well as the need for modernization of infrastructure and industry implies that imports in current prices could increase at about 14% per annum through 1985 (6% in real terms). With the current account balance turning negative from 1980 onward and reaching a deficit of some US$5.7 billion by 1985, gross inflows of medium- and long-term capital including direct foreign investment are projected to increase from US$3.1 billion in 1979 to US$9.4 billion in 1985. The bulk of these capital flows should be available from bilateral arrangements, export credits, world capital markets, and direct private investments. Official multilateral sources, however, may play an important role by providing financial support combined with technical and organizational assistance and by stimulating capital flows from other sources. 18. Argentina's medium- and long-term external public debt amounted to US$8.3 billion at the end of 1979. Medium- and long-term private external debt expanded more rapidly to US$5.4 billion. External public and total debt service ratios were 20% and 26% in 1979. Since the Central Bank earned interest on its large foreign exchange reserves, the total net debt service ratio was only 23.7%. The Bank's share of the external public debt was 5% and its share in debt service was 3%. Given the relatively modest anticipated external borrowing of the public sector, the public debt service ratio is expected to remain below 20%, with the Bank's share not expected to rise above 1979 levels. Private indebtedness will probably increase more rapidly, and the overall net debt service ratio is projected to rise to 30% in the mid-1980s. In view of these prospects with continuing prudent economic policies, Argentina is considered creditworthy for loans on conventional terms.  - 6 - PART II - BANK GROUP OPERATIONS IN ARGENTINA Bank Operations 19. Past Bank lending to Argentina has been sporadic because of periodic macroeconomic difficulties and unsatisfactory sector policies, along with delays and problems in complying with specific project conditions. After a hiatus of five years, lending was resumed in September 1976. Since that date, the Bank has made loans for nine projects amounting to US$876.0 million. A US$60 million loan for an agricultural credit project was recently cancelled. Projects financed by the Bank before 1971 are practically completed. 20. To assist Argentina through the initial stabilization effort, Bank lending during the past four years focussed on major infrastructure projects and credit provision to productive sectors. A grain storage project was designed to enable Argentina to export agricultural products in a more orderly manner throughout the year and obtain better prices; an industrial credit project supports modernization and expansion of export oriented industries, and the projects for power, highways and railways provide part of the infra- structure necessary to facilitate agricultural and industrial expansion. Disbursements of Bank loans have been slower than expected. Persistent high rates of inflation, the need for fiscal austerity and inertia of the private sector did not provide a conducive environment for progress of Bank financed projects. Following improvements in the economic situation of Argentina, as discussed in paras. 9 to 11, the pace of disbursement has picked up consid- erably over recent months. The marked slowdown in the rate of price increases and stricter budget procedures augur well for further progress. Provisions have been made to ensure satisfactory disbursement of the proposed loan. Annex II contains a summary statement of Bank loans as of August 31, 1980, and notes on the execution of ongoing projects. 21. The Bank's approach to assisting Argentina in recent years was to participate in a limited number of relatively large loans. Now that the Government has broadened its policies beyond stabilization to address struc- tural and institutional constraints, its task has become more complex. Continued Bank lending would support Government efforts to modernize the economy, which has been characterized by high cost industrial production, inefficient public sector enterprises and vintage capital stock. Future bank assistance would be directed to achieving the following objectives: (i) up- grade public sector enterprises and rationalize sector policies; (ii) restruc- ture the industrial sector to increase efficiency and improve export perfor- mance; (iii) help the Government in its efforts to promote private sector participation in industrial development; and (iv) transfer responsibilities from the Central Government to provincial authorities. 22. Within the framework for proposed assistance, the oil and gas sector offers promising possibilities for Bank participation. The recently approved Oil and Gas Engineering loan is a first step that could be followed by a proposed refinery conversion project to help the country meet its demand for  light petroleum products and operations for production, processing and trans- portation of oil and gas. The proposed coal exploration project to measure coal reserves would complement efforts in the petroleum sector. Argentina's ample hydropower potential, shared with riparian neighbors, represents another attractive field for Bank assistance. In the transport sector, the Bank is helping with the preparation of a ports project and plans to continue support- ing other modes of transport. 23. To help modernize the industrial sector, the Government is reducing tariffs to encourage domestic efficiency. Discussions between Bank and Govern- ment to strengthen human and financial resources in support of industrial development have led to the formulation of the recently approved Vocational Training and Technical Education project which could be followed by Research and Development and further Industrial Credit projects. 24. The present administration has taken long strides toward opening up areas for the private sector or joint ventures which traditionally have been the exclusive domain of the public sector. New mining legislation has cltared the way for the exploration and exploitation of Argentina's substantial mineral reserves by the private sector. Possible Bank participation could help ratio- nalize sector policies, attract foreign investors and promote domestic private sector participation. The Government has also expressed interest in Bank support for promoting private sector participation in the exploration and development of the hydrocarbon sector by providing needed capital through the National Development Bank as financial intermediary for projects presently being prepared by private Argentine companies in cooperation with the state oil company. 25. The Government has embarked on a major revision of the revenue sharing system and the distribution of Government responsibilities/expenditures to reduce bureaucracy, synchronize the supply of services more closely with demand and provide services more effectively at lower cost. The Bank would support these policies in the water supply and sewerage sector to help develop provincial institutions, consolidate sector finances and effectively expand service coverage. Bank participation in energy conservation, pollution control, regional water development and flood control are additional possibilities that are under study. IFC Operations 26. As of September 30, 1980, IFC had made 14 loans to borrowers in Argentina totalling US$99.4 million and two equity investments of US$2.5 million, of which US$48.5 million have been repaid, cancelled or sold. A summary of IFC's investments up to September 30, 1980, is shown in Annex II. III. THE COAL SECTOR Background 27. Argentina is well endowed with energy resources consisting of crude oil, natural gas, coal and uranium, as well as a sizeable hydroelectric potential. Total energy reserves have been estimated at about 7,300 million  tons of coal equivalent (tce), of which the exploitable hydropower potential-jf represents about 60%. Proven oil and gas reserves amount to 330 million tons of oil (500 million tce) and 430 billion m3 of gas (560 million tce), equiv- alent to 6.8% and 7.7% of the total energy reserves, respectively. Measured coal reserves, presently estimated at 224 million tons (180 million tce), account for 2.5% of the total. Uranium (8.2%), various forms of vegetable fuels (7.7%) and shale (7.1%) account for the balance. 28. Energy consumption is currently at an annual level of about 65 million tce. Petroleum products and natural gas contribute about 86.1% of total requirements; about 88% of this contribution comes from domestic sources. Hydro/nuclear power combined account for 6.8%; coal 2.5% and vegetable fuels for the remaining 4.6%. The consumption pattern of energy resources does nlot reflect their relative potential. The Government, aware of this situation, attempts to diversify and rationalize the use of energy resources and, at the same time, reduce and possibly eliminate the dependence on imports. Geology and Reserves 29. Coal is found in sedimentary basins that have been formed in the carboniferous/triassic, jurassic and tertiary periods. However, little 4.s known about coal characteristics. There are approximately 16 coal and lignite prospects for which exploration and assessment work has been sporadic and limited. Indicative figures for contained resources, 2/ not including the Rio Turbio area (see below), have been estimated at about 7,300 million tons of lignitic coal and about 5 million tons of hard coal. 30. The most promising coal bearing area is the tertiary Austral Basin in Santa Cruz province, where the only coal mining operation in Argentina, an underground mine, has been developed at Rio Turbio and where the only reliable coal reserve 3/ estimates have been made. These reserves have been estimated at 424 million tons, of which 224 million tons can be classified as measured 4/ 1/ The hydropower potential has been defined as the energy that can be generated measured over a period of 50 years and converted to tce at 2.5 kcal/kWh. 2/ Coal resources include known coal occurrences that may acquire an economic value in the future. 3/ Coal reserves are defined as coal occurrences which are deemed exploitable under current economic and technical conditions. 4/ Measured reserves are those for which tonnage is computed from dimensions revealed in outcrops, trenches, mine workings, and drill holes. The points of observation and measurement are so closely spaced, and the thickness and extent of the coal so well defined, that the computed tonnage is judged to be accurate within 20% of the true tonnage. Although the spacing of the points of observation differs according to the charac- teristics of the deposits, they are normally no more than 500-800m apart.  - 9 - and 200 million tons as indicated. 1/ In addition, another 26 million tons have been reported as inferred 2/ reserves. This coal is classified as a high volatile bituminous steam coal. After washing, it has a calorific value of 5,600 kcal/kg and contains 34% of volatile matter, 14% ash and 1.0% of sulphur. Institutional Structure 31. Development of oil, gas, and coal resources is mainly carried out by two state-owned entities: Yacimientos Petroliferos Fiscales (YPF) and Yacimientos Carboniferos Fiscales (YCF). Another public enterprise, Gas del Estado (GdE), distributes gas. All three organizations report to the Secretariat of Energy, within the Ministry of Economy, through the Director General for Fuels. The Secretariat of Energy regulates fuel prices and has authority to direct the planning and investment activities of YPF, GdE and YCF. It also has direct control over the three major state-owned power utilities. 32. YCF was created in 1946 as a government department for developing the Rio Turbio mine. In 1958 its status was changed to that of a state enter- prise, thereby increasing its autonomy; nevertheless, it is still heavily dependent on the Secretariat of Energy, especially for investment decisions. YCF is responsible for exploration and exploitation of the Rio Turbio coal deposit as well as for transport and sale of the coal produced. The company is also responsible for carrying out exploration activities for solid fuels in other regions of the country. 33. YCF did not grow from the late 1950s to the early 1970s. While the company is a technically competent enterprise, it has produced poor financial results and continues to rely on heavy government subsidies. In 1979, YCF covered only 40% of its operating expenses through revenues from coal sales. A serious problem is excessive transport cost. The obsolete equipment of the railroad to the Atlantic coast and the limited capacity of the Rio Gallegos port facilities, where only small vessels can operate, continue to impose a heavy burden on YCF's operations. In 1979, transport costs alone represented 45% of operating expenses. Also, for most of the past, the Government kept coal prices substantially below world market levels, thus further deteriorating YCF's financial performance. During the early 1970s a modernization program of 1/ Indicated reserves are those for which tonnage is computed partly from specific measurements and partly from projections of visible data for a reasonable distance on the basis of geologic evidence. In general, the points of observation are about 1,500-2,500m apart. 2/ Inferred reserves are those for which quantitative estimates are based largely on broad knowledge of the geologic character of the bed or region and for which few measurements of bed thickness are available. The estimates are based primarily on an assumed continuity in areas remote from outcrops of beds. In general, inferred coal lies more than 3,000m from points for which information is available.  - 10 - the mining operations was carried out; currently, the mines are adequately mechanized and appear to be reasonably well managed. However, there remains room for further improvements in the productivity of YCF as a whole mainly because its non-operational departments appear overstaffed. Coal Consumption and Supply 34. Argentina's coal consumption in 1979 reached a level of 1.6 million tce, equivalent to 2.5% of the estimated national energy consumption. Domestic production contributed about 37% of total requirements. The main consumer is the steel industry, using about 900,000 tpy of metallurgical grades of coal, equivalent to 63% of total consumption, most of which is imported from the US and Poland, with Colombia supplying the remainder. Power generation is the second major consuming sector, representing 31% of total consumption. Miscel- laneous industrial users accounted for the remaining 6%. Coal consumption during 1970-79 showed a moderate increase at an average annual rate of 1.8%. This trend is likely to be maintained until 1982-83 when the new Bahia Blanca power plant comes into operation. Since this 620 MW power plant is being designed to burn either natural gas or coal, it could represent an additional coal demand of up to 1.5 million tpy. 35. During 1970-79, supply from Rio Turbio has remained static at an average level of 600,000 tpy. About 80% of Rio Turbio's output is shipped to the Buenos Aires area, where it is used mainly for power generation. The balance is consumed locally for power generation, heating and by the railway connecting the mine with the port at Rio Gallegos. An expansion to increase the output from Rio Turbio to 1.5 million tpy has been proposed by YCF to supply, at least partially, the requirement of the new Bahia Blanca power plant. However, the capacity of the Rio Gallegos port is limited to handle only about 1.0 million tpy. An expansion above 1.0 million tpy will imply a relocation of the port facilities. For this reason, a study is being carried out about the feasibility of relocating the port to a more suitable site. Sector Development 36. To improve energy resource use and achieve self-sufficiency in oil and gas, the Government attempts to increase and diversify domestic energy supply. An important strategy component is the large scale expansion of the power sector; installed capacity is to double by the mid 1980s. About 80% of the capacity expansion will be in the form of hydropower. In addition, the Government has now begun to embark on an ambitious program to increase oil and gas supply and promote more efficient fuel utilization. An important step in these efforts is the recently approved Oil and Gas Engineering Project. 37. Until now, insufficient knowledge of coal reserves, resulting from YCF's lack of exploration efforts, prevented that coal be included in Argentina's long-term energy planning. Past price increases in hydrocarbons, however, expected to continue in the future, have pointed at the need for developing additional energy resources. While coal is not likely to alter the domestic energy consumption pattern fundamentally, it could play a comple- mentary role to hydrocarbons and contribute to energy self-sufficiency.  - 11 - New, financially viable coal mining operations could be developed if the proposed project delineates sufficient reserves, if domestic energy prices are kept in line with world market levels and if transport costs are lowered through more efficient port and railway facilities or pipelines to be financed by the revenues of the mining operation. The Government is aware that future exploration of existing coal reserves would require the definition of an overall price policy for available energy resources. IV. THE PROJECT Background and Objectives 38. The proposed project was identified during the visit of a Bank mission to Argentina in November 1979 and it was appraised in April 1980. The project was prepared by the Exploration Department of YCF with the assis- tance of a coal exploration consultant retained by the Bank. Negotiations were held in Washington from September 30 to October 1, 1980. The Argentine delegation was headed by Mr. Carlos Calcagno, Undersecretary of Hydrocarbons. Since this is an engineering project, no separate staff appraisal report has been prepared. A supplemental project data sheet is presented in Annex III. 39. The objective of the proposed project would be to evaluate the coal reserves in the most promising areas of the Austral Basin. The proposed project would be aimed at providing the Government with a basic coal reserves inventory, thus enabling it to establish investment priorities and define policies for the long term development of the Argentine energy sector. Given the long lead time required to achieve an increased level of coal production needed in the 1990s, the exploration program should be carried out as soon as possible. Project Description 40. Over a period of four years (September 1981-April 1985), the fol- lowing activities would be carried out: (a) a drilling program, involving approximately 60 boreholes with a total length of 32,000 m; (b) high resolution seismics, with a total line length of about 600 km; (c) geological reconnaissance, including mapping, trenching an5 sampling over an area of initially up to 30,000 km , which will be reduced as the work advances; (d) prefeasibility studies, including conceptual and basic engineering design, for specific projects which may be identified as a result of the exploration campaign.  - 12 - The project would define coal reserves in the Rio Turbio area, located at the Southern rim of the Austral Basin (Map IBRD 14997), by transferring indicated and inferred coal reserves into the measured category. Furthermore, coal prospects along the Northeastern and Northwestern rim of the same basin in the areas of Rio Lista, Lago Cardiel, Man Aike, Rio Chalia, Rio Santa Cruz and the Bajo de San Julian (Map IBRD 14996) will be examined. 41. The study area encompasses the southern half of Santa Cruz Province in Southern Argentina between south latitudes 480 and 520. The topography ranges from steep ridges in the western section near the Andes on the Chilean frontier, to rolling hills, mesas and terraces in the broad plains eastward to the Atlantic Ocean. Elevations range from below sea level in the Gran Bajo de San Julian area to 1200 meters in the Rio Lista area. Temperatures range from a maximum of 20 C in the summer (November to April) to -30 C in the winter with a mean annual reading of about 4 0C. Average wind speed is 50 km/hr; gusts up to 140 km/hr are common. Annual rainfall is estimated at 375 mm. These climatic conditions limit surface exploration to six months annually. Numerous dirt roads connect the Atlantic coast paved highway with the Andes highland area. Roads are dry and well-maintained during the six month work season (October-March), but most are not usable in the winter. 42. Geologic knowledge of the Austral Basin is mostly based on sub-sur- face information generated from YPF's oil well data. The sediments are Cretaceous and Tertiary in age with the major coal-bearing formation of early Tertiary time. Oil well data reveal the overall structure of the basin to be a south plunging assymetrical syncline 1/ (trough) with steeper western flank (250) near the Andean uplift, and shallow dips on the eastern side. The major coal-bearing formation is the Rio Leona of tertiary age composed mostly of claystones and shales, with occasional sandstone layers. This formation generally erodes easily and does not outcrop 2/ very well. However, the overlying Patagonia formation, containing several layers of highly resistant marine fossil horizons, is used as a marker bed for locating the Rio Leona beds throughout the basin. 43. The Rio Turbio and Rio Lista areas are an exception to the above. In these areas the Rio Leona formation outcrops prominently and the coal seams are exposed. The only well known mineable coal seams in the entire basin 1/ Syncline: A fold in which the strata dip inward from both sides toward the axis. 2/ Outcrop: Surface showing of a geological formation or mineral deposit.  - 13 - occur in the Rio Turbio area. Two coal groups with a 250 meter interval between them are known to occur in the Rio Leona formation in this locale. The lower group is made up of two seams "Inferior" and "Superior". They occur about 10-15 m apart and the mineable portions of each averages 1.40 m in thickness. Both are high ash seams with many thin shale partings separating the coal benches. The upper group is made up of three seam horizons, B, A and Dorotea. Dorotea seam is the more highly developed in areal extent and thick- ness. Present mining activities are in this seam and average thickness is about 1.80 m. Average mining depth is between 400 and 600 m and the mine is developed by horizontal tunnels above valley elevations. 44. The envisaged exploration campaign has been designed based on information from drilling programs and surface mapping carried out by YCF and it will concentrate on the following areas, which are listed below in order of priorities and expected coal potential: a) Rio Turbio Area The proposed YCF drilling program in the Rio Turbio area is a continua- tion of previous programs at an accelerated rate. The purpose of the addi- tional drilling is to upgrade the reserves to more reliable categories and to increase the known reserve base. This area is the most promising target; so far, only 50% of the total reserves, estimated at 424 million tons, are measured and there are excellent prospects for considerably increasing these figures. Approximately 27 drillholes with a total depth of 17,300 m. are planned. The holes will be cored through the coal bearing zone and logged electrically by geophysical methods throughout their length. High resolution seismics will complement the drilling program. b) Austral Basin The geological and structural characteristics and the coal resource potential of the Northwestern and Northeastern rim of the Austral Basin will also be explored. Geological reconnaissance and mapping will be carried out over the whole area, from Rio Lista in the West to the Bajo de San Julian in the East. Five geology teams are required for this purpose throughout the implementation period of the project. Drilling and seismic requirements will be determined as this work progresses. There are four sub-areas with identi- fied coal potential where initial drill programs have already been laid out. These, in order of decreasing potential are: (i) Rio Lista. This is an area of well defined outcrops of the Rio Leona formation. Surface study groups have mapped the outcrop zones showing shale beds containing a series of coal seams up to 3.5 m in thickness. Selected outcrop samples indicate the coal quality to be comparable to that being mined at Rio Turbio. Since this is an area of known coal occurrence, exploratory drilling will be conducted here on a priority basis. The proposed scout drilling program of six holes is sufficient to determine whether a promising coal zone exists.  - 14 - (ii) Lago Cardiel. The Rio Leona formations shows outcrops in this area, and oil wells indicate carbonaceous zones of both Tertiary (Rio Leona) and Upper Cretaceuos age. Three deep scout holes penetrating both zones will be drilled. (iii) Rio Chalia/Man Aike. Oil well data indicate carbonaceous zones at depths ranging from 100 m to 800 m, dipping easterly and suggesting a subcrop 1/ zone a short distance westward. Initially, three drill holes will be drilled which, depending on the results, will be extended up to a total of seven. (iv) Rio Santa Cruz. Oil well data indicate a carbonaceous zone at depth of 450-675 m. Six holes were drilled during the 1977-78 work season. Two low quality lignite coal seams, the thickest averaging 4 m, were found at an average depth of 470 m. Three drill holes are programmed to investigate the possibility of finding coal of better quality and at shallower depth toward the eastern flank of the basin. Implementation 45. The borrower would be the Government; it would enter into a Subsidiary Financing Agreement with YCF and would pass along the loan proceeds together with the local funding to YCF in the form of equity (Section 3.01 of the draft Loan Agreement). Because of its technical experience and capacity, YCF would act as executing agency for the proposed project and would enter into a Project Agreement with the Bank. As a state enterprise, YCF's accounting systems and procedures follow the Government's budgetary system, and its financial state- ments are audited by the Sindicatura General de Empresas Publicas which is considered qualified and independent. For the proposed project, YCF would establish special project accounts within its normal budgetary system. 46. Execution and management of the project would be carried out by YCF through its Exploration Department; the necessary mineral exploration permits would be issued to YCF by the appropriate authorities (Section 3.02 of the draft Loan Agreement). During the last five years the YCF Exploration Department has conducted several campaigns for coal and oil shale exploration throughout Argentina and is currently engaged in a limited drilling campaign in the immediate surroundings of the Rio Turbio mine. YCF's managerial and technical staff have shown a high degree of competence and efficiency in preparing the project. The company owns a well equipped coal laboratory which will do most of the required analytical work. Its Exploration Department has the staff and organization required for carrying out the project, provided it receives technical assistance in certain fields. YCF has indicated its desire to obtain such assistance. 47. YCF would contract the services of a General Consultant to: (a) manage the project activities; and (b) assume the responsibility of interpretation and quality of the results. For this purpose, the consultant, who should be 1/ Subcrop: A zone where a geological formation or a mineral deposit reaches top of bedrock, but remains hidden by alluvial deposits.  - 15 - a mining engineering firm with strong capabilities and experience in coal exploration, would provide three geologists, a drilling engineer and other support services from their headquarters. One of the geologists would be the project manager. The consultant will also carry out the prefeasibility studies mentioned in para. 40. Total technical assistance manpower required is estimated at 146 man-months. The Exploration Department of YCF, comprising a staff of nearly 50 persons, including 10 geologists, would be fully assigned to the project. The project manager, from the General Consultant, would report to the head of the Exploration Department. 48. Project preparation is well advanced. YCF has already initiated the prequalification process for equipment and is initiating the selection process for the General Consultant who would assist in equipment procurement and selection of sub-contractors for drilling and geophysical work. As shown on the attached implementation schedule (Annex IV), physical field work would start in October 1981 and continue for four full field seasons, to be com- pleted in 1985. Equipment procurement is on the critical path, and orders should not be placed later than January 1981. Cost Estimates and FinancinR 49. The total cost of the project has been estimated at US$20.0 million, including a foreign exchange component of US$10.0 million (50Z of total project cost). The General Consultant services have been estimated at an average cost of US$13,500 per man-month. This estimate has taken into account the special- ized skills required, the seasonal nature of the field activites and the high cost of living in Argentina. The cost estimates for equipment and drilling contract have been based on recent quotations for similar work in South America and adjusted for local conditions. The estimated project cost includes US$5.8 million in contingencies, of which physical contingencies have been estimated at US$0.9 million, representing 6.3% of base project costs. Price contingencies have been estimated at US$4.9 million, assuming an annual rate of 10.4% in 1980, and decreasing from 9.0% in 1981 to 6.5% in 1985. 50. About 70% of the US$10 million of local financing required would be contributed by YCF, including provision of personnel, operating expenses and overheads. As the project would be carried out with staff already on YCF's payroll, these costs will not represent any additional burden on the Government. The balance, about US$3 million, would be required to finance the local portion of various contracts. The Government would finance this local portion out of the National Energy Fund. 51. The Bank loan of US$10 million would be lent at 9.25% per annum interest for ten years including a grace period of four years. If, as result of this project, a loan were to be made for a subsequent project, the proposed engineering loan would be refinanced out of such loan.  - 16 - Procurement 52. The project will contain three groups of procurement packages: equipment and vehicles, the drilling contract, and the General Consultant contract. Equipment will include drilling rigs with accessories and spare parts, as well as auxiliary equipment like bulldozers and vehicles. Equ-ipmeut contracts costing more than US$50,000 will be procured through international competitive bidding. Items costing less than US$50,000 will be procured by international shopping, whereby YCF would solicit four quotations from at least three countries abroad; procurement under this procedure would, in the aggregate, not exceed US$400,000. Proposals for service contracts would also be sought internationally. It would be preferable to include in the General Consultant contract the in-hole geophysical logging 1/ and the seismic services. If the selected firm, however, could not provide these specialized services, they would be procured as sub-contracts. Disbursement 53. Disbursements for equipment and vehicles would be made against 100% of foreign expenditures or 100% of the ex-factory cost of locally manufactured goods. Disbursements for the drilling contract and the General Consultant contract would be made against 100% of foreign expenditures. The loan would be disbursed over a period of five years because the harsh weather conditions in the project area allow exploration activities only during six months of the year. The closing date of the loan would be December 31, 1985. Benefits and Risks 54. The project's main benefit is the generation of information on coal reserves that would improve sector knowledge and contribute to the formulation of a long-term energy plan. The project would intensify the dialogue with the Secretariat of Energy on the role of coal as a supplement to other energy sources. The development of the exploration program would also strengthen the technical and specialized capabilities of the Exploration Department of YCF through technical assistance in specific fields of expertise presently not available. The participation of consultants in the project is expected to make an important contribution to the evaluation of potential uses of coal through the knowledge of present and future technologies such as coal gasifi- cation and liquefaction, assisting in the definition of the most effective use that could be made of the coal resources. 55. The risk of not finding coal deposits is that normally involved in an exploration project of this kind. However, coal exploration generally carries less risk than exploration for other minerals; also, the Rio Turbio area has an excellent potential for finding additional reserves and here the risk is minimal. It increases, however, in the other areas, where the coal deposits are less known. 1/ In-hole geophysical logging: a bore hole logging method whereby a sonde, lowered into the hole, measures electrically certain characteristics of the rock strata.  - 17 - 56. The risks associated with the carrying out of the project are minimal and refer mainly to delays and possibly related extra costs be- cause of abnormal weather conditions which could limit field activities to substantially less than the six months envisaged for each season. Another risk relates to the quality of the geological data that would be obtained, but gathering and interpretation will be made by specialized and experienced consultants. PART V - LEGAL INSTRUMENTS AND AUTHORITY 57. The draft Loan Agreement between The Argentine Republic and the Bank, the draft Project Agreement between YCF and the Bank, and the Report of the Committee provided for in Article III, Section 4(iii) of the Articles of Agreement are being distributed to the Executive Directors separately. Special conditions of the proposed loan are listed in Section II of Annex III. Additional conditions of effectiveness are that: (a) a Subsidiary Financing Agreement, on behalf of the Government and YCF, respectively, has been duly authorized or ratified by all necessary corporate and governmental action; and (ii) a contract for the services of the general consultant, acceptable to the Bank, has been properly executed (Section 6.01 of the draft Loan Agreement). 58. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 59. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President Attachment November 18, 1980  - 18- Annex I Page 1 of 5 TABLE 3A ARGENTINA - SOCIAL INDICATORS DATA SHEET ARGENTINA REFERENCE GROUPS (WEIGHTED AVECAGES LAND AREA (THOUSAND SQ. EKM.) - MOST RECENT ESTIMATE)- TOTAL 2766.9 AGRICULTURAL 1786.0 MOST RECENT MIDDLE INCOME MIDDLE INCOME 1960 /b 1970 /b ESTIMATE Lb LATIN AMERICA & CARIBBEAN EUROPE GNP PER CAPITA (USS) 600.0 1050.0 2280/d 1384.1 2381.1 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 1129.0 1703.0 1873.0 1055.9 1641.4 POPULATION AND VITAL STATISTICS POPULATION, hID-YEAR (MILLIONS) 20.6 23.7 26.4 URBAN POPULATION (PERCENT OF TOTAL) 73.6 78.4 81.6 63.4 53.9 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 33.0 STATIONARY POPULATION (MILLIONS) 41.0 YEAR STATIONARY POPULATION IS REACHED 2065 POPULATION DENSITY PER SQ. KM. 7.4 9.0 9.5 28.1 77.2 PER SQ. KM. AGRICULTURAL LAND 12.0 13.0 15.0 81.7 129.5 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 30.7 29.3 28.9 41.4 30.6 15-64 YRS. 63.7 63.7 62.8 54.7 61.1 65 YRS. AND ABOVE 5.6 7.0 8.3 3.9 8.2 POPULATION GROWTH RATE (PERCENT) TOTAL 1.8 1.4 1.3 2.7 1.6 URBAN 2.6 2.0 1.9 4.1 3.3 CRUDE BIRTH RATE (PER THOUSAND) 24.0 22.0 21.0 34.8 22.8 CRUDE DEATH RATE (PER THOUSAND) 9.0 9.0 8.0 8.9 8.9 GROSS REPRODUCTION RATE 1.5 1.5 1.4 2.5 1.5 FAMILY PLANNING ALCEPTORS, ANNUAL (THOUSANDS) USERS (PERCENT OF MARRIED WOMEN) .. .. FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 96.0 101.0 122.0 106.9 113.1 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 122.0 130.0 126.0 107.4 125.3 PROTEINS (GRAMS PER DAY) 104.0 109.0 109.5 65.6 91.0 OF WHICH ANIhAL AND PULSE 65.0 69.0 71.2 33.7 39.6 CHILD (ACES 1-4) MORTALITY RATE 6.0 4.0 3.0 8.4 4.3 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 65.0 67.4 71.0 63.1 67.8 INFANT MORTALITY RATE (PER THOUSAND) .. 59.0 .. 66.5 55.9 ACCESS TO SAFE WATER (PERCENT OF' POPULATION) TOTAL .. 56.0 66.0 65.9 URBAN .. 69.0 76.0 80.4 RURAL .. 12.0 26.0 44.0 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. 85.0 97.0 62.3 URBAN .. 87.0 100.0 79.4 RURAL .. 79.0 83.0 29.6 POPULATION PER PHYSICLAN 660.0 500.0 530.0 1849.2 1030.1 POPULATION PER NURSING PERSON .. 980.0 .. 1227.5 929.4 POPULATION PER NOSPITAL BED TOTAL 160.0 179.0 .. 480.3 289.7 URBAN .. 144.0 RURAL .. 989.0 ADMISSIONS PER hOSPITAL BED .. .. .. .. 17.0 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL 3.7 3.8 URBAN 3.5 .. RURAL 4.3 .. AVERAGE NUMBER OF PERSONS PER ROOM TOTAL 1.4 1.4 URBAN 1.3 1.4 RURAL 1.7 .. ACCESS TO ELECTRICITY (PERCENT OF OWELLINGS) TOTAL 69.0 76.0 79.0/c URBAN 84.7 .. RURAL 19.0 ..  - 19 - Annex I TABLE 3A Page 2 of 5 ARGENTIN - SOCIAL INDICATORS DATA SREET ARGENTINA REFERENCE GROUPS (WEIGHTED AVERAGES - HOST RECENT ESTMATEr HOST RECENT MIDDLE INCOME MIDDLE INCOHE 1960 /b 1970 /b ESTIMATE LATIN AMERICA & CARIBBEAN EUROPE EDUCATION ADJUSTED ENROLLMENT RATIOS 10 PRIhARY. TOTAL 98.0 106.0 110.0- 99.7 105.9 MALE 98.0 106.0 110.0 101.0 109.3 FEMALE 99.0 107.0 111.0 99.4 103.0 SECONDARY: TOTAL 23.0 32.0 41.OLe 34.4 64.0 hALE 23.0 30.0 38.0 33.5 71.1 FEMALE 24.0 35.0 44.0 34.7 56.9 VOCATIONAL ENROL. (2 OF SECONDARY) 50.0 59.0 63.0 38.2 28.8 PUPIL-TEACHER RATIO PRIMARY 22.0 19.0 18.0 - 30.5 29.4 SECONDARY 7.0 7.0 8.0 14.5 26.1 ADULT LITERACY RATE (PERCENT) 91.0 93.0 94.0 -f 76.3 CONSUWPTION PASSENGER CARS PER THOUSAND POPULATION 24.0 61.0 81.0 43.0 84.6 RADIO RECEIVERS PER ThOUSAND PoPULATION 170.0 379.0 838.0 245.3 192.2 TV RECEIVERS PER THOUSAND POPULATION 22.0 147.0 177.0 84.2 118.5 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER ThOUSAND POPULATION 155.0 179.0 147.0 63.3 93.0 CINE!A ANNUAL ATTENDANCE PER CAPITA 7.0 2.0 3.2 . 5.7 LABOR FORCE TUTAL LABOR FORCE (THOUSANDS) 8131.7 9213.2 10140.9 FEMALE (PERCENT) 21.4 24.7 26.0 22.2 30.4 AGRICULTURE (PERCENT) 20.0 16.0 14.0 37.1 37.0 INDUSTRY (PERCENT) 36.0 32.0 29.0 23.5 29.3 PARTICIPATION RATE (PERCENT) TOTAL 39.5 38.8 38.6 31.5 40.9 MALE 61.0 58.1 57.3 48.9 55.9 FEMALE 17.2 19.3 19.8 14.0 26.2 ECONOMIC DLPENDENCY RATIO 0.9 0.9 1.0 1.4 1.0 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECLIVED BY HIGhEST 5 PERCENT OF HUUSEhOLDS 27.5 HIGHEST 20 PERCENT OF HOUSEHOLDS 50.9 50.3 LOWEST 20 PERCENT OF hOUSEHOLDS 6.9 4.4 LODEST 40 PERCENT UF HOUSEHOLDS 16.6 14.1 POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN .. RURAL . . 190.8 ESTIMATED RELATIVE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN . 653.0 474.0 RURAL 577.0 332.5 385.6 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN . RURAL . Not available Not applicable. NOTES /a The group averages for each indicator are population-wetghted arithmetic means. Coverage of Countries among the indicators depends on availability of data and is not uniform. /b Unless othervise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1974 and 1978. /c Percent of population. td 1979 /a Net primary end secondary enrollment rates in 1978 vero 89S and 31: respectiwly. /1f Pupil-TYaelier Ibtio and Adult Literacy Rate in 1978 were 17.0 and .93.0 respectively. April 1980  -20 -Annex I Page 3 of 5 DEFINITIONS OF SOCIAL I7901CATIRS Act-- Although the data r drawn free sou-e gene.rally judged the. centauheritative and reliable, in should aso he noted that they nay nut ho lone- -acltnaly c.....hl heoeofte look of on-n-rdl-d daflnititoe and c--opte used hy diffteren cuiste in -11-ecitg the dote. The dune ore ..0.... thIou,u Ie oderieoders of stanitade, indicate trends, and uh...aftarlee cetain stalr diffreece hoen....e..u.trim.. Tlhe eeet uop r the ea - outry group of the subject country and (2) a toutry grop etch somehat higier average inon than she coustry groP of he uhjct ounry exeptforCaptalSurlu Oil Owpofen grop whose' "iddle o1 North Afrlna and MIddle tEnt" is ch.... because s.stf se ucrc-clcru oititaf C rho e asr group data she ssrgs r popuaIton sightedarishsent eaafor eah indicato and show only whew as leat alfofthecentiasi ruphsdt Ifarithen inditates. Stt asnveaes-tn t riesI amog the ledio-tos depends us the erllehlity o data and is out uniform ouionmus e -eoiedinsiasi average efoeldinotas to see ,the, lesavre are sly ucefa1 in oumpartg the value cfooind icatoranI ties aceng the runtnry end referents greups. L.AND AR". (thos..o.d q.ke.) sslatltoqn,perj Phyccen- Fupalstlon diVeasd bp sUmer at practlicin PlY- T.te1 - Tonal nerfeso area reeprtiag land area and inlnnaee n'iou qualifd -re _ ndical school an naersity local. Agoic-Itura1 - Estimate of Isgri_ltul ores used seposartly or p-'meeiiy Pegolatian sat NursingPwa PPopuation divie ynae fpetcn icr croPs, pataras. marker and hitohse gardens or to lie follow; 1977 dota. male and female gredatnane. retla n ursee, ti.I end a*sist-a flsss qN GNP Per .-Pit .."-t::.k A .. -k bp. e) 1~6 urban,and rcral) dendadb p-thei-r esapttdocomboslof hospital beAm colored hy sass converion nthd am Woi ahAta lbTNhas 91, oaibe optsad priot gnealea aernIledhopiala r 190, aod 197N at.hahilitetion retes.NoPitei are aetebl Iwhett persneely staffed (91011 CONIISIYTION FIR CAPITA - Aen.o. coemta1f --oeraaii. energy (nusi by t isa aepyIoded. Renabhpitlebsepesdn priodsh.ipoh cudtodiat.1 and ligoito, petrolon. n I,rl a asd hyd ro-, soolear Ind gscnherml also- roter son pesmeately staffed by a physfotias (but by a medical assistant. tricity) to kilogram ef c-e equlvalent per -apita; 1960, 170, sod 197Nsarse, sid-iff.. etc.) hfoth ffer in-petleat aeesdtton osd protde a datei.ietted range of madloa1 fertlirteeo. Pus etotiteit porp.mes utb.e hepi- ruIn. in-lude sees pli-tipal genera au. yctld hospitals, andcat POPULATION All VITAL STATISTICSh. th- t. . ni-.d t..i t Tncl or1 oio. id-Year feillion.f. As If July 1; iN6O, 1970, end 197N8 dtuie Ianoal ld Ttel nebee uf ednisti... no us discharges Udata, free heopitols dtvided hy the somber of buds. rbanfcuaoo (erceet of total) -Rotie of ashes to ttotl populatte; different defteitiens Ef -sbw eseco ma yffeon -emps-billty of dote HOUSING anongocotfee; 1960, 1970, and 1978 data. Avaro.. lime of geaed(esn o oshll-ntl ra,aditl Pnrola5iocPoSrisaA I,e...ehold ceaslte fagoso aiisl sets share lisg questers. Pncneotn- 1 yes 000- Cureot pepuletian psuJenties are base.d on 1980 land their main meets A b...der sr ledge may cc map ao hr included to total cpuPlotien by sgs end men a-d thwir -ersaity.as furtility ras.ttehushl o stttclpupss leve, adfem liespsonauf stbhilting. at 77. 'yar. .h pare- dwellings, r,epeotinsy. Tw_llings e..a. eca .-parcast etrectrur.esnd frttlitVectrdies no lecem lana and past fruity pla-sing pesfaosea-s Ao...renoRceinv(secoNAahss-rta.uacadrrl- Eact o..utry Na thtnasaelgnsd ens of abase ales cohl-tantn of cortallny Ceetional dee11iags wit et erlyinlvngIaters as Perc...tag and fertility trends inf pajoia pupssIf sta.t1 urban, and rura dwellings r-Peot-lvlp St.,ionasy opgulati-a- .Ieestairsry pspulatios there Is ne gr-bs cire thr bi-ch rtst is oqus1 to ths death ren, and also the e enun ra EDUCATION males~ . tontat, Thia is ochiev-d ealy aftse festtiya rose doolto to dae EOnrlimeet Ratisa the reylecomet level of oafstnet r-p-cda-ti sets, when .s.h genera:tto Pis so l-ttlGaaadgml-r.es tota.1 mas and fends of'.enstncplaces ittsf e_anly. The atattna.ry popolatisa liosea osroliet oNsl ages at th prmay levl Ton eos Igs f rrp-otine esImafed on2ts. bwia of the projected ceatrs Icof the .paplatte- primary aohs-l-agSppuatoe; IIma, isudes shildro aged h-Ili in the year 200, and the rena of denies af f-rtilipy cats o tssplac- Veers bus adjutd for diffesrent lengihe of petary adu..stln; fat lon- tr nsr sruair Os ..e...bod - Th. yas when statica..ry pepale.tto icierppl.aeblwc bv heofca colae .i.: h.. b.. ~~~~~~~~~~~~~~~Sceedasy a-he-oli- itarl. male ead femlsl - Computed am .V .hoe; ..oeda-y PeculatIds laoeitv Per ee. km. - Mid-yeas pspulatise per sqear kilosnter (1)0 hnotmrsa) f edecatiee roqirsa at leas.tfesyeese sf appresd piaytsroi Pa a.o in cioult.ra1 load - ComPeted ao bhsn f or gr 1atra -ad enoldad. only. sotes s-ilstferetof secends-n - Vo..stirn..l itasttittons PurulanIIe doe Stouctor (er-net) - Childrse )0-14 yer)*nrbing-aga ll(sloe1rbfa. sunra,s ehepraa wthoprt idyo hIt yers,, ad atre fIyeasan ve)a pe targes of mid-yeas pPOPO dently or me deportee.e e f sa...ndary intisttn in.- lno;190. 90, sod 1976 data.. Poal-nerhdrsti, _rmr. sad a.ecadary - Total stud ats eroldIt PPoplation Arosth Rate (per-t) tonal1 - Asta..l greeth races sO total sld- primay i1-1day evl dinided by numbers nf teahers in the yeas popu1atices far 1950-hi 90 -0 and 1970-TN8. rc-repoodinS lsr-l.. Population trooth Ra te (enees -rhen - Anscol grnth rate of ethos pepn- Adult literay rate (per-et) - Litertet adults (able no read Ied write) 1acto.. fos 191)-NI, 1960-70. and 1970-78. ae a per-ennage of ntal. adult popalatios aged 151-yers and o-re. Crude Birth Ruse fear thousand) - A-1ea live births per thousand of mid-year pp.ylatton; 1960. 1970, and 1970 data. CONSUMIJPTION Cruds te-th Rane fIrert(ho-!and) - Ae....al deat.hs per tha.....d of eli-yea Pamser ar t(e a...s.d P.solteaf P:aseger~ crs temprics stsr ycpultin;190, 1970 and 1978 date.P~.. cr eseglt hc ih oaon;acae muao erc n Aros Ocdu-ton R -A"vs..sge number of dasghtsrsaI coa seol bear iaetosr vehiclesl 1". M ih . bI . ... . Itr rise; u-aally .i. fis-ea h.ram aed.ig ...Inp 1960 1970 saI 97 raneet aea eIepr teado auate a e n fail looan- yar fesenea r ofmarign,endingo - essngoif arid ootis e laedlaintg Iloil, 1 .. i.rt.' "oel (th....d. - A...1 ..mb.fae-e-noree Ciau.te fee touan reelaaa - Show r.it.tia rOragdi. II iode ofPuo prdocien o see .C.ite .19i9-1a1 .0 - loden ef par naytt aangnl tia of dslyfesa interest secaapt defne wep pridicllub tucod f ufs wh1-,,ich.9 are 44dyib re aed tat btirtth (e.g. t os1 fee.. end Ciem Annual A,j(,nPteiom.. ad Car.itsre ls - Nosed.. enr fto bahss of te r nldd)-i.. Agegt prdciso so cr ebae nnceaaddc h year, including deisiraiton driVe-in . tinema nentocolenerage produces preneIweights;-1961-65, 1970. anddlift data per loa dsy A ...hi boppile C n.ydisoi emasi produncto g.imot lane. t.b. .iy Toaltr for itrhoasesief . - troef-sl ative person. oudg qurtitta used,d in foodt ~proted tins n lse in dihencihut1ienb.. Raot- licefstiest .Id arngths cntri se ato arba t. th,1971 and- esnOn nos esImtd hriPA baenh an phystolagisal nedae macma a- ti- 1979 data. ni sod erdietethutton of-Ptlopulatin. ad a...otise. peod canfo rst a Ageicuiture.(.sTesif-Ltbho f.... Eoene tifaring,t peeary., beatingan hop-oehold lrl ihth. I, 1970,I end 1977li. dan.jdfIshing asodpesogatage. of totalh.y late fue;190..T n 197fndote. Per ii . . doccsescl ofpdpe ... aer esdy -.: P dtis otacbti of pa.r is uD.fiti.. f irona -1Labo fo-rc in mmti tonetrubies 60aaufattusio cotyndspl hcitfoh e ay a upl rfo tode..d.ahvid.erad lstrniy woeran- asauresoisge- ef- natal labrfre 90 quroeow oral ccoric oa enchd by1USiA1 proviep f or -totun 971 nd 970 ana hnorh.Fod Ontrey; 1961-65, 1970 and 1977 dat.fihna. 190.g f .. Ibr ... 90, 1970, n 9)dta naIs Llssntpnda 19to8 deletig fa ccrarott crly inns. anima ad. cu-Pronsi. .u.pl o f feed is- ag-IInuduno h wplto,adlogtm eed e s tre aadsrd Ero latife table;lihI,d 197 s'APIi.frin-17 d 197P asd.SC tNPESTIOT Inola onrcto ona 5 Mb ( rea thl A rldagosomber dfeay AOf life ch.maindg 1 percent .dscs 207 derten. po..orest 70 psnetj.ipsod yeran t !hecet i at birh; 190,91970and f9N dana blent it P _oclty Rat foesl fthouan)i-A" oa deats.oIt. ants. 'Pl unde oned year .....l .TAOO fr-OUPS I -I ofigope f hcusand Ice bir1..Jt-hardy 16-5 17 d197dt. Est..imat eednAbolut Rotisry Income tene p (.iS n pecapita -5 e rhd a5 rural - Access in Sept-' Wa~~.ter(acu oftdcopulation) -rtotel, urban, sod th ....l 1 - Ahauthtetporeby fooelee s hnicrslve ee wiha ia toler nuc us ritd fromlf tb.; 90 ysce7rd er ndle. 1psiga adset nar wIs n fNC sne _ DSRelaTIvePvrONom ee f7er aio ra n ea pcrcsnoue ofohclrespcnta peolatoss.IoaeshassoaFchlu Rael rlante proct incme lvel s ce-n-ed -o a bysge iectapin IcoArTH ltr topertode rtmoepaol..ara ro oesm)'bteroa40os fsh eonp Ihnleeri eirdfrmte tua tartlh' canon oIseddt. rural -Ourher hP people (tonal uran ad.rural) earnedthyndcreta Y- OETYTRETGOP ;rpua au peredtgIeI riotsth ropa tinecouli lb,n. n Ouracadta loo mi,an moel etsRirato poel m Inlud th cllciio an Aboad nth at ....o . troarsc ost elaeadPoetoaip ec A_ hrarccao saecceb ae- ore yu ' s.ho.n o .bnt.18 plc combo end ulsllec tosnullaricra.~~~~~~~~~~~~~~~  - 21 - ANNEX I Page 4 of 5 E C O N O M I C D E V E L O P M E N T D A T A NATIONAL ACCOUNTS a Actual Projected 1970- 1979- 1976 1977 1979Y 1980 1985 19-76 198-5 1976 1979 1985 Annual Growth Millions of US$ at 1978 Prices and Exchange Rate Rates As Percert of GDY Gross Domestic Product 53,484 56,240 59,886 60,906 77,004 3.3 4.3 100.? 99.3 98.8 Gains from Terms of Trade () -385 -293 400 720 923 .. .. -.) .7 1.2 Gross Domestic Income 53,099 55,947 60,286 61,626 77,927 3.3 4.3 100.0 100.0 100.0 Import Goods and NFS 3,837 4,456 7,922 9,854 13,213 13.1 8.9 7.2 13.1 17.0 Export Goods and NFS -4,996 -6,841 7,871 -8,209 10,812 9.7 5.4 -9.4 -13.1 -13.9 Resource Gap -1,159 -2,385 51 1,645 2,401 - -2.2 0.0 3.1 Consumption Expenditures 41,157 41,847 46,491 49.248 6Z,557 3.3 3.1 77.7 77.1 6u.3 Investment Expenditures 10,685 11,720 13,846 14,023 17,770 5.0 4.3 20.2 23.0 22.8 Domestic Savings 11,844 14,022 13,795 13,378 15,370 4.5 1.8 22.3 22.9 19.7 National Savings 11,440 13,535 13,300 12,072 14,157 3.6 1.0 21.4 22.1 18.2 MERCHANDISE TRADE Annual Data at Current U8$ As Percent of Total Impor ts Capital Goods 500 874 2,241 2,922 6,433 - - 18 33.6 33.7 Intermediate Goods 1,870 2,402 3,418 4,292 9,159 - - 61.3 51.2 48.0 Petroleum & Products 560 584 617 868 1,466 - - 18.4 9.2 7.7 Consumption Goods 70 98 398 1,103 2,010 - - 2.3 6.0 10.5 Total Merch. Imports (r,i.f.) 3,050 3,958 6,674 9,186 19,068 - - 100.0 100.0 100.0 Exports Primary products 2,807 3,842 6,778 7,760 15,560 - - 74.6 86.8 87.9 Manufactured goods 956 1,495 1.027 1,158 2,136 - - 25.4 13.2 12.1 Total Merch.Exports (f.o.b.) 3,763 5,337 7,805 8,918 17,696 - - 100.0 100.0 100.0 Merchandise Trade Indices Average 1978 = 100 Cxport Price Index 83 91 127 145 213 Import Price Index 83 97 118 130 192 Terms of Frade InBde. 9I 09 109 111 111 VALUE-ADDED B. SECTOR Annual Data at 1978 Prices and Exchange Rate Agriculture 6,365 6,7!9 7,235 7,452 9,512 3.0 4.7 11.9 12.1 12.4 Industry and Mining 20,805 23,621 27,677 28,230 36,363 6.9 4.7 38.9 46.2 47.2 Services and others 26,314 25.870 24,974 25,224 31,129 .5 3.7 49.2 41.7 40.4 Total 53,484 56,240 59,886 60,906 77,004 3.4 7.3 IOO 100.0 100.0 PUBLIC FINANCE Annual Data at Current Prices As Percent of GDP (Central Government) billions of $a Current Receipts ,984 3,040 18,319 - 12.3 13.1 Current Expenditures 903 2,183 15,089 - 11.3 10.8 Budgetary Savings 81 857 3,230 1.0 2.3 Transfers (net) -483 -724 -1,641 - 6.1 1.1 Investment 343 920 3,840 - 4.3 2.7 SELECTED INDICATORS 1965- 1970- 1975- 1980- (Calculated from 3-yr. av. data) 1970 1975 1980 1985 Average ICOR 4.4 6.9 6.8 3.7 Import Elasticity 1.1 0.9 1.4 1.3 Marginal Domest.Ss6iigs RataL(%) 26.7 10.6 43.7 24,5 Marginal Nat'l Savings Rate (7.) 23.2 16.2 44.5 24.9 LABOR FORCE AND OUTPUT PER LABOR FORCE VALUE-ADDED PER WORKER IN 1975 PRICES WORKER AND EXCHANGE RATE In millions In 7. of Total Annual Growth Net In US$ Percent of Av. Growth 1970 1975 1970 1975 1970/75 1970 1975 1970 1975 1970/75 Agriculture 1,474 1,420 16 14 - 0.7 3,357 3,575 81 79 1.2 Industry 2,948 2,941 32 29 0.0 5,407 6,842 131 150 4.5 Services 4,790 5,779 52 57 3.8 4.140 3,618 100 80 -2.4 TOTAL 9,213 10,140 100 100 1.0 4,133 4,551 100 TOU 1.9 MONEY AND PRICES 1975 L976 1977 1978 1979 (billions of $a) Money Supply (Ml) 330.6 1,259.9 3,080.0 7,742.9 18,545.0 M1+ time deposits (M2) 409.7 1,838.4 6,254.2 17,169.3 49,604.0 Mb as of GDP 23.3 15.8 14.5 14.8 15.0 M, as do of GDP 28.9 23.0 29.4 32.8 37.0 CPI Index (1974=10C) 270.6 1,472.2 4,o63.7 11,873.8 29,474.5 E change CPI index 619.6 444 176 192 148 a/ The Argentine Central Bank has undertaken a major revision of the national accounts. Data in this table are based on preliminary estimates and are not fully comparable to those presented in Report 2988-AR, dated July 10, 1980. b/ The 1977-1979 changes reflect to a large extent the, real appreciation of the exchange rate during 1978/79. November 7, 1980  -22 ANNEX I Page 5 of 5 BALANCE OF PAYMENTS, EXTERNAL ASSISTANCE AND DEBT (amounts in millions of U.S. dollars at curres,t prices) Actual Estimated Projected SUMMARY BALANCE OP PAYMENTS 1972 1973 1974 1975 1976 1977 1978 1979 1980 1985 Exports (itcl. NFS) 2,389 3,799 4,761 3,669 4,668 6,769 7,689 9,279 10,315 20,536 Imports (incl. NFS) -2,222 -2,633 -4,218 -4,517 -3,584 -4,892 -4,901 -9,211 -12,449 -24,071 Resource Balance 167 1,166 1,543 -848 1.084 1,877 2,788 6R - 2.134 -3,535 Net Interest Pyepnts -323 _382 -388 -425 -464 -370 -381 -526 -203 -1,935 Direct Investment Income -60 -77 -35 -16 -28 -208 -292 -30 -170 -220 Other Factor Service Income -3 4 7 1 2 -40 -136 -55 -60 -R5 Net Factor Service Income -386 -455 -416 -440 -490 -618 -815 -611 -433 2,240 Current Transfers (net) -4 10 - 5 18 31 48 50 5 68 Balance on Current Account -223 721 127 -1,283 611 1,290 2,021 -493 -2,517 -5,70 Private Direct Investment 10 10 10 - - 146 290 350 500 805 Official Capital Grants 10 26 17 9 8 - - Public M&LT Loans (net) 205 364 228 -66 1,319 356 1,350 207 241 260 Disbursements 522 832 776 448 1,908 1,064 2,910 340 415 610 A-ortization -317 -468 -548 -516 -590 -7108 -1,560 -133 -174 -350 Other M&LT Loans (net) 51 -29 28 -3 -159 519 309 951 317 688 Disbursements 101 71 244 405 268 1,059 1,328 2,489 2,071 8,013 Amortization -50 -100 -216 -408 -427 -540 -1,019 -1,538 -1,754 -2,325 Short-term Capital and Transactions n.e.i. 82 -444 -339 275 -1,814 31 -1,558 3,282 - Change in Reserves (- = increase) -135 -648 - 71 1,D70 17 __ 92.412 _,297 1,459 -1,046 Level of Gross Reserves 465 1,330 1,286 432 1,589 3,816 5,814 10,111 8,540 8,959 GRANT AND LOAN COMMITMENTS Official Granti & Grant-Like - - - - Public M&LT Loans IBRD 9 - - - 115 205 165 306 Other Multilateral 92 57 1 177 165 148 230 323 Bilatera' 82 42 519 42 146 117 74 41 Suppliers 118 116 535 307 196 363 339 542 Financial Institutions 390 156 488 126 970 754 1,445 1,770 Bonds 120 65 290 200 207 93 146 104 Total Public M&LT Loans 802 436 1,833 852 1,803 1,680 2,399 3,086 DEBT AND DEBT SERVICE public Debt Outstanding & 2 Dis horsed 2,368 2,792 3,046 2,901 4,251 4,836 6,791 8,088 Interest on Public Debt 156 199 233 250 258 308 512 Repayments on Public Debt 317 468 548 516 589 708 1,5767 Total Public Debt Service 473 667 781 766 847 1,016 2,088 16587 Other Debt Service 174 244 408 626 659 602 1,369 Total Debt Service 647 911 1,189 1,392 1,506 1,618 3,457 BURDEN ON EXPORT EARNT?rMS (%) Public Debt Service 19.8 17.6 16.4 20.9 18.1 15.0 27.2 20 Total Debt Service 27.1 24.0 25.0 37.9 32.3 24.0 38.6 26 TDS + Dir. Inv. Income 29.6 26.0 25.7 38.4 32.9 27.0 42.4 29 AVERAGE TERMS OF PUBLIC DEBT It. as 7 Prior Year DO&D 8.3 8.4 8.3 8.2 8.9 11.6 11.8 10 Amort. as 7, Prior Year DO&D 16.9 19.8 19.6 16.9 20.3 36.7 19.7 14 'IBRD Debt Outst. & Disbursed 256 302 340 341 342 342 352 363 IBRD as. % of Public Debt O&D 10.8 10.8 11.2 11.8 8.0 7.1 5.7 4 IBRD Debt Service as % of Public Debt Service 5.1 4.6 4.5 5.6 5.1 2.2 3.2 3 EXTERNAL DEBT (Disbursed Only) Actual Debt Outstanding on Dec. 31. 1978 Estimated Debt Oustanding on Dec. 31. 1979 Disbursed Only Percent Disbursed onlY Percent IBR1 352 5.2 363 4 Other Multilateral 552 8.1 619 8 Bilateral 728 10.7 796 -10 Suppliers 1,575 23.2 I,S55 19 Financial Institutions 2,618 38.5 3,858 48 Bonds 966 14.3 897 11 Iocal Public M&LT Debt 6,791 100.0 8,088 100 November 11, 1980  ANNEX II - 23 - Page I of 4 THE STATUS OF BANK GROUP OPERATIONS IN ARGENTINA A. STATEMENT OF BANK LOANS (As of August 31, 1980) Amount less Undis- Loan No. Year Borrower Purpose Cancellations bursed (US$ million) Fully disbursed loans 466.1 505 1968 Argentina Livestock 15.3 0.7 1330 1977 SEGBA, S.A. Power 115.0 63.5 1384 1977 Argentina Highways 105.0 92.5 1463 1978 Banco Nacional Industrial de Desarrollo Credit 100.0 70.8 1521 1978 Argentina Grain Storage 105.0 104.1 1677 1979 Ferrocarriles Railways Argentinos S.A. 96.0 96.0 1761 1979 Argentina 1/ Yacyreta Power 210.0 210.0 1880 1980 Yacimientos Petroliferos Fiscales 1/ 27.0 27.0 Total 1,239.4 Of which has been repaid 175.6 1,063.8 Amount sold 12.8 Of which has been repaid 8.1 4.6 Total now held by Bank 1,059.2 Total undisbursed 664.6 1/ Not yet effective.  - 24 - ANNEX II Page 2 of 4 B. STATEMENT OF IFC INVESTMENTS (As of September 30, 1980) Fiscal Amount in US$ million Year Obligor Type of Business Loans Equity Total (US$ million) 1960 Acindar Industria Steel Products 3.7 - 3.7 Argentina de Aceros, S.A. 1960 Papelera Rio Parana, S.A. Pulp and Paper 3.0 - 3.0 1961 Fabrica Argentina de Automotive 1.5 - 1.5 Engranajes, S.A.I.C. Transmission 1962 PASA, Petroquimica Petrochemicals 3.0 - 3.0 Argentina, S.A.I.C. 1965/ 1972 Celulosa Argentina, S.A. Pulp and Paper 12.5 - 12.5 1969/ 1975 Dalmine Siderca, S.A. Steel Products 17.0 - 17.0 1969 Editorial Codex, S.A. Printing and 5.0 2.0 7.0 Publishing 1971/ 1973 Calera Avellaneda, S.A. Cement 5.5 - 5.5 1977 Alpargatas S.A.I.C. Textiles & Fibers 7.0 - 7.0 1977 Soyex S.A. Soybean Processing 9.0 - 9.0 Plant 1978 Massuh, S.A. Pulp and paper 8.0 - 8.0 1978 Juan Minetti, S.A. Cement and Construction materials 9.0 - 9.0 1978 Ipako-Industrias Chemicals and Petroquimicas Petrochemicals Argentinas S.A. 10.0 - 10.0 1979 Alpesca S.A. Fisheries 5.2 0.5 5.7 Total Gross Commitments 99.4 2.5 101.9 Less Cancellations, Terminations Repayments and Sales 46.5 2.0 48.5 Total Commitments Now Held by IFC 52.9 0.5 53.4 Total Undisbursed 21.3 - 21.3  - 25 - ANNEX II Page 3 of 4 C. PROJECTS IN EXECUTION (As of September 30, 1980) Loan 505-AR Balcarce Livestock Project, US$15.3 million loan of July 31. 1967; Effective Date: August 31, 1967; Closing Date: July 31. 1980. Lending to ranchers was slow from loan effectiveness until 1970, then accelerated as cattle prices increased and technical services improved. From 1970 to 1973, project performance was satisfactory and a substantial amount of the loan was disbursed but implementation slowed down again in 1974. After the change in Government in 1976, conditions for beef cattle development in Argentina improved for some time but recently the agricultural investment climate has deteriorated as a result of the Government's foreign exchange policies. The Bank loan is expected to be fully disbursed by November 15, 1980. Loan 1330-AR Electric Transmission and Distribution Program. US$115.0 million loan of November 1, 1976; Effective Date: January 10, 1977; Closing Date: December 31, 1981. Mainly because of budgetary constraints on the funding of local cost requirements during 1978 and 1979, the overall execution of the project has been delayed by about 15 months. This delay, however, does not significantly affect the economic viability of the project. The project is proceeding according to a revised schedule prepared in December 1979. Loan 1384-AR Fourth Highway Project; US$105.0 million loan of May 16, 1977; Effective Date: December 13, 1977; Closing Date: June 30, 1981. The civil works component has been delayed by about two years because of the Government's efforts during 1978 and 1979 to reduce public expenditures. All 48 civil works contracts have been tendered, 47 have been awarded and work has started in most of them. Other project components are being implemented satisfactorily. Loan 1463-AR Industrial Credit Prolect; US$100.0 million loan of September 23, 1977; Effective Date: November 28, 1977; Closing Date: December 31. 1982. The credit component of the project is proceeding somewhat behind schedule because of a lag in overall industrial investment. Commitments increased recently; so far about US$50.0 million have been committed; subprojects corresponding to another US$20.0 million are under review. BANADE's financial condition remains sound and management has begun taking important steps for further strengthening of its organization and procedures.  - 26 - ANNEX II Page 4 of 4 Loan 1521-AR Grain Storage Pro-ject; US$105.0 million loan of June 29, 1978, Effective Date: November 28, 1978; Closing Date: June 30, 1983. Consultants for project execution were contracted in October 1978 and preliminary designs for the project silos have been evaluated. In June 1979, the Government requested that the responsibility for project silo construction and operation be transferred from the public sector to the private sector and also that silo capacity be reduced from 100,000 tons to about 50,000 tons to make silos more attractive to the private sector. A new project proposal is being prepared by the Government for Bank review; project implementation has been suspended in the meantime. Based on additional studies to be undertaken by the Government on effective demand for construc- tion of the silos by the private sector, a decision would be taken by December 1980 whether to implement the project as a private sector credit project, or as originally designed. Loan 1677-AR Second Railway Project, US$96.0 million of November 8, 1979; Effective Date: May 6, 1980; Closing Date: June 30, 1983. Despite delays in loan effectiveness, project implementation is proceeding satisfactorily. A detailed procurement schedule has been agreed on between the Railways and the Bank; it should result in loan disbursement on schedule. Although financial ratios have deteriorated, the Railways has exceeded virtually all of the agreed-upon operating targets. Loan 1761-AR Yacyreta Hydroelectric Project; US$210.0 million loan of November 6, 1979; not yet effective; Closing Date: June 30, 1987. Project execution is proceeding about three months behind shedule. Bids for main civil works, turbines and generators have been opened and are being evaluated. The loan is expected to be made effective soon pending finalizing of changes to be made in the financial covenants included in the Loan Agreement.  - 27 - ANNEX III ARGENTINA COAL EXPLORATION PROJECT Supplementary Pro_ect Data Sheet Section I: Timetable of Key Events (a) Time taken to prepare project: 3 months (b) Agency which prepared project: Yacimientos Carboniferos Fiscales (c) First presentation to Bank: November 1979 (d) First mission to prepare the project: January 1980 (e) Departure of appraisal mission: April 1980 (f) Completion of negotiations: October 1980 (g) Planned date of effectiveness: April 1981 Section II: Special Bank Implementation Actions None. Section III: Special Conditions 1. The Bank has obtained assurances that: (a) the Government and YCF would enter into a Subsidiary Financing Agreement under which the proceeds of the Bank loan as well as the Government's financial contribution to project costs would be passed on in the form of equity (para 45); and (b) the appropriate Argentine authorities would issue the necessary mineral exploration permits to YCF (para 46). 2. Conditions of effectiveness would be that: (a) a Subsidiary Financing Agreement, on behalf of the Government and YCF, respectively, has been duly authorized or ratified by all necessary corporate and governmental action (para 57); and (b) a contract for the services of the general consultant, acceptable to the Bank, has been properly executed (para 57).  ARGENTINA COAL EXPLORATION - IMPLEMENTATION SCHEDULE tt HD H o lb 0 rf 1980 1981 1982 1983 1984 1985 I II III I II III I I II III I I II I III III IV 1 IV 2 A) Project Preparation Procurement of Equipment & Contractors rt Prequalifications Bidding Process Contract Awards & Delivery Transport to Site Consulting Services Selection Intermittent Assistance during Project Preparation B) Project Execution . . - Project Management _ . - General Consultant's Services Geological Reconnaissance Work Drilling Geophysical  / ~~- 2 [a toga Ba/gi-oaa T, Ra~ MAlya 7 a oroor tiaao ,-'->-\ '1 ~~~~~~~~~ARGENTINA A ~~~~COAL DEVELOPMENT PROJECT 8 C H IL E Austral Basin Priority Sub-Areas f* A ~ ~ ~ ~ ~ ~ ~ -~~~--~~-- Approxinose limits of Austral Rosin Aproximote lmits of priority s.b-areas V - - - ']App,oxiieose oLtcrop/sibcrop Rio Leono formation / ~ ~ ~ ~ ~~~~~~~ ~~~~~~~~ ~~~Proposed drill holes (except Ric) T,rbio Siboarea 1) Sr ~ ~ ~ ~ ~~~6() Completed drill holes Sr - M~~~~~~~~~~~~~~~~~~~~%o'n lr-ighmay Sr ~~~~~~. L ~~~~~- Secordory vnned roads ~~ Qtitggans I >'~~~~~~~~Gobernodor -,--. Railroad I O~~~~~~~~~~~re ors '-'<- Rivers LSoa LCa,-oIvI aCZ