Morocco - Fifth Education Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-3293-MOR REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE KINGDOM OF MOROCCO FOR A FIFTH EDUCATION PROJECT April 26, 1982 This doeument has a restricted distiribution and may be used by recipients only in the performance of their ofricial duties. Its contents may not otherwise be disclosed without World- Bank authorizatiow-  KINGDOM OF MOROCCO CURRENCY EQUIVALENT Currency Unit - Dirham (DH) US$1 = DH5.30 DH1 = US$0.19 FISCAL YEAR January 1 - December 31 GLOSSARY OF ABBREVIATIONS MOE: Ministry of Education MOF: Ministry of Finance MOP: Ministry of Planning OFPPT: Office of Vocational Training and Employment (Office de la Formation Professionnelle et Promotion du Travail) PIU: Project Implementation Unit ;  FOR OFFICIAL USE ONLY KINGDOM OF MOROCCO FIFTH EDUCATION PROJECT Loan and Project Summary Borrower: The Kingdom of Morocco. Amount: US$50.0 million equivalent, including the capitalized front-end fee. Terms: Seventeen years including four years of grace, at an interest rate of 11.6 percent per annum. Project Description; The proposed project is designed to: (a) improve teaching effectiveness at the primary level; (b) assist the Government in meeting more effectively the basic educational needs of rural children; and (c) improve the quality of science and mathematics teaching at the senior secondary level. The project would finance the following components: (i) the provision of learning aids for 700 existing primary schools; (ii) the construction and equipping of 40 rural primary schools and related technical assistance; (iii) the development of programs and of a cadre of qualified staff for training senior secondary mathematics and science teachers, through technical assistance and the construction and equipping of 4 teacher training institutes; and (iv) technical assistance for project implementation and for the preparation of pre-investment studies. The immediate benefits from the project would be: the provision of basic learning aids to about 450,000 primary school students; the addition of approximately 8,000 primary school places in areas poorly served by educational facilities; the creation of a competent cadre of Moroccan teacher trainers and the development of science and mathematics training programs; and the training of approximately 1,850 additional senior secondary teachers of mathematics and science per year. However, the long-term benefits expected from the project are much rore substantial. The project will permit further dissemination of a new approach for the delivery of primary education to rural areas, introducing a more practical and relevant curriculum and providing teacher housing to encourage assignment of teachers to remote areas. The provision of learning aids would reinforce on-going efforts to improve the effectiveness of teaching. The training of an increased 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) number of senior secondary teachers in mathematics and science will permit the expansion and improvement of the quality of mathematics and science teaching, reinforcing the shift away from a literary bias towards scientific studies in secondary education, while at the same time reducing reliance on costly expatriate teachers. Project risks relate (a) to the adequate staffing of the Project Implementation Unit (PIU) to ensure timely and efficient project implementation as well as (b) to the importance of developing appropriate teacher training programs and of recruiting a qualified cadre of teacher training staff. Assurances were obtained that the PIU will strengthen and maintain its current professional staff throughout project implementation. Technical assistance will be financed under the project to assist the Government in training teacher training staff and developing curricula, and the final curricula and staffing plans will be submitted to the Bank for approval. Estimated Cost Local Foreign Total -------- (usc Millions) - Construction, equipment furniture and TA: 40 primary schools; 9.3 7.4 16.7 4 senior secondary teachers' institutes 21.4 21.3 42.7 Teaching aids: 700 primary schools 0.4 3.4 3.8 Technical assistance for the Project Implementation Unit 0.1 0.4 0.5 Preinvestment studies 0.5 2.3 2.8 Baseline cost 31.7 34.8 66.5 Contingencies: Physical 3.1 3.2 6.3 Price 9.7 11.3 21.0 Total Project Cost 44.5 49.3 93.8 Front-end fee on Bank loan - 0.7 0.7 Total project financing needs 44.5 50.0 94.5  - iii - Financing Plan Local Foreign Total -------- (US$ Millions) ---- Bank loan - 50.0 50.0 Government 44.5 - 44.5 Total 44.5 50.0 94.5 Estimated Disbursements FY83 FY84 FY85 FY86 FY87 FY88 (US$ Million) Annual 2.2 10.9 14.8 12.7 8.4 1.0 Cumulative 2.2 13.1 27.9 40.6 49.0 50.0 Rate of Return: Not applicable Appraisal Report: Report No. 3693a-MOR, dated April 20, 1982. .  9  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE KINGDOM OF MOROCCO FOR A FIFTH EDUCATION PROJECT 1. I submit the following report and recommendation on a proposed loan to the Kingdom of Morocco for the equivalent of US$50.0 million, to assist in financing a Fifth Education Project. The loan, which includes a capitalized front-end fee of 1.5% on the Bank loan, would be repaid over a period of 17 years, including 4 years of grace, with interest at 11.6 percent per annum. PART I - THE ECONOMY 1/ 2. A basic economic mission visited Morocco in November 1978, and updating missions in September and December 1979 and in May 1980. A report entitled "Morocco. Basic Economic Report" (3289-MOR) was distributed to the Executive Directors in December 1980. A mission to review Morocco's Five Year Plan (1981-85) and development prospects was in the field in December 1981. Country and Economic Data Sheets are attached as Annex I. Introduction 3. Compared with many developing countries, Morocco is well endowed with natural resources. It has a considerable agricultural potential both in irrigated and rainfed areas. The Atlantic and the Mediterranean coastlines offer considerable fish resources. Morocco also has the world's largest and most easily recoverable phosphate reserves, which makes the phosphate sector a key export sector. Other minerals such as iron ore, manganese, lead and zinc are also exported, but in much smaller amounts. Coal and hydropower plants satisfy only a small part of the countryts energy requirements, which are essentially met with imported oil. Morocco has however uranium and oil shale resources which it plans to exploit. In addition, Morocco's proximity to Europe has favored trade, tourism and labor migration with the EEC countries. 4. During the first 15 years after independence (1956), a conservative approach to economic policy predominated in Morocco. GDP increased at an average rate of 4% a year in the 1960s. Growth accelerated somewhat under the 1968-72 development plan as the economy derived substantial momentum from exports. However, a relatively weak savings effort and a small 1/ Part I is substantially the same as Part I of President's Report No. P-3223-MOR of March 3, 1982 on a proposed Oil Shale Engineering Project.  -2- externally financed resource gap resulted in only a slow rise in the share of resources allocated to investment. Morocco thus entered the 1970s with no major financial imbalances, but a relatively limited growth capacity. Although some industrialization had taken place, over half of the labor force was employed in the relatively inefficient traditional agricultural sector, and primary products accounted for close to 90% of merchandise exports, with phosphates representing about a quarter of the total. Economic Performance in the 1970s 5. During the 1970s, economic policy became more ambitious. The 1973-77 Development Plan aimed at an acceleration of economic growth, as well as an improvement in income distribution. To accomplish this, the original plan strategy included two key elements: an intensified savings effort and the development of exports. However, in 1974, with the sudden jump in phosphate prices, phosphate export earnings more than quadrupled. As a result of this windfall, the value of merchandise exports doubled and budgetary receipts rose by 70% between 1973 and 1974. Although the petroleum import bill also quadrupled in 1974, the current account of the balance of payments remained in surplus. The plan's concern for exports and savings lost some of its urgency, and the Government launched a massive public investment program which brought about a sharp acceleration in the rate of growth of the economy and a considerable increase in demand for imported goods and services, whose share in GDP doubled from 19% in 1972 to 39% in 1977. 6. The phosphate boom, however, was shortlived; as early as mid-1975, phosphate exports started falling in both volume and value, and prices continued to decline until 1980. Markets for other exports as well as for tourism and labor migration were also negatively affected by the world recession and restrictions imposed by the EEC. Agricultural production and exports entered a period of prolonged stagnation, and Morocco turned from a net exporter to a net importer of foodstuffs. As a result of all these factors, the growth of exports of goods and nonfactor services, which in constant prices had exceeded 8% a year in 1968-72, was only 1% a year in 1973-77. 7. Stimulated by the high investment level, a high GDP growth rate of 7.3% a year was achieved during the 1973-77 plan period. This growth was led by the expansion of the construction and service sectors. The pattern of investment, however, favored economic and social infrastructure more than the productive sectors. In addition, public investments in industry, agriculture and transport tended to be capital intensive and to emphasize import substitution. 8. Accelerated investment and growing public expenditures created strong pressures on both the balance of payments and the Government budget. While investment jumped from about 15% of GDP in the early 1970s to 32% in 1977, gross domestic savings rose briefly from 13% of GDP in 1972 to 21% of GDP in 1974 thanks to phosphate receipts, but fell back to 10-11% in  -3- 1976-77. The large resource gap which emerged as early as 1975 rose to an unsustainable 20% of GDP in 1977 (in current prices). To help finance the gap, Morocco borrowed heavily from the international capital market, which led to rapid increases in external debt and the debt service burden. By the end of 1977, external debt outstanding was close to 40% of GDP. The debt service ratio rose from 5.6% of exports of goods and services in 1975 to 10.7% in 1977, and 18.5% in 1978. 9. The Government's overall budget position also deteriorated considerably during the period 1973-77. While budgetary revenues increased rapidly as a result of the windfall phosphate profits in 1974 and 1975 and of the growth of import duties and taxes in following years (reaching 23% of GDP in 1977), the growth of expenditure far exceeded that of revenues. Total budgetary outlays rose from 20% of GDP in 1972 to nearly 42% in 1977, in response to a number of pressures. These included not only the large scale public investment launched under the plan, but also the rapid increase in defense spending in response to growing tensions in the Western Sahara, and the acceleration of current expenditure for social programs (particularly education). As a result, the Government's overall budget deficit increased sharply, reaching peaks of 17 and 18% of GDP in 1976 and 1977. The expansionary monetary and fiscal policies pursued during the period led to some acceleration of domestic inflation, but excess demand was largely allowed to spill over into the external sector. Recent Developments 10. In order to redress the rapidly deteriorating financial situation, the Moroccan Government in 1978 adopted a three-year stabilization program, characterized by a substantial retrenchment of investment and import levels. In 1978, the first year of the adjustment, public investment was cut back by nearly half in real terms and the growth of current budgetary expenditure held down to about 13% (or less than 3% in real terms). These measures of fiscal restraint were combined with tight credit policies and stringent import controls. As a result, the overall budget deficit declined to about 12% of GDP and the external payments situation improved in 1978. Since then, however, the stabilization program encountered a number of obstacles, including poor harvests, petroleum price increases and the rise in interest on the commercial debt. In addition, internal pressures led to some relaxation of the highly restrictive fiscal policy adopted in 1978. Although the economy continued to make slow progress toward equilibrium, by 1980 both fiscal and external imbalances were still substantial. The resource gap (in current prices) remained at about 10% of GDP and the ratio of the overall budget deficit to GDP at about 11%. 11. The reduction in the Government deficit during the 1978-80 period was achieved chiefly through cutbacks in the level of budgetary investments, which dropped from 22% of GDP in 1977 to 12% in 1980. The growth of current expenditure proved difficult to restrain because of the continuing need to maintain defense and social expenditures, the growing interest payments on the public debt and the rising cost of consumption subsidies. The latter  tripled in 1979-80 reaching 2% of GDP, as price increases for subsidized staple food and petroleum products could not catch up with the rise in import costs for these products. Reflecting these pressures, the growth of current expenditure accelerated to 16% in 1979 and 22% in 1980. 12. In the external sector, non-oil imports were reduced substantially and remained below the 1977 level in nominal terms due to a sharp reduction in capital goods imports (by about two-thirds in real terms between 1977 and 1980). Oil imports on the other hand increased 2.5 times in value due to price increases. Export earnings improved in 1979 and received a significant boost from the recovery of phosphate prices in 1980. Thus, despite a large increase in the petroleum import bill (from less than $400 million in 1977 to $1 billion in 1980) and a rise in external debt interest payments by about $350 million between 1977 and 1980, the current account deficit was reduced from $1.8 billion, or 18% of GDP, in 1977 to about $1.4 billion, or 8% of GDP, in 1980. The growth of external borrowing slowed considerably during the period. However, the absolute level of gross external capital requirements rose because of growing amortization payments on mediumrterm commercial credits contracted earlier and the rise in the interest rate on these credits in 1980 (paragraph 21). 13. The budgetary and balance-of-payments constraints had a serious impact on the levels of investment and economic activity in 1978-80. Annual GDP growth dropped to 4% in 1978-80. The adverse impact of the stabilization program on employment has probably been substantial in contrast with the rapid rate of employment creation during 1973-77. On the whole, the demand management policies followed since 1978 have had a high cost in terms of growth and employment and appear to have been only partly successful in their short-term stabilization objectives. These results brought out the urgent need to address adequately the long-term structural weaknesses which are at the root of the continuing financial imbalances in the Moroccan economy, and which must be corrected if an acceptable rate of economic growth is to be achieved over the medium term without unsustainable external deficits. Medium Term Prospects 14. Projectionsl/ of the likely outcome of the continuation of past policies without concerted effort to implement major structural reforms suggest that Morocco would be faced with a prolonged period of slow growth, rising unemployment and continued large external imbalances which would keep the country in considerable dependence on external borrowing and could jeopardize its creditworthiness. To forestall such a deterioration, the Government adopted a strategy in the development plan for 1981-85 which aims at narrowing the external resource gap while accelerating growth and spreading the benefits of growth more widely. The main objectives are to 1/ For details on these Bank projections, see Morocco - Basic Economic Report, December 30, 1980 (No. 3289-MOR), Chapter III.  achieve a significant increase in domestic savings and exports, a reduction in the elasticity of imports with respect to GDP, and a rise in productivity and the employment rate. The Plan's projections show that, if achieved, such changes would permit a gradual acceleration of annual GDP growth to 6.5% p.a., somewhat higher than Bank projections, in 1981-85, accompanied by a reduction of the resource gap to about 7% in 1985. 15. The containment of imports would result in part from the substitution of imports of food products (cereals, sugar, vegetable oil, meat and dairy products) to be brought about by an acceleration of the rate of growth of agricultural production. This will require a wide range of institutional reforms in addition to a review of prices of certain inputs and outputs, and a greater allocation of resources to rainfed areas and to projects with high rates of return. The Government also intends to follow a determined policy in 1981-85 in the area of energy conservation, including in particular maintaining domestic energy prices at high levels, and making the necessary investment allocations to increase energy production from local sources. 16. An essential role in the achievement of the Plan's objectives will have to be played by export promotion aimed at exploiting Morocco's comparative advantage as regards phosphates and phosphate derivatives as well as the current favorable export prospects for manufactured goods, agricultural products and tourism. Exports of goods and nonfactor services are expected to rise at 8.5% p.a. in real terms over 1981-85. While feasible, such a growth rate would require implementation of the supporting investments and incentives policies. 17. Narrowing the resource gap while maintaining at the same time high investment levels would require an increase in domestic savings as well as rationalization of the pattern and content of investment. A vigorous recovery in domestic savings, which would rise from 11.5% of GDP in 1980 to 16% by 1985, would make it possible to narrow gradually the resource gap from about 10% in 1980 to 5% of GDP by 1985. Such a rise in the domestic savings rate would exceed the performance in 1973-77 when savings averaged 14% of GDP. It would demand intensive efforts to increase public savings (through an increase in budgetary savings and an improvement in the performance of public enterprises) and to stimulate private savings (through a revision of interest rates and improvements in financial intermediation). 18. Given the feasible level of investment, the future rate of growth of the economy will depend to a large extent on the sectoral allocation and the efficiency of investment as well as institutional reforms. Under the Plan, the Government will start fewer large capital-intensive projects and pay particular attention to the allocation of investments to priority subsectors. Priority is given to projects that are export oriented, less capital intensive and which use a greater proportion of domestic resources. In addition, particular attention will be paid by the Government to manpower planning and to the employment effect of investments in order to ensure that unemployment does not rise.  -6- Social Development 19. Comparatively slow economic growth and employment creation up to the early 1970s were accompanied by widening income disparities. The limited data available indicate that in the 1970s, while disparities continued to grow, household incomes increased in both urban and rural areas, and the lower income groups shared in the real increase in incomes. In addition, infant mortality has declined and life expectancy has increased, both significantly. More recently, partly in response to the demands of locally elected assemblies, the Government has shown more awareness of social problems and greater interest in the issue of basic needs. Social expenditures have been at a high level in recent years, accounting for more than half current outlays. However, social indicators still appear to be at low levels in Morocco. The limited effectiveness of past social policies in reaching the lower income groups, especially in rural areas, is increasingly recognized as a major issue, and the new strategy of the 1981-85 Development Plan emphasizes rural development in rainfed areas, where most of the poorest households in Morocco currently live, and improved mechanisms to deliver services to meet basic needs at an affordable cost, especially in rural areas. An effort is also being made to increase the involvement of local comnunities in providing basic needs, particularly for sites and services for low cost housing, water supply, sewerage and electrification. Although rapid results cannot be expected in any of these areas, implementation of these policies would help meet the needs of low-income groups, while holding down the budgetary cost of social programs. External Debt and Debt Service 20. Morocco sharply increased external borrowings after 1974. Nearly all of the increase came from Arab and commercial sources. Morocco also drew on the IMF automatic credit facilities in early 1976, and obtained about $70 million in IMF compensatory financing in August 1978. Agreement was reached with the IMF in 1980 for Morocco to draw on the Extended Fund Facility (EFF); the agreement provided for the use of IMF resources in the amount of SDR 810 million over the 1980-83 period, an amount subsequently increased to SDR 956 million ($1.2 billion). However, as Morocco did not satisfy performance criteria at the end of July 1981, its purchases under the EFF were suspended. The Government has requested that the EFF be replaced by a one-year standby arrangement for SDR 281 million ($330 million and a purchase under the Compensatory Financing Facility (cereals option) for SDR 236 million ($278 million). 21. From the low levels of 1974-75, Morocco's external debt rose rapidly to $7.1 billion (disbursed only) by December 1980. Gross inflow of medium and long term capital reached $1.57 billion in 1980. Debt service amounted to $800 million in 1979 and $1.2 billion in 1980 (22% and about 28%, respectively, of total exports of goods and services). The debt service rose considerably in 1980 due mainly to the steep rise in interest on commercial credits. As a result of recent and projected borrowings, debt service may be expected to average $1.8 billion annually in the early 1980s. Because of the growing  burden of debt service, external borrowing has become more restrictive and selective since 1978. If debt service is to stay manageable, the Government will have to continue this policy over the next few years. Limits on commercial borrowing are to be incorporated in the framework of the standby arrangement with the IMF, and efforts should be continued to seek loans on softer terms. 22. Loan commitments from multilateral and bilateral official sources to Morocco rose from $205 million in 1975 to $1376 million in 1978. Since then, they have averaged $700-800 million a year (excluding grants). Major sources of aid were France, Saudi Arabia, the UAE, the U.S., Germany and the Bank Group. At the end of 1980, the Bank Group's share in Morocco's outstanding and disbursed external public debt was 7%. The share of the Bank Group in debt service was 21% in 1976 and declined to 15% in 1977, and 6% in 1980. By 1985 the Bank Group's shares in debt outstanding and in debt service are projected at about 10% and 11% respectively. PART II - BANK GROUP OPERATIONS IN MOROCCO 23. Bank and IDA lending to Morocco has supported 55 projects, financing a total of $1,915.6 million (net of cancellations), of which $1,084.5 million has been lent since the beginning of FY1978. IDA credits, totalling $50 million, have been made available for five projects. A Third Window loan for $25 million for the third education project was approved in March 1976. IFC investments have amounted to $43.8 million ($17.5 million after cancellations, terminations, repayments and sales). Annex II contains a summary statement of Bank loans, IDA credits and IFC investments as of March 31, 1982, and notes on the execution of ongoing IBRD/IDA projects. In some cases delays in project implementation have been caused by management problems and budgetary constraints; however, overall performance in project execution has been improving and is satisfactory. 24. Past Bank Group lending has been concentrated in the agricultural and industrial sectors, which have accounted for 28% and 26%, respectively of total commitments; the balance is represented by utilities (16%), tourism (9%), education (8%), roads (6%), energy (4%) and urban development (3%). While limited as regards the transfer of resources to Morocco (Bank Group gross disbursements amounted to 2.2% of total fixed investment during the 1973-77 Plan period), the main objectives of Bank lending in previous years were to foster and strengthen development institutions, provide technical assistance, especially for project preparation, and increase productive capacity, in order to improve the balance of payments. 25. While these objectives remain, in recent years Bank lending has increasingly focussed on supporting a number of policy objectives: to promote exports and other foreign-exchange earning activities; to reduce imports, particularly of food and energy; to lower unit costs for the  - 8 - delivery of basic services, widen their distribution among regions and increase access by lower-income groups; and to increase employment and improve income distribution. 26. Since FY1975, lending in agriculture has emphasized improvement in the productivity of rainfed agriculture and livestock, which employ over 80 percent of the rural population, primarily small farmers. The Fes-Karia-Tissa Agriculture Project, approved in June 1978, directly addresses these objectives in the favorable cereal producing zone. The Loukkos project, approved in May 1980, and the recently approved Middle Atlas and Forestry projects extend support of these objectives to less favorably endowed regions and finance investments for agricultural development, erosion control, forestry rehabilitation and replanting and livestock. They should have a significant poverty impact and address major issues in developing Morocco's relatively densely populated but poorly endowed imountainous regions. Continued Bank support of rainfed agriculture is expected to be provided through an integrated rural development project in the Khemisset province, which is under preparation. A fourth line of credit to Caisse Nationale de Credit Agricole (CNCA) has helped provide credit to small and medium farmers, and a fifth project is under preparation. Increased export earnings are expected to result from a Bank-supported project for vegetable marketing and production, as well as from a project currently under preparation to improve the efficiency of the coastal fishing industry. Projects are also under preparation for research and extension, for irrigation rehabilitation, and for development of small- and medium-scale irrigation. 27. Increased foreign exchange earnings or savings and, more recently, job creation, have been the key objectives of Bank projects in industry and tourism. A ninth line of credit to the Banque Nationale pour le D4veloppement Economique (BNDE), incorporating a pilot component for export-oriented industries, as well as a second line of credit for small scale industries with an emphasis on job creation were approved by the Board in early FY1982. A project focussing on the development of electro-mechanical industries is being prepared. A fourth line of credit to Credit Immobilier et Hotelier (CIH) for tourism projects was approved in FY1981 by the Executive Directors, in a sector which has contributed a substantial share of Morocco's foreign exchange earnings and provided significant employment. A project to increase mineral export earnings and raise the incomes of small-scale miners in Southeastern Morocco, a region largely bypassed by previous development efforts, was recently approved by the Board. 28. Projects to improve basic infrastructure and services have concentrated on improving the efficiency of existing investments and extending services to rural and low-income urban groups. A second urban development project was approved by the Board in FY1981, which would continue to support the Government's efforts to provide shelter, basic services and employment to low-income urban families. A third highway project approved in FY1980 supported the Government's road maintenance  - 9 - efforts and a fourth project now being prepared would continue support for maintenance and improve rural access roads. A loan for village electrification approved in FY1979 is helping bring power to over a hundred small towns and villages. A third water supply project, recently approved, will provide access to safe water in small towns and semi-rural areas, as well as expand a pilot component initiated under the second project to provide credit for house connections to low income urban families. In addition, a project to strengthen the capacity of local communities to prepare and implement their own development programs and provide financing for such programs through the Communal Infrastructure Fund (FEC) is being prepared. It will not only help to widen the distribution of infrastructure and services but will also support the Government's policy of encouraging administrative decentralization and local participation. 29. Education continues to need attention to ensure Morocco's manpower development. While recent projects have focussed on secondary level technical education and teacher training, attention has also been given to expanding basic education in the rural areas and ensuring a greater orientation in primary schooling towards practical training. The Government's recent policy supporting primary health care would be tested through a project currently being prepared as a first phase in a nationwide program to reorganize medical and paramedical training, health education, nutrition, environmental sanitation and family planning services, especially in rural areas. 30. In order to aim at reducing the impact of the oil import burden on the Moroccan economy, a project was approved in April 1980 to contribute to the Government's efforts to accelerate the exploration and development of its petroleum resources, and an engineering project to study the viability of exploring the country's oil shale resources was approved in March 1982. Additional projects for development of possible gas resources as well as coal and hydropower, are under consideration. 31. Morocco's disbursement performance continues to lag behind that of other countries in the region. The disbursement shortfall is most acute for a few projects in new sectors, due mainly to institutional or project management problems. These cases are being closely mrnitored and implementation schedules have been established, specifying critical actions, in agreement with the Government. In the case of some agricultural projects, performance was affected by the 1980-81 drought but is expected to improve with recovery of the sector. In the case of certain projects, notably in agriculture, water supply and highways, implementing agencies have been slow in submitting disbursement requests to the Ministry of Finance for transmittal to the Bank. We have drawn the Government's attention to the need to resolve this problem. Finally, it appears possible that the rate of disbursement over the last few months may have been affected by the appreciation of the dollar against other currencies.  - 10 - PART III - THE EDUCATION SECTOR 32. The Government's principal objectives as regards education and training and reflected in the current Five Year Plan (1981-1985) are: expansion of enrollments, wmroccanization of the teaching force, increased emphasis on the teaching of science, technology and practical skills and arabization of the curriculum. From a slow start after independence (as reflected in adult literacy rates still only 28%), considerable progress has been made towards these objectives in quantitative terms. During 1973 - 1980, primary and secondary school enrollments grew by an average of 6.4% and 10.6% per year, respectively, and university enrollments more than tripled. Recruitment of teachers has also expanded and the teaching force is now entirely Moroccan through the junior secondary level, though expatriates are still relied on for science, mathematics and technical teaching at the senior secondary and post-secondary levels. New curricula for science, mathematics and applied technology have been developed (see para. 37). Training of higher and middle level technicians has been expanded, although training has lagged for semi-skilled workers. Arabization of the curriculum has been slow but is now virtually complete at the primary level. Sector Issues. 33. The emphasis on the quantitative expansion of the education system has, however, been to the detriment of the quality of learning offered. The system suffers from serious internal and external inefficiencies as well as from continuing disparities in access to education between boys and girls, urban and rural areas, and among geographical regions. The Government is aware of the shortcomings of the education system; a national commission is drawing up a new charter for education and training which will set out long-term objectives and policy guidelines for addressing these issues. 34. Efficiency. High drop-out and repeater rates plague the education system at all levels, adding significantly to the unit costs of education. This situation stems in part from inappropriate student admissions and promotion criteria, outdated curricula and a lack of classroom equipment, basic teaching materials and textbooks. In addition, the Government has met quantitative requirements for teachers by shortening teacher training programs and by recruitment based on academic credentials without pedagogical training. The resulting deterioration in the quality of the teaching force is a major cause of the internal inefficiency of the education system. Moreover, a literary and rote learning bias continues to predominate throughout the education system, hampering Morocco's ability to provide the trained manpower, particularly in applied science and technology, needed for its economic development and prolonging reliance on expatriate technicians. For example, 77% of university students are enrolled in law and the humanities, and only 23% in science, medicine and engineering. Lack of detailed employment data and analysis have prevented the definition of a manpower policy which could underpin an education and training strategy, and there is an increasing risk of creating a pool of  - 11 - "educated unemployed", while manpower shortages remain in critical areas. Technical training is also dispersed among several ministries and lacks an effective mechanism for coordination and systematic planning. 35. Equity. The expansion of educational coverage has not been evenly distributed; primary school enrollment rates in rural areas are less than half those in urban areas, and in the sparsely populated south and east this proportion drops to about one-third. Moreover, girls represent about 44% of urban enrollments but only 23% of rural enrollments (initially 28% dropping to 17% in the fifth year), so that rural women are largely bypassed by the educational system. The differentials in enrollments are partly a result of disparities in educational infrastructure and partly a result of varying demand for educational services. Among the factors creating these variations are: dispersion of rural population and consequent long distances to schools (affecting most significantly girls' participation); lack of housing for teachers in rural areas (again a more serious constraint for women teachers who could encourage girls' attendance); and the limited relevance of the traditional curriculum to rural life, reinforcing existing socio-cultural biases against schooling, especially for girls. Socio-cultural factors have also influenced the provision of formal vocational training which has been virtually limited to boys, to urban areas, and to students who have completed at least junior secondary school. Although basic education is now given higher priority by the Government, past investments have favoured senior secondary and post-secondary education and training. 36. Education Finance. Education absorbs a large proportion of Government expenditures (about 20% of total public outlays and 7% of GDP in 1980), and a particularly high proportion (26%) of the recurrent budget. A large part of these recurrent expenditures is absorbed by student stipends at the post-secondary level, leaving insufficient funds for teacher upgrading, the provision of teaching materials, textbooks and basic learning aids or the renovation of existing infrastructure, all essential to improving the quality of schooling. In view of expected budgetary constraints, the Government may have to reduce its ambitious enrollment targets and construction program, and define priority target groups. Therefore, Government investments would be limited to essential projects related to increasing the efficiency of the educational system. These include the ongoing and proposed Bank-financed projects. Improved allocation of recurrent expenditures could be achieved through decreases in student stipends and through increasing beneficiaries' participation in the costs of education, currently provided free of charge to all students. Government Strategy. 37. Curriculum relevance. There has recently been a strong effort to reorient the curriculum at all levels towards practical skills, mathematics and applied science. A primary curriculum offering manual skills training is being field-tested in 120 rural primary schools (with the assistance of  - 12 - UNICEF) as well as in the 47 rural primary schools financed under the Third Education Project (Ln. 1220-T-MOR) and will be further disseminated under the proposed fifth project. A new subject "Introduction to Technology" has been introduced into junior secondary education (also under the Third Project), while the Fourth Project (Ln. 1681-MOR) will increase enrollments in technical secondary and post-secondary education by almost 60%. Senior secondary enrollments have shifted from the arts to the mathematics/science option (55%) and the opening of four new science faculties has almost quadrupled the number of university science students. Greater emphasis is also being given to vocational training, whose capacity is expected to triple over the Plan Period. 38. Teacher Effectiveness. The Government has recognized the problems stemming from accelerated teacher recruitment and has given high priority to the improvement of teaching methods through expanded teacher training and upgrading programs. This is particularly true as concerns technical education as well as science and mathematics teaching, in order to reinforce the desired reorientation of the curriculum towards those subjects and permit the replacement of expatriate teachers. These objectives are supported under the Third, Fourth and proposed Fifth Projects. The Government is also planning to reinforce teaching effectiveness through the distribution of basic learning aids and equipment to primary schools, of which the first phase would be financed under the proposed project. 39. Basic Education. More equitable access to primary education, particularly in rural areas, is an important objective under the proposed Plan and will be facilitated by a national school mapping exercise. Some of the factors hindering effective delivery of education to disadvantaged groups and areas are being addressed through programs to provide primary schools with teacher housing (as an incentive for teacher recruitment), more relevant curricula and school canteens, such as those financed under the Third and proposed Fifth Projects. In addition, Morocco's capacity for pedagogical reasearch, evaluation and planning must be strengthened so that some of the factors contributing to the low internal efficiency of the education system and the varying demand for education, especially among girls, can be analyzed and remedial measures recommended. 40. Manpower Planning. The Ministry of Planning is undertaking a manpower planning study (financed under the Third Project) which will help adapt the Government's education and training strategy to meet identified employment needs and to promote improved coordination both among training activities and with the formal education system. Further studies will be needed to examine in greater detail particular training needs as well as to develop and test new approaches to training, with particular emphasis on reaching rural areas and unskilled workers. 41. Cost-effectiveness. The Government has recognized the need to develop innovative and less costly ways of satisfying the growing demand for education, in order to avoid undue strain on overall budgetary resources. Plans are underway to experiment with double shifts at the primary level,  - 13 - thus improving the use of existing educational facilities and with new construction norms and decentralized procedures, such as increasing the participation of local communities, all of which could lower unit costs significantly for primary education. The Government is also considering establishing criteria for the targetting of student stipends and of free education at the university level in an effort to restructure and reduce recurrent expenditures on education. Both the Bank and the IMF are encouraging the Government to pursue these efforts to improve the cost-effectiveness of the education system as part of an ongoing dialogue on overall economic management. Sector Organization 42. The Ministry of Education (MOE) is responsible for formal education which includes primary, junior secondary, general and technical, senior secondary and post-secondary education (universities, technical training colleges and teacher training). Administrative problems under the First Education Credit (78-MOR, approved in 1965) led to the creation of a separate Project Implementation Unit (PIU) within the Ministry which has handled construction and procurement for the Bank-financed projects since 1971. The Government's overall policy of increased administrative decentralization will give greater decision-making power to the provincial delegations of the MOE, especially as regards school construction and equipment, although curriculum development, production of teaching materials and teacher training will remain under the control of the central Ministry. 43. The Ministry of Planning (MOP) oversees the planning and co-ordination of vocational and technical training outside the formal education system, in conjunction with the Inter-Ministerial Commission on Vocational Training and Employment. While many Government ministries have separate institutes for training specialized staff, most industrial training is carried out by the Office of Vocational Training and Employment (Office de la Formation Professionnelle et Promotion du Travail - OFPPT) with administrative and financial autonomy under the umbrella of the MOP. Coordination among the various training programs remains relatively ineffective. Bank Experience 44. Previous Bank loans have focussed on; support for general secondary education (Cr. 78-MOR); strengthening of teacher training and support for scientific and technical secondary education (Cr. 266-MOR); increasing access to rural primary schooling and developing lower secondary education, as well as support for agricultural training and manpower planning (Ln. 1220T MOR); and expanding secondary and post-secondary technical education including related teacher training (Ln. 1681 MOR). The first two projects were completed satisfactorily (Project Completion Reports of May, 1976 and June, 1981 respectively) although management problems resulted in substantial implementation delays. While these problems were alleviated following the creation of the separate PIU under the Second Project,  - 14 - staffing difficulties for the PIU and budgetary constraints continued to delay the implementation of the Third Project, especially the technical assistance components. In addition, project components under the Ministries of Health and Tourism were seriously behind schedule due to managenent problems in these Ministries and had to be reduced in scope. Following reinforcement of the PIU and increased attention to processing of contracts and disbursement requests by the Ministry of Finance (MOF), project implenentation has now accelerated. The Fourth Project approved in April 1979 is also well underway, and contracts have been signed for all project components, although disbursements are lagging. A sector Survey was carried out by the Bank in October, 1981 with the assistance of UNESCO to review the Government's overall education and training strategy and to explore areas of future collaboration. The survey report is now being prepared. Feasibility studies for priority items and pre-investment designs for future project components identified as a result of the sector survey would be financed under the proposed project. 45. Bank experience in implementing the two completed projects, as well as the two ongoing projects, has indicated the need to: (a) ensure as complete a preparation of project components as possible; (b) supervise the technical assistance components closely from the very outset of project implementation; (c) ensure that the PIU maintains an adequate and qualified staff; and (d) review constantly progress in processing of contract approvals and disbursement applications by the MOF to forestall delays. Preparation of the proposed project was at a very advanced stage by the time of negotiations, and the above mentioned issues will be carefully monitored throughout the implenentation of the proposed Fifth Project. PART IV - THE PROJECT Project Concept and Background 46. The proposed project would continue the Bank's support for the reorientation of the Moroccan education system to give greater emphasis to practical skills and to science, mathematics and applied technology in order to prepare school leavers more adequately for employment and to contribute to the country's socio-economic development efforts. The project would also seek to reduce educational wastage by increasing primary school teacher effectiveness through the distribution of basic learning aids to primary schools, supporting the introduction of more relevant curricula at the primary level and by improving the training of teachers. Finally, it would increase access to basic education in disadvantaged rural areas. 47. The project was identified in March 1979 and prepared by the Moroccan Government, with preliminary engineering designs for the proposed facilities financed under the Fourth Education Project. It was appraised in May, 1980 and final agreement was reached on project composition and scope during a post-appraisal mission in February, 1981. Negotiations were held  - 15 - in Washington in March, 1982; the leader of the Moroccan negotiating team was Mr. Hassan Belkoura, of the Prime Minister's office. The main features of this project are outlined in the Loan and Project Summary at the beginning of this report; a Supplementary Project Data Sheet (Annex III) and Map No. IBRD 16219 are also attached. A Staff Appraisal Report (No. 3693a MOR, dated April 20, 1982) is being circulated separately to the Executive Directors. Project Description 48. The proposed project is designed to: (a) improve the effectiveness of teaching at the primary level; (b) assist the Government in meeting more effectively the basic educational needs of rural children; and (c) expand and improve the quality of science and mathematics teaching at the senior secondary level. The three components are linked by their common objective of improving the quality and relevance of primary and secondary education, especially as regards mathematics and science, thereby preparing students for further skill and professional training to meet the country's manpower needs. 49. The project would finance the following components: i) the provision of learning aids for 700 existing primary schools; ii) the construction and equipping of 40 rural primary schools and related technical assistance; iii) the development of staff and programs for training senior secondary mathematics and science teachers, through technical assistance and the construction and equipping of 4 teacher training institutes; and iv) technical assistance for project implementation and for the preparation of pre-investment studies. 50. Basic Learning Aids. To improve the quality of teaching and learning in the primary schools, the project would provide a package of basic learning aids to 700 existing primary schools. This would be the first phase in a Government program to equip all primary schools with such aids, which include maps, charts, dictionaries, blackboard instruments and copying machines, considered essential to effective teaching. This first phase would concentrate on the poorest rural and urban schools. Only about 30% of primary school students would be reached under this first phase, but this program would allow the MOE to test its proposed system for large-scale equipment procurement, distribution and maintenance. The proposed schools have been selected with the Bank's approval. An understanding was reached during negotiations that the Government would retain the services of an experienced international agency to assist in the procurement and distribution of the learning aids. The system for distribution, storage,  - 16 - and maintenance of the aids would be established by January 1, 1983 (Loan Agreement, Section 3.04(a)). The Government would submit a report on the implementation of the system by January 1, 1986 (Loan Agreement, Section 3.04(b)). 51. Primary Schools. The proposed construction and equipping of 40 rural primary schools is a continuation of a program initiated under the Third Education Project (47 schools). These schools will be located in the administrative districts which have the lowest age-group enrollment ratios according to a national school mapping program. Each school would include 5 classrooms for 40 students each, teacher housing, a school canteen, a small health room, a workshop for practical activities and a small garden. The workshop and garden would be used for simple manual skills and home economics training, as part of an experimental reform of the curriculum to include practical activities and increased science and mathematics teaching. The school facilities could also be used after hours for community development, preventive health and adult education activities. Housing will be provided to the teachers and school principal as part of an effort to attract qualified primary teachers to serve in isolated rural areas. The new curriculum, already approved by the Bank, has been field-tested in 120 primary schools and has already been integrated into the national teacher training programs as a prelude to the possible generalization of the curriculum throughout the primary school system. Teachers for the 40 schools to be constructed under the project will be given in-service training in the use of the new curriculum. Twelve man-months of technical assistance would be financed to strengthen the practical activities' curriculum development unit within the MOE starting January 1, 1983 (Loan Agreement, Section 3.02(a)(ii)). Three fellowships of three man-months each would be provided for the unit's staff, to familiarize them with similar programs in other countries, and the candidates would be selected by January 1, 1983 (Loan Agreement, Section 3.03). 52. Senior Secondary Education. The prqject would finance the construction and equipping of 4 teacher training institutes to help meet the estimated needs for qualified science and mathematics teachers at the senior secondary level. The colleges would provide a flexible mix of three alternative training programs: (a) a one-year pedagogical training program for university science and mathematics graduates; (b) a four-year general science teacher degree program for baccalaureate holders; (c) a two-year upgrading program for outstanding junior secondary science and mathematics teachers. The anticipated initial mix of these three programs would produce a total of 1200, 450 and 200 trained teachers each year, sufficient to replace expatriate teachers and expand significantly the proportion of qualified senior secondary teachers by 1990. Each college would provide boarding facilities to encourage applicants from more distant regions, and to promote maximum student concentration on the training program. It is estimated that about one-third of the students would be women. 53. Key to the development of an effective teaching corps is the creation of a permanent staff of qualified teacher trainers. The project  - 17 - will provide 212 man-months of consultant services to train the future Moroccan staff and to help prepare training curricula. The profiles for the consultants were agreed during negotiations and they would be hired by January 1, 1983 (Loan Agreement, Section 3.02(a)(i)). Fourteen fellowships of two years each and 12 short-term fellowships are to be provided in specialized fields not currently available in Morocco, to experienced secondary teachers, who would subsequently be assigned to the training institutes. The staff training program was reviewed during negotiations and the candidates and detailed arrangements for the fellowships would be submitted to the Bank by January 1, 1983 (Loan Agreement, Section 3.03). The job descriptions for the future teacher training staff will be reviewed by the Bank and the staff will be recruited by January 1, 1983 (Loan Agreement, Section 3.05(a)). The draft training curricula, including student selection criteria and procedures, will be submitted to the Bank for comments by September 1, 1984, prior to their finalization (Loan Agreement, Section 3.05(b)). 54. Technical Assistance. In addition to the technical assistance for the teacher training institutes as well as for continuing the development of the "practical activities" primary curriculum described above, technical assistance will be provided to the Project Implementation Unit (PIU) (see para. 55). In addition, $2.8 million (equivalent to 250 man-months of consultant services) are allocated for carrying out feasibility and pre-investment studies for possible future projects, to be identified on the basis of the sector survey carried out in October 1981 (see para. 44). Implementation 55. The project will be implemented over a period of about five years by the Ministry of Education (MOE). Construction and procurement would be managed by the PIU which has been responsible for implementing the previous three Bank-financed projects (see para. 42), in close collaboration with the relevant MOE provincial delegations and central technical directorates. The Directorate of Primary Education would supervise the technical assistance and in-service teacher training for the practical activities curriculum as well as monitor the distribution and maintenance of the educational aids to the existing primary schools and evaluate their utilization. The Directorate of Teacher Training will be responsible for supervising the technical assistance component and the preparation of the staffing plans and curricula for the teacher training institutes. The PIU is presently considered adequately staffed with engineers, architects and administrative personnel to carry out most of its tasks, and would be maintained at its current level throughout project implementation (Loan Agreement Section 3.01 (b)). However, to ensure continuity in the PIU and the development of an efficient equipment procurement system, the project provides funds to extend the contract of the senior architect attached to the PIU, for 24 man-months (presently financed under the Fourth Education Project) effective July 1, 1985, and to provide engineering consultants to the PIU for 36 man-months, who would be recruited by January 1, 1983 (Loan Agreement, Section 3.02(a)(iv)). Selected PIU staff members would also be given short-term training in areas key to project implementation.  - 18 - 56. In order to avoid the implementation delays that have plagued previous Bank-financed education projects, the MOE has already acquired all project institution sites and prepared detailed equipment lists for the teacher training institutes. Final contruction drawings and bid documents for the four teacher training institutes and 20 of the rural primary schools and site layouts for the remaining 20 schools have been approved by the Bank. Bid documents for the equipment for the training institutes would be submitted to the Bank by March 31, 1983 (Loan Agreement, Section 3.05 (c)). Budget allocations for local and foreign costs have already been approved for the Five-Year Plan period (1981-1985), and the Government has confirmed that the Bank-financed projects would receive highest priority if the overall budgetary allocations were reduced. The annual recurrent costs required to operate the project-financed institutions are estimated at around DH 100 million ($19 million), a modest increase in recurrent expenditures which is not expected to strain the Governnent's resources. 57. The PIU maintains its own accounts, under the control of the Ministry of Finance (MOF) which must approve all financial commitments and which processes applications for Bank disbursements. However, the PIU's accounts have not previously been formally audited. During negotiations, assurances were obtained that the PIU's accounts will be audited annually by the MOF and that the audit reports will be furnished to the Bank within six months after the end of each fiscal year (Loan Agreement, Section 4.03). Project Costs and Financing Plan 58. The total cost of the proposed project, excluding taxes but including contingencies is estimated at $93.8 million, of which 53% or $49.3 million represents the foreign exchange component. This calculation is based on the assumption that: (a) all civil works and almost all engineering services will be awarded to local or mixed Moroccan/foreign firms; (b) all equipment will be directly imported, and (c) about 70% of the furniture contracts will be awarded to foreign suppliers. The proposed Bank loan of $50.0 million would finance the estimated foreign exchange cost of the project and the capitalized front-end fee of $0.7 million ($738,916). The Government would finance the balance of the total project cost. Civil works costs, including professional services, are estimated on the basis of unit prices in current contracts and detailed estimates from other projects of a similar character and were adjusted for regional cost differences. Furniture and equipment costs are based on the current CIF unit prices adjusted to include local transportation and installation. Technical assistance costs include: (a) a total of 284 man-months estimated at an average cost of $8,650 per man-month of foreign consultant services including subsistence, travel and fees and (b) 369 man-months of fellowships at an average cost of $2,290 per man-nonth. Base cost estimates have been adjusted to reflect anticipated prices for March 1982. The project cost includes a physical contingency allowance equal to 10% of all base costs except for technical assistance, for which it is estimated at 5%. International price increases were calculated at 8% for 1982 and 1983, 7.5% for 1984, 7% for 1985 and 6% for 1986 and 1987. Domestic costs were  - 19 - estimated to increase by 8% annually from 1982 through 1987. Total contingencies are estimated at 41% of baseline costs. Procurement and Disbursement 59. Civil works contracts for the rural primary schools and the 4 teacher training institutes (totalling $46.4 million not including contingencies), would be awarded on. the basis of ICB in accordance with Bank guidelines. The contracts for the primary schools would be grouped to the extent possible. Furniture and equipment items (amounting to $11.7 million not including contingencies) would be grouped, to the extent possible, in large packages to permit bulk procurement and contracts in excess of $200,000 would be awarded on the basis of ICB. Contracts for less than $200,000 for equipment items for which ICB would not be practical, would be procured under local procedures acceptable to the Bank; the total value of furniture and equipment so procured would not exceed $1.5 million. For the purpose of comparing foreign and local bids under ICB, local manufacturers of furniture and equipment would be allowed a margin of preference equal to the existing rate of custom duties applicable to competing imports or 15% of the CIF price, whichever is lower. The qualifications, experience, terms and conditions of employment of consultants financed under the project would be satisfactory to the Bank (Loan Agreement, Section 3.02 (b)). Local engineering services would be procured under local procedures acceptable to the Bank. 60. Disbursements would be made over the period August, 1982 through March, 1988, on the following: (a) civil works: ($24.7 million) 42% of total expenditures. (b) furniture and equipment ($14.4 million): (i) directly imported 100% of foreign expenditures; (ii) locally manufactured 100% of ex-factory cost; (procured according to ICB) (iii) locally procured 85% of local expenditures. (off the shelf) (c) engineering services: ($0.5 million) 18% of total expenditures. (d) technical assistance: (i) expert services 80% of total expenditures; ($2.7 million) (ii) fellowships 100% of foreign expenditures; ($0.9 million) (iii) pre-investment studies 80% of total expenditures. ($2.9 million) (e) front-end fee ($0.7 million) amount due $3.2 million would be unallocated.  - 20 - Benefits and Risks 61. The immediate benefits from the project would be the provision of basic learning materials and equipment to about 450,000 primary school students; the addition of approximately 8,000 primary school places in areas poorly served by educational facilities; the creation of a competent cadre of Moroccan teacher trainers and the development of science and mathematics teacher training programs; and the training of approximately 1,850 additional senior secondary teachers per year in order to expand and improve the quality of mathematics and science teaching. However, the long-term benefits expected from the project are nuch more substantial. For example, the project permits the further dissemination of a new approach for the delivery of primary education to rural areas. This model seeks to address the major constraints to increasing access to basic education, by reorienting the curriculum to emphasize practical skills more relevant to rural needs and by introducing a new physical lay-out which remedies one of the principal difficulties in recruiting teachers for rural areas, teacher housing. Moreover, the curriculum and location of these rural schools try to address some of the factors which have led to low participation of girls in primary education. The provision of basic learning aids to existing primary schools is expected to reinforce on-going efforts to improve primary school teaching, increase the participation of students in the learning process, reduce repeater and drop-out rates, and make education more responsive to the country's development needs. 62. The construction and staffing of the institutes for the training of senior secondary teachers in mathematics and science is essential to increase the output of qualified Moroccan teachers required to implement the desired shift away from a literary bias toward scientific studies in secondary education, while at the same time reducing reliance on costly expatriate teachers. The expansion and qualitative improvement of the science/mathematics curriculum option in senior secondary education will enhance the provision of higher level scientific and technological manpower for the country's development efforts. 63. Experience with previous projects has indicated problems in maintaining sufficient staff in the PIU, with resulting delays in project execution. The PIU, currently managing the implementation of the Third and Fourth Education Projects, has now been provided with adequate professional staff which would be maintained throughout the implementation of the Fifth Project. However, to ensure its capacity to assume the execution of the Fifth Project, particularly as regards procurement, provision has been made for architectural and engineering consultants to be recruited. It is imperative that the PIU's staff strength be monitored closely by the Bank through senestrial reports and supervision missions (see para. 55). 64. Review of some of the existing teacher training and university programs indicates extremely high failure rates and considerable variation in the quality of the training provided. Agreement has been reached on a mix of training programs which would permit flexible selection of the most  - 21 - appropriate candidates from the universities, from qualified high school graduates and from promising junior secondary school teachers, and which should help reduce failure rates. To ensure a high standard of training in the senior teachers' institutes, development of a highly qualified cadre of Moroccan teacher trainers is essential. Consequently, the technical assistance to develop training curricula, train future trainers and test the new training programs in provisional facilities is of critical importance, and is clearly recognized by the concerned authorities. Assurances were also obtained concerning the profiles and recruitment schedule for the future teacher training staff. In addition, the final training curricula and student selection criteria and procedures will be submitted to the Bank for review and comments as part of an on-going dialogue with the MOE on ways of ensuring the efficient and effective use of these facilities (see para. 53). PART V - LEGAL INSTRUMENTS AND AUTHORITY 65. The draft Loan Agreement between the Kingdom of Morocco 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. 66. Special conditions of the loan are listed in Annex III. 67. 1 am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 68. I recommend that the Executive Directors approve the proposed loan. A.W. Clausen President Attachments April 26, 1982 Washington, D.C.  - 22 - ANNE I Page 1 of 6 TAIL1 3A MO&OCCr1CZAL INDICATOU DATA SHEET MOROCCO REFERENCE CROUPS (tEIGHTED AVWES LAND AKEA (ThUUSAND S. Kll. ) - MOST RECENT ESTITATE)- 20TAL 447.0/c MIDDLE INCOME AGRICULTUMAL 203. 77c MOST FIECENT NORTH AFRICA & MIDDLE INCOME 1960 lb 1970 /b ESTIMATE /b MIDDLE EAST LATIN AMERICA 4 CARIB!EAN GhP FLA LAPITA (U59) 200.0 310.0 740.0 865.5 1616.2 ENLKGY COhSUMPTIUb PER CAPITA (KILU(A*tS Oi COAL LUILVAL