Morocco - Communal Infrastructure Fund (FEC) Pilot Project

Document ofeo The World Bank FOR OFFICIAL USE ONLY Report No. P-3510-MOR REPORT AND RECOMMENDATIONS OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO US$16.0 MILLION TO THE KINGDOM OF MOROCCO FOR A PILOT PROJECT FOR COMMUNAL INFRASTRUCTURE FUND April 4, 1983 This document has a restricted distribution and may he used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  KINGDOM OF MOROCCO CURRENCY EQUIVALENT Currency Unit - Dirham (DH) US$l = DH 6.25 DH I = US$o.l6 FISCAL YEAR January 1 - December 3] GLOSSARY OF ABBREVIATIONS BNDE = Banque Nationale pour le Developpement Economique CDG = Caisse de Dep5ts et de Gestion FEC = Fonds d'Equipement Communal FDCL = Fonds de Developpement des Communaut6s Locales FSDR = Fonds Special de Developpement Regional LC = Local Commune MOI = Ministry of Interior  FOR OFFICIAL USE ONLY KINGDOM OF MOROCCO PILOT PROJECT FOR THE COMMUNAL INFRASTRUCTURE FUND (FEC) LOAN AND PROJECT SUMMARY Borrower: Kingdom of Morocco Beneficiary: Fonds d'Equipement Communal (FEC) Amount: US$16.0 million equivalent, including a capitalized front-end fee. Terms: 17 years, including 4 years of grace, at the standard variable interest rate. Re-lending Terms: The Government would on-lend US$16.0 million equivalent of the Bank loan to FEC at an interest rate of 11.5% per annum for 17 years, including four years of grace. About $15 million would be relent to local communes and public utility and transport authorities (Regies) at a rate acceptable to the Bank and at terms up to 14 years, including three years of grace. The Government would assume the foreign exchange and interest rate risks. Project Objectives and Description:- The project aims at developing the capacity of FEC to act as an effective channel of financing for local communes. The project would provide a line of credit and technical assistance to FEC to help finance revenue-earning infrastructure projects. In view of the insufficient appraisal and supervision capability of FEC and the inadequate personnel and financial resources of the local communes, the project is designed on a pilot basis, focusing on strengthening FEC as an institution. The project would increase the availability of water supply and sewerage, electricity, urban development and transportation, as well as warehouses, markets and slaughterhouses in local communes dispersed throughout Morocco. The main project risk is related to the difficulty the local communes may have in implementing the sub-projects. The appraisal criteria and technical assistance provided under the project would, however, ensure the viability of projects eligible for FEC's financing, and FEC's supervision would help improve their implementation. 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.  Estimated Disbursement: Bank FY 1984 1985 1986 1987 1988 1989 -----------------USt Million---------------- Annual 0.9 3.3 4.7 3.6 2.0 1.5 Cumulative 0.9 4.2 8.9 12.5 14.5 16.0 Staff Appraisal Report: No. 4186-MOR dated April 1, 1983.  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE IBRD TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO US$16.0 MILLION TO THE KINGDOM OF MOROCCO FOR A PILOT PROJECT FOR THE COMMUNAL INFRASTRUCTURE FUND 1. I submit the following report and recommendations on a proposed loan * to the Government of Morocco for the equivalent of US$16.0 million, including the capitalized front-end fee, to help finance a Pilot Project for Communal Infrastructure Fund. The loan would have a term of 17 years, including four years of grace, at the standard variable interest rate. The proceeds of the loan would be onlent to the Fonds d'Equipement Communal for 17 years, including four years of grace, with an interest rate of 11.5% 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 report on Morocco's Public Sector Investment Program for 1981-85 is expected to be distributed to the Board shortly. An economic mission on industrial incentives and export promotion was in Morocco in September 1982. Country and Economic Data Sheets are attached as Annex I. Introduction 3. Compared with many developing countries, Morocco is well endowed with natural resources. Morocco 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 country's energy requirements, but Morocco has some uranium and oil shale resources which could become significant energy sources in the long term. There are moreover preliminary indications of natural gas reserves. Morocco has also a relatively good agricultural potential. In addition, Morocco's proximity to Europe has favored trade, tourism and lahor migration with the EEC countries. 1/ Parts 'I and II are essentially the same as in the Oulmes-Rommani Agricultural Development Project (Report No. P-3413-MOR of November 22, 1982).  - 2 - 4. During the first 15 years after independence (1956), a conservative approach to economic policy predominated in Morocco, and GDP increased at an average rate of 4% a year in the 1960s. A relatively weak savings effort and conservative external borrowing policies permitted 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 bad 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 Expansion in the Mid-1970s 5. During the 1970s, economic policy became more ambitious, and the original 1973-77 Development Plan strategy stressed an intensified savings effort and development of exports. In 1974, with the sudden jump in phosphate prices, phosphate export earnings more than quadrupled, and 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. The Government launched a massive public investment program which brought about a sharp acceleration in the rate of growth of the economy, and GDP grew at the rate of 6.7% per year between 1973-1977. The expansion of the investment program also led to a considerable increase in demand for imported goods and services, whose share in GDP doubled from 19% in 1972 to 37% in 1977. 6. The phosphate boom, however, was shortlived and phosphate exports started falling in both volume and value as early as mid-1975. Phosphate 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. 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 growtb of exports of goods and nonfactor services,-which in constant prices had exceeded 8% a year in 1968-72, averaged only 1% a year in 1973-77. 7. Accelerated investment, growing public expenditures, and particularly increased defense spending in response to growing tensions in the Western Sahara, 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 15% of GDP in 1972 to 20% of GDP in 1974 thanks to phospbate receipts, but fell back to 10-12% in 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. The debt service ratio rose from 5.6% of exports of goods and services in 1975 to 10.7% in 1977.  - 3 - 8. 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 22% of GDP in 1977), the growth of expenditure far exceeded that of revenues. Budgetary outlays rose from 19% of GDP in 1972 to 39% in 1977. As a result, the Government's overall budget deficit increased sharply, reaching peaks of 18% of GDP in 1976 and 1977. Stabilization Program 1978-1980 9. 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 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 10% of GDP and the external payments situation improved in 1978. Later, bowever, 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. By 1980 both fiscal and external imbalances were still substantial: the resource gap (in current prices) remained at about 11% of GDP, and the ratio of the overall budget deficit to GDP at about 12%. 10. The reduction in the Government deficit during the 1978-80 period was achieved cbiefly through cutbacks in the level of budgetary investments, which dropped from 27% 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 reached 27% in 1980 and their share of GDP represented 22%. 11. 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 and volume 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 and a rise in external debt interest payments, the current account deficit before grants was reduced from $1.8 billion, or 17% of GDP, in 1977 to about $1.4 billion, or 8% of GDP, in 1980.  -4- 12. 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 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. Recent Developments 13. In 1981, the economy was subjected to strong external shocks: a substantial increase of imports of cereals, following a drought which reduced agricultural value added by about 23% in real terms; a large appreciation of the US dollar; and a rise in foreign interest rates, which further increased the cost of debt service. As a result of these factors, economic and financial performance worsened. Gross domestic product fell by 1.3% in real terms, the Treasury deficit reached 14% of GDP in 1981, and the current account deficit reached $l.9 billion in 1981 (12.6% of GDP). Economic activity improved in 1982 as agricultural production recovered thanks to a good harvest, but phosphate prices weakened. adversely affecting export earnings. GDP is estimated to have increased by 5 to 6% in real terms but the external payments situation has not improved significantly. The budgetary situation improved somewhat as a result of a combination of tax increases and expenditure restraining the measures adopted in the framework of a stand-by agreement reached with the IMF in April 1982, but the Treasury deficit remains high. Medium Term Prospects 14. The initial development strategy in the 1981-,85 Plan period was to reach a high rate of GDP growth (6.5%), needed to obtain an acceleration of employment creation and a strengthening of Government programs for social and regional development. The Plan projection was, however, too ambitious and although the financial constraint lessened somewhat in 1982 as the economy recovers from the 1981 drought, Morocco's external financial situation will remain difficult in 1982-85 and will continue to constrain GDP growth. 15. Bank projections for the 1981-85 Plan period are based on the assumption that exports of goods and non-factor services could grow by 5.8% in real terms, while imports of goods and non-factor services would be allowed to rise by no more than 0.5% p.a. in real terms, as the need for food imports is expected to diminish, the increase in capital goods and oil imports to slow down, and payments for military equipment to be lower. Moreover, the growth in investment expenditures would not exceed 3.1% p.a. in real terms. Given these assumptions, domestic savings could recover from the abnormally low 1981 level (7.8% of GDP) to reach 12.5 % of GDP in 1985, the resource gap would gradually decline from 13.3% of GDP in 1981 to 7.5% in 1985, while GDP could still grow at about 4.5% p.a. in real terms or just over 1% per capita. 16. The projected export growth would result from an increase (in real terms) of 6.6% in pbosphate and phosphate based products and 9.5% p.a. in manufactured products between 1981-85. Such a performance would depend upon  - 5 - identification of new markets and could be accomplished only if high priority is given to export promotion. In the case of finished and intermediate products, the extent to which the projected increase in exports would materialize depends on the revision of incentives granted to exporters, the diversification of Moroccan exports towards non-traditional exports and new markets, and the appropriate level of the exchange rate. 17. A sustained reduction of the trade gap will be difficult to achieve unless growth of merchandise imports is drastically curtailed. This would require not only a higher increase in agricultural output so that the level of food imports would decline in real terms, but also an effective domestic pricing policy so as to limit the growth of petroleum imports (assumed at 1.3% p.a.) from 1981 to 1985. It would require moreover a reduction of the capital goods imports growth to 1.8% p.a. in 1981-85 through cuts in Treasury civilian investment with respect to the level planned in the 1981-85 Plan, and a revision of the various investment codes so as to reduce financial incentives to imported capital goods. 18. In view of the projected stagnation in per capita household incomes, any significant increase in domestic savings would mainly come from substantial improvements in Government savings performance. As part of the 1982 stand-by arrangement between Morocco and the IMF, several measures and reductions in real Government expenditures were implemented in 1982. The Bank's projections assume that progress will continue in this area. 19. Given the strong constraints on investment levels, the future rate of growth of the economy will depend to a large extent on the sectoral allocation and the efficiency of investment. In conformity with the Plan objectives, the Government should start fewer large capital-intensive projects and restrict the allocation of investments to priority subsectors. Priority is to be given to projects that are export oriented, less capital intensive and which use a greater proportion of domestic resources. In addition, particular attention will have to be paid by the Government to manpower planning and to the employment effect of investments in order to prevent unemployment from rising. Social Development 0 20. Social expenditures have been at a high level in recent years, accounting for more than half of current outlays. However, social indicators still appear to be at a relatively low level 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 strategy of the 1981-85 Development Plan emphasizes rural development in rainfed areas, where most of the poorest households in Morocco currently live, and the need to improve mechanisms for delivering 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 communities in meeting basic needs, particularly for low cost housing, water supply, sewerage and electrification. Although rapid results cannot be expected in any of these  - 6 - 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 210 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. In October 1980, the IMF approved an extended arrangement for a three-year period in the amount of SDR 810 million in support of a medium term program of financial adjustment. This arrangement was interrupted in 1981 when it appeared that the assumptions and targets of the EFF program were no longer possible. It was replaced in 1982 by a stand-by arrangement in the amount of SDR 281 million and purchase of SDR 236 million under the Compensatory Financing Facility. The 1982 financial program, which was supported by the standby arrangement now drawing to a close, sought to reduce the deficit in the current account of the balance of payments (excluding grants) to 10% of GDP and to decrease the overall Treasury deficit by one-third to 8% of GDP. Other major elements of the program included an upward revision of the interest rate structure, restraint in overall credit and monetary expansion, further trade liberalization, and progress with respect to both tax reform and reform of the state enterprises. Preliminary data indicates that the targets under the standby for end-1982 were met. The performance criteria of the program were observed and Morocco was able to make the last drawing under the standby arrangement in February 1983. Discussions are underway of a possible further standby arrangement for 1983/84. 22. From the low levels of 1974-75, Morocco's external debt rose rapidly to $8.4 billion (disbursed only) by December 1981. Gross inflow of medium and long term capital reached $1.8 billion in 1981. Debt service amounted to $1.2 billion in 1980, $1.3 billion in 1981 and $1.5 billion in 1982 (27%, 31% and 35% respectively, of total exports of goods and services). As a result of recent and projected borrowings, debt service may be expected to average $1.8 billion annually during 1982-85. 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 while taking special measures to expand exports. 23. Loan commitments from multilateral and bilateral official sources to Morocco rose from $205 million in 1975 to $1368 million in 1978. In 1979-80 they have averaged $700-800 million a year (excluding grants). In 1981 they are estimated at $1759 million. Major sources of aid were France, Saudi Arabia, the UAE, the U.S., Germany and the Bank Group. At the end of 1981, the Bank Group's share in Morocco's outstanding and disbursed external public debt was 7.5%. The share of the Bank Group in debt service was 21% in 1976 and declined to 15% in 1977, and 7% in 1981. 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 24. Bank and IDA lending to Morocco has supported 61 projects, financing a total of $2,109.7 million (net of cancellations), of which $1,351.5 million has been lent since the beginning of FY1978. IDA credits, totalling $50 million, have been made available for five projects and a Third Window loan for $25 million has been made for an education project. IFC investments have amounted to $61.6 million ($41.6 million after cancellations, terminations, repayments and sales). Annex II contains a summary statement of Bank loans, IDA credits and IFC investments and notes on the execution of ongoing IBRD/IDA projects as of February 28, 1983. Overall performance in project execution is satisfactory, although in some cases, delays in project implementation have been caused by management problems and budgetary constraints. 25. Past Bank Group lending bas been concentrated in the agricultural and industrial sectors, which have accounted for 28 percent and 26 percent, respectively of total commitments; the balance is represented by utilities (16 percent), tourism (9 percent), education (8 percent), roads (6 percent), energy (4 percent) and urban development (3 percent). The main objectives of Bank lending in previous years were to foster and strengthen development institutions and to increase productive capacity, in order to improve the balance of payments. While these objectives remain, Bank lending now also focuses on supporting a number of other policy objectives: to contribute to the reduction of the Treasury deficits; to lower unit costs for the 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 FY75, 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 Meknes and Fes-Karia-Tissa Agriculture Projects address this objective in the favorable cereal producing zone. The Loukkos, Middle Atlas, Forestry and Oulmes-Rommani projects extend support to less favorably endowed regions. Four lines of credit to Caisse Nationale de Credit Agricole (CNCA) have helped provide credit to farmers, and a fifth project is under preparation. An irrigation project aims at development of small and medium schemes. Increased export earnings are expected to result from the 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. The scope of future lending is likely to be expanded to include projects aimed at improving input supply and marketing nationwide. 27. Increased foreign exchange earnings or savings have also been the key objectives of Bank projects in industry, mining and tourism and led to nine lines of credit to the Banque Nationale pour le Developpement Economique (BNDE) for industrial projects and four lines of credit to Credit Immobilier et H8telier (CIH) for tourism projects. A project to increase mineral export earnings and raise the incomes of small-scale miners in southeastern Morocco was approved by the Board in FY82.  - 8 - 28. Projects in 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 aims at supporting the Government's efforts to provide shelter, basic services and employment to low-income urban families and a third urban project is helping to provide finance to low income housing. Two highway projects support the Government's road maintenance efforts and improve rural access roads. A loan for village electrification is helping bring power to over a hundred small towns and villages, and a third water supply project is providing access to safe water in small towns and semi-rural areas. 29. Five education projects have focused on secondary level technical education and teacher training, on expanding basic education in the rural areas and on ensuring a greater orientation in primary schooling towards practical training. Further lending will be focussed on vocational training and on primary education. 30. In order to reduce Morocco's dependence on oil imports, the Government has made considerable efforts to develop national resources, notably of gas and oil shale. These efforts are being supported by the Bank through a first gas exploration project and an engineering project aimed at studying the viability of developing the country's oil shale resources. A second exploration and appraisal project is proposed, and additional projects for further gas exploration, as well as coal and hydropower development, are being studied. 31. Morocco's disbursement performance improved in FY82. Disbursement shortfalls are, however, still being experienced, particularly for a few projects in new sectors, due mainly to institutional or project management problems. These cases are being closely monitored and implementation schedules have been established specifying critical actions, in agreement with the Government. In some projects, implementing agencies have been slow in submitting disbursement requests to the Ministry of Finance for transmittal to the Bank, but the Government has recently taken effective measures to resolve this problem. The rate of disbursement has also been affected by the appreciation of the dollar against other currencies. PART III. SECTORAL BACKGROUND Regional Development 32. In terms of spatial distribution, growth in Morocco has been concentrated mainly in a zone located in the center, north and northwest of the country. Favorable climate and rainfall, the location of phosphate deposits, and easy access to international transportation have resulted in most of the country's development in industry and modern agriculture being located in these regions. The development of other regions has moved at a much slower pace. These economic imbalances are also accompanied by disparities in income distribution and in access to public services. 33. A study on regional distribution in Morocco showed that the urban areas accounted for about 80% of the growth in GDP between 1960 and 1971; and  - 9 - the northern regions generated three-quarters of the value added in industry and more than half the value added in services. Per capita GDP in Casablanca was 60% higher than the national average while in the east, south and southwest of the country, per capita GDP only represented 74%, 55% and 50%, respectively of the national average. The primary school enrollment rates are five times lower in the south than in the central region. Regional disparities can also be found in public services, such as health, where there are 10,000 inhabitants per doctor in the central and western regions in comparison to 20,000 in the other regions; and in infrastructure, where the density of highway networks in the central and northwestern regions are more than 100% of the national average and in the south 38% of the national average. While most of the urban population has access to potable water, only 25% of the rural population are provided with this service. About one-half of the urban population have access to electricity compared to 6% of the rural population. Although updated data on regional development is not yet available, there are indications that disparities have been growing. The consumption of the poorest 10% of households acounted only for 1.2% of total consumption in 1970 as compared to 3.3% in 1960. 34. The Government has long recognized the growing regional, urban and rural disparities, but it is only since the mid-seventies that serious efforts have been made to reduce them. Among measures to improve regional development are the establishment of industrial development poles outside the Casablanca - Kenitra corridor, the improvement of accessibility to social services such as health and education in rural areas, the reliance on public autonomous agencies for the distribution of water and electricity and transport, and the improvement of communal development financing. Local Government: Administrative Structure andPlann 35. The communes are the basic local government units. A commune's administrative structure consists of elected members of a Commune Council and a local executive official appointed by the Ministry of Interior (MOI). At present, there are 849 communes, of which 90% or 763 are rural. The communes depend heavily on the MOI for both administrative and financial assistance, but there is a marked difference between the urban and rural communes. The former generally have competent technical staff and can basically finance some of their operating costs out of their own resources while the latter are seriously deficient in both fields. In the urban communes, there are several public autonomous agencies (Regies) which are entrusted by law with the distribution of water and electricity and with the provision of public transport. At present, there are about 20 Regies which are well organized with competent technical staff and are financially self-supporting. Their operating costs and a substantial part of their development programs are covered through sales revenues. 36. The next level of local administration is the province of which there are 47. Responsibilities for the provincial administration are divided between an elected Provincial Assembly and the Governor. The province has no financial resources of its own and is entirely funded through Government subsidies. The Governor, appointed by the King, is responsible for the  - 10 - coordination of the activities of the central ministries and agencies established in the provinces, for supervision of the communes and for execution of expenditures financed by the "Local Community Development Fund" and the "Special Regional Development Fund" (para. 40). He reports directly to the MOI and is advised by a Provincial Technical Committee consisting of local representatives of the central ministries in his province. The MOI has a two-fold role to play: that of maintaining public order through provincial and communal police operations, and that of supervising the local authorities. The latter is focused on accounting and budgetary control, while organization and management of the financial resources needed to meet local needs are the main concern of the elected councils. 37. The 1981-85 Plan calls for an increased role for the LCs in planning their own development programs. The communes establish local investment priorities whicb are submitted to the Governor and then to the MOI. Within the framework of national and regional priorities, the investment proposals of the communes are examined by the Ministries of Planning and Finance, where budget limits are defined for each province and commune. Investment proposals are then adjusted by the communes to fit the defined budget limits. While this planning process theoretically caters to the particular needs and priorities of individual LCs, its effectiveness faces several constraints. First, the LCs lack planning and implementing capacity and second, allocation of financial resources decided at the central level is often much less than the communes' requirements. Steps have been taken by the Government to reinforce the LCs, particularly by strengthening technical staff (about 100 engineers, 1,200 technical agents, and 1,400 administrative agents would be trained and appointed by 1985 to LCs) and by increasing local financial resources. In the intermediate term, the Government has used foreign experts through bilateral aid programs and private consultant firms to help prepare and implement the LCs' projects. Communal Development Financing 38. The 1981-85 investment program for LCs contained proposals totalling DH 1,943 million ($311 million) in 1981 and increasing to DH 3,400 million ($544 million) in 1985. These proposals are far too ambitious in comparison to the LCs' implementation capability, and they are being revised downward. There are three sources of finances: (a) the LCs' own resources; (b) budgetary allocations through the Local Community Development Fund (FDCL) and Special Regional Development Fund (FSDR); and (c) the Communal Infrastructure Fund (FEC). The share of each of these types of funds in the financing plan of the LCs' annual investment programs is proposed each fiscal year by the LCs and the province at the time of budget preparation. After having overall budget approval, the LCs select projects suitable for each type of financing. FEC's resources are exclusively reserved to finance revenue-generating projects for which allocations under other sources of grant financing have not been made, and after the LCs have committed all the funds provided under (a) and (b). 39. The bulk of the communes' own resources stems from property taxes and revenue earning projects, but these revenues are relatively modest and skewed  - 11 - towards urban areas. In most rural LCs, the own resources only cover about 50% of operating expenditures. Current deficit and investment expenditures are covered by the Government's budgetary allocations. These allocations are primarily subsidies, and to a limited extent, include revenues collected by the Government on behalf of the LCs. The Government is now working towards a fiscal reform which would rationalize the redistribution of local revenues collected by the central Government. The objective is to make the LCs self-supporting in current expenditures and increasingly finance part of capital expenditures. 40. The Local Community Development Fund (FDCL), operated by MOI, was created in 1976, for financing LCs' capital expenditures and received an initial contribution of DH 1 billion ($160 million) for 1979-80. The Plan has allocated about DH 3 billion ($480 million) in 1981-85 for FDCL which is substantially less than the projected requirements of the LCs. In addition, the Special Regional Development Fund (FSDR), established in 1973 with an initial appropriation of DH 300 million ($48 million), is used to finance small-scale infrastructure and services in the least developed regions. The FSDR's role is declining as it has been overshadowed by the FDCL. For the period 1981-85, it was projected that about 65% of LCs' investment requirements would be financed by FDCL and FSDR, 20% by FEC and 15% by LCs' own resources and the Regies internal cash generation. The Institution: FEC 41. Organization. FEC was founded in 1959 to extend loans to local communes, and to public utility and transport authorities. Management of FEC is entrusted to the Caisse de Depots et Gestion (CDG). CDG, an autonomous public financial institution headed by a General Director, is a well managed and profitable institution with competent staff. CDG is responsible for managing various other public funds, such as the National Insurance and Retirement Fund, the National Savings Fund, and the Pension Fund. CDG's assets amounted to DH 3,946 million ($631 million) in 1981. It extends financing in the form of equity and bond subscriptions in the fields of housing, tourism, industry, transportation and communal development. Although FEC is managed by the CDG, its accounts are separate from those of CDG. FEC is authorized to borrow with Government guarantee. 42. FEC's chief executive is the Director General of CDG who holds substantial control over the policy and operations of FEC. He also approves all of FEC's loans upon recommendations of a Technical Committee which includes two ex-officio members from the MOI, and two from the Ministry of Finance. Administrative responsibilities including the organization of work teams, review of loan requests, follow-up on loan disbursements and repayments, and the preparation of FEC's budget are de facto delegated to the Director of FEC. The present Director is knowledgeable in administrative, public finance and local commune matters. He has less experience in project analysis. The personnel allocated to FEC is insufficient, in number and experience, to carry out its proposed functions effectively. Furthermore, their functions are not clearly separated between project evaluation and accounting tasks. FEC's organization and staffing would be strengthened under the project (paras. 58-59).  - 12 - 43. Policies and Procedures. Although FEC generally finances revenue-generating projects, it does not have formalized operating procedures. Decisions on lending are being made on the basis of informally established operating guidelines and cursory appraisal of projects. Project preparation and implementation have essentially been carried out by the local authorities and public agencies with no technical assistance from FEC. There are no systematic appraisal criteria and little supervision of projects financed by FEC has been done so far. The project would aim at defining policies for FEC's operations and improving its lending and supervision procedures (paras. 60-61). 44. Operations and Finances. FEC's operations have expanded considerably in recent years. Between 1977 and 1980, FEC's loan approvals grew at an annual rate of 70%, increasing from DH 35.4 million ($5.5 million) for 7 loans in 1977 to DH 171 million ($27.5 million) for 37 loans in 1980. Total approvals in 1981 fell to DH 103 million ($16.5 million) due mainly to a shift in investment priorities following the serious drought that hit Morocco that year but increased to DH 160 million ($25.6 million) in 1982. The sectoral distribution over the period 1977-81 was as follows: (i) in the case of the LCs, 48% of the financing went for sewerage, 30% for productive facilities, 20% for various infrastructure works, and 2% for water supply; and (ii) in the case of the Regies, 51% for water supply, 23% for electricity, and 26% for transport. 45. Over the period of 1982-86, FEC's loan approvals had been projected to grow from DH 280 million ($45 million) to DH 800 million ($128 million). These projections were, however, too ambitious and have been revised downwards by FEC and the Bank. The new projections forecast a loan approval level of DH 210 million ($33.6 million) in 1983, growing thereafter at 20% per annum in current terms, to reach DH 360 million ($58 million) in 1986. FEC intends to focus more on the rural communes, increasing its lending from an insignificant share in the past to an annual average of 35% over 1982-86, while the urban communes would receive 38% and the regies 27%. Sectorally, about 25% of FEC's lending would be for sewerage projects, 22% for water supply, 22% for productive facilities, 14% for electrification and the balance, 17%, for urban development projects. 46. As of end 1981, FEC's total assets amounted to DH 523 million ($83.7 million), including a loan portfolio .of DH 503 million ($80.5 million). These assets have been mainly funded by CDG's and Central Bank's short-term discount notes of DH 392 million ($62.7 million), advances from CDG of DH 23 million ($3.7 million), a long-term bond issue guaranteed by the Government of DH 43 million ($6.9 million), and equity and retained earnings of DH 65 million ($10.4 million). The financial structure is imbalanced as FEC's long-term loan portfolio (up to 12 years) is mainly funded by short.term discount notes. FEC is also undercapitalized, with a debt-equity ratio of about seven. However, FEC's financial viability and creditworthiness is guaranteed by CDG which manages FEC and is a viable financial institution (para. 41).  - 13 - 47. At present, FEC generally finances 100% of project cost at an interest rate of 8.5% for up to 12 years. With a current lending rate of 8.5%, FEC has been able to generate moderate annual surpluses, given the low overall cost (5.8%) of its borrowed resources. It has no provisions for risks on its portfolio as the LCs' borrowings are Government guaranteed. However, this is not applied to the borrowings from Regies. The financial quality of FEC's portfolio is good with only one loan to a Regie in default. In this case, FEC has suspended further lending to this particular Regie until the outstanding amount is settled. Bank Role and Lending Strategy 48. This project would represent the Bank's first support to LCs' investment needs through FEC. It is aimed at reinforcing the Government's efforts to improve the efficiency of planned investments, extending services to rural and low-income urban groups and promoting a more balanced regional development. This effort would complement previous Bank lending to the development of local infrastructure and social services in Morocco. In recent years, this included urban development projects to provide shelter to low income groups in Rabat (FY78), Meknes and Kenitra (FY81); and a housing finance project for low income housings through the Credit Immobilier et H8telier (FY83); a rural electrification project (FY79) to help bring electricity to over a hundred small towns and villages; water supply projects (FY79, FY81) to provide access to safe water in small towns and semi-rural areas; and highway projects to support the Government's road maintenance efforts and to improve rural access roads (FY80 and FY83). A project to upgrade the sewerage system in Casablanca is under preparation. The proposed project would widen the distribution of infrastructure and services, and at the same time, strengthen the capacity of LCs to prepare and implement their own development programs. PART IV. THE PROJECT Project Background 49. The concept of a Bank loan to FEC arose out of the visit of a Moroccan delegation to the Bank in March 1980 to request Bank assistance to strengthen FEC, both financially and institutionally, in its expanded role of promoter of communal development and financier of communal investments throughout the country, and particularly in Morocco's least developed areas. This intention to strengthen FEC as an institution for the LCs stems from the Government's new policy to promote regional and communal development through decentralization. A Bank identification mission visited Morocco in May 1980 to review the Government's objectives and plans of action regarding its regional and communal development strategy, and in this context, FEC and its expanded role. The project was appraised in June 1982, and negotiations were held in Washington, DC on March 22, 1983. The Moroccan delegation was led by Mr. Siraj. A Staff Appraisal Report No. 4186-MOR is being circulated separately to the Executive Directors. The main features of the loan and project are listed in the Loan and Project Summary and in Annex III.  - 14 - Project Objective 50. The ultimate objective of Bank lending in this area is to strengthen local and regional investment planning and implementation capacity. In view of the diversity in the level of economic development of some 850 communes, the multisectoral nature of the LCs' investment plans, and the complexity of the development planning process, this objective can only be achieved through a gradual approach. The present project is thus limited to a first phase of developing the capacity of FEC to act as an effective channel for financing revenue-earning local infrastructure projects. The project does not address the broader issues of local authority organization and financing. If it is successful, further lending through FEC would be aimed at developing a dialogue on these issues. Project Description 51. The project would consist of: (a) a line of credit to FEC for financing revenue-earning infrastructure projects meeting specific technical, financial and economic criteria; and (b) technical assisfance to FEC to help strengthen its internal organization and operating procedures, with particular emphasis on project preparation, evaluation and supervision. 52. The line of credit would be used to finance about 35 sub-projects dispersed throughout Morocco, in the sectors eligible for FEC's assistance, including water and electricity distribution, sewerage, urban transportation and development, and productive facilities such as warehouses, markets and slaughterhouses. There would be users fees and/or direct taxes associated with the implementation of sub-projects. In most sectors, except for sewerage and for sub-projects costing below DH 0.5 million ($80,000), these charges would cover fully operation and maintenance costs and amortization of capital expenditures. The inclusion of several sectors and widespread geographic coverage would help to provide a representative range of physical and institutional conditions within which to test the applicability of the design criteria. The sub-borrowers would be urban and rural communes and public utility and transport authorities (the Regies). All projects assisted by FEC, irrespective of the source of finance, would be subject to the selection, appraisal, and supervision criteria developed in consultation with the Bank (Project Agreement, Section 3.01). Particular emphasis would be given to the projects' design and standards, cost recovery capacity, financial viability, and where relevant, justification vis-a-vis the borrowing LC's financial position. Satisfactory arrangements by the sub-borrowers for project implementation and subsequent operation and maintenance would also be addressed. In particular, in the water and electricity sectors, the proposed loan would finance sub-projects operated or managed by the R6gies or national agencies which have the technical capability to prepare and execute such projects. MOI would also assist FEC in project supervision according to policies and procedures satisfactory to the Bank (Loan Agreement, Section 3.03). 53. The technical assistance program would focus on (i) project preparation, where the assistance of FEC to the LCs would be strengthened by  - 15 - reviewing and completing the LCs' feasibility studies, particularly for sub-projects in water and electricity sectors costing above DH 5 million ($0.8 million), and in sewerage sector; (ii) guidance to FEC's staff to ensure compliance with the agreed appraisal criteria for sub-projects and in the supervision of sub-projects; (iii) design of a training program for FEC's staff; (iv) preparation of an operational manual detailing the role of FEC in the project cycle; and (v) development of internal monitoring procedures and of a management information system. FEC would utilize the services of advisors for 24 months, and technical consultants (individual or firms) for about 24 man-months at a cost of about $10,000 per man-month, including international travel and subsistence. Employment of the advisor for assisting FEC in appraising and supervising sub-projects would be a condition of loan effectiveness (Loan Agreement, Section 6.01(b), Project Agreement, Section 2.07(a)(i)). Other advisors would be employed by October 1, 1983 (Project Agreement, Section 2.07 (a) (ii)). The technical consultants would be engaged by January 1, 1984 to provide technical assistance and training to FEC's staff in their specialization (Project Agreement, Section 2.07(a)(iii)). These experts would be selected according to Bank guidelines and their qualifications, terms of reference and conditions of employment would be satisfactory to the Bank (Project Agreement, Section 2.07(b)). Project Financial Features 54. Financial Plan. The proposed $16.0 million loan would be made to the Government at the standard Bank terms and conditions for Morocco (17 years maturity, including four years of grace, and at variable interest rate). The proceeds of the loan would be on-lent by the Government to FEC at a fixed interest rate of 11.5%, which is related to the present cost of FEC's borrowings on the local bond market, and with the same maturity conditions as the Bank's loan (Loan Agreement, Section 3.01(c)). The loan would cover about 15% of the borrowing needs projected for FEC during the period of 1983-86. The Government would bear both the foreign exchange and interest rate risks. Agreements on the on-lending terms and conditions of the Bank loan by the Government to FEC would be incorporated in a Financing Agreement. The execution of a Financing Agreement satisfactory to the Bank would be a condition of loan effectiveness (Loan Agreement, Section 6.01(a)). The proposed loan would finance the foreign exchange costs of the sub-projects. 55. FEC's on-lending arrangements. Sub-loans would be made by FEC to the communes and the Regies for up to 14 years including grace periods of up to three years at an interest rate of 8.5% in 1983. However, in the medium-term, FEC will have to increasingly rely on less concessionary funds and it would be appropriate to increase the on-lending rate gradually to achieve a minimum spread of 3% on the projected average cost of FEC's resources. FEC's interest rate policy would be reviewed annually, starting in 1983, with the aim of moving gradually towards achievement of this objective (Loan Agreement, Section 4.02, Project Agreement, Section 2.08). The Government intends to cause FEC to increase its lending rate to at least 10% by the end of 1983, which is above the projected rate of inflation of 9%. While the Regies bear the full interest cost on their loans, at present the LCs receive a 3% interest subsidy on their borrowings from FEC. An increase in the on-lending  - 16 - rate may lead to an increase in this subsidy. This would, however, have an insignificant impact since such subsidies amount to less than 1% of the Government budgetary allocations to the LCs. Furthermore, as the overall envelope of Government financial allocations to the LCs is fixed each year, an increase in interest subsidy would simply imply a decrease in other forms of Government subsidies to the LCs, thus putting no additional burden on the Treasury. Possible modification of interest policy for local authorities is an issue which would need to be addressed in the context of longer term reform of the overall structure of financing of local authorities. In the context of this project, an understanding has been reached with the Government on the objective to eventually eliminate interest rate subsidy. 56. Disbursements and Procurement. Loan proceeds would be disbursed as following: (i) a maximum of 50% of total expenditures on sub-projects under the line of credit; and (ii) 100% of foreign currency cost and 75% of local currency cost for technical assistance. In the case of the line of credit, disbursements will be made on the basis of certified statements of expenditures submitted by FEC. Documentation for expenditures would be retained by FEC for review by FEC's auditors and Bank representatives. FEC's accounts and statement of expenditures would be audited by an independent auditor (Project Agreement, Section 4.02). To allow for a sufficient number of sub-projects to be refinanced out of the proceeds of the loan, there would be limit on the total cost of a sub-project of a maximum amount of DH 6.5 million ($l.O million) when the sub-borrower is a local commune. When the sub-borrower is a Regie, the maxium amount of Bank refinancing would be DH 5 million ($0.8 million) since the size of a R6gie's project tends to be large (Project Agreement, Schedule 1, Part 4(d)). All sub-projects to be refinanced from the Bank loan would be submitted to the Bank for approval (Loan Agreement, Section 2.03(a)(i)). The cut off date for loan submission would be June 30, 1986 (Project Agreement, Section 2.03 (b)) and disbursements would be expected to be completed by June 30, 1989 (Loan Agreement, Section 2.04). 57. As the total cost of most sub-projects would be small, and the contracts would be limited and scattered in space and time, they would not be suitable for international competitive bidding. They would be subject to the Government procurement practices which allow for competitive bidding and are satisfactory to the Bank. FEC's staff has developed good experience in procurement practices and is able to scrutinize cost estimates, invoices and other documents provided by the contractors. These procedures are satisfactory and would be applied under the proposed project. FEC's present disbursement practices are satisfactory. Strengthening of FEC 58. Organization. Though FEC is broadly organized along two main functional lines (project financing and accounting), the allocation of tasks between them remains unclear (para. 42). The plan for reorganization of FEC, effectively separating project appraisal and monitoring from financial management and accounting, would be submitted to the Bank for its approval by October 31, 1983 and (Project Agreement, Section 3.02(a)). It is also  - 17 - expected that a small statistics and research unit would be created. Consultants provided under the technical assistance program would be attached to FEC (para. 53), 59. Staff allocated to FEC would be increased. Budget allocations have been made and recruitment of staff has started to increase the existing total staff from 20 in early 1982 to 35 by 1984, including the employment by January 1, 1984 of two additional engineers, five economists/financial analysts and three technical aides (Project Agreement, Section 3.02(b)). This staffing pattern would permit processing about 60 sub-projects and supervising about 120 sub-projects per year. Staff training would be implemented with the assistance of advisors and technical consultants. A training program t would be submitted to the Bank for its approval by January 1, 1984 (Project Agreement, Section 3.02(c)). 60. Policies. FEC's lending policies are specified in a Statement of Policy recently approved by CDG, which, inter alia, provides that, within the framework of development plans, projects would be selected on the basis of economic priority, financial viability, technical performance and social merit. FEC should, furthermore, give priority to smaller projects in less endowed rural areas. 61. Procedures. A main focus of the project is to set up coherent operating procedures for FEC, particularly as regards project processing. It is thus intended to prepare an operational manual with the assistance of the previously mentioned adviser (para. 53). The manual would particularly deal with: (i) project preparation: although not directly the responsibility of FEC, but rather of the LCs soliciting a loan, FEC would increase its assistance to the LCs in this regard. In selecting projects for furtber consideration, FEC would ascertain whether they are indeed in line with prevailing development priorities and sectoral master plans. (ii) project appraisal: FEC's projects would be approved in accordance with criteria applicable to water supply, sewerage, electricity, road, urban transportation and development projects. (iii) project supervision: FEC would be required to monitor technical and financial progress of its assisted projects. 62. Finances. As the medium-term objective of FEC would be to become a financially viable organization, steps would be taken to gradually strengthen its financial structure. The Government and FEC would review with the Bank annually FEC's capital requirements and interest rates starting in 1983 (Loan Agreement, Section 4.02, Project Agreement, Section 2.08)). An understanding has been reached that the Government intends to: (i) contribute additional capital, or to cause CDG to provide FEC with long-term subordinated loans at a moderate cost, to FEC's equity in equal annual installments of DH 20 million starting December 31, 1983; (ii) raise FEC's lending rate from 8.5% to 10% by December 31, 1983 (para. 55); and (iii) cause FEC to set up provisions for risk for debts not guaranteed by the Government starting from 0.25% of unsecured loan portfolio in 1984 and increasing to 1% by 1986 and 3% thereafter.  - 18 - Benefits and Risks 63. The project would increase the availability of funds to meet the LCs' requirements in water supply and sewerage, electricity, and urban development and transportation, as well as warehouses, markets and slaughterhouses. The direct benefits and the overall rate of return are difficult to quantify at this stage as the relevant data of the sub-projects to be financed are not available. However, FEC's use of appraisal criteria agreed with the Bank should ensure the economic viability of the sub-projects. Although the project impact on the LCs' investment requirements is limited due to its pilot nature, the most important and permanent benefit of this project would be the development of FEC's capacity to operate as an effective development finance institution. This would gradually put FEC in a position to play a more determinant role in the development process at the local level and to have a greater influence on the LCs' investment policies and capacities, particularly in the less developed regions. 64. The main risk involved in the project is the adequate implementation of sub-projects by the sub-borrowers. However, the appraisal criteria, technical assistance and the requirement of FEC's supervision on its assisted projects would help reduce this risk. PART V - LEGAL INSTRUMENTS AND AUTHORITY 65. The draft Loan Agreement between the Bank and Kingdom of Morocco, the draft Project Agreement between the Bank and Fonds d'Equipement Communal et Caisse de Depot et de Gestion, are being distributed to the Executive Directors separately. The draft agreements conform to the normal pattern for loans for development finance companies. 66. Special conditions of the Loan are listed in Section III of Annex III. Special conditions of effectiveness include: (i) execution of the Financing Agreement between the Government and FEC (Loan Agreement, Section 6.01 (a); and (ii) employment of the advisor responsible for assisting FEC in appraising and supervising sub-projects (Loan Agreement, Section 6.01 (b)). 67. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION - 68. I recommend that the Executive Directors approve the proposed loan. A.W. Clausen President Attachments April 4, 1983 Washington, D.C.  - 19 - ANNEX I Page 1 of 6 TABLE 3A MOROCCO - SOCIAL INDICATORS DATA SHEET MOROCCO REFERENCE GROUPS (WEIGHTED AVERGES AREA (THOL'SAND SQ. EHM.) - MOST RECENT ESTIMATE)- TOTAL 446.6/c MIDDLE INCOME AGRICULTURAL 202.2 Ic MOST RECENT NORTH AFRICA & MIDDLE INCOME 1960 /b 1970 /b ESTIMATE /b MIDDLE EAST LATIN AMERICA & CARIBBEAN CNP PER CAPITA (US$) 220.0 340.0 900.0 1253.6 1902.0 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 163.2 214.0 302.3 713.5 1259.9 POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (THOUSANDS) 11626.0 14993.0 20182.0 URBAN POPIULATION (PERCENT OF TOTAL) 29.3 34.6 40.6 47.3 65.7 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 35.5 STATIONARY POPULATION (MILLIONS) 81.2 YEAR STATIONARY POPULATION IS REACHED 2090 POPULATION DENSITY PER SQ. KM. 26.0 33.6 43.8 35.8 35.2 PER SQ. KM. AGRICULTURAL LAND 61.1 75.0 96.6 420.9 92.5 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 44.8 47.6 46.1 44.3 39.7 15-64 YRS. 52.6 48.3 50.7 52.4 56.1 65 YRS. AND ABOVE 2.6 4.2 3.2 3.3 4.2 POPULATION CROWTH RATE (PERCEET) TOTAL 2.6 2.5 3.0 2.8 2.4 URBAN 3.7 4.2 4.6 4.6 3.8 CRUDE BIRTH RATE (PER THOUSAND) 51.8 47.3 44.9 41.2 31.4 CRUDE DOATH RATE (PER THOUSAND) 23.4 17.2 12.7 12.2 8.4 GROSS REPRODUCTION RATE 3.5 3.5 3.2 2.9 2.1 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. 25.1 78.0/d USERS (PERCENT OF MARRIED WOMEN) .. 1.0 5.4/d POOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 99.0 98.0 88.0 100.4 110.0 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 100.8 103.0 106.5/e 108.5 108.4 PROTEINS (GRAMS PER DAY) 64.6 66.5 68.3/e 71.9 66.0 OF WHICH ANLIMAL AND PULSE 13.8 12.6 13.5/e 18.0 34.0 CHILD (AGES 1-4) MORTALITY RATE 36.8 26.6 15.5 15.1 5.6 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 46.7 51.7 56.5 56.9 64.2 INFANT MORTALITY RATE (PER THOUSAND) 160.5 136.3 107.2 104.3 64.2 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL 30.6 51.0 55.0/d 59.1 65.6 UERBAN 58.7 92.0 100.0/d 83.1 78.9 RURAL 19.0 28.0 25.0/d 39.8 43.9 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. 29.0 .. ., 59.3 URBAN .. 75.0 .. .. 75.3 RURAL 4.0 . .. 30.0 POPULATION PER PHYSICIAN 9406.1 12814.5 11037.4/d 4015.5 1617.3 POPULATION PER NURSING PERSON .. 2742.2 1826.3/e 1802.2 1063.5 POPULATION PER HOSPITAL BED TOTAL 625.6 664.3 773.6/e 641.7 477.4 URBAN .. 454.7 623.4/e 538.3 679.8 RURAL .. 5821.4 3089.6/e 2403.3 1903.4 ADMISSIONS PER HOSPITAL BED .. 15.5 17.9/e 25.5 27.3 HOUSING AVERACE SIZE OF HOUSEHOLD TOTAL 4.8 5.5 .. . . URBAN 4.3 4.9 RURAL 5.1 5.8 AVERAC.E NUMBER OF PERSONS PER ROOM TOTAL 2.2 2.4 URBAN 2.1 2.1 RURAL 2.3 2.6 .6 . ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL .. .. U RBAN .. 68.4 65.0/e R-RAL .. ..  - 20 - ANNEX I Page 2 of 6 TABLE 3A MOROCCO - SOCIAL INDICATORS DATA SHEET MOROCCO REFERENCE GROUPS (WEIGHTED AVE0GES - MOST RECENT ESTIMATE)- MIDDLE INCOME MOST RECENT NORTH AFRICA & MIDDLE INCOME 1960 /b 1970 /b ESTIMATE lb MIDDLE EAST LATIN AMERICA & CARIBBEAN EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 47.0 52.0 75.0 88.7 104.3 MALE 67.0 67.0 93.0 104.5 106.4 FEMALE 27.0 36.0 56.0 72.0 103.3 SECONDARY: TOTAL 5.0 13.0 22.0 39.7 41.3 MALE 7.0 18.0 27.0 49.3 40.4 FEItALE 2.0 7.0 17.0 29.0 41.8 VOCATIONAL ENROL. (% OF SECONDARY) 30.2 2.3 2.8 10.1 33.7 ) PUPIL-TEACHFR RATIO PRIMARY 42.4 34.3 40.3 34.1 29.9 SECONDARY 6.3 20.4 21.0/f 23.7 16.7 ADULT LITERACY RATE (PERCENT) 13.8 21.4 28.0 43.3 79.1 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 10.7 14.8 19.6/d 17.8 42.8 RADIO RECEIVERS PER THOUSAND POPULATION 45.8 62.4 107.5 131.3 270.5 TV RECEIVERS PER THOUSAND POPULATION 0.4 11.6 38.4 44.1 107.7 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 22.1 16.2 11.8 31.5 63.7 CINEMA ANNUAL ATTENDANCE PER CAPITA 2.0 .. 2.0/e 1.7 2.7 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 3388.7 3945.2 5294.8 FEFALE (PERCENT) 10.0 14.2 15.8 10.6 24.4 AGRICULTURE (PERCENT) 62.0 57.0 52.0 42.4 31.3 INDUSTRY (PERCENT) 14.0 17.0 21.0 27.8 23.9 PARTICIPATION RATE (PERCENT) TOTAL 29.1 26.3 26.2 26.0 33.6 MALE 52.1 45.2 44.2 46.2 50.4 FEMALE 5.9 7.5 8.3 5.6 16.8 ECONOMIC DEPENDENCY RATIO 1.6 2.0 1.9 1.9 1.3 INCOME DISTRIBUTION RURAL .. .. 219.0/i PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS 18.0/g 20.0_/g HIGHEST 20 PERCENT OF HOUSEHOLDs 43.3/g 49.0/g LOWEST 20 PERCENT OF HOUSEHOLDS 7.0/g 4.0./ LOWEST 40 PERCENT OF HOUSEHOLDS 18.0_/g 12.0 .. POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN 107.0 157.0 389.0 279,2 RURAL 66.0 101.0 238.0 178.6 184.1 ESTIMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) LRBAN .. .. 242.0 403.6 518.0 RURAL .. .. 257.0 285.6 371.1 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN - 51.0 38.0 28.0 22.1 RURAL 49.0 45.0 45.0 30.9 Not available Not applicable. NOTES /a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among the indicators depends on availability of data and is not uniform. /b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1978 and 1980. /c Excludes the es-Spanish Sahara; /d 1976; /e 1977; /f 1975; /g Consumption expenditures of households. May, 1982  - 21 - AnNEX I DEyiNfTlyrlS OF SOCIAL IrtDtTATOa. F Notes nk ..lty rh. date are denti frel arra generally jdgad it. ous ehort-tt- and ro..lle.. it ahold alno ho tu-d thor rhay on rot hanotor- ntoaly ooyt Nletcoen. of tire lah of e "drdrnofieirtt I od conet te-d by dffl.lro cotn c l,llninrh dtt. Tirhoi am.aota thla. af.l to d-ne0oorai of geie-da. indicete treds, edo,i rs o -tla eti. eslor ditfar...eLoec. -anuoctit.. T'he eo, n eer r 11 teee cotyrnp of rihs eobjat ountry and (21 onr group nirh o-ochat hiahe onoroha iLco thou ciro toeehy groOp of the u IFncunr IsI. t o Hg loon Olinotr"fo-aytar "HitdaIne North Atrlc- da diddle hoot" La cc...c hncao of -n-oe1a eeoio-cnitoraIoftinirteti. I the nefaraeoaoruap data th avr-_ neppeatnoo -gte -eithantico -n for nec hld..a.o andran ony hr majoityof oa ccatiss o agono 'to dta fe tan ndlntur doz th cooneg ofc...rt..amae te idl. o drada-ndr o tn aotlei-it ofunt and is or titor. tantie ucet h eorvciad in rlaefag neteger f nan idlcateroannthar Thone ntnnteaato onld erulol n- cnnpL. tghrhooolaeoo on ndc to at a ties ot rol coutry sad rafse-o.... 0a AORA Iohona..o. s....Iltfn d ho-oteal io - tota, orton.,admyl-hplto tl Coal-Totla taf- arnatpten lad -rb and LIniadoaee 1919 data. urian aide..rall di,ia hy thei -oponl- cnooof honpetal. node oogtcltoosi -tic of otetnaltoro ores asd tuepo-rrly orPnrn..sly -nilorle Id palte and prioo oteio- yuille hospitl onna for cops,yaennre .nahht and liensetare- ornolt t_IIo 1919 dat. 'a Ibllntaci..on arr.' Hupirl ann ou nlnhrco.n vnaxnyo a IN? Pi CAP_ITA IlS)j GNlP ye- aioarstea orn -atht picts ca- hlar are cot inclddn.Slne hotyifas fih no._ lo heoIlci cnlarad he eans connr hoe. enthod ne WolId tak Otlar 1197640 httti .96d. au ediol00 e o Inannl fa hY a .nhal ba that hya 170 an 580 fat. eaiol elona.trt,ndtf et. hc ufrl-ncnrooa EfLtRiY COcNCf@TIOt PrO CAPITA - .noou onneupsyrton of oocaPoun caltcl pneea . r..h. pla on: -l4d Info yelnlonpalinelhoio IrbttL teolore ofca n e lnt ee capta li960, 1i70, nod 1919 onet potlndhnprl r i_duce colt _no tota. data. dI.lrioeoo eec do101nyia tao - hel. _oot_ of dneeni..t to -e dtoha-aue iron hoo.pltolt dlnidnd hy cnn -uhc of hade. yll.o Te 1h 1h SATISTICSOOSN Moa(oelfa.Hi-otIhoosandn) -nof inly 1; ff60. 1970. oaf li9 dl0N dat. hoard- Sito of Ifl-uhold(crnoe joouadf-ot.ucb,adoal frbn nulta (prRo fcool -ftn of -rhat no nnI.p. na. on h-othold -oniota of a trop o2finevcdl 1Onadrn ioit qoarttro ditierent defnt.ii... ofaen araray affen.., ately of-t e hlrmtsl. badeo lodlto-ay o a eioao r f neont ocuntrias; hobO,~~~~~1111 1900. end l9l0 dan.rha hnoecod fruoitnlporyna.. 1Por-ola,iLn Pnftt.oeA dtern ntar of cretnrtoettl ron o ocI- ut oo P"oatn prebr for aersl ty rotse tont f thren -I ..laes- otpid acs ing lif. sPopate..cy an birth itroaognth cetePar capita taos deas o... tict l eern-ectY 1 oLf -nnlit.a - -oa.an. nb on len, en d female lifa enoonY -bhriitg, an 77.5 yar h na Cooottoel dullg niniR dlnotinity itlilu Ma ern_nrn an pert -a-~ a Iee o harell iy m ale dretre Hn ase declie i of totti, nebor. nod r-en d-allinga.. rett-lnnl. inhconr is the ..lgs onu of Ih,,, oeoniaiaaof ae-1liy EDCATICCON and frrtiliny Irenf far prlanr_ine puposs -tund te ... II- notio thebirh trn e Ioa no the ne- n eas edonoregsbccyr ft-nllfxoIo allY roe o'.doIrlo-r Inn n acntgeo c os rylnars. ilce... exactly.The o.lat.o.ary popalatlotsle o ooutrIaeIthucioLel enoalnt rotti .la nay ren-d 110 esrctot reisr Ixtoheeso. c rjci hrttica fteyylcc nc ooppi r bhaley on oh1 nor th. ificial -ctoL r ho the Y-er 2000, ned therat of. ea lie at fri'lty rate1 to stloce coodo-yecao1. ttl,voeat eol -d teataureConday Vsten.1 td-cai-orqireo I...foe Yrra ofactooy- ay orccto Pete ..foa . onnoatn Ia r-scid - Th. Yeo oh.. f-tlic-y S Inabxproer aoel oa be, rtethertenn lnrc o fat 9aplb -nonl o rahd. a...l of, . l to 17 yetn n ag;ceepuuoeoocnra. urn grnre-ly Per oo. as- ttdyo pplnanppuorn hila-ta Il acaae t aocna ne-oln...roroot-oftoouP I nvv V- tot ..nuo lo-it-t cot l acn; 19hf 1~.71971nd17 oara.-cldnte-hxncn1~i. ndorIn, OP onnt-rab-n -tchooac iednped- Per en. ha.. etricoltoral iaed - Toepotad us ab.x. for upiolnrl od -tnip -e stfpenee ttnnay oatea only: 1960, 197t ted 1979 date. yoi-rcherrto-piay-n endrn-Itlsono noldI PaainAn. Inroucor Ipnet-ihid-e 10-14 y-an. nocio-er1- prmay and a_onory enIt..1 diVidad hr xeo-rt nf teteIo the hA y-arr I,ed -stico 15 Peers and ovr) o acens fnfpa ou ornodc eea lathan; 1960, 1970. oud 1980 data. .oalt on-r-c rate Ip-t..nt - Linoronna~dultn (obls to crd aooo-inn) PopuIlaion cr-th net (nercern) -oct01 - e-en groethcra of' tots ed- ueoy ..cnetngeof rural wdelr onnto gad 11 d-r end over. ma pylaln a 195-At9Wh-73I..od 1970-ti. le-iax far 1950-60. 19h0-l0. and 1970-dO0. faeosvCr arconndyvloln Ot ttetco atrot roto Crude Oierh nate tearoh-neol, - ..o.a Ine hirthe per thon...da of ord-yoar coeostx boa ih-n e1igc pot...ncaatahnc hoorro -an yneoeo; O. 19 70 n 190 dor. siitcaeyohiclna. popolati_x; 1990. 1970, no 90dt.honcest arn polio par croun.ed of P.pltc;ea oe 0 oe-anlrpuat-v plrio if oh. euerer presen aa-epeifi bctn- onteun in fteac; data for rcr yearn map net brono It ni... ....t rte; aolly f ior-yo --bras neding ia 1960. 190.ad 1980. -ne -oooiee to.lilhdlcneg menyPladoong A-orrenro dot-a (olho.a-del onnlcno f aornr VOooea(e faadyylno)- CO cr-ine for. hI tceac ohIrt-or ietoer nod-r -opines of n-niona famiy lanno yogen nne_ poilipr hno.a.d-penoca molden c1ieedTIorano- r fascin Panning arste rercantof earr-d snar - Parce..inge of esvrnn o-ntrias and in year h.. rney o of 15cr r ann ofhild-b-ati ape z O-AA y ,se)ah onebeth-conro d-xic.n. heear Ira. o ettasr. oenln ho h vre oie- all maried aa no ar agagtp. oiioofdoily -. enrlI-rer-nn-papnr def aidnIayniodicnl polccunfotd premarly ont crt. ~ nee re ri ncideer feWD OtO MoRLyTtlIn tn h demo I if ,Ppe.r. or Ioa.t Ione~i -nner. Inden o food ranuetir err aoirn 1969-yI'll0 - lodno of Par captaanca Cinn_ Anun "Iodo p-er- Cap it. per crar - toned on the dr f yrodetin ofallfun cnsndilra -1neoin ldes seed aa eoadfokn odntn tire y-e, itoinding anel-a... to drierItcoe te on nairedar yesr one Ia. Co-dicieetnvar plisary gne eg euacsad enbila ni inatnad of trfoc are dibla- en t utlentierta (eg.aofeen baaar acld.d). Aggreg.tt evdu Inof .ach eneetry is cae or. Ic iFORC otnlaregs p-ad.c-po siht; 91-65 . 1970. aed 1980 deta, Total Labor torte :theosadsj-foanal aaisytao,teatq Poe aapica noPPir fclrs eo of ofruerat)- Coapntnd trs me It rce -d cnpor o ald h.nnam ... udotne. amadt energ eqotn-l- of err food euppliee availble Idce-oey per cepirn covora poynlact.of a all ogs. lufinici-u ho o-ria..eo-orieiet Per da. rA-ilalbl cepla aoo na oai y-odaetlo, lepoe laa-aro -baala; 1960, 10)70 an 196 dor. anere,ad oh.ngee In stn.-t soplassnlde -xima faad, eneds, Feae(orai - Pti ao u oPereoneagef tota labto icoco, _eentxeasdL.fndpanei_dan leash dnrielo. anio hrconarl-rYe)- aorfot i or-g,-oory anie n attn ar aeletd by PA0 baIad a ptyhloiaI oes o oralal- fi.ichm no pere...ntge of tonal labor force; 1960. 1970 an,d 1960 fota. very end haalhbaeidre nnnrnse-l nsneeanL. hod..y airbs,as n_er (eoe - Lber foros itcie. cosenoitLtngonto and an tatihetonof P7ylta,I old siloin 10pren lo nas an on lcrctySer e esnpr eg of ittel c-n fare C ~~~~~~~~~~~~h..o.-Id Iloo; 1961465. 9190 ed 197) daa,1 IO17 oef lIrd eo ne neYof ro erdy etdpl og toad .. I rfodebn , in- co .oty .tns eta co-p-ra a -Ie . a . and fm Le eor force qatreanr foral -onnir oerod iebrd by USDA pranife for ennma pecocns of ard eoedfac oaabo foloerectr loeceof '60 irn f on puro e n and 10 gtss of aumladbr,17.ndhgdt,Coonah eadon tloyriciatnrev pules yrti.of eth 10 gree lthad h nmlpeen _Tedse inane Iontnu g-r conr fteoplto.adlo cunrf -rde ore los throh t- of 75S goe of ltona protein ond 23 genes at fee.. na -rtn ore Iran n-i-nun..o. * anamal~~~~~~.._ pertai ae at o_-rg Ion thd enrld, prope-d hy fd no t1he Thind ""on I aotvu fato - tame of "pop-inco unfo 15 and h5 nod o Wn-1d Fond Serve; 1961-65,I90ed17 aa to rho Iocl bierfoce FIr -Iln. rey ro-anealan ynlooPrnreh nRpplr of food d- res een-d eadpissh oe per- dey; 196-5. 1970 atd1977 dent.. ixCaro DISTRIBUTION iChtlf (ono - ) DI-Ih tote Inst thaordl -oenL deaths. per thooe..d. letIorts f pI'nonnn Iccoe (7.ho LEphlone -rcoa a ..cec-ecbt r-cla egeirnnpl-Amnar,oaheldr-s i lhoisatSo goooerure"I xlpil,t.o.... I prcor, rc-alotfat enr . - otoo 11 rooo-adyout--loanr nrire data deri-e fIn life alo 1960. 1970 end 96 deO o olh-hO thtlOO. unon ya~~~~~~~~~~~~~~~~~~~?VrTy-i TOARCT 1601P0 loft ftectnnooat Oirn years) -l.xrge e-b-ar o yea-tIf Lifeym unn -Ito hollon va earnat y opproobanr onoo of Po.rt. Y -loot 00 hie; IOnO, la .od 1961 Osta.ndoolctcrvrad ih ooed-ocen_n Inflot Oaoltlco ac Ip oar ..anr -,oooo deaths ftloaaor onecat fr oatf .tAl-noe yo--n cet -Ioal coo~ -- -v en o-nIocdtal- tsr of people (total. arhLoan. andorotallieirbrnaqn-ablaapore...o.na n1fomoahl ooreiareu- tan aint .Plo rsonl e ocee o iTna ous. l; Icn nmnano lelua ootoc Oeoe -cor-oe toosr- 'Iro hol(rnt rescbl nea al lappl l y htth otatao neaeo the,, hoe l or-ora -b Perocr forcahacu- --oa fo rrl) hbmeaulc _ootnoo_ oyeneIerepom--arel n of the da ... tancanog-B. ircearob t ietnoa_ oercoo -o ooult tn coccI IIor I, and oAc er Eofreol (totl, oIrat eo ote) ertd 9 eta elopoal pecette f hbrener v yeIotIore, acta jpoo6 myhocd hooainper- ycac-Popnlnrine diondr ocy ...hot of praccielug phyei- ~coeccoSocIa Ont D-otaco aeon enliied rom aendial ehanl er oi ...le lae. iooaoo.nIS 00 ytc7nt-on ...r. t Popnlnior em Ooshon rmnne- Popinrio Onoided by ocer of ynacta he na 1001  - 22- Population : 20.8 million (mid-1981) ANNEX I GNP Per Capita: US$ 870 (1981) Page 4 of 6 MOROCCO - ECONOMIC INDICATORS Amount (million US$ at Annual Growth Rates (%Y current prices) Actual Projected Indicator 1980 1977 1978 1979 1980 1981e/ 1982 1983 1984 1985 NATIONAL ACCOUNTS Gross domestic product a/ 17820 6.0 2.2 4.8 3.6 -1.3 4.0 5.1 4.5 4.3 Agriculture 3229 -12.3 18.0 -1.7 6.2 -23.0 7.0 9.6 3.1 2.5 Industry 5752 8.0 -0.9 7.7 -2.5 -0.5 3.7 4.6 5.4 5.1 Services 7762 8.5 4.0 5.1 6.4 3.4 3.7 4.3 4.3 4.3 Consumption 15770 5.3 4.2 5.8 2.5 2.2 1.3 4.2 3.5 3.6 Gross investment 4025 15.6 -25.9 1.3 -7.3 -3.6 6.5 -1.1 3.7 3.2 Exports of GNFS 3273 10.3 3.3 0.9 3.7 3.5 4.5 7.0 6.3 5.3 Imports of GNFS 5247 14.5 -17.4 3.3 -9.8 10.7 -1.9 -0.6 2.2 2.3 Gross national savings 2606 1.5 -15.4 3.2 6.0 -20.6 9.5 15.6 13.2 1.7 PRICES GDP deflator (1969 = 100) . 172.0 186.5 200.2 218.4 241.2 Exchange rate (US$ per DH) . .222 .240 .256 .254 .193 Share of GOP at Market Prices CE) Average Annual Increase (%) (at current prices)d/ (at constant 1969 prices) (at constant 1980 prices) 1960 1970 1975 1980 1985 1990 1960-70 1970-75 1975-80 1980-85 1985-90 Gross domestic product 4.0 4.6 5.1 3.7 5.1 Agriculture b 29.1 19.2 17.9 18.1 17.1 15.1 3.5 -2.1 3.8 2.5 2.5 Industry b/ 23.5 27.2 35.2 32.3 34.9 35.8 4.7 7.1 4.2 3.9 5.5 Services b/ 47.4 53.6 46.9 49.6 47.9 49.1 4.1 5.5 5.9 4.0 5.5 Consumption 89.2 85.5 85.5 88.5 87.7 84.0 4.1 4.8 5.8 3.0 4.2 Gross investment 10.3 18.5 25.4 22.6 20.0 20.0 6.0 9.3 -2.8 2.0 5.1 Exports GNFS 27.4 17.6 22.5 18.4 20.5 22.7 1.3 2.1 4.9 5.5 7.1 Imports GNFS 26.9 21.6 33.4 29.4 28.7 26.7 3.5 8.1 0.5 1.7 4.0 Gross national savings 11.0 14.8 19.3 14.6 14.5 17.9 3.5 15.3 -4.4 3.0 10.0 As X of GDP 1960 1970 1975 1980 1981 PUBLIC FINANCE Current revenues 16.5 16.1 23.3 21.6 23.3 Current expenditures 15.6 14.5 20.2 21.8 24.7 Surplus (+) or deficit (-) 0.9 1.6 3.1 -0.2 -1.4 Capital expenditure 3.8 5.7 12.2 12.4 12.6 Foreign financing .. 1.3 3.7 5.6 9.3 1960-70 1970-75 1975-80 1980-85 1985-90 OTHER INDICATORS GNP growth rate (X) 4.0 6.0 5.2 3.4 5.1 GNP per capita growth rate (%) 1.6 3.1 1.8 -0.1 2.0 Energy consumption growth rate (M) 3.8 6.7 5.6 4.3 5.0 ICOR 3.09 3.0 4.1 6.2 3.9 Marginal savings rate 0.10 0.38 -0.15 0.27 0.28 Import elasticityE/ 0.95 1.84 0.13 0.95 0.78 a! At market prices. b/ Share of GDP at factor cost beginning in 1985 and sectoral growth rates at factor cosc beginning in 1980-85. c/ Goods only. d/ Projected years at constant 1980 prices. e/ Estimates. fI 1977-1980 at 1969 prices, 1981-85 at 1980 prices. January 27, 1983 EMENA CP II-B ID 0180B P.1  Population s 20.8 million (mid-1981) - 23 ANNEX I GNP Per Capita: US$ 870 (1981) Page 5 of 6 MOROCCO - EXTERNAL TRADE Amount Indicator (million US$ at Annual Growth Rates (%)l/ current prices) Actual Projected 1980 1975 1977 1978 1979 1980 1981 1982 1983 1984 1985 EXTERNAL TRADE Merchandise exports (FOB) 2414 -21.9 10.7 5.3 1.8 5.1 1.0 4.0 7.8 6.7 5.1 Primary products 1823 -25.2 7.7 5.4 0.0 5.8 -8.1 1.2 3.4 3.8 3.5 Phosphate rock 765 -29.9 9.6 9.6 3.2 7.4 -5.4 0.0 3.0 5.0 4.0 Others 939 -22.3 6.5 2.8 -1.7 14.7 -10.0 2.1 3.7 2.9 3.1 Intermediate & manufactures 591 -1.4 23.8 5.0 7.1 2.8 27.4 9.8 16.3 11.8 7.6 Merchandise imports (CIF) 4283 21.2 14.4 -19.9 6.6 -7.1 9.3 -1.9 0.5 3.9 4.0 Food 720 37.8 0.4 8.6 2.2 3.4 32.5 -16.8 -0,9 2.1 4.5 Petroleum 1006 12.8 8.7 11.0 12.1 -11.9 10.8 0.0 -1.1 3.3 3.2 Machinery and equipment 805 51.7 26.7 -44.3 -3.2 -19.8 7.5 3.0 -2.5 4.0 2.9 Others 1752 4.0 13.0 -15.1 12.5 -5.2 -0.3 2.6 3.7 5.0 4.8 PRICES (1980 = 100) Export price index . 89.9 68.4 69.7 83.5 100.0 123.3 125.1 137.1 153.5 171.8 Import price index . 64.1 67.9 73.0 79.2 100.0 122.3 130.9 140.2 154.3 169.8 Terms of trade index . 140.3 100.7 95.5 105.4 100.0 100.8 95.6 97.8 99.5 101.2 Composition of Merchandise Trade (%) Average Annual Increase (%) (at current prices) (Constant 1969 prices) (Constant 1980 prices) 1960 1970_ 1975 1980 1985 1990 1960-70 1970-75 1975-80 1980-85 1985-90 Exports 2.0 -1.2 6.6 5.2 7.6 Primary products 89.5 89.4 86.9 74.4 60.5 49.1 .. -2.7 5.3 1.3 3.3 Intermediates & manu- 10.5 10.6 12.9 25.6 39.5 50.9 .. 8.1 12.1 14.0 13.0 factures Imports 4.0 9.1 0.7 2.4 4.0 Food 27.3 16.9 25.0 16.9 16.9 15.5 .. 14.0 3.0 0.7 2.4 Petroleum 7.4 5.5 10.8 23.6 23.6 22.4 .. 9.6 5.3 2.4 2.8 Machinery and equipment 6.7 24.1 24.0 18.9 18.7 19.2 .. 12.8 -7.0 2.4 4.5 Others 58.6 53.5 40.2 40.6 40.7 42.9 .. 5.5 2.9 3.3 5.1 Share of Trade with Share of Trade with Share of Trade with Industrial Countries (%) Developing Countries (%) Capital Surplus Oil Exporters (M) 1960 1970 1980 1960 1970 1980 1960 1970 1980 DIRECTION OF TRADE Exports 72.3 73.7 76.5 27.7 25.4 21.6 .. 0.9 1.9 Imports 76.7 74.9 72.9 23.3 25.1 8.3 .. .. 18.8 1/ 1975-1980 at 1969 prices, 1981-1985 at 1980 prices September 22, 1982 EMENA CP I0 -B ID 01808 p.2  Population : 20.8 million (mid-1981) - 24 _ ANNEX I GNP Per Capita: US$ 870 (1981) Page 6 of 6 MOROCCO - BALANCE OF PAYMENTS, EXTERNAL CAPITAL AND DEBT (million US$ at current prices) Indicator Actual Projected 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1990 BALANCE OF PAYMENTS Exports of goods and services 2288 2486 2955 3694 4364 4132 4087 4669 5401 6193 11297 Of which: Merchandise f.o.b. 1245 1283 1488 1938 2414 2283 2180 2575 3077 3618 7163 Imports of goods and services 3691 4364 4353 5268 5912 6095 5780 6276 6930 7734 12812 Of which: Merchandise f.o.b.a/ 2305 2820 2628 3245 3770 3840 4054 4365 4994 5714 9856 Net current tranfers 47 52 50 44 128 102 - - - - - Current account balance -1355 -1826 -1348 -1530 -1420 -1861 -1692 -1607 -1529 -1541 -1515 Special grants 435 360 260 420 314 313 84 197 320 150 232 Current account balance after grants -920 -1466 -1088 -1110 -1106 -1548 -1609 -1410 -1209 -1391 -1283 Private capital 38 53 45 37 88 68 76 85 96 106 171 MLT loans (net) 838 1338 1109 946 971 1205 1071 1425 1371 1666 1359 Official .. .. .. .. .. 1315 994 736 878 982 1092 Private .. .. .. .. .. -110 77 689 493 684 267 Other capital 28 68 -73 73 -200 17 .. .. Monetary movementsI/ 16 6 8 53 247 258 462 -100 -258 -381 -263 International reserves 548 609 772 917 814 508 470 543 653 787 1635 Of which: Gold 82 104 154 360 415 278 278 278 278 278 278 Reserves as months imports 1.8 1.7 2.1 2.1 1.7 1.0 1.0 1.0 1.1 1.2 1.5 EXTERNAL CAPITAL AND DEBT c/ Gross disbursements 725 1787 1182 1405 1567 1807 Concessional loans 111 636 325 293 750 1089 DAC 63 109 91 76 96 138 OPEC 41 507 189 168 584 837 IDA 4 3 - - 1 2 Other 3 16 45 49 69 112 Non-concessional loans 614 1151 859 1113 818 718 Official export credits 22 27 2 2 12 128 IBRD 59 68 72 137 64 129 Other multilateral 2 6 53 7 13 86 Private 531 1050 732 967 729 375 Suppliers credits 10 171 10 8 16 6 Financial credits and bonds 521 879 722 957 713 368 External Debt Debt outstanding and disbursed 2330 4069 5123 6182 7097 8381 Official 1250 1975 2456 2833 3482 4865 Private 1080 2094 2667 3349 3615 3515 Undisbursed debt 801 1024 2280 2337 2058 2901 Debt service Total service payments 162 264 547 798 1191 1340 Interest 66 148 252 410 618 738 Payments as 1 exports of G+S d/ 7.2 10.7 18.7 21.8 27.0 31.3 Average interest rate on new loans (%) 7.7 6.8 7.0 8.2 8.1 8.5 Average maturity of new loans (years) 11.7 13.1 13.2 15.9 13.7 8.0 As X of Debt Outstanding at End of Most Recent Year (1980) Maturity structure of debt outstanding Maturities due within 5 years 47.9 Maturities due within 10 years 88.0 Interest structure of debt outstanding Interest due within first year 7.3 a/ c.i.f. for projected years. b/ Projected values include IMF credits. c/ Years 1976-80 from IBRD External Debt Reporting System, 1981 from the BOP statistics. There are sizeable discrepancies in some years between the external capital and debt service flows reported under the IBRD Debt System and those recorded in the official balance of payments statistics shown in the upper part of this table. d/ Excluding debt service on IMF loans. January 27, 1983 EMENA CP I1-B ID 0180B p.3  - 25 - ANNEX II Page 1 of 8 A. STATEMENT OF BANK LOANS AND IDA CREDITS (As of February 28, 1983) a/ Loan or US$ Million Credit Amount (less cancellations) Number Year Borrower Purpose Sank IDA Undisbursed Twenty-six Loans Fully disbursed 672.6 Four Credits Fully disbursed 36.0 1018 1974 Kingdom of Morocco Agriculture 32.0 7.8 555 1975 Kingdom of Morocco Agriculture 14.0 10.2 1220-T 1976 Kingdom of Morocco Education 25.0 12.3 1416 1977 Kingdom of Morocco Agriculture 41.0 27.6 1428 1977 BNDE DFC 35.6 1.8 S-7 1977 Kingdom of Morocco Engineering 1.5 0.4 1528 1978 Kingdom of Morocco Urban Development 18.0 13.4 1602 1978 Kingdom of Morocco Agriculture 65.0 57.7 1681 1979 Kingdom of Morocco Education 113.0 103.1 1687 1979 Kingdom of Morocco DFC (SSI) 25.0 11.9 1695 1979 Kingdom of Morocco Power 42.0 41.0 1704 1979 CNCA Agriculture 70.0 21.7 1724 1979 Kingdom of Morocco Water Supply 49.0 22.8 1757 1980 Kingdom of Morocco Agriculture 58.0 47.3 S-18 1980 BRPM Oil Exploration 50.0 16.9 1830 1980 Kingdom of Morocco Highway 62.0 40.6 1848 1980 Kingdom of Morocco Agriculture 34.0 31.7 1943 1981 CIN Tourism 100.0 61.4 1944 1981 Kingdom of Morocco Urban Development 36.0 34.2 2006 1982 Kingdom of Morocco Water Supply 87.0 85.3 2037 1982 BNDE DFC 70.0 67.8 2038 1982 Kingdom of Morocco DFC (SSI) 70.0 70.0 2082 1982 Kingdom of Morocco Agriculture 29.0 29.0 2109 1982 Kingdom of Morocco Mining 9.5 9.5 2110 1982 Kingdom of Morcco Forestry 27.5 27.1 2114 1982 ONAREP Oil Shale 20.0 20.0 214911 1982 Kingdom of Morocco Education V 50.0 50.0 22171/ 1982 Kingdom of Morocco Agriculture 30.0 30.0 Total 1922.7 50.0 952.5 of which has been repaid 256.0 1.3 Total now outstanding 1666.7 48.7 Amount Sold 20.1 of which has been repaid 17.7 2.4 Total now held by Bank and IDA 1664.3 48.7 Total undisbursed 942.3 10.2 952.5 NOTE a/ Does not include the Housing Development Project, loan of W60 million, approved March 15, 1983; the Fourth Highway Project, Loan of $85 million approved March 29, 1983; and the Small-and-Medium Irrigation Project, Loan of $42 million, approved March 29, 1983. 1/ Not effective as of March 31, 1982. 4 B. STATEMENT OF IFC INVESTMENTS (As of February 28, 1983) US0 Million Loan Equity Total 1962/1978 BNDE Development Bank - 2.7 2.7 1966 CIL Canning Factory 0.9 0.5 1.4 1976 Marrakech Cement Cement Factory - 1.3 1.3 1977/i980 Temara Cement Cement Factory 4.7 3.6 8.3 1979 Agadir Cement * Cement Factory 12.5 2.2 14.7 1980 SOMIFER Copper Mining 13.0 2.3 15.3 1981/1983 Casablanca Cement Cement Factory 15.8 -2.1 17.9 Total Gross Commitments 46.9 14.7 61.6 Less cancellation, terminations, repayments and sales 16.5 3.5 20.0 Total commitments now held by IFC 30.4 11.2 41.6 Total Undisbursed 11.6 0.3 11.9 * Agadir Cement has been cancelled.  - 26 - ANNEX II Page 2 of 8 C. PROJECTS IN EXECUTION AS OF FEBRUARY 28, 19831/ Cr. No. 555 Meknes Agricultural Development Project; US$14.0 million of June 11, 1975; Date of Effectiveness: November 14, 1975; Closing Date: June 30, 1984. After a 2-year initial delay, project implementation has picked up momentum. Major activities concerned with the land consolidation and redistribution program have been completed in one district and civil works (roads, destoning and irrigation rehabilitation) have been started in the remaining three districts. Progress is slower than expected, mainly because project implementation has proven more complex than anticipated, wbich has been aggravated by project management problems. However, the first results of the completed components are promising. Because of the initial delay and the complexity in implementation, the original closing date was extended by three years. Ln. No. 1220-T Third Education Project; US$25.0 million of March 18, 1976; Date of Effectiveness: October 1, 1976; Closing Date; September 1, 1983. The project is designed to expand and improve primary and secondary education in rural areas and specialized training to meet manpower needs in education, agricultural extension, health and tourism. After an initial two-year delay, construction under the education and agriculture components is largely completed and funds are committed for the equipment and technical assistance components, but lengthy delays have been experienced in the implementation of the health and tourism components, for which a portion of the funds have been reallocated to the education components. Ln. No. 1416 Doukkala II Irrigation Project. US$4l.0 million of June 16, 1977; Date of Effectiveness: December 1, 1977; Closing Date: June 30, 1984. The project aims at extending irrigation and related agricultural development in the Doukkala perimeter by 16,600 hectares; it also calls for 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any problems which are being encountered, and the action being taken to remedy them. They should be read in this sense, and with the understanding that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution.  - 27 - ANNEX II Page 3 of 8 provision of extension and credit services, and village infrastructure. The land consolidation program and the enlargement of the main canal are proceeding according to schedule. Implementation was slowed down due to budgetary constraints facing Morocco in 1980-81 which caused a delay of about two years. Project implementation has resumed vigorously under excellent project management. Ln. No. S-7 Sewerage Engineering Project; UStl,5 million of August 30, 1977; Date of Effectiveness: August 18, 1978; * Closing Date; October-31, 1983. The project includes the preparation of a sewerage Master Plan for the Casablanca-Mohammedia region and of a first phase project. It would assist Morocco in developing the design and planning criteria for urban sewer systems and strengthening the institutional and financial bases for the development of this sector. Project implementation was delayed by about 15 months, due to administrative and budgetary difficulties, but studies were launched in May 1980, and are now proceeding satisfactorily. Ln. No. 1528 Rabat Urban Development Project; US$l8.0 million of March 31, 1978; Date of Effectiveness: November 21, 1978; Closing Date: March 31, 1983. The project is designed to improve living conditions of the urban poor in Rabat. It includes upgrading of slum infrastructure and social services in three squatter areas with a total population of about 60,000; an experimental sites and services housing scheme; an employment generation program; and related technical assistance. After initial delays, project implementation has recently improved significantly. Infrastructure works are under way and housing improvement loans are being made. Relocation to sites and services areas is under progress and some enterprises have started operation in the industrial zone. Disbursements, however, remain low and the matter is under review with the Government. An extension of the closing date is under consideration. Ln. No. 1602 Fes-Karia-Tissa Agriculture Project; US$65.0 million of September 6, 1978; Date of Effectiveness: February 18, 1979; Closing Date: June 30, 1986. The project aims at (i) improving the standard of living of about 33,900 farm families in the Fes-Karia-Tissa region, and (ii) contributing to the growth of agricultural production and to a reduction in Moroccan dependence on imported food commodities. These aims would be achieved through a reorganization and strengthening of agricultural extension and soil conservation services, training, the provision of credit and infrastructure. Although somewhat delayed, implementation is now proceeding satisfactorily, due to excellent project management.  - 28 - ANNEX II Page 4 of 8 Ln. No. 1681 Fourth Education Project; US$113.0 million on April 25, 1979; Date of Effectiveness: October 16, 1979; Closing Date: December 31, 1984. The project consists of the construction, furnishing and equipping of 11 technical high schools, a technical teacher training college, two higher institutes of technology, an institute of applied engineering and an extension of Mohammedia Engineering College and associated technical assistance. Implementation was initially delayed; however, most major contracts have now been signed and disbursements are expected to accelerate. Ln. No. 1687 Small Scale Industry Integrated Development Project; US$25.0 million of April 25, 1979; Date of Effectiveness: December 17, 1979; Closing Date: December 31, 1983. The project consists of support for a Government program to assist small and labor intensive industries through technical, managerial and financial assistance. The loan is fully committed, and earlier disbursement delays are being remedied subsequent to the recent introduction of simplified administrative procedures. Ln. No. 1695 Village Electrification Project; US$42.0 million of May 22, 1979; Date of Effectiveness: April 30, 1980; Closing Date: June 30, 1984. This project, which is the first stage of a 15-year village electrification program, would provide electricitv to about 60,000 dwellings in more than 200 villages throughout the country. Problems of interministerial coordination and budgetary allocations delayed project start-up for about one year. Orders have now been placed for most of the equipment but no payments have yet been made. However, implementation is well under way and the project is expected to be completed with only a slight delay. Ln. No. 1704 Fourth Agricultural Credit Project; US$70.0 million of May 23, 1979; Date of Effectiveness: December 5, 1979; Closing Date; June 30, 1983. The project aims at increasing Morocco's agricultural production thereby improving the standard of living of about 475,000 of Morocco's farm families. The project covers most of the Caisse Nationale de Credit Agricole's (CNCA) medium- and long-term lending program and farm investment program through mid-1983. Cofinancing of $75 million is provided by IFAD and the Federal Republic of Germany (through KfW). CNCA's on-lending as well as repayments were severely affected by the 1980-1981 drought, slowing disbursement of the Bank loan. Disbursements have, however, accelerated and are expected to be completed by the closing date (including funds from cofinancing sources).  - 29 - ANNEX II p. 5 of 8 Ln. No. 1724 Second Water Supply Project; US$49.0 million of Julv 2, 1979; Date of Effectiveness: February 4, 1980; Closing Date: June 30, 1984. The project is designed to improve access to safe water supplies for the population of the Mid-Atlantic Coast and the Greater Agadir area. It consists of: (i) the expansion of bulk water production and transmission facilities along the Mid-Atlantic Coast; (ii) the expansion of bulk water * production and transmission facilities in Agadir; (iii) the establishment of a revolving fund to facilitate house connections for low income families; and (iv) studies on accounting and management systems. Administrative problems created some initial delays, but there is strong demand for the credit facilities for low-income house connections. The project is now proceeding satisfactorily and disbursements are expected to increase accordingly. Ln. No. 1757 Vegetable Production and Marketing Project; US$58.0 million of November 15, 1979; Date of Effectiveness: April 17, 1980; Closing Date: June 30, 1984. The project is the first phase of a long-term program for development of off-season vegetables for export. W5O0. million of the loan is to be on-lent for long and medium-term farm investments and incremental short-term production costs of vegetable quality control centers, for two small producer packing stations, and for seedling greenhouses benefitting about 8,000 farm families and creating seasonal employment. The balance of the loan would help finance infrastructure in the project area, and technical assistance. Implementation is proceeding satisfactorily. Overall production did not progress as scheduled due to two cold winters, but greenhouses, which have resisted frost fairly well, are gaining acceptance with the farmers and the prospects of rising production are promising. Ln. No. S-18 Petroleum Exploration Project; US$50 million of May 19, 1980; Date of Effectiveness: October 24, 1980; Closing Date: December 31, 1983. The project aims essentially at accelerating the Government's petroleum exploration and development program. It has recently been transferred from BRPM, the original Borrower, to the new petroleum development agency, the Office National de Recherches et d'Exploitations Petrolieres (ONAREP). The project also provides technical assistance in prospect evaluation, analysis of results of exploration, and exploration management. Drilling so far has shown encouraging results, particularly as regards natural gas prospects and has recently focused on appraising the Meskala gas discovery. Procurement problems initially hampered project implementation but the loan is now fully committed. Administrative problems (due to the loan transfer) have also delayed disbursements.  - 30 - ANNEX II p. 6 of 8 Ln. No. 1830 Third Highway Project; US$62.0 million of May 19, 1980; Date of Effectiveness: September 29, 1980; Closing Date: June 30, 1984. The project comprises (i) a three-and-a-half year time slice of the Government's pavement strengthening and preservation program; (ii) strengthening and management of the road maintenance program and (iii) technical assistance for the Ministry of Transport to improve transport planning and to study road maintenance. The pavement strengthening and maintenance activities are progressing satisfactorily. Disbursements have lagged due to delays in payment of contractors as well as transmittal of reimbursement requests to the Ministry of Finance, but have recently accelerated. Ln. No. 1848 Loukkos Rural Development Project; US$34.0 million of December 22, 1980; Date of Effectiveness; September 30, 1981; Closing Date: June 30, 1987. The project should increase incomes and productivity of very poor subsistence farmers in the Loukkos Basin by reversing the declining trends caused by soil erosion and inappropriate farming practices. It consists of: (i) development and erosion control works on 15,000 steeply sloping hectares in Upper Loukkos; (ii) development of field crops and small irrigation improvements in Middle Loukkos; (iii) establishment and maintenance of pine plantations in the Izarene Forest; (iv) construction of roads and social service facilities in the Project area; and (v) execution of a cadastral survey on about 500,000 hectares of land. Once proven, the project implementation methodology could be widely replicated throughout Morocco's mountain and steppe land. Project implementation is progressing satisfactorily. Ln. No. 1943 Fourth Hotel Development Project; US$100.0 million of February 5, 1981; Date of Effectiveness: April 9, 1981; Closing Date: December 31, 1985. The project provides funds over a three year period to the Credit Immobilier et Hotelier (CIH), a Moroccan development bank specializing in the tourism and housing sectors, for the development of tourism hotels. It also includes studies for developing policies in the tourism sector and training of CIH staff in appraisal methodologies for tourism projects. Commitments and disbursements have been extremely rapid. Ln. No. 1944 Second Urban Development Project; US$36.0 million of April 16, 1981; Date of Effectiveness: August 4, 1981; Closing Date: July 31, 1986. The project consists of the provision of shelter, basic services and employment to low-income urban families through a program for slum upgrading,  - 31 - ANNEX II p. 7 of 8 sites and services and provision of serviced land for small-scale industries, to be implemented in the cities of Meknes and Kenitra. Assistance is also provided to strengthen the municipal services of the project cities. Implementation is on schedule, due to the efficient coordination through the provincial Governors' offices, but some delays in approval of contracts by the Ministry of Finance have occurred. Disbursements remain low due to administrative problems, currently being examined by the Government. Ln. No. 2006 Third Water Supply Project; US$87.0 million of September 28, 1981; Date of Effectiveness: March 15, 1982; Closing Date: December 31, 1986. The project includes the construction of two regional water supply systems and the expansion and upgrading of the water supply facilities in about 32 small towns scattered throughout Morocco. It would also provide revolving funds to facilitate house connections for low income households, equipment, technical assistance, training and studies. Project implementation is progressing satisfactorily, although disbursements have lagged. Ln. No. 2037 Ninth BNDE Project; US$70.0 million of November 3, 1981. Date of effectiveness: November 2, 1982. Closing Date: December 31, 1986. The project includes a pilot component in the line of credit to BNDE, to finance export-oriented industrial sub-projects. The project also focusses on strengthening organizational aspects of BNDE in the field of project appraisal, portfolio monitoring and export promotion. Effectiveness was delayed due financial and to managerial problems, which have since been remedied. Ln. No. 2038 Second Small Scale Industry Project; US$70.0 million of November 3, 1981; Date of Effectiveness: February 24, 1983. Closing Date: June 30, 1986. The project comprises (i) a line of credit to the Government to be relent to BNDE and commercial banks for relending to small scale industries (SSIs); (ii) financing of the foreign exchange costs of technical assistance provided by the Government to SSIs; and (iii) financing of studies relating to the structure of incentives for SSIs. Ln. No. 2082 Middle Atlas Agriculture Development Project: US$29.0 million of March 5, 1982. Date of Effectiveness: November 30, 1982. Closing Date: June 30, 1988. The project consists of interrelated forestry, range and cropping land development to bring about production increases of meat, milk, fodder, cereals and wood, on about 600 ha. in central Morocco, as well as to raise income and employment among the target population.  - 32 - ANNEX II p. 8 of 8 Loan No. 2109 Small-Scale Mining Project: US$9.5 million of April 14, 1982. Date of Effectiveness: November 19, 1982. Closing Date: December 31, 1988. This pilot project would increase the productivity of small-scale lead and zinc mining operations through provision of equipment and facilities, as well as credit to miners, in a remote region of Morocco thus increasing exports and raising rural incomes. The project would also strengthen the financial, technical and administrative base of CADETAF, the implementing agency, and finance studies as a basis for future expansion of mining activities. Implementation is proceeding satisfactorily. Loan No. 2110 Forestry Project: US$27.5 million of April 14, 1982. Date of Effectiveness: October 28, 1982. Closing date: June 30, 1988. The project consists of destumping about 30,000 ha of eucalyptus plantations and degraded oak and cork forests and replanting with eucalyptus, pine and acacia; upgrading and construction of forest and access roads; pasture improvement over 2,000 ha; and technical and institutional support. Project implementation has commenced satisfactorily. Loan No. 2114 Oil Shale Engineering Project: US$20.0 million of April 14, 1982. Date of Effectiveness: February 25, 1983. Closing date: September 30, 1986. The engineering project would finance studies and the construction of a shale retorting test station to generate information and analysis on the characteristics of Moroccan oil shale resources and on the technical and economic viability of alternative options for their development. Project implementation is proceeding slowly. Loan No. 2149 Fifth Education Project: US$50.0 million of November 5, 1982. Not yet effective. Closing date: March 31, 1988. The project is designed to improve the effectiveness of primary education and support expanded science and mathematics teaching at the senior secondary level, through construction of four senior secondary teachers training colleges, 40 rural primary schools and the provision of teaching aids to about 700 primary schools and related technical assistance. Construction of physical facilities is underway although there have been delays in defining the terms of reference for the proposed technical assistance.  - 33 - ANNEX III KINGDOM OF MOROCCO PILOT PROJECT FOR COMMUNAL INFRASTRUCTURE FUND SUPPLEMENTARY PROJECT DATA SHEET Section I: Timetable of Key Events (a) Project Identification May 1980 (b) Time taken by the Borrower to prepare project: 16 months (c) Agencies responsible for project preparation; Government and Fonds d'Equipement Communal (d) First Bank mission to review project: February 1981 (e) Date of departure of Appraisal Mission: June 1982 (f) Date of completion of negotiations: March 25, 1983 (g) Planned date of effectiveness: September 1983 Section II: Special Bank Implementation Action None. Section III: Special Conditions Effectiveness 1. Employment of the advisor responsible for assisting FEC in appraising and supervising sub-projects (para. 53) 2. Execution of the Financing Agreement between the Government and FEC (para. 54). Other Conditions 3. All FEC's projects, irrespective of the source of refinance would be subject to the appraisal and supervision criteria acceptable to the Bank (para. 52). 4. Refinancing from the Bank would be limited to a cost per sub-project of DH 6.5 million ($l.O million) for sub-projects to be carried out by LCs and to an amount of DH 5.0 million ($0.8 million) for sub-projects to be carried out by Regies (para. 56). 5. All sub-projects to be refinanced by the Bank would be submitted to the Bank for approval (para. 56). 6. Submission to the Bank of an organization plan by October 31, 1983 (para. 58). 7. Completion of staff recruitment and submission of training program to the Bank by January 1, 1984 (para. 59). 8. Annual review of FEC's capital requirements and interest rates beginning in 1983 (para. 62).  -I i  __________________________ ________________________ ~~~~~~~IBRD 15252 SPAIN/0,0 ITALY,, rOCET,/O~- to . PORluX r7JslA - ., , -36