Philippines - Regional Cities Development Project

Document of The World Bank FOR OFFICIAL USE ONLYF F ILE COP.Y Report No. P-3380-PH REPORT AND RECOMMENDATION 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$67.0 MILLION TO THE REPUBLIC OF THE PHILIPPINES FOR A REGIONAL CITIES DEVELOPMENT PROJECT March 11, 1983 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.  CURRENCY EQUIVALENTS Currency Unit = Peso (P) US$1 = P 9.0 Pesos 1 = US$0.1111 ABBREVIATIONS AND ACRONYMS CPO - City Project Office MED - Municipal Enterprise Department MHS - Ministry of Human Settlements MLG - Ministry of Local Government MOB - Ministry of Budget MOF - Ministry of Finance MOTC - Ministry of Transportation and Communications MOTI - Ministry of Trade and Industry MPWH - Ministry of Public Works and Highways NEDA - National Economic and Development Authority NHA - National Housing Authority RCDPO - Regional Cities Development Project Office SIR - Slum Improvement and Resettlement FISCAL YEAR January 1 - December 31  FOR OFFICIAL USE ONLY PHILIPPINES REGIONAL CITIES DEVELOPMENT PROJECT Loan and Project Summary Borrower: Republic of the Philippines Beneficiaries: The National Housing Authority (NHA), and the cities of Bacolod, Cagayan de Oro, Davao and Iloilo (project cities). Amount: $6/.0 million equivalent, including capitalized front-end fee. Terms: ZO years, including 5 years of grace, at the standard variable interest rate. Relending Terms: The equivalent of $21.4 million and $21.5 million of the loan proceeds would be relent by the Government to NHA and the project cities, respectively, at 13% for 20 years, including 5 years of grace. The loan balance (excluding the capitalized front-end fee of $0.5 million) would be provided to various Government agencies as budgetary allocations. NHA and the project cities would pay the standard commitment fee and front-end fee on their portions of the Bank loan. The Government would absorb interest rate variations, and would bear the foreign exchange risk for the entire Bank loan. These relending arrangements are justified in view of the need to avoid administrative complications and to facilitate the cities financial planning efforts which are now being enhanced. Also, based on projected rates of inflation during the project implementation period, the proposed relending rate of 13% would be positive in real terms. Project Degcription: The proposed project is the first multi-sectoral urban project in support of the Government's regional development strategy. The project aims at reducing infrastructure bottlenecks to economic development in the project cities, providing basic urban services, and improving the project management capabilities of the cities and the participating Government agencies. The project includes: (a) construc- tion, rehabilitation or upgrading of urban roads and the provision of road maintenance equipment and vehicles; (b) improvements in drainage, solid wastes management and sanitation; (c) provision or upgrading of municipal enter- prise facilities including markets, slaughterhouses, bus terminals and a livelihood zone; (d) improvement of shelter conditions through the provision of about 16,500 serviced and upgraded plots benefitting about 133,000 people, about 660 serviced plots for small businesses generating employment for about 6,500 people, and building materials loans for residential structures; and (e) technical assistance for project implementation, institutional strengthening and preparation of future projects. This document has a restricted distribution and may be used by recipients only in the performance of 1 their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - The project's main risks are related to management and coordination of implementation, and possible poorer than anticipated improvements in municipal revenues. Prov:Lsion of technical assistance and other measures proposed under the project to strengthen the involved institutions and to improve city collection systems and revenue bases are, however, expected to minimize these risks. Local Foreign Total Estimated Cost: / ---- ($ million) ----- Streets and road maintenance 9.5 8.0 17.5 Drainage and sanitation 4.8 5.6 10.4 Municipal enterprises 7.0 2.8 9.8 Shelter 15.9 5.6 21.5 Land 8.0 - 8.0 Technical assistance and training 5.6 8.4 14.0 Subtotal 50.8 30.4 81.2 Physical contingencies 4.5 2.7 7.2 Price contingencies l6.Z 9.5 25.7 Total Project Cost 71.5 42.6 114.1 Front-end fee on Bank loan - 0.5 U.5 Total Financing Required 71.5 43.1 L14.6 Financing Plan: Bank loan 27.7 39.3 67.0 Government 32.3 - 32.3 Project Cities 11.5 - 11.5 Urban Engineering Loan (2067-PH) - 3.8 3.8 Total /1.5 43.1 1L14.6 Estimated Disbursements: Bank FY 1984 1985 1986 1987 1988 1989 1990 ------- ($ million) ---------------- Annual 1.3 6.3 16.9 20.4 17.1 4.0 1.0 Cumulative 1.3 7.6 24.5 44.9 62.0 66.0 67.0 Rate of Return: 27% (weighted average of components comprising 62% of total project costs). Staff Appraisal Report: No. 4094-PH, dated March 10, 1983. Map: IBRD-16595 /1 Excluding identifiable taxes and duties from which the project is exempted.  REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF THE PHILIPPINES FOR A REGIONAL CITIES DEVELOPMENT PROJECT 1. I submit the following report and recommendation on a proposed loan to the Republic of the Philippines for the equivalent of $67.0 million, to help finance a regional cities development project. The loan would be repaid over 20 years, including 5 years of grace, at the standard variable interest rate. The equivalent of $21.4 million and $21.5 million of the loan proceeds would be relent by the Government to NHA and the project cities, respectively, at 13% for 20 years, including 5 years of grace. The loan balance (excluding the capitalized front-end fee of $0.5 million) would be provided to various Government agencies as budgetary allocatiions. NHA and the project cities would pay the standard commitment fee and front-end fee on their portions of the Bank loan. The Government would absorb interest rate variations, and would bear the foreign exchange risk for the entire Bank loan. The relending arrangements are justified in view of the need to avoid administrative complications and to facilitate the cities' financial planning efforts which are now being enhanced. Also, the proposed relending rate of 13% is expected to be positive in real terms given the anticipated inflation rates in the Philippines. PART I - THE ECONOMY 2. An economic report, entitled "The Philippines: Selected Issues for the 1983-87 Plan Period" (No. 3861-PH), was distributed to the Executive Directors under Sec.M82-542, dated June 16, 1982. A special report, "Aspects of Poverty in the Philippines: A Review and Assessment" (No. 2984-PH), was distributed to the Executive Directors on December 1, 1980 under Sec.M80-919. Country data are given in Annex 1. Performance in the 1970s 3. During the 1970s, the economic performance of the Philippines improved considerably, raising the GNP growth rate to almost 7% at the end of the decade. The ratio of fixed investment to GNP rose from 16% to 25% during this period. Half of this increase was in the public sector; the ratio of public fixed investment to GNP rose from 1.5% to 6.5% during the decade, reflecting substantially expanded revenues and improved implementation capacity. Export growth was accelerated, particularly in nontraditional manufactures, while growth in imports of oil and consumer goods was restrained. Overall, expansion in agricultural production was quite rapid, and rice deficits were eliminated in the second half of the decade. Population growth slowed in the 1970s. However, the economy still has a number of structural problems. Most important, the efficiency of investment has been low, particularly in manufacturing industry producing for the domestic market; industrial employment has not expanded rapidly enough; and poverty is still widespread.  4. The structural problems of the Philippine economy are reflected in the balance of payments. Improvements achieved in the early 1970s were more than offset by a sharp deterioration of the Philippines' terms cof trade since 1975, stemming from the oil price increases, accelerated international inflation, and depressed prices for major export commodities. Consequently, the Philippines has had to rely heavily on foreign borrowings to finance the imports needed to maintain growth and investment levels. Recent Economic Developments 5. The structural problems of the Philippine economy have been greatly exacerbated by the 1979 oil price increase and the ensuing international recession. Given its production structure, the Philippines was severely affected by the fall in commodity prices. The increased debt service put an additional strain on the balance of payments. Real GNP growth decreased to an estimated 2% in 1982. Agriculture continued to perform satisfactorily, but industrial sector growth deteriorated markedly. Recessionary conditions and a liquidity crisis in the financial sector in 1981 restrained private investment, although this was partially offset by a further expansion of public fixed investment to around 8% of GNP in 1980-82. The Philippine economy also suffered from a temporary acceleration in the inflation rate, which rose from 7% in 1978 to around 17% in 1979/80 before moderating to 10% in 1982. All these factors put significant constraints on the development effort. Real income per capita appears to have fallen, further aggravating the serious poverty problems. Development Strategy 6. To increase economic growth while holding the external deficit at a sustainable level, further structural adjustment will have to be achieved in the Philippine economy. The Development Plan of the Philippines for the period 1983-87 reflects the need for structural adjustment. The Plan outlines as the principal elements of the growth strategy: (a) efficient exploitation of agricultural potential for food, agro-energy, and export crops; (b) manufacturing development along the lines of comparative advantage, which would include primarily labor-intensive industries and selected capital-intensive industries based on domestic raw materials; (c) expansion of infrastructure necessary to support agricultural and industrial growth; (d) import-substituting investments and effective demand management in the energy sector; and (e) increased domestic resource mobilization and more efficient resource utilization. On the basis of this program, the Plan projects GNP growth to average 6.5% p.a. during the five-year period. Equity aspects of development will be pursued through emphasis on employment generation, a more balanced development among regions, as well as increased public expenditures for education, health, housing, and rural infrastructure. 7. The Plan's objectives are broadly appropriate to the Philippines- development problems, and, at the time of its drafting, the Plan's  - 3 - quantitative targets appeared to be ambitious, but still attainable. However, the recent adverse economic developments have made it very difficult for the country to achieve the Plan targets. Short-term demand-management problems have emerged, mainly as a result of the international recession and its impact on the Philippine economy. Acute public resource constraints have developed which will seriously limit public investment growth. Moreover, the prospects for export growth are less favorable than envisaged in the Plan, and projections of borrowing capacity indicate that the country has to aim at a more rapid reduction in dependence on foreign savings than originally envisaged. Even with a higher level of domestic resource mobilization, growth of investment and imports will probably be slower than projected in the Plan. Since the structural changes will require a number of years to effect the needed improvements in the efficiency of resource use, the economy is likely to grow at only 2-5% during the next 2-3 years and not accelerate to 6.5% until after 1985. However, even this outcome is dependent on a recovery in the external terms of trade (para. 23). Macro Issues for the 1980s 8. As noted above, the Philippines faces several fundamental long- standing development problems which will need increased attention during the 1980s. The four most important of these are reduction of population growth, poverty alleviation, employment generation, and increased efficiency of investment. 9. Population Growth. The Philippines has achieved an impressive reduction in population growth from 3% in 1970 to about 2.5% in 1980./1 Nevertheless, rapid population growth is still straining available land resources, aggravating already serious employment and poverty problems, and burdening the public budget with a high growth in demand for basic public services. Further reduction of population growth is, therefore, vital for the country's development. The Philippines has an active family planning program which has expanded rapidly during the 1970s. However, participation in the family planning program is still low by East Asian standards, and the n*umber of new acceptors has reached a plateau as the program has faced the increasingly difficult problem of extending into rural areas. 10. Poverty Alleviation. Despite satisfactory economic growth during the 1970s, the incidence of poverty remains around 40%. Income distribution continues to be very skewed, and a small elite is conspicuously wealthy. Regional disparities remain pronounced, with the incidence of poverty reaching 60-70% in the least developed regions. Large numbers of people, especially in the rural areas, still suffer from malnutrition and lack safe /1 This figure is based on a more recent survey than the data in Annex I.  water, basic education and health facilities. An increasingly unfavorable man/land ratio, the resulting expansion of cultivation into marginal lands, limited employment opportunities in the industrial sector, and the sharp deterioration in the external terms of trade have put downward pressure on real incomes. Although the Government instituted several programs during the 1970s that should directly improve the lives of the poor, most of these were implemented on a large scale only toward the end of the decade, and will require several years to achieve a marked impact. Key steps needed to alleviate poverty wil be the development of rainfed agriculture, more balanced regional development, rapid expansion of manufacturing employment, continued improvement in basic public services, and further reduction of population growth. 11. Employment Generation. Growth of productive employment, particu- larly in the industrial sector, has lagged behind the rapid expansion of the labor force, and considerable underemployment exists. During the 1970s, the agriculture and service sectors had to absorb an excessively high proportion of new entrants to the labor force. Manufacturing employment stagnated in the first half of the decade, and picked up only slightly thereafter as labor-intensive export production grew. Overseas employment, especialLy in the Middle East, increased rapidly, providing a temporary income opportu- nity. As the absorptive capacity of the agricultural sector is limited, employment generation in manufacturing will have to increase considerably in the 1980s. 12. Efficiency of Investment. While private and public investments rose sharply during the last decade and have reached reasonable levels, the accompanying expansion of the economy s real output has been relatively low. In addition, the low rate of industrial job creation indicates that, on average, investment has not been labor-intensive enough. The low efficiency and low labor-intensity of investment have been caused by the distortive effects of past trade, industrial, and financial policies on the allocation of capital. In view of tight resource constraints, the efficiency and labor-intensity of investment will be critical determinants of future growth in output and employment. Sectoral Issues 13. The Philippines- macro-economic performance reflects achievements and problems at the sectoral level. The more important of these are summarized below for the agricultural, industrial, and energy sectors. 14. Agriculture and Rural Development. Although there has been con- siderable variation among subsectors, the trend growth rate of the agricul- ture, fishery, and forestry sector was about 5% during the 1970s, which is quite high by international standards. The Philippines, once a chronic importer of rice, began to export modest quantities in 1977, and rice self- sufficiency appears assured for the 1980s. Production of fish and non- traditional export crops, such as bananas and coffee, has also expanded  - 5 - rapidly. However, the development of rainfed agriculture, which is of critical importance for raising the incomes of the rural poor, has lagged behind. Technologies to increase yields of corn have been developed only recently, while multiple cropping systems are still at an early stage of development. Productivity in the important coconut export sector remains low because the recently introduced program to replace overage trees has not yet attained rapid progress. Furthermore, population pressure on the arable land is steadily increasing, and soil erosion in hilly areas that have been logged over or settled is a serious problem. 15. The Government has provided substantial support for rural develop- ment. Agricultural production has benefitted from the introduction of high- yielding varieties, improved credit, extension, and irrigation programs. Rural infrastructure programs in water supply, electrification and health services have also been expanded significantly. An agrarian reform of rice and corn land, instituted in 1972, is well advanced. 16. While these programs have achieved considerable improvements, the gains have been uneven among regions, crops, and farming systems. Difficult issues remain to be addressed if the living conditions of the rural poor are to be improved. Solutions to the interrelated problems of low incomes and poor soils in marginal settlements will require the development of tree cropping and mixed farming technologies, resolution of land tenure ques- tions, and substantial upgrading of the administrative capability of the agencies concerned. Steps are also needed to reduce poverty among subsis- tence fishermen, coconut farmers, and sugar cane workers. 17. Industry. Although industrial and trade policies were improved in the early 1970s, manufacturing industry grew only at about the same rate as GDP, and its growth pattern remained unsatisfactory during the decade. Excessive protection and artificially low cost of capital have led to low efficiency of investment and stagnation of manufacturing employment in industries producing for the domestic market. The introduction of export promotion measures in the early 1970s led to extremely rapid growth in exports of nontraditional manufactures, which rose from about $50 million in 1970 to $2.4 billion in 1982. However, the export expansion has been concentrated on a few items, and backward linkages with the rest of the economy have been limited due to the high cost and low quality of domestic inputs. Consequently, nontraditional manufacturing export industries have developed as an outward-looking enclave in an otherwise heavily protected economy. 18. The objectives of the Government s industrial policy are to accel- erate growth of output and employment, sustain the high growth of manufac- tured exports, reduce import dependence of domestic industry, improve the efficiency of investment, and promote industrial development outside the Manila area. Since industries producing for the domestic market still account for more than 80% of manufacturing investment, output, and employ- ment, restructuring of home industries as well as continued export expansion  - 6 - are needed to achieve these objectives. In 1980, the Government initiated a series of fundamental policy reforms designed to improve the performance of the industrial sector. The first phase of the adjustment program has focused on trade and industrial policies which have been a primary cause of low efficiency and suboptimal allocation of investment in the private sector. The reform program aims at reducing protection through tariff reform and liberalization of import licensing as well as strengthening export promotion. The Government is implementing a second phase of reforms that correct shortcomings of the industrial incentives and promotion system. 19. Energy. Another sector critical for the success of the Philippines- structural adjustment effort is the energy sector. Since the 1973-74 oil price increase, the Philippines.has made a considerable effort to reduce its dependency on imported oil. The Government has not only passed on oil price increases to consumers, but has also increased taxes and levies on oil products with the result that domestic oil prices are considerably above import parity. These price increases, combined with direct conservation measures, resulted in a reduction of commercial energy consumption. Steps to increase and diversify domestic energy supply have also continued and include the development of hydroelectric, geothermal, coal, and nuclear energy. Limited domestic petroleum production also began in 1979. However, due to the long gestation period of energy projects, domestic energy production still constituted only 17% of total commercial energy supply in 1980. As part of its structural adjustment program, the Government has prepared policy reforms in the energy sector which aim at further reducing the country-s heavy dependence on oil imports, improving the efficiency of energy use, and strengthening the self-financing of the National Power Corporation. Domestic Resource Mobilization and Allocation 20. Domestic Savings and the Financial Sector. During the 1970s, gross national savings expanded considerably, reaching 22.5% of GNP and financing about 80% of total investment. However, the savings ratio needs to rise by another 2-3% of GNP in order to maintain investment levels while simultaneously limiting the current account deficit and the country s reliance on foreign savings. In addition, interest rates and other finan- cial incentives affecting the labor-intensity and efficiency of investment, the flexibility and competitiveness of the financial system, and the maturity of lending all needed to be increased. Hence, in 1980-81 the Government introduced a comprehensive set of financial reforms. Interest rates were substantially decontrolled, and revised monetary, fiscal, and rediscount policies were introduced. Legislation to encourage multipurpose banking was adopted to reduce the present excessive specialization and fragmentation of the financial system and to increase competition. 21. Public Finance. During the 1970s, the Government raised the over- all level of public expenditures by 5% of GNP and increased the shares going to economic services and investment. At the end of the decade, total government expenditures had reached 18% of GNP, with public investment  - 7 - equalling 6.5% of GNP. The expansion of public expenditures has made possible improvements in basic infrastructure, particularly in transporta- tion, power and irrigation, as well as expanded programs in urban develop- ment, health and family planning. At present, the size of the public investment program is appropriate, and its composition is, with a few exceptions, broadly consistent with the country's development priorities. 22. However, the current recession has highlighted the inherent weakness of the Philippines public finances. Total public sector revenues fell sharply from a level of 16% of GNP in recent years to 14% in 1982. Although considerable tax legislation was passed in the last few years, this did not prevent the already low tax ratio from falling further to 11% of GNP in 1982. With the rapidly rising level of public investment, recurrent expenditures had to be cut back from 12% of GNP in 1978 to only 9% in 1982, which is inadequate to maintain the level of public services and provide for maintenance of the existing capital stock. Despite this constraint on recurrent expenditures, the public sector deficit, which traditionally has been relatively small, increased to over 5% of GNP in 1982. Further tax reforms are needed to raise the elasticity of the revenue system, to improve its equity by increasing the proportion of revenue coming from direct taxes, and to eliminate remaining distortions in economic incentives. Balance of Payments Adjustment and External Capital Requirements 23. The 1979-80 oil price increase and the ensuing worldwide recession have considerably tightened the long-term balance of payments constraints for the Philippines. The current account deficit widened from $1.2 billion (4.9% of GNP) in 1978 to an estimated $3.2 billion (8.1% of GNP) in 1982. This had two main sources. First, the Philippines- terms of trade fell by 28%. The increase in oil prices alone added $1.2 billion to the import bill, although oil imports declined in volume terms. The steep drop in commodity export prices was aggravated by a decline in export volume. Second, interest payments increased more than four-fold to $1.4 billion in 1982. This reflected both a larger volume of external debt and a sharp rise in interest rates on international capital markets (40% of the country's debt carries variable interest rates). The only export category whose earnings continued to expand was nontraditional manufactured exports which increased to $2.4 billion in 1982. Another positive factor was the sustained growth of migrant workers remittances. Accelerated structural adjustments in the economy and the balance of payments have become essential to hold the external deficit at a sustainable level. Considerable reforms have already been introduced with respect to trade, industrial, financial and energy policies (see paras. 18-20), but additional policy measures will be needed in these areas as well as in public finance. However, policy measures will require a number of years to effect the needed structural improvement in the balance of payments. The current account deficit is expected to gradually decrease to $2.0 billion by 1985 and remain at a sustainable level of around 3% of CDP throughout the second half of the decade.  - 8 - 24. The current account deficits incurred after the oil price increases were financed mainly by higher foreign borrowings, although international reserves were also drawn down. Net disbursements of medium- and long-term loans rose from $900 million in 1978 to $1.6 billion in 1982, and the medium- and long-term debt outstanding reached $13 billion at the end of 1982./I The debt service ratio increased from 17% in 1978 to 24.6% in 1982./2 Substantial additional foreign capital will be needed during the adjustment period. Gross external capital requirements are expected to increase to $3.1 billion in 1985 and $4.5 billion in 1990 because of the considerable repayment burden of debt contracted by the country during the 1970s. Nevertheless, the debt service burden should remain manageable; it is forecasted to remain in the range of 22 to 25% during the second half of the 1980s, dependent on anticipated improvements in export earnings. 25. Official sources are expected to provide about 43% of the Philippines- gross external capital in the early 1980s. The last Consultative Group Meeting, held in June 1982, agreed that it would be reasonable for the Philippines to seek official development assistance (ODA) of about $1.2 billion during 1983, similar to ODA commitments sought for 1982. 26. As noted above, some progress has been made in domestic resource mobilization. However, because the deterioration in the terms of trade has increased the Philippines external financing requirements, and many projects planned for ODA have low foreign exchange costs, the necessary resource transfer can be achieved only through some financing of local costs of projects and non-project lending. PART II - WORLD BANK OPERATIONS 27. As of September 30, 1982 the Philippines had received 87 Bank loans (of which two were on Third Window terms) amounting to $3,463.52 million and six IDA credits amounting to $122.2 million. IFC investments totalled $154.8 million. The share of the Bank Group in total debt disbursed and outstanding is currently about 11%, and its share in total debt service is about 8%. These ratios are expected to increase to about 18% and 12%, /1 Total external debt, including short-term debt and IMF obligations, reached $17.7 billion at the end of 1982. /2 Debt service ratio defined as ratio of amortization and interest payments on medium and long-term debt to receipts from export of goods and services during the same year. If debt service to the IMF and interest payments on short-term debt were to be included, the debt service ratio would increase to 20% and 30%, respectively.  - 9 - respectively, by 1985. Annex II contains a summary of IDA credits, Bank loans, and IFC investments as of September 30, 1982 as well as notes on the execution of ongoing projects. 28. The volume of World Bank lending to the Philippines has increased substantially from an average of about $90.0 million per year in FY71-75 to an average of $450.0 million per year in FY78-82. Although the Bank has financed projects in virtually all sectors of the economy, particular emphasis has been given to agriculture, which has accounted for almost one- third of total Bank/IDA lending. Lending for industry, transportation, power, and social sectors followed in declining order of size. The sectoral allocation of Bank lending remained fairly stable throughout the 1970s. Pronounced changes took place only within infrastructure as lending for transportation and power declined in the second half of the 1970s, while lending for water supply and urban development was initiated during this period. 29. In agriculture, lending initially focused on expanding the irri- gation system, credit programs, and other services to support rice production. More recently, efforts have been made to diversify agricultural production through loans for tree-crops, livestock and fisheries, and to assist low- income areas through integrated rural development projects. In the industrial and financial sectors, the Bank initially concentrated on strengthening individual development finance institutions and on providing for the credit needs of small and medium industries. In the last two years, however, industrial and financial lending has been broadened to support the implementation of needed policy reforms. A structural adjustment loan was made in September 1980 in support of trade and industrial policy reforms. Improvements in financial sector policies were the basis for the May 1981 Industrial Finance Loan, which also introduced a new institutional concept to broaden the reach of Bank lending by channelling loans through an apex unit in the Central Bank. In the energy sector, while previous Bank lending focused exclusively on the power subsector - through seven loans for power generation/transmission and one loan for rural electrification - the Bank is now supporting a broader range of activities in the energy sector, including exploration and development of indigenous energy resources, provision of supporting infrastructure, and strengthening of institutions. Energy policy issues are also being addressed through structural adjustment lending. 30. While overall implementation of Bank-financed projects in the Philippines has been satisfactory, disbursements have been slower than anticipated. The disbursement ratio (amount disbursed during the fiscal year as compared to the total undisbursed at the beginning of the fiscal year) declined marginally from about 18% in FY78 to about 16.7% in FY82./l /1 Excludes disbursements under the Structural Adjustment Loan. If included, the ratio increases to 21.8%.  - 10 - The Bank-wide average was 21.5% in FY82; the comparable ratios for Thailand and Morocco were 24.4% and 13.7% respectively in the same year./l Imple- mentation problems increased in the late 1970s, reflecting in part, admin- istrative problems caused by high inflation and tight budget constraints. They also result from the changes in the scope of the Bank-s lending. operations: a substantial increase in the number of projects, new areas of lending, an emphasis on institution-building, and efforts to reach specific target groups and deprived regions have all made implementation a more demanding task than in the past. In recognition of growing implementation problems, the Government and the Bank have instituted a process of joint Country Implementation Reviews. Four reviews have been held between May 1980 and March 1983; the procedure is now fully institutionalized and will be continued on a regular basis. As a direct result of these reviews we have noted significant improvements in government regulations and procedures governing budget releases and contracting. Another issue which has been extensively discussed in these meetings is problems and delays in the preparation and processing of disbursement withdrawal requests. The Government has recently established a small disbursement unit in the National Economic and Development Authority (NEDA) and the staff of the unit have been sent to the Bank for training. 31. The Bank's future lending program has been designed to support the major objectives of the Government's Development Plan (para. 6). Par- ticular emphasis is being given to poverty alleviation efforts and to bringing about needed structural adjustments in the economy. Economic and sector work is being closely integrated with lending operations. Additional structural adjustment loans would support further policy reforms in trade, industry, energy and other key sectors. In sectoral terms, agriculture and rural development will continue to account for the largest share of lending, with emphasis on food production and programs to increase the incomes of the rural poor. Substantial assistance will be given to industry through further subsector loans aimed at restructuring or developing specific subsectors; through increased financial and technical assistance to small and medium industries, particularly outside the Metro Manila area; and through continued industrial finance projects utilizing the recently intro- duced "apex" concept. Further support is also planned to develop domestic energy resources and to strengthen the institutions responsible for develop- ing and managing energy supplies. The Bank's support for projects in education, water supply, and urban development, and possibly health and family planning, will aim at improving basic services and creating employ- ment, particularly in less advanced areas of the country. 32. This is the fifth loan to the Philippines to be presented to the Executive Directors this fiscal year. Loans for Structual Adjustment, Central Visayas Regional Development and Agricultural Credit have been appraised and are scheduled for Board presentation in the coming months. /1 Thailand and Morocco are useful as comparators as they have similar per capita income levels and Bank Group lending programs.  - 11 - PART III - THE URBAN SECTOR Urban Background 33. The Philippines' urban population in 1980 was estimated at about 15.3 million people,/1 approximately one-third of the total population. Metro Manila dominates the Philippines urban scene with approximately 6.4 million persons, or 42% of the total urban population. There are six additional urban areas with populations greater than 200,000 and a further 20 centers with populations ranging from 100,000 to 200,000 persons./2 Between 1960 and 1980 the urban population more than doubled, increasing at an average annual rate of above 3.6%, as compared to 2.7% for the total population. Within the next 20 years the population of the Philippines will have grown to approximately 77 million people. At least half of this added population is likely to be absorbed in urban areas. 34. The absolute urban poverty threshold for the Philippines in 1982 was estimated at $295 (P2,660) per person. Approximately 32% of families in urban areas and about 80% of families in typical slum areas of major cities have per capita incomes below that level. Urban unemployment and under- employment continue to represent serious problems and real incomes of the urban poverty group appear to have stagnated or declined in recent years. Government Priorities in the Urban Sector 35. Regional Development. Intermediate and smaller cities, and their needs for infrastructure and industry have, in the past, been neglected as a focus of national policy. This has led to a striking disparity in the provision of economic and social infrastructure in different urban areas. With a view to redressing this imbalance, the Government is placing greater emphasis on regional investment planning and on strengthening the regional institutional focus of line and staff agencies outside Metro Manila. Since the mid-1970s, NEDA has been developing investment plans for each of the regions. Partially as a result of these efforts more government attention has been placed on achieving a more equitable distribution of government resources among regions. However, difficulties in implementing a government budgetary system based on agreed priorities is making the goal of balanced regional development an elusive objective. 36. Industrial Development. The Government places a high priority on increasing employment and industrialization to: (a) increase the nation-s overall economic output, (b) reduce the highly skewed income profile, (c) absorb surplus farm labor, and (d) improve its balance of payments /1 This figure is based on a more recent survey than the data in Annex I. /2 Many of these cities contain extensive rural areas within their boundaries.  - 12 - position. Broadly, the objective is to develop an efficient and competitive industrial structure based on the country-s comparative advantage with respect to labor costs and availability of raw materials. The provision of industrial estates and export processing zones of various sizes along with improved access to credit and technical assistance are key aspects of the Government's program to promote industrialization. While one such estate/zone was originally included in each of the four cities under the proposed project, it was later decided that further studies of sectoral priorities and related institutional and organizational aspects were required before undertaking investments in additional large-scale estates/zones. 37. Municipal Infrastructure and Services. The Government has recognized the need for substantial improvements in the provision of urban infrastructure (most notably water supply systems and urban streets) and urban services (such as solid wastes management and municipal markets). The Government's efforts towards alleviating these deficiencies are concentrated in the Ministry of Public Works and Highways (MPWH) and its attached corporations. More recently MPWH has established a program to assist secondary cities in planning and developing their facilities and services using principally local staff and financial resources./l The Local Water Utilities Administration, created in 1973, has rapidly moved into a large scale program of providing financing and technical assistance to local water districts in urban areas outside Metro Manila. 38. Shelter. Virtually all Philippine cities have large squatter and slum settlements which typically constitute between 20% to 35% of their total population. These densely populated areas typically lack safe water supply, drainage, human waste disposal, and public access. While the Government's shelter programs have increased over the last few years, they still are not on a large enough scale to prevent growth of slums. Since the creation of the National Housing Authority (NHA) in 1975, a major reorientation of Government shelter policy has been under way, moving away from squatter removal and relocation and towards (a) improvement of existing slums and (b) servicing urban land for low-income settlement. Several local governments are now organized and staffed to prepare shelter projects in conjunction witlh NHA. The Government established the National Home Mortgage Finance Corporation (NHMFC) in 1978 to provide a secondary market for home mortgages, thus further strengthening the Government's role in supporting the sector. 39. Urban Management. Philippine cities and municipalities suffer from a shortage of qualified professional/managerial staff and insufficient levels of locally generated revenues to meet municipal infrastructure and service deficiencies. The Ministries of Local Government (MLG) and of Finance (MOF), among others, are assisting in developing the general adminis- trative and financial mechanisms of local governments. These agencies, along with MPWH with its technical expertise, are also strengthening their own regional staffs to assist local governments. /1 The program is entitled "PREMIUMED" (Program for Essential Municipal Infrastructure, Utilities, Maintenance, and Engineering Development).  - 13 - Bank Involvement in the Urban Sector 40. In addition to five urban water supply and sanitation projects, and an urban engineering loan, the Bank has to date made three loans in support of urban development, mainly within Metro Manila. The first urban loans to the Philippines (1272-T-PH/1282-PH), which became effective in December 1976, concentrated on upgrading the environment of 160,000 persons living in Tondo, the country's largest slum area, located in Manila. The second urban loan (1647-PH), which became effective in April 1979, financed a large sites and services project at Dagat-Dagatan also in Manila, and a relatively modest sites and services and slum upgrading program in three regional cities: Davao, Cebu, and Cagayan de Oro. The third urban loan (1821-PH) became effective in September 1980 and addresses the provision of basic needs and productivity growth of the low income families in Metro Manila. This third project expanded upon the slum upgrading and sites and services programs which started in Manila under the first two projects and added the concept of low-cost secondary and tertiary infrastucture (roads, drainage, utilities) within slum zones without encroaching on private property. A complementary program called PROGRESS (Program for Removing Sewage from Streets) financed as a part of a Metro Manila sewerage project (Loan 1814-PH), seeks to upgrade the sanitation of these slum areas by provision of facilities such as toilets and combined sewers. 41. After initial delays, all three urban projects are now under way, with the first project almost completed, and are providing a sound basis upon which to expand the Government-s urban program. Favorable features of the shelter portion of the first three projects to date include: (a) positive beneficiary response to the programs; and (b) the willingness of families to invest large sums in upgrading their dwellings (especially after tenure is assured). The provision of secondary and tertiary infrastructure to provide basic urban services to the urban poor in Metro Manila under the third urban project is off to a good start. Results from the livelihood programs aimed at supporting small-scale enterprises in the three urban projects are still inconclusive. While there is clearly a demand for these programs, disburse- ments have been slow. The principal difficulties with the urban projects to date have been: (a) slow start-up, mainly due to land acquisition problems; (b) less than satisfactory contractor performance and construction supervision by implementing agencies on some components, resulting in cost overruns and delayed completion; and (c) lagging collections from shelter beneficiaries due to uncompleted works and absence of appropriate mechanisms and enforcement. These difficulties are being addressed under the proposed project, through measures aimed at strengthening the management and staffing of NHA and the involved cities. 42. Future Bank lending in the sector will continue to build on the basic approach developed under the first three projects to provide basic urban services and shelter at affordable costs. However, greater emphasis will be placed on improving urban management, institution building, increased resource mobilization, and on supporting cost recovery measures. The development of national level intermediaries to channel funds and technical assistance to  - 14 - local governments for planning, management and finance will be pursued as a longer-term objective. In accordance with the government strategy for decentralization, an increased proportion of lending would be devoted to assisting cities and regions outside of Metro Manila. The Project Cities 43. The Government has selected four of the nation's largest cities - Bacolod, Cagayan de Oro, Davao, and Iloilo - for its first major urban intervention outside Metro Manila. These cities have urban populations ranging from about 180,000 to 420,000 persons. The principal criterion for selecting these cities was their considerable economic "take-off" poltential as key regional centers. They also have an extensive slum population requiring the provision of basic services. However, as their economies are not well developed, and considering their relatively rich agricultural hinterLands, the principal project strategy is to accelerate the economic development of these cities by removing certain key infrastructure bottlenecks. PART IV - THE PROJECT Background 44. Preparation of the proposed project began in late 1979. Based on identification studies, which recommended major investments that wou:Ld over- come infrastructure deficiencies, the Government proposed in early 1980 an initial package of investments. Feasibility studies were undertaken during the period March 1981 through April 1982 in the project cities, and related detailed engineering was financed under the Urban Engineering Loan (2067-PH)./l Appraisal took place in March/April 1982 and negotiations were held in Washington, D.C. from February 28 to March 4, 1983. The Phi:Lippine delegation was led by H.E. Benjamin Romualdez, Philippine Ambassador to the United States. Staff Appraisal Report No. 4094-PH, dated March 10, 1983, is being distributed separately to the Executive Directors. Annex III of this report provides supplementary project data. Project Objectives and Description 45. The main project objectives are: (a) to stimulate economic decen- tralization and regional growth in the four project cities through reduction of infrastructure bottlenecks; (b) to assist the cities in strengthening municipal institutions, particularly in finance and implementation, and in operating and maintaining urban facilities; (c) to strengthen further the administrative abilities of MPWH and NHA in providing municipal infrastructure and shelter, respectively; and (d) to improve basic social services including shelter, public health, and urban mobility with particular emphasis on the needs of the urban poor. /1 This loan (see Report P-3150-PH) financed feasibility studies and detailed engineering to prepare the proposed Regional Cities Development Project and a proposed Central Visayas Regional Development Project.  - 15 - 46. The project would include the following components: (a) Urban transport ($28.6 million): provision of: (i) about 10 km of new streets, about 32 km of upgraded or rehabilitated existing streets, and limited traffic engineering measures; and (ii) improved road maintenance capability, including a new maintenance depot in Davao, upgrading of existing depots, and vehicles, plant, equipment and tools; (b) Sanitation and drainage ($16.8 million): provision of: (i) solid wastes management measures, including new dump sites, and vehicles and equip- ment; (ii) improved sanitation measures, including equipment and civil works in Iloilo and Bacolod; and (iii) drainage works, comprising about 25 km of open or closed storm drains including laterals, and related maintenance equipment; (c) Municipal enterprises ($11.2 million): provision of: (i) six new markets and 10 rehabilitated markets; (ii) two new slaughterhouses in Cagayan de Oro and Davao; and (iii) two new bus terminals in Cagayan de Oro and Davao; (d) Shelter ($38.4 million): provision of: (i) sites and services at nine sites in the four cities with a total of about 9,580 residential plots, including grant of tenure, infrastructure, sanitary, health, education and community facilities, benefitting about 78,300 persons; (ii) slum upgrading in ten different slum areas in the four cities, with a total of about 6,900 plots serving over 55,000 people, including grant of tenure, improved infra- structure and sanitary facilities; (iii) about 660 serviced commercial/ industrial plots for small businesses generating employment for about 6,500 people; and (iv) loans for building materials for residential structures; (e) Livelihood Zone pilot project ($2.9 million): establishment of a mini-industrial estate in Davao on about 5 ha of developed land, with serviced industrial plots, standard factory buildings and necessary offsite infrastructure, to generate employment for about 1,200 people; and (f) Technical assistance and training ($16.2 million, inclusive of $2.3 million from the Urban Engineering Loan): About 1,385 man-months of foreign (627 man-months) and local (758 man-months) consultants (i) to MPWH, NEDA, NHA, and the project cities for assistance in project implementation, including engineering services, and monitoring (220 man-months); (ii) to MOF, MLG, and the project cities for institutional strengthening measures, including introduction of improved records management systems, formulation and implementation of a municipal training program, and equipment (104 man- months); and (iii) to MPWH, MOTC, MOTI and NEDA for future project preparation and related studies, including a comprehensive industrial estate subsector study, a Metro Manila urban transport study, advisory services in national transportation planning, detailed engineering for a proposed secondary cities development project, and future project identification (1,061 man-months). Implementation Arrangements 47. The Project Steering Committee would act as the policy-making body for the project. Overall project management responsibilities would be vested  - 16 - in the Regional Cities Development Project Office (RCDPO), established under NEDA, with the present Project Director from NEDA and the Assistant Director (technical) from MPWH. At the city level, City Project Offices (CPOs), headed by a City Project Manager, would be retained to handle day-to-day administra- tive matters. The project would be implemented in the following four basic programs, assisted by foreign advisory services for NEDA, MPWH, NRA and the project cities to complement existing capabilities, and in accordance with already signed project implementation memoranda of agreement between the project cities and MLG, MPWH, NEDA, and NHA: (a) Municipal Infrastructure (roads, road maintenance, drainage, solid wastes management, sanitation): In each CPO, a city level engineering unit under an MPWH Manager would be responsible for the design and construction of MPWH- and city-financed municipal infrastructure. The engineering units have been established and staffed by both MPWH and city personnel, all reporting directly to the Manager. (b) Municipal Enterprises (markets, slaughterhouses, bus terminals, and a livelihood zone): The project cities administration would be responsible for the implementation and subsequent management of these facilities as municipal departments, with technical guidance from MPWH. To overcome the present organizational and staffing deficiencies in managing municipal enterprises, the cities would establish, no later than December 31, 1984, Municipal Enterprise Departments (MEDs) with responsibilities, staff, resources and policies satisfactory to the Bank (Section 3.08(a) of the draft Loan Agreement). The MEDs would be given increasing responsibilities in overall administration, operation and maintenance, and in monitoring the accounts and collection of fees. The livelihood zone in Davao is intended as a pilot/demonstration project and was located in Davao in view of that city-s clear potential for economic development and rapid growth. However, as the related feasibility study has not yet been finalized, completion of an acceptable feasibility study in support of this investment would be a condition for disbursement against the livelihood zone component (paragraph 4(b) of Schedule 1 to the draft Loan Agreement). (c) Shelter (slum upgrading, sites and services, and commercial/indus- trial plots): The shelter components in the four cities would be implemented under NHA/city joint venture arrangements similar to those existing under the Slum Improvement and Resettlement (SIR) program in Davao and Cagayan de Oro, which is supported by the Second Urban Development Project (Loan 1647-PH). NHA would provide qualified technical teams to assist the shelter units of the CPOs in project implementation and training of city staff. The construction and operation of the shelter component would be the responsibility of the SIR teams, managed by NHA. (d) Municipal Training: The municipal training program to strengthen the cities project management skills and planning capabilities would be administered by MLG's Bureau of Local Government Development. It would be guided by a steering committee composed of representatives of MLG (Chair), MPWH, MOF and the National Manpower and Youth Council.  - 17 - Implementing Agencies 48. Ministry of Public Works and Highways (MPWH). The former Ministries of Public Works and of Public Highways were merged in late 1981. The new Ministry has a close working relationship with city engineers who are appointed by MPWI and are mandated to carry out selected construction and maintenance functions funded by MPWH. In general, the Ministry is well equipped to assume the proposed leadership role it would play in managing or overseeing construction of a significant proportion of civil works under the project. 49. National Housing Authority (NHA) is the principal government agency responsible for provision of shelter (sites and services and slum upgrading) for low income families. Its programs to date have been largely financed from corporate equity and relatively large amounts of long-term borrowings, including bonds. Of the authorized capital of P 2,000 million, about P 1,300 million have been paid in by the end of 1982. While NHA is expected to generate a 15% return on its corporate equity, the actual annual return has not recently exceeded 0.5%, primarily because of: (a) poor performance in cost recovery on ongoing projects; (b) the undertaking of some uneconomical "prestige" projects, and (c) the financing of shelter-related major infrastructure and facilities on behalf of other agencies. Given the nature of sites and services and slum upgrading, cost recovery is intrinsically problematical. In addition, NHA's cost recovery efforts have lacked commitment, and enforcement has not been systematic. NHA has therefore initiated a series of measures to improve its financial position. Some of the actions now being taken which would strengthen NHA's finances and would enable it to start to revolve the funds available to it include (a) transferring the cost of nonrecoverable investments to appropriate agencies; and (b) selling mortgages to the National Home Mortgage Finance Corporation (MHMFC) which administers a secondary market for residential mortgages. In addition, it has been agreed that under this project NRA would also take further steps to implement a cost recovery program satisfactory to the Bank (para. 54(a)). It was also agreed that in view of NILA's present financial constraints, the counterpart funds required by NHA for this project would be provided by the Government in the form of equity (Section 3.02(b) of the draft Loan Agreement). In order to strengthen its organization and staffing, NHA has undertaken certain measures to decentralize management and expand staffing. During negotiations, it was agreed that by June 30, 1984, NHA would furnish to the Bank a staffing study, completed in accordance with terms of reference satisfactory to the Bank, and would employ qualified full-time senior staff to be responsible for finance and for operations activities (Section 3.03 of the draft Project Agreement). 50. City Governments. Management, operations and finances of all the project cities are weak and need considerable strengthening. In recent years, these local governments have relied increasingly on rapidly escalating government grants rather than on local taxes to finance municipal services. The level of capital expenditures for municipal services and shelter proposed  - 18 - under this project far exceeds the capacity of these cities to finance from available reserves and will have to be financed largely from borrowings. As a result, annual debt service obligations would become significant. In addi- tion, these cities are expected to increase their infrastructure maintenance budgets by about 8% per annum in real terms. With this in mind, each local government has implemented a series of measures to increase locally-generated revenues, particularly through improved collection performance on existing taxes, fees and charges. At negotiations, it was agreed that the property and business tax collections and the tax rate on commercial and industrial pro- perty would be increased to levels and in accordance with a timetable satis- factory to the Bank (Paragraph 10 of Schedule 6 to the draft Loan Agreement). The property tax collection ratio would be increased to 80% by 1984, business tax collection is expected to double over -the project period, and the tax rate on commercial and industrial property is expected to increase by 0.5% during 1983. Also, to keep the cities debt at manageable levels, it was agreed that the Government would limit the borrowings of each project city to a level which would not exceed the city-s debt servicing capacity (Section 4.04 of the draft Loan Agreement). In addition, pricing policies for municipal enter- prises would fully recover their capital and operating costs (para. 54 (b)). MOF would monitor the operation and effectiveness of the pricing policies for these enterprises. To support the development of the cities administrative and project management capabilities, MLG, as chairman of the Joint Commission on Local Government Personnel Administration, plans to recommend, by mid-1984, an action plan regarding staffing levels, job descriptions, salary scales, and key staff recruitment for city departments. To strengthen the cities opera- tions and maintenance functions, a number of remedial measures are needed including: (a) consolidation of equipment and vehicle maintenance functions; (b) creation of traffic management units; (c) provision of adequate mainte- nance budgets; and (d) initiation of training programs. The project cities are presently preparing proposals to address specific issues in these areas. During negotiations, it was agreed that each city would commence implementing, by July 1, 1984, action programs satisfactory to the Bank for improvement of their respective operation and maintenance of roads, drainage works arid sanitation (Section 4.03 (b) of the draft Loan Agreement). Project Cost and Financing 51. The total project cost, excluding duties and taxes from which the project is exempted, is estimated at $114.1 million. This amount includes physical and price contingencies and $3.8 million for detailed engineering and technical assistance financed from the Urban Engineering Loan (para. 44). All costs are expressed in April 1983 prices. Physical contingencies have been estimated at 15% for all civil works except for slum upgrading and market rehabilitations for which 20% has been included. Price contingencies are included at 12% for 1983, 14% for 1984, 12% for 1985, 10% for 1986, arid 8% thereafter for local costs, and at 8% for 1983, 7-1/2% for 1984, 7% for 1985 and 6% thereafter for foreign costs. The cost of technical assistance has been based on an average of $12,400 per man-month for foreign consultants and $3,400 per man-month for local consultants. These costs include fees, subsis- tence, and international travel, but exclude price contingencies, vehicles, local transportation, and equipment.  - 19 - 52. The proposed Bank loan of $67.0 million would finance the capital- ized front-end fee of $0.5 million and about 60% of total project costs, which are not already financed through the Urban Engineering Loan. The loan would cover the full foreign exchange cost estimated at $39.3 million and about $27.7 million of local costs (about 39%). Local cost financing is justified in view of severe domestic resource constraints (para. 26). The loan would be made to the Government of the Philippines for 20 years, including 5 years of grace, at standard variable interest rate. The Government would bear the foreign exchange risk for the entire Bank loan and would absorb variations in the interest rate for proceeds relent to NHA and the project cities at a fixed rate. The proceeds of the loan would be made available by the Government to the implementing agencies as follows: (a) a loan of $21.4 million to NHA under a Subsidiary Loan Agreement, to be onlent on the same terms to the project cities under an onlending agreement between NHA and the project cities to finance the cities share of the joint venture with NHA under the shelter component (para. 47(c) and Section 3.02 (c) of the draft Loan Agreement); and a loan of $21.5 million to the project cities for municipal infrastructure, municipal enterprises and data processing equipment under a Subsidiary Loan Agreement (Section 3.03 of the draft Loan Agreement). The above subsidiary loan and onlending agreements would be on terms and conditions acceptable to the Bank, with repayment over 20 years, including 5 years of grace, and interest at 13% per annum. NHA and the project cities would pay to the Government the standard commitment fee and front-end fee on their portions of the Bank loan; and (b) budgetary appropriation to MPWH ($10.5 million) for major municipal infrastructure, and to various government agencies ($13.1 million) for techni- cal assistance and training. The balance of funds required for the project, excluding $3.8 million available from the Urban Engineering Loan, would be provided as follows: Government corporate equity to NHA ($15.6 million equivalent); Government appropriations to MPWH ($16.7 million equivalent); project cities revenues ($1.5 million equivalent); and project cities borrowings ($10.0 million equivalent, of which $4.7 million for municipal infrastructure as interest- free loans repayable over 20 years, including 5 years of grace, from the Government and $5.3 million for municipal enterprises and building materials loans from a Government-designated bank on prevailing commercial terms). Signing of the subsidiary loan and onlending agreements would be a condition of loan effectiveness (Section 6.01(b), (c) and (d) of the draft Loan Agreement). 53. The interest rates charged to the ultimate beneficiaries would be 13% for shelter and about 15% for municipal enterprises. These rates are expected to be positive in real terms in light of the anticipated inflation rate in the Philippines, ranging from 14% to 8%, during the project period. The average interest cost for financing the shelter component under the joint venture arrangements between NHA and the project cities, is about 11.4% as NHA expects to generate 9% return on its equity participation.  - 20 - Cost Recovery 54. Pricing policies for shelter and municipal enterprises are designed to make these components at least financially self-liquidating, with about 46% of total capital outlays directly recoverable through sale and lease of land and facilities developed under these components. A further 15% of municipal infrastructure works would be financed from increased municipal tax revenues, leaving about 39% for national roads, main drainage, and technical assistance to be borne by the Government. Cost recovery for specific project components would be managed as follows: (a) Shelter: The cost of land and development would be recovered from beneficiaries through monthly plot charges on the lease/purchase of lots which would amortize these costs at 13% for up to 25 years. Building materials loans would be available at 13% for up to 15 years depending on the potential life of the structure. Land developed within the contiguous shelter areas for small-scale industrial or commercial use would be marketed at prevailing (profitable) values. Sites and services under the project are designed to be affordable to a target group which falls between the 12th and 70th income percentiles; upgrading in slum and squatter communities is to be made affordable down to around the 10th percentile. Cross subsidies available from land developed within or adjacent to the shelter sites for small-scale industrial and commercial use would be utilized in accommodating the Lower income groups. During negotiations, it was agreed that NHA would, by December 31, 1983, begin implementing a cost recovery program satisfactory to t-he Bank with respect to all of its sites and services and slum upgrading projects (Section 4.03 of the draft Project Agreement). (b) Municipal Enterprises: Rents, fees and charges for public markets, slaughterhouses, bus terminals, and livelihood zone plots would be set at levels at least sufficient to fully recover operating costs and amortized capital costs at 15% nominal interest rate. During negotiations, it was agreed that each project city would maintain its public enterprises as financially viable entities through adequate costing systems and pricing poli- cies, subject to an annual review of rents, fees and charges levied by its municipal enterprises. By July 1, 1985 and each July 1 thereafter, each city would furnish to the Bank for its review and comments the results of its annual review and recommendations for adjustment of charges, if any, to be implemented in consultation with the Government and the Bank (Section 3.08(b) of the draft Loan Agreement). (c) Solid Wastes Management: A fee would be levied on commercial and industrial establishments as part of the local government s annual business licensing process. Residential cost recovery would be achieved indirectly through general municipal revenues. (d) Sanitation Services: A service charge would be levied covering about half of the costs, with the rest covered by general municipal revenues.  - 21 - Procurement and Disbursement 55. Plant and equipment, including vehicles, totalling $6.2 million equivalent, inclusive of contingencies, would be grouped in appropriate bidding packages and procured by ICB in accordance with Bank Guidelines. Qualifying domestic manufacturers would receive a preference in bid evaluation of 15% or the import duty, whichever is the lower. Equipment and tools, in packages less than $200,000 each and totalling up to $3.0 million, would be procured under local competitive procedures satisfactory to the Bank. Miscellaneous items of equipment, materials and tools under contracts valued at $15,000 each and up to an aggregate of $300,000, would be procured following prudent shopping procedures satisfactory to the Borrower and the Bank. Large civil works contracts for construction of roads, totalling about $14.0 million, would be procured on the basis of ICB in accordance with Bank Guidelines. The balance of construction, totalling $52.0 million, consisting of minor works of estimated contract size less than $1.5 million equivalent each distributed over the four cities, would be procured following local competitive bidding procedures satisfactory to the Bank. Works totalling about $2.0 million for rehabilitation of existing markets and minor traffic management measures would be executed through force account due to the need to work around existing operations on a very carefully phased program. Individual contracts for markets, bus terminals and slaughterhouses estimated to cost over $250,000 each, all bidding packages for other civil works estimated to cost over $0.5 million equivalent each, and bidding packages for goods over $200,000 equivalent each would be subject to prior Bank review. 56. Disbursements would be made against: (a) 100% of the foreign exchange cost of directly imported goods; (b) 100% of ex-factory cost of locally manufactured goods; (c) 65% of the cost of goods procured locally; (d) 70% of the cost of civil works contracts for shelter, markets, slaughter- houses, bus terminals, and the livelihood zone; (e) 45% of the cost of all other civil works; and (f) 100% of the cost of technical assistance and training. Disbursements for payments under contracts for minor civil works (valued at less than P 1,000,000 each), and for civil works by force account (market rehabilitation and minor traffic management measures) would be made against statements of expenditure. Disbursements for force account civil works would be based on agreed unit prices. The executing agency concerned would retain, until one year after the Closing Date, supporting documents for inspection by supervision missions (Section 4.02(b) of the draft Loan Agree- ment and Section 4.01(b) of the draft Project Agreement). The loan is expected to be disbursed over about six and half years ending December 31, 1989. The disbursement period is shorter than the historical profiles of eight years, due mainly to advanced preparation through the urban engineering loan (para. 44) and the involvement of MPWH and NHA who are fully familiar with the Bank-s procurement and disbursement procedures. Completion of an acceptable feasibility study for the proposed livelihood zone would be a condition for disbursement against this component (para. 46(e)). Loan proceeds would not be used in disbursing against building materials loans. Accounts and Audits 57. Each project implementing agency (MPWH, NHA and the project cities) would be responsible for maintaining detailed project accounts to be audited  - 22 - annually by independent auditors acceptable to the Bank. In addition to audited project accounts, NRA and the project cities would submit through RCDPO audited annual final accounts covering their respective operations as a whole. Separate opinions would also be given by the independent auditors confirming that funds withdrawn under statements of expenditure have been used for the purposes intended (Section 4.02(c) of the draft Loan Agreement, and Section 4.02(b) of the draft Project Agreement). Benefits and Risks 58. The project would support the Government-s regional development strategy by providing an adequate infrastructure base to support expanding economic opportunities in four important cities. The project-s design has been based on full commitment from the project cities to address existing needs. The city officials have participated in project preparation discus- sions, and supported all actions proposed for successful project implementa- tion. Schedule 6 to the draft Loan Agreement spells out the main obligations of the participating cities. The project would also strengthen the principal institutions responsible for delivering, operating and maintaining urban services. This latter objective would be accomplished partially by skills developed through the project implementation experience and partially by training programs offered as part of the project. 59. Traffic and transport improvements would relieve congestion in the central business districts, improve flows on heavy traffic routes, open up access to new development areas, and reduce vehicle operating costs. The rehabilitation of existing drainage systems would relieve severe flooding which causes damage to property and public infrastructure. These improvements would affect areas serving about 370,000 people in the four project cities. New equipment and better management for removal of solid wastes would expand service coverage to about 65% from about 30% at present in project cities. Pilot sanitation schemes in Iloilo and Bacolod would improve groundwater conditions in the service areas. Markets proposed under the project would improve sanitary conditions, reduce spoilage, and increase employment and business activity. The new slaughterhouses proposed under the project would serve the daily local meat requirements and release existing centrally located facilities for other higher value use. Bus terminals would reduce traffic congestion in city centers and provide more convenient transfer facilities for public transport patrons. The shelter component would benefit over 133,000 persons in the project cities. This component wolald (a) upgrade hasic services in depressed existing communities; (b) regularize tenure; and (c) provide additional serviced residential land for low income families thereby reducing squatter settlements in these fast growing cities. Serviced land for industrial/commercial use within or adjacent to the contiguous shelter areas would provide additional employment opportunities (about 6,500 jobs) for these lower income communities. The economic rate of return is estimated to be 30% for shelter, 27% for city streets, 23% for slaughterhouses, 18% for markets, and 17% for bus terminals. Together these components account for 62% of total project costs, and the weighted average economic rate of return on these components is 27%. Principal quantifiable  - 23 - benefits were increases in property values for shelter, increases in (or new) rents and fees for municipal enterprises, and vehicle operating costs and time savings for urban streets. 60. The needs of the urban poor are addressed in part by all project components and are specifically addressed in the slum upgrading and sites and services components: (a) approximately 70% of the residents in slum areas under the project are in the urban poor group; the slum upgrading program would directly benefit 38,000 persons or about 22% of the urban poor residing in slums in the four cities; and (b) approximately 39,000 persons or about 50% of the beneficiaries of new sites and services projects would be the urban poor; this program is expected to accommodate a further 21% of the urban poor residing in slums across the four cities. 61. The principal risk is the managerial capability of the local govern- ments to implement a project which is larger and more complex than any that they have undertaken before. MPWH's assistance in municipal infrastructure and NHA-s assistance in the shelter component should substantially reduce the risk of overextending the cities managerial capabilities. The establishment of CPOs to focus each city-s energies on the project and the cities commit- ments to hire and train additional key staff would further reduce this risk. 62. A second risk is related to the project cities ability to increase general revenues and to implement satisfactory cost recovery measures on revenue-generating project components to create additional funds. These additional funds are needed not only to repay project loans but also to provide for increased operation and maintenance budgets. To minimize this risk, the MOF has established a unit to assist with and monitor the collection of municipal taxes and fees, and to strengthen the staffing of those city departments where cost recovery is important. 63. A third risk is related to land acquisition, which has represented a risk in all Philippine urban projects both from the standpoint of project implementation delay and cost escalation. It is a particularly significant factor in this project as most components require some land acquisition. To reduce this risk, completion of negotiations for lands needed for commencing construction during the first year of the implementation program (about half of all project lands) or initiation of expropriation proceedings was a condition for loan negotiations which was satisfactorily met. During negotiations, it was also agreed that the Government would cause the project executing agencies to acquire all land and rights in respect of land required for the proposed project (Section 3.07 of the draft Loan Agreement). Environmental Aspects 64. The project is expected to have a substantial net positive environ- mental impact. The municipal infrastructure and the municipal enterprises components are designed specifically to improve environmental conditions, especially improved water quality and reduced disease risks in the project cities.  - 24 - PART V - LEGAL INSTRUMENTS AND AUTHORITY b5. Lie dratt Loan Agreement between the Republic of the Philippines and the Bank, the draft Project Agreement between the Bank and NHA and the Report of the Committee provided for in Article III, Section 4(iii) of the Articles of Agreement are being distributed to the Executive Directors separately. In addition to the special conditions listed in Section III of Annex III, signing of the NRA Subsidiary Loan Agreement between the Government of the Philippines and NHA, the NHA Onlending Agreement between NHA and the project cities, and the Subsidiary Loan Agreement between the Government of the Philippines and the project cities would be additional conditions of loan effectiveness (Section 6.01 (b), (c) and (d) of the draft Loan Agreement). Completion of an acceptable feasibility study for the proposed livelihood zone would be a condition for disbursement against this component (paragraph 4(b) of Schedule 1 to the draft Loan Agreement). 66. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 67. I recommend that the Executive Directors approve the proposed loan. A.W. Clausen President Attachments Washington, D.C. March 11, 1983  ANNEX I -25 - Page 1 of 5 TABLE 3A PHILIPPINES - SOCIAL INDICATORS DATA SHEET PHILIPPINES REFERENCE GROUPS (WEIGHTED AVE%GES AREA (THOUSAND SQ. KM.) - MOST RECENT ESTIMATE)- TOTAL 300.0 MOST RECENT MIDDLE INCOME MIDDLE INCOME AGRICULTURAL 109.0 1960 /b 1970 /b ESTIMATE /b ASIA & PACIFIC LATIN AMERICA & CARIBBEAN GNP PER CAPlTA (USS) 150.0 250.0 690.0 890.1 1902.0 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 146.8 272.3 329.4 701.7 1259.9 POPULATION AND VITAL STATISTICS POPLULATION, MID-YEAR (THOUSANDS) 27902.0 37540.0 49049.0 URBAN POPULATION (PERCENT OF TOTAL) 30.3 32.9 36.2 32.4 65.7 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 76.9 STATIONARY POPULATION (MILLIONS) 126.7 YEAR STATIONARY POPULATION IS REACHED 2075 POPULATION DENSITY PER SQ. KM. 93.0 125.1 159.2 255.9 35.2 PER SQ. KM. AGRICULTURAL LAND 282.4 361.0 438.2 1748.0 92.5 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 44.6 45.5 44.1 39.9 39.7 15-64 YRS. 52.4 51.6 52.8 56.8 56.1 65 YRS. AND ABOVE 3.0 2.9 3.1 3.3 4.2 POPULATION GROWTH RATE (PERCENT) TOTAL 3.1 3.0 2.7 2.3 2.4 URBAN 4.2 3.8 3.6 3.9 3.8 CRUDE BIRTH RATE (PER THOUSAND) 45.5 38.5 34.1 31.8 31.4 CRUDE DEATH RATE (PER THOUSAND) 14.6 9.8 7.3 9.8 8.4 GROSS REPRODUCTION RATE 3.3 2.7 2.2 2.0 2.1 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. 191.7 650.0 USERS (PERCENT OF MARRIED WOMEN) .. 2.0 37.0 36.3 FOOD AND NUTRITION INUEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 102.0 101.0 113.0 115.6 110.0 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 96.6 97.2 106.7/c 106.4 108.4 PROTEINS (GRAMS PER DAY) 45.0 47.5 52.0/c 54.4 66.0 OP WHICH ANIMAL AND PULSE 16.6 18.7 20.4/c 13.9 34.0 CHILD (AGES 1-4) MORTALITY RATE 13.6 7.9 4.5 6.7 5.6 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 52.8 59.0 63.5 59.8 64.2 INFANT MORTALITY RATE (PER THOUSAND) 105.8 75.0 54.7 63.7 64.2 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. 24.0 43.0/d 32.0 65.6 URBAN .. .. 66.0/d 51.9 78.9 RURAL .. .. 33.0/2 20.5 43.9 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. 57.0 56.0/d 37.7 59.3 URBAN .. .. 76.0/2 65.7 75.3 RURAL .. .. 44.0/d 24.0 30.0 POPULATION PER PHYSICIAN .. .. 2809.4/c 8540.4 1617.3 POPULATION PER NURSING PERSON .. 3840.0 3173.1/c 4829.4 1063.5 POPULATION PER HOSPITAL BED TOTAL 1229.3 838.6 568.7 1047.5 477.4 URBAN 547.3 400.6 .. 651.6 679.8 RURAL .. .. .. 2597.6 1903.4 ADMISSIONS PER HOSPITAL BED .. 30.0 .. 27.0 27.3 HOUS ING AVERAGE SIZE OF HOUSEHOLD TOTAL 5.8 5.9 URBAN .. 6.2 RURAL .. 5.8 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL .. 2.3 URBAN .. 2.1 RURAL .. 2.4 ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL 16.5 23.2 36.0 URBAN .. 60.4 82.0 RURAL .. 6.8 10.0  ANNEX I Page 2 of 5 - 26 - TABLE 3A PHILIPPINES - SOCIAL INDICATORS DATA SHEET PHILIPPINES REFERENCE GROUPS (WEIGHTED AVE%GES - MOST RECENT ESTIMATE)- MOST RECENT MIDDLE INCOME MIDDLE INCOME 1960 /b 1970 /b ESTIMATE /b ASIA & PACIFIC LATIN AMERICA & CARIBBEAN EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 95.0 114.0 98.0 96.2 104.3 MALE 98.0 115.0 .. 99.8 106.4 FEMALE 93.0 113.0 .. 92.1 103.3 SECONDARY: TOTAL 26.0 51.0 63.0 37.6 41.3 MALE 28.0 52.0 .. 41.1 40.4 FEMALE 25.0 49.0 .. 34.1 41.8 VOCATIONAL ENROL. (E OF SECONDARY) 14.3 8.9/e 33.9/c 20.8 33.7 PUPIL-TEACHER RATIO PRLMARY 35.9 28.6 31.2/c 35.5 29.9 SECONDARY 26.9/f 33.0 35.6/7 25.0 16.7 ADULT LITERACY RATE (PERCENT) 71.9 82.6 75.0 73.1 79.1 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 3.1 7.4 8.8/g 9.8 42.8 RADIO RECEIVERS PER THOUSAND POPULATION 21.5 40.0 44.0 116.5 270.5 TV RECEIVERS PER THOUSAND POPULATION 1.4 10.7 20.9 37.6 107.7 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 17.4 13.4 20.3 53.7 63.7 CINiEMA ANNUAL ATrENDANCE PER CAPITA 0.6/h .. 7.5/d 2.8 2.7 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 11117.5 13730.4 17412.1 FEMALE (PERCENT) 34.2 33.1 32.3 33.6 24.4 AGRICULTURE (PERCENT) 61.0 53.0 46.0 52.2 31.3 INDUSTRY (PERCENT) 15.0 16.0 17.0 17.9 23.9 PARTICIPATION RATE (PERCENT) TOTAL 39.8 36.6 35.5 38.5 33.6 MALE 52.1 48.6 47.6 50.5 50.4 FEMALE 27.4 24.4 23.2 26.6 16.8 ECONOMIC DEPENDENCY RATIO 1.2 1.3 1.3 1.1 1.3 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGhEST 5 PERCENT OF HOUSEHOLDS .. 25.1 HIGHEST 20 PERCENT OF HOUSEHOLDS .. 54.0 LOWEST 20 PERCENT OF HOUSEHOLDS .. 5.2 LOWEST 40 PERCENT OF HOUSEHOLDS .. 14.2 POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 260.0 194.7 RURAL .. .. 195.0 155.1 184.1 ESTIMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 266.0 178.2 518.0 RURAL .. .. 200.0 164.9 371.1 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 32.0 24.4 RURAL .. .. 41.0 41.1 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 1977; /d 1975; /e 1972; If L962; /g 1976; /h 1958. May, 1982  - 27 - ANNEX I Page 3 of 5 DEF7ITIONS OF SOCIAL INDICATORtS tones Although the data ae dro from scurces generally jodged the me-t authoritative and reliable, it should ase br noted tht Ictey y -ot be Inter- nationally comparable hecansr of the lack of stadardi.ed definitiona and -c-opta oaed by ditff eret Io.ntrion ti collecting the data. The dta are, non - _heleen. onefll to deschibe orders of mgnitude, indirate trondn, and haratertie certain jor differencea betweee ceuntri.ee The refererce groupt are (I) the tact country group of the nubject country and (2) a country group with nuiewhat highre aurrage incote than the country group of the nubjoct country (coceyt for "ttgh locome 0il txporters" group where 'Middlt income North Africa mod Middle tact' Ischonen hecause of ntronger o.o.a-culuta1 naftuition). nI the reference group data the averages ore populotion seighted arithsotic meant fur each indicator and bhwov only vhno cajority of the countrries in e group has data for that ind icator. since the coverago of cuounrrire seong the indicators depends non the availahility of data ood in nou outturn chautor cUnt hc cxercised in relating anecagea of ore indicator to anotber. Thtse averages ace only oseful inuompaclig the value ft onetlndicatortat artineoeactgtheruantryand reference groups. kNdA fthaousad sqIrn.) Poputatie cr potaocicuta ted - total, urban, and rurai - Popuact-Oi (total, focal - lutai aurfore oven co00tinitg oaud aosetd irland wacern; 1979 data, urban, and rurai) dvided hy theit respectinn no ubet of bnpital heda Mricolturol - loit eace of agicuiltur-l area used temporarily or permnently available in publit and private general and - pec-alieed hospital and re- far crops, panture. marhet and kitchen gardens or to lie falloe; 1979 data. hailttaiionuenier. fespital care estoblishmrnts permanently stalled by at leati one phy-i-lan. itoblish_ests providing principally costa- (iNP PIE CAPITA fUll) - diP per capita cotia tea at current market pricet rat- dial core are onotincluded. grat hospitale. howere, itlutde health culated hy non caonvrson tomethod as World oath Atias 11929-at bastil) 19fO, and =edical centers nout ptrmanently staffed by a physincton (hut by a 1970, and 19ff data. edtiona ansitravid nure bided f etc.) 0 nicb offer in-patient accomeo- ENEMiiY CONSU!IPTION PER CAPITA - Annual conoamptiot of coroinl energy (coal tical purpe.es urban bonpiatas include feOn yrtncipulfgencrat bompitolc. ansd tiglte, petrolu. natural fan and hydro-. ouclear and geothermal elec- ond rural ospitais lsitaa or talco hopitals and medalI and maternity tricity) in rllogruns of coat equivalent per capita; 1960. 197o, and 1929 centors. ipectotteed hospitals ore included only under ctotal data fdriIuot yeitals dliav ed by Tota nu o b bof admiasions to o dic tcarget Total Pupuleetuu. Mid-fear (thoutantds) - An of duty 1; 1960, 1970, and 1990 1oft.Sl dat. Aerae ineofofenehld yceno perhunbudf -dtotl, urban and ruea frban Purulailor oaeroeot of total) - gtito of arhac to total population; A heunohuld consintn of a group oPf individua'l no taotal, tugb nqoarirts- differret definiteloon of urban ocean may affect rompoeahtllty at data and their main mealt A boarder or lodgde ny on may not ho included is ameng countries; 19ff, t97, and 19fd dat-A the household lee utatistical purptnsc Popu ationtoi year 20Of - Current population pruojctienc ore hated on 1OOf her of pernsn per rues in all urba an ahd rar *nl occpie c *ventoc total population by ago and urn and their marenlitty and fertility roles. doell logo. respectively. Dvellings earclude tue-pormatoto streuctures and P'rojection parameters Per ttcroality craes runpnice of three levels nmun unouccopied parts. min6lt d td femae lt brt Aop iv u ta bilia ig or 2 2 years. The para- Currentional dv lings with electri ity i living quartern as per tage _rters for Perttility rare alo hove three lonevet auticlg decline in of total, urben, and rural dwve llgn respectively fertility according to incomec louel anod fast fa=inly planning parformacce. loch country ic lbhrenn asigned one of these nice rumhlcatloos of mePrtafite EDUCATIONI and fertility try rnds Inc prujetion purposes. Adjusted t lltent tattdd Sratoonry poculatito - In a op al..nary ynpuloion tero in no groath since Primary school - total, male and fempale - Gross toal, sale and female the birth rote in eqool to the death rate, and also the age structure re- enrolltent of oil agrunat the prima ry level an percentogos of resperctitoo colon constaot. Thin In auhoened pnly after fcctlttiy rares decline to primnty ucbnul-ago poyulations; nor=aily inclodes childrcon aged 6-li rhe roplacerent tevel of unitoetrcpruduttiot rate. when each generation pene hat edjusted fur differect lengths of primary educatloni for of vo=en roplaros Itnelf coachtly The stationary population sine can countrioes irh uvnieesal educationoercollrent enyre;ceed 1ff percent esripmated on rho boois of the projected characteristics of the poputatlon sinre none pupins are helwn or about nbe ofticlol school ego. In tOo year 2000, and thctrate of declinr of fertility rate to replact- fecondary school - total, stale and tomat - Computed as abve1; secondary nent lnvel. education reqoires at leant foot yeors of approoed primTary tostrnnttnn; Yont ton blona yy populatlon in -reched - hei year ohe startlunacy population pronides funtrat, vocational, or cracher training iostructions lot pupils nize nill ho reached. unoally of 12 no 12 years of a go; carretspondence coureso are generalip Population trunity excluded- Peroo.h.-nd-y ncr popnlurnon puosuaro kilonhtae lr(10 recrnniof Voracionalcocallmeuc ern of s condary)-fVcarlonal Ins i ut tact t fval o ent; 19li, 1920 nod 1929 darn. Includr techoioal itdustrall a other prugrant whIch operane Indopend- Per onq kn. agricultural land - CunynUted as about for ageriulturel land ently or an depnvtnentn of secondary inctitutlOnt. cOp;.li..Y. 1920 and 1979 d a. Pnpil-toonor rotio - prima ry, and Iccoddary-Totol studentseolled in P hoaut l ge t hc _luchure (eorcenr) - Children (0-14 years), vouklof-oge 115- priery and -b- podary -uet divided by numters of tearhern to the h4 yeros). and noticed (61 years and tvor) en ptrcet-lges at mid-year ppop- correspooding levels. lotion; 1961, 1910, and 1980 data. Adult titeracy rate (perceot)I - Literate adults fable to road eind wrice) ropulation fronth ter (peruent) - tural - annual grovth rates of total pid- asnaperrontafe of total adult population ogrd 15 yearn end over. foar populotior fur 19hO-6f, ti96-f0, and 1970-90. Population Grovth gate (porcien) - urban- Annual grooth rates of urhan popu- CO5ssiPCIOI lat -on y tot 1950-60. i900-20, and 9f-f.- Passonger l re (per thousand poputatoloI - Passenger cars co=pr iseo mtor Crude tirth fRae lper chouannd) - Montua lire births per thousand of mid-pent tarn nearing less than eight persons; etcludos nuabulancen, hoarser and population, lif0. 1f70. and 1980 dorat military nehiIle to Cruto Death loRe Iper chonsand) - Annual deaths per thounand of nid-yrar R dio teotivers tert thounand popn1atton) - All typos of reoeivers tee radio puolvio;liI 1920 nod -d dl. h lifedb.h-odcstteeoeatpuli per . thosan of . poaiio onoe lode on- front Reycudui lt oot R Avrrng _ nu=ber ot daughters n Io-en cill he in ticnteyd coreevrtIc counthe. and in yea Phergitrationef rd her notsnal hrproductive period if ohe experien pruest oge-specific oer- tern wain teffort; data Inc recent yearns=ay not he unsparait smeut tility rater; usually tine-year averages ending to 1960, 1970, and 19. mrsrc rc inrie abolisbod licensing. yanly Planninpa-rcceprors, Annual (thouanTds) - .Pcatl na=ber of accept-re 7V Rercelvrt (per thousand population) - l tV oeoctiver for broadcast no of hirbt-cot rrd devices nder ahupices of tatlomal family plannino prugran. general public trr thou-ni d population; rIc udos aoliconod TVreeeivers IYP dly Planoing-fUsrn (perceot of married vpten) - Prrcentage of married inoutesetnd in yearn vhen regisoration of TV sets aw in effort ntmen at child-bearing ago (15-44 roots) who ate birrh-coutrol devices to Ntewpeper Circalatino (per thousnnd pupulotion) - lb out the average ir- all macclod nont in sane age group. ullation of 'doily generat in erent n paprI defined an a periodical oblination denoted primarily to recording goneral aYew I is considered P0OD ANfD NUTRlTION to hr 'daily0 if it appears at leant feat tineds a week. Index of Pood Produtlon per Capita (1969-71-10f) - Iodnd of per capita annual Cinema Mountu Avdaunt perr Copita per Year - loned on rho number of produc Ion of alt food r.Yesoditlosi Produc ion oNcludos need nod teed and tickers told durng rh year. including odulwiorn to drive-in cluma in or rairndar year bass CdomdEtr is cover erimarI gotd f og sugarcant and cobIto un sn inotoad of sugart whiob are edible and convain nurrieon s(eg. coffee and tea are encluded)l Aggregate produ cion of each country in hated oc L00 PORC Pneronal ororago produe tlorico (pr engof 19t-, 1d a t da Total L;bor force (tho1aud -f Efonn ica-y actfp t pcdunns, incloding Prcpta"'.' o rlre orru fcvuonou Contur hed tru ofe ore n ooesluyd ht ec ld-n,onote,wuens t. per day. huacluhie supplion co=prise dowlesric production. itports leon nou corpatablet lift. lift tnod lift data. rrporrn, and rbangeo inoroo. bet supplien etnlude animal f eed, nerds, remain (pecrwen) - Peadle labvr force an preruetage ot total Ibunt tProee quan tieslo cured in tood prucennlng. and loosen In disurihu intt toquire- Agriculture (percent) - Labor foro eIn farming, turestry, hooting and ptents note eurimaired by PAt hound on phyniulologia needs for normadl uri- flub tog as percen huge of total labor tocrce; 1960, 1970 and 19801 data. city and health routsidering enultoonmental tenpreniure. body teights , age Industry (perceunt) - Labor torce in wining. onstrurtion, covnufoctut lrg and sex distribution of poptlarion, and allowing 10 percent fur vaste at and electricitry, aatrr and gas as percentage of total laohr force hounehuld rl; v l, -h 1 o1-6t, 19 nd 1922 darn 1960. lift oan 19f data. Pet capita supply of protrin (grams per day) - Protein conteno at per capita Participation Rtatr (portent) - rural, male, and femeale - PortIc ipat too or Oct supply of food ror day Net sopply ur food 1s defiued an abou. te- ativity ta es arecuopated so total, male, nod female labor f qulrmerten for all ucurerien eloahlishrd by USDA pruovde foe =inikod percentagen of total, male and femle population of all a get ccnpertivelyt allov;nces of 6f gramy at rural proteio per day and tO frams of sotml and 1960, 1920. and 19Sf data. Those are bared on - Tt s participatlon rates pulue proteio, of ohich It aroap thould hr onimtal protrin. These stand- reflecting a ge-urn ntructure of tho ppoplation. and long tipne trend. A ardn are boor chat those of 21 gracoy of total protein and 20 groa= of ion osrimsers ace true national sources. anImal pruo lan or a averagef for hle aucla, propound by PMO in rho Third tcono=ic Depeodeocy lotio - Rttio of populatIon apder 15 end 65 and oncer World yood Sarvey; 1961-5, 1970 and 192 data to the tr al labor forr e Per YapIa protein noyply fros a65 l al and pulae - ProtYr en sply of foud de- riced true onimalt and pulnes in grams per day; 1961-61. 1920 and 1922 dora. tiifeti tflTUTIZI Chrud (agen 1-4) Drath lote (per thoLuand) - Anaool deaths per thounand is Poreotango of Private In ooe (hoth in cash and kind) - oRdeived by richosc agietg data peniend from hLdeo to thIs a6oge9gruoLp, for cos developitog couno- 5 perceuc. tichesr 20 perocot, poorent 20 percent. aed poorest if precent HEALTd POfVifTY TMGEfT 0G10LP Lite toye ancy at oirth (rearo) - AIrage no-Ir ot years of life remaining The fulloving eiur late are very apprenimate teasurex of poerIty levels, no bIrth; 190ff 1920 and 1960 dora, and should he oto rpreted sith nonsiderahle _at ion t age per rhoasoed Ilie hicrbu 19ff 1920 nod1 19 tfdare. o Absolute pnyerty income leei o tht into e Level beLo which t minima anbenrof lotoe stomei uorcan tx ofrulatio) -itotl