Morocco - Small- and Medium-scale Irrigation Project

Document of FILECOPy The World Bank FOR OFFICIAL USE ONLY Report No. P-3476-MOB REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMEY' TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO US$42 MILLION TO THE KINGDOM OF MOROCCO FOR A SMALL- AND MEDIUM-SCALE IRRIGATION PROJECT March 7, 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. KINGDOM OF MOROCCO CURRENCY EQUIVALENT Currency Unit - Dirbam (DH) UStl = DH 5.65 DH 1 = US$0.16 FISCAL YEAR January 1 - December 31 GLOSSARY OF ABBREVIATIONS ADA Association of Agricultural Development CMU Central Management Unit CNCA National Agricultural Credit Bank (Caisse Nationale de Cr4dit Agricole) DPA Provincial Directorate of Agriculture (Direction Provinciale de l'Agriculture) INRA National Institute for Agricultural Research (Institut National de la Recherche Agricole) LSI Large-Scale Irrigation MARA Ministry of Agriculture (Ministhre de 1'Agriculture et de la R6forme Agraire) ORMVASM Regional Office for Agricultural Development for Souss-Massa (Organisation R6gionale pour la Mise en Valeur Agricole de Souss-Massa) PCC Project Coordinating Committee RCC Regional Coordinating Committee SMSI Small- and Medium-Scale Irrigation FOR OFFICIAL USE ONLY KINGDOM OF MOROCCO SMALL- AND MEDIUM-SCALE IRRIGATION PROJECT LOAN AND PROJECT SUMMARY Borrower: Kingdom of Morocco Amount: USt42 million equivalent, including a capitalized front-end fee. Terms: Amortization over seventeen years, including four years of grace, at the standard variable interest rate. Project Objectives and Description: The proposed project aims at establishing a systematic approach to the development of the hitherto neglected small- and medium-scale irrigation subsector, which has considerable potential for increasing agricultural diversification, yields and production. The project would finance the rehabilitation of three traditional irrigation perimeters covering some 12,500 ha and the development of two new perimeters with a total irrigated surface of about 5,300 ba. The project would also support complementary infrastructure such as road construction, power supply and on-farm development. The proposed investments would be complemented by the introduction of a legal framework ensuring that beneficiary farmers assume responsibility for operation and maintenance of irrigation networks as well as for reimbursing the Government for investment costs to a degree commensurate with their earning capacity. The project would also provide an opportunity for the regional offices of the Ministry of Agriculture to build up experience in planning, implementing and . monitoring the development of the subsector. The project does not face any major risks apart from possible delays which could occur in the formation of water users' associations. However, this risk appears manageable in light of the success achieved, in this respect, in one of the project perimeters (Souss) during 1982 and in view of long-standing practices of cooperation among farmers in traditional irrigation perimeters based on universal appreciation of the need to carefully manage scarce water resources. 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. - 11 - Project Cost Estimates Local Foreign Total ------(USt Million)------ Irrigation infrastructure 31.5 24.1 55.6 of which: Souss (11.9) (9.2) (21.1) Middle Sebou (14.8) (11.5) (26.3) Gbiss (2.5) (1.7) (4.2) Cbichaoua (1.4) (0.9) (2.3) Jemaa Sahim (0.9) (0.8) (1.7) Support costs 6.6 4.1 10.7 On-farm investments 0.6 0.5 1.1 Central Mon. and Eval. Unit 0.5 0.6 1.1 Total Base Cost 39.2 29.3 68.5 Physical contingencies 5.3 4.1 9.4 Price contingencies 14.7 8.7 23.4 Total Project Cost 59.2 42.1 101.3 1/ Front-end fee on Bank loan - 0.3 0.3 Total Required Financing 59.2 42.4 101.6 Financing Plan IBRD - 42.0 42.0 Government 56.4 - 56.4 CNCA (Nat. Agric. Cred. Bank) 0.6 0.4 1.0 Beneficiaries 2.2 - 2.2 Total 59.2 42.4 101.6 Estimated disbursements: ---------------------USt Million-------------- Fiscal year 1984 1985 1986 1987 1988 1989 Annual 2.8 3.9 9.4 11.4 8.6 5.9 Cumulative 2.8 6.7 16.1 27.5 36.1 42.0 Economic Rate of Return: 15% Appraisal Report: Staff Appraisal Report No. 4197MOR dated February 10, 1983 1/ Includes 27.5 million of duties and taxes. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE IBRD TO THE EXECUTIVE DIRECTORS ,ON A PROPOSED LOAN TO THE KINGDOM OF MOROCCO FOR A SMALL- AND MEDIUM-SCALE IRRIGATION PROJECT 1. I submit the following report and recommendation on a proposed loan to the Government of Morocco for the equivalent of USt42 million, including the capitalized front-end fee, to help finance a Small- and Medium-Scale Irrigation Project. The loan would have a term of 17 years, including 4 years of grace, at the standard variable interest rate. PART I - THE ECONOMY 1/ 2. A basic economic mission visited Morocco in November 1978, and updating missions in September and December 1979 and in May 1980. A report entitled "Morocco: Basic Economic Report" (3289-MOR) was distributed to the Executive Directors in December 1980. A report on Morocco's Public Sector Investment Program for 1981-85 is expected to be distributed to the Board shortly. An economic mission on industrial incentives and export promotion was in Morocco in September 1982. Country and Economic Data Sheets are attached as Annex I. Introduction 3. Compared with many developing countries, Morocco is well endowed with natural resources. Morocco has the world's largest and most easily recoverable phosphate reserves, which makes the phosphate sector a key export sector. Other minerals such as iron ore, manganese, lead and zinc are also exported, but in much smaller amounts. Coal and hydropower plants satisfy only a small part of the country's energy requirements, but Morocco has some uranium and oil shale resources which could become significant energy sources in the long term. There are moreover preliminary indications of natural gas reserves. Morocco has also a relatively good agricultural potential. In addition, Morocco's proximity to Europe has favored trade, tourism and labor migration with the EEC countries. 1/ Parts I and II are essentially the same as in the Oulm6s-Rommani Agricultural Development Project (Report No. P-3413-MOR of November 22, 1982). - 2 - 4. During the first 15 years after independence (1956), a conservative approach to economic policy predominated in Morocco, and GDP increased at an average rate of 4% a year in the 1960s. A relatively weak savings effort and conservative external borrowing policies permitted only a slow rise in the share of resources allocated to investment. Morocco thus entered the 1970s with no major financial imbalances, but a relatively limited growth capacity. Although some industrialization had taken place, over half of the labor force was employed in the relatively inefficient traditional agricultural sector, and primary products accounted for close to 90% of merchandise exports, with phosphates representing about a quarter of the total. Economic Expansion in the Mid-1970s 5. During the 1970s, economic policy became more ambitious, and the original 1973-77 Development Plan strategy stressed an intensified savings effort and development of exports. In 1974, with the sudden jump in phosphate prices, phosphate export earnings more than quadrupled, and although the petroleum import bill also quadrupled in 1974, the current account of the balance of payments remained in surplus. The Plan's concern for exports and savings lost some of its urgency. The Government launched a massive public investment program which brought about a sharp acceleration in the rate of growth of the economy, and GDP grew at the rate of 6.7% per year between 1973-1977. The expansion of the investment program also led to a considerable increase in demand for imported goods and services, whose share in GDP doubled from 19% in 1972 to 37% in 1977. 6. The phosphate boom, however, was shortlived and phosphate exports started falling in both volume and value as early as mid-1975. Phosphate prices continued to decline until 1980. Markets for other exports as well as for tourism and labor migration were also negatively affected by the world recession. Agricultural production and exports entered a period of prolonged stagnation and Morocco turned from a net exporter to a net importer of foodstuffs. As a result of all these factors, the growth of exports of goods and nonfactor services, which in constant prices had exceeded 8% a year in 1968-72, averaged only 1% a year in 1973-77. 7. Accelerated investment, growing public expenditures, and particularly increased defense spending in response to growing tensions in the Western Sahara, created strong pressures on both the balance of payments and the Government budget. While investment jumped from about 15% of GDP in the early 1970s to 32% in 1977, gross domestic savings rose briefly from 15% of GDP in 1972 to 20% of GDP in 1974 thanks to phosphate receipts, but fell back to 10-12% in 1976-77. The large resource gap which emerged as early as 1975 rose to an unsustainable 20% of GDP in 1977 (in current prices). To help finance the gap, Morocco borrowed heavily from the international capital market, which led to rapid increases in external debt and the debt service burden. The debt service ratio rose from 5.6% of exports of goods and services in 1975 to 10.7% in 1977. - 3 - 8. The Government's overall budget position also deteriorated considerably during the period 1973-77. While budgetary revenues increased rapidly as a result of the windfall phosphate profits in 1974 and 1975 and of the growth of import duties and taxes in following years (reaching 22% of GDP in 1977), the growth of expenditure far exceeded that of revenues. Budgetary outlays rose from 19% of GDP in 1972 to 39% in 1977. As a result, the Government's overall budget deficit increased sharply, reaching peaks of 18% of GDP in 1976 and 1977. Stabilization Program 1978-1980 9. In order to redress the rapidly deteriorating financial situation, the Moroccan Government in 1978 adopted a three-year stabilization program, characterized by a substantial retrenchment of investment and import levels. In 1978, the first year of the adjustment, public investment was cut back by nearly half in real terms and the growth of current budgetary expenditure held down to 3% (in real terms). These measures of fiscal restraint were combined with tight credit policies and stringent import controls. As a result, the overall budget deficit declined to about 10% of GDP and the external payments situation improved in 1978. Later, however, the stabilization program encountered a number of obstacles, including poor harvests, petroleum price increases and the rise in interest on the commercial debt. In addition, internal pressures led to some relaxation of the highly restrictive fiscal policy adopted in 1978. By 1980 both fiscal and external imbalances were still substantial; the resource gap (in current prices) remained at about 11% of GDP, and the ratio of the overall budget deficit to GDP at about 12%. 10. The reduction in the Government deficit during the 1978-80 period was achieved chiefly through cutbacks in the level of budgetary investments, which dropped from 27% of GDP in 1977 to 12% in 1980. The growth of current expenditure proved difficult to restrain because of the continuing need to maintain defense and social expenditures, the growing interest payments on the public debt and the rising cost of consumption subsidies. The latter tripled in 1979-80 reaching 2% of GDP, as price increases for subsidized staple food and petroleum products could not catch up with the rise in import costs for these products. Reflecting these pressures, the growth of current expenditure reached 27% in 1980 and their share of GDP represented 22%. 11. In the external sector, non-oil imports were reduced substantially and remained below the 1977 level in nominal terms due to a sharp reduction in capital goods imports (by about two-thirds in real terms between 1977 and 1980). Oil imports on the other hand increased 2.5 times in value due to price and volume increases. Export earnings improved in 1979 and received a significant boost from the recovery of phosphate prices in 1980. Thus, despite a large increase in the petroleum import bill and a rise in external debt interest payments, the current account deficit before grants was reduced from $1.8 billion, or 17% of GDP, in 1977 to about $1.4 billion, or 8% of GDP, in 1980. 12. The adverse impact of the stabilization program on employment has probably been substantial in contrast with the rapid rate of employment creation during 1973-77. On the whole, the policies followed since 1.978 have had a high cost in terms of growth and employment and appear to have been only partly successful in their short-term stabilization objectives. Recent Developments 13. In 1981, the economy was subjected to strong external shocks: a substantial increase of imports of cereals, following a drought which reduced agricultural value added by about 23% in real terms; a large appreciation of the US dollar; and a rise in foreign interest rates, which further increased the cost of debt service. As a result of these factors, economic and financial performance worsened. Gross domestic product fell by 1.3% in real terms, the Treasury deficit reached 14% of GDP in 1981, and the current account deficit reached tl.9 billion in 1981 (12.6% of GDP). Economic activity improved in 1982 as agricultural production recovered thanks to a good harvest, but phosphate prices weakened, adversely affecting export earnings. GDP is estimated to have increased by 5 to 6% in real terms but the external payments situation has not improved significantly. The budgetary situation improved somewhat as a result of a combination of tax increases and expenditure restraining the measures adopted in the framework of a stand-by agreement reached with the IMF in April 1982, but the Treasury deficit remains high. Medium Term Prospects 14. The initial development strategy in the 1981-85 Plan period was to reach a high rate of GDP growth (6.5%), needed to obtain an acceleration of employment creation and a strengthening of Government programs for social and regional development. The Plan projection was, however, too ambitious and although the financial constraint lessened somewhat in 1982 as the economy recovers from the 1981 drought, Morocco's external financial situation will remain difficult in 1982-85 and will continue to constrain GDP growth. 15. Bank projections for the 1981-85 Plan period are based on the assumption that exports of goods and non-factor services could grow by 5.8% in real terms, while imports of goods and non-factor services would be allowed to rise by no more than 0.5% p.a. in real terms, as the need for food imports is expected to diminish, the increase in capital goods and oil imports to slow down, and payments for military equipment to be lower. Moreover, the growth in investment expenditures would not exceed 3.1% p.a. in real terms. Given these assumptions, domestic savings could recover from the abnormally low 1981 level (7.8% of GDP) to reach 12.5 % of GDP in 1985, the resource gap would gradually decline from 13.3% of GDP in 1981 to 7.5% in 1985, while GDP could still grow at about 4.5% p.a. in real terms or just over 1% per capita. 16. The projected export growth would result from an increase (in real terms) of 6.6% in phosphate and phosphate based products and 9.5% p.a. in manufactured products between 1981-85. Such a performance would depend upon -5- identification of new markets and could be accomplished only if high priority is given to export promotion. In the case of finished and intermediate products, the extent to which the projected increase in exports would materialize depends on the revision of incentives granted to exporters, the diversification of Moroccan exports towards non-traditional exports and new markets, and the appropriate level of the exchange rate. 17. A sustained reduction of the trade gap will be difficult to achieve unless growth of merchandise imports is drastically curtailed. This would require not only a higher increase in agricultural output so that the level of food imports would decline in real terms, but also an effective domestic pricing policy so as to limit the growth of petroleum imports (assumed at 1.3% p.a.) from 1981 to 1985. It would require moreover a reduction of the capital goods imports growth to 1.8% p.a. in 1981-85 through cuts in Treasury civilian investment with respect to the level planned in the 1981-85 Plan, and a revision of the various investment codes so as to reduce financial incentives to imported capital goods. 18. In view of the projected stagnation in per capita household incomes, any significant increase in domestic savings would mainly come from substantial improvements in Government savings performance. As part of the 1982 stand-by arrangement between Morocco and the IMF, several measures and reductions in real Government expenditures were implemented in 1982. The Bank's projections assume that progress will continue in this area. 19. Given the strong constraints on investment levels, the future rate of growth of the economy will depend to a large extent on the sectoral allocation and the efficiency of investment. In conformity with the Plan objectives, the Government should start fewer large capital-intensive projects and restrict the allocation of investments to priority subsectors. Priority is to be given to projects that are export oriented, less capital intensive and which use a greater proportion of domestic resources. In addition, particular attention will have to be paid by the Government to manpower planning and to the employment effect of investments in order to prevent unemployment from rising. Social Development 20. Social expenditures have been at a high level in recent years, accounting for more than half of current outlays. However, social indicators still appear to be at a relatively low level in Morocco. The limited effectiveness of past social policies in reaching the lower income groups, especially in rural areas, is increasingly recognized as a major issue, and the strategy of the 1981-85 Development Plan emphasizes rural development in rainfed areas, where most of the poorest households in Morocco currently live, and the need to improve mechanisms for delivering services to meet basic needs at an affordable cost, especially in rural areas. An effort is also being made to increase the involvement of local communities in meeting basic needs, particularly for low cost housing, water supply, sewerage and electrification. Although rapid results cannot be expected in any of these - 6 - areas, implementation of these policies would help meet the needs of low-income groups, while holding down the budgetary cost of social programs. External Debt and Debt Service 21. Morocco sharply increased external borrowings after 1974. Nearly all of the increase came from Arab and commercial sources. Morocco also drew on the IMF automatic credit facilities in early 1976, and obtained about $70 million in IMF compensatory financing in August 1978. In October 1980, the IMF approved an extended arrangement for a three-year period in the amount of SDR 810 million in support of a medium term program of financial adjustment. This arrangement was interrupted in 1981 when it appeared that the assumptions and targets of the EFF program were no longer possible. It was replaced in 1982 by a stand-by arrangement in the amount of SDR 281 million and purchase of SDR 236 million under the Compensatory Financing Facility. The 1982 financial program, which was supported by the standby arrangement now drawing to a close, sought to reduce the deficit in the current account of the balance of payments (excluding grants) to 10% of GDP and to decrease the overall Treasury deficit by one-third to 8% of GDP. Other major elements of the program included an upward revision of the interest rate structure, restraint in overall credit and monetary expansion, further trade liberalization, and progress with respect to both tax reform and reform of the state enterprises. Preliminary data indicates that the targets under the standby for end-1982 were met. The performance criteria of the program were observed and Morocco was able to make the last drawing under the standby arrangement in February 1983. Discussions are underway of a possible further standby arrangement for 1983/84. 22. From the low levels of 1974-75, Morocco's external debt rose rapidly to $8.4 billion (disbursed only) by December 1981. Gross inflow of medium and long term capital reached $1.8 billion in 1981. Debt service amounted to $1.2 billion in 1980, $1.3 billion in 1981 and $1.5 billion in 1982 (27%, 31% and 35% respectively, of total exports of goods and services). As a result of recent and projected borrowings, debt service may be expected to average $1.8 billion annually during 1982-85. Because of the growing burden of debt service, external borrowing has become more restrictive and selective since 1978. If debt service is to stay manageable, the Government will have to continue this policy over the next few years while taking special measures to expand exports. 23. Loan commitments from multilateral and bilateral official sources to Morocco rose from $205 million in 1975 to $1368 million in 1978. In 1979-80 they have averaged $700-800 million a year (excluding grants). In 1981 they are estimated at $1759 million. Major sources of aid were France, Saudi Arabia, the UAE, the U.S., Germany and the Bank Group. At the end of 1981, the Bank Group's share in Morocco's outstanding and disbursed external public debt was 7.5%. The share of the Bank Group in debt service was 21% in 1976 and declined to 15% in 1977, and 7% in 1981. By 1985 the Bank Group's shares in debt outstanding and in debt service are projected at about 10 and 11% respectively. - 7 - PART II - BANK GROUP OPERATIONS IN MOROCCO 24. Bank and IDA lending to Morocco has supported 58 projects, financing a total of $1,988.5 million (net of cancellations), of which $1,164.5 million has been lent since the beginning of FY1978. IDA credits, totalling $50 million, have been made available for five projects and a Third Window loan for $25 million has been made for an education project. IFC investments have amounted to $61.6 million (42.7 million after cancellations, terminations, repayments and sales). Annex II contains a summary statement of Bank loans, IDA credits and IFC investments and notes on the execution of ongoing IBRD/IDA projects as of September 30, 1982. Overall performance in project execution is satisfactory, although in some cases, delays in project implementation have been caused by management problems and budgetary constraints. 25. Past Bank Group lending has been concentrated in the agricultural and industrial sectors, which have accounted for 28 percent and 26 percent, respectively of total commitments; the balance is represented by utilities (16 percent), tourism (9 percent), education (8 percent), roads (6 percent), energy (4 percent) and urban development (3 percent). The main objectives of Bank lending in previous years were to foster and strengthen development institutions and to increase productive capacity, in order to improve the balance of payments. While these objectives remain, Bank lending now also focuses on supporting a number of other policy objectives: to contribute to the reduction of the Treasury deficits; to lower unit costs for the delivery of basic services, widen their distribution among regions and increase access by lower-income groups; and to increase employment and improve income distribution. 26. Since FY75, lending in agriculture has emphasized improvement in the productivity of rainfed agriculture and livestock, which employ over 80 percent of the rural population, primarily small farmers. The Meknes and Fes-Karia-Tissa Agriculture Projects address this objective in the favorable cereal producing zone. The Loukkos, Middle Atlas, Forestry and Oulm6s-Rommani projects extend support to less favorably endowed regions. Four lines of credit to Caisse Nationale de Cr4dit Agricole (CNCA) have helped provide credit to farmers, and a fifth project is under preparation. Increased export earnings are expected to result from the Bank-supported project for Vegetable Marketing and Production, as well as from a project currently under preparation to improve the efficiency of the coastal fishing industry. The scope of future lending is likely to be expanded to include projects aimed at improving input supply and marketing nationwide. 27. Increased foreign exchange earnings or savings have also been the key objectives of Bank projects in industry, mining and tourism and led to nine lines of credit to the Banque Nationale pour le D6veloppement Economique (BNDE) for industrial projects and four lines of credit to Cr4dit Immobilier et Hbtelier (CIH) for tourism projects. A project to increase mineral export earnings and raise the incomes of small-scale miners in southeastern Morocco was approved by the Board in FY82. - 8 - 28. Projects in basic infrastructure and services have concentrated on improving the efficiency of existing investments and extending services to rural and low-income urban groups. A second urban development project aims at supporting the Government's efforts to provide shelter, basic services and employment to low-income urban families. A third highway project supports the Government's road maintenance efforts and a fourth project now being prepared would continue this effort and improve rural access roads. A loan for village electrification is helping bring power to over a hundred small towns and villages, and a third water supply project is providing access to safe water in small towns and semi-rural areas. A project aimed at strengthening the Communal Infrastructure Fund's (FEC) capacity to support local communities is being prepared. 29. Five education projects have focused on secondary level technical education and teacher training, on expanding basic education in the rural areas and on ensuring a greater orientation in primary schooling towards practical training. Further lending will be focussed on vocational training and on primary education. 30. In order to reduce Morocco's dependence on oil imports, the Government has made considerable efforts to develop national resources, notably of gas and oil shale. These efforts are being supported by the Bank through a gas exploration project and an engineering project aimed at studying the viability of developing the country's oil shale resources. Additional projects for further gas exploration, as well as coal and hydropower development, are being studied. 31. Morocco's disbursement performance improved in FY82. Disbursement shortfalls are, however, still being experienced, particularly for a few projects in new sectors, due mainly to institutional or project management problems. These cases are being closely monitored and implementation schedules have been established specifying critical actions, in agreement with the Government. In some projects, implementing agencies have been slow in submitting disbursement requests to the Ministry of Finance for transmittal to the Bank, but the Government has recently taken effective measures to resolve this problem. The rate of disbursement has also been affected by the appreciation of the dollar against other currencies. PART III - THE AGRICULTURE SECTOR AND THE SMALL- AND MEDIUM-SCALE IRRIGATION SUBSECTOR 32. Agricultural Sector Background. About 60 percent of Morocco's 20 million inhabitants live in rural areas and their numbers are increasing by about 1.8 percent per year as compared to a national average of 2.9 percent annual population growth. In 1978-80 the agricultural sector contributed some 13 percent to GDP, 33 percent of total exports and employed about 40 percent Morocco's labor force. Arable land covers about 7.7 million ha, while areas - 9 - suitable for forestry and grazing cover a further 20 million ha. About 5.8 million ha are cultivated each year, mainly under cereals (4.6 million ha), pulses (500,000 ba), fruit trees (140,000 ha), and sugar beet (60,000 ha). Most of Morocco's rainfed areas are characterized by traditional agricultural practices which result in low crop yields and low livestock productivity. Permanent irrigation covers between 800,000 and 1,000,000 ha. 33. Agricultural production has grown less rapidly than demand over the past fifteen years leading to a rapid increase in imports. The value of food imports during the same period has grown by about 21 percent per year while that of exports has only grown by some 6 percent per year. Development in agriculture has, however, been uneven. The introduction of modern farming techniques coupled with attractive producer prices has, in the case of sugar beet and cane, milk and vegetables, resulted in substantial increases in production. On the other hand, crops such as cereals, cotton, pulses and edible oils have yielded little or no increase in production due inter alia to a combination of poor cultivation techniques and inadequate pricing and marketing policies. Irrigation Subsector 34. The small- and medium-scale irrigation (SMSI) subsector has historically been relatively neglected by the authorities. In the recent past the Government has, however, given increased emphasis to the subsector which offers opportunities both for substantial increases in agricultural production and for relieving poverty among small holders. The present five-year Development Plan thus foresees a fivefold increase of investments in the subsector as compared to the previous plan. An increase in investment in SMSI is well justified, given the potential economic and social impact of the projects. 35. Approximately 1 million ha of arable land are irrigated in Morocco although only about 800,000 ba are under permanent irrigation, the remainder being irrigated sporadically by desert floods, runoff water after violent rainfall and oasis springs. The area under more or less permanent irrigation is either identified as small- and medium-scale irrigation (SMSI) or as large-scale irrigation (LSI). Large-scale irrigation projects are generally new investments covering 10,000-20,000 ha or more. They involve large civil works for regulating and conveying water, modern distribution systems and land consolidation and they are managed by relatively independent, well-staffed regional agricultural development offices (ORMVA). Morocco has 9 LSI perimeters covering a potential 900,000 ba of which 560,000 ha have been completed. 36. The SMSI subsector covers perimeters ranging from a few hectares to several thousand, and is divided into two main categories: (i) Modern SMSI perimeters are technically similar to large-scale projects and involve land consolidation, construction of new irrigation networks with rectangular grid lay-out and predetermined crop rotation. They - 10 - are usually introduced in rainfed areas with potential access to secure sources of river water or exploitable underground water. It is estimated that some 100,000 ha of rainfed areas are suitable for development as modern SMSI perimeters. Development costs fall in the range between $3,500 and $5,300 per hectare and benefits are quite high. Perimeters which are legally delimited as modern perimeters are covered by the Agricultural Investment Code of 1969 which inter alia provides for recovery of operations and maintenance costs and up to 40 percent of investment costs. (ii) Traditional SMSI perimeters are almost invariably located in areas where irrigation has been practiced for centuries usually on the basis of springs, resurgences, or river water diverted by small dams which are rebuilt by the farmers after each flood period. Water is distributed through intricate rustic canals (where water losses are frequently high) on the basis of inherited water rights which are often not written down, but nevertheless respected by the farmers. Farms in these perimeters are predominantly very small and fragmented. Rehabilitation costs average about tl,400 to t3,500 per hectare and consist of constructing concrete intake structures, lining canals, installing permanent outlets and leveling and draining where necessary. Rehabilitation does not normally involve land consolidation but relies on traditional water rights. Substantial profits can be derived from these investments primarily due to reduction of water losses (frequently between 25 and 45 percent), permitting higher yields and more intensive cropping and occasionally extension of the cultivated areas. Since costs are normally lower than in the modern perimeters, the economic rates of return tend to be higher. Traditional perimeters are not covered by the Agricultural Investment Code, and while the farmers in these perimeters normally take full responsibility for operation and maintenance of the network through their own labor, a mechanism would have to be developed to ensure that they also contribute to expenditures for operations and maintenance financed by the Government, and a reasonable portion of investment costs. It is estimated that some 500,000 ha are covered by traditional SMSI perimeters. 37. Modernization of the SMSI subsector in Morocco faces more social and institutional than technical problems: water user rights; diverging interests between upstream farmers with relatively more abundant water and downstream farms; collectively held land; increasing fragmentation of land; inadequate institutional and legal structures to ensure adequate operation and cost recovery, all influence the pace and design of SMSI investments. These are a few obstacles which are particularly pervasive: (i) Fragmentation of land holdings. In most traditional SMSI perimeters land fragmentation is extreme and aggravated by inheritance laws allowing for further division of land in already very densely populated perimeters. On the other hand, the practical and social difficulties of carrying out a successful land consolidation program are so formidable that insistence upon such a program could easily lead to abandoning efforts to rehabilitate many of the traditional perimeters. Since rehabilitation can be economically justified anyway, although benefits will be smaller, the authorities frequently choose to undertake rehabilitation within the limitations of existing patterns of - 11i - land holdings. This approach appears realistic and the Bank supports its realization, provided that the economic rate of return is satisfactory for each perimeter. The land consolidation issue is less difficult in modern SMSI perimeters where land fragmentation is less severe and traditional water rights are nonexistent, and the prospects of substantial benefits, following introduction of permanent irrigation, tend to be enough to persuade the farmers of the benefits of land consolidation. (ii) Public land ownership linked to private and collective usufruct. In some cases farmers occupy or rent land owned by the Government under a variety of different arrangements. Usufruct and rental arrangements on low-yielding, rainfed land do not present any major problems and cultivation practices tend to follow age-old patterns. On the other hand, it appears clear that the inevitable ambiguity in land control and owner obligations could become a problem following a drastic improvement in land value due to the introduction of permanent irrigation. Within the project only about 200 ba fall in this category and the Government intends to transfer these lands to the farmers who are presently cultivating them. (iii) Water rights. Water rights, whether private or communal, are nearly invariably based on centuries of practice and have therefore assumed considerable complexity. While such arrangements may be adequate under the subsistence conditions prevailing before rehabilitation, they need to be replaced by more concrete arrangements to ensure that the new installations are adequately operated and maintained and that participating farmers make reasonable contributions to operations and maintenance activities undertaken by Government agencies and to the investments made by the Government. This would be achieved through contracts to be signed between the Government and the farmers, organized into water users' associations. (See further paras. 53, 54, and 55.) 38. Bank Agricultural Sector Strategy. Over recent years, the Bank has supported the Government's objectives of increasing agricultural production wherever economically justified and, for economic as well as social reasons, of placing emphasis on the development of rainfed areas, where a large untapped potential exists. The Bank's strategy for the coming years is to increasingly support the Government's efforts to assist the medium- and small-scale farmers who cover large areas of Morocco's arable land and where productivity has to increase dramatically if Morocco is to achieve its objectives to reduce its present dependency on imported food. To reach this objective the Bank envisages further projects in rainfed and small- and medium-scale irrigation, and agricultural credit. Furthermore, projects are under preparation to strengthen research and extension services, to improve seed and fertilizer distribution and to handle, market and store cereals. 39. Performance Under Previous Bank Financed Agricultural Projects. Bank Group lending for agriculture in Morocco began in 1965 and to date 18 projects have been supported by $621.5 million in Bank/IDA funds. They include six - 12 - irrigation projects (three of which are completed) and five rainfed projects; a vegetable production and marketing project; and a forestry project; and four credit projects. Project performance to date is generally satisfactory, although irrigation projects suffered initially from poor coordination between and within participating ministries, which resulted in delays in construction and in acquisition of irrigation equipment. A major issue has been inadequate cost-recovery, but a recent increase in irrigation water charges of about 100 percent should, together with the implementation of the proposals included under the present project, contribute to its eventual solution. A Project Performance Audit Report has been prepared for the Sebou I Project (FY70) and for the Doukkala I Irrigation Project (FY76). In the case of Sebou I, the report stresses the project's success in institution building as well as in increasing production through the provision of adequate infrastructure. It also highlights the importance of successful extension, timely allocation of funds, and collection of water charges. In the case of Doukkala I, the project was successfully completed with a rate of return that exceeded appraisal estimates. The report also stresses the effective irrigation network design, strong management and adequate extension. Both projects were also successful in reducing land fragmentation, thus facilitating the introduction of improved cropping systems. Among rainfed agriculture projects, which are mostly still at an early stage of execution, implementation has also been satisfactory so far, with the exception of the Meknes Project which has encountered very substantial delays. The major issue has been difficulties in establishing the land consolidation and redistribution program, this being the first time these measures have been attempted in a rainfed area in Morocco. This has now been overcome and the implementation of the consolidation program is underway with substantial support of the population. PART IV - THE PROJECT 40. The project, which was identified by a joint Bank-FAO/CP mission in 1980, would be the Bank's first involvement in the small- and medium-scale irrigation subsector in Morocco. The project is designed to realize some specific development schemes included in the Five-Year National Development Plan while helping the Government to establish a systematic approach to further development of SMSI projects. The project was prepared by the Government with FAO/CP assistance, and after appraisal in June and October 1982, negotiations were held in Washington in January 1983. The Moroccan delegation was led by Mr. Belkoura of the Prime Minister's Office. A Staff Appraisal Report (No. 4197-MOR) is being circulated separately to the Executive Directors. The main features of the proposed loan are presented in the Loan and Project Summary, and key events, as well as special conditions, are listed in Annex III. - 13 - Project Objectives 41. The long-term objective of the Government is to realize the potential for increasing agricultural production, yields and rural income by rehabilitating and developing the SMSI subsector, which could cover several hundred thousand hectares widely distributed throughout the country. The immediate objective of the project is to undertake the necessary investments on some 17,800 ha and to establish a systematic approach to future development. This latter objective would include measures ensuring that future beneficiaries make reasonable contributions to the development and/or rehabilitation costs and would also include the preparation and execution of future SMSI projects. Project Description 42. The project area includes five SMSI perimeters in widely separated parts of Morocco. These perimeters have different types of water sources and are located in three different climatic zones, all of which, however, have dry hot summers and irregular rainfall. The project would include: (i) rehabilitation of three traditional irrigation perimeters (Chichaoua, Ghiss and Souss) totaling about 12,500 ha; (ii) development of two modern irrigation perimeters (Middle Sebou and Jemaa Sabim) totaling an area of about 5,300 ha; (iii) support services and technical assistance to the relevant regional directorates of the Ministry of Agriculture (MARA) and to its Central Management Unit; and (iv) technical assistance and on-farm investments in the project perimeters. Project Area and Irrigation Infrastructure 43. The rehabilitation of three traditional perimeters would involve: (i) Chichaoua, covering some 1,900 ha on the northern piedmont of the Atlas Mountains, some 80 km west of the city of Marrakech. This perimeter has been cultivated and irrigated for centuries. The irrigation network was reinforced with concrete in the 1940s and has since then fallen into considerable disrepair resulting in high water losses and inequitable distribution of water between the farms. Land holdings in the perimeter, which is inhabited by some 14,400 people, average 1.13 ha with 70 percent being below 1 ba. Most holdings are privately owned. In this perimeter, 57 km of deteriorated canals would be lined in concrete or rehabilitated. Two syphons, with a combined length of 450 m would be built, a drainage network would be constructed, and about 56 km of unsurfaced roads would be rehabilitated. - 14 - (ii) Ghiss, covering about 780 ha on the Mediterranean coast. The irrigation perimeter which depends on diversion of water from the Ghiss river, has been cultivated for centuries. The present, deteriorated channels were lined with concrete in the 1930s. All land on the perimeter is privately owned and the average size of the holdings is 0.8 ba and almost 80 percent of the farms are smaller than 1 ba. There are about 9,600 persons in the area. This perimeter would be expanded from about 780 to 920 ha through the construction of some 52 km of concrete-lined canals, a new diversion weir in the Ghiss River and a concrete-lined conveyance canal of about 4 km linking the weir to the perimeter. Buried-pipe drainage would be installed and a collector would be built to divert excess rainwater from the perimeter. Flood protection dikes and a 6-km long interconnector canal to the adjacent Nekor perimeter would be built. (iii) Souss, covering about 9,650 ha, is the largest perimeter covered by the project. It is located in the southwestern part of Morocco in the 150 km long Souss valley which separates the Atlas and the Anti-Atlas mountains. The subproject would be the first phase in a program aimed at rehabilitating 22,000 ha of traditional irrigation perimeters in the Souss Valley. Earlier, this area had been irrigated by the diversion of stream resurgences but these have been steadily drying up and at least one-third of the area is currently under rainfed cultivation. Most of the land is privately owned and the average farm size is 2.8 .ba and there are almost 49,000 people living in the area. Under the project, dependence on resurgences would be abandoned and water would be provided from pumping of ground water through wells and tubewells. The present network of traditional earth channels would be replaced by 125 km of concrete canals, and the existing concrete canals would be relined. The canal network would be served by about 13 wells, 60 tubewells and 25 pumping stations totalling about 4,000 km. About 53 km of power supply lines would be constructed and related equipment provided. Some 60 km of unsurfaced roads would be improved. 44. The development of two modern perimeters would involve: (i) Middle Sebou, covering about 4,870 ba in north-central Morocco, some 60 km northwest of the city of Fes. The perimeter, which is located within the meanders of the Sebou River and is dispersed over some 28 terraces, would be irrigated by water being pumped from the Sebou River. The average size of the approximately 1,500 holdings is 3.15 ha and the number of persons in the area is about 14,800. All land in the perimeter is privately owned (except for some 200 ha mentioned in para. 37 (ii). Eleven pumping stations, totaling about 2,500 kw would be constructed to provide an aggregate flow of water of about 6,000 liters per second to the new gravity perimeter. About 80 km of power supply lines would be installed and related equipment provided. Thirteen regulating reservoirs would be provided as would concrete canals of about 190 km and an interceptor and a collection system to divert runoff water. Land would be levelled and consolidated. About 300 km of roads would be constructed or upgraded, and 32 km would be asphalted. (ii) Jemaa Sahim, covering about 410 ha on the Atlantic coast some 180 km southwest of Casablanca. This small perimeter will be developed as a modern perimeter, but because of its small size, it will not be legally delimited as a perimeter subject to the Agricultural Investment Code (see para. 36). The - 15 - perimeter will be fed by a guaranteed supply of water from the Safi canal which is the main source of industrial and potable water for the city of Safi. There are only about 1,800 people in the area and the average farm covers some 2.15 ha. At this perimenter, a pumping station and a regulated reservoir would be erected and about 14 km of underground pipes would be laid for water distribution. About 3 km of power supply lines would be drawn and related equipment provided. Mobile sprinkler equipment would be provided since this constitutes the most appropriate irrigation system in the undulating terrain on the perimeter. A system of ditches would be constructed to provide drainage. Support Activities 45. In order to support the realization of the irrigation investments, the provincial directorates of MARA (DPAs), the regional agricultural development office of Souss and the Central Management Unit would be strengthened and equipped. This would include the construction and equipping of about 142 staff houses; 11 livestock development centers; 15 livestock breeding centers, one artificial insemination center, six milk collection centers; 7 extension work centers; 3 input centers; and provision of 47 vehicles, 116 motorcycles and 30 bulls. Furthermore, a Division of Irrigation Crop Agronomy within MARA's Directorate of Crop Production (Loan Agreement, Section 3.04(a)) would be. maintained to provide a long-term focus on the particular problems of small-scale irrigated agriculture. The Government would also undertake a study on the type of small-scale animal traction and hand-held machinery and equipment most suitable in the project area. Finally, the Livestock Directorate of MARA would, as a basis for improving the genetic breed of livestock in the project areas, prepare an action plan for artificial insemination in each perimeter. The study and the action plan would be carried out in time to provide support to on-farm development at the time of the start-up of irrigation (Loan Agreement, Section 3.03). 46. About 100 man-months of technical assistance would be provided including: 8 months of short-term consultancies to assist with procurement of electromechanical equipment at Souss, Jemaa Sahim and Middle Sebou, 3 months to conduct the study of small-scale farm equipment and 4 months to assist with the preparation of a follow-up project. It is also proposed to finance the services of two civil engineers for two years each to advise on the supervision of construction, one in Middle Sebou and one in Ghiss. Electromechanical engineering consultants would be recruited to help supervise electromechanical equipment installation for one year each in Souss and Middle Sebou. Finally, an extension expert would, during one year help organize extension training programs in all perimeters before start-up of irrigation on each perimeter (Loan Agreement, Section 3.02(a) (v) and 3.03). Project Implementation 47. Overall responsibility for project implementation would rest with MARA, and its Director of Rural Equipment would be project manager. To ensure adequate coordination of project implementation and institutional development, - 16 - the Project Manager would preside over a Project Coordination Committee which would include the Directors of Crop Production, Livestock, Extension and Planning from MARA, the Directors responsible for Water Resources and for Highways from the Ministry of Equipment, the Director of Rural Affairs from the Ministry of Interior and representatives from the Ministry of Finance, ONE and CNCA (Loan Agreement, Schedule 5, Part 1). 48. Monitoring, coordination and reporting of project activities as well as evaluation of project implementation, agricultural production and cost recovery would be done by a Central Management Unit (CMU) within MARA's Directorate of Rural Equipment, which would be maintained throughout the project period. MARA would also be responsible for conducting a baseline survey and a subsequent evaluation of project benefits (Loan Agreement, Section 3.06(c) and (d) and Schedule 5, Part 2). 49. The subprojects would be implemented by the respective provincial directorates of agriculture (DPAs) except in the case of the Souss subproject, which would be executed by the semi-autonomous Regional Office for Agricultural Development for Souss-Massa (ORMVASM), which was also responsible for executing the Souss Groundwater Project (Ln. 1123-MOR). The DPA in Fes, which is already implementing the Fes Karia Tissa project (Ln. 1602-MOR), would be responsible for the Middle Sebou subproject. Between them, these two experienced agencies would implement about 80 percent of the project. 50. Some components of the project would be executed with the assistance of other agencies. The National Electricity Office (ONE) would be responsible for installing power lines and related electrical equipment at Souss, Middle Sebou and Jemaa Sahim. The Ministry of Equipment would manage construction of 32 km of asphalt roads in Middle Sebou and CNCA (the national agricultural credit institution) would provide credit for on-farm investments. 51. The implementation of irrigation infrastructure and support investments is not expected to cause major problems, but the execution of the Middle Sebou and Chichaoua components would require the establishment and staffing of construction field offices at the project sites. This is particularly the case in Chichaoua in view of the distance -- 80 km -- between the DPA in Marrakech and the project site and of the limited experience of the Chichaoua technical staff. The sub-office would therefore be built and staffed according to an agreed upon timetable (Loan Agreement, Section 3.04(b)). 52. Some further institutional arrangements regarding the irrigation infrastructure merit particular mention. At Chichaoua, upstream farmers are diverting water in excess of their water rights to the detriment of the downstream farms. Adoption of an acceptable plan for resolving this problem would be a condition for disbursement against this subproject (Loan Agreement, Schedule 1, para. 4b). In the Ghiss perimeter, it is envisaged to transfer excess water through an interconnector canal to the neighboring perimeter, Nekor, during most of the year. However, since Ghiss would not normally have any excess water in mid-summer, and since the farmers in the perimeter have - 17 - the traditional right to this water, priority for water would be given to the Ghiss farmers in times of water shortage (Loan Agreement, Section 3.08). At Souss, where all water would be pumped from the aquifer, and where private pumping during the past decade has substantially lowered the water table, it is essential to safeguard the aquifer. The Government has therefore issued a decree providing for monitoring and certain controls over pumping. Under the project, the Ministry of Interior and ORMVASM would continue to regulate pumping and keep the Bank informed about the movements of the groundwater levels (Loan Agreement, Secion 3.07). 53. A key feature of the project, and of fundamental importance for its replicability, is the principle that the beneficiaries, in the undelimited perimeters, as far as possible formally agree to operate and maintain the irrigation systems. The vehicle for this would be the establishment of water users' associations, tentatively called "Associations of Agricultural Development" (ADAs), whose members would sign legally binding statutes, under which they would assume certain responsibilities for managing and financing the operation and maintenance works. The ADAs would have an elected president, a financial officer and a management committee. Members would undertake to make specific financial contributions and approve all proposed irrigation works. The existing legal framework for the formation of ADAs is outdated and a new draft law is under preparation. In the meantime, MARA has proceeded to organize water users in the project area in de facto associations which would be legally established as soon as parliamentary approval of the new law has been obtained which should be achieved no later than December 31, 1985 (Loan Agreement, Section 3.10). So far all the beneficiaries in the Souss perimeter have been organized in de facto water users' associations. Similar associations would be established in Ghiss and Chichaoua as a condition of disbursement for these sub-projects (Loan Agreement, Schedule 1, Part 4(b) and (c)). In Jemaa Sahim, the de facto associations would be formed no later than June 30, 1985 (Loan Agreement, Section 3.09), i.e., in time for start-up of irrigation on the perimeter. 54. The statutes of water users' associations will vary as regards degree of responsibility for management of operations and maintenance. Thus, the farmers at Ghiss and Chichaoua, where irrigation works are simple and cooperation has existed for generations, would be expected to assume full responsibility for operation and maintenance of the entire irrigation network. At Souss, where the farmers have cooperative experience but are not familiar with modern pumping stations, ORMVASM would operate and maintain the pumping stations for at least three years, while about 60 local technicians are being trained to assume this responsibility. The situation would be rather different at the currently rainfed Middle Sebou and Jemaa Sahim perimeters where there is no irrigation tradition. At Middle Sebou, which will be covered by the Agricultural Investment Code, the DPA would establish an Irrigation Operations Division not later than December 31, 1985 (Loan Agreement, Section 3.04(c)) to manage the perimeter. At Jemaa Sahim the DPA would retain responsibility for the pumping station. As in the case of Souss, the responsibility for these activities would gradually be transferred to farmers. - 18 - 55. Cost recovery. As previously mentioned, the beneficiaries would cover all operation and maintenance costs as well as a reasonable portion of investment costs, either through their own work or by paying charges for investments and operations financed by ORMVASM or the DPAs. This would be achieved in two different ways depending on the status (delimited or undelimited) of the perimeter. Middle Sebou is being delimited as a modern perimeter and will therefore fall under the Agricultural Investment Code. The Agricultural Investment Code, which dates back to 1969, provides for a fixed volumetric water charge, an energy charge and a fixed land betterment levy aimed at recovering all O&M costs as well as a portion of investment costs. In its present form the Code suffers from certain weaknesses which frequently lead to cost recovery levels which are too low to even pay for operations and maintenance. It is therefore being revised by the Government to ensure more equitable and uniform application. It ig expected that the revised Code would be applied in the Middle Sebou perimeter, and that all O&M costs and 10 percent of investment costs would be recovered from all farmers. In addition, larger farmers would contribute a further 10% of investment costs. This can, however, also be achieved within the context of the Code in its present form. The other four perimeters would not be delimited and would therefore not be subject to the provisions of the Code. Consequently MARA would sign contracts with all ADAs in Ghiss, Chichaoua, Souss and Jemaa Sahim, which would include provisions for cost recovery (Loan Agreement, Section 4.05)and be signed, at the latest, six months before the opening of the respective irrigation systems. The charges would in all cases cover all O&M. In addition, the Government envisages that 40 percent of investment costs would be recovered at Chichaoua and Ghiss, 15 percent at Souss and 10 percent at Jemaa Sabim. The Government may, in some cases, decide to exempt very small farms from making these contributions to the investment costs but understandings have been reached that in such cases a minimum of 10% of investment costs would still be recovered. The different levels of cost recovery reflect not only the different costs of construction and operations to be carried out and the division of responsibility for future operations, but also the farmers' ability to pay. Project Cost and Financing 56. Total project costs are detailed in the Loan and Project Summary and are estimated at DH 572.4 million ($101.3 million) of which 42.1 million or 41.5 percent in foreign exchange. Cost estimates include DH 155.3 million ($27.5 million) of taxes and duties, or 27 percent of total project costs. Estimates are based on prices obtained during appraisal in June 1982 and updated to end-1982 prices. Physical contingencies include 15 percent for civil works and 10 percent for equipment and studies. Price escalation has been estimated for local costs at 11 percent in 1983, 9 percent in 1984 and 8 percent thereafter and for foreign costs at 8 percent in 1983, 7.5 percent in 1984, 7 percent in 1985 and 6 percent thereafter. Contingencies amount to DH 185.6 million (32.8 million) or 32 percent of total costs and 48 percent of base costs. The average cost of consultants has been estimated at t10,000 per month including international travel, subsistence and overhead. 57. The proposed Bank loan of $42 million, including the capitalized front-end fee, would finance the estimated foreign exchange costs of the - 19 - project except on-farm investments since these are financed by credits from CNCA, which already benefits from external financing for this purpose, including loans from the Bank. Remaining project costs would be financed by the Government ($56.4 million), the beneficiaries ($2.2 million) and CNCA (31 million). Procurement and Disbursement 58. Contracts for civil works, including irrigation, roads, power supply and buildings of t1.5 million or more and contracts for purchase of vehicles and equipment exceeding $200,000, totaling about $58 and $6.7 million respectively, would be awarded following international competitive bidding procedures (ICB), in accordance with Bank guidelines. Qualifying domestic manufacturers of equipment and vehicles would receive preference in bid evaluation of 15% or the prevailing import duty, whichever is less. Civil works contracts below $1.5 million and totaling about 23 million and vehicle contracts below t200,000 would be awarded following competitive bidding, advertised locally (LCB) and in accordance with procedures acceptable to the Bank affording foreign bidders an opportunity to participate. In aggregate, contracts for vehicles awarded under LCB would not exceed $800,000. Contracts for goods not exceeding $200,000 and aggregating no more than 300,000 would also be awarded following competitive bidding advertised locally (LCB), and in accordance with procedures acceptable to the Bank. An exception to the above is necessary since some specialized hydraulic equipment valued at about $2.0 million will have to be bought from the sole manufacturer under terms and conditions acceptable to the Bank. This type of equipment is currently in use in existing perimeters in Morocco, and no similar equipment exists in the world market. Acquisition of miscellaneous equipment estimated to cost less than $10,000 and aggregating no more than $200,000 as well as of selected breeding animals valued at 100,000 would be made in small lots through local shopping after obtaining at least three quotations. Contracts for about 100 man-months of consulting services would be awarded in accordance with Bank guidelines for the use of consultants. 59. Contract review. All bid packages and contract awards over $500,000 for civil works and $200,000 for goods and all contracts for hydromechanical and electromechanical equipment would be subject to prior review by the Bank as well as the bid documents for the first three contracts regardless of size for which bids would be invited by ORMVASM and each of the DPAs. These reviews should, in aggregate, exceed 85 percent of total contract values. 60. The proposed loan would be disbursed as follows: (i) 40 percent of total cost for civil works, excluding power supply; (ii) 100 percent of foreign expenditure and 60 percent of local expenditures for non-power equipment, vehicles, breeding animals and civil works and equipment for power supply; and - 20 - (iii) 100 percent of total expenditures for consultants' services and training abroad. Retroactive financing not exceeding $1.0 million would be provided for tubewell/exploratory works and a land-use survey through Landsat imagery in the Souss subproject. 61. Accounts, audits and reports. Existing financial control and audit of governmental bodies is undertaken by the Ministry of Finance in a systematic and satisfactory manner. For the specific needs of the project the following arrangements would be made: (i) the implementing agencies participating in the project would separately identify the amounts included in their annual budgetary requests for carrying out planned actions in each subproject, and the Government would separately identify the approved amounts in the relevant annual budget law; (ii) each implementating agency would maintain separate accounts for the works in each subproject; (iii) these accounts, as established and certified by the Regional Financial Controller and Treasury Officer, would be audited and physical implementation of the project verified by the Ministry of Finance; and (iv) an overall audit report for the Project would be prepared by the Ministry of Finance and would be submitted to the Bank, along with the year-end certified summary accounts of all implementing agencies, within 6 months after the end of each fiscal year (Loan Agreement, Sections 4.02 and 4.03). Environmental Effect 62. All the subproject areas are free of serious environmental and health hazards such as bilharzia and malaria. The project would not adversely affect the environment and would improve it by (i) protecting population, land and crops from floods in Ghiss; (ii) intercepting damaging surface run-off water through appropriate drainage systems in all the subproject areas except in Souss where such run-off normally is of limited scope and intercepted by farmers for irrigation; and (iii) providing an improved water supply through the irrigation system to the villages of the Jemaa Sahim perimeter, thus reducing the disease risk in this area. Benefits and Risks 63. The overall economic rate of return (ERR) of the project is estimated at 15 percent over a 35-year period, and has been calculated by aggregating the ERRs for the five individual subprojects, which range from 12.9 percent to 17.3 percent. The highest ERRs, 15.3 percent, 16.7 percent, and 17.3 percent, have been estimated for the three traditional perimeters, Gbiss, Chichaoua and Souss, respectively, and are illustrative of the rates of return which may be expected from rehabilitation projects in different types of traditional small- and medium-scale irrigation perimeters. Sensitivity tests show that under a range of assumptions the resulting ERRs would remain satisfactory for each subproject. Thus, a simultaneous decrease in benefits of 20 percent and increase in cost of 20 percent or a significant delay in benefits (2 years) accompanied by a 10 percent increase in irrigation costs would still yield rates of return exceeding 10 percent for each subproject. Such adverse changes are, however, considered unlikely. - 21 - 64. The expected financial rate of return of individual farms ranges between 13 percent and 41 percent with the lowest rates of return estimated for smaller farms in the modern perimeters of Middle Sebou and Jemaa Sabim. In the traditional perimeters, even the smallest farms are expected to obtain financial rates of return of 17 percent or more, with the majority of the farms expected to obtain between 25 percent and 41 percent. In total, some 8,000 farms and about 50,000 people would benefit from the project through an increase in their income. Higher yields, intensified cropping and expanded areas should yield an increase in value of 220 percent for crop production and 420 percent for livestock production as compared to a "without project situation." All this incremental production would be marketed and consumed in Morocco. This is not expected to cause difficulties since the increased production will be made available in relatively small amounts in a large number of dispersed markets. 65. The main risks of the project are institutional. Difficulties could be experienced in the formation of water users' associations in Chichaoua, Gbiss and Jemaa Sahim. However, the positive experience in Souss during 1982 as well as the long-standing tradition of water user cooperation tend to make these risks manageable. There is also a risk that the financial difficulties of the Government could affect budgetary allocation to the project, but this risk is also believed to be limited in view of the high priority the Government gives to the SMSI-subsector. PART V - LEGAL INSTRUMENTS AND AUTHORITY 66. The draft Loan Agreement between the Kingdom of Morocco and the Bank, and the Report of the Committee provided for in Article III, Section 4(iii) of the Articles of Agreement of the Bank are being distributed separately to the Executive Directors. 67. Special conditions of the proposed loan are listed in Section III of Annex III. Special conditions of disbursement include: (i) Expenditures for the rehabilitation of the Chichaoua perimeter will only be authorized if the water users' associations on the perimeter have been established and a rational and viable plan for the use of water of the Tajoujet network has been adopted (Loan Agreement, Schedule 1, part 4(b)). (ii) Expenditures for the rehabilitation of the Ghiss perimeter will only be authorized if the water users' associations on the perimeter have been established into associations (Schedule 1, part 4(c)). 68. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. - 22 - PART VI - RECOMMENDATION 69. I recommend that the Executive Directors approve the proposed loan. A.W. Clausen President Attachments March 7, 1983 - 23 - ANNEX I Page 1 of 6 TABLE 3A MOROCCO - SOCIAL INDICATORS DATA SHEET MOROCCO REFERENCE GROUPS (WEIGHTED AVE GES AREA (THOUSAND SQ. KM.) - MOST RECENT ESTIMATE) TOTAL 446.6/c MIDDLE INCOME AGRICULTURAL 202.2 /c MOST RECENT NORTH AFRICA & MIDDLE INCOME 1960 /b 1970 /b ESTIMATE /b MIDDLE EAST LATIN AMERICA & CARIBBEAN CNP PER CAPITA (US$) 220.0 340.0 900.0 1253.6 1902.0 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 163.2 214.0 302.3 713.5 1259.9 POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (THOUSANDS) 11626.0 14993.0 20182.0 URBAN POPULATION (PERCENT OF TOTAL) 29.3 34.6 40.6 47.3 65.7 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 35.5 STATIONARY POPULATION (MILLIONS) 81.2 YEAR STATIONARY POPULATION IS REACHED 2090 POPULATION DENSITY PER SQ. KM. 26.0 33.6 43.8 35.8 35.2 PER SQ. KM. AGRICULTURAL LAND 61.1 75.0 96.6 420.9 92.5 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 44.8 47.6 46.1 44.3 39.7 15-64 YRS. 52.6 48.3 50.7 52.4 56.1 65 YRS. AND ABOVE 2.6 4.2 3.2 3.3 4.2 POPULATION GROWTH RATE (PERCENT) TOTAL 2.6 2.5 3.0 2.8 2.4 URBAN 3.7 4.2 4.6 4.6 3.8 CRUDE BIRTH RATE (PER THOUSAND) 51.8 47.3 44.9 41.2 31.4 CRUDE DEATH RATE (PER THOUSAND) 23.4 17.2 12.7 12.2 8.4 GROSS REPRODUCTION RATE 3.5 3.5 3.2 2.9 2.1 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. 25.1 78.0/d USERS (PERCENT OF MARRIED WOMEN) .. 1.0 5.4/d FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71=100) 99.0 98.0 88.0 100.4 110.0 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 100.8 103.0 106.5/e 108.5 108.4 PROTEINS (GRAMS PER DAY) 64.6 66.5 68.3/e 71.9 66.0 OF WHICH ANIMAL AND PULSE 13.8 12.6 13.5/e 18.0 34.0 CHILD (AGES 1-4) MORTALITY RATE 36.8 26.6 15.5 15.1 5.6 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 46.7 51.7 56.5 56.9 64.2 INFANT MORTALITY RATE (PER THOUSAND) 160.5 136.3 107.2 104.3 64.2 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL 30.6 51.0 55.0/d 59.1 65.6 URBAN 58.7 92.0 100.0/d 83.1 78.9 RURAL 19.0 28.0 25.0/d 39.8 43.9 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. 29.0 .. .. 59.3 URBAN .. 75.0 .. .. 75.3 RURAL .. 4.0 .. .. 30.0 POPULATION PER PHYSICIAN 9406.1 12814.5 11037.4/d 4015.5 1617.3 POPULATION PER NURSING PERSON .. 2742.2 1826.3/e 1802.2 1063.5 POPULATION PER HOSPITAL BED TOTAL 625.6 664.3 773.6/e 641.7 477.4 URBAN .. 454.7 623.4/e 538.3 679.8 RURAL .. 5821.4 3089.6/s 2403.3 1903.4 ADMISSIONS PER HOSPITAL BED .. 15.5 17.9/e 25.5 27.3 HOUSING AVERACE SIZE OF HOUSEHOLD TOTAL 4.8 5.5 .. . . URBAN 4.3 4.9 RURAL 5.1 5.8 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL 2.2 2.4 URBAN 2.1 2.1 RURAL 2.3 2.6 ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL .. URBAN .. 68.4 65.0/e RURAL .. .. - 24 - ANNEX I iABLE 3A Page 2 of 6 MOROCCO - SOCIAL INDICATORS DATA SHEET loROCCO REFERENCE GROUPS (WEIGHTED AVE GES - MOST RECENT ESTIMATE) MIDDLE INCOME MOST RECENT NORTH AFRICA & MIDDLE INCOME 1961 /b 1970 /b ESTIMATE /b MIDDLE EAST LATIN AMERICA & CARIBBEAN EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 47.0 52.0 75.0 88.7 104.3 .AL- 67.0 67.0 93.1 104.5 106.4 FEMIALE 27.0 36.0 56.1 72.0 103.3 SECONDARY: TOTAL 5.0 13.0 22.0 39.7 41.3 'SAE 7.0 18.1 27.0 49.3 40.4 Ff_ALE 2.0 7.0 17.0 29.0 41.8 VOCATIONAL TNROL. 0T OF SECONPARY) 30.2 2.3 2.8 10.1 33.7 PUPIL-TIACER RATIO PRIELARY 42.4 34.3 40.3 34.1 29.9 SECOEDARY 6.3 20.4 21.0/f 23.7 16.7 ADULT LITERACY RATE (PERCENT) 13.8 21.4 28.0 43.3 79.1 CONS-UMTION PASSENGER CARS PFR THO'SAND POPULATION 10.7 14.8 19.6/d 17.8 42.8 RADIO RECEIVERS PER THOUSAND POPULATION 45.8 62.4 107.5 131.3 270.5 TV RECEIVERS PER THOUSAND POPULATION 0.4 11.6 38.4 44.1 107.7 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 22.1 16.2 11.8 31.5 63.7 CINEMA ANNUAL ATTENDANCE PER CAPITA 2.0 .. 2.0/e 1.7 2.7 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 3388.7 3945.2 5294.8 FEMALE (PERCENT) 10.0 14.2 15.8 10.6 24.4 AGRICULTURE (PERCENT) 62.0 57.0 52.0 42.4 31.3 INDUSTRY (PERCENT) 14.0 17.0 21.0 27.8 23.9 PARTICTPATION RATE (PERCENT) TOTAL 29.1 26.3 26.2 26.0 33.6 MALE 52.1 45.2 44.2 46.2 50.4 FEM4ALE 5.9 7.5 8.3 5.6 16.8 ECONOMIC DEPENDENCY RATIO 1.6 2.0 1.9 1.9 1.3 INCOME DISTRIBUTION RURAL .. .. 219.0/1 PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS 18.0/ 20.0/g HIGHEST 20 PERCENT OF HOUSEHOLDS 43.3/g 49.0/g . LOWEST 20 PERCENT OF HOUSEHOLDS 7.0/g 4.0/& LOWEST 40 PERCENT OF HOUSEHOLDS 18.Oft 12.0/g POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN 107.0 157.0 389.0 279,2 RURAL 66.0 101.0 238.0 178.6 184.1 ESTIMATED RELATIVE POVERTY INCOME LEVEL (JS$ PER CAPITA) URBAN .. .. 242.0 403.6 518.0 RURAL .. .. 257.0 285.6 371.1 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN 51.0 38.0 28.0 22.1 RURAL 49.0 45.0 45.0 30.9 Not available Not applicable. NOTES /a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among the indicators depends on availability of data and is not uniform. /b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between L978 and 1980. /c Excludes the ex-Spanish Sahara; /d 1976; /e 1977; /f 1975; /g Consumption expenditures of households. May, 1982 - 25 - ANNEX I DeFi4VTIONS OF SOCIAL NDICATOaS Page 3 of 6 totes: Althaugh th data ar. dra - fro t ta.. genelly judg1d the most authoritative and rellable, ib ehould also be no.td at ty tay naot bet ntet- nationauly compCaral Secause af the lack af tandardle-d detinttions and concepta us by atfferent countrs in collecting nt data. Th. date ar, non.- th.less. us.fl to d.scrih -rder of sagituads. trdLcata trend&, and characterize certai tajor differences between countries. Thm refeence grups art (1) th. sam country Brop af tjh subjt country and (2) a country grop with Aæsonht ihigher trage incomseg.an the country group of heb subj.ec country (ecbpt for 41gh Lnom OLl Exparters" group where "Niddle Income North Africa and Middle East" Is chots beuo f tr socio-nultural affinities). In the aeference group data ano average. are popultton eignted arthmen~c meana for ac b "nd"a"or and shon only when najorty ot the counries na group hS data for that Indicator, sbnc te coverage of countries s n e d ator. denads un th. .aalablity o data and Is nat unfor, caton tust be eoacisedbn nelating averages af one indicator no anoher. Thase avenages are only usef A n comparing tbhe alue ane indicao at a tine atong tht cuntry and refearc. group.. ARA (thou.and sq.k..) Populationpe R 1dtalaBd-atoal, rban, and rur- --putin' Iot T otal - otal aurface are eprtsing land arse and inland ater.; 1979 data. urban. and runal) dbvided by their reapectve numne oa hoptal beds Aricltural - Etitnen nn agrculrurab are. used temporably permanently avatlable npubli and priate general and 3pecialnac hoapital and ra- oy arops, panaues, sarea and kioth.n gardena or no lie tallow; I979 dala. nabiltnaco ceneors. toptals are nata- shnts an....ently sana"ed by at least oe pby.ican. Eablutmmentt pronidlng principally austo- CNP PER CAPITA (US$) - G P per ceta *stimtes at current mret prices. cal- dial cae ane non included. Rural hospltal., however. tnclude heaLth culated by sa con,erion ethod a, World Babk Atlas (1978-80 basjb); 1960. and mdical cntees not yermanentely staffed Sv a pnascan a(bt by A 1970. aad 198 data. -dical assisaina, nurs., ldife., etc.) whiten ater In-patnent accom- dation and provide a libzed range o sedical tac ilties. F n t"t s- ENERGY CONSUMPTION PER CAPITA - nnal uonsunt. on ft comercial enanr ,erg a1 rbal purpose urban hospitals include Wd0s plinc2palleneral boanitals, oband Lnite erroeum, natural ga u and hydr-, nuclear ond geotaerhal n lc- and rural hospitals. (ocal ar rural hospitals and aledil and naternity tricity; ba kilnoran ni tal ielenr per capita; L960, 1970, and 1979 centers. Speecallaed hospizals ae in lued only ucer toeal. data. AMisons" Per dospital 3ed - Total nune of adef aona no rischarges Ero. hosptnalt divided by the nomber f bede. POPT"A,ION AND VITAL STATISTICS Total Population, Mid-Taar (tha.nd.) - As of july l; :960, 1970, and 1980 HOUSING ana. Average bie nf yHonnnhld (nertone per household> - noal(, arban, and tons>- Urban Pop t (perceant af tonal) - Rati of urbn to it-al population; A h uebold enne.ats of a grup 0f individuea wo share lin elg uartes differn denfinitions ot urban aes may affect comparabtlity af data and thmie an eals. A .oad.r or lodg.r may er may nor e nacluded In ao counries; 1960, 1970, and 1980 dat. abe household for staistical puros.... Pooulaton Prolnctons Averatenbrotersaon ner room- total, urban, and rura> -naera noe- Population le year b000 - Curren population projections ane based an 1980 ber of panton, par ron. all urtan. aod rural occupiedcoanveninal ttal popuation by og, nd se, and th,ir -ortallty and terility rtes. dwellins re.pectiely. D.ellIng. etcld. no-p-enmnettrtures and Projection peaates far or tality betescopris of tahree (evels asa.- un,cupied parts. >bg life expectnc at bIrt' isnreasing with conntry'a par capita incom. cceste ilectity (percetnt o llings) - total, urban, ad runal - Innvl, and tele I fe extpecnncy stablizin g at 77.5 yeara. Th« para- conventibnal daellnswihalectricity ton-lu vng quartrsi as Ctre far fertility rate also have thrae evsela assuming decline In at total, urban. and rural doelling. re.pactiv.ly. fertilty, accordlag to ncone leve> and past famly planning pertra-nce. Each country is then assigned no of these nne ombinatione Of ortlity EDUCATION and fertility trend for project.on purpoe. Adtuated Enrollment R.Cin Statianary population --nattoary population thre is no graothn ce PrImary ochool - notal. male nd female-Grnss total. sale and female the birth rate is equal to -he deash rate. and also che agt strucrure re.- rnollmen oa ell ages abe prImary (avels 'aecnages at r etive mainsncoastant. Thit S anievd oly aftern ' ftliCy attes declne to primary school-age populationa; normally includes chkldren aged 6-1 the replacennt level ot unit net reprodactin rate, a en ach generation years but adjuted fon differ.nt lengtha of primary education; ton of aoPen neplate tself e.atly. The stabaonypoulaio ansea counrie with universal edtlatin enrollmeant ay exceed 100 peruet estlmted onh: bSat ot t projected character,stic of ahe f nppuap n sinte ome pupils are belna ar abose thn cfficial school abe. Lo the y-e 2000, end nhe r-L 1 of decln of at rtiltly rate to replane- Secondary scbonl - botal. solo and teale - Camputed aah3bove; seacodary cent Ie-I. educanon reqire"at l (east toar years opproed premary Lastuction., Sean astaonary popula:l.n .a reached - The yen hen. atatinary poplaton providea grenral, vncarionad, an teacher eraining lnscructIns or pupls tie oIll be reahed. uually nf 12 to 17 yeArs of .a; correspondence coresnaa generally Pyopulation Density ex0 luded. Pen s . - Kid-year populacion ner squart aloeLer (100 hctars) r Vocattanal ev, nllmnst ( ntrcuant 2fseonary) - Vocaton institt tntal aea; .960, 1970 and 1979 data. inlue tenical, industrial, an other pragsamo w-'hi onrate independ- Per sq. km. agricultural land - C-oputed as above for agylcultural land ently o as departments of secondary Institutions. noly; 1960. 1970 end (979 dets. Pap.il-anar ratio - priary, and secondany - Total students enrallzd Is Popelulanon etructure (percent) - Children C-l4 yearu, working-age (15- priay and secondary (evtle divided by oumbera teachers in tja a4 years). and retied (65 yeer. ond over) an percenagsg of ad-year pop- carrepondIng lenel. latio; 1960, 1970, and 1980 data. Adult 1itracy rate (p,re,nt) - Literale aduts able toread tond -It.) PopainsLIb Gonth Rtea (nPcent) - total - Annual groah tats. nf total mid- asapercentage f total eduli populatin agsd 15 years ad over. Yeer poblation for 1950-60,. 960-70, and 1970-80. Poulatin Grta Rate (p. r Ct) - rban -dAnal droen nates f urban popu- CONSUMPTIGN lations tor 1950-60, 1960-70, and 970-80, Paasenger Cars (per Chou-and population) - Pasnenger carn camprise antor Crude girb bet (ne1r taouand) - Annual live tSa pan nhosand of sid-year carn asating bese than eight persons; excludes ambulances. hearsean d population; 1960, 1970, and (980 data. eilitary vehitcles. Crude Deatha taLt (pe thousand) - Annual deatha per thousand of mid-year gadio Receivers (per chousand ppolation) - All types of recivs for radio populacton; 1960. (970, ond 1980 data. broadcaest no general publIn per thouand af popelaon; exc lad.. un- .ross Reproduction Rat- Averag nsuber of daughes oma g-ll arn len receiver. in cu.ounres nd in years uhen regi.trtion .f radic Set nonmal reproductive perind if aha experincea preen ag-specfic far- s s. -a n off.et; data fon recent yeas maynt be oaable snce 01lity rac; aaually ive-year aragen endina 1 60, 1970. and 1960. anet countrle.saolished l. icnsig. Family Plannag - Acteptats, anual (thousands) - Annual nu-ber of anceptors TV Receivers (per tuand populatot) - TV recetvers ior boadcast L df btrth-control device* under auspice. of national family planing Program. ganeral pubkic per thousend populatlon; exIndøs unlicensed TV reivers Fa.ily Plannin. - User. (percent fareud eb)f - Pancetat' married 1n countrea and in ytars when registration af TV ses ns is efct. Wonen at child-beaing og. (154-4 years) ahaouse brLh-control de,ices to Net.ar Circulation (per thousand populan) - Shos th. ave .a cir- alL maraied oansd insa ag - g.P. culation of 'daily general rnterest newupaper" def ined asa p-iodical pubbcaion deoted prlimarily to recording general nes, It l cons.ideed OOD ABND t UTRLITION to on 'daiily" if t appears at least four imesaweek. Inde0 nI Food Producbio per Capita (1969-7-100) - Inder af per capita annanl CInema bann uatedanc ben Capita pør Year - Bae.d os the numbe. If produton o all band co.dtie., Productio excludea seed nd ieed and nickats sold drtng be ye.. luding admessio te dr ve-n enre- a is an calenar ye«a natis. Codittes cover priary goode (.g. ageatrae asd mobLi units. inreed f aug.a) which ore rdible and costnta nutri.nt (e.g. coffee and nea ane exclgded). Aggregate production nf each councrya isad os LAB.OR FORCE natioal anerage producer price weightt; 1961-65, 1970. nd 19g0 dat,. Total Labor Fnrce (thousands) - Econo~ically active persona, including ben copta (uly nf calories percent of requirement) - Copted fro. ar,ed torces an uneployed but ecludlng housees, students, etc., tenrgy aqul .nt of --t faod suppli. avalabl. is country per apita covering population of al> ege. Deinitions le varios coucnes na per day. A..ilable supplies c.ffris d.-sti. production, Impots les cat co.parable; 1960, 1970 and 1980 data. n.port. and nhangs l inok. l. t supplite exclud1 an al fed, sey-e. ealt percent) - Fbnale labor forcea percntage of total laban tore. quanit4es se le-tood procesLag, end losss Ln distributir. Rrquit- Agricureercnt) - (abor torc Ln fartng, etry, hunting and ntswersseesttfated by 760 based an physiological needs for sorn. anI- ftibl g nu percentage af total se>lebor f e; 19k, 1970 nd 1980 data. vity and health consdering environtental teepeatu0 odwegt, age Induscry (pearect) - "abor force Is mining. construct£n. anufacturtaig and aef dseribation of population. and allowing 10 parrent for sete at and eluetricity, waer asd ges asnprcetaguet fotal laber forae; hosehold leeel; 11-65, 1970 and 1977 data. 1960, 1970 ted 1980 da. Per capita supply f Protin(n. nar day> - Protein content nf pas capita Prcpa tton tabs (percent) - oanl, negat end teual. - Participation an ann supply of food per day. Nst suppyp no fond ba defid asnabov. Re- activity rates ae puted as total, tel., and ffeoe aker forceaa quir1ent' forn1 al contrie. stablished by USDA provtde for miultae percentege* of toral, nel and feste populatio of all ages restvely; allownces of '60 grams of total protein per day and 20 gran. og anml and (960. 1970, and 1980 data. Thee ane based oa ILO'. pareccipaton rate Pouse protein. of which 10 gate snuld b. anal protain. Thesa stand- eflecting nsu-s structur. ot the populatlon, and long ti~ trend. A ards re. lower an ghoe of 75 gram of total protein end 23 grama af aew entie,s are frOme national so..rc. .aimal P.rte as ans aeag for bha enld, proposed by bAO in the Third Econoait Dependncy Rati. - Rato af population under 15 and 65 and over W.rld Food Survey; 1961-6., 1970 and 1977 date. to the total labor force. Per napita protein supply fron anial and pul!y - Protet aupply of food de- rived froe aniaela and pulsa In graa pe day; 1i-65. 1970 and 1977 data. INCOKE DISTRIBUTION ChIld (egen b-et Deatb Rate (pr chousandt - Annual death, pen .housand in Percntag.eofPrivat. lnacom (both in ash and kind) - R-cived by richent a group 1-4 yearu, to chldren in thiu agsroeup, for m-er developingr oun- 5 percent, nicheat 20 prcet, ponet 20 perenet, and poorkst 40 percent tries data derived from lifs table&; 1960. 1970 and 1980 data. of h.osehold. HEALTH POVERTY tARGET GROUPS Uf EOtcty at Birth (yetro> - Arage nber at yean. af l>fe retI.ng he follow8ng esrimaee ar vry nppnomate mansu of ponerty leves. nr hbntha 1960 1970 ane 1960 data. and should b, inc-rpted wth consid*rable naution. Infaot Mortality bete (e fnousand) - tAnna deaths of in0anta under ota yea sated Abolute Poverty Innme Levn> (S$ nar capita) - urban and rral - nf ags per thosad lIne births; 1960. 1970 and 1960 data. Absoluba poety inOne >evel Is tha income 1eve1 belro hich 0atmnl Acaess to teaf noter Capeent oaf ppulation) - oanul, uran, and aunal - Nus- nutrito ally ad.quate dit plus essetial non-food rquLements I. nt aer af people (total. urban, and rueal) with neasoablu acceu to sole affordabl. ater supPly (inClude re ared surta - vaters or untraated but uncontatnated Etalnsed Relative PovertZ Incoe Level (USS pe cpit - arban ond antal - waten sank at that froe protectd borahole, nprings, und anLcary nella e) ulI relative poverty income (annl is one-third of aeorg, par capit p entess ef th.t respctlive popationa. na urobannaeanelic eonal >noe af ehe aounry. Prbnr .se is derined a ro the naa> fauntain oa ntandpost locaed net -ors han 200 usters fra a honne -y be lene> wth adjustent for higher coat of liaing in urken see.. constderedas ing withia neasonble as. af that a.ous. In nal aaa Estimted Population Belw Absolut. Poverty tcon. Level (peraenta - ub.an rea.sknble accesso*uld Lmply tat nht housuwbfe ar abers nf ts househo ld and rural - Per-ent af population ran a n ae) ho ae "absolut da .oe hae to spenadspoortone pant dl the ay 10 tchnlg heo fatily's "ater nueds. Acce.s to Ex,eta DItosael aeent f population) - tea, arba. and nural - nmber at people .tal, uan., and rural) srved ky ..creta ditposal at Pnrcentagea of ahir respective paptulatn. aEcr.e dsp.sal may inlud. r.he collaetion aud disp.al. eatb ar nuta n tre-taent. ni eta ta ond wast-ater by ater-onarnå syat or ht use af pit privtes and ali- (ar lnstallatios. Population "er hyscatn - Pop-latron died9 by ~ner at practj.ng phyli- Ecooic asd Social Dons Divisin clans qualified ftoZa medical school at univesity lave>i- Econemie Anlysis and Proj«ctions Departmant Population per urng- Person - Populatien divid.d by number oi practiaintg May 1982 sale nd felu graduat snues, as-lstat orss. pnriacal nurss end ntursing auxiliaries. - 26 - Population : 20.8 million (mid-1981) ANNEX I GNP Per Capita. US$ 870 (1981) Page 4 of 6 MOROCCO - ECONOMIC INDICATORS Amount f/ (million US$ at Annual Growth Rates (%)- current prices) Actual Projected Indicator 1980 1977 1978 1979 1980 1981e/ 1982 1983 1984 1985 NATIONAL ACCOUNTS Gross domestic product a/ 17820 6.0 2.2 4.8 3.6 -1.3 4.0 5.1 4.5 4.3 Agriculture 3229 -12.3 18.0 -1.7 6.2 -23.0 7.0 9.6 3.1 2.5 Industry 5752 8.0 -0.9 7.7 -2.5 -0.5 3.7 4.6 5.4 5.1 Services 7762 8.5 4.0 5.1 6.4 3.4 3.7 4.3 4.3 4.3 Consumption 15770 5.3 4.2 5.8 2.5 2.2 1.3 4.2 3.5 3.6 Gross investment 4025 15.6 -25.9 1.3 -7.3 -3.6 6.5 -1.1 3.7 3.2 Exports of GNFS 3.273 10.3 3.3 0.9 3.7 3.5 4.5 7.0 6.3 5.3 Imports of GNFS 5247 14.5 -17.4 3.3 -9.8 10.7 -1.9 -0.6 2.2 2.3 Gross national savings 2606 1.5 -15.4 3.2 6.0 -20.6 9.5 15.6 13.2 1.7 PRICES GDP deflator (19b9 = 100) . 172.0 186.5 200.2 218.4 241.2 Exchange rate (US$ per DH) . .222 .240 .256 .254 .193 Share of GDP at Market Prices (%) Average Annual Increase (%) (at current prices)d/ (at constant 1969 prices) (at constant 1980 prices) 1960 1970 1975 1980 1985 1990 1960-70 1970-75 1975-80 1980-85 1985-90 Gross domestic product 4.0 4.6 5.1 3.7 5.1 Agriculture E/ 29.1 19.2 17.9 18.1 17.1 15.1 3.5 -2.1 3.8 2.5 2.5 Industry b/ 23.5 27.2 35.2 32.3 34.9 35.8 4.7 7.1 4.2 3.9 5.5 Services 47.4 53.6 46.9 49.6 47.9 49.1 4.1 5.5 5.9 4.0 5.5 Consumption 89.2 85.5 85.5 88.5 87.7 84.0 4.1 4.8 5.8 3.0 4.2 Gross investment 10.3 18.5 25.4 22.6 20.0 20.0 8.0 9.3 -2.8 2.0 5.1 Exports GNFS 27.4 17.6 22.5 18.4 20.5 22.7 1.3 2.1 4.9 5.5 7.1 Imports GNFS 26.9 21.6 33.4 29.4 28.7 26.7 3.5 8.1 0.5 1.7 4.0 Gross national savings 11.0 14.8 19.3 14.6 14.5 17.9 3.5 15.3 -4.4 3.0 10.0 As % of GDP 1960 1970 1975 1980 1981 PUBLIC FINANCE Current revenues 16.5 16.1 23.3 21.6 23.3 Current expenditures 15.6 14.5 20.2 21.8 24.7 Surplus (+) or deficit (-) 0.9 1.6 3.1 -0.2 -1.4 Capital expenditure 3.8 5.7 12.2 12.4 12.6 Foreign financing .. 1.3 3.7 5.6 9.3 1960-70 1970-75 1975-80 1980-85 1985-90 OTHER INDICATORS GNP growth rate (%) 4.0 6.0 5.2 3.4 5.1 GNP per capita growth rate (%) 1.6 3.1 1.8 -0.1 2.0 Energy consumption growth rate (%) 3.8 6.7 5.6 4.3 5.0 ICOR 3.09 3.0 4.1 6.2 3.9 Marginal savings rate 0.10 0.38 -0.15 0.27 0.28 Import elasticity2L 0.95 1.84 0.13 0.95 0.78 a/ At market prices. h/ Share of GDP at factor cost beginning in 1985 and sectoral growth rates at factor cost beginning in 1980-85. c/ Goods only. d/ Projected years at constant 1980 prices. e/ Estimates. f/ 1977-1980 at 1969 prices, 1981-85 at 1980 prices. January 27, 1983 EMENA CP II-B ID 0180B P.1 - 27 - Population . 20.6 million (mid-1981) ANNEX I GNP Per Capita: US$ 870 (1981) Page 5 of 6 MOROCCO - EXTERNAL TRADE Amount Indicator (million US$ at Annual Growth Rates (%)1/ current prices) Actual Projected 1980 1975 1977 1978 1979 1980 1981 1982 1983 1984 1985 EXTERNAL TRADE Merchandise exports (FOB) 2414 -21.9 10.7 5.3 1.8 5.1 1.0 4.0 7.8 6.7 5.1 Primary products 1823 -25.2 7.7 5.4 0.0 5.8 -8.1 1.2 3.4 3.8 3.5 Phosphate rock 765 -29.9 9.6 9.6 3.2 7.4 -5.4 0.0 3.0 5.0 4.0 Others 939 -22.3 6.5 2.8 -1.7 14.7 -10.0 2.1 3.7 2.9 3.1 Intermediate & manufactures 591 -1.4 23.8 5.0 7.1 2.8 27.4 9.8 16.3 11.8 7.6 Merchandise imports (CIF) 4283 21.2 14.4 -19.9 6.6 -7.1 9.3 -1.9 0.5 3.9 4.0 Food 720 37.8 0.4 8.6 2.2 3.4 32.5 -16.8 -0.9 2.1 4.5 Petroleum 1006 12.8 8.7 11.0 12.1 -11.9 10.8 0.0 -1.1 3.3 3.2 Machinery and equipment 805 51.7 26.7 -44.3 -3.2 -19.8 7.5 3.0 -2.5 4.0 2.9 Others 1752 4.0 13.0 -15.1 12.5 -5.2 -0.3 2.6 3.7 5.0 4.8 PRICES (1980 = 100) Export price index . 89.9 68.4 69.7 83.5 100.0 123.3 125.1 137.1 153.5 171.8 Import price index . 64.1 67.9 73.0 79.2 100.0 122.3 130.9 140.2 154.3 169.8 Terms of trade index . 140.3 100.7 95.5 105.4 100.0 100.8 95.6 97.8 99.5 101.2 Composition of Merchandise Trade (%) Average Annual Increase (%) (at current prices) (Constant 1969 prices) (Constant 1980 prices) 1960 1970 1975 1980 1985 1990 1960-70 1970-75 1975-80 1980-85 1985-90 Exports 2.0 -1.2 6.6 5.2 7.6 Primary products 89.5 89.4 86.9 74.4 60.5 49.1 .. -2.7 5.3 1.3 3.3 Intermediates & manu- 10.5 10.6 12.9 25.6 39.5 50.9 .. 8.1 12.1 14.0 13.0 factures Imports 4.0 9.1 0.7 2.4 4.0 Food 27.3 16.9 25.0 16.9 16.9 15.5 .. 14.0 3.0 0.7 2.4 Petroleum 7.4 5.5 10.8 23.6 23.6 22.4 .. 9.6 5.3 2.4 2.8 Machinery and equipment 6.7 24.1 24.0 18.9 18.7 19.2 .. 12.8 -7.0 2.4 4.5 Others 58.6 53.5 40.2 40.6 40.7 42.9 .. 5.5 2.9 3.3 5.1 Share of Trade with Share of Trade with Share of Trade with Industrial Countries (%) Developing Countries (%) Capital Surplus Oil Exporters (%) 1960 1970 1980 1960 1970 1980 1960 1970 1980 DIRECTION OF TRADE Exports 72.3 73.7 76.5 27.7 25.4 21.6 .. 0.9 1.9 Imports 76.7 74.9 72.9 23.3 25.1 8.3 .. .. 18.8 1/ 1975-1980 at 1969 prices, 1981-1985 at 1980 prices September 22, 1982 EMENA CP II-B ID 01808 p.2 - 28 - Population 20.8 million (mid-i981) ANNEX I NP Per Capita: US3 870 (1981) Page 6 of 6 MOROCCO - BALANCE OF PAYMENTS, EXTERNAL CAPITAL AND DEBT (million US$ at current prices) Iacator Actual Projected 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1990 BALANCE OF PAYMENTS Esports of goods and services 2288 2486 2955 3694 4364 4132 4087 4669 5401 6193 11297 Of which: Merchandise f.o.b. 1245 1283 1488 1938 2414 2283 2180 2575 3077 3618 7163 imports of goods and services 3691 4364 4353 5268 5912 6095 5780 6276 6930 7734 12812 Of which: Merchandise f.o.b.l 2305 2820 2628 3245 3770 3840 4054 4365 4994 5714 9856 Net current cranfers 47 52 50 44 128 102 - - - - - Current account balance -1355 -1826 -1348 -1530 -1420 -1861 -1692 -1607 -1529 -1541 -1515 Special grants 435 360 260 420 314 313 84 197 320 150 232 Current account balance after grants -920 -1466 -1088 -1110 -1106 -1546 -1609 -1410 -1209 -1391 -1283 Private capital 38 53 45 37 88 68 76 85 96 106 171 MLT loans (net) 838 1338 1109 946 971 1205 1071 1425 1371 1666 1359 Official .. .. .. .. .. 1315 994 736 878 982 1092 Private .. .. *. .. .. -110 77 689 493 684 267 Other capital 28 68 -73 73 -200 17 .. .. .. Monetary movementsb/ 16 6 8 53 247 258 462 -100 -258 -381 -263 laternational reserves 548 609 772 917 814 508 470 543 653 787 1635 Of which: Gold 82 104 154 360 415 278 278 278 278 278 278 Reserves as montns imports 1.8 1.7 2.1 2.1 1.7 1.0 1.0 1.0 1.1 1.2 1.5 EXTERNAL CAPITAL AND DEBT c/ Gross disbursements 725 1787 1182 1405 1567 1807 Concessional loans 111 636 325 293 750 1089 UAC 63 109 91 76 96 138 OPEC 41 507 189 168 584 837 IDA 4 3 - - 1 2 Other 3 16 45 49 69 112 Non-concessional loans 614 1151 859 1113 818 718 Official export credits 22 27 2 2 12 128 tBRD 59 68 72 137 64 120 Other multilateral 2 6 53 7 13 86 Private 531 1050 732 967 729 375 Suppliers credits 10 171 10 8 16 6 Financial credits and bonds 521 879 722 957 713 368 External Debt Debt outstanding ane disbursed 2330 4069 5123 6182 7097 8381 official 1250 1975 2456 2833 3482 4865 Private 1080 2094 2667 3349 3615 3515 Undisbursed debt 801 1024 2280 2337 2058 2901 Debt service Total service payments 162 264 547 798 1191 1340 Interest 66 148 252 410 618 738 Payments as % exports of 0+S -1 7.2 10.7 18.7 21.8 27.0 31.3 Average interest rate on new loans (%) 7.7 6.8 7.0 8.2 8.1 8.5 Average maturity of new loans (years) 11.7 13.1 13.2 15.9 13.7 8.0 As % of Debt Outstanding at End of Most Recent Year (1980) Maturity structure of debt outstanding Maturities due within 5 years 47.9 Maturities due within 10 years 88.0 interest structure of debt outstanding Interest due within first year 7.3 a/ c.i.f. for projected years. b/ Projected values include IMF credits. c/ Years 1976-80 from IBRD External Debt Reporting System, 1981 from the BOP statistics. There are sizeable discrepancies in some years between the external capital and debt service flows reported under the IBRD Debt System and those recorded in the official balance of payments statistics shown in the upper part of this table. d/ Excluding debt service on IMF loans. January 27, 1983 EMENA CP II-8 ID 0180B p.3 - 29 - ANNEX II Page 1 of 10 A. STATEMENT OF BANK LOANS AND IDA CREDITS (As of September 30, 1982) a/ Loan or US$ Million Credit Amount (less cancellations) Number Year Borrower Purpose Bank IDA Undisbursed Twenty-four Loans Fully disbursed 617.4 Four Lrecits Fully disbursed 36.0 1018 1974 Kingdom of Morocco Agriculture 32.0 8.4 555 1975 Kingdom of Morocco Agriculture 14.0 11.1 1202 197b Kingdom of Morocco Tourism 21.0 11.6 1)20-T 1976 Kingdom of Morocco Education 25.0 14.6 141b 1977 Kingdom of Morocco Agriculture 41.0 30.5 t426 1977 BNDE DFC 35.6 2.5 S-7 1977 Kingdom ot Morocco Engineering 1.5 0.5 1528 1978 Kingoom of Morocco Urban Development 18.0 15.2 ibO2 1978 Kingdom of Morocco Agriculture 65.0 59.1 1625 1978 Maroc-Phosphore Industry 50.0 5.9 1681 1979 Kingdom of Morocco Education 113.0 108.9 1687 1979 Kingdom of Morocco DFC (SSI) 25.0 12.8 1695 1979 Kingdom of Morocco Power 42.0 41.9 1704 1979 CNCA Agriculture 70.0 30.8 1724 1979 Kingdom of Morocco Water Supply 49.0 30.4 1757 1980 Kingdom of Morocco Agriculture 58.0 49.6 S-18 1980 BRPM Oil Exploration 50.0 20.7 1830 1980 Kingdom of Morocco Highway 62.0 53.8 1848 1980 Kingdom of Morocco Agriculture 34.0 32.2 1943 1981 CIH Tourism 100.0 70.9 1944 1981 Kingdom of Morocco Urban Development 36.0 36.0 2006 1982 Kingdom of Morocco Water Supply 87.0 87.0 20371/ 1982 BNDE DFC 70.0 70.0 20381/ 1982 Kingdom of Morocco DFC (SSI) 70.0 70.0 2U821/ i982 Kingdom of Morocco Agriculture 29.0 29.0 21091/ 1982 Kingdom of Morocco Mining 9.5 9.5 21101/ 1982 Kingdom of Morcco Forestry 27.5 27.5 21141/ 1982 ONAREP Oil Shale 20.0 20.0 21491/ 1982 Kingdom of Morocco Education V 50.0 50.0 Total 1908.5 50.0 1010.4 of which has been repaid 239.4 1.2 Total now outstanding 1669.1 48.8 Amount Sold 20.1 of which has been repaid 17.7 2.4 Total now held by Bank and IDA 1666.7 48.8 Total undisbursed 999.3 11.1 1010.4 NOTE a/ Does not include the Oulm s Rommani Agriculture Development Project, loan of $30 million, approved December 14, 1982. 1/ Not effective as of 9/30/82. However, since then the following loans have been declared effective; BNDE IX, Forestry, Small-Scale Mining, Middle Atlas Agricultural Development, Small Scale Industry II, and Oil Shale Engineering. B. STATEMENT OF IFC INVESTMENTS (As of September 30, 1982) US$ Million Loan Equity Total 19b2/1978 BNDE Development Bank - 2.7 2.7 1966 CIL Canning Factory 0.9 0.5 1.4 1970 Marrakech Cement Cement Factory - 1.3 1.3 1977/1980 Temara Cement Cement Factory 4.7 3.6 8.3 1979 Agadir Cement * Cement Factory 12.5 2.2 14.7 1980 SOMIFER Copper Mining 13.0 2.3 15.3 1981/1983 Casablanca Cement Cement Factory 15.8 -2.1 17.9 Total Gross Commitments 46.9 14.7 61.6 Less cancellation, terminations, repayments and sales 15.4 3.5 18.9 Total commitments now held by IFC 31.5 11.2 42.7 Total Undisbursed 15.8 2.4 18.2 * Agadir Cement has been cancelled. - 30 - ANNEX II Page 2 of 10 C. PROJECTS IN EXECUTION AS OF SEPTEMBER 30, 1982 1/ Ln. No. 1018 Sebou II Development Project; USt32.0 million of June 27, 1974; Date of Effectiveness: February 28, 1975; Closing Date: December 31, 1982. The project as originally appraised was completed in November 1980. Funds have been fully committed for the additional infrastructure works and equipment provided for under an amendment.to the Loan Agreement approved in July 1980. Final disbursements are expected by end-March, 1983 and unused funds will be cancelled. Cr. No. 555 Meknes Agricultural Development Project; USW14.0 million of June 11, 1975; Date of Effectiveness: November 14, 1975; Closing Date: June 30, 1984. After a 2-year initial delay, project implementation has picked up momentum. Major activities concerned with the land consolidation and redistribution program have been completed in one district and civil works (roads, destoning and irrigation rehabilitation) have been started in the remaining three districts. Progress is slower than expected, mainly because project implementation has proven more complex than anticipated, which has been aggravated by project management problems. However, the first results of the completed components are promising. Because of the initial delay and the complexity in implementation, the original closing date was extended by three years. Ln. No. 1202 Bay of Agadir Tourism Project; US$21.0 million of February 27, 1976; Date of Effectiveness: October 29, 1976; Closing Date: December 31, 1981. The project consists of infrastructure works and common facilities for a hotel/residential tourism development complex. Most infrastructure works were completed in December 1980, except for the construction of common facilities (representing some 20% of the total project costs). This delay is mainly due to institutional and project management problems. Project 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any problems which are being encountered, and the action being taken to remedy them. They should be read in this sense, and with the understanding that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution. - 31 - ANNEX II Page 3 of 10 completion is expected to be delayed by at least 18 months, and an extension of the closing date has been under consideration for a long time since it has been made contingent on the Government's agreement to an action program. The Government has now been advised that the Bank will cancel the balance of the loan on December 31, 1982 unless an action program has been agreed upon by that date. Ln. No. 1220-T Third Education Project; US$25.0 million of March 18, 1976; Date of Effectiveness: October 1, 1976; Closing Date: September 1, 1983. The project is designed to expand and improve primary and secondary education in rural areas and specialized training to meet manpower needs in education, agricultural extension, health and tourism. After an initial two-year delay, construction under the education and agriculture components is largely completed and funds are committed for the equipment and technical assistance components, but lengthy delays have been experienced in the implementation of the health and tourism components. Ln. No. 1416 Doukkala II Irrigation Project. US$41.0 million of June 16, 1977; Date of Effectiveness: December 1, 1977; Closing Date: June 30, 1984. The project aims at extending irrigation and related agricultural development in the Doukkala perimeter by 16,600 hectares; it also calls for provision of extension and credit services, and village infrastructure. The land consolidation program and the enlargement of the main canal are proceeding according to schedule. Implementation was slowed down due to budgetary constraints facing Morocco in 1980-81 which caused a delay of about two years. Project implementation has resumed vigorously under excellent project management. Ln. No. 1428 Eighth BNDE Project; US$45.0 million of June 16, 1977; Date of Effectiveness: December 21, 1977; Closing Date: September 30, 1982. The project is designed to meet part of the Banque Nationale de Developpement Economique's (BNDE) requirements for financing of the import component of industrial sub-projects, and of a small-scale industry pilot credit program ($5 million). The loan is fully committed, and the loan is expected to fully be disbursed before end 1982. BNDE's financial performance deteriorated sharply in 1981, but the trend should be reversed since a package of measures to rehabilitate BNDE financially and to strengthen the institution has recently been agreed upon. - 32 - ANNEX II Page 4 of 10 Ln. No. S-7 Sewerage Engineering Project; US$1.5 million of August 30, 1977; Date of Effectiveness: August 18, 1978; Closing Date: October 31, 1982. The project includes the preparation of a sewerage Master Plan for the Casablanca-Mohammedia region and of a first phase project. It would assist Morocco in developing the design and planning criteria for urban sewer systems and strengthening the institutional and financial bases for the development of this sector. Project implementation was delayed by about 15 months, due to administrative and budgetary difficulties, but studies were launched in May 1980, and are now proceeding satisfactorily and an extension of the closing date is under consideration. The technical components of a possible project have been identified, but institutional problems have not yet been resolved. Ln. No. 1528 Rabat Urban Development Project; US18.0 million of March 31, 1978; Date of Effectiveness: November 21, 1978; Closing Date: March 31, 1983. The project is designed to improve living conditions of the urban poor in Rabat. It includes upgrading of slum infrastructure and social services in three squatter areas with a total population of about 60,000; an experimental sites and services housing scheme; an employment generation program; and related technical assistance. After initial delays, project implementation has recently improved significantly. Infrastructure works are under way and housing improvement loans are being made. Relocation to sites and services areas is under progress and some enterprises have started operation in the industrial zone. Disbursements, however, remain low and the matter is under review with the Government. Ln. No. 1602 Fes-Karia-Tissa Agriculture Project; US$65.0 million of September 6, 1978; Date of Effectiveness: February 18, 1979; Closing Date: June 30, 1986. The project aims at (i) improving the standard of living of about 33,900 farm families in the Fes-Karia-Tissa region, and (ii) contributing to the growth of agricultural production and to a reduction in Moroccan dependence on imported food commodities. These aims would be achieved through a reorganization and strengthening of agricultural extension and soil conservation services, training, the provision of credit and infrastructure. Although somewhat delayed, implementation is proceeding satisfactorily, due to excellent project management and good interagency coordination. However, disbursements have lagged due to delays by the implementing agencies in submitting reimbursement requests to the Ministry of Finance. - 33 - ANNEX II Page 5 of 10 Ln. No. 1625 Maroc Phosphore Expansion Project; USt50.0 million of October 27, 1978; Date of Effectiveness: March 23, 1979; Closing Date: June 30, 1982 The project consists of expansion of existing production facilities at Safi through (a) the erection, on the site of the existing Maroc Phosphore plant, of an additional unit and ancillary facilities to produce for export 165,000 tpy of phosphoric acid, and (b) the construction of sulphur melting and storing facilities as well as of new phosphoric acid concentration and storage facilities. Commercial operations have begun and the project will probably be completed on schedule. Maroc Phosphore's technical management appears satisfactory. The project account is being closed and an amount of about t5 million is expected to be cancelled. Ln. No. 1681 Fourth Education Project; US$113.0 million on April 25, 1979; Date of Effectiveness: October 16, 1979; Closing Date: December 31, 1984. The project consists of the construction, furnishing and equipping of 11 technical high schools, a technical teacher training college, two higher institutes of technology, an institute of applied engineering and an extension of Mobammedia Engineering College and associated technical assistance. Implementation was initially delayed; however, all major contracts have now been signed and disbursements are expected to accelerate. Ln. No. 1687 Small Scale Industry Integrated Development Project; USt25.0 million of April 25, 1979; Date of Effectiveness: December 17, 1979; Closing Date: December 31, 1983. The project consists of support for a Government program to assist small and labor intensive industries through technical, managerial and financial assistance. The loan is fully committed, and earlier disbursement delays are being remedied subsequent to the recent introduction of simplified administrative procedures. Ln. No. 1695 Village Electrification Project; USt42.0 million of May 22, 1979; Date of Effectiveness: April 30, 1980; Closing Date: June 30, 1984. This project, which is the first stage of a 15-year village electrification program, would provide electricity to about 60,000 dwellings in more than 200 villages throughout the country. Problems of interministerial coordination and budgetary allocations delayed project start-up for about one year. Orders have now been placed for most of the equipment but no payments have yet been made. However, implementation is well under way and the project is expected to be completed according to schedule. - 34 - ANNEX II Page 6 of 10 Ln. No. 1704 Fourth Agricultural Credit Project; US70.0 million of May 23, 1979; Date of Effectiveness: December 5, 1979; Closing Date: June 30, 1983. The project aims at increasing Morocco's agricultural production thereby improving the standard of living of about 475,000 of Morocco's farm families. The project covers most of the Caisse Nationale de Cr6dit Agricole's (CNCA) medium- and long-term lending program and farm investment program through mid-1983. Cofinancing of $75 million is provided by IFAD and KfW. CNCA's on-lending as well as repayments were severely affected by the 1980-1981 drought, slowing disbursement of the Bank loan. To alleviate CNCA's short-term liquidity problems (due mainly to the drought), its lenders, including the Bank, have increased their disbursement percentages under their respective loans. Ln. No. 1724 Second Water Supply Project; USt49.0 million of July 2, 1979; Date of Effectiveness: February 4, 1980; Closing Date: June 30, 1984. The project is designed to improve access to safe water supplies for the population of the Mid-Atlantic Coast and the Greater Agadir area. It consists of: (i) the expansion of bulk water production and transmission facilities along the Mid-Atlantic Coast; (ii) the expansion of bulk water production and transmission facilities in Agadir; (iii) the establishment of a revolving fund to facilitate house connections for low income families; and (iv) studies on accounting and management systems. Administrative problems created some initial delays, but there is strong demand for the credit facilities for low-income house connections. The project is now proceeding satisfactorily and disbursements are expected to increase accordingly. Ln. No. 1757 Vegetable Production and Marketing Project; USt58.0 million of November 15, 1979; Date of Effectiveness: April 17, 1980; Closing Date: June 30, 1984. The project is the first phase of a long-term program for development of off-season vegetables for export. $50.0 million of the loan is to be on-lent for long and medium-term farm investments and incremental short-term production costs of vegetable quality control centers, for two small producer packing stations, and for seedling greenhouses benefitting about 8,000 farm families and creating seasonal employment. The balance of the loan would help finance infrastructure in the project area, and technical assistance. Implementation is proceeding satisfactorily. Overall production did not progress as scheduled due to two cold winters, but greenhouses, which have resisted frost fairly well, are gaining acceptance with the farmers and the prospects of rising production are promising. - 35 - ANNEX II Page 7 of 10 Ln. No. S-18 Petroleum Exploration Project; US50 million of May 19, 1980; Date of Effectiveness: October 24, 1980; Closing Date: December 31, 1983. The project aims essentially at accelerating the Government's petroleum exploration and development program. It has recently been transferred from BRPM, the original Borrower, to the new petroleum development agency, the Office National de Recherches et d'Exploitations Petrolibres (ONAREP). The project also provides technical assistance in prospect evaluation, analysis of results of exploration, and exploration management. Drilling so far has shown encouraging results, particularly as regards natural gas prospects. Procurement problems have hampered project implementation and recruitment of consultants has proceeded very slowly. Administrative problems have also delayed disbursements. Ln. No. 1830 Third Highway Project; USW62.0 million of May 19, 1980; Date of Effectiveness: September 29, 1980; Closing Date: June 30, 1984. The project comprises (i) a three-and-a-balf year time slice of the Government's pavement strengthening and preservation program; (ii) strengthening and management of the road maintenance program and (iii) technical assistance for the Ministry of Transport to improve transport planning and to study road maintenance. The pavement strengthening and maintenance activities are progressing satisfactorily. The hiring of consultants for technical assistance is behind schedule due to the slow preparation of the terms of reference. Disbursements have lagged due to delays in payment of contractors as well as transmittal of reimbursement requests to the Ministry of Finance. Ln. No. 1848 Loukkos Rural Development Project; USt34.0 million of December 22, 1980; Date of Effectiveness; September 30, 1981; Closing Date: June 30, 1987. The project should increase incomes and productivity of very poor subsistence farmers in the Loukkos Basin by reversing the declining trends caused by soil erosion and inappropriate farming practices. It consists of: (i) development and erosion control works on 15,000 steeply sloping hectares in Upper Loukkos; (ii) development of field crops and small irrigation improvements in Middle Loukkos; (iii) establishment and maintenance of pine plantations in the Izarene Forest; (iv) construction of roads and social service facilities in the Project area; and (v) execution of a cadastral survey on about 500,000 hectares of land. Once proven, the project implementation methodology could be widely replicated throughout Morocco's mountain and steppe land. Project implementation is progressing satisfactorily. - 36 - ANNEX II Page 8 of 10 Ln. No. 1943 Fourth Hotel Development Project; US$100.0 million of February 5, 1981; Date of Effectiveness: April 9, 1981; Closing Date: December 31, 1985. The project provides funds over a three year period to the Credit Immobilier et H8telier (CIH), a Moroccan development bank specializing in the tourism and housing sectors, for the development of tourism hotels. It also includes studies for developing policies in the tourism sector and training of CIH staff in appraisal methodologies for tourism projects. Commitments and disbursements have been extremely rapid. Ln. No. 1944 Second Urban Development Project; US$36.0 million of April 16, 1981; Date of Effectiveness: August 4, 1981; Closing Date: July 31, 1986. The project consists of the provision of shelter, basic services and employment to low-income urban families through a program for slum upgrading, sites and services and provision of serviced land for small-scale industries, to be implemented in the cities of Meknes and Kenitra. Assistance is also provided to strengthen the municipal services of the project cities. Implementation is on schedule, due to the efficient coordination through the provincial Governors' offices, but some delays in approval of contracts by the Ministry of Finance have occurred. Ln. No. 2006 Third Water Supply Project; US$87.0 million of September 28, 1981; Date of Effectiveness: March 15, 1982; Closing Date: December 31, 1986. The project includes the construction of two regional water supply systems and the expansion and upgrading of the water supply facilities in about 32 small towns scattered throughout Morocco. It would also provide revolving funds to facilitate house connections for low income households, equipment, technical assistance, training and studies. Ln. No. 2037 Ninth BNDE Project; US$70.0 million of November 3, 1981. Date of effectiveness: November 2, 1982. Closing Date: December 31, 1986. The project would include a pilot component in the line of credit to BNDE, to finance export-oriented industrial sub-projects. The project also focusses on strengthening organizational aspects of BNDE in the field of project appraisal, portfolio monitoring and export promotion. - 37 - ANNEX II Page 9 of 10 Ln. No. 2038 Small Scale Industry II Project; US$70.0 million of November 3, 1981; Date of Effectiveness: February 24, 1983. Closing Date: June 30, 1986. The project comprises (i) a line of credit to the Government to be relent to BNDE and commercial banks for relending to small scale industries (SSIs); (ii) financing of the foreign exchange costs of technical assistance provided by the Government to SSIs; and (iii) financing of studies relating to the structure of incentives for SSIs. Ln. No. 2082 Middle Atlas - Central Area - Agriculture Development Project: US$29.0 million of March 5, 1982. Date of Effectiveness: November 30, 1982. Closing Date: June 30, 1988. The project consists of interrelated forestry, range and cropping land development to bring about production increases of meat, milk, fodder, cereals and wood, on about 600 ha. in central Morocco, as well as to raise income and employment among the target population. Loan No. 2109 Small-Scale Mining Project: USt9.5 million of April 14, 1982. Date of Effectiveness: November 19, 1982. Closing Date: December 31, 1988. This pilot project would increase the productivity of small-scale lead and zinc mining operations through provision of equipment and facilities, as well as credit to miners, in a remote region of Morocco thus increasing exports and raising rural incomes. The project would also strengthen the financial, technical and administrative base of CADETAF, the implementing agency, and finance studies as a basis for future expansion of mining activities. Implementation is proceeding satisfactorily. Loan No. 2110 Forestry Project: USt27.5 million of April 14, 1982. Date of Effectiveness: October 28, 1982. Closing date: June 30, 1988. The project consists of destumping about 30,000 ha of eucalyptus plantations and degraded oak and cork forests and replanting with eucalyptus, pine and acacia; upgrading and construction of forest and access roads; pasture improvement over 2,000 ha; and technical and institutional support. Project implementation has commenced satisfactorily. Loan No. 2114 Oil Shale Engineering Project: US020.0 million of April 14, 1982. Date of Effectiveness: February 25, 1983. Closing date: September 30, 1986. The engineering project would finance studies and the construction of a shale retorting test station to generate information and analysis on the characteristics of Moroccan oil shale resources and on the technical and economic viability of alternative options for their development. - 38 - ANNEX II Page 10 of 10 Loan No. 2149 Fifth Education Project: US$50.0 million of November 5, 1982. Not yet effective. Closing date: March 31, 1988. The project is designed to improve the effectiveness of primary education and support expanded science and mathematics teaching at the senior secondary level, through construction of four senior secondary teachers training colleges, 40 rural primary schools and the provision of teaching aids to about 700 primary schools. - 39 - Annex III Page 1 of 2 KINGDOM OF MOROCCO SMALL- AND MEDIUM-SCALE IRRIGATION PROJECT SUPPLEMENTARY PROJECT DATA SHEET Section 1: Timetable of Key Events a) Project identification - November 1980 b) Time taken by borrower to prepare project 19 months c) Agencies responsible for preparation Government with help from FAO/CP d) First Bank mission to review project May 1981 e) Departure of Appraisal Mission May 1982 f) Date of completion of negotiations January 21, 1983 g) Planned effective date June 30, 1983 Section II: Special Bank Implementation Action None Section III: Special Conditions Disbursements 1. Disbursements would only be made against expenditures for: (i) rehabilitation of the Chichaoua perimeter when the farmers have been organized into water users' associations and an agreement has been reached on water allocation between upstream and downstream farmers; (ii) rehabilitation of the Ghiss perimeter when farmers have been organized into water users' association (para. 53). - 40 - Annex III Page 2 of 2 Other conditions 2. MARA would: maintain a Division of Irrigation Crop Agronomy; undertake a study of small scale animal traction and handheld machinery and equipment; and prepare an action plan for artificial insemination for each perimeter (para. 45). An extension expert would, furthermore help organize extension training programs in all perimeters (para. 46). MARA would also maintain a Central Manageme-t 1-it during the project (para. 48). DPA, Marrakech wouLd establish and staff a field/office at Chichaoua (para. 51); and DPA, Fes would establish an Irrigation Operations Division (para. 54). 3. Priority would be given to the water needs of the Ghiss perimeter and private pumping would be regulated at Souss (para. 52). 4. Water users' associations would be formed at Jemaa Sahim by June 30, 1985, and de facto water users' associations in all perimeters would be legally established after approval of new legislation and no later than December 31, 1985 (para. 53). 5. Contracts with water users' associations at Souss, Ghiss, Jemaa Sahim and Chichaoua would include cost-recovery provisions (para. 55). IBRD 16646 MOROCCO SMALL AND MEDIUM SCALE IRRIGATION PROJECT - PROJETDE DEVELOPPEMENT DE LA PETITE ET MOYENNE HYDRAULIQUE AGRICO2E LOCATION OF SUBPROJECTS LOCA L ISATION DES SOUIS PROJETS PFrennol nyhrs i - O doi Ov-ds pdrmennes - f Oveds,mtermittents- Terrae,i meanders of the , ver_ -- 34 Bosses terrssOs dess las méansdres des rav eros (O0'_ i -- _Foothi zonesowth pa eril wotsr frm springs sr -oe epemn riae atrt nrc . - - Aquyfs - -...- -h.' a~.1 ,5 N ~ps qiférs- ne" t flood pis. - PÉ'rimotres d'épandage da erves (Mader's) - 0 - Elavations above 100Ometers .-0-I Altitde plw de 000 metres' National copito chséola d',st - Provincd captals -. _-- .- C/>el-lass das proamees _ e, . - - ,_.- -. Provnc al boundries -I 1 -n 3- _-- -..." lnterasioa bouar s - I~-- -l' -- .. š - - d'j /- - -..~~ ".-_.. 2-- - T 'h map hs been preared5 byte Wold akt sat clsiel fth'e 'w'ncac a'h nts, gt tte lea snus n tsw ofS 5'ny enosmnor Kli eer s 0 100 200 seet',aa f suchsbosndes 30 ....0 o 0 50 10 150 - - 5.., 3- "'"'- ---': :'k C -an-Tan , ( AURITANIA MAL