India - Export Development Project

Document of The World IRsk FOR OmCIL USE ONLY A 3 Reprt No. P-4975-IN M-MORANDUM AND RGCOMMENDATION OF THE je= ;3; }~~~-~PE!trO-7HN - -- INIMRNATIONAL BANK FOR RE1CONSTUCTION AND DEVELOPMENT ? TO THE EXECUTIVE DIECTORS. ON PROPOSED LOANS TO INDIA IN AN AMOUNT EQUIVALENT TO US$120 MILLION AND TO THE INU mTRIAL CREDIT AND INVESTMENT CORPORATION OF MIDIA, ITED ' IN AN AMOUNT EQUIVALEIT TO US$175 MIT4ION FOR AN EXPORT DEVELOPMENT PROJECT APRIL 20, 1989 This doc_met has a restricted dbtributlon avd may be used by,recipients only In the performae of their officialdtieL Its contents laY not otwise be dilosed witout Wol Bank autWrza tn.  CURRENCY EQIAET Re I - US$0.071 .s ~ ~ ~ ~ ~ s .USLO Government of India - April 1 -mArch 3;~- 'ICICI _I-i 1I ch31 _ _ - January 1 - December 31. Brak --of Barada - January 1 - December 32. Canara Bank I aur 1 ecqnber 31. PRINCIPAL ABMUEITIONS AND ACRONMS USED AL - AdvanceA License - ~CCS - cash Compensatory Suppobt DD - Duty Drawback DPI - Development Finance Institution ED! - ,port Development Fud EMY - Eport Marketing Fund BRAS - Exchange Risk Administration Scheme Ezimbeank - Export-Import Bank of,India FERA - Foreign Exchange RpSulat ion Act Government of I of India ICICI - The industral Credit aAd Investent Corporation of India. Limited IDI -Industrial Development Bank of India Ia - IndustriAl Export Project lid - Industr-ial Financte Co~rporation of India MrTP - Monopolies and Restrictive, Trade Practices Act OQL - open General License PCB - Participating Commercial Bank PF - Expoduciivity FpuntF RBI - Reserve lank of India TAIF - XTechnical Assistance  7-06k OFFICIAL USE OMIT INDrA EXPORT DEVELOIMMNT PROJECT WN AND PRMJET SKW-X Borrower-- : (a) India, acting by its President; and (b)-Industrial Credit and Investment Corporation of India, Limited (ICICI) Guarantor of the : India, acting by its President Loan to ICICI Beneficiaries s ICICI: Export-Import Bank of India CEximbank); Bank of Baroda; and Canara Bank Amounts t US$120 million to India, Acting by its Presideuii; and US$175 million to,ICICI Terms s The proposed loans would be made at the Bank's standard variable interest rate and would have terms of 20 years including 5 years of grace. telending Terms ICICI Credit Component. The proceeds of the US$-175 milliop of the Bank loan to ICICI would be relent to the final private subborrowers either in foreign exchange at the Bank's standard variable rate plus 22 or in local currehcy at the prevailing Exchange Risk Administration Scheme (ERAS) rate (presently 152 with a cap rite of 182). Under this arrangement, the differential spread between the interest rate on the Bank loan and the ERAS rate, less 22 for ICICI's" spread, would accrue to the ERAS Fund to cover the foreign exchange and interest rate risks. The ERAS rates would be adjusted every six months to ensure that the interest rate and foreign exchange risks are adequately covered. Eximbank and PCBs Credit Component. US$100 million of the US$120 million loan to the Government would be passed on to these financial intermediaries as equity. Their clients will be small and medium size firms and the final interest rates to subborrowers would be consistent with the Reserve Bank of India interest rate structure for term lending to these sectorss 13.5? for small firms and 142 p.a. for medium size firms. These rates are highly positive in real terms given current and projected inflation rates of 82. The Government would bear the foreign exchange and interest rate risks. This document has a rsatdcted distibution and may be used by dcipisuts on in th pX f_uace of their official duties. Its contents may not otherwise be discld wthout Wodd Dank aut_hatin  -ii- Export Development Fund and Technical Assistance Fund Components. US$20 million of the Bank loan to the Government and US$2.7 million from the proposed Japanese Grant Facility would be allocated to the Export Development Funds and Technical Assistance Funds, respectively. The Export Development Funds would be administered by the financial institutions on behalf of the GOvernment. The Government would pass on the Technical Assistance Funds to the institutions on a non-reimbursable basis. Financing Plan s Local Foreign Total -------US$ Million-- Bank -- 295.0 295.0 ICICI 45.0 -- 45.0 Eximbank 8.0 -- 8.0 Commercial Banks 47.6 -_ 47.6 Subproject Sponsors 212.0 -- 212.0 Other Capital Market Sources 120.1 -- 120.1 Government of Japan -- 2.7 2.7 Total 432.7 297.7 730.4 Economic Rate of Return : Subprojects financed under the project would have a minimum economic rate of return of 12Z. Staff Appraisal Report s Report No. 7603-IN  1E KAND DZCOI ON QF THE PUESDENT OFPTRE' in NATIONAL B3 FOR REONSTRUCTION AND DEVELOPNT TO ITHE EMECUTIV DRECTORS ON PROPSED LaN TO MN AND TO THE INDUSTRIL CREDIT AND IMESTbE CORPORATION OP IDIA, LIMITED FOR AN XaPORT' DEVELOPMENT PROJECT : 1. The following memorandum and recomiendation on proposed Bank loans of US$175 million equivalent to ICICI and US$120 million equivalent to India is submitted for approval. The proposed loans would be for 20 years., including five years of grace, at the Bank's standard variable interest rate to help finance an Export Development Project. 2. Background. India's exports grew at about 3Z p.a. in real teoms from 1976177 to 1984185. 'Disappoiuting manufacturing growth and export performance were predominantly due to the trade and domestic regulatory policies. The combination of rigid investment licensing, high tariffs and import controls, cascading indirect taxation, unfavorable exchange rate management and inefficiency in export compensatory schemes led to inefficient high cost industries which could not generate sustained export growth. 3. Since 1985, GOI has initiated a series of policy actions that have - made significant changes in the policy environment. The domestic regulatory system has been liberalized by delicensing investments, easing barriers to expansion, allowing greater imports of capital goods and technology and gradually streamlining industrial exit policies. The share of imports not subject to quantitative restrictions has increased significantly. There has also been a significant reduction in the proportion of industrial investments subject to licensing. In addition, the tax system has beenvrestructured by reduction and simplification of income and corporate taxes and a modified value-added tax (MODVAT) has been,introduced that elii-inates the cascading effect of indirect taxes facilitating indirect tax deduction for exporters. 4. The most fundamental changes, however, h#ve been made in export policies. The most important change has been the adoption of a more realistic and flexible exchange rate policy by which the real effective exchange rate has depreciated by 302 between July 1985 and November 1988. New duty exemption schemes have been introduced so that now almost all inputs that are used in direct and indirect exports are importable without restrictions and payment of duties. The GOI has also streamlined the duty drawback and refund of excise taxes for firms that,use duty-paid and domestic inputs. 5. Primarily as a result of these reforms, manufacturing, which grew at an average annual rate of only 4.7? during FY67-FY85 period, accelerated to about 9t p.s. over the last four years. Manufactured exports, which form about 781 of total exports, have also accelerated rapidly growing by 132 in real terms in FY87 and 252 in FY88. However, in order to sustain rapid export growth, many industries in India will have to modernize and restructure their processes and products through physical investments to be competitive in the world markets. D 6. Rationale for Bank Involvement. The Bank has prepared a series of sector reports on export promotion, industrial regulation and technology policy as well as a number of reports on individual subsectors. The 1987 CEM, 'Indias An Industrializing Economy in Transition* (Report No. 6633-IN),  -2- outlined a three-pronged industrial strategy consisting of domestic dereg- ulation, export promotion and import liberalization. The Bank has also lent US$250 million for an Industrial Export (Engineering Products) Project (IEP) (Loans 2629-IN and 2630-IN). These loans became effective in June 1986 and are contributing to the restructuring needs of export-oriented enterprises. The proposed project would support the continuing policy dialogue with the Government on export policies and provide funds for investments for expansion of exports and for development of key institutions providing C&nancial and technical assistance to exporters. 7. Proiect Obiectives. While the recent policy changes have eliminated most bottlenecks that inhibited export growth, domestic firms need significant assistance in restructuring their products and processes to enter inter- national markets. The Project woulds (i) help actual and potential exporters to identify, enter and maintain export markets through assistance for export marketing, product and process adaptations and improvements; and (ii) com- plement this assistance with term lending for export related investments. 8. ProJect Description. The Project would support an integrated export development program in four financial institutions, which would play a major role in helping private sector clients develop export plans for the production and marketing of their products and in financing the resulting investments. This integrated program in each institution would include the following three components: (a) Export Development Funds, which the financial institutions would administer on behalf of the Government, to assist exporters by giving them matching grants primarily for costs of consultant and foreign travel associated with the preparation and implementation of export development plans (USS20 million); (b) Technical Assistance Funds for improving the financial institutions' capabilities to promote and appraise export development programs and export-oriented investments through training of key staff and development of information linkages (US$2.7 million); and (c) a term lending component to supply investment funds to export-oriented subprojects for expanding export- able output (US$275 million). The four financial institutions participating in the project would be: the Industrial Credit and Investment Corporation of India, Limited (ICICI); Export-Import Bank of India (Eximbank); Bank of Baroda; and Canara Bank. The total cost of the project is estimated to be US$730 million, with a foreign exchange cost of US$297.7 million (412). A grant of 364.5 million yen (US$2.7 million equivalent) from the Japanese Grant Facility is expected to finance the Technical Assistance component. A break- down of costs and financing plan are shown in Schedule A. Amounts and methods of procurement and estimated disbursemen.ts are shown in Schedule B. A time- table of the project's key processing events and the status of Bank Group operations in India are given in Schedules C and D, respectively. The Staff Appraisal Report No. 7603-IN, dated April 20, 1989, is attached. 9. Agreed Actions. The Government and the DPIs have established an Exchange Risk Administration Scheme (ERAS) for relending to large scale borrowers. Under the ERAS scheme, DFIs will pool their foreign currency borrowings and relend in local currency at adjustable rates, which will be adeqaate to provide a 2? spread for DFIs and cover the foreign exchange and interest risks. Each subloan will initially be set at the prevailing ERAS rate with a maximum cap rate (presently 152 and 182, respectively). The Government woulds (a) adjust the ERAS rate as necessary to cover the interest rate and foreign exchange risks; and (b) would make an advance to the ERAS fund if the fund runs into a deficit in the short-run due to unexpected exchange rate movements, but would be repaid when the Fund is in surplus.  . ~-3- 10. The Government apreods (a) to pass on US$100 million of the loan to Government in the form of equity to the two commercial banks and Eximbank under the terms of financial agreements. These funds would be relent to small scale firms at 13.51 and to medium size firms at 142, subject to the maximum subloan size of US$1 million; and (b) to review the relending terms period- ically to ensure that the rates to final users remain positive in real terms, reflective of market conditions and sufficient to provide a reasonable spread to the financial instLtutions; and (c) to pass on to the participating financial institutions US$20 million on a grant basis to support the requirements of the Esport Development Funds to be admiristered on behalf of Government. It is expected that US$2.7 million from the Japanese Grant Facility to support the Thes of thc participating financial institutions will be passed on a non-reimbursable asis. Signing of the necessary financial agreements would be a condition of effectiveness of the proposed loans. 11. The participating financial institutions agreed to: (a) follow procedures for administering the term lending component, acceptable to the Bank, including repayment terms of no more than 15 years including up to three years of grace, agreed maximum loan limits, free limits and minimum financial and economic rates of return on subprojects of 152 and 12?, respectively; (b) follow procedures for the administration of the Export Development Funds, acceptable to the Bank, including a matching requirement of at least 502 from the beneficiary. free limits for review by Government Steering Committees and strict standards for evaluation of individual proposals. Procedures for the administration of the Technical Assistance Funds, acceptable to the Bank, have been discussed during negotiations and it is expected that these will be confirmed as part of the understandings to be reached in the context of a US$2.7 million grant from the Japanese Grant Facility. 12. Benefits. The Project would support the Government's successful export promotion effort and would continue the Bank's role in the process of industrial reform. The Project would strengthen the ability of four participating financial institutions to provide production and marketing advice and investment financing to develop and implement export plans of private sector borrowers. The Technical Assistance Funds would provide training for a nucleus of staff in each financial institution in export marketing and project appraisal and access to international production and market information. The Export Development Funds would encourage firms to prepare and implement coherent export development plans through matching funds for technical assistance in product development and market entry. Under the IEP, these funds already give evidence of promoting exports many times the amount of the fund costs. The credit component would finance investments of private enterprises to improve product quality and expand production for exports. The loan is expected to finance export-oriented subprojects with minimum financial and economic rates of return of 15? and 122, respectively. It is projected that the EDP component will support 300 firms, while about 350 subprojects would be assisted under the term lending component. 13. Risks. Given the traditional emphasis of Indian industrial policy on developing production capabilities largely for the domestic market, the financial institutions have had only limited experience in arvlyzing export projects. It will be essential that the participating financial institutions improve their capability to promote and appraise investments for export production; the technical assistance and export development funds are designed  -4- to ensure that they do this effectively. The proposed Foreign Exchange Risk Administration Scheme is an Important Innovation linking the relending rates to she cost of funds through the mechanism of floating rates. Since this scheme is new, the Government, ICICI and the Bank will monitor developments closely to ensure that the relending rates adjust properly to cover the costs of foreign borrowings and meet the needs of the financial institutions and subborrowers for some predictability in their financial plaoning. 14. Recommendation. I am satisfied that the proposed loans comply with the Articles of Agteement of the Bank and recowuend that the Executive Directors approve the proposed loans. Barber B. Conable President Attachments Washington, D.C. April 20, 1989  -5- SCHEDULE A ADOA EXPORT DEVBL0MPENT PROJECT Estimated Costs Local Foreign Total ------(US$ Million)----- Credit Component 411.7 275.0 686.7 Export Development Fund (ICICI) 7.0 7.0 14.0 Export Development Fund (Ezimbank) 7.0 7.0 14.0 Export Development Fund (Commercial Banks) 6.0 6.0 12.0 Techni_al Assistance for ICICI 0.4 1.2 1.6 Technical Assistance for Eximbank 0.3 0.7 1.0 Technical Assistance for Commerciai Banks 0.3 0.8 1.1 Total 432.7 297.7 730.4 Financing Plan Bank -- 295.0 295.0 ICICI 45.0 -- 45.0 Eximbank 8.0 -- 8.0 Commercial Banks 47.6 -- 47.6 Subproject Sponsors 212.0 -- 212.0 -Other Capital Market Sources 120.1 -- 120.1 Government of Japan --2.7 2.7 Total 432.7 297.7 730.4  -6- -SCHEDuE B INDIA EXPORT DEVELOPIKNT PROJECT PROCUREMENT METHODS AND DISBURSEMENT PROCUREMENT METHODS (US$ Million) Procurement Method Proiect Element ICBELIB IS CON Total credit Component 35.0 652.0 687.0 --Bank (25.0) (250.0) (275.0) Export Development Funds 36.0 2.0 40.0 --Bank (19.0) (1.0) (20.0) Technical Assistance Funds 1.0 3.0 4.0 --Japanese Government (0.7) (2.0) (2.7) Total 35.0 691.0 5.0 731.0 --Bank (25.0) (269.0) (1.0) (295.0) --Japanese Government (0.7) (2.0) (2.7) Notes: IC! means International Competitive Bidding IS means International Shopping LIB means Limited International Bidding CON means in accordance with consultancy selection guidelines ESTIMATED DISBURSEMENTS Bank Fiscal Year 89 90 91 92 93 94 95 Annual 0.4 33.0 60.0 77.0 86.0 24.0 t.6 Cumulative 0.4 33.4 99.4 176.4 262.4 286.4 295.0  SCHZDL C niDIA EXPORT DEVELOPMENT PROJECT Timetable of Key Protect Processing Events (a) Time taken to prepares 16 months (b) Prepared bys 60I vith World Bank assistance (c) First Bank mission: September 1987 (d) Appraisal mission departures November 1988 (e) Negotiations% March 27, 1989 (f) Planned date of effectiveness: August 31, 1989 (g) List of relevant PCR8s IDBI Public/Joint Sector Project (PCR No. 6S57) 1DBI Second SFCs Project (PCR No. 6876) ICICI. Eleventh and Twelfth Projects (PCR No. 6052) ICICI. Thirteenth Project (Loan No. 1843-IN)  4-8 PUN STAl 07 IIAN G;ROP CPRfCS IN INDI A. SPAlS OF BANK LAS AUIDA CREDIS (AS of 1atch SIb 1989) US$ million (not of CsO.llationas Loan or iscal Crit No. Tr of Punas IBRD IDA Il, NDiur d 2/ 66 L l 3,855.8 - - 136 CredLts fully disbursed - 8,976.1 963-IN 1980 Iuland Fisheries - 20.0 O."5 1003-IN 1980 Taiil Nadu Nutrlton - 32.0 2.51 1011-1N 1980 cuja3Ot Irriation It - 173.0 23.45 1027-IN 1980 Sngruli Thermal It 300.0 7.16 1034-IN 1980 Karnataka Sericulture - 54.0 1.41 '053-IN 1980 Farakka Thermal Poer - 225.0 9.03 1887-iN 1980 Farakk Th...l Power 25.0 - 25.00 1072-IN 1981 Bihar Rural Ros - 35.0 0.2* 1078-TN 1981 4 lanad Barrages 83.0 1."5 1116-IN 1981 Karnataka Tank Irrigation - 54.0 0.43 1125-IN 1981 Hasire, ertilLesr Pro3ect - 399.1 0.02 1138-IN 1981 M.P. tpicultura1 Ext. I1 - 37.0 3.79 1172-IN 1982 Xorba thermal Power Project tr - 400.0 55.63 1177-ZN 1982 Nodhyr Pradesh Major Irrisation - 220.0 87.80 1178-IN 1982 West Benual Socl Forestry - 29.0 9.89 2076-IN 1982 Ramauapdmn Thermal Power II 300.0 - 78.29 1219-IN 1982 Andbra Pradesh Agrlculturoal axt. - 6.0 1.9f 2186-IN 1982 allada Irrigation 20.3 - 2.35 1280-IN 1983 Gujar&t water supply - 2.0 46.12 1286-IN 1983 J =mmsJshair nd RaQann socal& lorestiy - 33.0 10.00 ilmZ-i8 1983 Chsmbal Madhy. Pradesh Irrigation II - 31.0 4.64 1289-IN 1983 Subernarekha Irrigation - 127.0 8.43 2205-IN 1983 trishna-Godavari EIpY cation 165.5 - 9.34 2210-IN 1983 Railvays Modegnizatitu & Malnten.u.ae tt 200.0 - 79.82 2241-IN 1983 South Sassein GOs Development 139.3 4.36 1319-ID 1983 Haryana Irrigation II - 150.0 52.88 1332-IN 1983 U.P. Public Tubewells IT - 101.0 33.33 1356-l 1983 Upper XZdrvtl Biydro Per - 170.0 78.15 2278-IN 1983 Upper Iftnravtl Sydro Power 154.4 - 154.01 1369-1D 1983 Calcutta Urban Development III - 147.0 100.50 2283-IN 1983 Central Power Tranmissio 250.7 - 217.86 2295-IN 1983 Himalayan watershed manaement 46.2 - 34.82 1383-IN 1983 Naharashtra Water UtliLation - 32.0 10.37 2308-IN 1983 Maharashtra Water Utlizatio 22.7 - 22.64 2329-IN 1983 Madhya Pradesh Urban 24.1 - 13.89 1424-IN 1984 Rainfed Area Watershel Dew. - 31.0 33.04  PA5E 2 O 1426-ID 1984 Population III 70.0 49.02 1432-1N 1984 Iaxnatak Social Porestry - 27.0 13.79 2387-20 1984 shava Sheav Port 250.0 - 78.62 2393-IN 1984 Dudhlcha Cooal l15.0 - 97.83 2403-10 1984 Cembey B -in Petroleim 213.5 - 120.50 2413-D3 1984 mbdbya Pradesh Ferttlizer 203.6 52.97 1454-23 1984 Tazil Na6u Water supply - 96_S 25.73 SF-12-iN 1984 Tamal Kada Water Supply - 36.5 45.60 1468-13 1984 Perlyar Valgat 1I Irristlon - 17.5 1.15 SF-16-TN 1984 Perlyar V1giaL 1I Irrigation - 17.5 14.69 1483-IN 1984 Upper anga Irrigatien - 125.0 117.17 1496-IN 1984 Gujarat Medium Irrigation - 172.0 120.28 2416-IN 1984 Indira S&arovr Uydroeleotric 17.4 - 12.50 SF-20-lU 1984 Indira Sarovar Nydroelectrie - 13.8 16.15 2417-IN 1984 Railways Electrlficatioln 280.7 - f62.63 2442-IN 1984 Farakka II Thermal Power 300.8 - 251.53 2452-I1 1984 Fourth Trombay Thernal Pover 135.4 - 38.94 1502-IN 1984 National Cooperative Deelopment Corporation III - 220.0 188. n 1514-IN 1985 Kerala Soc"al Foreetry - 31.8 24.15 1523-IN 1985 Natienal Agric. Extension I - 39.1 43.07 1544-IN 1985 BRsby Urban Development - 138.0 132.74 2497-IN 1985 armada (Oujarst) Dm and Power 200.0 - 200.00 1552-IN 1985 Nbrmad. (Gujarat) Daa and Power - 100.0 93.30 1553-IN 1985 Darmada (Gujarat) Canal - 150.0 166.16 1569-IN 1985 Sece National Agricultural Ext. - 49.0 43.14 1611-ID 1985 national Social Forestry - 165.0 140.12 1618-TD 1985 Indira Sarovar Eydroelectric - 13.2 16.02 2498-IN 1985 Jharis Coking Coal 248.0 - 207.67 2505-1N 1985 Maharashtra Petrochemical 300.0 - 76.57 2534-IN 1985 Second National iglhway 200.0 ^ 162.08 2544-SN 198S Chandrapur Thermal Power 300.0 2 206.01 2555-IN 1985 Rihand Power Tran-isslon 250.0 - 124.08 2582-IN 1985 Kerala Power 176.0 - 160.14 1619-IN 1986 West Bengal Mlnor Irrigation - 99.0 123.24 1621-1R 1986 Mabarashtra Composite Irrigation - 160.0 195.86 1622-2D 1986 Rerala Water Supply and Sanitation - 41.0 44.57 1623-IN 1986 West Bengal Population - 51.0 55.71 1631-IN 1986 National Agricultural Research XI - 72.1 75.25 2629-IN 1986 Industrial Export Dev. Finance 90.0 - 71.67 2630-I8 1986 ICICI-Indus. Bxp. Dev. Finance 160.0 - 107.06 1643-IN 1986 Oujarat Urban - 62.0 70.15 2653-IN 1986 RABARD I 375.0 - 60.53 2660-IN 1986 Cement Industry 165.0 - 110.60 2661-DN 1986 ICICI - Cement Industry 35.0 - 25.97 1665-IN 1986 Andhra Pradesh II Irrigation - 140.0 164.69 2662-IN 1986 Andhra Pradesh II Irrigation 131.0 - 131.00 2674-2D 1986 Combind Cycle Powa. 485.0 _ 219.17 2729-ID 1986 Cooperative Fertiliser 150.2 - 6.95 2730-IN 1986 Cooperative FertliLer 152.0 - 68.73 1737-IN 1987 BLhar Tubewells - 68.0 69.64 2769-1N 1987 Bombay Water Supply t Sewerage III 40.0 - 40.00 1750-IN 1987 Bombay Water Supply & Sewerage III - 145.0 116.96  -10- 1754-1N 1987 Eationel ftric. inteso X - 85.0 87.70 1757-IR 1987 GuJarat Rural Roads - 119.6 121.42 1770-ZN 1987 National water Management - 14.0 1S2.46 2783-1R 1987 Oi1 Zndia Petrolimu 140.0 - 127.15 2794-tR 1987 Coal Mning & QualiLty roprovment 340.0 - 193.13 2813-tN 1987 TIXconicae ens rx 345.0 - 282.76 2797-tN 1987 Uttar Pradesh Urban Developoent 20.0 - 20.00 1780-tN 1987 Utter Pradesh Urban Develepment - 190.0 122.36 2827-N 1987 Karneteka Power 330.0 - 314.48 2844-IN 1987 NatLenal Capital powe: 485.0 - 421.50 2843-1N 1987 Tal her Thermal 373.0 - 350.63 2846-IN 1987 Madras Water Supply 33.0 - 53.00 1822-tn 1987 Madras water Supply - 16.0 9.08 2893-IR 1988 National Dairy II 200.0 - 200.00 1839-I8 1988 National Dairy n - 160.0 104.36 2904-ZN 1988 western