Nicaragua - Industrial Rehabilitation Project

Document of The World Bank FOR OFCIAL USE ONLY Repm No. 12375 PROJECT COMPLETION REPORT NICARAGU INUSTRIAL REHABILITATION CREDIT PROJECT (LOAN 2028-NI) OCTOBER 5, 1993 MICROGRAPHICS Report No: 1.2375 Type: PCR Country Operations Division Country Department II Latin America and the Caribbean Region 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.  NICARAGUA PROJECT COMPLETION REPORT INDUSTRIAL REHABILITATION CRED PROJECT (Ioaa 2028- NI) Currency Equivalent Currecy Unit= Cdrdoba= 100 cents Average Exchane Rates US$1 MECAL YEAR July 1 - June 30 On F7ebruay 1S, 1M88 a Now CGh oba was harod;o I Now Cortoba= 1,000 old C6rdobas. On Mye 1, 1990 the Cordoba Oro=1000 o6rdobas was inuduced. ft vwa pgWd to die USSdolkr. I*iaffy, it was e4d as a uoit of s800n to simlify saouoog mg as a molm of toacd betv6e die Mrdxoba Oro and dh Mddoba- b Much 3, M99 dfie so-aed Cdoba Oro vas dostuaS by 400% fm ICO=IUSS to SCO= IUS$  FOR OMCAL USE ONLY NICARAGUA PROJECT COMPLETION REPORT IDUSTRL REHABILIION CREDrT PROJECT (Lan 2028 - NI) WEt&HIS AND MASURES One Hctare (ha) = 10,000 square meters Metric ton (mt) =2,200 pounds Metric ton (mt) =1,000 kg Kilometer (km) =0.6215 miles Kilometer (Ian) = 1,000 meters Cubic Meterm) =1,000 lites Liter =1,000 millilite ABBIREVIATIONS AND ACRONYM USED BANIC -Niaguan Industry and Commew Bank BCN -Centra Bank of Nicagua BND -Nicaraguan Development Bank CAFENIC -Nicaaguan Coffee State Trading Company COIP -Peoples Industial Corporation CONDEMNA -Nicaraguan Mining Dvelopment Corporation CORFIN -Nicaraguan Financial Cororation CORNAP -State-owned Corpoaon Holding Company ENIPEX -Nicarguan Eot Promotion Agency FED -Special Development Fund FINAPRI -Preinvestent Fund FISE -Social Emergency Inestment Fund FNI -Nicaraguan Investment Fund ICB -International Compettive Bidding IDA -International Development Agency IDB -Inter-American Development Bank INAA -Nicauan Institute for Water and Sewerage INAP -Nicaguan Institute of Public Administio me -I onal Monetary Fund MEC -Ministry of External Coopert MOF -Ministry of Finance SOE -Statement of Expenses UN -United Nations UNDP -United Nations Development Programme USAID -United States Agency for Iternational Coopertion 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.  FOR OFICLAL USE ONLY THE WORLD BANK W."GNngt M.C 2043 USA omf of Dirootoreonea Opetons Evalualion October 5, 1993 MEMORANDU-M TO TH]E 9X MDIREOI DR AM PR$DN SUBJECT: Prject Completion Report on Nicaragua - InduA Rhabilitation CrMt folct (Loan 2O2JA*M Attached i the Project Completion Report ao Nicuagua - lIndusal Rehabilttation Cdit Projet (La 2028-NI) prepared by the Latin America Regional Office. The Borrower wu not asked for a Part IL The PCR is of satisfacy quality. It was prepre almost ten yeas after the project closed. his is explained by the break in the official relationship beween . ie Bank and the Government pu tuan to Nicaragua's non-aceal status between 1984 and September 1991. Because of the poltical and economic upheavals that took place in Nicargua during the last decade, many of the entrises suppored wnder this projedt no longer exist Isufficient information is available to rate the outcome of this project. Obviously its sustaiability is unlikely and the project has had no lasting impact on institutional development. The PCR corrmcty wans agaist undertaking projects of this nature in highly uncran political enviroments. It specifically suggests that in such circumstances: "the Bank must be prepared to be flexible in project design and willing to suspend commitments, if necessary." No audit is planned. Attachment his docummtb a reacsd didtioad may be uaed by ecpieztulyindthpefomncotfr officil du& hBsom way sol oesw be dicoed wihA Wod Book vAcizado.  FOM OmCIL Us OnLy MNCARAGUA PROJECTcCOMPLEnON REPORT DDUSTRIAL REHABILTATION CREDrr PROJECT (Loan 2028-NI) TABLE OF CONTENTS ha No. PREFACE ................ .............................. i EVALUATIONSU 4?ARY .......... ................................ * i PART k PROJECT REVIEW FROM THE BANK PERSPECXTVE ...... 1 1. BIdntity .................... ................ * ...... 1 2. Bagid ......... . *. 9* *9*... * * 9.9.. . 9.9.....9*...... 1 3. Project I'epartion and Appraisal ......................... 2 4. Prject Objectives .................... .... 3 5. Projec Description .................... . . 3 6. Project Design and Crganization ................... ...... 5 7. Pqectnpmni ...... ...... * ...... * ...... 7 8. Proect .Results ...... . ...... ..... . 8 9. Susaiabt . ......... *w .9 ..... *...... 9.... 9 10. Bank Performance .. .............................. 10 11. Borwwer Performance ......... . ............ .......... 11 12. Project idi ............ O... 0.... ....... 0. 11 13. Documentoton and Data .............................. 12 14. LssosLeamed ............................... 12 PART IL PROJECT REVIEW FROM BORROWER PERSPECTIVE ..... 14 PARTI[h BASIC DATA . . ... ............................... 15 RelatedBanLoanss .9.................................. 15 PrcJectTimnetable ... . ........ ........*** 16 CumuativeEstmatedandActualDisbursements ....... .......... 17 Project Cost and Financing .. . ................... * * 9 * * * * ..... 18 UseofBankResources ... ..** ............ 22 List of Subprojects Approved ... ....................... . 23 Subprjets by Sectors ................. ................ 24 This document has a restricted distribution and may be used by recipients only in the perfornance of their official duties Its contents may not otherwise be diclosed without World fank autheri,tIn  Submjwb by OwnesMp ........................................ 25 Subloas by Bank Intermeiaries ......... . .......................... . 25 Subloans by Size of Enteprise ..................................... . 26 Lit of Subpwo*bbySorceof Finncing ... ................. 27 IncomeStatement ......................................... * 28 Balance Sheets ... ........... ........... ... ...... 29  NICARAGUA PROJECT COMPLETION REPORT I-DUSTRLAL REHABILITATION CREDIT PROJECT a(Lan 2028 - NJ) PREFACE This is the Project Compleion Report (PCR) for the Industridal ehabilitation Credit Priject (Lan 2028-NI) in the amount of US$30 million, which was made to tfie Corporacidn Financa de Nicaragua (CORFIN) representing the Fondo Especial de Desaollo (FED), with the guanntee of the Republic of Nicaraga. The project was desgned to help the Govenment in the rehabili of the industrial sector, which had suffered physical and financial damage due to the 1979 civil war. The proect also included technical astance for eni the project preparation, appais and supeison capailites of paripating enc, intermiaries and terises, and scolarships to train public industrial enterise pe lonnel The loan was approved on June 25, 1981, siged on July 15, 982 declared effectve an Otober 15, 1981. The loan was closed on December 31, 1984. The last disbursement was on January 18, 1985. The PCR was prepared by the Country Op ion Division 2 of Latin Anmeica and te Caribbean Region (Prefac, Evaluation Summary, Parts I and Il). Given the tme eapsed since t last dibust (January 1985) and the fact that many of the Borower's staff involved in magig te proect have rtired or moved to new assignments, completion of Part II of the PCR by the govenment was not requested. Prparadon of the PCR began in February 1993, and is based, iner alia, on data obtained during a mission to Niargua in April 1993, the Staff Appraisal Report, the Credit and Guarantee Agreements for the loan, Project Supervision Reports, conrespondence between the Bank and the Borrower, teies with Bank staff involved in the implementation of the project and interal Bank memoranda  PROJECT COMPILETON REPORT NICARAGUA INDUSTIAL REHABILITATION CREDIT PROJECT (LOAN 2028-NI) EVALUATION SUMMARY Objective and Desciption The principal objective of the proect was to assist the government in its efforts to stimulate output, exports, and employment in the industrial sector, which had suffered damage directly attrbutable to civil war. An industial credit operaton was camied out through a second tier bank. A second objective was to continue strengthening the project evaluation capability within the government, through the provision of thnical assistance. Implementation and Results Tbe tota actual cost of the project reached US$65.6 million (se Annex 4), of which US$30 milLion equivalent (46%) was financed by the Bank, and the remainder US$35.6 million equivalent (54%) was financed by PNI and intermediaries. The bulk of the loan (55%) went to subprojects located in Managua Under the loan, FNI financed 30 subprojects; the average size of the subloan was US$0.9 million. A total of 19 subloans were for state enterprises, 71% of the total lending amount. The average loan for state enterprise was US$0.9 million (see Annexes 7-10). Of the technical assistance resources (US$2.5 million), US$0.5 million was used and the balance was reallocated to the credit component. It is difficult to evaluate the results of this project. The PCR has been completed almost ten years after the project closed. This is due to the absence of an official relaonship between the govemment and the Bank which was caused by Nicaragua's non-accrual stus between 1984 and September 1991. During this hiatus political and economic upheaval has take place and many of the entprses supported under this project appntly no longer exist, some have fallen into disarray and others have no record of suppor from the project. Institutionally, no lasting impact of the project on FNIM and/or particpating financial intermediaries can be ascertained after such a long hiatus. Project Sustalnabity The project was implemented in an unstable policy environment and hence its sustainability was doubtfud. In the initial years the revolutionary govemment was unclear in its own economic policy and by the middle of the decade the Sandinistas we preoccupied with the ongoing civil strife and Increasingly isolated.  - ijij Fldlngs and Lessons Learned The principal lessons learned from this project experence can be summadzed as fllows: (i) This opeation was undertaken in a highly uncerain environent, i.e. sOon after a bittely contested and only parally resolved civil war. Subsequent to fte design of the project the policy environment deteriorated and jeopardized th achievement of the project's objectives. In such an n thank must preared t be flexible in pro -t design and willing to suspend commitments it nearv. (A) Given the state of the Nicaraguan economy in the early 1980s, with an increasing deficit in well qualfied human resources, institution-building and the provion of technical assistance were high piority ts. W x d as high rirty for the succss of a roc. thnil astn shol not be de- inked from Bak control. even under-the guise Mf "fresour (iii) FED and FNI submission of ports (include audited fnancial staments) to the Bank were not sent with the aeed periodicity and lacked adequate technical coverage. I anessentily satiskMa Xoicmament. oiectdesig mus give iMpance to fnt and well designed technical. economic and finial ting =euk ts- (iv) Coordination between FED, FNI and participating banks was poor. Prtipating banks used different criteria for evaluating subprjects. FED and FIs m ement information system was not adequate and needed imprvement for processing subprojects data obtained from sev nancial intmediies. FNrs accounting system did not reflect properly the actual loan portfolio and inmuest accrued. Common. aceted technical and financial ariteria should be utilized at the participating financial interediares. Coordination poedures should be similarly well understood.  NICARAGUA PROJECT COMPLETION REPORT INDUSTRIAL REHABILIATION CREDIT PROJECT (Loan 2028 - NI) PART I: PROJECT REVIEW FROM THE BANK PERSPECTIVE 1. Identity Project Name: Industrial Rehabilitation Cret Proect Loan Number: 2028-NI Amount: US$30 milion equivalent Year of Approval: 1981 Borrower: Govwrnment of Nicaragua RVP Unit: LA2C2 Country: Nicagua Sctor. Industry 2. Bad 2.01 =e Q w On July 19, 1979 revolutionary rc led by the Frente Sandinista de Liberacion Nacional (FSLN) assumed control of the govemmentof Nsiragua. After prolonged guerria activity and a year of civil war the Nicaragun economy was devastated. Real GDP had dropped 9% in 1978 and 27% in 1979, there had been massive capital fight, and many firms and bank fiaced insolvency. The direct damage to physical structus, equipment and ietories was estmatd at more than $250 million. In the decade that followed the Sandinistas established a centraly controlled economy. As a consequence of inapprpiate economic policies, prolonged civil strfe, and other fcs such as the U.S. tade embargo, the economk situation deteiortd further. Stting in 1983, GDP feWl each year and by 1989 production was below the 1970 levels. At the end of the decade exrs were about half their pre-1980 level. Inflaon acceratd shaply in 1984 over the previous year (from 11% to 39%) and continued threafter reaching 14,000 percent in 1988. International reserves were depleted folowing the civil war and pre-war levels were not recovered. Total exral debt rose sharply, from $1.1 bilion in 1979 to US$10 bilion in 1990. EiPmated per capita GDP was about US$400 in 1990, well below the level of $570 in 1979, and less than half the US$850 level prevaiing in the 1970s. 2.02 The Chamor govemment, which took office in April 1990, was unable iniially to reverse this economic decline. In March 1991, the Government launched an economic stabilizaion program dedgned to diminate hypernation, halt the decline in GDP, and stegten tie balance of payments through tight fiscal and monetary policieLs By the end of 1991, te resut of the stabilization prog&wn wer encouraging. Hiation had been ated, and although GDP declined once again, it was by less than 1%. By the end of 1992, the economy showed some si of recovery, with GDP growing by 0.4% and inflation faling futer to 4%.  -2 - 2.03 Bnk Lediing to the Sector. After takdng into account the Sandinista government's priorities for emergency rehabilitaion and the assistance already planned by other extna agencies, the Bank provided ftree industial development loans and credits to Nicaragua totalling US$57 million in 1979 and 1980. The firs pject (Agricultal and Industrial Rehabiliton, LU. 1785-NI and Cr. 966-Ni), approved in December 1979, included a loan of US$20 million and a credit of US$10 million whose objective was to assist te overnment to rein the levels of output, export, and employment in the agticultural and industral st that exsted befre the civil war. A total of 897 agricultural subloans and 19 industrial subloans were granted to public and private sector enterpri and the loan/creditproceeds were speedily disbursed.' The second credit (Urban Reconruction Prject, tn. 965-Ni) amounting to US$22 million, was approved in December 1979 and was mainly designed to finance urba reconuon fowing the civil war. The project included a small scale entepxise component of US$4.5 milLion to finance credits to about 3200 entuprises. Execution of the project was satisfactory and it appently achieved its desired employment effects although the quantitaive tesults could not be fully documented. The prject was fully disbursed and completed in September 1983. The third project (Pinvsment Fund, La. 1081-NI) amounting to US$5 milLion, apprawd on December 1980, was nade with the purpose of assisting the Govemment establish a sound basis for project idencation and preparaton. The project was completed succesfully and provided the Govment several studies that were exected to identify important imvesmts for the retuctuing of the economy. Unfortunatly, because of the detiorating economic and political conditions of the country, the preinvestment stude materialized as new investnts in only a few cases. 3. Project Prearaton and Appraial 3.01 Following e 1979 civil war, the industial sector needed credit to repair physical dme, rebuild invtoies and renew marketing activities. The capacity of the bankdng system to mobilize adt;tional funds was, however, limited, and the govenment was unable to obtain new foeign bank credits. Apainst this ccal situion, the govemnment requested aitanc from the World Bank. The Industial Rehabilition Credit Project (Ln. 2028-NI) was prepared by Fondo Especial de Desamollo (FED), with the assistance of tie Bank, and in line with the government's 1. Project Performance Audit Report (PPAR). Nlcatagua Agltw annd Inbsd1l RehaWitoan fPect. Loan 1785-NI/C,t 966-NI. Report No. 4855. December 28, 1983 2. Project Performance Audit Report (PPAR) No. 6193, McA,ag Uabn Reeostn Pectw Cre&t 965-NI, Report No. 6193. May 14, 1988. 3. Project Completion Report (AR), Ainvestnent Fund Projet CrOnA No. 1081-NI. Report No. 8338. January 26, 1990. 4. FED was created by Decree No. 323 of April 12, 1972 as a GovefnfmCtowned fund, administered by BCN as the Govemment's fiduciar agent. After the civil war, control of FED was shifted from BCN to the newly established BND.  -3- main obJectives for restoring production, promoting exports and generaating employment During the preparon of the project Bank staff worked closely with the govenment in the identification of the principal industries which needed urgent rehabdlitation and which could be ed to genrt additionl export earnngs and employment. It was noted that relatively little investent had tk place due to continuing political and economic uncertainties, shoage of inputs, loss of markets and lack of tained technical and management staff. 3.02 The project was appraised in September-October of 1980, and the appal was completed in March 1981. The loan was negotiated in May 1981, apprved in June 1981, and signed in July 1981, but it did not become effective until October 1981 due to delays in the authorizaton of the Lon Agrement by the Government of Nicaragua. 4. Project Objectives 4.01 The primary objective of the project was to assist the govenment in its efforts to regain p-war levels of output, xpors, and employment in the industial sector, which had suffered damage directy attributable to the civil war. Priority for loan utilizatio was to be given to mining and industrial sector entepises wbose reabilio would result In increased exorts and emplyment. A second objective was to continue sgthening the project evaluaion capability within the govenment The project was desiged in line with the govenment of Nicaagua's economic policies. 4.02 The project would provide financing for raw materials, spare parts, machinery t, equipment, and relatedcivil works and services, thus enabling industrial and mining enises in the public and prvate sctors to restore lost productive capacity. Firms with significant export potential were identified mainly in the subsectors of nmning, textles, sugar refining, metal and wood products, and chemical-pharmaceuical production. 5. Project Description 5.01 The total project cost was estimated at US$43 million. The Bank loan, amounting to US$30 million, would finance the total foreign exchange cost of the project, admated at US$26 million (about 60% of tot project cost), as well as a portion of local costs (US$4 million equivalent). Fiancing a portion of local costs was justified in view of the extreme scarcity of credit resuces available in Nicaragua. WiLthout Bank finanng of part of the local costs of the project, there was a danger that some high priorit rehabilition prqects could not proceed. Financial intermediars were required to provide US$ 4.4 million, about 10% of the total project cost, and prect onsors were required to provide at least US$8.6 million, which was the balance needed to complet the financ plan (on average about 20% of total project cost). The total local cost of the proect was estimated at about US$17 million. 5.02 The US$30 milion loan was to be used to fince: (1) subprojects carried out by induswial and mining enterprs (US$27.5 million); and (ui) technical astance (US$2.5 million) Of the former amount at least US$15 million woud be for sbprojects exorting one-third or more of  - 4 - total output after the proposed habilitonwas completed, and the balance would finance other impornt epodng eteprises. The technical assistne was to be prvided to various sta owned enterprises for a vaiety of instituton building studies. 5.03 T'he Bank loan was made on standard Bank terms, with 20 years maturity, including five years gace peiod, and an interet rate of 9.6%. Repayment was to be made on the basis of equal semi-annual payments in accordance with a fixed amorzation schedule. The Govermment was to bear the foeign eixchange risk but would on-lend in local cuirency the proceeds of the loan to FED on Bank terms. Trm and conditions of subloans were similar to the fmr Agricultur and Industrial Rehabiliion Project (Loan 1785-NI and Credit 966-NI), i.e., for up to five yeas for worldng capital loans and up to 15 years for rpairs, and modca of fixed assets and reatd services requiued for the rebailitation subprDject. A grace period in eithercase of up to three years would be permited. 5.04 As was common in operations of this type at the fime, the Bank imposed restrictio on the use of part of the program funds, i.e. by excluding: (1) refnancing of debts to third parties by the beneficiay; (ii) rental or pwrchae of land or commerca buildings; (iii) acquisition of used goods, except in te case of used machiney, whose fimctioning was guaranteed by an entity of recognized solvency; (iv) purchase of shares, bonds or other seurties; and (v) payments of dividends or recovery of invested capital. 5.05 To reduce risks to an acceptable level, Bank funds were to be made avalable only to enftepr capable of successfully restoring productive capacity and markting their incesed outut. To encourage pivate sector participation, assuance was obtained fom the Goverment that access to the proceeds of the loan woul be on a equal bais for both privat and public sectr enterpises. The technical assistance and taining component, which was desgned to rgthen the FED, and major state mimng and industrial corporaons, was considerd an imortant component for reducng project riks. 5.06 Like the frst proect (Agricultural and Ilndustral Rehabiliion Ln. 1785-NI and Cr. 966 NI), FED was the executing agency and was assisted by 1Mnancera de Preinverndn (FINAPRI) in the admiist of tchnicalassistance reqred to implement eudies. Under the previous prqject FED had the resonsibility for channelling the Bank's and local counterrt resourmes for the rehabilitaton subprojects and was responsible for reviewing all ubproject appaisal repos submitted by the five A g inancial Btermediarie, o Nacional de Desarrolo (BND), Banco Mcaraguense, Banco de AmWrica, Banco Popular and Banco mnobiao. These bank were selected based on thi technical and admin r caty. Their functons and obligatio in the use and channeling of progam funds wee set in fte Participating Bank Subsidiary Loan Agreement betwe these instudons and the FED. 5.07 FED would on-lend to financial itermediaries at 12% or 14% for special program subloans (for expore that exported one-third of total output). The paripaing commeral banks would re-lend to final beneficiaries at 15% and 17% (the Wead would be 3% in either case). The adequacy of the rates was to be reviewed amually by the Government, which would  -5- consult with the Bank on the result of the coonding reviews. The Bank would have the right to stop further commitments until an agreement was reached. 5.08 FED would receive a spead of 2.2% or 4.4%. This was esdmated to be sumcient to enable FED to more than fully recover its operating expenses connected with the project. FMI) would share responsibility of subproject appaisal and supevion with the commercial banks FED would review all subproject appraisal repor submitted by the fnancial intear, and the first three subprojects from each of the mining, chemicals, pharmaceutical and sugar industries. These latter subprojects would also be subject to the Bank's pdior approval. The maximum cumulative amount of Bank funds that could be relnt to a single enterprise would be US$3 million. 6. Project Deg d Or ation 6.01 Several important issues that had during peparti and appaisal wee incorporated into the project design, including on: (i) interest rates; (ii) allocatio of proceeds to pivate sector, (di) free lit; and (iv) deinition of the technical asistance. The proposed design also took into consideration the emergency/rehabilitation nature of the project and the prevling severe coanomic conditions at that time. 6.02 During apaisal, te Bank was conced about the low levl of inteerat (e.g. 12% for small scale enterpse) which were below the prevailing rate of 25% in 1981. Prior to lan negotiation the Govenment exressed to the Bank its intentions to raise the inter rates to 20% ad 22% for industial lending and if the projections for a decline in the high rate of inftio wre to materialize, such rates would become positve over the medium-term. At negodations, the Bank accepted the annual interest rate of 17% to be charged to the ultimate bficdae, based on the infmat obtained from the Government on the new inest te stuc The prposed 15% interest rae for epot-oriented subprqects was also acced (alough the economic rationale for the differenation was not convinng), under cerin condions First, the Borrower, in consultion with the Bank, would review on an annual basis the adequacy of its interest rate structure for subloans under the project -the fAt consultation would take place no later than March 31, 1982. In the event that the intest rates to be hged for subprojects should not be acceptable to the Bank, the Bank would have the right to withhold appr of furte commitments under the loan. Second, the Bank's agreement to it rates would depend on a careful analysis of the prvaing economic conditions in icaragua, which would include an acceptable positive spread between the highest passive intet rate in the country and those chged under the project for subloans to the ultimate borowers. Third, a review of past and fute inflionay trends in Nicaragua would be made with a view to ensuring t renable probability sted for the rates charged to subloans under the project to become positie over the lie of the subloans. It was also agreed that eligiq for pecl pogram subloans with an inter rat of 15 % would be limited to the investment enteprises that export more than one-third of their outpt after compledon of the respecive subprject.  -6 - 6.03 At appis it was suggested that US$10 millon of the proposed loa be allocated to the private sector. At negodations, the Govenment felt that the objectve would be betw met thrugh a covenant being added to the Loan Agreement, indicating that both public and private sector enterpnses would have equal access to subloans under the project. It was agred tw prior to Board presentation, FED would send to the Bank a letter giving its current esdmate of its project pipeline expected for the private sector. The Bank informed tbe govemment of its intentons to monitor closely the actual allocation of subloans between private and public enterprises. 6.04 It was agreed that the free limit for the FED (i.e. the maximum amount for subloans not requiring Bank approval) would be set at US$500,000 based on the expenence obtained under the first project The first three subprojects from the mining, chemical, pharmacutical and sugar industres, regrdless of subloan amount, would be subject to the Baks appro. This procedure was epected to result in areview by the Bank of some 30-35 subprojet covering 75% of the project financing being provided under the loan. The definition of the technical asstance component was decided to include assistance to FED and the lending in a in appisal and supevison techniques, prourment matters and export promodon. Assistance would also be provided to ste-owned companies to resolve any technical or financial problems. 6.05 P It was agreed with FED that the loan funds would finance foreign excbange costs of imported and locally nanufactured equipment, materials, civil works, and sevces, as well as a porton of the local costs associated with these ivestments. Consulting services for taning and technical assistance would be open to intertional tment. Procment would be carried out in accordance with FED guidelines, which were approved by the Bank. Participating financial intermdaries would satisfy themselves that p nt items were suitable for the respective investment projects, that they were reasonable priced, that the beneficiaries had examined the mai sources of supply, and that they were purchased from the most advantageous sources. All subproject appraisal reports would be required to include a full discussion of the procurement procedures to be used, responses received, prices quoted, and criteria establisied for the selection of suppliers. 6.06 Disuigsements. The loan was expected to be disbursed over a four year period from mid- 1981 to end-1984. The Bank would disburse against the approved subprojects and the coreponding list of goods and srvices, with the conditon that the total cost of such goods and services would not eceed 70% of the total cost of the rehailition subprojects of the bonowing enterprises. For those items on tie approved list of goods and services for an industia sub- project, the Bank would disburse aginst 100% of foreign exenditre for direct imports and 100% of expendi for locally proured goods and services. The Bank would also disburse for 100% of consuling srvices and scholarships. The financial in es had the right to suspend credit disbursements, if the beneficiaries did not met tir obligations. The nal date for submiion of subprojects was March 31, 1983 and the closing date for di was March 31, 1984. 6.07 Accounting and auditin& During project appraisal it was agreed that FED would maintin separat accounts for the project in accordance with sound accounting principlea. The project  -7- account and reated annual financial satements would be audited annually by independent auditors acceptable to the Bank in accordance witi generally accepted auditing principles. During negotiatons, agreement was reached that FED would employ audiors saftstory to the Bank and all annual audit reports and financial satements would be submitted to the Bank not later than four months after the end of each fiscal year. Supplementary data on operati, financial positions, quality of portfolio and sope of work carried out by the auditors, and such other additional inomation as the Bank might from time to ime reasonably request would be prvided. 7. Project Impleation 7.01 Implementation of the project was delayed by about one year and as a result the closing date for disbursements was extended to January 1985. These delays ocured for numerous reasons, e.g. insituonal ones such as frequent staff tumover at the FED, the dissolution of the FED, rejection of seal subproject proposals by the mUmediary banks, poicy changes within the government and a deteriorating political climate that hampered the industial recovery. 7.02 Additionally, utlinion of the technical assisnce component did not occur as exectd, larely because grt asstance became available from donor countries which made the Bankts fincing for technical assistance less attwcive. As a result, additiona fwun from the loan proceeds became available, and the Bank approved the FED's request of a reallocat of US$1.3 miion from the technical assistance component to the credit component of the loan, which refiected more accurately the actual financing needs. Even though technical assa did become vailable on a grant basis, it is not known whether the funds were applied to the components in the Bank's loan. 7.03 On December 13, 1983, after 11 years of existence, the FED was replaced by the Fondo NicaagunsedeInversones (FM, which absobed both the firmer FED and Preinwestment Fund (FINAPRI). The reason given by the Government for this change was the urgent need to centrize investment decision-making, and to maximize the use of scarce human and fnancial resources5. The Bank was concemed that the subprojects were to be preaproved at high levels, which would limit the independence of the financial institutions to make their own decisions at the time of project appraisal, especially those projects with strong poLdtcal backng. Another Bank concern was the sepation of appraisal and supvision fimctons within FNI, which had limited experience i the preparation of subprojects, and had a reily small staff. The FNI was created to act as the central focus for financing prenvestment and productive investmt, and would be able to either finance projects directly or indirectly through other financial intermediars. PNI was expected to be able to channel two or three times the combined resources mobilized by FED/FINAPRI. To support this new structure, the Government established standards for preivest and investment analysis and guidelines for consutans. 5. The Govements attempt to systematize investment decision-making began wit fthe creation of the Economic Council established in 1982, as the highest authority at the ministy level, dealn with economic matters  -8- 7.04 Actual isbu after the fir two Y amouted to US$4.8 million.about 19% of the appisl estimate (see Amn 3). Commitments at the end of FY83 reached US$8.8 milLon. Commitments and disbursemet acceleated sharply in late F83, as a rsult of addiional FNIefo to promote exprt oriented activities and betteordinaion commerial bak and bene Qther posible contrbuing ss were the exhauston of alteratv sources of foeign resouces, and the substantal in e in world interest tes, which made the Bank lon more competdtive. A further clement that helped to ine disbursements was the Bankms approval for the ablismet of a Revolving Fund in November 1983, with an initial deposit of US$3.5 milLon, (amedment dated October 1992) and a subsequent ince of $3,400,000 in the Fund (amendment dated December 1983) The conditions that the Bank considered as acceptable for the creation (and increase) of the revolving fimd were h severe breign exchange shotage in the country, and the difficulties epqnced by most fim in securing short-term credit fom supplies or commeral banks. 7.05 By tie end of 1983, the Government of Nicaragua had stared diusso with the Bank regarding the settement of the overdue debt service payments to the Bak and IMA, and the handling of future debt service. An innovatie agreement was reahed in which disburment from the loan were utiizd to repay Ncar'gua!s outstanding debt service obligats to the Bank, with the govemment makUng equivaent disbursements for subprojects in local currcy. About $10.0 miLlion in diements was aplied to these obligations. 7.06 AccolmgandAvdiUia. The government did not omply wth accounting and auding requiremen. Extery audited inancial statments were not fursd in the Anal three years of the proect. 7.07 ect cost Based on data submitted by FNI, tie total actual cost of the project reached US$65.6 milion (see annex 4), of which US$30 million equivalent (46%) was financed by the Bank, and the remainder US$35.6 million equivalent (54%) was financed by FNI and 8. Project Results 8.01 It is extremly difclct to evaluate the results of this project Nica was placed in non-accrual status at the end of 1984, and there was virtually no relaonship with the Bank until Sptember 1991 when the currnt goenment cleared aears amoung to $220 milliom. As a consequence this PCR has been completd almost ten years after the prcect closed. During that dine political arid eoonomic upheaval has tk place of pe s an equal magnitude to that which brought the Sandinist to power. Many of the entepris upported under this pnuject apparenly no longer exist, some have falle nto disarray, other have no record of sppt from the project. Insttutoally, FNI has undergone major changes since 1983 and the intermediary ban have been absoxbed into a state owned financial system, which itsef is currently insoivent 8.02 Given the sharp changes in the economic and social conditions in the period between the last disbusement and this PCR the tangible benefits to industry can not be measured. Had the  -9 PCR been prepard immediately after lon losing in 1985 it is not clear what the reults might have been. At that time the macroeconomic situation was deteriorating, civil strife was contining, and, contrary to the assurances given by the Govnment during appraisal, private sector participation in the economy was declining furtier. Reflecdng the eteioing macro economic conditions, the FNI had begun to experience financial difficutes and was unable to mobe domestic resources, thus calling into question its iability. During the peiod of project iplementation, FNI had come under political ptessur, and Its procedures for loan procesng were becoming incry cumbeome and time-consuming. No lasing impact of tie project on FNI and/or participating financial intemediarie can be ascertained after such a long hiaus. 8.03 Stastcs on subloan approvals are shown in Annxes 7-10. The bulk of the loan (55%) went to subprjec located in Mang The subsectoral distribution showed that about 80% of the loan went to two subctorsfood and beverages, and mining. Under the loan, FM financed 30 subprojects, including 14 subprojects above the fee limit of US$500,000 equivaent; i.e., 10 subprojects above US$1 million. he awag size of the ubloan was US$0.9 million. About 25% of the loan was for new projects, the rest fianced a on ad m a on a stdg enterrs. The biggest subloan US$2.6 milli;o was for the bilin of a suga mill "Ingeero Bejamin Zeldn ", which included fte financing of a tan n and pumping equipment system, civil worls, agricutul machinery and addiioa spare parts and inputs for the sugar mill. A total of 21 subloans were for state entepries, 71% of the total lehng amotmnt and only 9 subloans were for prvate enterpises, which cr d to 29% of the total lending amount, idicating that the agreed upon equal access to both the public and prvate sect may not have occured. The avea loan for state entepris was also US$0.9 million. 8.04 Implementtion of the tchna assistance component was limdted in amount and scope. Of the total estmated technical assistan resources of US$2.5 million, US$0.8 million was used and the balnce was reallocated to the credit component. (paW 7.02) The technical asste resources were used to carry out training cours in Inestment Administti, and Poject Pation and Supevision in Nicaragua for 77 profesionals from eight financial institu and 29 from government agencies and private sector enterpres. Additionally, this component financed the pumchasing of sixteen vdele for the FED to strengthen its appaisa and sprsi capability. 9. Sustalnablty 9.01 The prqject was implemented under extremely difficult c n . In the inidal yar the rolutionary govement was uncle in its own economic poliy and by the middle of the decade the Sandinistas were preoccupwd wnth the ongoing civil strife and increasingly isolated interntionally. As a conequence, the likeihood of achieving the objectv of the project - recovery of ouput - became incresIly remot 9.02 By the time the loan was canceed in 1987, FNFs capability to mobiize foreign or local eources had long since dnied up. rs operatons continued at a very low level, based on  - 10- relending tfie funds collected from its clients Other sources of financing of the private sctor activities in Nicaragua also disappeared. On the institutional side, lending to an instutixon that eventually required coltinuing replenishment of its capital by a government that was unable to meet its own debt service obligations was not suswinable either. 10. Bank Performauce 10.01 The Bank demonsated commitment and fexibility throughout the proect cycle. At the dme of preparation and appraisal of the project, the Bank correctly highlighted the folowing issues: (i) the need to increase interest rates in the event of negative real ates; (ii) broadening the definition of eligible enterprises to enable a wider spectrum of firms to utiie Bank funds; (iii) fte need to adopt more rigorous subproject appraisal; (h) lack of exprience; of te sta-owned entrpises to resolve any technical and fnancial problems; and (v) definion of the technical assistance for specific areas. 10.02 The Bank reacted quickly in approving the request of the eecuaing agency FED to establish a revolving fund to fcilitate disbur and withdrawal applicatim of the loan. The man reons for this were the sevre forg echange shortage in the country and the inabilit of the Central Bank to advance foreign exchange under subloas pending reimburse by the Bank from the loan account. lb encourage the use of the loan, the Bank accepted the reallocation of the r loan prceeds. About US$1.3 million wer realocated from the tehnica assistance component, Part 0b), to the credit component Part (a) of the loan (am 7.02). 10.03 The Bank appeared to be strongly committed to assist Nicaragua in developing the industial sector and strengthening the management and the organizaton of key indusrial sector institutions. During prepartion and appraisal, the Bank staf worked closely with FED and the Government on the tengening of FED, and on its policy statment for financia inedion hat would gde FM's lending through other finncial ntr es. The Bank, MED, FN, COIP, CORFIN, and the Government maintained good r and und ng of theissues concrng some Of the constraints affecting the project. 10.04 Total sup on resources aocated to the project wee relatively high (110 sws), tugh the number of Bank staff supervsion missons appears to have bee inadequte, given the complexity of the project and the ina piae economic conditions. (see Annex 6). Supervision efforts were sustained ugh full or partial missions from Project Effectveness to Closing Date. There were an average of 1.8 missions per year. Bank supevision of the project stard Wight afer the loan became effecdve (October 1981) and intenisied during the period 1982-84. Begiing in 1985, when Nicargua was in non-accrual, supevion dropped off markedly. Six of the project supervision missions were combined with supervision for other Bank projects. Supervision was dominated by concerns about the Boower's slow disement pace, slow implementation of the technical assistance component, and the FNrs managnt problems. Also noted were problems with FNI's quality of supervision such as lack of standardizon of subproject appraisals and the absence of periodic progress rets. Apart from its small impac on FNI's capacity to undertake more rigorous subproject appraisals and for estmating fte likely  - 11 - economic impact of subprojects, it is evident that the Bank's influence on the way FM functioned was limited. Finally, the Bank's supermision missions did not assess the extent to which the country's deteriorating economic and financial deveopments might be compro atnment of the findamtal objecdve of the loan, i.e. the financing of econondcally viable industrial projects. 10.05 Nonetheless, the Bank appears to have erted little inauence on Nicatagua's industrial sector policies and was unable to achieve the interest rate adjustments that would have been called for under the amual review clause, prculadrly with significant negatve real intest ates from 1983 onward. This coincided with a diminished Bank role in Nicaragua, parcularly as Niarag moved to non-accrual stus at the end of 1984. The Bank's supervision efforts also did not assess fully the issue of private ctopar ipaon in the project. A mejor concern was to determin whether private and state industial enterprises would be dealt an an equal basis, and to assess the extent of private sector demand for financing the rehabilitation of enterpri. On several ocasions, the Bank exchanged vies with the prvate sector in response to certain accusations, made by the prite sectr, chargng the FED and particang bank with discrimiton in granting fincing. 11. Borwer Performance 11.01 Financial peformance on FNI between 1982-1988 is presmted in Annexes 12 and 13. Though the end of 1985, FNI maintained a satisfaory finaial position showing small i in its profits. By 1987, FNIrs financial position had become critical, as a result of excessive loan and interes obligations. FED improved its overall perfmance and its Industrial Department was reorpnized to increase its efficiency. FED's management infmation system was not adequate and needed im vent for procesing subprqect data fwm sveral intediaries. Additional r ructuing of its accuting, budgeting and iation sysm was required to faciltate the preparaon of forecasts of revenues and expenses. FNI erienced simila problems with its accounting system and financial capabilities. Thus additio stgthning was needed, incluing for lending praces and procedures. FNrs accountng vstem did not rflect propetiy the actual loan portfolio value and interest accrued. 12. PojectRelationship 12.01 Over the full period of proect implemenion, FED, FNI, CORFIN, FINAPRI, and the Bank maintained a oe relaionship and a good ustanding coning the main con_aints of project implaton. Botlnecks and conints we sorted out witot negatve impacts on the Bank-Borrower rehaonship. Hower, this ionship was characd by a lack of continuity of staff and managers working on tie prqject, both in Nicrgua and at the Bank; wich affected project spersion. 12.02 The Bank's reltion with other national agencies and g instuons were also very cordial. TIe Bank had no problem gaining access to highest levels of Govenment for sector policy dialoge and rendering prfesonal advice.  - 12- 13. DocumentatIon ajmd Data 13.01 Project documentation and data included legal documents (a Loan and a Project Agreement), the staff appraisal report (SAR), the mission back-to-offace reports, supervision reports, and progress reports provided by the Borrower. 13.02 The Loan and Project Agreements and the SAR were adequately prepared and served satisfactorily during project implementation. The Borrowee's progre reports were submitted with some delays and did not reflect a complete picture of the financial situation of the Borrower, nor of the intermediary banks. Supervision reports provided a comprehensive picture of the technical aspects of the subprojects, but rarely of the institutional matters conceming the country and/or the Borrower. The analysis of such aspects improved in later supervson rport. There was a lack of continuity between several supervision reports, and it is sometimes difficult to get a clear idea of the evolution of the situation between supervision missions. 13.03 The data required for the preparation of the PCR were not always readily available because of incomplete files, missing back-t-offce and supervision reports, as well as Borower progres reports and other project data. Some of these shortcomings are due to poor records' management at the Bank. 14. Lessons Learned 14.01 The principal lessons leamned from this project eperience can be summadzed as folows: (i) This operation was undertaken in a highly uncertain emironment, i.e. soon after a bitterly contested and only partally resolved civil war. Subsequent to the design of the project the policy envinment deteriorated and jeopadiazed the achievement of the project's objectives. In such an eironut the Bank must be read to be flexible in nroject design and willing to suend commitmentstL if (ii) Given the state of the Nicaraguan economy in the early 1980s, with an increasing deficit in well qualified human resources, insidution-building and the provision of technical assistance were high priority tks. En atond Br high friofr the s gccess of a prect. technical a ss shoul t b d lined from Bank control, even under the guise of Ufre" ue (iii) FED and FNI submission of reports (include audited fintcial statements) to the Bank were not sent with the agreed periodicity and lacd adequate technical coverage. 1h an essentially unsae ir =ct give importanc to frequent and well designed technical, nomic and financal g regirmets.  - 13 - (iv) Coordination between FED, FNI and participating banks was poor. Participating banks used different criteria for evaluating subprqects. FED and MNI's management information system was not adequate and needed improvement for pocsg subprojects data obtained from seeral financial intermediaries. FNI's accounting system did not reflect properly the actual loan portfolio and interest accrued. Common. aZepted technical and financial criteria should be utiliWzd at the ariciDadng financial intermediaries. Coordinadton podures shoud be similarly welluderstood.  - 14- NICARAGUA PROJECr COMPLETION REPORT INDUSTRIAL REHABILfTATION CREDIT PROJECT (Loan 2028-NI) PART ITh PROJECT REVIEW FROM BORROWER PSPECTIVE Given the dme apsed since the last disbursement (January 1985) and the fact that many of the Borrower's staff imvolved in managig the project have tired or moved to new assnments, completon of Part It of the PCR by the govemnment was not requested.  s- 1S- NICARAGUA PROJECT COMPLElON REPORT INDUSTRIAL REHABIUXTATION CREDIT PROJECT (Loan 2028 - NI) PART m BASIC DATA RELATED BANK LOANS "kw ~ ~ - 0~~M R Credit 965-NI. Urban Reconstruction To assist the Government in the 1979 Completed in Project (US$22 million). rehabilitation of wardamaged cides, Setember 1983. establishing insttional basis for PCR 5/1211986. development. It included &ancing of small scale enterprise componeot. Loan 1785-NI and Credit 966-NI. To assist the Goverment to regain pre-war 1979 Completed in Agrieltural and Industridal levels of output, exports, and employment in May 1983. PCR Rehabilitation Project (Loan US$20 the agricultur3l and industrl sector, which 12128/1983 milion and Credit US$10 million). existed before the civil war. 1081-NI. Preinveatment Fund Project To assist the Goverment in the 1980 Completed In (US$5 milion). establishment of a sound basis for new lune 1985. PCR projec identifcatdon and preparadon. 1/2611990.  - 16- Anwx2 NICAAGUA PROJECT COMPLETION REPORT INDUSTRIAL REHABILITATION CREDIT PROJECT (Loan 2028 - NI) PROJECT TETABLE -IN! -g D a _ __11V, Identification May 4, 1980 May 4, 1980 Prparation July 2, 1980 July 2, 1980 Appraisal September 22, 1980 - September 22, 1980 Post-Apprisal March 17, 1980 - March 17, 1980 Negoaions May 19, 1981 - May 19, 1981 Board Approval June 25, 1981 - June 25, 1981 Loan Sinature July 15, 1981 - July 15, 1981 Loan Effectiveness October 10, 1981 - October 15, 1981 Loan Closing March 31, 1984 December 31, 1984 Last Disbursement Mrch 31, 1984 January 18, 1985 On April 24, 1987, the Bank cancelled US$22,284.26 equivalent.  -17 - NICARAGUA PROJECT COMPLEION REPORT INDUSTRIAL REHABILITATION CREDIT PROJECr (Loan 2028 - NJ) CUMUIATIVE ESTIMTED AND ACTUAL DISBURSEM?NT (US$ milion) Appraisal Estimate 10.0 25.0 30.0 30.0 30.0 Actual 2.5 4.8 23.3 23.4 29.9* Actaas % of Estimate 25 19 77 77 100 US$22,284 was cancelled ........... aUS$10.0 mUlion was appled as payment to debt sefvice of the Mank ii,10~~~~~~~.. -.0.-..... S. U$422,284 was carncelled from the original loan amount of US$30 million. OUS8I10.0 million was applied as payment to debt service of the Bank.  -18.- Amx 4 MCARAGUA PROJECT COMPLETION REPORT INDUSTI}AL REHABILrrATION CREDIT PROJECT (Loan 2028 - NI) PROJECT COST AND FINANCING (USS million equivalents) Total Cost 17.0 26.0 43.0 31.7 33.9 65.6 *working capital 14.0 6.5 20.5 10.2 11.3 21.5 *fixed capital 2.0 18.0 20.0 21.4 21.9 43.3 *technical assistance 1.0 1.5 2.5 0.1 0.7 0.8 Fiuncing Pla 17.0 26.0 43.0 33.0 32.6 65.6 *Bank 4.0 26.0 30.0 4.0 26.0 30.0* *FED/Intermediaries 8.6 - 8.6 5.6 6.6 12.2 *Project Sponsors 4.4 - 4.4 23.4 - 23.4 TOTAL 17.0 26.0 43.0 33.0 32.6 65.6  -19 - ~~ANN 5 Page I of 3 NICARAGUA PROJECT COMPLETION REPORT INDUSTRIAL REHABILITATION CREDIT PROJECT (LOAN 2028-ND ,~~~~~~IItOOeUib .ophe .a ~ Sectioa 3.01 (a) (i) Eofnd shall: ( maintain separate Complie accounts and a consolidated Projwet Account on its records in such separate accounts all receipts and payments under each Catgory of the table set forth in paraph 1 of Schedule 1 to the Loa Agrment adequate to reflect, in accordance with consstntly maintand appropriate accounting practices. Qi) (i(i) tae al steps necessay to ensuo that for each Ivestmnt Project the Complied responsible Participating Banks maintain Sub-loan Accont adequate to demonstrat the use of the proceeds of the Loan in the execution of each such Inve*stmet Proect. Section 3.01 (b) Have the accoun refrred to in paragraph (a) hereof and its finacial Complied statements for each fsca year audited, in accordace t appropriate ading princple consisey applie, by independen auditors acceptable to th Bank. Section 3.01 (c) t) Shall firnish to the Borrower and the Bank at the end of the fisa year. () Partil compliance cerified copies of its finaal statements, and financial statements with respect to the accounts referred to in paragraph (a) heof for such year as so audited, and (ii) (ih) the report of such audit by said Ptial compliance auditors, of such scope and in such detail as the Bank sha have reasably reudd.  -20 - Annex $ Page 2 of 3 Secton 3.01 (d) kautezo cocerng the acounts and Complied but not timely ncial satemeats with respect to the Project and Eggn&2 and the audit thereof, as the Borrom and the Bank may from time to time reasonably request. Section 3.02 (a) (1) Egnm: (i) shall establish and maintain, CompW and cause die Participating Bank to establish and maintain procedures adoqut to monitor and record the progress of tho Proect, including the costs of the Project inputs and activities, and value of output., such procdur to permit identificaion of goods and ervices fiace out of the proceeds of the Lan and disclosue of dthir use in the Projt and the nvesmen Projects; () dsall enable, and cause the (i) Particiating Banks to facilites and Complied consrucion sites included in the Ptoject, the Investment Proiect and to examine the goods financed out of the proceeds of the Loan and any relevwant records and documents; and (ii) sall funish, and caus the (ii) Participating Banks to furnsh, tbrough CompiL;d E2a4u to the Bank, at regular intervals, all such infonnation as the Bank shall reasonably request conceraing Part A of the Project and the Investment Projects, including, inter the expendiure of the proceeds of the Loan, the Subdiary Loans and the Sub-Loans, the goods and servic financed out of such proceeds, and the admnisraton, operations and finacial conditions of Fondo. the Participating Bank and FINAPRL  - 21 . SuA ex S Page 3 of 3 I'~~~, .. . ' , *- ....... Section 3.02 (b) Wt six month folawig the last Rlot was rpo y completd withdrawal fiom the Loa Account, but could not be loated by the Fgond sh prepareo ad fish to the PCR prepmtioa tam. Bak a report, of sucb scope and in sucb dei as th Back shl reasonably request, on the execution and iital opeation of the lnvestmn Projects, their coss and beneft deived and to be derived from them, the performance by the Bank, !9of, tkho Prciatng Banks, thwInestme Entpriss and FINAM of tir respective oblgation under thi Agremen t Subsiy Loan Arement, die Technical A_bsa A_mb th Subw Loan Agreements, the articipatin Bank Subsidiary Lon Ageements and the Sub-loan Cotracts, and fte accmplisment of th purpos of the =* ~~~Lo  -22 PROJECr COMPLETION REPORT NUSTRLAL REHABIIlTATION CREDIT PROJECT (Loan 2028 - NI) USE OF BANK RESOURCES Staff Inputs Through Appraisal n.a. 71.9 Board Approval through Effectiveness n.a. 31.7 Supervision na. 110.8 TOTAL B.a. 214.4 Missions Idspdfloetn 05a10/0 2 2 FNA.BCN - Apprai__ 09/1980 2 3 FNA, -CN - 1 stAppraio t 03/1981 4 1 FNACN,OTH SupeavisIon 12/1981 2 2 FNAIOTIH _ n. Supevisos 01/1982 1 1 TRO M suavision* 06/1982 4 2 FNA.CN,OH Ia.e MF Supervision' 07/1982 2 2 PNA.OTH n.e. MNP SupesionU 81982 3 3 FNAXCN,lH n. I KP Sup in 12/1982 1 2 PNA 2 U.S. Suprvo 11/1963 1 2 FNA 3 M,F Suprvision* 12/1983 4 2 PNABCO,OTH !.n. MYF SUPervin 06/1984 1 2 FNA 2 MFP SUrvWO40 07/1984 3 2 PNA.CO,OaTH 2 M,P,P Superisit 10/19U 2 2 PNAC0 | 2 M,F,P Supco 06/1986 1 I FNA |n8. MAFIP Saperidon 061O87 I I PNA n. . . . . . : 1A-F=n=aU: AMYUW;4 fC-noono RGl-Ttaiq Wmo ulH=Umjw Type of Pobimm F- Oncnid; T3taohaio M-manal Pwpoltsk n/snspeoli * Iou sup4 vision far othr pc4j  -23 - Annex 7 PROJECT COMPLEIION REPORT INDUSTRI REHABIATION CREDIT PROJECT (Loan 2028 - NI) LUst of Subprojects Apprd (USS mlion) Mis Bonaa 2.51 Memnat 0.54 COPESCOSA 6.61 Mima Poaco Mean 3.44 Nicargua Suga SW". 2.28 ICICASA 2.20 15p-Top 4.45 IDg. Bajaminf Zded6a 17.71 L.bomorios Salk 1.46 GCus y Ahla 4.28 Avicola La BOW& 1.71 Mina LaLbatad 1.76 CECALSA 0.76 EmpCa Cocatora 5.89 Mango S.A. 2.05 CIDESA 1.00 FgPica Naeional do Fdsfobro 0.07 MUDESA 0.30 Polm do iWagua 1.67 Jadua CQrvema Ta 0.93 AGROSA 0.75 Cano" 0.25 IUCASA 0.57 Sitleciadora ConmWl S.A 0.2 AlionsAlmy 0.49 Ifidaa Malr 0.08 1MPLAGSA 0.76 Induutris Edison 0.12 PROCON 0.14 TOTAL 65.60  -24- Annex 8 NICARAGUA PROJECT COMPLETION REPORT INDUSIRIAL REHABILITATION CREDIT PROJECT (Loan 2028 - Ni) Subprojects by Sectors (US$ million) Food and Beverages 11 37 42.18 64 Textile, Lether Products 1 3 0.64 1 Wood and Furnire 2 7 2.33 4 Paper and Pinting Activities 1 3 0.57 1 Chemical and Rubber Products 4 13 6.75 10 Non-Metal Minerals 1 6 0.37 1 Metal Products and Electric Equipments 4 13 1.68 2 Others 3 10 0.88 1 Mining 3 11 10.49 16 TOTAL 30 100 65.69 100  .3 - co e1n1 . | : 0 R @ | { W~~~~~~~~~~~~~4  26-tex 10 NICARAGUA PROJECT COMPLEnON REPORT INDUSTRiAL REABXATION CREDiT PROJECT a.oan 2028 - Ni) Subloam by Size of Euteprise (US$ thouand) US$ 100 to 500 6 20 2.43 1 0.40 US$ SOOto 1,000 3 10 2.24 1 0.74 US$1,000to 2,000 4 13 6.36 3 1.59 US$ 2,000 to 5,000 8 27 29.98 15 3.48 US$5,000 and Jp 9 30 160.17 80 32.12 TOTAL 30 100 201.18 100 6.70  * Annex 11 PROJECT COMPLElON REPORT NDUSTRiAL RE4ABIuxrATION CREDIT PROJECT (Loa. 2028 - NI) I3st of Subprojects by Source of Jnanchug (US$ milLion) Mina Bonarma 1.5 - - 0.7 2.2 Merinsa 0.2 - 0.1 0.4 COPESCOSA 0.8 0.3 - 4.4 0.4 6.0 Mine Francisco Meza 1.4 0.2 0.4 4.5 6.7 Nicarwua Sugar Sats 1.6 - 0.2 0.4 2.2 ICICASA 1.5 - 0.7 2.2 Tip-Top - 2.9 - 5.3 - 8.3 l;n. BenJamIn Zeleddn 2.6 7.1 0.8 - - 10.5 Laboratorios Sodka 1.0 0.1 0.9 0.3 - 2.4 Grasas y Aceites 1.0 - 3.1 - 4.1 Avicola La EsueIla 0.9 . 0.1 0.2 1.3 Mina La Libenad 0.1 0.7 0.1 0.4 1.4 CECALSA 0.4 * 0.1 0.1 - 0.6 Empress Cocotera 1.9 0.4 - - 1.7 4.0 Mangos S.A. 0.2 0.1 0.5 1.7 - 2.9 CIDENSA 0.2 * 0.6 1.1 2.1 Fabrca Nacional de Fdsforos 0.1 - 0.1 - 0.2 MUDESA - 0.1 - - 0.1 Polymer de Nicaragua 0.1 0.2 - 0.1 1.2 1.6 Industria Cenreceras Tofla 0.5 - - 0.5 - 1.0 AGROSA 0.3 - 0.2 0.7 1.2 Canteras 0.1 - 0.1 0.2 0.4 SILCASA 1.3 - 0.3 1.3 * 3.1 Almidones Almy 0.1 0.1 0.1 0.3 - 0.7 Hielers Polar 0.1 - - - 0.1 IMPLAGSA 0.1 - 0.3 0.2 0.2 0.8 industrias Edison 0.1 - - - - 0.1 PROCON 0.1 - - 0.1 TOTAL 17.9* 12.2 6.6 21.3 8. 65.6 T1e difleence betwoen total loan dIsbursernents U29.9 aS total disburd tor suprojct ina ws appied to the pagment of public debt.  Anntx 12 NICARAGUA PROJECT COMPLETION REPORT INDUSTRIAL REHABILITATION PROJECT (Loan 2028O PONDO NICARAGUENSE DB 11VBERSONBS INCOMB SrATEMEW INCOME: nterutandconumissafiloam 0.12 44.28 9.10 34.39 28.44 11.77 9.29 Teebwuid sais o iwo Q0.00 0.19 0.04 0.03 0.36 0.60 0.19 Odier iucme 0.02 1.40 0.29 0.16 050 0.49 0.15 TOWal luoe 0.14 45.87 9.43 34.S8 29.30 12.16 9.63 * Interest and comiioo 2.59 138.61 32.40 14.47 0.00 6.17 4.84 Gonrand 0aduuminishtWo expeos 0.34 39.45 8.86 17.26 6.64 0.00 3.02 Povislons for npormuing loons 43.83 31.14 7.06 0.00 o.ao 0.00 0.00 hclieugflucluutiosofac cmo 0.00 0.00 0.00 0.00 0.00 0.00 0.00 roedvable 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Tot pe... 46.76 209.20 48.33 31.73 20.71 6.17 7.78 1wom befotre tame 0.00 (163.33) (38.89) 2.85 8.53 8.53 1.84 Invome taxes 0.00 0.00 0.00 2.2S 4.52 4.52 0.00 Bp oraw coectwa. 46.77 0.00 0.00 2.71 1.52 t.52 0.00 Net income_ 0.15 (163.33) (36.89) 3.30 S.53 5.53 1.84  Annex 13 NICARAGUA PROJECT COMPLETION REPORT INDUSTRIAL REHABIUTATION PROJECT (Loan 2028-NI) Balanee Sheet (U8$ WMlUm AS 1988 1987 6 198 184 18 8 Cash md bank deposs 1.72 154.12 28.24 103.79 16.68 33.20 21.20 LOsm reeivl 39.40 1,586.03 416.58 360.67 139.31 148.02 U13.79 Oter "sts 0.34 239.14 32.22 58.68 14.81 14.32 13.03 Net fixed MsU 0;16 1.9S 0.48 0.65 0.50 1.10 0.53 2 Dof"nud chages 0.00 0.72 0.26 0.23 0.17 0.53 0.59 Guarundeposits 0.00 0.12 0.00 0.01 0.01 0.03 0.01 Toall Assfts 41.62 1,982.08 477.79 524.04 171.46 197.20 149.17 LIAUJl1IS AND EQUITY n-term losW payable 38.44 1,961.29 426.13 344.00 86.37 115.37 87.00 futnt and commissio payable 2.56 78.38 21.30 10.71 6.36 5.58 1.83 AdmistrtiveDaepens 0.04 28.54 2.08 8.66 5.33 9.17 5.92 Acuaumated expese payable 0.01 6.02 2.07 7.10 1.62 0.25 1.35 Fracial assite from the Cent 0.27 0.00 0.00 1.02 0.92 0.82 0.03 Rink of Niagua 0.00 0.01 0.01 0.00 0.00 0.00 0.08 0.00 0.03 0.04 0.13 0.16 Totl Liabilitis 41.32 2,074.25 451.59 371.53 100.63 131.31 96.29 Totd Ekpqty 0.29 -9216 26.2 1S2.51 70.84 65.89 5287 TotaloIabilis and Equity 41.62 1,982.08 477.79 524.04 171.46 197.20 149.17