Peru - Privatization Adjustment Loan Project

Document of The World Bank FOR OFFICIAL USE ONLY i-K! 3~ _- p,g Report No. P-5929-PE REPORT AND RECOMMENDATION OF THE PtBESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND PE"ELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED PRIVATIZATION ADJUSTHMENT LOAN IN AN AMOUNT EQUIVALENT TO US$250 MIrLLION TO THE REPUBLIC OF PERU MARCH 30, 1993 ; t ' \j !,, - --1 si ' : . -;A ..,r; ,.- },3tr-l5- j I S?)*;i I ;. .;I' '-Nt\{ T', F- TA,~ This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (as of March 1, 1993) Currency Unit = Sol US$1.00 = 1.77 Soles 1 Sol = US$0.56 FISCAL YEAR January 1 to December 31 ABBREVIATIONS AND AZCRGOMS AEROPERU - Empresa de Transportes Adreo del Perd (Peru National Airline) CENTROMIN - Empresa Minera del Centro del Perd (Central Peru Minmng Company) COPRI - Comision de Promoci6n de la Inversi6n Privada (Commission for the Promotion of Private Investment) CPT - Compaifa Peruana de Telefonos (Peru Telephone Company) CPV - Compaiia Peruana de Vapores (National Shipping Company) EFF - Extended Fund Facility ELECTROPERU - Empresa de Electicidad del Perd (Peru Electricity Company) ENATRU - Empresa Nacional Transporte Urbano del Perd (National Urban Trnsport Company) ENTEL - Empresa Nacional de Telefonos (National Telephone Company) FONCODES - Fondo Nacional de Compensacidn y Desarrrollo (National Social Compensation and Development Fund) FOPRI - Fondo de Promoci6n de la Inversidn Privada (Fund for the Promotion of Private Investment) FSAL - Financial Sector Adjustment Loan IDB - Inter-American Development Bank IF! - international financial institution IMF - Intenational Monetary Fund HIERRO PERU - Empresa Minera del Hierro del Perl (Peru Iron Ore Company) MINERO PERU - Empresa Minera del Peri (Peru Mining Company) PESCAPERU - Empresa Nacional Pesquera (National Fish Company) PETROPERU - Petr6leos del Peri (National Petroleum Company) QUIMPAC - Qufriuca del Pacffico (Pacific Chemicals Company) RAP - Rights Accumulation Program SAL - Structural Adjustment Loan SEDAPAL - Servicio Agua Potable do Lima (Lima Water Company) SIDERPERU - Empresa Siderdrgica del Peri (National Steel Company) SOEs - State-owned enterprises SOLGAS - Coqpahfa Peruana de Gas (Peru Gas Company) SUNAT - Superintendencia Nacional do Administracidn Tributaria (National Tax Administration Office) TA - Technical Assistance UNDP - United Nations Development Program VAT - Value added tax  FR0M FFCIA6L USE ONLY PERLU PRIVATIZATION ADUENT LOAN Table of Cone=t Loan and Program Summary ................................... i L Country Policies and Bank Group's Assistance Stra ............ ..... 1 A. Historical Perspective 1................................ B. Recent Developments ................................ 2 C. Macroeconomic Assessment ............................ 4 D. Peru's Extern Environment .......................... 7 E. Peru's Development Objectives and Policies ................ 8 F. Bank's Assistance Saegy: Objectives and Activities .... ........ 13 G. FCfMIGA Operations ............................... 18 H. Relations widh Other Multilateral Institutions and Bfateral Donors ................................ 19 HI. 1he Privatization Pogram ....... ............................. 20 m. The Reform Program to beSupported by the Loan ................... 21 A. Macroeconomic Progam and Fnaning Plan ................. 21 B. Sectoral Policy, Legal and Reguatory Reforms ................ 21 C. Implementing the Privatiation Agenda ..................... 25 D. Fiscal Impact ..................................... 27 E. SocialImpact ..................................... 27 F. Environment Aspects .... ; .......................... 28 IV. The Proposed Loan ....................................... 28 A. Description ................... ................... 28 B. Policy Letter .................. ................... 29 C. Loan Conditions ....... ........ .. .................. 29 D. Monitoring and Reporting ............................. 30 E. Technical Assistance ................. ................ 30 F. Procuroment, Disbursement, Audit and Admiistration........ . 30 G. Benefits and Risks .................................. 31 V. Recommendation .......... 32 This document has a restcted 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.  T bW