Argentina - Flood Protection Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-6818-AR MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT OF US$200 MILLION TO THE ARGENTINE REPUBLIC FOR A FLOOD PROTECTION PROJECT OCTOBER 29, 1996 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Currency Unit - Peso (Arg$) US$1.0 = Arg$1.0 FISCAL YEAR January 1 - December 31 MEASURES AND EQUIVALENTS Metric System PRINCIPAL ABBREVIATIONS AND ACRONYMS CEU Central Execution Unit of SSAP ICB International Competitive Bidding IDB Inter-American Development Bank IERR Internal Economic Rate of Return INCYTH Instituto Nacional de Ciencia y T6cnica Hidrica National Institute of Hydrological Sciences and Technology JEXIM Export-Import Bank of Japan MERCOSUR Commom Market Agreement among Argentina, Brazil, Paraguay and Uruguay NCB National Competitive Bidding NGO Non-Governmental Organization POM Project Operational Manual SSAP Under Secretariat for Assistance to the Provinces SUCCE Sub-Unidad Central de Coordinaci6n para la Emergencia SUPCE Sub-Unidad Provincial de Coordinaci6n para la Emergencia FOR OFFICIAL USE ONLY ARGENTINA FLOOD PROTECTION PROJECT Loan and Project Summary Borrower: The Argentine Republic Implementing Ministry of the Interior, beneficiary provinces and the city of Agency: Buenos Aires Beneficaries: Ministry of the Interior, the Provinces of Buenos Aires, Chaco, Corrientes, Entre Rios, Formosa, Misiones, and Santa Fd, and the city of Buenos Aires Poverty: Not Applicable Amount: US$200 million (including up to US$20 million of retroactive financing) Terms: Repayment in 15 years, including five years of grace, at the Bank's standard interest rate for LIBOR-based US dollar single currency loans Commitment Fee: 0.75% on undisbursed loan balances, beginning 60 days after signing, less any waiver Onlending Most proceeds of the loan would be onlent to provincial Terms governments and to the government of the city of Buenos Aires from the national government under the same terms and conditions as the Bank loan. The provinces would assume the foreign exchange risk and the full cost of the central executing unit (SUCCE). Each province's revenue-sharing funds from the national government would serve as a guarantee for repayment of subsidiary loans Financing Plan: See Schedule A Estimated Rate of Return: 20.4% Staff Appraisal Report: Report No. 15354-AR Project ID. No.: AR-PA-6052 Maps: IBRD No. 27719, 27720, 27721 and 27722 Vice President: Shahid Javed Burki Director: Gobind T. Nankani Division Chief: Asif Faiz Task Manager: Armando Araujo 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  MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE ARGENTINE REPUBLIC FOR A FLOOD PROTECTION PROJECT 1. I submit for your approval the following memorandum and recommendation on a proposed loan to the Argentine Republic, in the amount of US$200 million, to help finance a flood protection project. The proposed loan would be on LIBOR-based US dollar single currency loan terms repayable in 15 years, including five years of grace. 2. Background. Torrential rainfall in the Parand River Basin in 1992 produced massive flooding, causing severe damage in seven Argentine provinces and requiring large-scale evacuation of people. This event capped an unusual development: five of this century's 10 worst floods have occurred since 1983, and the resulting losses have been very costly. The 1982/83 floods caused damage calculated at US$1.8 billion, those in 1992 half that sum. Output losses and damage to the capital stock were considerable, and urban centers were hard hit. 3. A 1993 Bank study found that basin flooding historically has been more frequent and severe in the latter part of this century than before. The 10-year discharge rates have been greater, and low flows less frequent, since 1950. The study concluded that changes in patterns and rates of precipitation (whose levels have also risen, with strong correlation with the El Nifho phenomenon) are the most important explanation for the expanded streamflows. Independent consultants concur with these findings and conclusions. 4. These developments and the prospects for further damage from the recurrent flooding weigh heavily on the affected area. Chaco, Corrientes, Formosa and Misiones Provinces have relatively weak economies and show higher-than-average poverty levels. However, they also show promising prospects. Their 1994 export growth rates were the highest of any region in Argentina, based on expanded cereal, cotton, and tea production, as well as on more receptive Paraguayan and Brazilian markets. Santa Fe and Buenos Aires Provinces are also flood-prone, with losses substantially affecting three of the largest cities of the country and hurting the entire economy because these provinces are major contributors to the nation's GDP. 5. The 1994 World Development Report, featuring infrastructure, showed that Argentina needs to improve the quantity and quality of its infrastructure. The.Government accordingly plans to increase gross capital investment in order to recondition and expand the infrastructure capital stock. For this purpose, it has targeted over US$8 billion equivalent per year for the period 1995-99. Some of these planned expenditures would help improve Parand Basin flood defenses. However, a review of the basin conditions and the lessons of global experience indicate that it would be inadvisable to attempt to fully safeguard against severe floods or to control flows through large "structural" works. In several provinces, there has been extensive -2- commercial and other development in many areas that are highly vulnerable to flood damage. The authorities appreciate that, in these and some less risky areas, past capital works have raised unrealistic expectations of flood protection. This has increased--rather than diminished-- the actual risks. The authorities also share the understanding that excessive use of dikes, dams, and levees, has, in fact, prevented flood plains from being used as natural flood control mechanisms. 6. The authorities also understand that the Flood Rehabilitation Project (Loan 3521-AR) will only restore some of the infrastructure devastated by the 1991-92 floods. This activity, launched as an "emergency project," is now moving towards completion with a successful record of reinforced riverside embankments, drainage and sewerage systems put back in operation, and some residents' housing rendered more flood-resistant. The Flood Rehabilitation project supported a comprehensive assessment of Parand Basin hydrologic and climatic conditions, the adequacy of the Federal and provincial legal and institutional frameworks for managing the flood problem, and recommendations for policy changes in this field (including civil defense and environmental safeguards). It thus built the foundation for the proposed new project, as well as effective institutions for carrying it out. 7. Based on the above, the Government has decided to adopt a new strategy of: (i) investment in flood protection works only in the most important economic and socially vulnerable areas (based on proper risk analyses); (ii) initiation and tighter enforcement of stronger restrictions on land use to discourage unwise development of sensitive areas; (iii) stricter adherence to environmental assessments and safeguards; (iv) upgrading preparedness for dealing with flood emergencies in areas in which protective structures are not environmentally or economically justified, including expansion of shelters, construction of safer housing, enhanced flood warning and civil defense systems; and (v) making institutional improvements to effect and sustain these changes. But even with programs restricted to areas of high economic return, the investment required in flood protection works identified during the preparation of this proposed project is quite substantial. Consequently, the Government has decided to implement the program in two phases, the first to be financed under this project and a second phase to be considered for a future Bank operation. 8. The institutional framework for dealing with floods needs to be improved. Under the Argentine Constitution each province maintains control over its natural resources and is responsible for preserving and protecting their quality. Accordingly, especially as the provinces have not delegated to Federal agencies the majority of water management and civil defense actions, a stronger institutional framework is now needed in the provinces. It would result in plans and regulations to rationalize land usage in accordance with its vulnerability to flood risk, and creation of a unit to coordinate civil defense, flood warning, hydraulic works, maintenance of flood defense facilities and flood-related environmental actions. Provincial legislation, to be submitted to the corresponding provincial legislature as a condition of disbursement in each province, would create this necessary institutional framework for dealing with recurrent floods. -3 - 9. Rationale for Bank Involvement. The Bank's country assistance strategy (CAS), discussed at the Board on May 4, 1995, and an update, discussed on April 25, 1996, aim to: (a) consolidate macro reforms by extending the adjustment process to the provinces; (b) rebuild the infrastructure base; and (c) strengthen public institutions (especially those for social services). The proposed project is fully supportive of these CAS objectives. It would advance Government actions to remedy the adverse impact of harmful practices and patterns in the use of natural resources, improve the infrastructure base in flood-prone areas, and further enhance the natural resource base on which future growth depends. This is especially important in the flood-affected areas because of their economic significance and the sizeable populations they contain--in addition to important health and environmental implications. Further, the experience gained in implementation of the Flood Rehabilitation Project makes the Bank uniquely qualified in the Government's view to guide a more comprehensive flood protection effort. This experience is especially relevant due to the limited administrative capacity of the Government in this field. In addition, the investments required are unlikely to be mobilized from private sector sources. 10. Project Objectives. The Project would help improve the security of economic assets and persons living in flood-prone areas by constructing defense facilities to reduce future losses due to floods, and by strengthening national and provincial institutions and systems for dealing with future floods as a next phase after the Flood Rehabilitation Project to restore the assets lost in the recent floods. The specific objectives would be to enhance provincial capacity to deal with periodic flooding by upgrading their flood preparedness and mitigation systems, as well as strengthening coordination within the Basin. The aim is to provide technically sound and cost- effective flood-protection coverage of the most important economic areas, and to develop satisfactory institutional mechanisms to sustain them. The project also would help create the legal and institutional framework for each province to develop a well-defined strategy to cope with recurrent floods, including preparation and implementation of master plans for flood defense systems in areas in which flood protection works are not economically or environmentally justified. 11. Project Description. The project would support the first phase of a two-stage Flood Protection Program. It would include the following components: (a) Structural Measures: This component would consist of construction works to protect important areas of the flood plain. It would include fortification of flood defenses in geographic areas with strong economic activity and greatest vulnerability to serious repeated flood damage. These investments would not attempt to control flows of the major rivers (Parand, Paraguay and Uruguay). Instead, they would protect the cities against floods caused by the rivers through works that would prevent water invasions without interfering with the rivers. Works would concentrate on raising bridges, improvement of existing and construction of new drainage channels, embankments and small flood control works. These investments would follow the master plans developed for each flood-prone area (75.9 percent of base costs). -4- (b) Nonstructural Measures: This component, amounting to 24. 1 percent of base costs, would consist of: (bl) New Institutional Framework. Technical assistance would be provided to help create and implement an institutional framework in each province to deal with recurrent floods. It would help: (i) develop plans and regulations to rationalize land usage in flood-prone areas including classification of areas according to their vulnerability to flood risk, thereby stimulating property and land owners to obtain private flood insurance; (ii) create a unit to coordinate civil defense, flood warning, consultation on hydraulic works, maintenance of flood defense facilities, and coordination of environmental actions on flooding issues; and (iii) institutional development actions that would support the coordinating units in their initial operation through technical assistance and equipment (0.7 percent of base costs); (b2) Upgrading of Flood Preparedness. For vulnerable areas not considered to warrant further investment in structural defenses, the proposed assistance would provide shelters (multi- purpose installations) and improved housing for lower-income families in flood-prone zones. The shelters would be located adjacent to existing schools or community centers to allow them to be used by the population during non-emergency periods, as well as to facilitate their maintenance. The housing component would follow the same principles as the previous project, providing funding for a voluntary program of self-construction of houses by the community. Building materials (about US$6,200 per house) are expected to comprise about 80% of the construction cost. Beneficiaries would receive vouchers for tranches of materials for the unit construction; this same system was used successfully in the previous project. The provinces would provide land, infrastructure, and technical and social assistance to the beneficiaries. The beneficiaries, who are among the poorest families in the affected areas, would finance the remaining 20% through their labor input. The units would be constructed on the same site or in the same neighborhood in which the beneficiary already lives to avoid resettlement problems. Improvements in the civil defense arrangements are also envisaged (12.1 percent of base costs); (b3) Early Flood Warning System. This component would aim to ensure the development of a more adequate and extensive flood warning system linked to the National Institute of Hydrological Sciences and Technology (INCYTH) and provincial systems. It would include a new hydro metering system, computational equipment and software, a new communications system, and the creation of local flood warning systems in each province (1.0 percent of base costs); and (b4) Proiect Implementation and Administration. Technical assistance would be provided to help implement the project and carry out a related training program for improving the provinces' capabilities in flood forecasting, early warning, civil defense and environmental activities. The project would include consultant services for the design of the flood defense works, supervision of construction and implementation of four environmental programs. The environmental programs were designed as part of the environmental assessment carried out during preparation, and would consist of: (i) environmental education and public awareness in communities benefiting from flood protection works; (ii) strengthening of environmental -5- management capacity of the implementing agencies as well as the environmental agencies; (iii) technical assistance to communities and municipalities to improve urban environmental management and monitoring, especially regarding the sound disposal of solid waste; and (iv) improvements in baseline knowledge of ecology and dynamics of the riverine and floodplain ecosystem and protection and management of wetlands within the project region, especially near urban areas (10.3 percent of base costs). 12. Project Cost and Financing. Total financing requirements (including US$68 million of interest during construction) are estimated at US$488 million. Foreign exchange costs are calculated at US$319.3 million. The proposed Bank loan of US$200 million would finance some 41 % of total financing requirements. The financing plan envisages that the Export-Import Bank of Japan (JEXIM) would provide cofinancing of US$120 million (or 24.6% of total financing requirements), with the provincial governments providing the balance (US$168 million), representing 34.4%. Retroactive financing for eligible expenditures incurred after January 15, 1996, (but not earlier than 12 months prior to loan signing) in an amount not to exceed US$20 million is recommended. 13. In keeping with the design and execution of the Flood Rehabilitation Project (Loan 3521- AR), loan proceeds would be onlent to the participating provinces on the terms and conditions applying to Bank loans to the Federal Government. A small portion would be retained at the Federal level, mainly for INCYTH improvements. The provinces would pay commitment fees, assume the foreign exchange risk, and guarantee loan repayment through pledges against the earmarked revenue-sharing fund transfers from the Federal Government. 14. Implementation. Implementation arrangements would remain essentially the same as in the ongoing Rehabilitation Project. The "Sub-Unidad Central de Coordinaci6n para la Emergencia" (SUCCE) would remain within the Under Secretariat for Assistance to the Provinces (SSAP), and would continue to report to the Central Executing Unit (CEU) of SSAP. As the national executing agency for the proposed project, SUCCE would retain its responsibility for overall project management, including orientation and technical assistance to the provinces (directly and through the project operational manual) in the preparation, approval, control, and monitoring of project implementation, as well as for all financial and reporting transactions with the Bank. SUCCE would also retain its responsibility for all aspects concerning sub-project evaluation, approval, and procurement, as well as ensuring timely project reporting and obtaining Bank approval of procurement and disbursements. 15. SUCCE would continue to be headed by an executive Chief assisted by a team of high- level consultants in the various infrastructure sectors of the operation. An individual consultant would continue to act as General Supervisor with responsibility for independently monitoring the project and reporting to SSAP. In each province the project would be implemented by a provincial implementation agency (SUPCE--Sub-Unidad Provincial de Coordinaci6n para la Emergencia). The SUPCEs would be responsible for formulation, implementation, and supervision of provincial sub-projects. The SUPCEs would also be responsible for all procurement, contracting, and submission of disbursements, subject to review by SUCCE. A -6- satisfactory Project Operational Manual (POM), to be approved by the Borrower as a condition of effectiveness, will provide guidance and establish standards for all aspects of project implementation. 16. Sustainability. The investments in civil works would aim at protecting existing infrastructure. Their sustainability would be enhanced by the proposed project conditions governing future operations and maintenance of these facilities. The required new river-basin- wide coordinating arrangements should help strengthen the provincial governments' flood preparedness and mitigation systems. The proposed carryover of the experience, together with the competent staff of SUCCE and the SUPCEs, should provide a strong basis for sustaining project works. The amount of investment in each province and the financing plan (with JEXIM participation) were taken into consideration to adapt provincial counterpart requirements to their financial implementation capacities in order to assure sustainability of implementation. 17. Lessons from Previous Bank Involvement. Bank-wide experience has shown that reconstruction alone is insufficient, and that measures are needed to reduce risks of future disaster damage and to safeguard people at risk. Another lesson is that, while quick responses to disaster are important, it is equally important to take account of underlying problems and determine how to resolve them. Regarding recurrent flooding, the 1993 Bank Water Resources Policy Paper encouraged the use of fiscal incentives, control of land use and management practices, and other measures to lessen vulnerability rather than investing in "structural" works. Additionally, previous Bank-supported provincial and municipal operations in Argentina have indicated that the more successful activities have: (a) concentrated on relatively simple investments; (b) covered a large number of affected localities; (c) involved highly competent local executing units; and (d) had access to funds that could be shifted among competing provinces. 18. Issues and Actions. A complete list of physical improvements related to flood protection works was first prepared based on a comprehensive provincial protection strategy expressed in individual provincial master plans. These were scaled down and rationalized on the basis of technical, environmental, and economic criteria. The proposals had to comply with criteria for environmental impacts, and to have minimum internal economic rates of return of about 12%. Since the investment required to implement the entire list of improvements would be quite substantial, the Government has decided to implement the program in two phases. The main criterion for the first phase was to select from eligible sub-projects (those which met the minimum environmental and economic criteria) those which would, in each province, defend the most important economic assets (normally the most populated cities) but limit the amount of investment in each province in accordance with its counterpart funding capacity. This criterion would also allow all affected provinces to participate in the project. This is required for implementation of the "nonstructural" measures whose effectiveness requires the participation of all provinces in the Basin. Additionally, it is proposed to structure the Loan so as to facilitate the possible incorporation of "second round" list activities during project execution. In view of the provinces' varying implementation capabilities and performance, two annual reviews at an early stage of implementation would be held to determine if the initial provincial allocations -7- require revision. This review would allow possible transfer of funding from slow-moving provinces to projects in better-performing provinces. Sub-projects from the second priority group (in provinces with a good implementation record) would replace non-started sub-projects from the first priority group in provinces showing delays in project implementation. Also, when project implementation is further advanced (to around 50%), a second operation might be prepared for the implementation of the remaining economically sound sub-projects (the future "second round" group). 19. Financing Plan. JEXIM has appraised the project and is at an advanced stage of its approval process for cofinancing the project. However, during negotiations it was agreed that if JEXIM's funds do not become available, the Government of Argentina would reduce the project's size, with consequent postponement of some sub-projects to the second phase, or alternatively, provide additional funding. 20. Institutional Arrangements. To achieve greater integration in the overall management of Parand Basin natural resources, the project strategy calls for creation of a coordinating framework for policy-making, information exchanges, and regulation within each province and among provinces. This framework could be useful in setting standards for economic activities, reconciling the interests of water and land users, and for administering defined rights. To address these issues, it was agreed during negotiations that: (a) a draft Flood Protection Law will be submitted to each provincial legislature as a condition for disbursement in each province and as a condition of effectiveness in the first province to sign the on-lending loan agreement with the national Government; and (b) no disbursements will be made to each province in excess of 50 percent of the evaluated total cost of all first priority sub-projects for a participating province unless the Flood Protection Law has been enacted in that province. "Non-structural" measurers could be implemented without restrictions. 21. Hidrovia (Waterway). A proposed "Hidrovia" waterway scheme, which is outside the scope of the project, is currently under study by Argentina, Uruguay, Brazil, Paraguay and Bolivia. It aims to expand navigation of large ships and barges on the Parand and Paraguay Rivers through civil works, which could conceivably affect Parand Basin river flows. The Inter- American Development Bank (IDB), which is supporting the development of the Hidrovia, has been managing its project analysis including its economic evaluation and an environmental assessment. The Bank is continuing to monitor the progress of this scheme, which has not been advancing rapidly (partly because of environmental concerns). The proposed project would not have any investment that could impact upon the Hidrovia. 22. International Waterways. The project has no investments on rivers that involve the use or potential pollution of international waterways. The works included in the project aim at protecting cities and lands from river overflow. They would not provide flood control. Floods will continue to happen; however, the preparedness (to be established under the project) for living with floods, and the flood defense works (to be implemented under the project) will reduce losses to the local population, avoid the inundation of cities, and reduce the duration of -8- local floods. Accordingly, the requisite Bank directive specified for international waterways (OP 7.50) is not applicable. 23. Local Counterpart Funding. To reduce the risk of lack of provincial counterpart funding, it was agreed that the onlending agreement between the Central Government and each Province would include provisions allowing the Central Government to send part of the province's revenue-sharing ("coparticipation") funds directly to the SUPCEs to provide adequate counterpart funding. 24. Environmental Aspects. This project is classified as category A. Positive environmental consequences are envisaged from the fuller restoration of damaged health, water, sewerage, and housing facilities. The provision of additional security against floods would improve environmental conditions, through e. g., a reduction in soil erosion, and reduce or eliminate drainage congestion with consequent reductions in health hazards. Positive benefits would also accrue from fuller public participation, especially regarding environmental aspects of flood protection proposals. A regional environmental assessment for the entire Basin was carried out in accordance with terms of reference approved by the Bank. A seminar for public consultation on the project and for comments on the preliminary environmental assessment report was held in Buenos Aires in May 1995. The seminar included participation of provincial public entities and national and provincial Non-Governmental Organizations (NGOs). Regional environmental issues associated with floods will be addressed through the provision of technical assistance, training and some basic equipment to SUCCE and to the provinces to (i) promote urban environmental infrastructure diagnostics and the planning of urban expansion; (ii) improve wetland protection; (iii) strengthen environmental assessment capacity of flood protection projects; and (iv) develop environmental education programs in communities benefiting from flood protection works. The final environmental assessment report has been completed and was discussed at a public seminar during appraisal. The final report is available to the public in Buenos Aires and at the Bank's Public Information Center. An executive summary in English was prepared by the Government and was circulated to the Board prior to appraisal. 25. Each sub-project included in the project (either in the first or second group) was subjected to a detailed environmental assessment during project preparation. Sub-projects were screened for: (i) compliance with the project's basic philosophy of protection of existing infrastructure and non-promotion of urban expansion in high-risk areas; (ii) minimum interference with natural flood processes; and (iii) minimum effects on sensitive ecosystems. All sub-projects selected met these conditions. These studies concluded that the sub-projects' negative effects would mainly be highly localized and short-lived. Moreover, the areas affected are so small in relation to the total floodplain as to virtually preclude any regional impact at the macro level. Nonetheless, the design and construction of those sub-projects with adverse implications include mitigation and monitoring measures, which will be included in the bidding documents. In addition, the Operational Manual will include suitable guidance for contractors to follow. -9- 26. While some housing would be built under the project, there is no resettlement involved, particularly as participation in this aspect of the program is entirely voluntary. In addition, the main civil works would be thoroughly screened to avoid any involuntary resettlement. 27. Program Objective and Poverty Categories. The project aims to help the environmentally sustainable development of the provinces (Category EN) by reducing and, to some extent, avoiding the economic losses caused by frequent floods throughout the Parand Basin. It would also stimulate employment generation in the construction sector, and improve physical and social infrastructure. Project implementation is expected to generate about 33,500 person-years of construction employment, or the equivalent of 6,700 persons permanently employed during the five-year project period. Other sectors would also benefit from new jobs in transport, and the supply of goods and other services to the project. The housing component, in particular, would improve the living conditions of lower-income segments of the population. 28. Participatory Approach. Project preparation took into consideration the results of extensive consultations with local communities and all affected municipalities. The consultants who prepared the Master Plans were responsible for gathering data and obtaining feedback from the communities involved. The SUPCEs also made contacts with all municipalities in the affected areas. Public hearings were held in the areas in which works are envisioned. They were very productive, resulting in modifications to the original engineering solution in some locations due to suggestions from local communities (e.g., in Gualeguay, Resistencia and Goya). Two seminars with participation of several governmental units (central and provincial) and NGOs were held during the pre-appraisal and appraisal missions to discuss the project and its environmental assessment report. Project implementation will also seek strong community participation, especially in: (i) the installation of the emergency family shelters; (ii) the housing component based on self-construction by community groups; (iii) the maintenance and operation of some components of the early flood warning system; and (iv) enforcement of the regulations on land utilization, particularly where it includes restricted use of land. 29. Project Benefits. The proposed project would reduce the loss of life and devastation of property during major floods. Major benefits would accrue from the fuller restoration of the damaged infrastructure in one of the most productive areas of the country and the area closest to Brazil and Paraguay, two of Argentina's partners in MERCOSUR. The reduction of the frequency and range of flood-caused damage would improve the efficiency of the productive and commercial sectors in this area and reduce the damage to transport facilities, thus facilitating Argentina's competitiveness within MERCOSUR. The project works also would reduce health hazards and waterborne diseases in flood-prone areas. Other benefits would include the provision of substantially more flood-secure housing and the generation of sizeable civil works and construction employment. 30. Economic Impacts. The proposed project includes flood-defense works in several provinces. Each sub-project was analyzed from its technical, environmental and economic aspects. Each sub-project represents the alternative with the highest net present value for overcoming the local problem. In all economic calculations, at both the regional and the sub- - 10 - project levels, cost streams include the capital cost of proposed works and the maintenance costs associated with their future operation. Benefits were estimated as the direct "avoided damage cost" of future floods. Those direct costs refer only to the estimated rehabilitation costs of existing facilities and infrastructure, such as roads, houses, and lost crops, calculated from data on past floods. No indirect, economic or social costs associated with past floods (or likely to result from future ones) were considered, resulting therefore in a lower bound of benefits from the project. To evaluate the direct avoided damage costs, a flood risk analysis was carried out to assess the flood risk (using the river mathematical model developed by Halcrow). This analysis generated a risk curve comparing probability and damage associated with that probability. Correspondingly, the average or expected damage cost was calculated for conditions with and without the project (considering the expected degree of flood protection from the project, also calculated from the risk study). The difference was considered as an estimate of the benefits. For the project as a whole, a consultant study reviewed the results of the preliminary study, using more conservative criteria for evaluation of benefits (only direct damage costs caused by floods). This study gave a final estimate of an internal economic rate of return (IERR) of 22.2% for the "structural" component of the project investments in flood protection (representing 76% of total project cost) and of 20.4% for the project as a whole. The IERR of each sub-project was calculated and ranged from 11.8% to 79.2% (see Schedule E). 31. Risks. There are four possible risks: (a) time and cost overruns; (b) inadequate management and control due to weak, bureaucratic public entities in the provinces; (c) possible abuses in the housing component; and (d) lack of counterpart funds for project implementation. During preparation, steps were taken to address these issues and design suitable safeguards. The major risk concerns timely project implementation. Therefore, project management was streamlined based on the experience gained in risk management during the previous project. In this connection, the project would be implemented by the same units (SUCCE in the central government and SUPCEs in the provinces) that are successfully implementing the Flood Rehabilitation Project (Loan 3521-AR). Additionally, a full-time, independent supervising engineer reporting to SSAP would again be hired. Adequate funding for technical assistance has been included in the project to help reduce implementation risks. The housing component was designed following the excellent experience with the use of vouchers for acquisition of material used in the previous project. The same management systems would be used (no cases of abuse have occurred in the previous project). To reduce counterpart funding constraints, cofinancing is being pursued to design a financing plan of the project which would permit the provinces to ensure sufficient resources for project works, as well as transfers of Federal "coparticipation funds" to SUPCEs' accounts. The aforementioned contingent arrangements for possible transfer of funding from slow-moving provinces to better-performing provinces (ref. para. 18) should contribute to effective project implementation. 32. Financial Aspects. The borrower has considered the Bank's alternative loan term options--currency pool loan, LIBOR-based single currency loan and fixed rate single currency loan terms--and has indicated a preference for LIBOR-based US dollar single currency loan terms, in order to improve the management of its external liabilities. The choice of US dollar terms was motivated by a better match between cash inflows and outflows in that currency, - 11 - which is the base of the country's external commerce. The Argentine peso is also legally tied to the US dollar under the convertibility law that governs the basic principles of the Argentine economy. The LIBOR-based single currency loan was considered preferable because of the long grace period and maturity it offers. The borrower estimated that the risk posed by the volatility of the LIBOR-based single currency loan rate would be mitigated in the medium range; short- period higher rates would be compensated by subsequent periods of a lower rate, with averages about the same as if the rate had been fixed. However, the more favorable grace period and maturity would better match the life span of the proposed investments. 33. Reconunendation. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank, and recommend that the Executive Directors approve it. James D. Wolfensohn President by Caio Koch-Weser Attachments Washington, D.C. October 29, 1996 - 12 - Schedule A ARGENTINA FLOOD PROTECTION PROJECT ESTIMATED PROJECT COST (US$ million, January 1996) Component Local Foreign Total Foreign % of as % of Total Total Base Cost A) Structural Measures 110.5 167.0 277.5 60.2 75.9 B) Non-Structural Measures B) New Institutional Framework 0.5 2.0 2.5 80.0 0.7 B2) Upgrading Flood Preparedness (i) Shelters 4.4 8.0 12.4 64.5 3.4 (ii) Housing 18.0 13.0 31.0 41.9 8.5 (iii) Civil Defense 0.2 0.5 0.7 71.5 0.2 B3) Early Flood Warning 0.8 3.0 3.8 78.9 1.0 B4) Project Implementation (i) Environmental Programs 0.6 3.0 3.6 83.3 1.0 (ii) Consultants 4.7 16.0 20.7 77.3 5.7 (iii) SUCCE 5.0 4.2 9.2 45.6 2.5 (iv) Auditing 0.5 1.0 1.5 66.6 0.4 (v) Training 0.5 0.5 100.0 0.1 (vi) Housing Tech. Asst. 2.0 2.0 0.0 0.6 Total Base Cost 147.2 218.2 365.4 59.6 100.0 Physical Contingencies 11.0 18.0 29.0 62.0 8.0 Price Contingencies 10.0 15.6 25.6 60.9 7.0 Total Project Cost 168.2 251.8 420.0 59.8 115.0 Interest during Construction 68.0 68.0 100.0 18.6 Total Financing Required 168.2 319.8 488.0 65.4 133.6 - 13 - Schedule B Page 1 PROCUREMENT ARRANGEMENTS (US$ million, January 1996) Procurement Method' Category N.B.F S Total Cost ICB NCB Other b/ Civil Works 106.0 215.4 1.0 322.4 (36.5) (79.5) (0.3) (116.3) Goods 16.2 0.2 16.4 (6.3) (0.1) (6.4) Technical Assistance 41.0 41.0 (41.0) (41.0) Flood Warning System 4.4 4.4 (4.0) (4.0) Housing Grants 35.3 35.3 (31.8) (31.8) Training 0.5 0.5 (0.5) (0.5) Total Project Cost 126.6 215.4 78.0 420.0 Bank Total (46.8) (79.5) (73.7) (200.0) ICB = International Competitive Bidding NCB = National Competitive Bidding Figures in parentheses are the respective amounts financed by the Bank National shopping, small works, special procedures for housing materials, and hiring of auditors and consultants in accordance with Bank guidelines Not Bank financed - 14 - Schedule B Page 2 DISBURSEMENTS (US$ millions) Estimated Schedule of Bank Disbursements (US$ millions) Bank Fiscal Year 1998 1999 2000 2001 2002 Annual 10.0 40.0 70.0 64.0 16.0 Cumulative 10.0 50.0 120.0 184.0 200.0 - 15 - Schedule C TIMETABLE OF KEY PROCESSING EVENTS (a) Time taken to prepare: 25 months (b) Prepared by: SUCCE (Ministry of Interior) (c) First Bank mission: November 1993 (d) Appraisal: December 1995 (e) Negotiations: October 1996 (f) Planned date of effectiveness: April 1997 (g) List of relevant documents: Report No. PAR 12919, March 1994 Sfax Flood Protection Project (Tunisia) Report No. P-5852-AR (Ln 3521-AR) Flood Rehabilitation Project (Argentina) Report No. 7093-AR (Ln 3877-AR) Second Provincial Development Project (Argentina) MOP Schedule D Status of Bank Group Operations in Argentina IBRD Loans and IDA Credits in the Operations Portfolio Difference Original Amount in US$ Millions Between actual Loan or Fiscal and expected Project ID Credit No. Year Borrower Purpose IBRD IDA Cancellations Undisbursed Disbursements a/ Number of Closed Loans/credits: 48 AR-PA-5945 L26410 1986 GOVERNMENT WATER SUPPLY 60.00 0.00 20.03 1.64 21.67 AR-PA-5968 L28540 1987 SEGBA SEGBA V 276.00 0.00 0.00 68.45 68.45 AR-PA-5977 L32810 1991 ARGENTINE REPUBLIC WTR SUPPLY II 100.00 0.00 0.00 81.59 60.99 AR-PA-6005 L32800 1991 REPUBLIC OF ARGENTINA PROVINC DEV PROJ 200.00 0.00 0.00 80.96 79.46 AR-PA-6009 L32970 1991 GOVT OF ARGENTINA INA AG SERVCES&INST DEV 33.50 0.00 0.00 6.17 2.77 AR-PA-6034 L34600 1992 GOVERNMENT TAX ADMIN II 20.00 0.00 0.00 2.83 2.42 AR-PA-6003 L36110 1993 GOVT OF ARGENTINA INA RD MAINT & REHAB SCT 340.00 0.00 0.00 187.25 123.40 AR-PA-6036 L35200 1993 GOVERNMENT YACYRETA II 300.00 0.00 0.00 4.02 3.26 AR-PA-6051 L35210 1993 ARGENTINA FLOOD REHABILITATION 170.00 0.00 0.00 16.24 16.24 AR-PA-5988 L37090 1994 REP OF ARGENTINA A CAPITAL MKT DEVT 500.00 0.00 0.00 483.88 -16.12 AR-PA-6025 L36430 1994 GOVT OF ARGENTINA INA MTNAL CHILD HLTH & N 100.00 0.00 0.00 66.68 26.68 AR-PA-6062 L37100 1994 MIN OF ECONOMY CAPITAL MKT TA 8.50 0.00 0.00 5.98 3.08 AR-PA-40826 L38780 1995 ARG REPUBLIC PROV.BANK PRIV. 500.00 0.00 0.00 166.00 166.00 AR-PA-5992 L37940 1995 GOVT OF ARGENTINA INA SECONDARY ED I 190.00 0.00 0.00 180.43 83.63 AR-PA-6018 L3B770 1995 ARGENTINE REPUBLIC PROV DEVT II 225.00 0.00 0.00 225.00 15.00 AR-PA-6035 L38360 1995 REP OF ARGENTINA PROV.REFORM 300.00 0.00 0.00 100.37 .37 AR-PA-6060 L38600 1995 GOVT OF ARGENTINA MUNIC DEVT II 210.00 0.00 0.00 202.81 -3.43 AR-PA-34091 L39210 1996 REP OF ARGENTINA HIGHER ED REFORM 165.00 0.00 0.00 158.54 33.54 AR-PA-35495 L39570 1996 SEC.OF SOC.DEVIT (OFFICE SOCIAL PROTECTION 152.00 0.00 0.00 55.13 8.03 AR-PA-37049 L39580 1996 GOVT OF ARGENTINA PUB.INV.STRENGTHG 16.00 .0.00 0.00 16.00 1.40 AR-PA-38883 L39600 1996 REPUBLIC OF ARGENTINA ENT.EXPORT DV. 38.50 0.00 0.00 35.99 7.25 AR-PA-40904 L39260 1996 REPUBLIC OF ARGENTINA BANK REFORM 500.00 0.00 0.00 333.00 250.01 AR-PA-40909 L40020 1996 REP. OF ARGENTINA H. INSURANCE REFORM 250.00 0.00 0.00 100.00 -108.31 AR-PA-40909 L40030 1996 REP. OF ARGENTINA H. INSURANCE REFORM 100.00 0.00 0.00 100.00 0.00 AR-PA-45687 L40040 1996 REP. OF ARGENTINA H.INSURANCE TA 25.00 0.00 0.00 23.17 -1.83 AR-PA-6030 L39310 1996 REPUB OF ARGENTINA PROVCL HLTH SCTR DEV 101.40 0.00 0.00 98.08 4.88 AR-PA-6040 L39480 1996 GOVERNMENT FORESTRY/DV 16.00 0.00 0.00 15.70 .50 AR-PA-6055 L39270 1996 GOVT. OF ARGENTINA MINING SCTR DEVT 30.00 0.00 0.00 22.29 -5.01 AR-PA-6057 L39710 1996 GOV'T OF ARGENTINA SECNDARY ED 2 115.50 0.00 0.00 115.50 13.90 AR-PA-40808 L40850 1997 GOA N.FOREST/PROTC 19.50 0.00 0.00 19.50 0.00 AR-PA-5980 L40930 1997 GOVT OF ARGENTINA PROV ROADS 300.00 0.00 0.00 300.00 0.00 Total 5,361.90 0.00 20.03 3,273.22 Active Loans Closed Loans Total Total Disbursed (IBRD and IDA): 2,068.65 5,526.89 7,595.54 of which has been repaid: 151.01 2,695.63 2,846.64 Total now held by IBRD and IDA: 5,190.86 2,831.47 8,022.33 Amount sold 0.00 12.79 12.79 Of which repaid : 0.00 12.79 12.79 Total Undisbursed : 3,273.22 .21 3,273.43 a. Intended disbursements to date minus actual disbursements to date as projected at appraisal. b. Rating of 1-4: see OD 13.05. Annex D2. Preparation of Implementation Summary (Form 590). Following the FY94 Annual Review of Portfolio performance (ARPP), a letter based system will be used (HS = highly Satisfactory, S = satisfactory, U = unsatisfactory, HU = highly unsatisfactory) : see proposed Improvements in Project and Portfolio Performance Rating Methodology (SecM94-901), August 23, 1994. c. Following the FY94 ARPP, "Implementation Progress" will be reported here. - 17 - MOP Schedule D Argentina STATEMENT OF IFC's Comnitted and Dispursed Portfolio As of08/31/96 In Millions US Dollars Committed Disbursed -IFC- -IFC FY Company Loan Equity Quast Partic Loan Equity Quad Partic Aproval 1960 Acindar 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1977 Alpargatas 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1978 Minetti 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1981 Minetti .84 0.00 0.00 0.00 .84 0.00 0.00 0.00 1984 Alpargatas 0.00 -. 1.05 0.00 0.00 0.00 1.05 0.00 0.00 1985 ROPASA 0.00 .05 0.00 0.00 0.00 .05 0.00 0.00 1986 Alpargatas 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1986 Minetti 30 0.00 0.00 1.48 .30 0.00 0.00 1.48 1987 BGN-Bolland 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1987 BGN-CENCOSUD .13 0.00 0.00 0.00 .13 0.00 0.00 0.00 1987 BON-CILSA .03 0.00 0.00 0.00 .03 0.00 0.00 0.00 1987 BGN-Flichman .04 0.00 0.00 0.00 .04 0.00 0.00 0.00 1987 BON-Longvic .05 0.00 0.00 0.00 .05 0.00 0.00 0.00 1987 BGN-Noroeste .07 0.00 0.00 0.00 .07 0.00 0.00 0.00 1987 BGN-Sebastian .13 0.00 0.00 0.00 .13 0.00 0.00 0.00 1987 BGN-TBR .25 0.00 0.00 0.00 .25 0.00 0.00 0.00 1987 BGN-Vandenfil .07 0.00 0.00 0.00 .07 0.00 0.00 0.00 1987 BRLP 3.00 0.00 0.00 0.00 3.00 0.00 0.00 0.00 1987 Minetti .59 0.00 0.00 2.96 .59 0.00 0.00 2.96 1987 Terminal 6 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1987 BGN-COLORTEX .13 0.00 0.00 0.00 .13 0.00 0.00 0.00 1987 BON-Trvycon .04 0.00 0.00 0.00 .04 0.00 0.00 0.00 1987 BGN-Valley .07 0.00 0.00 0.00 .07 0.00 0.00 0.00 1987 BGN-Moldeada .13 0.00 0.00 0.00 .13 0.00 0.00 0.00 1988 Alpargatas 1.70 0.00 1.37 0.00 1.70 0.00 1.37 0.00 1988 Bunge y Bom 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1989 Astra CAPSA 2.08 0.00 0.00 0.00 2.08 0.00 0.00 0.00 1989 Banco Frances 5.39 0.00 0.00 1.43 5.39 0.00 0.00 1.43 1989 BGN-Algodonerm .38 0.00 0.00 0.00 .38 0.00 0.00 0.00 1989 BON-Bolland .31 0.00 0.00 0.00 .31 0.00 0.00 0.00 - 18 - MOP Schedule D Committed Disbursed -JFC -IFC- FY Company Loan Equity Quasi Partic Loan Equity Qual Partic Approval 1989 BON-Ferum 1.17 0.00 0.00 0.00 1.17 0.00 0.00 0.00 1989 BGN-Flichman .23 0.00 0.00 0.00 .23 0.00 0.00 0.00 1989 BGN-Genaro .96 0.00 0.00 0.00 .96 0.00 0.00 0.00 1989 BON-Parafina .88 0.00 0.00 0.00 .88 0.00 0.00 0.00 1989 BGN-Willmor .96 0.00 0.00 0.00 .96 0.00 0.00 0.00 1989 ROB-COMESI .47 0.00 0.00 0.00 .47 0.00 0.00 0.00 1989 ROB-Fracchia .28 0.00 0.00 0.00 .28 0.00 0.00 0.00 1989 ROB-INTA .47 0.00 0.00 0.00 .47 0.00 0.00 0.00 1989 Terminal 6 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1989 BON-Interpack .35 0.00 0.00 0.00 .35 0.00 0.00 0.00 1989 BGN-FRIGOTOBA .18 0.00 0.00 0.00 .18 0.00 0.00 0.00 1990 CIP 0.00 .08 0.00 0.00 0.00 .08 0.00 0.00 1990 Petroken 9.17 0.00 5.00 4.58 9.17 0.00 5.00 4.58 1990 Terminal 6 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1991 Astra CAPSA 13.88 0.00 0.00 24.50 13.88 0.00 0.00 24.50 1991 BCA 2.51 0.00 0.00 3.20 2.51 0.00 0.00 3.20 1991 Minetti .74 0.00 0.00 0.00 .74 0.00 0.00 0.00 1991 ROB-Alimenticia .41 0.00 0.00 0.00 .41 0.00 0.00 0.00 1991 ROB-Emprigas .56 0.00 0.00 0.00 .56 0.00 0.00 0.00 1991 ROB-Guilford .27 0.00 0.00 0.00 .27 0.00 0.00 0.00 1991 ROB-Jugos .13 0.00 0.00 0.00 .13 0.00 0.00 0.00 1991 ROB-Longvie .56 0.00 0.00 0.00 .56 0.00 0.00 0.00 1991 ROB-Surfactan .09 0.00 0.00 0.00 .09 0.00 0.00 0.00 1991 ROB-Mendoza .56 0.00 0.00 0.00 .56 0.00 0.00 0.00 1991 ROB-tnterpack .50 0.00 0.00 0.00 .50 0.00 0.00 0.00 1992 Astra CAPSA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1992 Bridas 26.57 0.00 15.00 43.43 26.57 0.00 15.00 43.43 1992 BRLP 11.91 0.00 0.00 2.63 4.38 0.00 0.00 2.63 1992 FEPSA 11.35 0.00 0.00 14.13 9.15 0.00 0.00 11.73 1992 Malteria Pampa 7.59 0.00 0.00 14.62 7.59 0.00 0.00 14.62 1992 MBABolsa 0.00 .16 0.00 0.00 0.00 .16 0.00 0.00 1992 Oleagnosa Oeste 7.64 0.00 5.00 11.83 7.64 0.00 5.00 11.83 1992 Rioplatense 7.33 1.00 0.00 2.33 7.33 1.00 0.00 2.33 - 19 - MOP Schedule D Commnitted Disbaned IFC- -IFC- FY Company Loan Equity Quai Partic Loan Equity Quai Partic Approval 1992 San Jorge 10.00 27.00 0.00 23.33 10.00 0.00 0.00 23.33 1993 Argentina Equity 0.00 4.00 0.00 0.00 0.00 4.00 0.00 0.00 1993 APSA 0.00 19.47 0.00 0.00 0.00 19.47 0.00 0.00 1993 Bunge y Born 4.79 0.00 0.00 36.09 4.79 0.00 0.00 36.09 1993 Cadipsa 10.00 0.00 5.00 13.00 10.00 0.00 5.00 13.00 1993 Malteria Pampa 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1993 Minetti 1.95 0.00 0.00 0.00 1.95 0.00 0.00 0.00 1993 Molinos 0.00 4.31 0.00 0.00 0.00 4.31 0.00 0.00 1993 Nuvo Central 8.13 3.00 0.00 13.75 8.13 3.00 0.00 13.75 1993 Yacylec 9.90 5.04 0.00 40.42 9.90 5.04 0.00 40.42 1994 Aceitera 15.00 10.00 0.00 15.00 15.00 10.00 0.00 0.00 1994 Aguas 38.00 7.00 0.00 116.57 38.00 7.00 0.00 116.57 1994 Alpargata 12.69 0.00 10.00 20.71 12.69 0.00 10.00 20.71 1994 BON 12.00 0.00 3.00 0.00 12.00 0.00 3.00 0.00 1994 Cia. Combustible 21.23 15.00 0.00 37.40 21.23 15.00 0.00 37.40 1994 EDENOR 22.75 0.00 15.00 110.17 22.75 0.00 15.00 110.17 1994 La Maxima 0.00 10.19 0.00 0.00 0.00 10.19 0.00 0.00 1994 LBAR 0.00 1.17 0.00 0.00 0.00 .64 0.00 0.00 1994 Molinos 0.00 1.24 0.00 0.00 0.00 1.24 0.00 0.00 1994 Petroken 17.50 0.00 0.00 2.50 17.50 0.00 0.00 2.50 1994 Quitma 13.43 0.00 0.00 12.50 13.43 0.00 0.00 12.50 1994 MASISA 10.31 0.00 0.00 0.00 10.31 0.00 0.00 0.00 1994 LBAV 0.00 3.62 0.00 0.00 0.00 3.62 0.00 0.00 1995 Acindar 15.00 0.00 10.00 20.00 6.43 0.00 10.00 8.57 1995 Agas 40.00 0.00 0.00 173.00 0.00 0.00 0.00 0.00 1995 Banco Roberts 0.00 0.00 20.00 0.00 0.00 0.00 20.00 0.00 1995 Bridas 20.00 10.00 0.00 40.00 20.00 10.00 0.00 40.00 1995 Cadess 20.00 0.00 8.00 0.00 20.00 0.00 8.00 0.00 1995 CEPA 13.67 0.00 0.00 4.80 13.67 0.00 0.00 4.80 1995 EDENOR 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1995 Kleppe/Caldero 6.00 0.00 0.00 0.00 6.00 0.00 0.00 0.00 1995 La Maxima 0.00 0.00 4.00 0.00 0.00 0.00 3.96 0.00 1995 Mastellone 40.00 0.00 0.00 35.00 40.00 0.00 0.00 0.00 - 20 -MOP Schedule D Commuitted Disbursed IFC- -IFC- FY Company Loan Equity Quast Partic Loan Equity Quasi Partic Approval 1995 Nahuelsat 30.00 5.00 0.00 0.00 26.00 5.00 0.00 0.00 1995 SanCor 20.00 0.00 20.00 30.00 20.00 0.00 20.00 30.00 1995 Socma 24.99 0.00 0.00 0.00 24.99 0.00 0.00 0.00 1995 Terinales Port. 10.00 2.00 0.00 0.00 7.00 1.40 0.00 0.00 1995 Tower Fund Mgr 0.00 .15 0.00 0.00 0.00 .05 0.00 0.00 1995 SIDECO 0.00 15.00 0.00 0.00 0.00 15.00 0.00 0.00 1995 Tower Fund 0.00 20.00 0.00 0.00 0.00 6.82 0.00 0.00 1996 Aguas 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1996 Alpargatas 15.00 0.00 0.00 81.00 10.00 0.00 0.00 21.00 1996 APSA 0.00 0.00 2.50 0.00 0.00 0.00 2.50 0.00 1996 Banco Galicia 30.00 0.00 0.00 200.00 30.00 0.00 0.00 200.00 1996 Bralina - ARG 18.50 0.00 0.00 33.00 18.50 0.00 0.00 33.00 1996 Grunbaum 8.00 0.00 2.00 0.00 8.00 0.00 2.00 0.00 1996 Malteria Pampa 6.00 0.00 1.00 0.00 6.00 0.00 1.00 0.00 1996 Minetti 10.00 0.00 0.00 30.00 4.10 0.00 0.00 12.30 1996 Terminal 6 10.50 0.00 0.00 6.50 9.00 0.00 0.00 5.00 1996 Transconor 22.50 0.00 20.00 152.00 22.50 0.00 20.00 152.00 1996 Zanon 14.00 0.00 6.00 0.00 7.00 0.00 6.00 0.00 Pending Commitments 1996 * AGUAS III - INC 15.00 0.00 0.00 75.00 1996 * BANSUD CL 25.00 0.00 0.00 0.00 1996 * CCBA ARG B INC 0.00 0.00 0.00 8.00 1996 * DIADEMA FIELD 15.00 0.00 5.00 40.00 1994 * EDENOR INCREASE 0.00 0.00 0.00 8.00 1996 * EDESUR II BLINC 0.00 0.00 0.00 108.00 1996 * EDESUR REHAB 40.00 0.00 0.00 80.00 1993 * FEPSA (II) 0.00 0.00 0.00 4.00 1996 * FRANCES CL 40.00 0.00 0.00 0.00 1996 * MINETTI EM 0.00 0.00 10.00 0.00 1996 * NEUQUEN BASIN 0.00 26.40 0.00 0.00 1995 * R-E-C TOLL H'WAY 20.00 0.00 0.00 61.00 1996 * REFISAN 20.00 0.00 0.00 30.00 1996 * TRANSCONOR II 5.00 0.00 0.00 0.00 - 21 - MOP Schedule D Committed Disbursed IFC- -IFC FY Company Loan Equity Quasi Parik Loan Equity Quasi Partic Approval 1994 * TUCUMAN 0.00 .30 0.00 0.00 1997 * VICENTIN 25.00 0.00 0.00 10.00 1996 * WESTERN ACCESS 30.00 0.00 5.00 130.00 - 22 - SCHEDULE E PROJECT INTERNAL ECONOMIC RATE OF RETURN Scenario IERR (%1 Whole Project (structural & non-structural measures) Base Case 20.4% Costs increased by 17% 17.4% Benefits increased by 20% 24.6% Costs increased 17% & benefits 20% 20.9% Only Structural measures of the Project Base Case 22.2% Costs increased by 17% 19.0% Benefits increased by 20% 30.6% Costs increased 17% & benefits 20% 22.5% Internal Economic Rate of Return of Sub-Projects Province Sub-Project IRR Net Present Value (NPV) Number Name I%) (in USO8 at discount rate of 8% 10% 12% Santa Fe 711 Arroyo Pavon 79.15 83,412,579 65,043,333 52,365,643 Santa Fe 712 Linea Parana 68.50 118,907,683 92,255,935 73,869,440 Santa Fe 704 Rio Carcarana 46.82 68,289.193 52,058,713 40,869,877 Corrientes 301/307 Corrientes Capital 41.17 78,896,106 60,351,643 46,886,341 Misiones 603/609 Puerto Iguazu 41.11 18,672,193 14,104,599 10,957,554 Misiones 604 San Javier 39.95 7.794,474 5,874,721 4,552,152 Misiones 600 Tome de Ague Posadas 39.32 692,096 526,414 411.203 Santa Fe 709 Cuenca Colastine 34.95 70,882,997 52,268,090 39,538,796 Santa Fe 703/710 Arroyo Monje Carrizales 34.14 56,521,022 51,994,754 31,993,474 Santa Fe 705 Arroyo Saladillo 33.83 52,843,933 37,996,839 28,014,118 Entre Rios 411 lbicuy 30,46 9,161,976 6,788,632 5,140,345 Formosa 500 Clorinda 29.38 22,625,971 16,519,013 12.316,624 Santa Fe 700/708 Arroyo Las Conchas 27.82 16,835,065 12,072,213 8,822,105 Misiones 602 Wanda 27.59 4,236,998 3,068,904 2.264,133 Entre Rios 403/409 Gualeguay 27.44 40,956,962 29,595,318 21,781,122 Santa Fe 701 Arroyo San Antonio 25.31 14,962,170 10,551,001 7.550,386 Santa Fe 702 Arroyo Cululu 25.23 44,868,205 31,527,819 22,566,927 Capital Federal 800/801 Arroyo Maldonado 25.04 310,676,395 219,174,602 156,651,344 Misiones 607 Alteo Puentes 23.57 2,233,760 1,569,733 1,113,390 Formosa 501/502 Formosa Capital 23.53 25,576,728 17,857,728 12.583,536 Santa Fe 707/714 Alte Puentes 22.24 97,475,889 66,742,364 45,938,352 Misiones 601 Puerto Esperanza 21.81 2,932,041 2,026,923 1,403,628 Entre RAs 405/414 Concordia 20.75 25,693,321 18,277,468 12,502,109 Buenos Aires 100/115 Islas del Delta 19.18 17.788,578 11,695,382 7,555,644 Entre Rios (*) Colon 18.78 23,205,442 14,027,839 8,395,085 Chaco 202 Alteao Puentes 18.83 10,297,872 6,822,316 4,407,952 Santa Fe 706/713 Sistema Setubal 18.45 46,900,562 28,948,853 17,421,978 Misiones 608 Obrera 18.16 1,789,703 1,169,104 739,315 Corrientes 300/306 Belle Vista 17.14 5,174,241 3,227,783 1,913,690 Chaco 201 Linea Tapenaga 16.87 17,656.279 11,055,113 6,530,129 Chaco 200 Resistencia 15.85 30,345,478 18,251,262 7,555,644 Entre Rios 408 Federacion 15.83 2,872,028 1,747,696 966,678 Entre Rios 401 Diamante 15.78 2,358,795 1,431,784 787,974 Entre Rios 402/407 La Paz 15.63 7,089,533 4,250,940 2,295,997 Buenos Aires 10111021109/110 Zaratey Campana 15.62 5,536,124 3,336.984 1,809,562 Entre Rios 400 Concepcion del Uruguay 15.52 28,111.410 15,456,918 7,704,514 Entre Rios 404/412 Parana 15.36 11,524.480 6,860,333 3,621,083 Entre Rios 415 Villa Paranacito 15.11 3,635,055 2,136,295 1,094,867 Entre Rios 406 Santa Elena 15.09 1,215,643 747,959 398,760 Corrientes 304/310 Mercedes 14.08 4,835,251 2,629,714 1,119,640 Corrientes 303/309 Esquina 13.44 4,444,886 2,277,614 795,202 Corrientes 312 Alteo Puentes 12.97 4,824,127 2,360,986 650,335 Corrientes 302/308 Curuzu Cuatia 12.49 1,748,131 794,053 131,192 Formosa ( I"I Cuencas Internas 12.46 37,424,004 16,926,960 2,691,767 Corrientes 305/311 Goya 12.36 13.654,416 5,838,550 721,374 Entre Rios 410 Gualeguaychu 11.75 3,977,781 1,482,969 1175,016) Entre Rios 413 Victoria 11.19 239,030 77,478 (46.5711 P) Cancelled by environmental Reasons (.) Needs Additional Studies - 23 - Argentina at a glance Latin Upper- POVERTY and SOCIAL America middle- Argentina & Carib. Income Development diamond Population mid-1995 rmihons) 34 6 480 440 OrP per capita 1995 jUss) 7,770 3300 4300 Lie expectancy GjP 1995 (billions US$) 2688 1,584 1.892 Average annual growth, 1990-95 Population (%) 1.2 1 8 1.7 GNP Gross Labor force 1%) 2.0 2.4 21 per pnimary Most recent estimate (laest year evailable since 1989) capita .enrollment Poverty. heiadcount inder (% of populaton) 26 - Uroan populatson I% of total population) 88 74 74 Lfe expecancy al birth (years; 73 68 69 infant morlaIry lper 1,000 hv births) 22 41 36 Access to safe water Ctild malnutriin (% of Ch)ddren under 5) 5 . Access to sale water 1% ofpopulalion) 64 81 89 lilIteracy (% of populanon age 15+) 4 13 13 - Argenuna Gross primary enrollment (% ofschmol-age Popularonj 107 110 107 - perud o Male 108 Upper-middle-ncome group Female 107 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1976 1985 1994 1996 Economic ratios' GDP (billons USS) 52 4 88.4 2805 2760 Gross domestic in.estmentlGDP 294 17.6 199 17.8 EAporls of goods and non-factor services/GDP 58 11.7 6.8 89 Openness of economy Gross domslic savingsGDP 29 3 23.1 176 18.0 Gross national sa.ngaGDP 26.9 16.5 166 170 Cuirent account balance/GDP -25 -1.1 -33 -08 Interest payrnenlwGDP 0 9 50 1 3 1 8 Saongs Investment Total ablGODP 14 7 576 27.6 303 Total dabi service-exports 447 60 1 326 33.6 Present value of debtGDP . 24 4 Present value of iabuiapons . . 325 3 indebtedness 1975-84 1985-95 1994 1995 1996-04 javerage annual growtn) - Argentina GDP 1.0 28 7.4 -4.4 4.9 Upper-rniddle-incorm group GNP per capita -15 2.0 59 -5.2 3 7 Exports of goods and nfs 5.1 59 148 257 8.0 STRUCTURE of the ECONOMY 1975 1985 1994 1995 (% of GDP) Growth rates of output and Investment (%) Agriculture 6.6 7.6 4.9 . 40 Industry 50.1 39.3 30.1 20 Manufacturing 38.2 29.6 20.0 Services 43.3 53.1 65.1 0 91 92 93 94 -20 Private consumption 58.1 66.5 69.2 69.6 -40 General government consumption 12.6 10.4 13.3 12.4 - GDl 0 GDP Imports of goods and non-factor services 6.0 6.3 9.2 8.7 1976-84 1986-95 1994 1995 (average annual growth) Growth rates of exports and Imports (%) Agriculture 1.7 1.6 3.8 2.1 so Industry -1.1 2.7 6.5 -6.0 Manufacturing -1.4 1.4 4.2 -6.5 Services 2.5 3.1 8.5 -3.4 4 Private consumption .. . ....... General government consumption .. .. ..9..9o Gross domestic investment -2.4 5.4 19.0 -15.9 -20 g Imports of goods and non-factor services 4.5 14.0 20.9 -10.6 - Exports O.Imports Gross national product 0.0 3.4 6.9 -5.0 Note: 1995 data are preliminary estimates. The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete. - 24 - Argentina PRICES and GOVERNMENT FINANCE 1976 1985 1994 1996 Domestic prices Inflation (%) (% change) 4000 Consumer prices 182.6 .. 3.9 1.6 3,o0o Implicit GDP deflator 198.2 618.0 1.8 2.5 2000 Government finance 1,000 (% ofGDP) 0" Current revenue .. .. 16.6 16.5 90 91 92 93 94 96 Current budget balance .. .. 0.7 -0.1 - GDP def CPI Overall surplus/deficit .. .. 0.0 -1.0 TRADE 1976 1985 1994 1995 (mlillons US$) Export and Import levels (mill. US$) Total exports (fob) 2,961 8,396 15,839 20,968 25,000 Food .. .. 1,323 1,956 Meat .. .. 1,546 1,572 20000 Manufactures .. .. 8,059 10,635 is.co Total imports (cif) 3,947 3,814 21,590 20,124 Food .. .. 6,3 4 Fuel and energy .. .. 591 628 5000 Capital goods . .. 6,039 4,754 o0 Export price index (1987=100) .. .. 118 124 90 91 92 93 94 95 Import price index (1987=100) .. .. 115 120 0 Exports I Imports Terms of trade (1987=100) .. .. 102 103 BALANCE of PAYMENTS 1975 1986 1994 1996 (millions USS) Current account balance to GDP ratio (%) Exports of goods and non-factor services 3,498 10,039 18,507 23,857 2 Imports of goods and non-factor services 4,324 5,285 25,591 23,724 Resource balance -826 4,754 -7,084 133 1 Net factor income -466 -5,706 -2,547 -2,842 a Net current transfers 6 0 320 432 1 9 2 95 Current account balance, -2 before official transfers -1,286 -952 -9,310 -2.277 -3 Financing items (net) 208 2,200 9.868 2,208 Changes in net reserves 1,078 -1,248 -558 69 -4 Memo: Reserves including gold (mill. USS) 848 4,703 19,758 19,888 Conversion rate (localVUS$) 3.7E-10 6.0E-05 1.0 1.0 EXTERNAL DEBT and RESOURCE FLOWS 1976 1986 1994 1996 (millions US$) Composition of total debt, 1995 (mill. USS) Total debt outstanding and disbursed 7,723 50,946 77,457 83,724 IBRD 341 700 4.109 4,913 G A IDA 0 0 0 0 7171 4913 C 6131 Total debt service 1,603 6,209 6,847 8,609 D IBRD 43 114 709 565 4501 IDA 0 0 0 0 E Composition of net resource flows 11428 Official grants 0 6 16 20 Official creditors 58 217 715 851 Private creditors -111 2,350 5,805 1,993 Foreign direct investment 0 919 1,200 3,900 F Portfolio equity 0 0 1,205 294 49580 World Bank program Commitments 0 0 509 2,272 A - IBRD E - Bilateral Disbursements 19 144 547 941 B - IDA D - Other multlateral F - Private Principal repayments 17 68 425 259 C - IMF G - Short-term Net flows 1 75 122 682 Interest payments 26 46 284 306 Net transfers -25 30 -162 376 International Economics Department 8/20/96 MAP SECTION t IBRD 27719 BOLIVIA j ARGENTINA LOCALIZATION OF SUB-PROJECTS b SUB-PROJECTS @ NATIONAL CAPITAL REGIONAL SUB-PROJECTS: RIVERS PUENTES SANTA FE PROVINCE BOUNDARIES REGION BOUNDARIES PUENTES MISIONES INTERNATIONAL BOUNDARIES SITEMA HiDRICO FORMOSA _24. 0 100 200 300 KILOMETERS CLORINDAC PUERTO IGUAZU 0 WANDA1 . FORMOSA U PARAGUAY ESPERANZA\ 1> - POSADAS R NGA OBERA - RNACAACORRIENTES CAPITAL p.r SAN JAViER,,' -28° UNEA PARANA2 BELLA VISTA The boundores, colors, denomotrons and any other onformoton shown on , Y MERCEDES this eap do not irply, 0n the port oF GOYA @ The World Bonk Group, 0ny judgetr on the legal status of any territory, or any endorsement r oroeptance of CUENCA CURUZU-CUATIA , 56 such boundaris. LAS CONCHAS ESQUINA .BO.IV.A CUENCA A. SAN ANTONIO toG CUENCAA. JDLA PAZ CUE A. SANTA ELENA, FEDERACION,< CONCORDIA LEY SET BAL - CUENCAA 0- COLASTIN .PANA ARGENTINA( 5, ;vE32 'URUGUAY 32° CO CA DIAMANTE COO lC,rsArs CUENC A. å,COLON C BrtArs CARRIZALCNEPIN Arecof omap CONCEPCION*1) IÉTORIA* DEL URUGUAY UENC GUALEGUAYCHU C0 ARCARA GUALEGUAY@ 9 ~ ALA DILL VMo.O IBU Y- CP' A' N PEDRO VILLA PARANACITO - BARADERGM ZARATE --ILAS DEL DELTA CAMPAN TIGRE -0 ESCOBAR SAN FERNANDO BUENS AIES*CAPITAL FEDERAL 6,4 6,0 70' 6o MARCH 1996  IBRD 27720 60' RETN BOLIVIA / R GENTINA -- GENERAL LOCALIZATION OF FLOOD RISK MAPS SHORELINES (1992) ( PROVINCE CAPITALS FLOODLINES THAT OCCUR APPROXIMATELY ® NATIONAL CAPITAL EVERY 100 YEARS RIVERS BOUNDARIES OF ALLUVIAL VALLEYS -PROVINCE BOUNDARIES FLOODLINES THAT OCCUR APPROXIMATELY REGION BOUNDARIES EVERY 20 YEARS INT-REG ION A BOUNDARIES o SELECTED CITIES AND TOWNS ---INTERNATIONAL BOUNDARIES NOTE ALL FLOODLINES ARE TENTATIVE AND THUS REQUIRE CAREFUL INTERPRETATION 24 S A L T A AT THE LOCAL LEVEL THE AVAILABILITY OF BETTER LOCAL TOPOGRAPHICAL INFORMATION COULD CAUSE ADJUSTMENTS TO THEM 24' O \ SOURCES SATELLITE IMAGES, LANDSAT TM; MATHEMATICAL MODELLING, ONDA, CARTOGRAPHY, I G.M., EXISTING GEOMORPHOLOGICAL WORK; AND GEOMORPHOLOGICAL ANALYSIS DONE FOR THE CURRENT STUDY. NORTH- '. '~ O"AP 3 Cl-ortnsdes>, Pt Iguaz6 3,3 WEST CHACO Fo P R SA TI G 9 rine Posaclas eSantiago ND E LA eie oretsP a N 0 R T E .A 5 T 28 ES T E R 0 8. /1 Rsi ec~ ~1 TPAR GUAY~he28- ISanto OW R T S To- SThe boundries, colors, denominotronsad Doya ony other i mahon shown on this map do not imply, on the part of S A T A Yapey-6 The World Bank Group, any judgment 0 on the legai status of any territory, or SF E Paso d [ os Libres J6' any endoo-lment or acceptace of BOLIVIA P ARAGUAY La Paz > Cordoba --C- Fc- r MAP I * Parana NT ARGENTINA P A M P A N fA Col6n 32 Buenos URUGUAY 32 Diamante R I enos Ares 0C Area of map C O R D O B A Concepcion del Uruga tyo , ,AC'4 40'- > BUENOS AIRES 0 100 200 300 BUENOS AIRs METROPOLITAN KILOMETERS 600 MARCH 1996  _______________________________IBRD 27721 0 BOLIVIA 60' 59' 58' 57c ARAG JAYR GENTINA 22'. >iFLOOD RISK MAP FOR Area- L)5LiV F I of map CORRIENTES - CHACO - AREA 30 50 100 150 ARGENTINA _"\ KILOMETERS URUGUAY" Buenos Ai-* NOTES: ALL FLOODLINES ARE TENTATIVE AND THUS REQUIRE CAREFUL INTERPRETATION AT THE LOCAL LEVEL Buenos Ares® THE A VAILABILITY OF BETTER LOCAL TOPOGRAPHICAL INFORMA TION COULD CA USE ADJUSTM ENTS TO THEM IN SOME LOCATIONS, WHERE THERE IS NO INDICATION OF A FLOODLINE OCCURRING EVERY 20 YEARS, IT IS ASSUMED THAT IT COINCIDES WITH THE FLOODLINE THAT OCCURS APPROXIMATELY EVERY 100 YEARS. T2E' GEOGRAPHIC PROJECTION, GAUSS KRUGER 24 THE COORDINATES REFERRED TO ABOVE CORRESPOND TO THE FIVE BELTS OF THE PANAMA RIVER. SOURCES: SATELLITE IMAGES, LANDSAT TM; MATHEMATICAL MODELLING, ONDA, CARTOGRAPHY, I.G M ; EXISTING GEOMORPHOLOGICAL WORK; AND GEOMORPHOLOGICAL ANALYSIS DONE FOR THE CURRENT STUDY. T, ouA f C. 0 REGION ES A The, boudoes cors deominsb 0 I25' 25 0750000 15 7,00 Clorinda 0 SHORELINES P1992) '2 N F S TNFLOODLINES THAT OCCUR T26E 26 APPROXIMATELY EVERY 100 YEARS BOUNDARIES OF ALLUVIAL VALLEYS '~Formosa P A RAGU A Y ITFLOODLINES THAT OCCUR APPROXIMATELY EVERY 20 YEARS O SELECTED CITIES AND TOWNS C O P PROVINCE CAPITALS GANATIONAL CAPITAL INSET) RIVERS Puerto Bermoi' PROVINCE BOUNDARIES -27' C H A C 0 '1 4j27' -25J REGION BOUNDARIES INTERNATIONAL BOUNDARIES Ressteci so do D C n da Patria Barranquer ori Ito a N 0 RI T H E A S T ..8. - . - .- - -- O Empedrado The boundaries, coors, denominations .28 and any other information shown on this map do not imply, on the part oG The World Bank Group, any judgment C E N T T CORR ENTE 29' , G o ya' 29' 60' 59' 5,8 57' MARCH 1996  5660 5680 7 AR GENTINA FLOOD RISK FOR CITY OF FORMOSA AREA - -- 1. SHORELINE (1992) 2. FLOODLINE THAT OCCURS APPROXIMATELY EVERY 100 YEARS 3. BOUNDARY OF ALLUVIAL VALLEY 4. FLOODLINE THAT OCCURS APPROXIMATELY EVERY 20 YEARS ROADS + INTERNATIONAL AIRPORT INTERNATIONAL BOUNDARIES NOTES: All floodlines are tentative and thus require careful interpretation at the local level. ) The availability of better local topographical information could cause adjustments to them. 7120 In some locations, where there is no indication of a floodline occuring every 20 years, 7120 it is assumed that it coincides with the floodline that occurs approximately every 100 years. Sources: satellite images,Landsat TM; mathematical modelling ONDA; cartography, I.G.M. ; existing geomorp ological work: and geomorphological analisys done for the current study. GEOGRAPHIC PROJECTION, Gouss Kruger The coordinates referred in this map correspond to the five belts of Parana River. 0 4 8 12 16 KILOMETERS Nafiona . BRAZIL -1o ARGENTINA U 2 Buenos Aires The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, 0 or any endorsement or acceptance of such 14 5660 5680 boundaries.   IMAGING Report No: P- 6818 AR Type: MOP