Philippines - Third Elementary Education Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-6963-PH MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN THE AMOUNT OF US$113.4 MILLION TO THE REPUBLIC OF THE PHILIPPINES FOR A THIRD ELEMENTARY EDUCATION PROJECT October 25, 1996 Human Resources Operations Division Country Department I East Asia and Pacific 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. CURRENCY EQUIVALENTS (As of September, 1996) Currency Unit = Peso US$1.00 = Pesos 26 US$ 0.038 = Peso 1.00 WEIGHTS AND MEASURES 1 Meter (in) = 3.28 Feet (ft) 1 Kilometer (km) = 0.62 Mile ABBREVIATIONS AND ACRONYMS DECS Department of Education, Culture and Sports DECS-CO Central Office of DECS DECS-RO Regional Office of DECS DECS-DO Divisional Office of DECS DEDP Divisional Elementary Education Plan GoP Government of the Philippines INSET In-Service Training LGU Local Government Unit NEDA National Economic and Development Agency NGO Non Governmental Organization OECF Overseas Economic Cooperation Fund PISU Project Implementation Support Unit PMAC Project Management Advisory Committee PSC Project Steering Committee PY Project Year SIIF School Improvement and Innovation Facility SRA Social Reform Agenda TEEP Third Elementary Education Project FISCAL YEAR January 1 - December 31 SCHOOL YEAR June 1 - March 31 FOR OFFICIAL USE ONLY PHILIPPINES THIRD ELEMENTARY EDUCATION PROJECT Loan and Project Summary Borrower: Republic of the Philippines Implementing Agencies: Department of Education, Culture and Sports (DECS), Local Government Units (LGUs) Beneficiary: N/A Poverty: Program of Targeted Interventions Amount: US$113.4 million, equivalent Terms: Repayable in 20 years, including 5 years of grace, at the standard interest rate for a LIBOR-based US dollar single currency loan. Commitment Fee: 0.75% on undisbursed loan balances, beginning 60 days after signing, less any waiver. Financing Plan: See Schedule A Net Present Value: N/A Map Number: IBRD 27835 Project Identification Number: 4602 Vice President: Javad Khalilzadeh-Shirazi, Acting, EAP Director: Javad Khalilzadeh-Shirazi, EA 1 Division Chief: Sven Burmester, EAlHR Task Manager: Frangoise Delannoy, Sr. Operations Officer 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 widout 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 REPUBLIC OF THE PHILIPPINES FOR A THIRD ELEMENTARY EDUCATION PROJECT (TEEP) 1. I submit for your approval the following memorandum and recommendation on a proposed loan to the Republic of the Philippines for US$113.4 million to help finance a Third Elementary Education Project. The loan would be at the Bank's LIBOR-based interest rate for single currency loans, with a maturity of 20 years, including five years of grace. The proceeds of the loan would be made available by the Borrower as grant contributions to the Department of Education, Culture and Sports (DECS) and selected Local Government Units (LGUs). Japan's Overseas Economic Cooperation Fund (OECF) would cofinance the project with a loan of US$104.8 million equivalent, expected to be at a 2.7 percent interest rate (2.3 percent for consulting services), with a 30 years repayment period including 10 years of grace. 2. Background. Following a decade of reform and restructuring, the economy is well on the path to recovery. GNP growth averaged close to six percent since 1994, and the prospects for sustaining this trend are better than they have been since the early 80s. They depend on the Government's ability to maintain macroeconomic stability, pursue economic liberalization and intensify the fight against poverty. Poverty remains the major development problem, affecting over one-third of households. It is particularly acute in the rural areas, where two-thirds of the poor live, and over half of the population is poor. Rural poverty reflects not only lower average incomes, but also more severe income disparities than in the country as a whole. The Government recognizes that this situation is inequitable and poses a threat to social stability, investor confidence and economic competitiveness. In 1994, under President Ramos' leadership, it declared poverty reduction one of its priorities and has formulated a strategy, the Social Reform Agenda, to address it. The SRA aims to redistribute the benefits of growth and to involve the poor more actively in the development process. It is a geographically targeted program which combines measures to expand economic opportunities, provide quality basic social services to the poor, and promote democratic governance in depressed rural areas. The proposed operation is the first SRA project of the Government of the Philippines (GoP). 3. Sectoral Performance. One of the most mature in Asia, the Philippine education system can boast impressive quantitative achievements. The elementary gross and net enrollment ratios, at 112 and 87 percent, are substantially higher than predicted at that level of per capita GNP (US$1,134 in 1995). Higher education enrollments and (in urban areas) post-elementary private sector participation (32 percent at the secondary level, 79 percent at the tertiary level) are among the highest in the developing world. However, educational outcomes vary widely, and the education system, while structurally balanced in terms of budgetary shares allocated to each level, is socially regressive. National and even regional averages hide major provincial disparities in access to quality education which are poverty related. Practically all children enter elementary school, but one-third drop out. Those dropping out come disproportionately from -2- poor households and economically depressed areas. Urban/rural differences in student and school scores are also particularly pronounced. Low levels of education are not the only factor explaining income differentials; however, when combined with limited agricultural investment, they have condemned rural youths to a life of poverty. Social selectivity in elementary completion rates is a key issue because the inequities generated at this level are transmitted to the higher levels of schooling and carried into society at large. 4. A number of factors contribute to the high drop-out among poor rural children. First, they are less prepared for school for lack of early childhood programs, and less teachable, due to poor health and nutrition. They also have no choice but to go to public schools, which tend to offer lower quality education; the quality gap is especially marked in the rural areas, because of a pupil-based resource allocation system which puts small remote schools at a severe disadvantage. Second, although no fees are charged in public education, one-third of the costs (textbooks, transport, uniforms, etc.) are privately borne, so that public education is more costly to poor households, as a proportion of their budget, than private education is to the rich. Third, poor children often have to work; one-fourth do so for a living; there is even some child labor, mainly among boys. Due to the combination of low educational quality and limited job opportunities for graduates on one hand, and of high monetary and opportunity costs on the other, the poor perceive school attendance as a waste of time; this has resulted in a decline in demand. About 1.5 million 7-12 year olds are not in school. 5. By contrast with most countries, girls, with minor, narrowly localized exceptions, are more schooled than boys, amounting for 50, 52 and 56 percent of total enrollment in elementary, secondary and higher education, respectively. On the other hand, among the poor, children of ethnic minorities, of migrant workers, of nomadic tribes and boy laborers face particular educational odds due to size, culture, isolation, or lifestyle. 6. Sectoral financing. The nation as a whole allocates 6 percent of GNP to education, reflecting a high level of commitment. However, the public contribution, at 2.8 percent of GNP, is too low to enable GoP to play its role in correcting market failures and promoting equity. Despite major budgetary increases in the late 80s, sectoral spending has become less pro-poor, by level of education, because the share of secondary has increased at the expense of elementary education. By type of expenditure, it has become incompatible with the delivery of quality because salaries have crowded out other items such as textbooks. GoP's difficulties in meeting the sector's growing financing obligations have been compensated by increasing contributions from the private sector and Local Government Units (LGUs), which since 1991 have received substantial transfers from GoP and enjoy taxing powers. Although education is one of the few sectors not yet devolved, the LGUs' share in public sectoral funding reached seven percent in 1994, and has the potential to grow, given the right incentives. While this dual trend towards privatization and devolution can free up public resources for priority uses and promote efficiency, it may also exacerbate inequities, as there are wide variations in LGUs' ability to pay, and no central Government compensatory mechanism to target resources on the greatest needs. 7. The options available to redress educational inequities, besides improving resource mobilization, are limited. The proportion of the national budget allocated to education, 26 -3- percent in 1995, cannot be substantially increased. The scope for developing private elementary education is being studied but also remains limited, especially in rural areas. Some resources could be reallocated from the State University and College sub-sector and from a revision of staff deployment norms, which are cost-ineffective. The most promising avenue is, however, LGU funding: central Government transfers to them are being sharply increased and appropriate incentives help direct part of these incremental resources to education. GoP's financial strategy is to: (a) reactivate its priority funding commitment to elementary education; (b) operationalize the concept of social targeting; (c) introduce central/local government cost-sharing, initially for school construction/repair as a first step towards its devolution; (d) pilot a targeted demand-side financing mechanism to test the impact of a reduced cost of schooling on completion rates among poor children; and (e) review resource allocation norms to make them more cost-effective and needs-based. 8. Sectoral management. The Department of Education, Culture and Sports (DECS) employs 45 percent of the civil service. Its rigid, bureaucratic procedures are ill-adapted to the needs of a large, diverse education system or those of a modernizing economy. Decision-making is centralized, control-oriented and top-down, with five layers of authority and complex sets of rules that leave little room for autonomy and generate risk-averse behaviors. Incentives to motivate staff are limited. Uniform norms are applied despite a wide variety of conditions. These administrative characteristics are mirrored in a prescriptive pedagogical system in which experimentation and innovation are not encouraged and the focus is on "minimal learning competencies" rather than on achieving the potential of individual learners. Also, the voluminous information generated by educational statistics and student assessments is under- utilized for decision-making because of poor data quality and analytical skill constraints. There is pressure to contain costs, but weak budget monitoring contributes to the lack of accountability for results. 9. Sectoral Institutions. DECS' Central Office remains involved in implementation matters, including support services such as assessment which could be privatized. Some operational responsibility was delegated in the early 80s to Regional Offices, but they remain too remote from the locus of action in education -- the school -- and absorb a large share of resources. DECS' Divisional Offices (province level) implement decisions made above and have line authority over the Districts. District Offices, for lack of resources, struggle to supervise widely dispersed schools. Remote schools feel neglected: they usually have no principal, no experienced teachers, limited teaching/learning resources; they must practice multigrade teaching without proper inputs, and receive little supervision. The dearth of basic inputs is compounded by the limited attention given to the micro processes known to make schools effective: school climate and autonomy, teamwork, active teaching/learning methods, parental and community involvement. 10. Strategy. The concern with quality and equity has been growing in recent years. Some positive measures, such as streamlining DECS, lengthening the school year, and relaxing private education sector rules, have been taken, in a somewhat piecemeal fashion. Preparation of the proposed operation provided an opportunity to organize into a coherent elementary education strategy long-standing and new commitments, some profoundly Filipino, others adapted from -4- other countries. DECS' vision is to focus on schools and classrooms to improve quality and retention. The core principle is to target resources on poor provinces, communities and schools to give them the basic inputs they need and to use in-service training and a grant mechanism to promote school-based improvement and management and the piloting of innovative approaches in school and classroom processes. To support the school focus and improve sustainability, it is proposed to decentralize decision-making and operational responsibility to the Divisional Offices or lower level, and to create partnerships with LGUs, communities, parents associations, and NGOs in all aspects of the life of the school, from resource mobilization to curriculum adaptation. Finally, to better target resources, decide whether to institutionalize or drop the pilots, increase accountability and transparency, DECS intends to promote a culture of measurement and information-based decision making. The plan is to test the strategy in the most challenging conditions under the project and if successful, to generalize it. 11. Project Objectives and Approach. The project would aim to: (a) build the institutional capacity of DECS and other stakeholders to manage the change process associated with the above-mentioned strategy; and (b) improve learning achievements, completion rates and access to quality elementary education in 26 poor provinces, in especially their most disadvantaged schools and communities. The target group consists of the 20 SRA, plus six "Intensely Poor" Provinces, where poverty incidence is 60 percent and which account for 24 percent of the country's poor. Eleven key performance indicators and quantified targets linked to these objectives would be used to measure inputs, processes, outcomes and impact. They include: the quality of data and their use in decision-making; improved budget monitoring; institutionalization of in-service training (INSET); availability and use of resources at the school level; degree of poverty targeting; textbook:pupil ratio in remote schools; pupil scores, completion rates, distance from school; and effectiveness of the participatory approach, especially for indigenous people. Implementation would be phased. This is a process project characterized by a flexible design under which detailed planning of interventions would be done by the stakeholders during implementation. Six pilot provinces have prepared their own "Divisional Elementary Education Development Plans" (DEDPs), following a highly participatory approach which involved DECS, LGUs, NGOs, parents and communities. These six DEDPs formed the basis for appraisal. DEDPs for two more batches of 8 and 12 provinces would be prepared during the first and second year of implementation, building on the lessons learned at each step. The project is a Bank Participation Flagship, and ownership is particularly strong in the central agencies and at the provincial level (DECS and LGUs). 12. Project Description. The project has two investment components. Under the first objective, it would: (a) create a national structure for project management and capacity-building, the Project Implementation Support Unit (estimated baseline cost, US$6.7 million); and (b) build capacities in support of (i) policy and decision-making (US$9.6 million) and (ii) decentralized implementation and effective schools (US$11.7 million). 13. Under the second objective, it would: (a) build the capacities of DECS, LGUs, and other stakeholders in the 26 targeted provinces (US$32.5 million); and (b) develop and implement, on a phased basis, locally-prepared, customized DEDPs in these 26 provinces (US$421.2 million). -5- With local variations, the DEDPs are expected to: improve learning through the provision of textbooks/instructional materials, cluster-based in-service training (INSET) and school-based management, and grants from a School Improvement and Innovation Facility (SIIF); raise completion rates through the provision, rehabilitation and repair of fully equipped, complete small multigrade schools, community mobilization, and demand-side interventions; and expand access to quality elementary education through the provision of additional fully equipped school capacity. A breakdown of costs and the financing plan are in Schedule A. Amounts and methods of procurement and of disbursements, and the disbursement schedule are in Schedule B. A timetable of key project processing events and the status of Bank Group Operations in the Philippines are in Schedules C and D, respectively. Country-at-a-Glance for Philippines is in Schedule E. A map is also attached. The Staff Appraisal Report No. 15888-PH dated October 25, 1996 is being distributed separately. 14. To operationalize the above strategy, the project's policy and institutional framework will: (a) improve the adequacy, efficiency, and equity of sub-sectoral funding through sectoral budgetary targets, a rationalization of staffing norms and a triple mechanism to target resources on the neediest groups -- geographically, through a special grant fund, and on poor households; (b) focus on schools and make them more effective by ensuring that they get the basic inputs they need and improving the school processes through which those inputs are managed; (c) introduce systems and procedures to decentralize selected education functions and the corresponding resources in support of the school focus; (d) measure the impact of project interventions on learning (through sample-based assessment) and on cost (through a streamlined, hyper-relational MIS) to guide future investment decisions; and (e) provide a framework for the few cases when the school construction program may raise issues of resettlement and compensation. These policies are outlined in a Memorandum of Policy prepared by DECS and formally adopted by the GoP. They are being translated into TEEP Guidelines for project implementation. 15. Project Implementation. Overall responsibility for project management and implementation would lie with DECS, in close partnership with LGUs. The project would implement a process of decentralization and devolution under which DECS' Divisional Offices would become the basic operational units, with the central and regional levels playing a support role. At the center, policy guidance and interagency coordination would be provided by a Project Steering Committee (PSC) consisting of the National Economic and Development Agency (NEDA), the SRA Council, and the National Committee on Education-for-All. At DECS, a Project Management Advisory Committee (PMAC) assisted by an independent Advisory Group of Eminent Educators would advise the Project Director on project management, provide internal coordination, and articulate stakeholder views to guide implementation. 16. A Project Implementation Support Unit (PISU) has been established to coordinate, support and monitor project implementation by DECS, and to manage the capacity-building effort. The PISU is headed by a TEEP manager and staffed by a combination of permanent DECS personnel (12 ) and a team of long and short term, mainly national consultants (core of 13, plus 435 months of specialists). The manager and the permanent staff have already been appointed. A partly rotating arrangement would ensure that after five years, PISU is fully -6- merged into the DECS structure, and the Department has a critical mass of retooled staff. The PISU would also serve as the Secretariat for the PSC and the PMAC. Detailed implementation would be the responsibility of DECS' Divisional Offices (DOs). In order to discharge their new managerial functions the DOs, currently mere implementing bodies, would be reinforced by one TEEP advisor each, "on demand" short-term consultants recruited under the PISU umbrella contract, plus a financial officer added under GoP budget. The duration of this technical assistance would vary, depending on the demonstrated ability of individual DOs. Other noteworthy features include: (a) a decentralized flow of funds; (b) delegation of the School Building Program (SBP) to the Municipal Engineering Offices and channeling of SBP funding through the Municipal Development Fund (MDF); (c) the use of various local "democratic oversight" bodies (provincial and municipal School Boards, School Management Advisory Committees at the school level); and (d) the eligibility of NGOs and communities as contractors in various parts of the project. Membership and terms of reference for PSC, PMAC, PISU, and the advisory Group of Eminent Educators have been agreed. 17. Project Sustainability. At the macroeconomic level, strong growth projections (six percent p.a.), GoP's commitment to maintain the budget share of education at 26 percent, to restore that of elementary education to 60 percent of the sectoral total by 2001 (Memorandum of Policy) and the support of the central agencies to the SRA and educational devolution create a positive environment for project sustainability. The participatory approach to project planning and implementation is expected to enhance stakeholder ownership and commitment and reduce reliance on central government. The local/central government cost-sharing formula, reflecting needs, ability and willingness to pay, would serve as a targeting mechanism for the TEEP provinces, while demanding more from the richer LGUs and thus expanding the sector's resource availability; it would also enable GoP to influence, in favor of education, the way LGUs will spend the considerable increase in resources being transferred to them, through TEEP and other sources. Finally, the TEEP approach, once generalized, would free central DECS from a number of implementing responsibilities, enabling it to focus more on its role of resource mobilization and efficient management. GoP's ability to finance TEEP would be limited based on the current allocation of 16.7 percent of the elementary education budget going to the 26 provinces; increasing this allocation to 20 percent, i.e., pro-rating it to their share of the 6-12 year-old population, as proposed, would make the project sustainable if the current macroeconomic projections are realized. Sustainability would be further reinforced by the increasing involvement of LGUs, especially their proposed 25 percent average contribution to the costs of the School Building Program. 18. Lessons Learned. The eleven education projects implemented since 1965 provide many relevant lessons. On simple project elements such as school construction, Filipinos have a good mastery of the required techniques, and even a change in approach as proposed here can be easily absorbed. On the other hand, qualitative objectives have been elusive, and more complex interventions such as targeting and monitoring/evaluation require thorough, practical preparation (e.g., a school-map, rather than an elaborate mathematical formula) and supervision. Another lesson is that participation in project design is essential to avoid stakeholder resistance, and ensure effective implementation. Some projects would have benefited, had they been implemented in a phased manner, in line with absorptive capacity, rather than wholesale -7- nationwide. The preparation of projects involving decentralization, in particular, requires careful consideration of administrative arrangements, roles and responsibilities and early institutionalization. Incentives, such as honoraria, when excessive, are not sustainable, as demonstrated by the demise of the INSET program under the first elementary education project. Other relevant lessons include the importance of: (a) a free-standing, properly staffed, project management unit: (b) making better use of consultants; and (c) simplifying disbursement arrangements. These lessons have been reflected in project design. 19. Rationale for Bank Involvement. The project is an important building-block of the Bank's CAS, discussed by the Executive Directors on April 4, 1996, which aims to help GoP transform the present growth into sustainable, broad-based development and to accelerate poverty reduction. It is a direct follow-up to the Bank's recent Strategy to Fight Poverty (Report No. 14933-PH), and would operationalize several of its key priorities: the provision of quality basic social services for the poor; recognition that education remains a central government function and the main intervention to help the next generation pull themselves out of poverty; and targeting. By focusing on the design and testing of a framework for redressing inequities, on the development of more effective and efficient delivery mechanisms, and on donor concessional finance and technical mobilization, the project would have the type of strategic and multiplier impact the GoP expects from Bank operations in the social sectors. It would also support implementation of the 1995 Public Expenditure Review recommendation to rationalize public expenditures by improving resource allocation through better budget monitoring and a revision of the norms governing staff deployment and allocation. 20. Agreed Actions. At negotiations, assurances were obtained that GoP would: (a) carry out the project in accordance with the principles set forth in the Memorandum of Policy and TEEP Guidelines, including (i) a Framework for the Resettlement and compensation of persons affected by land acquisition for school construction; and (ii) the informed participation of. and consultation with, stakeholders, especially indigenous people, to ensure that the DEDPs address their needs and cultural preferences; (b) exchange views with the Bank prior to any modification of the Memorandum of Policy that would materially and adversely affect the carrying out of the project; (c) in PYs 2, 4, and 6, administer to elementary school pupils in TEEP provinces assessment tests in accordance with methods satisfactory to the Bank; (d) prepare, by March 31. 1997, a plan for the distribution of textbooks to the most remote project areas, and by September 30, 1997, a strategy to address demand-side issues in the provision of elementary education, and implement both after review with the Bank; (e) furnish to the Bank quarterly progress reports, annual reports based on participatory performance audits for joint GoP/donor reviews, and a Beneficiary Assessment for the mid-term review (2000). GoP has also agreed that: (f) as Conditions of Effectiveness: (i) the Memoranda of Agreement (MOA) between DECS and other concerned GoP agencies shall have become effective; and (ii) all conditions precedent to the effectiveness of the OECF loan shall have been fulfilled; (g) as Conditions of Disbursement: (i) the TEEP Guidelines shall have been put into effect; (ii) for the DEDPs of each of the six pilot provinces, the respective DECS-DOs shall have entered into a MOA setting forth the obligations of each party; and (iii) GoP shall have appointed the key PISU consultants. -8- 21. Poverty Category. The project falls under the category "Program of Targeted Interventions". It is geographically targeted, and within the targeted provinces, phasing would begin with the most disadvantaged districts. The School Improvement and Innovation Facility would direct proportionately more grants at marginalized schools. A pilot voucher scheme would target the poorest households. Criteria for all three schemes have been agreed. 22. Environmental Aspects. The project would have no adverse impact on the environment. The SBP would comply with national regulations such as the logging ban and international ones such as the banning of asbestos materials. Indigenous people would benefit: they would be consulted about their educational needs, during DEDP preparation and implementation; and the project includes provisions for indigenization of the curriculum and instructional materials. School-mapping would be participatory, and, should there be cases when families have to be displaced for school construction, the Framework for Resettlement defines a legal process to ensure that the affected groups would be duly compensated. Historically, such cases have been few and far apart. Environmentally-oriented proposals would be eligible for school grants under the S1IF. 23. Program Objective Category. The project would improve access to quality elementary education in provinces featuring both low incomes and unfavorable education indicators. Women, who constitute 88% of the teachers, and young children are the prime beneficiaries. The project also addresses the needs of disadvantaged groups--especially children of indigenous, migrant or nomadic communities and boys engaged in child labor--and would generate economic benefits through community school construction. These interventions are cost-effective and, combined with other social and agricultural investments, are expected to accelerate poverty reduction in depressed rural areas. 24. Participatory Approach. Participation was built in the project design early on. The underlying sector work was done by national Task Forces with numerous countrywide consultations. At identification, it was agreed that DEDP preparation would be bottom-up and decentralized. Provincial planning teams were formed and local consultants were recruited to assist with the approach, which was new in the sector. A variety of participatory techniques were used to inform, consult, jointly assess and decide, collaborate and evaluate. The process involved not only DECS personnel, but LGUs, NGOs, parents and communities, and has been enthusiastically received in the field, where capacity has been built. The entire project is to unfold as a structured learning process, in which lessons would be drawn at each phase, and groups involved in pilot activities such as the first six DEDPs would coach those responsible for replicating them in the next "batch" of project provinces. 25. Benefits. The project is expected to benefit about 2.3 million 6-12 year olds, 70 percent of whom come from poor families. Based on previous studies, the provision of textbooks and furniture alone could improve learning achievements by 20 percent; the completion rate, which averages 55 percent in the targeted provinces, could reach 64, and even 71 percent under a low and high case scenario; up to 250,000 new school places would provide access to better quality education. For these children and their families, these would yield intrinsic equity, intergenerational benefits in terms of welfare, prospects for better health, lowered fertility, higher -9- life expectancy, end earning potential. Closing the educational quality gap between rich and poor would also improve social cohesiveness, reduce the social costs associated with pockets of extreme poverty and educational underachievement, including the risk of social unrest which could deter foreign investment. The project would also assist GoP in operationalizing several of the Ramos Administration's key development strategies underlying the Social Reform Agency, devolution, and people empowerment. 26. Risks. At the macroeconomic level, the main risk is that, if the rapid growth of the economy were to falter, GoP might find it more difficult to honor the financial commitments arising from the project, and the LGUs may not be able to participate in the cost-sharing to the level expected by central government. This risk can only be monitored but the seriousness of GoP in observing its macroeconomic targets and recent improvements in education funding give reasons for optimism. The contingency planning methodology used for project preparation would further minimize the negative impact of such a situation. At the sectoral level, the main risk is that of wavering commitment to targeting and to improving the quality of education for the poor. The participatory approach and the advocacy program are expected to create a strong constituency for the project among its direct beneficiaries, their elected officials and the poverty reduction constituency. At the project level, the complexity inherent in the systemic approach, in decentralization and in the shift away from uniform norms, might test DECS' capacity to absorb change. This risk is reduced to manageable proportions through piloting and phasing. Another risk is that of loss of original focus due to political pressure or the demands of implementation. Extensive popular participation and transparent procedures should counter the likelihood of this occurring to an excessive degree. A final risk lies in decentralization, which could be resisted by the central and regional levels, and may be slowed down by absorptive capacity constraints at the Divisional level. The project's multipronged response combines appropriate incentives, upfront capacity-building, systematic learning from feedback, the flexible provision of technical assistance, the TEEP Guidelines and the controls built in the yearly plans, budgets, and performance reviews. GoP and the donors recognize that there are residual risks linked to the innovativeness of the project. These risks are considered worth taking, given the present problems in the system. 27. Recommendation. 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 Gautam S. Kaji Attachments Washington, D.C. October 25, 1996 -10- Schedule A PHILIPPINES THIRD ELEMENTARY EDUCATION PROJECT Estimated Costs and Financing Plan (US$ million) Local Foreign Total Estimated Costs: A. Capacity Building at National & Regional Level 1. National Management Structure 5.0 1.7 6.7 2. Support to Policy/Decision Making 9.2 0.5 9.6 3. Support to Decentralized Implementation 9.6 2.1 11.7 Subtotal 28.0 B. Elementary Education Improvement in 26 Provinces 1. Capacity Building 27.8 4.7 32.5 2. DEDPs 325.8 95.4 421.2 Subtotal 253-& 100.1 453.7 Total Base Cost 317 104.4 481. Physical Contingency 35.0 10.3 45.3 Price Contingency 35.8 6.5 42.3 Total Project Cost 448.2 121.2 5.4 Financing Plan: Central Government 252.6 54.8 307.4 Local Governments 37.8 6.0 43.8 IBRD 69.7 43.7 113.4 OECF 88.1 16.7 104.8 Total 4482 12.L2 5.4A NB:(i) Totals may not add up due to rounding. (ii) Retroactive financing of US$3.0 million would be included to cover eligible expenditures incurred after July 1, 1996 under all disbursement categories except SIIF grants (category 5). -11- Schedule B Page 1 of 2 PHILIPPINES THIRD ELEMENTARY EDUCATION PROJECT Summary of Proposed Procurement Arrangement (US$ million) Procurement Method International National Procurement Elements Competitive Competitive Other NBF 2 Total3 Bidding Bidding School Buildings - - 194.9 - 194.9 (48.7) (48.7) Other Buildings - 3.1 6.5 - 9.6 (0.8) (1.6) (2.4) Computers 3.1 - - - 3.1 (2.5) (2.5) Reproduction Equipment 0.6 - - - 0.6 (0.0) (0.0) Communication 0.9 0.9 0.0 - 1.9 (0.8) (0.8) Other Equipment - - 3.1 - 3.1 School Furniture - 4.8 4.8 - 9.6 (1.2) (1.2) (2.4) Other Furniture 0.0 0.2 - - 0.2 (0.0) (0.0) School and classroom Kits 50.0 22.4 - - 72.4 (17.5) (7.9) (25.3) Vehicles 1.7 - - - 1.7 Instructional Materials (published) 5.2 - - 28.4 33.5 (4.7) (4.7) Instructional Materials (reprint) 6.7 - - - 6.7 (6.1) (6.1) Textbook Paper 2.7 - - - 2.7 (2.7) (2.7) Communication Materials - - 2.8 0.4 3.2 (0.1) (0.1) Training - Accommodation - - - 48.3 48.3 Training Mat & Trainers - - 48.1 - 48.1 (12.0) (12.0) Workshop - - 5.8 - 5.8 (1.4) (1.4) SIIF - - 10.4 - 10.4 (2.2) (2.2) Assessment - - 5.5 - 5.5 Research - - 4.1 - 4.1 Consultants - 0.1 31.1 - 31.1 (0.0) (1.9) (1.9) Personnel - - - 12.6 12.6 Maintenance - - - 53.4 53.4 Operating Cost - - - 6.7 6.7 Total 71.0 31.5 317.1 149.8 569.4 (33.5) (10.7) (69.1) (0.1) (113.4) 1 Other Procurement methods apply to contracts of individual value below US$50,000 that include: (i) National Shopping for annually phased procurement of small scale works and site-materials, (ii) Direct contracts with local Communities (pakyaw) for labor-intensive works as classroom constructions and furniture, (iii) Municipal force account when works are too small or in areas too remote to attract contractors; and consultant services. 2 NBF means "non Bank financed". 3 Figures in parentheses are the amounts financed by IBRD; totals may not add up exactly due to rounding. -12- Schedule B Page 2 of 2 PHILIPPINES THIRD ELEMENTARY EDUCATION PROJECT Disbursement Categories (US$ million) Disbursement Category IBRD Allocation % of Expenditure to be in US$ million Financed by the Loan Civil Works 46.5 50% Goods (other than textbooks and instructional materials) (a) School and classroom kits 23.0 35% (b) School furniture 2.2 50% (c) Other goods 3.1 100% of foreign expenditures, 100% of local expenditures (ex-factory cost) and 90% of local expenditures for other items procured locally Textbooks and instructional materials 12.2 100% of foreign expenditures, 100% of local expenditures (ex-factory cost) and 90% of local expenditures for other items procured locally Training 12.4 100% of foreign expenditures and 25% of local expenditures SIIF Grants under Part B.2 (d) of the Project 2.1 90% Consultants' services 1.8 100% Unallocated 10.1 Total 113.4 Estimated Disbursement Schedule (US$ million) Bank FY FY97 FY98 FY99 FY2000 FY2001 FY2002 FY2003 Annual 18.5 23.4 19.2 15.1 17.4 12.2 7.6 Cumulative 18.5 41.9 61.1 76.2 93.6 105.8 113.4 -13- Schedule C PHILIPPINES THIRD ELEMENTARY EDUCATION PROJECT Timetable of Key Project Events (a) Time taken to prepare: Eighteen months (b) Prepared by: Government of the Philippines with national consultants, IBRD and other donor assistance. (c) First IBRD mission: November 1993 (ESW) February 1995 (Identification) (d) Appraisal mission departure: April 22, 1996 (e) Negotiations: October 8, 1996 (f) Planned date of effectiveness: February, 1997 (g) List of relevant PCRs and PPARs: Credit/Loan No. FE= PCR No. & Dat PPAR No. Date Ln. 393-PH Education I - 0802 7/75 Cr. 349-PH Education II - 4162 11/82 Ln. 1224T-PH Education III - 6279 6/86 (Textbook) Ln. 1374-PH Education IV - 6348 7/86 Ln. S008-PH Education V 5004 3/84 - - (Mass Media) Ln. 1786-PH Education VI - 8788 6/90 Ln. 2030-PH Sector Program 9923 9/91 - - for Education Ln. 2200-PH Vocational Training 11163 3/92 - - This report is based on the findings of a joint IBRD-OECF appraisal mission which visited the Philippines in April/May 1996, comprising Mmes./Messrs. F. Delannoy (Task Manager, EAlHR), B. Bidani (Economics, ASTHR), M. Lockheed (Education, HDD), J. Kirk (Distance Education, Consultant), J. Renner (Management, Consultant), S. Theunynck (Civil Works/ Implementation, Consultant) and C. Vales (Resident Mission). OECF was represented by Messrs. Shimokawa and Kabayashi and Ms. Muto. Project design and preparation were partly funded by Japan, AusAID, CIDA, UNDP/UNICEF, UNESCO France and ADB. The underlying sector work was conducted by a Filipino team led by Mr. E. Barzaga (Innotech-Seamao) with support from V. Ordonez (UNESCO), and for the Bank by A. Schwartz (PSP) and J-P. Tan (HDD). Preparation was led by Ms. Lourdes G. de Vera and Mr. J. Mateo (DECS) under the leadership of Mrs. L. Pefianco (DECS Undersecretary) and with the assistance of Mr. M. Taguiwalo (Economist), University Ateneo de Manila, and the Philippines Business for Social Progress. Valuable comments/inputs were contributed by B. Alano (sustainability analysis, consultant), B. Diokno (devolution), A. Christensen (Indigenous people and resettlement, ASTHR), H. Patrinos (demand-side financing, HDD), E. Heneveld/H. Craig/Y. Zeeger/R. Matthews/A. Burke (schools and teachers), N. Jangira/G. Wall (pedagogical decentralization), I. Montagnes (textbooks), S. Shaeffer (multigrade), J. Izard (assessment). Peer Reviewers were E. Jimenez (PRDPH), B. Fredriksen (AFTHD), J. Middleton (EDINP), and V. Paqueo (LASHC). The Lead Advisor was Mr. A. Verspoor (SA2RS) and for the economic analysis, Mr. N. Prescott (EA1HR). The report has been endorsed by Messrs. S. Burmester (Chief, EAlHR) and J. Khalilzadeh-Shirazi (Director, EAl and Acting Vice President, EAP). -14- Schedule D Page 1 of 2 STATUS OF BANK GROUP OPERATIONS IN PHILIPPINES A. STATEMENT OF BANK LOANS AND IDA CREDITS /a (As of September 30, 1996) Amount (USS million) Loan or (less cancellations) Credit Fiscal Undis- Number Year Borrower Purpose IBRD IDA/b bursed One hundred and sixty-two Loans and seven Credits closed. 6,264.95 171.18 10.45 Of which SALs, SECALs and Program Loans 1903 1981 Republic of the Philippines SAL I 199.96 2266 1983 Republic of the Philippines SAL II 302.25 2277 1991 Republic of the Philippines Environment & Natural Res. Mgt. 66.00 2469 1985 Republic of the Philippines Agriculture Sector Inputs 150.00 2787 1987 Republic of the Philippines Economic Recovery Program 300.00 2956 1988 Republic of the Philippines Program for Govt. Reform 200.00 3049 1989 Republic of the Philippines Financial Sector 300.00 3149 1990 Republic of the Philippines Debt Management Loan 200.00 3539 1993 Republic of the Philippines Economic Integration Loan 200.00 1521 66.00 0.00 3099 1989 Republic of the Philippines Health Development 70.10 3.85 3146 1990 Republic of the Philippines Municipal Development II 40.00 3.86 3204 1990 Republic of the Philippines Coconut Farms Development 120.95 67.52 3242 1990 Republic of the Philippines WS/Sewer/Sanitation I 58.00 21.78 3261 1991 Republic of the Philippines Communal Irrigation II 46.20 26.95 3263 1991 Republic of the Philippines Earthquake Reconstruction 125.00 18.62 *3360 1991 Republic of the Philippines Env. & Natural Res. Mgt. 158.00 30.08 3430 1992 Republic of the Philippines Highway Management 150.00 112.65 3435 1992 Republic of the Philippines Engineering & Science Educ. 61.00 23.72 3439 1992 National Electrif. Adm. Rural Electrification 91.30 71.62 3455 1992 Republic of the Philippines Municipal Development Ill 68.00 53.19 2392 1992 Republic of the Philippines Second Vocational Training 36.00 19.75 2506 1993 Republic of the Philippines Urban Health & Nutrition 70.00 65.68 3523 1993 Dev. Bank of the Philippines Telephone System Expansion 134.00 96.98 3603 1993 Republic of the Philippines Tax Computerization 63.00 45.08 3607 1993 Republic of the Philippines Irrigation Operation Support II 51.30 37.28 3626 1993 Philippines National Power Corp. Power Transmission & Rehab. 54.55 11.68 3700 1994 National Power Corporation Leyte Cebu Geothermal 147.00 40.73 3702 1994 Philippines National Oil Co. Leyte Cebu Geothermal 64.00 20.49 3745 1994 Subic Bay Metropolitan Authority Subic Bay Freeport 40.00 11.65 3746 1994 National Power Corporation Leyte Luzon Geothermal 113.00 61.72 3747 1994 Philippine National Oil Co. Leyte Luzon Geothermal 114.00 87.33 3852 1995 Republic of the Philippines Womens Health & Safety 18.00 17.68 3938 1996 Land Bank of the Philippines Rural Finance II 50.00 32.64 3939 1996 Land Bank of the Philippines Rural Finance 11 50.00 36.00 3940 1996 Land Bank of the Philippines Rural Finance II 50.00 32.90 **3996 1996 National Power Corporation Transmission Grid Reinforcement 100.00 100.00 **3997 1996 National Power Corporation Transmission Grid Reinforcement 150.00 150.00 **4019 1996 Metro. Water Works & Sewerage Sys. Manila 2nd Sewerage 57.00 57.00 Total 8,511.76 277.18 1,368.88 of which has been repaid 2,921.21 11.76 Total now held by Bank and IDA 5.590.56 2A5.R3 Amount sold 31.35 Of which repaid 31.35 Total Undisbursed 1283. 85.43 1 ia The status of the projects listed in Part A is described in a separate report on all IBRD/IDA-financed projects in execution, which is updated twice yearly and circulated to the Executive Directors on April 30 and October 31. Amounts are presented net of cancellations. /b Principal amounts in USS equivalent at date of negotiations, and undisbursed amounts in equivalent are valued at exchange rate applicable on the date of this statement. Indicates SAL/SECAL Loan and Credits. Not yet effective. -15- Schedule D Page 2 of 2 B. STATEMENT OF IFC INVESTMENTS (As of September 30, 1996) Undisbursed Original Gross Commitments Including IFC IFC Parti- Held partici- Fiscal Loan Equity cipant Total by pants Year Obligor Type of Business ----------------- US$ million -------------------- IFC portion 1963/73 Private Dev. Corp. of the Philippines a/ Financial Services 6.52 4.36 8.48 19.36 - - 1967/89 Manila Electric Company Infrastructure 30.64 3.64 2.96 37.24 16.30 - 1970 Paper Industries Corporation a/ Timber, Pulp & Paper - 0.81 1.40 2.21 - - 1970/72 Mariwasa Manufacturing Company a/ Cement & Construction Mat. 0.38 0.26 0.55 1.19 - - 1970/87/ Philippine Long Distance Telelephone Co. Infrastructure 88.50 0.03 40.00 128.53 41.55 7.80 88/90 1971/77 Philippine Petroleum al Mining and Extraction 6.20 2.07 - 8.27 - - 1972 Marinduque Mining & Ind. Corporation a/ Mining and Extraction 15.00 - - 15.00 - - 1973 Victorias Chemical Corporation a/ Chemical & Petrochemicals 1.85 0.35 - 2.20 - - 1974 Filipinas Synthetic Fiber Corporation a/ Textiles 1.50 - - 1.50 - - 1974 RFM Corporation a/ Food & Agribusiness 1.20 - - 1.20 - - 1974/79 Maria Cristina Chemical Industry Mining and Extraction 1.55 0.64 - 2.19 0.44 - 1975 Philippines Polyamide Ind. Corporation a/ Textiles 7.00 - - 7.00 - - 1976 Philagro Edible Oils, Inc. a/ Food & Agribusiness 2.65 0.19 - 2.84 - - 1977 Sarmiento Industries a/ Timber, Pulp & Paper 3.50 - - 3.50 - - 1977/85 Acoje Mining Co. Inc. a/ Mining and Extraction 2.50 1.22 - 3.72 - - 1978 Cebu Shipyard & Engineering Works a/ Manufacturing 2.10 - - 2.10 - - 1979/90 General Milling Corporation Food & Agribusiness 4.00 1.73 - 5.73 1.73 - 1980 Consolidated Ind. Gas, Inc. a/ Chemicals & Petrochemicals 4.50 - - 4.50 - - 1980 Philippines Associated Smelting Mining and Extraction - 5.00 - 5.00 - - and Refining Corporation (PASAR) a/ 1980 Ventures in Industry & Business Financial Services - 0.24 - 0.24 - - Enterprise, Inc. (VIBES) a/ 1980/83/ All Asia Capital Trust Financial Services 30.16 2.77 6.00 38.93 27.73 10.00 89/90/95 1981 Loans to Small & Medium Scale Financial Services 18.50 0.64 - 19.14 - - Enterprises (SMSE) g/ 1981/92 Davao Union Cement Corporation Cement & Construction Mat. 16.00 0.85 - 16.85 - 1982 NDC-Guthrie Plantations, Inc. a/ Food & Agribusiness 11.00 - - 11.00 - - 1986/91/92 Pure Foods Corporation a/ Food & Agribusiness - 4.46 - 4.46 - - 1987 BPI Agribank Financial Services - 0.98 - 0.98 - - 1988 First Philippine Capital a! Financial Services - 4.20 - 4.20 - - 1989 Hambrecht & Quist Financial Services - 2.28 - 2.28 2.28 - 19qc First Philippine Fund a/ Financial Services - 29.73 - 29.73 - - 1990 rhe Manila Fund (Cayman) p/ Financial Services - 7.00 - 7.00 - - 1991 Automated Microelectronics a/ Manufacturing 9.00 2.80 - 11.80 - - 1991 Avantex Mill Corporation Textiles 11.25 2.33 - 13.58 8.31 - 1991 Best Chemicals Chemicals & Petrochemicals 6.50 2.30 - 8.80 2.03 - 1991 Hopewell Energy Infrastructure 10.00 1.10 - 11.10 0.95 - 1991 Makati Shangri-La Hotel Hotels and Tourism 29.50 - 29 50 59.00 4.57 - 1993 Bacnotan Cement Corp. Cement & Construction Mat. 18.00 9.24 - 27.24 12.63 - 1993 Hopewell Power Infrastructure 60.00 10.00 40.00 110.00 70.00 - 1993 Mactan Shangri-La Hotel Hotels and Tourism 12.00 - 12 00 2400 - - 1993 Northern Mindanao Power Infrastructure 12.50 4.50 21.00 38.00 13.96 0.24 1993 Pilipinas Shell Petroleum Oil Refining 50.00 - 85.00 135.00 11.63 - 1994 Hambrecht & Quist Financial Services - 2.50 - 2.50 2.50 0.10 1995 Walden AB Ayala Management Financial Services - 0.05 - 0.05 0.05 0.02 1995 Walden AB Ayala Ventures Financial Services - 3.75 - 3.76 3.75 1.85 1996 All Asia Capital Growth Financial Services - 4.00 - 4.00 4.00 - 1996 All Asia Capital Managers Financial Services - 0.04 - 0.04 0.04 - 1996 Asian Ventures Limited Financial Services - 0.01 - 0.01 0.01 - 1996 Pangasinan Electric Corporation Infrastructure 30.00 - 19600 226.00 30.00 226.00 Total Gross Commitments b/ 504.00 116.07 442.89 1062.96 Less Cancellations, Terminations, Repayments & Sales 292.16 73.45 181.38 546.99 Total Commitments Now Held c/ 211.84 42.62 261.51 515.97 267.67 246.01 Pending Commitments A. Magsaysay 8.00 3.00 26 50 37.50 Total Commitments Held & Pending Commitments 219.84 45.62 288.01 553.47 Total Undisbursed Commitments 43-34 2nn 20046 246t1. a/ Investments which have been fully cancelled, terminated, written off, sold redeemed or repaid. b/ Gross commitments consist of approved and signed projects. c/ Held commitments consist of disbursed and undisbursed investments. -16- Philippines at a glance Lower- POVERTY and SOCIAL East middle- Philippines Asia Income Development diamond* Population mid-1995 (millions) 67.5 1,709 1,154 GNP per capita 1995 (US$) 1,134 840 1,700 Life expectancy GNP 1995 (billions US3) 76.5 1,436 1,962 Average annual growth, 1990-95 Population (%) 1.9 1.3 1.4 Labor force (%) 2.6 1.4 1.7 GNP per_ Most recent estimate (latest year available since 1989) capita Poverty. headcount index (% of population) 41 Urban population (% of total population) 54 32 56 Life expectancy at birth (years) 65 68 67 Infant mortality (per 1,000 live births) 40 35 36 Access to safe water Child malnutrition (% of children under 5) 30 17 Access to safe water (% ofpopulation) 81 67 73 Illiteracy (% of population age 15+) 10 16 Philippines Gross primary enrollment (% of school-age population) 112 116 104 Lw0rpiei Male 13 11 10S - Lower-middle-income group Male 113 119 106 Female 111 115 101 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1975 1985 1994 1995 Economic ratios* GDP (billions US$) 15.0 30.7 64.2 74.1 Gross domestic investment/GDP 30.9 14.8 23.5 21.8 Openness of economy Exports of goods and non-factor services/GDP 21.0 24.7 33.0 35.1 Gross domestic savings/GDP 24.8 16.5 17.8 14.7 Gross national savings/GDP 24.7 14.9 19.0 19.3 Current account balance/GDP -6.2 -0.1 -4.4 -2.5 Savings Investment Interest payments/GDP 0.8 3.1 2.5 2.5 Total debt/GDP 28.0 86.7 60.0 54.9 Total debt service/exports 14.4 31.6 20.4 14.0 Present value of debt/GDP .. .. 54.6 Present value of debtlexports .. .. 143.1 .. Indebtedness 1975-84 1985-95 1994 1995 1996-04 (average annual growth) Philippines GDP 3.9 3.2 4.4 4.8 5.5 -Phel-pie GNP per capita 1 3 1.7 2.9 3.8 3.5 - Lower-middle-income group Exports of goods and nfs 9.5 8.7 19.8 11.9 10.6 STRUCTURE of the ECONOMY (% of GDP) 1975 1985 1994 1995 Growth rates of output and Investment (%) Industry 34.6 35.1 32.5 32.1 20 Manufacturing 25.7 25.2 23.3 23.0 10 Services 350 40.4 45.5 46.2 a 9- D 1 92 93 94 95 Private consumption 64.5 75.0 74.2 74.0 / General government consumption 10.7 7.6 10.7 11.2 Imports of goods and non-factor services 27.1 21.9 40.1 44.0 GDi GDP (average annual growth) 1975-84 1985-95 1994 1995 Growth rates of exports and Imports (%) Agriculture 2.7 2.0 2.6 0.9 20 Industry 4.2 3.1 5.8 7.2 Manufacturing 2.9 3.1 5.0 6.8 1s Services 4.4 4.0 4.2 4.9 10 5. Private consumption 3.8 3.5 3.7 3.8 General government consumption 1.0 3.2 6.1 3.6 0 Gross domestic investment 2.8 8.0 5.5 4.4 -s go 9 Imports of goods and non-factor services 6.1 12.3 13.6 16.6 Gross national product 3.7 4.0 5.3 5.5 -Exports --Imports 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 -17- Philippines PRICES and GOVERNMENT FINANCE 1975 1985 1994 1995 Inflation (%) Domestic prices (% change) 20 Consumer prices 6.8 23.1 9.1 8.1 i Implicit GDP deflator 9.4 17.6 10.0 7.4 Govemment finance (% of GDP) o Current revenue . 12.1 20.6 19.6 90 91 92 93 94 95 Current budget balance .. 2.4 3.2 3.1 Overall surplus/deficit .. -1.9 -0.5 -0.5 - GDP def - CPI TRADE 1975 1985 1994 1995 Export and import levels (mill. US$) (millions US$) Total exports (fob) .. 4.629 13,483 17,370 30 000 Coconut oil .. 347 639 989 25000 Sugar .. 185 77 74 Manufactures . 2,539 10.615 13,868 20000 Total imports (cif) .. 5,111 21,333 26,333 15000 Food .. 256 815 1,060 10.000 Fuel and energy .. 1,452 2,040 2,461 Capital goods .. 769 6,868 8,029 Export price index (1987=100) .. 81 120 132 8o 90 91 92 93 4 9s Import price index (1987=100) .. 63 117 126 1 Exports 1 Imports Terms of trade (1987=100) .. 127 103 105 BALANCE of PAYMENTS 1975 1983 1994 1995 (millions USS) Current account balance to GDP ratio (%) Exports of goods and non-factor services 3,000 6,864 20.044 26,532 0 - Imports of goods and non-factor services 4,116 5,961 25,712 32,804 |s so 91 92 93 e94 s Resource balance -1,116 903 -5,668 -6,272 Net factor income -126 -1,317 1,782 3,493 -2 Net current transfers 318 379 936 880 Current account balance, before official transfers -923 -35 -2,950 -1,899 Financing items (net) 912 867 4,752 2,544 Changes in net reserves 11 -832 -1,802 -645 - - Memo: Reserves including gold (mlt USS) 1,463 1,098 7,121 7,775 Conversion rate (localVS$) 7.2 18.6 26.4 25.7 EXTERNAL DEBT and RESOURCE FLOWS 1975 1985 1994 1995 (millions USS) Composition of total debt, 1995 (mill. US$) Total debt outstanding and disbursed 4,171 26,640 40,006 39,433 IBRD 238 2,420 4,855 5,002 G A IDA 17 84 174 183 5300 5002 8 Total debt service 457 2,534 4,637 5,294 C IBRD 26 285 717 790 728 D IDA 0 1 3 3 3303 Composition of net resource flows Official grants 72 139 284 290 Official creditors 185 382 214 -631 F Private creditors 348 776 1,755 819 11095 Foreign direct investment 98 12 1,289 1,189 Portfolio equity 0 0 269 1,201 E World Bank program 13822 Commitments 114 104 578 168 A-IBRD E - Bilateral Disbursements 94 276 305 403 B- IDA 0 - Other multilateral F - Private Principal repayments 12 110 359 415 C - IMF G - Short-term Net flows 82 166 -55 -12 Interest payments 14 176 360 378 Net transfers 68 -10 -415 -390 International Economics Department 10/28/96  江；   r' CL CL) <1 CLLL CC