Documentof The World Banke Worlv

FOROFFICIAL USE ONLY Public Disclosure Authorized

Report No. P-2502-UR

REPORT AND RECOMMENDATION

OF THE

PRESIDENT OF THE Public Disclosure Authorized INTERNATIONALBANK FOR RECONSTRUCTIONAND DEVELOPMENT

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED LOAN

TO THE

REPUBLICA ORIENTAL DEL URUGUAY Public Disclosure Authorized FOR A

SECOND HIGHWAY PROJECT

April 5, 1979 Public Disclosure Authorized

This doment has a restricteddistibution and may be usd by recipientsonly in the performanceof their officil duties. Its contentsmay not otherwse be disclosedwithumt World Dank authorizstion. CURRENCYEQUIVALENTS

Currency Unit Peso (NUr$) US$1.00 NUr$5.49 NUr$1.00 US$0.18 NUr$1,000,000 US$182,000

WEIGHTS AND MEASURES

Metric System

ABBREVIATIONS

DODE - Directorate of Economic Development Works MTOP - Ministry of Transport and Public Works Vialidad - MTOP's Highway Directorate

GOVERNMENT OF URUGUAY

Fiscal Year

January 1 - December 31 FOR OFFICIALUSE ONLY

URUGUAY

SECOND HIGHWAY PROJECT

Loan and Project Summary

Borrower: Republica Oriental del Uruguay

Amount: US$26.5 million equivalent

Terms: Repayable in 15 years, including 3 years of grace, at 7.9% per annum

Project Description: The proposed project would assist the Government in reconstructingthe most heavily travelled portion (140 km) of Route 8, an importantlink with Brazil (the section to be reconstructedis Punta Rieles -km 13 from Montevideo- to Arroyo Marmaraja -km 153). It would also help finance consulting services for supervisionof civil works, to prepare future highway rehabilitationand to develop a bridge improvement program, and technical assistance to strengthen trans- port planning.

Benefits and Risks: The proposed project has the dual objective of improving the integrationof the northern area of the country and the links from neighboring Brazil to Montevideo, Uruguay's capital and major port, and setting in motion an institu- tional effort to strengthen long term programmingand executing capacity of road rehabilitationand recon- struction as well as of transport planning and coordi- nation. The procurement phase of the project presents no special risk. Past experiencewith similar projects in Uruguay, however, shows that delays in project imple- mentation of one or two years were common, mainly because of inadequate project management. To help overcome this problem, the proposed project includes strengtheningof civil works supervisionby an experiencedconsultant firm.

This document has a restricteddistribution and may be used by recipients only in the performance of their offcial duties. Its contents may not otherwise be disclosed without World Bank authorization. - ii -

Estimated Cost: Local Cost Foreign Cost Total Cost ------US$ million equivalent------

Reconstructionof Route 8

(a) Civil works for 140 km 22.3 23.2 45.5

(b) Consultingservices for civil works supervision 0.9 0.9 1.8

Highway Programs and Preparation of Future Transport Sector Management

Consulting Services for:

(a) Preparationof a 4-year program of rehabilitation, strengtheningand recon- struction of national highways and a bridge improvementprogram 0.4 0.4 0.8

(b) Detailed engineeringof about 200 km of roads included in the first 2-year period of program in (a) above 0.5 0.5 1.0

Technical assistanceto strengthen and improve transport sector planning 0.2 0.6 0.8

Contingencies

(a) Physical (10% of civil works) 2.2 2.3 4.5

(b) Price escalation(12%) 1/ 3.2 3.6 6.8

Total 29.7 31.5 61.2

Financing Plan: Bank - 26.5 26.5

Private Bank 2/ or Government - 5.0 5.0

Government 29.7 - 29.7

Total 29.7 3/ 31.5 61.2

1/ Based on estimated annual price increasesof 7% for 1979-82. 2/ Co-financingarrangements currently under negotiation. 3/ Taxes are estimated to constitute16% of total costs. - iii -

Estimated Schedule of Fiscal Annual Disbursementsof Bank Year Disbursement Cumulative Loan (in US$ millions): 1980 0.5 0.5 1981 10.0 10.5 1982 14.0 24.5 1983 2.0 26.5

Rate of Return: 20% on 95% of project costs for which benefits have been quantified.

Staff Appraisal Report: April 5, 1979 (No. 2329b-UR)

REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO REPUBLICA ORIENTAL DEL URUGUAY FOR A SECOND HIGHWAY PROJECT

1. I submit the following report and recommendation on a proposed loan to the Republica Oriental del Uruguay for the equivalent of US$26.5 million to help finance the proposed Second Highway Project. The loan would have a term of 15 years, including 3 years of grace, at an interest of 7.9% per annum.

PART I - THE ECONOMY

2. An economic mission visited Uruguay in May 1978. The resulting Economic Memorandum (2241-UR) was distributed to the Executive Directors in December 1978. A summary of Country Basic Data is attached as Annex I.

Economic Performance

3. After having become one of the most prosperous countries in Latin America in the first half of the twentieth century, Uruguay's economy deteri- orated steadily in the next two decades. This was the result of policies that favored urban consumption and high-cost industrial import substitution at the expense of investment, exports and growth. A well-educated and predominantly urban population generated increasing demands for high employment, better public services and social benefits. The attempts to meet these demands took the form of fiscal, exchange rate and price policies that resulted in a sustained transfer of income out of the resource-rich agricultural and livestock sector. Industrial sector development, initially stimulated by shortages of consumer goods during World War II, was fostered through a deliberate import substitution and protection policy during the immediate post-war era. However economic growth faltered as agricultural production, productivity and exports declined after the Korean War. Moreover, industrial import substitu- tion possibilities in the small domestic market were largely exhausted. Unemployment and underemployment rose sharply. Government policies aimed at maintaining urban income and consumption levels resulted in strong inflationary pressures, capital flight and serious misallocation of resources. During the early 1970s, political and social unrest marked by urban terrorism and labor strife further discouraged savings, investment and any initiative to expand output and exports.

4. Prior to the beginning of the above dislocations, Uruguay instituted comprehensive welfare legislation. Progressive legislation covering such areas as social security retirement and death pensions, job security, unemploy- ment compensation, free health and education services provided mechanisms for redistributing income. Uruguay was thus able to achieve a relatively high level of social progress as evidenced by an income distribution pattern which compares favorably with that of some developed countries with a similar resource endowment,but considerablyhigher income per capita. Although Uruguay experienceda drop in per capita income during the 1960s and early 1970s, the country has attained levels that are comparable to those of some developed countriesand above those of most developing countriesin health (life expectancyat birth of 70 years), education (94% literacy rate), and nutrition (per capita intake of protein of 100 grams per day).

5. The redistribution mechanisms were not, however, immune to economic instability--and, in effect, contributed to it. The uncoordinated growth of the social security system and its liberal benefits, coupled with a stagnant economy and rapid inflation, caused increasing stress on the country's resources. Larger transfers from the Central Government were increasingly needed to provide decreasing real benefits to a larger number of people. In addition to the financial burden on the Government, the high level of contributions required by the system from employers increased the real cost of labor. This high cost, coupled with the incentives to the use of capital inherent in the import substitution strategy, acted as a brake on the creation of employ- ment. Moreover, the inadequate level of real benefits, together with the old age structure of the population, resulted in a large number of people working past retirement age and this further limited employment opportunities for the groups entering the labor force.

6. The structural changes in the world economy that emerged in late 1973 had a strong impact on the Uruguayan economy. The threefold increase in the price of imported oil (upon which the country is entirely dependent), substantial increases in other import prices, and the closing of the European Economic Community to meat imports contributed to a sharp reversal in the balance of payments, a precipitous deterioration of fiscal performance and to an acceleration of domestic inflation. The economic team appointed in mid-1974 recognized that long-term solutions to the country's economic problems went beyond stabilization and required a fundamental reorientation of economic management away from an inward-looking towards an export-oriented development strategy. The basic objectives of the new program were the improvement of resource allocation and productive efficiency through greater reliance on the price mechanism, and the promotion and diversification of nontraditional exports, i.e., those other than beef and wool. The achievement of these objectives required the freeing of domestic prices and the liberalization of the foreign trade and payment system from the burdensome controls instituted in the past.

7. The rapid implementation of export-oriented development measures yielded unexpectedly rapid and positive results in 1975-78, enabling Uruguay to surpass most of the performance targets embodied in three successive standby agreements with the IMF. Government economic policy during this period con- centrated on fostering growth in the commodity-producing sectors by eliminating various types of controls that distorted resource allocation, and by achieving a more realistic exchange rate in order to promote exports. Quantitative and financial import controls of raw materials and capital goods were eliminated; price ceilings on many domestic products were lifted; interest rates on de- posits and loans were freed; and nontraditional exports were successfully stimulated through a policy of minidevaluations and the establishment of a - 3 - system of tax rebates. Reversing policies that prevailed for thirty years, the government eliminatedcontrols on pricing and marketing of agriculturalgoods in the third quarter of 1978. While the immediate effect of the removal of the ceiling was to increase beef prices by about 20%, the difference between internationaland domestic prices, the measure should help to improve efficiency in the sector and lead to higher supplies, without undermining the Government's antiinflationprogram. In continuationof its liberalizationpolicies, the government reduced maximum levels of import duties and surcharges in January 1979.

8. Despite the continuationof generally unfavorable external factors, the economy respondedby achieving an annual average GDP growth of about 2.5% during 1974-78, compared with an annual decline of 0.5% during the previous four years. Productionof nontraditionalexports, particularlyleather and textile manufactures,led the recovery of the economy and was instrumental in initiating a remarkable turnaround in the external sector which has continued since 1976. The improvementin the current account balance continuedas the deficit declined from an average US$160 million in 1974-75 to US$70 million during 1976-78, which together with strong private capital inflows, resulting in increasing gains in net foreign exchange reserves of US$112 million, US$161 million and US$194 million in 1976, 1977 and 1978, respectively,compared with a loss of US$73 million in 1975. Moreover, the inflation rate had been reduced to 40% in 1976, from a level of 67% in 1975 and 107% in 1974, owing to a combinationof more restrictivemonetary management and incomes policy, and--above all--improvingfiscal performance. The Central Government fiscal deficit was reduced from 4.5% of GDP in 1974-75, to 2.5% in 1976, surpassing the target of 3.4% stipulated in a standby agreementwith the IMF. The marked fiscal improvementwas brought about by a combinationof increased collection of revenues from the value-added tax and IMPROME (a tax on imputed income on agriculturalland), and the restraint of current expendituresto the real level of 1975.

9. The Central Government'sfiscal situation continuedto improve in 1977-78 (an average overall deficit of 1.2% of GDP). The policy of wage restraint enabled the Government to restrict current expendituresand finance a larger investmentprogram. The Government'swage policy has also been instrumentalin maintaininga relatively low level of inflationduring 1976-78 as compared to 1974-75. The increased inflationarypressures in 1977, caused by a poor harvest and the monetary expansion resulting from accumulationof foreign exchange reserves,were controlled through monetary measures introduced in late 1977. As a result, the rate of inflationdeclined from 57% in 1977 to 46% in 1978. In all, real wages which declined during the stabilization''programreached their minimum level in November 1977.

Economic Prospects

10. The Government is attempting to shift the economic structuretowards a more open, export-orientedmodel. This shift is by no means easy in view of the deep-seatedrigidities which Uruguay's economy has acquired over the last - 4 - thirty years. High tariff protection and traditionalpublic sector management continue to hamper growth. Nevertheless,the success in stimulatingeconomic activity and turning around the balance of payments during the last four years attests to the economy's responsivenessto a consistent set of signals as the price mechanism is allowed to operate more freely. The key to sustained growth for the future will depend on the Government'sability to consolidate the recent gains through longer-termpolicies. Uruguay's long and difficult experience in pursuing income distributionpolicies in the face of a stagnant economy has led the authoritiesto give utmost priority over the coming years to sustainedgrowth. As this goal is attained, the task of redistributingthe resultingbenefits should prove easier and more viable than in the past.

11. In broad terms, government policies aim to provide a propitious economic environmentfor the fuller use of such advantages as the country's highly literate labor force, its strategic location between Argentina and Brazil, and a natural resource endowment suited to export-orientedagricultural production,including the traditionallivestock industry as well as the largely untappedpotential in crop production,food processing and fisheries.

12. Provided that the sound orientationof fiscal, monetary and trade policies already instituted is consolidated,the Uruguayan economy has the capacity to grow at faster rates than in recent years (possiblysome 4% p.a. compared to about 1.0% during 1971-78). The expansion of both traditional and nontraditionalexports should provide the main impetus for growth. Beef and wool exportswill benefit from the recently enacted price and marketing liberalizationmeasure, the reasonably favorableprice outlook, and the successfulpenetration of new markets in recent years. Sustained growth of manufacturingoutput and nontraditionalexports should be possible with the further developmentof such subsectors as leather products, textiles,processed foods, fish and other manufacturinggoods. Private sector investment should provide the principal impulse for growth in the coming year in the form of the rehabilitation,modernization and expansion of existing production units rather than the establishmentof new, large-scaleventures. The public sector is expected to play a key supporting role by channelingfinancial resources, rehabilitationof infrastructureand complementaryservices to the productive sectors.

13. Export expansion and diversificationwill require the modernization of the country'scapital stock. This implies heavy import requirementsfor key infrastructure,new plant and equipment, rehabilitationof the existing stock, and for related intermediateinputs. A rapid growth in imports (including petroleumproducts) is to be expected under these policies possibly resulting in a trade deficit averaging about US$70 million during 1979-81. With the developmentof alternativeenergy sources the volume of petroleum imports may decline in 1982 and 1983 and together with the expansion of beef exports, result in a small positive trade balance by 1983. The above trade projections combinedwith steadily increasing net factor payments on public and private borrowingwould result in a small widening of the current account deficit from an average of US$70 million during 1976-78 to an annual average of US$130 million in 1979-81. Expansion of beef exports in 1982-83 in conjunctionwith reduced petroleum imports may be expected to reduce the projected current account deficit to about US$50 million by 1983. The current account deficits - 5 - projectedare moderate and should lead to a further enhancementof Uruguay's creditworthinessand to more favorableterms on external credits than in the recent pact. The relativelymoderate gross external capital requirementsfor 1979-83 (estimatedat an annual average of US$220 million) can be expected to come partly from existing and new commitmentsof multilateraland bilateral agencies. Private financial institutions,suppliers' credits and Government bonds would provide the major portion of the remainder.

14. The remarkableturnaround in Uruguay's balance of payments since 1976 has enabled the authoritiesto amortize or refinance various commit- ments contractedon unfavorableterms during the previousyears. The volume of commitmentscontracted during 1974-75, together with their relatively unfavorableterms, resulted in a debt service ratio of about 28% in 1977. However, expansionof exports reduced the debt service ratio to an estimated 19% in 1978. Under these circumstances,Uruguay would remain creditworthy for the amounts of external capital required to rehabilitatethe country's capital stock and to achieve sustained economic and social progress.

PART II - BANK GROUP OPERATIONSIN URUGUAY

15. Uruguay has received US$202.7 million (net of cancellations)in Bank loans. As of February 28, 1979, the Bank held US$96.1 million, including US$24.5 million undisbursed. On a sectoral basis, Bank assistanceto Uruguay (14 loans in total) has mainly been for power (40%) and livestock (35%), with some lending for industry (10%), transport (10%) as well as vocationaltraining and technologicaldevelopment (5%). IFC has made two loans in Uruguay: to Fabrica Uruguaya de NeumaticosS.A. (FUNSA) (US$3.8million) to introduceradial tire production,increase tire manufacturingcapacity and improve operating efficiencyand product quality; and to Acodyke Supergas S.A. (US$950,000)to help finance a new liquid petroleumgas bottling plant. Execution of these projects has, on the whole, been satisfactory. Annex II contains a summary of Bank loans and IFC investmentsas of February 28, 1979, and notes on the executionof ongoing projects.

16. Bank lending to Uruguay in FY78 consistedof a loan of US$9.7 million equivalent for a Vocational Training and TechnologicalDevelopment project. In addition to the proposed project, a loan for a Fifth Power project is expected to be presented shortly to the Executive Directors. Work is also underway on ports and agricultureprojects for possible consideration by the ExecutiveDirectors during the next two years.

17. The Bank, in its program in Uruguay, is trying to assist the Government in implementingan economic strategy designed to put the economy on a path of sustainedgrowth. Towards this end, all operationsare aimed at policies and programswhich will support the continuedrecovery of the economy within a framework of financialstability. More specifically,the objectivesof the Bank's program are to: (i) foster productiveactivities by promoting the expansionand diversificationof export earnings; (ii) help strengthenthe country'ssectoral policies and public sector institutions; and (iii) improve and promote the integrationof the economy with the large markets of neighboringArgentina and Brazil, as well as with overseas markets. - 6-

18. The proposed project as well as those planned in transport is de- signed to support the Government'seffort to improve the country's infra- structure to foster increased economic activity, rising income and employment, strengtheningsector institutionsand investment planning. The transport projects will also assist Uruguay's efforts to integratewith its neighbors (Brazil and Argentina),which are its major trading partners. Bank lending for power is aimed at helping the country meet its growing power demand, while increasing the country's reliance on local energy sources and improving the financial and institutionalperformance of the power company. Bank lending for agricultureis directed at increasing crop and livestock production to assist Uruguay in achieving self-sufficiencyin grains and in increasing and diversifyingits export earnings. Bank assistance for industry, including vocational training and technologicaldevelopment, is primarily designed to help expand non-traditionalexports, the principalmotor of economic growth; at the same time, the Bank will continue to emphasize the importance of dismantlingand lowering the cumbersome tariff and import regulation structurewhich is necessary to increase the efficiencyof the sector.

PART III - THE SECTOR

Background

19. With its economy largely based on primary and processedagri- cultural/livestockproducts, Uruguay is heavily dependent for its continued economic growth on the development of its transport sector. Bordered by the two largest countries in South America, Argentina on the west and Brazil on the north, and with more than half of its national boundary navigable coastline on the south and east, the country is geographicallyunusually well endowed for the export-orienteddevelopment strategy being pursued. The country's economic difficultiesreferred to above have, however, led to a general neglect of an adequate pace of maintenanceand rehabilitation of infrastructurefacilities. The concentrationof Uruguay'scommercial activity and population in the capital of Montevideo and the extensive agriculturaland livestockdevelopment of its hinterland is reflected in the country's transport system. The interior,with relativelyflat terrain, main rivers at boundaries,and low density agriculturalactivity lent itself to developmentof radial roads and rail networks,extending north, east and west from the metropolitanregion around the seaport of Montevideo. Of the total freight traffic (in ton-km) carried within the country in 1976, roads accounted for about 73%, rail 20% and water 7%.

The Transport System

(a) Railways

20. The railway network of 3,000 km radiates in 5 lines from Montevideo. Passenger traffic has halved since the early 1950s to its lowest level in 1972 at 343 million pass-km. No substantiallong distance passenger traffic exists - 7 -

today, with the major part of traffic consistingof suburban commuter-type demand, concentratedwithin 100 km of Montevideo.Freight traffic had, by 1975, fallen to 290 million ton-km comparedwith 445 million ton-km in 1965. Principal items of freight are calcareous rock, rice, and, of lesser import- ance, other g-iTas, sugar and fertilizers. Despite its deterioration,the railway network still carries 20% of Uruguay's freight and passengertraffic. The managerial and operating proceduresof the governmentrailway company are antiquatedand inefficient. This, combined with the poor physical and largely obsolete condition of the system resulted in financial losses. These losses amounted to over US$7 million in 1976. A UNDP-financedtrans- port survey for which the Bank was the executingagency was conductedin 1978. It concluded that all rail traffic could be carried more efficiently on roads. However, recognizingthat complete closure of the rail system is a remote possibilitythe study recommendeda further survey of limitationof the passsengerservice to commuter lines near Montevideo and of freight service to specializedbulk cargoes such as minerals and fuels.

(b) Air Transport

21. Air Transporthas developedslowly in Uruguay, principallybecause of the concentrationof populationin the Montevideo area, the country'seasy topographyresulting in an abundanceof surface transportationand the short distancesinvolved. Domestic air traffic has increasedconsiderably in recent years, but the total number of domestic passengers(60,000 in 1976) remains low. Internationaltraffic, mostly related to travel in the River Plate area, totaled about 620,000 passengersin 1976. Uruguay has only one functioning internationalairport, Carrasco in Montevideo. A military airport to the north (Durazno)has been upgraded to emergencyalternative status. Maldonado, near the tourist resort of Punta del Este, has only daylightoperations. Commercialairline operationsare dominatedby PLUNA, a state-ownedcompany. Services to several domestic airports are provided in cooperationwith TAMU (TransportesAereos MilitaresUruguayos).

(c) Ports and Water Transport

22. Over 90% of Uruguay's foreign trade is handled by ports. Monte- video accounts for more than 70% of this traffic,while Colonia, Nueva Palmira, Fray Bentos and Paysandu handle the balance,mainly exports of cereals and constructionmaterials to Brazil and Argentina. In 1977, the Port of Montevideohandled, in all, 2.9 million tons. This included 1.8 million tons of crude oil, dischargedat the tanker berths of the oil refinery,which is being diverted to a new off shore mooring buoy. However, dry cargo traffic is expected to increaseas a result of the Government's efforts to increase the export of grains and beef and to reduce import restrictions. The current system of ad valorem port charges,which dis- courages imports and encouragesexports, and the shallow characteristicsof the ports in neighboringArgentina have enabledMontevideo to become a lighteningas well as topping off and bunkeringport for ships destined to or originatingin Buenos Aires. In the last few years, the National Port Authorityhas made considerableprogress in certain area, such as: the - 8 -

removal of the penalty surcharge on internationaltraffic that had been levied by major shipping conferences,as a result of better port operations and improved vessel dispatch since 1974-1976;reduction in the total number of port employees,from about 8,000 in 1972 to some 5,600 in mid-1978; and consistentreductions in total port operating costs in real terms between 1974 and 1978 notwithstandingincreases in port traffic. Despite these improvements,the Port Authority'scosts are still high, and efficiencyis low. To overcome existing problems, the Port Authority has a development program for the Montevideoport for 1978-1982and is preparingwith Bank assistancea possible project that could result in Bank financing of portions of the program. The national maritime fleet of Uruguay consists of 19 vessels (ten seagoing and nine coastal).

(d) Highways

23. The road network consists of some 50,000 km, of which 9,800 km are national roads maintainedby the Ministry of Transportand Public Works (MTOP). One-thirdof the national network is paved and about 90% of this lies in the radial system originatingin Montevideo. The remainder of the network, 40,000 km, consists of secondaryand feeder roads largely maintainedby the departmentsand municipalities. The coverage of the national road network is adequate, but the principal problem is its age and seriouslydeteriorated condition. This is particularlythe case as regards the main international connections,which have considerableimportance given the country's reliance on trade with its neighbors.Lack of timely periodic maintenanceduring the long period of economic stagnationhas contributedsignificantly to this deteriora- tion. The departmentalroad network needs expansion mainly in the southwest, center, north and northwest Departments,which are areas with high agricultural potential. Only 2,000 km (5%) of the departmentalnetwork is paved; 4,000 km are tosca gravel and 34,000 km are earth roads. These departmentalroads are of low standard,poorly maintained and offer restrictedservice ability during the rainy season. Recently, MTOP's Highway Directorate (Vialidad)has been helping the Departmentsto improve this situation.

24. Traffic growth in Uruguay has been low over the last decade. High average vehicle age, deterioratingroad conditions,rising fuel prices (at present, the price per gallon of regular gasoline is US$1.50 equivalent)and the overall state of the economy have apparentlyrestricted countrywide growth of traffic to negligibleproportions. The trucking industry,domestic and international,is highly competitivewith liberal entry. In the road trans- port industry,trucking companieswith principally internationaloperations are few, and they operate truck fleets which are reasonablymodern but smaller than the average for Latin America. Internationalfreight rates offered by Uruguayan firms are competitivewith those of Argentine and Brazilian operators. The level of serviceoffered and the capacity of the truck and bus fleet is broadly adequate for the demand, although the average age of the fleet for short and medium haul trips is high; the longevityof the truck fleet is explained by the short distances,mild climate, easy terrain and import restrictionsprevailing in the country.

25. Overloadingof vehicles does not appear to be a serious problem in Uruguay. A countrywideweight control program is being operated in an adequate manner. The present axle weight control law limits single axle weight to 10 tons, which is about the same as for Argentina (10.5 tons) and -9-

Brazil (10 tons). However, Uruguay limits gross vehicle weight to 36 tons, significantlybelow Argentina and Brazil, where gross loads are permitted up to 45 tons and 40 tons respectively. This regulation cannot be amended because of the large number of obsolete bridges along the Uruguayan road network. The proposed project thus includes the preparationof a bridge improvementprogram, which would also assess the proper limit to be set as gross vehicle weight and would review the efficiencyof the countrywide vehicle weight control program (see paragraph 39 below).

26. Over the period 1972-1976, about 20% (averagingabout US$3.6 million per year) of the national highway capital expenditures,was financed from external sources. The remaining funds came from MTOP's budget. Total road user revenues were growing at about 15% per year during this period and, by 1976, had reached over US$100 million per year, of which US$80 million were derived from fuel taxes. MTOP expenditure on roads for constructionand maintenancewas at less than half the level of user revenues, reaching about US$43 million in 1976. Total expenditureby MOPT on roads has been lagging behind revenues actually earmarked for roads by about 10% in recent years because of implementationdelays. About 42% of the fuel taxes are earmarked for MTOP, which togetherwith revenue from minor user taxes, representedabout 75% of MTOP revenues in 1976. The remainder came from the national budget (17%) and from external sources (8%).

27. The 1978 transport sector study (see para. 20) concluded that, over the period 1978-1982,a highway investment program of about US$310 million (in 1976 prices), would be economicallyjustified. While it is very unlikely that an amount approachingthis could be expended on roads, con- sidering the sector's existing capacity it remains apparent that investment in roads over the next five years would be substantial. The transportstudy also underscored the priority of rehabilitationand reconstructionof the country'smain internationallinks. Consequently,planning of highway rehabilitation,strengthening and reconstructionis considered a high priority componentof the proposed project (see paragraph39 below).

28. Vialidad is responsiblefor planning, constructingand maintaining the national highway network through its headquartersin Montevideo and nine regional offices. All road constructionby Vialidad is done under contract with private contractors.Contract constructionhas been performed satis- factorilybut with some delays in work completion.

29. Maintenanceof all national highways is performedby Vialidad, using its own equipment and a manpower of about 2,100 workers and 40 engineers. Maintenanceis carried out by the nine regional offices super- vising 26 districts. Routinemaintenance of trunk roads is generally acceptable. Periodic maintenance has historicallybeen unsatisfactory, mainly because of budgetary constraintsand poor planning. Although the organizationalsetup for maintenance of roads is generally adequate, the main problems are lack of equipment and lack of a labor force with suf- ficient skills and organization. Acquisitionof new equipment and increase in labor efficiencyare thereforeof high priority. Consultantscompleted a study in 1977 of maintenancerequirements under an IDB grant. This study identified and recommendedequipment requirementsfor highway maintenance, reorganizationof Vialidad and training needs. Implementationof these - 10 -

recommendationsis being financed under an on-going IDB-loan (US$4.0 million equivalent). Vialidad is also negotiatingwith equipment dealers in Uruguay for the acquisitionof an additional US$6.0 million worth of equipment. In line with the on-going efforts to improve road maintenance and Vialidad, assurances have been obtained that during the execution of the project, the Government will exchange views annuallly with the Bank on its overall road maintenance program and related budgetary proposals in order to review the adequacy of the programs of periodic maintenance for paved roads, renewal and acquisition of maintenance equipment and assistance to Departments for road maintenance (Section 4.04(b) of the draft Loan Agreement). To strengthen future planning of maintenanceworks, assurances have also been obtained that starting from 1980, Vialidad's accounting system will show itemized expendituresof routine and periodic maintenance,minor improvements, rehabilitation,major improvementsand construction. (Section 4.02(b) of the draft Loan Agreement).

Transport Planning and Coordination

30. MTOP was created in 1967 and is responsiblefor the developmentof a national transport policy, transport coordinationand establishmentof tariffs for transport services. The Ministry has some nominal jurisdiction over the investment plans and operationalpolicies and practices of the modal agencies. In practice,however, their plans and policies are formu- lated independentlyof MTOP. Sector management and intermodalcoordination have been badly neglected in the past. Lack of sectoral coordinationhas a long history, starting early this century with the parallel and often competitivedevelopment of the then foreign-ownedrailway and the national highway network. The almost complete absence, until the 1978 transport study, of data on transportcosts and demand has preempted any efforts in this regard. To overcome the problem and help the planning of future maintenance,rehabilitation and reconstructionworks, the proposed project includes a technicalassistance component to provide for permanent traffic counting and an implementationprogram (see paragraph41 below). Meanwhile, in recognitionof the existing deficienciesin the transportplanning mechanism, the Government has used the above-mentionedtransport study to establish needs and current priorities of the transportsector and to identify the present project. This study identified as key development issues the need for strengtheningof national transportplanning; improve- ments in road rehabilitationand reconstruction,particularly of the inter- national connectionsto Argentinaand Brazil; reductionsof the railroad network, its operationsand deficit; and port modernization.

31. As a first step toward improvingtransport planning and coordina- tion, in December 1977, it was decided to establisha TransportAdvisory Council. This Council is led by the National Directorateof Transportation and includes the Railways Administration,the state airline (PLUNA), the Airports Administration,the Ports Authority and the Government Planning Secretariat. This Council is preparinga national transportplan, which is to be based largely on the 1978-1982investment plan recommendationsof the - 11 -

transport study. A transportplanning unit within MTOP, staffed with counterpartsfrom the sector survey, is currently assisting the Transport Advisory Council in preparing the national transportplan. The project would provide technical assistanceby specializedconsultants to strengthenthis unit (see paragraph 41.below). Included in their program of work will be the comple- tion by June 30, 1981 of an intermodalcomparison study, initiatedby the trans- port sector survey,which would serve as the basis for coordinationof transport policies and investments. The study will be the subject of an exchange of views with the Bank (Section 4.08 of the draft Loan Agreement).

Past Bank Assistance for Highways

32. The Bank's only operation in the sector was a highways loan made in 1963 (Loan 324-UR, US$18.5 million equivalent) to help finance the improve- ment of Route 5 from Montevideo north to Rivera on the Brazilian border (about 500 km), strengtheningof highway maintenance,including the purchase of equipmentand a highway planning study. The improvementof Route 5 consistedmainly of paving and bridge replacementor improvement. The works were completed satisfactorilywith a 14% cost overrun but not until 1971, five years behind schedule. The delay was mainly due to poor contractor performance.Traffic in 1971 showed an average increase of about 50% over appraisal estimates.

33. As a result of equipmentpurchases under the project, maintenance of the national network improved considerablyand with the help of consultants employed under the project the quality of maintenancework performed in Vialidad'sworkshops was raised to a satisfactorylevel, and overall organi- zation was improved.

PART IV - THE PROJECT

34. A report entitled "Staff AppraisalReport; Second Highway Project" (No. 2329b-UR) dated April 5, 1979 is being distributedseparately. A Loan and Project Summary is being placed at the front of this report. A supplementaryProject Data Sheet is appended as Annex III. The project was identifiedby the Government in May 1977 followingthe transportsector study, and subsequentlyprepared by consultantsINVIAL (Uruguay)during 1977-78. The project was appraised in August-September1978. Negotiationswere held in Washington from March 19-27, 1979. The Uruguayandelegation was led by Mr. Eduardo Sampson, Minister of Transportationand Public Works.

Project Objectivesand General Description

35. The proposed project has the dual objectiveof (i) improvingthe inte- gration of the northern area of the country and of the link from neighboring Brazil to Montevideo,Uruguay's capital and major port; and (ii) setting in motion an institutionaleffort designed to improve long-termprogramming and executing capacity of road rehabilitationand reconstructionas well as of - 12 - transport planning and coordination. Given the country's reliance on trade with its neighbors and the central role of the port in Uruguay's export-led developmentpolicy, the proposed project should enhance the competitiveness of the country's production,reduce transportationcosts and provide more reliable transportservices to areas producing significant proportionsof the national outputs of rice, cattle and cereals. Exports of cement produced near Minas to Brazil (Rio Grande do Sul) would be facilitated,as would distributionof fish products to the interior and Brazil. Montevideowould benefit from easier flowing and less costly transportation,which would contribute to the development of its industry and enhance its role as Uruguay's leading port.

36. Specifically,the project would consist of:

(i) Reconstructionof Route 8 (140 km) between Punta Rieles (13 km from Montevideo)and Arroyo Marmaraja (153 km):

- civil works by contractors; and

- consultingservices for civil works supervision.

(ii) Preparation of Future Highway Programs and Strengthening of Transport Sector Management:

- consultingservices for preparationof a four-year program of rehabilitation,reconstruction and strengtheningprogram of national highways and a bridge improvement program;

- consultingservices for detailed engineeringfor about 200 km of roads included in the first two-year period of the program mentioned above; and

- technicalassistance to strengthenand improve transport sector planning.

Reconstructionof Route 8

37. Route 8 is one of the main roads linking Montevideo to the interior and is an importantconnector to Brazil. It extends from Montevideo to the Brazilianborder at Acegua (441 km) where it connects to the Brazilian highway system. At Treinta y Tres (271 km), Route 18 branches off Route 8 and crosses the border at Rio Branco (207 km) to form another connectionwith the Brazilian system (Map IBRD 14225). As indicatedabove, the proposed project comprises 140 km of Route 8 and the remainderis being rehabilitated and reconstructedwith the assistanceof an IDB loan. The present road has a relativelynew four-lane divided highway (13 km long) ending in Punta Rieles on the outskirts of Montevideowhere it links to a two-lane highway with design standards far below those required for present heavy traffic. The pavement and shoulders along the 140 km in the project are in a deterioratedstate, despite constant and costly repairs, and are hazardous to traffic safety, especially during wet weather. The feeder roads in the area of influence of Route 8 are generally adequate for the current and foreseeablelevel of activity. - 13 -

38. The 140 km of the project (Punta Rieles-ArroyoMarmaraja) would be constructedas a modern road, of which the first 17.5 km, extending the existing four-laneaccess road to the northeast of Montevideo,would be upgraded to four-lanestandards. The remainderwould be reconstructedto two-lane standardswith design and structurecharacteristics closely reflect- ing projected traffic volumes which decrease from about 3,000 vpd (of which about half correspondto heavy vehicles) to about 500 vpd as one moves away from Montevideo.

Preparationof Future Highway Programs and Transport Sector Management

39. The proposed project includes consultingservices (about 135 man- months) over an 18-month period starting in January 1980 to prepare a four-yearprogram of the rehabilitation,strengthening and reconstructionof national highways. The consultantswould also prepare a high prioritybridge improvementprogram. The program would mainly comprise bridges on the main national highways. Such a program is urgently needed, since most of the bridges were built 40 to 60 years ago and designed for traffic loads far below the present level. Vehicle weight and dimensionspermitted in Argen- tina and Brazil could not use the existing bridges safely because of their obsolescenceand insufficientcapacity. Consequently,most of the trucks with internationalfreight have to be off loaded at the Uruguayanborders or undertakea lengthy detour to the North. This problem contributesto high transportcosts in Uruguay and in the Region, and constitutesan obstacle to the developmentof Uruguay'sinternational trade.

40. The project would also provide consulting services (about 240 man-months)over a 23-month period, divided among 3 or 4 contracts,to prepare the detailed engineeringfor the roads included in the first two years of the four-yearprogram mentioned above. But one firm can handle several contracts. It is expected that this componentof the proposedproject would involve about 200 km of roads selected from the internationalroutes to Argentina,connecting Montevideo-Mercedes-Fray Bentos (Routes 1 and 3, 30.8 km), Montevideo-Paysandu-Salto(Route 3, 426 km) and Mercedes-Paysandu (Route 24, 120 km). These roads connect the four most importantand populous cities, traverse the foremost agriculturalzone and provide the only land connectionwith Argentinaover the bridges at Fray Bentos, Paysandu and Salto (Map IBRD 14225).

41. As mentioned above (para. 31), a transportplanning unit within MTOP, staffed with counterpartsfrom the transportstudy, is assisting the TransportAdvisory Council in preparinga national transport plan. However, the unit would need technicalassistance to pursue and develop its role as the focal point for keeping informationon the transport sector and advising the Government on all matters related to transport planning policies. The proposed project would provide technicalassistance by individualconsultants and/or a consultingfirm of about four senior experts for a three-yearperiod with a total of about 108 man-months.

Cost Estimates and Financing

42. The total cost of the proposed project is estimatedat US$61.2 million equivalentand the estimated foreign component is US$31.5 million; of this, US$26.5 million (or 44% of the net of tax cost of the project) - 14 - would be financed by the proposed loan. Taxes are estimated to constitute about US$4.7 million of project costs. The Government is currentlynegotiat- ing with the Bank of Nova Scotia (BNS) for an additional loan of about US$5 million, providing for better terms than could otherwisehave been obtained, namely 10 years, including5 years of grace and 7/8% above LIBOR. If such additional financing,however, is not obtained, the Governmentundertakes to provide the US$5 million itself.

43. When the additionalloan from BNS is obtained, the Loan Agreement would be amended to include (i) a "cross-default"clause; (ii) a skewed amorti- zation schedule so that uniform semi-annualamortization payments would amortize both loans; and (iii) a provision that disbursementsbe conditionedon the co-lenders'loan having been fully disbursed for civil works under the project (this is expected to occur within the first year of the project period). An agreementwould also be entered into beween the World Bank and the private Bank substantiallyin the form of earlier Bank agreementswith commercial banks.

44. A contingencyallowance of 10% has been included to cover increases in quantitiesusually expected in road works. About 12% of basic costs plus physical contingencieshas been allowed for price variationsassuming inflation rates as shown at the bottom of the cost table in the loan and project summary. These rates reflect recent worldwide estimatesand are relevant to Uruguay. Since it is the Government'spolicy to adjust the Peso/US$ exchange rate in line with respective inflation rates, and since constructionprices in Uruguay have moved in line with local inflationrates, a separate calculationfor domestic prices has not been considerednecessary. The cost per man-month for technicalassistance and consulting services is estimated to range from US$3,000 to US$9,000 with an average of US$6,000 per man-month.

Execution,Procurement and Disbursements

45. The executionof the project would be the responsibilityof MTOP. Vialidad would be the executingunit for all project componentsexcept the one dealing with transportsector planning,which would be carried out by the National TransportDirectorate. Vialidad has recently (1976) been strengthenedby the absorptionof the Directorateof Economic Development Works (DODE),a unit establishedwithin MOPT to executemajor internationally financed works, including the first bank project. DODE increasedconsiderably Vialidad'soperational capacity. Even after the absorptionof DODE, however, Vialidad still suffers from some scarcity of senior technicalstaff. Because of the extent of the roadworksunder the proposed project, Vialidadwould hire consultants,with qualifications,experience and terms of employment satisfacctoryto the Bank, to supervisethe civil works (Section3.01(d) of the Loan Agreement). In addition,a project coordinatorwould be appointed by the Government,not later than September 1, 1979, to serve as liaison between Vialidad and other agencies involved in the project. The project coordinatorwould representand be directlyresponsible to the Minister of Transportationand Public Works (Section3.01(c) of the Loan Agreement). To assist the consultantsemployed for the supervisionof civil works, the Governmentwould provide within the Departmentof Works of Vialidad at least two experiencedand qualifiedengineers as counterpartsfor the consultants - 15 -

(Section 3.01(d) of the Loan Agreement). As counterparts,on the other hand, of the consultantsemployed for the road rehabilitationand bridge improvementprograms, the Government would provide in Vialidad not less than one highway engineer,one bridge structure engineer and an economist (Section 3.02(b) of tlh -oan Agreement). The hiring of the consultantsfor the supervisionof civil works would be a condition of effectivenness(Section 5.01 of the Loan Agreement).

46. Procurementunder the project would be carried out in accordance with the Bank's "Guidelinesfor Procurement". Civil works for reconstruc- tion of Route 8 would be carried out on the basis of unit price contracts awarded in accordancewith internationalcompetitive bidding, procedures to prequalifiedfirms. The estimatedvalue of individual contractswould range from US$5 to to US$10 million, so that medium capacity local contractors would have an opportunity to bid. The civil works would be divided into four lots to be bid simultaneously. To facilitateparticipation by large contractors,bidders would be allowed one or more lots.

47. Project expenditureseligible for disbursementunder the Bank loan would be defined as follows:

(a) 42% of total constructioncosts for civil works;

(b) 51% of total expendituresfor the consulting services for (i) supervisionand civil works in construction,(ii) prepara- tion of a four-year program of rehabilitation,strengthening and reconstructionof national highways and a bridge improve- ment program, (iii) detailed engineeringfor selected highways; and

(c) 80% of total expendituresfor technicalassistance to improve transport sector planning.

Economic Evaluation

48. The reconstructionof Route 8 would benefit road users through vehicle operating cost savings (73% of benefits), time savings (16%) and accident savings (4%). In addition,benefits would accrue through savings of road maintenancecosts (7%). Given the highly competitivecharacter of the trucking industry and the reasonablebus tariffs set by the Government, the benefits from savings in vehicle operating costs are expected to be passed by and large to the users in the form of reductionsor more probably avoided increasesin transport tariffs.

49. For purposes of computing the project's overall economic rate of return, the 140 km of the road to be rehabilitatedwere divided into nine sections. On this basis, the overall economic rate of return for the civil works componentof the project (95% of the total cost) is estimatedat about 20%, with the nine sections of the road ranging between 43% and 11%. These results were obtained on the assumptionthat all nine sectionswill be recon- structed commencing in 1980. In addition,a sensitivitytest has been carried out assuming that the section with the lowest economic rate of return (section 9) - 16 - would not be included in the proposed project. Under the conservativeassump- tion that this would reduce the generatedtraffic of sections 1 to 8 only on the order of the traffic generated by section 9, the economic rate of return of section 9 would increase from about 11% to 14%, if the foregonebenefits of sections 1 to 8 from the lost generated trafficwere attributedto section 9. Sensitivitytests applied to the economic evaluationconsider a 15% increase in costs, a 25% decrease in benefits,no time savings and a two-yeardelay in the completionof the project. In the various cases, the overall rate of return is 18% (cost increase), 15% (benefitdecrease), 16% (time savings omission)and 15% (delay). The rates of return are furthermoreinsensitive to variationsof the shadow exchange and wage rates that could be applied within a reasonablerange.

50. An incrementalanalysis has been carried out for the first three sections (totalling17.7 km) for which a four-lane divided highway is proposed. Two alternativedesign standardswere compared with constructinga four-lane divided highway:

(i) staged construction: Stage I - completionof earthworksand constructionof one two-lane carriageway;Stage II - completion of constructionand addition of the second carriagewayin year 2, 5 or 10 after completing of Stage I; and

(ii) constructingonly a two-lanehighway parallel to the existing road.

The incrementalanalysis demonstratedthat constructinga four-lanedivided highway is economicallysuperior to alternatives(i) and (ii), and thus constitutesthe optimal solution for the project.

Risks

51. Particularattention was given during project preparationto the major sources of implementationproblems encounteredin past highway con- structionprojects in Uruguay. The procurementphase of the project presents no special risk. Past experiencewith similar projects in Uruguay, however, shows that delays in project implementationof one or two years were common, mainly because of inadequate projectmanagement. To help overcome the problem, the proposed project includes strengtheningof civil works supervi- sion by an experiencedconsultant firm.

PART V - LEGAL INSTRUMENTS AND AUTHORITY

52. The draft Loan Agreement between the Republic of Uruguay and the Bank, and the Report and Recommondationsof the Committeeprovided for in Article III, Section IV (iii) of the Bank's Articles of Agreementare being distributedto the Executive Directors separately.

53. Special conditionsof the loan are listed in Section III of Annex III. The hiring of the consultantsfor the supervisionof civil works in the constructionwould be a condition of effectiveness(paragraph 45). - 17 -

54. I am satisfiedthat the proposed loan would comply with the Articles of Agreement of the Bank.

PART VI - RECOMENDATION

55. I recommend that the Executive Directors approve the proposed loan.

Robert S. McNamara President

Attachments

April 5, 1979 ANNEX I - 18 -Pan 1

URUGUAY-WmL INDICATORS DATA SHET

URUGUAY nFEUNCE GROUPS (ADJUSTED AVRGZS

LAND AREA (THOUSAND SQ. 1K1.) - MOST RECENT ESTIMATE) TOTAL 177.5 SAME SAME NXT NIGHER AGRICULTURAL 154.4 MDST RECENT GEOGRAPHIC INCOME 1NOOE 1960 fb 1970 /b ESTIMATE Lb REGION/c GROUPLd GROUPLj

GNP PER CAPITA (US$) 630.0 900.0 1450.0 1066.7 1796.4 2839.0

ENERGY CONSUMPTIONPER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 825.0 930.0 942.0 911.1 1525.0 2376.4

POPULATION AND VITAL STATISTICS TOTAL POPULATION. MID-YEAR (MILLIONS) 2.5 2.7 2.8 URBAN POPULATION (PERCENT OF TOTAL) 72.6 78.1 80.6 57.9 52.2

POPULATION DENSITY PER SQ. KM. 14.0 15.0 16.0 25.6 27.6 55.8 PER SQ. KM. AGRICULTURALLAND 16.0 17.0 18.0 77.6 116.4 83.6

POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 28.0 28.3 28.0 42.0 34.8 40.0 15-64 YRS. 64.0 63.5 63.5 52.2 56.0 55.3 65 YRS. AND ABOVE 8.0 8.2 8.5 3.7 5.7 3.8

POPULATION GROWTHRATE (PERCENT) TOTAL 1.5 0.6 /f 0.4 /f 2.7 1.6 2.9 URBAN 2.8 1.2 1.0 4.3 3.4

CRUDE BIRTH RATE (PER THOUSAND) 23.0 22.1 20.4 35.8 27.0 31.7 CRUDE DEATH RATE (PER THOUSAND) 9.5 9.2 9.3 9.1 9.9 7.9 GROSS REPRODUCTIONBATE 1.4 1.4 1.4 2.6 1.9 1.6 PAMILY PLANNING ACCEPTORS, ANNUAL(THOUSANDS) ...... USERS (PERCENT OF MARRIED WHOMEN) ...... 15.1 19.3

FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1970-100) 90.0 100.0 99.1 102.1 103.8 114.7

PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 115.0 114.0 116.0 103.9 110.4 113.4 PROTEINS (GRAMSPER DAY) 93.0 96.0 98.1 60.3 77.7 89.9 OF WHICH ANIMAL AND PULSE 60.0 64.0 62.6 26.7 22.2 48.0

CHILD (AGES 1-4) MORTALITY RATE 1.8 1.3 1.1 8.7 1.9

HEALTH LIFE EXPECTANCYAT BIRTH (YEARS) 67.2 69.3 69.8 62.6 63.0 60.2 INFANT MORTALITY RATE (PER THOUSAND) 47.4 42.6 48.1 56.9 38.2 22.1

ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. 92.0 98.0 60.7 67.7 83.0 URBAN .. 100.0 100.0 78.0 83.5 100.0 RURAL .. 59.0 87.0 34.9 41.5

ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. 82.0 83.0 61.1 70.3 57.8 URBAN ., 97.0 97.0 80.3 90.7 99.3 RURAL .. 13.0 17.0 25.4 38.3

POPULATION PER PHYSICIAN 1100.0 /g 940.0 910.0 /h 1899.3 1310.8 976.9 POPULATION PER NURSING PERSON 7680.0 3340.0 3530.0 /h 1220.1 849.2 676.1 POPULATION PER HOSPITAL BED TOTAL 180.0 150.0 .. 422.3 275.4 325.8 URBAN ...... 258.2 129.9 250.0 RURAL ...... 2281.6 965.9 770.0

ADMISSIONS PER HOSPITAL BED ...... 25.6 18.9 18.7

HOUSING AVERAGESIZE OF HOUSEHOLD TOTAL 3.8 L .. .. 5.2 3.9 URBAN ...... RURAL ......

AVERAGENUMBER OF PERSONS PER ROOM TOTAL 1.5 ft *- * 2.0 0.9 URBAN 1.5 /t .. .. 2.1 0.8 RURAL ...... 2.7 1.0

ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL 78.0 t .. .. 51.2 59.2 URBAN 88.0 L .. .. 77.3 78.0 RURAL 29.0 t .. .. 12.8 12.5 ANNEX I - 19 - P 2

URUGUAY- SOCIALINDICATORS DATA SHEET

URUGUAy REFERENCEGROUPS (ADJUSTED AVERAGES - OST RECENTESTIMTE) SANE SAXE NEXT HIGEER MOSTRECENT GEOGRAPHIC INCOME INCOIIE 1960 /b 1970 /b ESTIMATE/b REGION/c GROUP/d GROUP/e EDUCATION ADJUSTED ENROLLMENTRATIOS PRIMARY: TOTAL 111,0 106.0 95.0 103.5 97.6 104.1 FEMALE 112.0 103.0 94.0 102.9 87.4 120.3

SECONDARY: TOTAL 37.0 57.0 62.0 37.2 47.8 44.7 FEMALE 38.0 63.0 68.0 37.9 42.6 46.0

VOCATIONAL (PERCENT OF SECONDARY) 23.0 21.0 19.0 14.7 22.7 18.7

PUPIL-TEACHER RATIO PRIMARY 31.0 29.0 23.0 32.8 25.4 30.6 SECONDARY 13.0 .. .. 17.8 24.9 16.3

ADULT LITERACY RATE (PERCENT) 90.0 91.0 94.0 74.9 96.3

CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 39.0 45.0 55.0 26.9 32.3 53.4 RADIO RECEIVERS PER THOUSAND POPULATION 285.0 346.0 495.0 173.5 201.9 195.5 TV RECEIVERS PER THOUSAND POPULATION 9.0 52.0 116.0 69.4 97.7 108.4 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION .. 140.0 .. 72.8 70.9 108.0 CINEMA ANNUAL ATTENDANCEPER CAPITA 9.0 .. .. 4.3 4.4

EMPLOYMENT TOTAL LABOR FORCE (THOUSANDS) 1000.0 /i 1020.0 1200.0 FEMALE (PERCENT) 24.6 27.5 28.5 21.4 17.4 26.9 AGRICULTURE (PERCENT) 18.0 17.0 13.2 37.8 38.4 25.7 INDUSTRY (PERCENT) 29.5 31.2

PARTICIPATION RATE (PERCENT) TOTAL 40.1 38.6 38.5 30.8 33.7 40.1 MALE 60.6 56.4 55.5 47.2 50.8 55.8 FEMALE 19.7 21.1 21.8 13.2 12.6 24.7

ECONOMIC DEPENDENCY RATIO 1.0 1.0 0.9 1.7 1.4 1.6

INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS 19.0 /j 28.9 20.2 HIGHEST 20 PERCENT OF HOUSEHOLDS . 47.5 1J .. 57.7 47.9 LOWEST 20 PERCENT OF HOUSEHOLDS . 4.4 .. 3.2 3.2 LOWEST 40 PERCENT OF HOUSEHOLDS .. 14.2 /1 10.7 13.7

POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. . 251.92. RURAL 183.0 200.6 157.9

ESTIMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. . 551.0 403.1 448.8 RURAL . 257.0 258.0 313.1

ESTIMATED POPULATION BELOW POVERTY INCOME LEVEL (PERCENT) URBAN . .. 26.0 24.8 23.2 RURAL . .. 30.0 65.2 54.5

Not available Not applicable. NOTES

/a The adjusted group averages for each indicator are population-weighted geometric means, excluding the extreme values of the indicator and the most populated country in each group. Coverage of countries among the indicators depends on availability of data and is not uniform.

/b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1973 and 1977.

/c Latin America & Caribbean; /d Upper Middle Income ($1136-2500 per capita, 1976); e High Income (over $2500 per capita, 1976); /f Due to emigration during 1960-70 and 1970-75, population growth rate is lower than rate of natural increase; /f 1962; /h 1972; Li 1963; aj 1967.

Septeaber, 1978 Z a = OC C OC; E08 a o cV3n a-°- C OCF° CC o c,s.5 fc4W-!v

_ - a. ar=, n,a> 'rY

o *-F .0CE .EF .o aEECnO _Yuu C.

I tsZC b b " _ < o > 8 C~~~. bn . C__ov__a bE V, nus

- !2Zv - P>a3N -C

_ no V FEC _ _ n >>u E tLEE D:

4~~~~3 . ~ ~~~~ .--. 0oi

_~~~~~~~_t .-- 00 FEOFOOec EX3o 82rb o

_ _ _ ZE S 0cE

e EO a . FE 2E. n -

_ ZZ LO

.01,Cz. C [LHC. U .R -21- ANNEXI

DRPINTTI W #I:IAL INICATORs Page s

Notes: Although the dota are drawn from courses generally judged the t-t astheritative And relibla, it aheold lse ha noted that they may not be ieter- nationally coeparahie because of the lack of standardized definitiona and cencepte used by different ceontries in collecting the data. The data are, nonethelese, useful to describe orders of megnitude, indicate trende, and characterise certain mjor differancee between ceuntries.

The adiuuted group averages for each indiostor are population-weighted geematrio mea.ns,eerludigs the estreme v-lue- of the indicator and the meat populated country in each group. Coverage of countries amongthe indicators depends en Availability of data and is not onifrm. Dfe to ltck of data, gro_p averages for Capital Sorplos Oil Enporters and indicators of access t water and encreta disposal, hbsaing, income distribtiom and povarty are saiple population-a ighted geometric teens without the excluslon of extreme valus

LANDAREA (thousand q. kn) Population por hospital bed - total, urban. And rural - Population (total. Total - Total surface ares comp,isiog land er-a a l-n d eters, urban, And rural) divided by their respective smber of hospital bads Agricultural - Most recent estimate of agricultural sre used temporarily available in public And private general and specialized hospital and re- or peoanently for crops, pastures, narkat and kitchen gardens or to habilitatien centers. Hospitala are astablishmente permanently staffed by lie fAllow At la.at one physician. Eetzblihmants providing principally custodial care Ae nt included. Rural hospitals, however, include health and mdi- CNPfiR CAPITA (10$) - GNP per capita estimates at current market prices. cal centers not permanently staffed by a physacian (but by a medical ae- calculated by 0000 conversion method as World Bank Atlas (1975-77 bsi): sistant, nurse, midwife, etc.) which offer in-patient acceadation and l9h0, 192, and 1977dota. providea limitedrange of medicalfacilities. Admisaiona per hospital bed - Total number of deiseLens to or disuhargas ENERGY CONSUMPTIONPER CAPITA - Annual consumption of comercial energy from haspitals divided by the sumberof beds. (coal and lignite, petroleum, catural gas and hydro-, nuclear and geo- thermal el_riricity) in kilograms of coal equivalect per c-pita. HOUSING Average aie of household (persons per household) - total, urban, and rural- POPULATION AND VITAL SIATIISTICS A bussehuld consists of a group of individuals who share living quarters Total Population mid-vear (millions) - Ar of July 1; if net available. and thair main meals. A boarder or lodger may or may not be included in overage of two end-year estimates; 1960, 1970, and 1977 datae 1 the household for statistical purpase. Statistical definitions of hbuae- Urbun porultaion (cect of total) - Ratio of urhan to total pepu a- hbld vary. t,ns; different definitions of urben areas may affect comparability Average number of personsPer room - total, urban, and rural - Average num- of data umnongcuotries. ber of persona per room in all,urban, end rural occupied conventional Population density dwellings, respectively. Dwellings exclude non-permnent structurs and Per sq. k. - Mid-year popula.tos per square kilameter (100 hectares) unoccupied parta. of total area. Access to electricity (Percent of dwellings) - total, urban, nd rural - Per sq. kh. agriculture land - Computed as above for agricultural land Conventional dwellings with electricity in living quarters as percentage only. of total, urban, and rural dwellings respectively. PopulatioA age srcucture (percent) - Children (0-14 years), working-age (15-64 years), and retired (61 years and over) as percentages of mid- EDUCATION year populatio... djuste enolmntrtios P.opulation growth rate (percent) - total, and urban - Compound annual Primyechou1 - total. and female - Total and female enrollment of all Ages growth rutes of total snd urban mid-year populations for 1950-60, at the primary level as percentages of respectively primary school-age 1960-70. and 1970-75. populations; norlly includen children aged 6-11 years but adjusted for Crude birth rate (per thousand) - Annual live births per thousand of different lengths of primary educatico; for countries with universal adu- mid-your population; tea-year arithetic averages ending in 1960 and cation enrollment may ecceed 100 percent aice some pupils are below or 1970 and five-year aretago ending in 1975 for most recent etimate, bove the official school age. Crude deuturate (pet thousand) - Annual deaths per thousand of mid- Secendacyschool - total. and fem1e - Computed As above; secondary edoca- year poyluction; ten-year arithmetic averages ending in 1960 and 1970 tion requires at least four years of approved primary instruction; pro- and fire-pysr average ending in 1975 for most recent eAtimate. vides general vocational, or teacher training instructions for pupils ross production rate -Average nu bnr of d-ughtnesw Aa n will boar usually of 12 to 17 years so oge; correspondente .oursas are groansly in her nornal reproductive period if she experiences present age- excluded. specific fertility rates; osually five-year averages ending in 1960, Vocational enrollment fPercemt of secondary) - Vocational institutions in- 1970, and 1975. clude technical, industrial, or other programs which uperact independently Family plannIng - euceotore. annual (thousands) - Annual nsober of or as departments of sucondary institutions. acueptors of birth-control devices under auspices of national family Pupil-teacher ratio - primarc, And secocdary - Total students enrolled in puonning progra. primary and secondary levele divided by numbers of teachers in the orre- aunilyploning - user (corcont of etrried umeni - Percentage o£ spending levels. marrrid on.en of child-bearing Age (15-44 years) who use birth-control Adult literacy rate (peresnt) - Literate adults (eblb to read and ritce) a de-ices to ol married womee in .s.e age group. a percentage of total adult population aged 15 years end over.

POOl AllD NUTRITI0N CONSUMPTION Index of food production per c-pita (1971-100) - Index number of per Pasenger care (per thousand pupulation) - Passenger cars comprise motorcare ropita annual production of all food coenodities. seating lees than eight persons; excludes ambulances, hearses And military Per capita supply of uglories (percent of reaqireaenta) - Computed from vehicles. energy equivleunt of net food supplies available in country per capita Radio receivers (per thousand popslation) - All types of receivers for radio per day. A,,ilablh supplien ronprise domestic production, inports less broadcasts to general public per thousand of population; excludes unlicensed euports, a_l changes in stock. Net supplies esciufe animal feed, seeds, receivern in cosntries and in year when registration of radio sets was in q-antitiet -d in food proues.ing, and losses in dietribhtiono Re- effect; data for recent years may not be comparsble since Aost countries qu4ireect- once- otiatod by FAO bhsed on physiological needs for nor- abolished licensina n. uctiohcy and health cuosidoring coviro-tental cmpeesture, body TV receivers (per thousand pooplution) - TV receivers for broadcast to ganert -.'rghru, ogound,too dictrihutiuns of pupudlation,und allowing 10 per- public perithousan,d Population; occludes unlicensed TV recivers in noun- ucuc for wuas or household. leol.. tris a Innd ye h registration of TV sets ws in effect Per c-cituuu_uly of protein (grams Par day) - Protein content of per Newepapur circulation retthounsed population) - Ohows the average circ.le- capita net supply of 1usd per day. Net supply of food is defined As tion of "daily general interest newapaper", defined as a periodicsl publi- aovoeo Roquir-omnts fur all countrios establiehad by USDA provide for cation devoted primarily to recording general nes. It is considered to I nicimur ullowo.c. of h0 gruto of total protein per day And 20 grams he "daily" if it appeare at leant four tines A Week. o£ animal and pulse prutein, of whiuh 10 grams should be animal protein. Cinema ansual attendanue par capita per year - eased on the number of tickets These standardn are lower than th.o. uf 75 gras of total protein snd sold during the year, including edmissions to drie-in cinemas and mobile 23 .ruro oEf ninul prtoin uu as average for the wtrld, proposed by units. Pvo in oho Third World Food Surry. fry pi:± pcrotein oupply fron sninal and pulse - Protein supply of food fNLOYMlENT laty fron animals and pulses in grams per day. Total labor force (thbouands) - Ecoon.irally active persona, including armed Childj44jj 1-4) mortulity rote (per thousand) - Annual deaths per thous- forces and unenployed but enuluding housewives, students, et. Defini- and in ago group 1-4 -oors, to childuen in this age group. tions in various u.untrien are not cumparable. femal (percent) - FPEna1 labor force as percentage of total labor force HEALTH Ariculture (percent) - Lahbr force in farming, forestry, bunting and fihing Life urpctot-cy at birth yearn) - hvnrage number of yeare of life as percentage of total labor force. rroui',ccg at birti; usually five-yeor averages ending in 1960, 1970, Industrv (percent) - Labor force in mining, uonstruction, manufauturing end und 1971. electriciy, water end gas as percentage of total labor force. Icfhuo ucraulact cuco (per tifousnod) - Annual deaths of infants under Participation rate (percent) - tol, mol. and fema1e - Trial, male, sod one yeor cf age per thousand live btrhts. fonale labor force as porunrtagen of their respective populations. Acuona to safe water (peruent of population) - total, urban, and rural - These are no's adjusted participation rates reflecting ags-ten uhet.. of poople (rual, urban uod rural) with reasonsble orras tc structure of the populatio, dnd 1-g tice rrnd. uuce uoter supply (includes treated surfaue waters or untreated but Eoonomic doe2ndency ratio - Ratio of pupulation ucder 15 and 65 and over to u_cunrunhcuted water tuch an that from protected boreholes, springs, the labor forue in sge group of 15-64 yert. uud --sotury w-ls1 as percentageu of their respective populations Io an urban uare a publcc fountain ut standpost located not more INCOlE DISTRIBCTION thon 200 meterstorn a hboue may be uonsidered An being within rea- Perce.tage of private income (buch in cash and kind) received by rirhast 5 so.able -oceus of trit huose. In rurtu areas reasonable a-cess would percent, richest 20 percent, poorest 20 percent, and pocrest 40 percent imply cur the icuseui_ or nesber of tho household do not harv to of households. opori a opropurtiunuto part of the day in fetching the family's water oeedu POVERTn TARGET GROUPS Acresc.. tu _eta dinposl (percercuf pupulacioni - tontl urban, sod Etimatfd sabslute pOv-rty inccno laev (US$ per cayire) - urban and rural - rur - NlNumber of psoplo (tutal, urban, und rural) served by encreto Absulute poverty i.ccue level is that imoose levl below which a nininal disp-sal uc percentages ut their ropyctin populations. Efsreta nutrit.onully adequate dint plu- esential non-food requirements is not di.poual may include the collection and disposal, with or without affordable. I.reatmet, of huruu eucroea and oaste-water by water-borse nyste.s Eltimated relative poverty income level (USS per capita) - urban sod runal - ,r she uno of pat prc_cs and nimilur installations. Relative poverty incnoe level is that income level less than one-third per capits perscnal incoer of tho country. P1o1, ione n_ -1 ph_ysiu - PopuLstion dinided by nunb-r of practicing p',u' d; zualiiird cofna urdical school ot unicerity leelE. reeated populatiot below puveny incoe lovel fuerceni) - urban aud rrat.l Pnpc½r._ u Ke _siogperson frpucli-c divided by number uf Percent of polatict (urhac und rural) uuone either "absolute pour" ur pru_-a: ing .d -Iaoeulu goadauto torsoe, ptcntfe-l nurses, and "relative puur" whicbhe-r is groater and, ruut cur qo- Economic and Sicial Data Division Econn.Ic Analysis and Projoction. DAp-rtment - 22- ANNEXI Page 5

(Amounts in millions of US DoTArs

ActualPrecd 1974- 1977- 1979 -17 98 18 1974 1976 ~1977 1978- 1979 1.963 1977 1979 1983 RATIONAL ACCOUNTS At 1975 - PricesS Exchange Rates Average Anual Growth Rates As Percent of GDY Gross Domestic Product3,9 372 3,746 3,896 4,064 4,761 2.4 4.2 4.2 955 9. 98. Gains from Terms of Treade () 5 -3 -811 34 77 . . .1.5 0.3 1. Gross Domestic Income 3,552 3,697 3,728 3,907 40-98 INs 1.6 4.9 4'.3 j~l tr !U

Import (incl. NipS) 557 646 775 759 827 998 8.16 3.3 4.8 15.7 19.4 20.6 Exports (import capacity) 470 639 744 780 787 1,023 16.4 2.9 6.8 13.2 20.0 21.1 Resource Gap -T7 -7 -31 -21 2r0 -775 . . 2.5 -0.6 -0.5

Consumption Expenditures 3,270 3,250 3,230 3,320 3,489 3,885 -0.4 3.9 2.7 92.1 85.0 8023 investment 1 (inc. stocks) 370 454 529 566 646 928 12.7 10.8 9.4 10.4 14.5 19.2

Domestic Savings 283 447 498 587 609 953 20.6 10.6 11.7 8.0 15.0 19.7 National Saving 259 399 451 520 558 897 20.2 11.2 12.4 7.3 13.3 18.5

MERCHANIDISETRADE Annual Data at Current Prices As Percent of Total

Imports Capital goods 38 114 130 149 178 316 50.8 17.0 15.4 7.7 18.8 22.2 Tntermediate goods amL.fuels) 250 233 325 354 411 671 9.1 12.5 13.0 50.6 44.8 47.2 Fuels and related materials 161 181 227 239 284 364 12.2 11.1 6.4 32.6 30.2 25.6 of which: Petroleum Cons u'tion goods 45 54 48 49 53 72 2.2 5.1 7.9 9.1 6,2 5.1 Total Merch. Deports (cif') 494 582 730 791 926 1,423 13.1 12.7 11.3 100.0I iD0U'fTO Exports Primary products ~sc1.fuels) 314 393 364 377 440 755 5.1 9.9 14.4 59.5 52.8 56.5 F'uelsand related mnaterials - - of which: Petroleum - - - - - Ma nufatrd goods 67 172 248 337 338 582 54.7 10.9 14.6 40.5 47.2 43.5 Toal MrhExots (fob) 381 365 fl 1 7 137 17.2 12.7 14.5 I~h X6D 17 Tourism and Border Trade

Merchandise Trade Indices Average 1975 - 100 Export Price Index 126 101 114 125 138 187 -1.4 10.0 7.9 Import Price Index 106 109 117 124 133 170 3.4 6.6 6.3 Terms of Trade Index 119 93 97 101 104 110 -6.6 3.5 1.4 Exports Volume Index 79 148 142 148 155 203 21.6 4.5 7.0 vALUE ADDED BY SECTOR Annual Data at 1975-- Prices and Exchange Rates Average Annual Growth Rates As Percent of Total

Agriculture 357 370 370 362 371 425 1.2 0.2 3.5 11.8 10.6 10.1 industry and Mining 9 72 1,102 1,127 1,197 1,279 1,610 5.1 6 2 4 6.5 5.9 32.1 34. 38.3 Service 1,697 __j,761 8~41 ,...8 1,t91 1 1j69 2.6 2.0 3.2 56.1 5.jj6 _..J6 Total 3,025 3,234 3,338 3,421 3,564 4,204 3.3 3.3 4.2 100.0 100.0 100.0

PUJBT.ICFINANCE (in current US$) As Percent of GDP (Centra Go~v-ernment) Current Receipts 588 1,722 2,938 4,495 6,610 22,835 71.0 50.0 36.3 14.4 14.9 15.5 Current Expenditures 709 1,808 2.796 4.225 6.160 20,330 58.6 48.3 34.6 17.3 14.0 13.8 BhsdgetarySavings -121 -86 142 270 450 2,505 . 78.0 53.5 -2.9 0.9 1.7 Other Public Sector 54 245 255 390 575 2,210 67.5 50.0 40.0 1.3 1.3 1.5 Public Sector Investment 182 573 1,009 1,325 2,025 7,070 77.0 41.9 36.5 4.4 4.6 4.8

US $ mi ilon CURRENT EXCPENDITUREDETAILS Actual Prelim. Eat. Proj. DETAIL ON At end 19 75 P and ER As 5 Total Current Expend.) 19 75 1976 19 77 1978 1983 PUBLIC SECTOR First Plan of Total, Education . . . . . INVESTMENTPROGRAM (1976/81- 1976 /81) Other Social Services...... Social Sectors 118 11.0 Agriculture ...... Agriculture 233 21.8 Other Economnic Services . . . . . Indlustry and Mining 108 10.1 Administration and Defense . . . . . Power 314 29.3 Other Transport and communications 224 20.9 Total Current Expenditures . . . . . Other 74 6.9 ______Total Expenditures 1,070 -

SELECTED INDICATORS 1960- 1965- 1970- 1978 - FINANCING (Calculated from 3-year averaged data) .1965 1970 1975 19%3 Average ICOR rr.39 37T .M3 - Public Se,ctor Savings 438 40.9 Import Elasticity -6.40 6.57 -0.08 Program aid counterpart 487 45.5 Ddo'ginal Domestic Savings Rate 0.14 -0.14 0.19 Foreign Project Aid 145 13.6 Marginal National Savings Rate 0.04 -0.17 0.16 Total Finanicing 1,070 15.7o

LABOR FORCE AND) Total Labor Force Value Added Per Worker (1975 Prices & Exc. Rates) OUTPUT PER WORKERN In Millions %6of Total 1963 - 75 in U.S.Dollars Percent ofAv-ernge 1963 - 75 1963 19 75 1963 19 75 Growth Rate 1963 1975 .1963 1975~ Growth Rate

Agriculture 0.18 0.21 17.9 19.8 1.3 2, 366 1,762 0.79 0.60 -2.2 Industry 0.26 0.31 25.7 29.0 1.5 3,519 3,439 1.18 1.16 -0.2 Service 0.56 0.55 36.4 51.2 -0.2 2,932 3,143 0.98 1.06 0.6 Total IDU 177 IOWNTW. i 75) flG' fl0 -0.1

not applicable - nil or niegligible not available -- less than half the smallest unit shown BAIANCE OF PAYMENTS, EXTERNAL ASSISTANCE AND DEBT 7amounts in milliais of U.S. dollars at current prices)

Avg. Annual Actual Estimated Projected Growth Rate 1974 1975 1976 1977 19 78 1979 1980 1981 19 19R3 1978-1983

SuMMARY8ALANCE OF PAYMhNTS

Exports (incl. NFS) 500.0 551.0 696.0 871.0 968.0 1,047.0 1,178.0 1,324.0 1,517.0 1,')9.0 14.1 Imports (incl.jNFS) 500.0 676.0 704.0 907.0 941.0 1,100.0 1,247.0 1.402.0 1,533.0 1,696.0 12.0 Resource alance X-M) -93.0 -125.0 - 8.0 -36.0 27.0 -53.0 -69.0 -78.0 -16.0 43 0

Interest (net) -26.0 -42.0 -50.0 -44.0 -42.0 -39.0 -44.0 -51.0 -60.0 -68,0 14.1 Other Factor Services -16.0 -30.0 -24.0 -23.0 -30.0 -28.0 -30.0 -33.0 -37.0 -40.0 9.9 Workers' Remittance _- _- _ _ _ _ CurrentTr nsaes (net) 17. L 7.0 .0 10.0D.0I 11.n 12.0 10.2 Balance tAccounts -118. .0 -74.0 -97.0 -38.0 101.0

Private Direct Investment ------Official Capital Grants 5.0 5.0 5.0 *

Public M5LT Loans Disbursements 289.0 284.0 215.0 205.0 152.0 174.0 203.0 212.0 238.0 259.0 5.8 -Repaysmnts -125.0 -182.0 -148.0 -187.0 -107.0 -100.0 -103.0 -102.0 -125.0 -141.0 5.7 Net Disburserents 164.0 102.0 67. --178.0 4.( 74.0 T10.0 110.0 3TTJ 118.0 6.0

Other M< Loans Disbursements -Repymtents Ne Disbursements -20.0 -94. 47.0 I,___ 25.0 25.0 73.0 72.0 _278 Actul-3i.0 -°7.0 Estimated Capital Transactions n.e.i. -B9.0 103.0 66.0 139.0 187.0 .~36.0 -38.0 1974 1975 1976 1977 1978 Change in Net Reserves 58.0 73.0 -112.0 -161.0 -194.0 DEBT AND DEBT SERVICE GRAtlT AND LOAN COMMITMENTS Public Debt Out. & Disbursed 516.0 615.7 684.3 707.0 795.2 Official Grants & Grant-like 5.3 5.4 - - Interest on Public Debt 30.8 46.1 57.2 56.3 67.1 Repayments on Public Debt 125.3 181.9 148.3 186.8 107.4 public BLT Loans Total Public Debt Service 156.1 228.0 205.5 243.1 174:5 IBRD - 52.0 - - Other Debt Service (net) ...... IDA - - - Total Debt Service (net) ......

Other Multilateral 21.8 60.1 - 15.0 Burden on Export Earnings (%) Governments 107.2 20.1 3.8 - Suppliers 16.4 27.2 3.9 1.6 Public Debt Service 31.2 41.4 29.5 27.9 18.0 Financial Institutions 51.0 245.9 84.6 83.6 Total Debt Service ...... Bonds 190.0 111.8 35.0 130.0 TDS+Direct Invest. Inc. 34.4 46.8 33.0 30.6 21.1 Public Loans n.e.i. -c-4- Total Public MALT Loans 386.4 517.1 127.3 230.2 Average Terms of Public Debt

MTERAL DEBT Debt Outstanding on Dec. 31.1977LActual Int. as % Prior Year DO&D 9.0 8.9 9.3 8.2 9.5 World Bank 42sbia.se Only Percent Amort. as % Prior Year D&D 36.4 35.3 24.1 27.3 15.2 WDA 75.6 10.7 Other ultilateral I.. IBRD Debt Out. & Disbursed 70.8 69.4 71.2 75.6 74.2 Governments 48.0 6.8 " as % Public Debt O&D 13.7 11.3 11.6 10.7 9.3 Suonliers 122.2 17.3 l as % Public Debt Service 7.3 4.9 5.8 5.7 7.2 Financial Institutions 30.7 4.3 Bonds 143.1 20.2 IDA Debt Out. & Disbursed Public Debts n.e.i 287.4 40.7 " as % Public Debt O&D Total Public M< Debt 'l as % Public Debt Service 707.0 100.0' Other M<Debts Short-term Debt (disb. only)

not applicable e staff estismte

... not available separately nil or negligible but included in total -- less than half the smallest unit shown - 24 -

ANNEX II Page 1

STATUS OF BANK GROUP OPERATIONS IN URUGUAY

A. Statement of Bank Loans (as of February 28, 1979)

(US$ million) Amount Loan (less cancellations) No. Year Borrower Purpose Bank Undisbursed

Eleven loans fully disbursed 155.1 -

1166 1975 Rep. Oriental Fifth Livestock del Uruguay Development 17.0 6.9

1176 1975 Rep. Oriental Industrial Development del Uruguay and Export Expansion 20.8 7.9

1594 1/ 1978 Rep. Oriental Vocational Training and del Uruguay Technological Development 9.7 9.7

Total (net of cancellations) 202.6 24.5 of which has been repaid 105.1

Total now outstanding 97.5 Amount sold 4.7 of which has been repaid 3.3 1.4

Total now held by Bank 96.1

Total undisbursed 24.5

1/ Not yet effective. - 25 -

ANNEX II Page 2

B. Statementof IFC Investments- February 28, 1979

Type of (Amount in US$ million) Year Obligor business Loan Equity Total

1976 Fabrica Uruguaya de Motorvehicles 3.80 - 3.80 Neumaticos and acessories

1979 Acodike Supergas S.A. Chemicalsand .95 - .95 petrochemicals _

Total gross commitments 4.75 4.75

Less cancellations,terminations, repaymentsand sales

Net held by IFC 4.75 4.75

Total undisbursed 3.45 - 3.45

C. Projects in Execution

Loan No. 1166-UR Fifth Livestock Development,US$17.0 million, October 15, 1975; (Date of Effectiveness: February 13, 1976; Closing Date: June 30, 1979).

Project disbursementsare more than a year behind appraisal forecasts. As of February 28, 1979, actual disbursementsamounted to only US$10.1 million, compared to the US$17 million projected at appraisal. However, the Government has issued a series of policy measures since August 1978 that have drastically improved the heretofore unfavorablerelationship between prices of inputs and outputs in the livestocksub-sector and the Government expects that the improved investmentclimate will result in a disbursementof most of the balance available from the loan (about US$6.9 million) by the end of 1979.

Loan No. 1176 IndustrialDevelopment and Export Expansion Project: US$20.8; December 4, 1975; (Date of Effectiveness: April 8, 1976; Closing Date: December 31, 1979

Project implementationremains slow. Faster commitmentsand disburse- ments, however, can be expected due to: (i) recently higher interest rate of competitivecredit lines, especially.eurodollar loans, (ii) new legislation that will speed up obtention of fiscal incentives,and (iii) a larger pipeline of export subprojects(US$9.9 million as of November 14, 1978). The administra- tion of the project, on the other hand, has become weaker due to continuous loss of operational independence of the appraisal and supervision unit under the project. The Bank has notified the government of the need to find an institutional solution. No later than June 30, 1979, the Bank together with the government will review the performance of UAT under the provisional arrangement accepted by the government to consider which other actions, if any, should be taken. - 26 -

ANNEX II Page 3

Loan No. 1594 Vocational Training and TechnologicalDevelopment: US$9.7 million; June 23, 1978; Closing Date: June 30, 1983

This loan has not yet become effective. - 27 -

ANNEX III Page 1

URUGUAY

SECOND HIGHWAY PROJECT

SupplementaryProject Data Sheet

Section I - Timetable of Key Events

(a) Time Take to Prepare Project: Twenty montNs (May 1977-January1979)

(b) Agency which Prepared Project: MOPT and Consultants

(c) First Presentationto the Bank: May 1977

(d) First Bank Mission to Review Project: May 1977

(e) Appraisal Mission Departure: August 1978

(f) Negotiations: March 1979

(g) Planned Date of Effectiveness: September1979.

Section II - Special Bank ImplementationActions

None

Section III - Special Conditionsof Bank Loan

(a) Vialidad will reorganize its accounting system to show, from 1980 onward, itemized expendituresof routine and periodic maintenance,minor improvementsand construction(paragraph 29).

(b) The Government will exchange views annually with the Bank during the per.iodof project execution on its maintenanceprogram and related budgetaryproposals in order to review the programs of periodic maintenance for paved roads, as well as renewal and acquisitionof equipment and assistance to departmentsfor road maintenance (paragraph29). - 28 -

ANNEX III Page 2

(c) The Borrower would carry out an intermodalcomparison study to assist in the coordinationof transportpolicies and investments(paragraph 31).

(d) When cofinancing arrangementsare completed, the draft Loan Agreement shall be amended to include: (i) a cross default clause; and (ii) a skewed amortizationschedule of the Bank loan so that approximatelyequal amortization payments would amortize both loans and a provision that disbursementsbe conditionedon the co-lender's loan having been fully disbursed for civil works under the project (paragraph43).

(e) Vialidad would be the executing agency for the civil works and related supervision(paragraph 45).

(f) A conditionof effectivenesswould be the hiring of con- sultants for the supervisionof civil works (paragraph45).

(g) The borrower will employ consultantsfor the supervisionof civil works, a four year rehabilitationprogram, engineeringstudies for the first two year period of this program, for a bridge improve- ment study and to strengthenthe transport planning unit. The qualifications,experience and terms and conditionsof employment shall be satisfactoryto the Bank. The borrower shall likewise appoint a project coordinatorto liaison between Vialidad and all other agencies involved in the execution of the project (paragraph 45). IBRD 1422

N , S~~~~~~~~~~~~J

7

-~~~~~~%

A,7

CM ,i W 1,,RK

"7.7,>~ ~ ~~O