Document of The World Bank Public Disclosure Authorized ReportNo. 15109-PAN STAFF APPRAISAL REPORT Public Disclosure Authorized THE REPUBLIC OF PANAMA BASIC EDUCATION PROJECT Public Disclosure Authorized FEBRUARY 29, 1996 Public Disclosure Authorized Country Department II Human Resources Operations Division Latin America and the Caribbean Regional Office CURRENCY AND EQUIVALENT UNITS US$ 1.00 = 1.00 Balboa (B) FISCAL YEAR January 1 - December 31 SCHOOL YEAR March-December GLOSSARY OF ACRONYMS CAS Country Assistance Strategy CEFACEI Community and Family Center for Initial Education (Centro Familiary Comunitario de EducacionInicial) COIF Center of Infant and FamnilyOrientation (Centros de Orientacidn Infantily Familiar) ERP Economic Recovery Program ERL Economic Recovery Loan FES Social Emergency Fund (Fondo de Emergencia Social) GDP Gross Domestic Product GNP Gross National Product GOP Government of Panama ICB International Competitive Bidding IDB Inter-American Development Bank IFARHU Institute for Training and Progress in Human Resources (Instituto para la Formaci6n y Aprovechamientode RecursosHumanos) IFI International Financial Institutions LIB Lirnited International Bidding MIPPE Ministry of Planning and Economic Policy (Ministerio de Planificaci6n y Politica Econ6mica) MOE Ministry of Education (Ministerio de Educaci6n) NCB National Competitive Bidding NGO Nongovernmental Organization OAS Organization of American States PAU Project Administration Unit SOE Statement of Expenses UNESCO United Nations Educational, Scientific,and Cultural Organization USAID United States Agency for International Development THE REPUBLIC OF PANAMA BASIC EDUCATIONPROJECT STAFFAPPRAISAL REPORT TABLE OF CONTENTS 1. INTRODUCTION....................... I A. ECONOMICAND SOCIAL SETTINO ....................... 1 B. THE EDUCATIONSECTOR ...................................................................................................... 2 (1) TheEducation System ............................................. 2 (2)Key Issues ........................................... 5 (3) GovernmentStrategy ........................................... 7 C. LESSONSLEARNED AND RATIONALE FOR BANK INVOLVEMENT ........................................... 8 (1)Lessons Learned ........................................... 8 (2)Rationale f Baor Involvementnk ............................................ ,. .................................9 2. THE PROJECT ........................................... 10 A. PROJECTCONCEPT AND OBJECTIVES ................................................................................................................. 10 B. PROJECTTARGET AREAS ........................................... 10 C. PROJECTCOMPONENTS ............................................................................................................. 10 D. PROJ ECTDESCRIPTION .............................................................................. 11 (1)Component I -Improvementof Qualityof, and ExpansionofAccess to, Primaryand Lower SecondaryEducation...................... ,,,..,,,,,..,,.,,.,...11 (2) Component2 -Expansionof Non-Formal Pre-School Education ., 14 (3)Component 3 -InstitutionalStrengthening of the Mvinistryof Education..................................................... 17 3. PROJECT COSTS AND FINANCING..................................................... 18 A. PROJECTCOSTS ...................................................... 18 B. PROJECTF INANCING.............................................................................................. ................................ 19 C. INCREMENTALRECURRENT EXPENDITURES AND PROJECT SUSTAINABILITY .................................................... 20 D. PROCUREMENT.................................................... 21 DISBURSEMENTSE . .................................................... 26 F. ACCOUNTINGAND AUDITING .................................................... 27 4. PROJECT IMPLEMENTATIONAND MANAGEMENT.................................................... 27 A. PROJECTIMPLEMENTATION AND MANAGEMENT .................................................... 27 B. PROJECTMONITORING AND SUPERVISION .................................................... 28 5. PROJECT BENEFITS AND RISKS.................................................... 29 A. PROJECTBENEFITS AND ECONOMIC RETURNS .................................................... 29 B. IMPACTON WOMEN........................................................................................................................................... 30 C. ENVIRONMENTALIMPACT ....................... 30 D. PARTICIPATORYAPPROACH ....................... 30 E. PROJECTRiSKS ....................... 30 F. PROGRAMOBJECTIVE CATEGORY ....................... 31 6. AGREEMENTS REACHED AND RECOMMENDATION............................................ 31 ANNEXES............................................ 32 Thisreport is basedon thefindings of the appraisaland post-appraisal missions that visitedPanama in May and July, 1995,respectively. Mission members were C. Chiappe(Task Manager); M. Vera,E. Waters,and H. Yang (LA2HR);M. Mathov(OBPIE); C. Benito, J.M. Ezquivel, and B. Hermosilla(Consultants); and F. Fuentes(RUTA Social).It has benefittedgreatly from the inputsof EleanorSchreiber (LA2HR); L.Kebeck contributed to the reportat headquarters.Messrs. Edilberto L. Segura(LA2DR) and Kye WooLee (LA2HR)are the Department Directorand DivisionChief, respectively, for this operation. Peer Reviewersare C. Valdivieso(ESP) and M Potashnik(LA 3HR). ii PANAMA BASIC EDUCATIONPROJECT LOAN AND PROJECTSUMMARY Borrower: The Republicof Panama. ImplementingAgency: Ministryof Education(MOE). Beneficiary: Not applicable Poverty: Program of TargetedInterventions. The projectwill target the poorest 185 townships(corregimientos) in the country as defined by housing,education, health and nutritionindicators. Amount: US$ 35 million. Terms: Standardamortization term, grace period, and interestrate for fixed-rateUS dollarssingle currency loans with an expected disbursementperiod of 3-6 years. Commitment Fee: 0.75% on undisbursedloan balances, beginning 60 days after signing,less any waiver. FinancingPlan: See para. 3.3 Net Present Value: Not Applicable(see paras. 5.1-5.3) Map: IBRDNo. 27496 Project ID: PA-7832 iii BASIC DATA SHEET A. GeneralCountry Data GDP Per Capita (US$) 2,600 S 1992 Area 77 000 Sq. Km. NA PopulationEstimate 2.3 Millions 1992 Urban Population(percent of total) 54 % 1992 IndigenousPopulation (percent of total) 8.3 % 1990 B. Social Indicators Crude Birth Rate (Per Thousand) 25 Births 1992 Crude DeathRate (Per Thousand) 5 Deaths 1992 PopulationGrowth Rate 2.1 Annual% 1992 Total FertilityRate 2.9 Births 1992 InfantMortality Rate (Per ThousandLive Births) 21 Deaths 1992 MaternalMortality Rate (Per 100,000Live Births) 60 Deaths 1992 Life ExpectancyAt Birth 73 Years 1992 AdultIlliteracy Rate 12 % 1990 C. Basic EducationIndicators EnrollmentNumbers Pre-school 33,288 Students 1992 Primary(grades 1-6) 356,247 Students 1992 Secondary(grades 7-12) 201,047 Students 1992 University 63,300 Students 1993 EnrollmentRates InitialEduc. (3-4 year-olds) 5.8 % 1992 Preschool (4 year-olds) 9.3 % 1992 Preschool(Jardin. 5 year-olds) 45.5 % 1992 Primary,Gross 104.5 % 1992 Primary,Net 90.9 % 1992 Secondary,Gross 63.6 % 1992 Secondary,Net 53 % 1992 University,Gross 18.3 % 1993 Private sectorparticipation in enrollments Pre-school 33 % 1992 Primary 8.5 % 1992 Secondary 17.5 % 1992 University 9 % 1992 iv D. Basic Education Efficiencv PrimaryEducation RepetitionRate 11.3 % 1992 Dropout Rate 1.6 % 1992 CompletionRate 90.4 % 1992 Lower secondaryEducation (Grades 7-9) RepetitionRate 11.1 % 1992 Dropout Rate 6.9 % 1992 CompletionRate 66.6 % 1992 E. Public Education ExDenditureData Total EducationExpenditures as % of GNP 5.5 % 1993 Educ. Expend. as % of Tot. Pub. Expend. 16.4 % 1993 Prescho. and Prim Educ. Expend. as % of Total Educ. Expen. 40.9 % 1992-93 Second.Expen. as % of Tot. Pub. Exp. 26.7 % 1992-93 HigherEd. Expen. as % of Tot. Pub. Exp. 32.4 % 1992-93 F. Annual Unit Costs Preschooland PrimaryEducation 290.0 $ 1992 SecondaryEducation 371.0 $ 1992 v EDUCATIONGLOSSARY BasicEducation Two years of pre-school,primary school (gradesl-6) and lower secondaryschool (grades7-9). CompletionRate For the nine years of basic education,the ratio betweenthe number of studentsexiting grade 9 in a givenyear T and the numberof studentsentering grade 1 in year T-9 as a close approximationof the percentageof studentsof a given cohort to completethe nine years of basic education. Dropout Rate Percentageof studentswho abandonthe systemwithout completing the educationcycle. EducationalAttainment Number of years of formalschooling attended by a student. EducationalAchievement Magnitudeof achievementin any subject area, generallymeasured accordingto nationalcurriculum learning objectives. EnrollmentRate Percentageof childrenof any age group or a givenage group enrolledin a certaineducation level. EnrollmentRate, Gross Percentageof childrenof any age group enrolledin a grade level. Percentagesmay be more than 100because somepupils are youngeror older than the standardschool age. IncompleteSchool A schoolwith fewer than the officialnumber of educationalgrades. Kindergarten One year before primary(five-year-olds). MultigradeClassroom A classroomwhere childrenof severaldifferent grades are taught by one teacher. Net EnrollmentRate Percentageof childrenof a given age group enrolledin their correspondinggrade level. Nursery School One year before kindergarten(four-year-olds)