Document of FILE COPY The World Bank
FOR OFFICIAL USE ONLY Public Disclosure Authorized
ReportNo. P-3299-PH
REPORT AND RECOMMENDATION
OF THE
PRESIDENT OF THE
INTERNATIONALBANK FOR RECONSTRUCTIONAND DEVELOPMENT Public Disclosure Authorized TO THE
EXECUTIVEDIRECTORS
ON A
PROPOSED LOAN
TO THE
REPUBLIC OF THE PHILIPPINES
Public Disclosure Authorized FOR A
NATIONAL FISHERIESDEVELOPMENT PROJECT
April 30, 1982 Public Disclosure Authorized
This documenthas a restricteddistribution and may be used by recipientsonly in the performanceof their official duties. Its contents may not otherwisebe disclosed withoutWorld Bank authoriation. CURRENCY EQUIVALENTS
Currency Unit = Peso (P = 100 centavos) P 1.00 = US$0.123 US$1.00 = P 8.1
GLOSSARY AND ABBREVIATIONS
ADB - Asian Development Bank BFAR - Bureau of Fisheries and Aquatic Resources (of MNR) DBP - Development Bank of the Philippines FIDC - Fishery Industry Development Council (of MNR) FRR - Financial rate of return GT - Gross tons ICB - International competitive bidding LCB - Local competitive bidding MNR - Ministry of Natural Resources PFDA - Philippine Fisheries Development Authority (of MNR) PU - Project Unit SEATI - Samar Sea-Ticao Pass Fisheries Development Coporation
FISCAL YEAR
January 1 to December 31 FOR OFFICIAL USE ONLY
PHILIPPINES
NATIONAL FISHERIES DEVELOPMENT PROJECT
Loan and Project Summary
Borrower: Republic of the Philippines
Beneficiary: Republic of the Philippines and Samar Sea-Ticao Pass Fisheries Development Corporation (SEATI).
Amount; $22.4 million equivalent (including capitalized front-end fee)./l
Terms: Repayable in 20 years, including 5 years of grace, with interest at 11.60% per annum.
Relending Terms. $12 million of the loan proceeds would be relent by the Borrower to SEATI with the same grace and repayment period and at the same interest rate as the Bank loan. Interest accrued during the grace period would be capitalized. The Government would bear the foreign exchange risk and the corporation would pay a foreign exchange risk fee. The balance of the loan would be allocated by the Government to the Ministry of Natural Resources for institution building.
Project Description: The proposed project is designed to help municipal (small- scale) fishermen, and to improve sector management through institution-building activities. To achieve its first objective, the project would assist municipal fishermen in one of the poorest regions of the Philippines (Masbate/ Ticao Pass/Western Samar) through the establishment of marketing facilities for the efficient collection, transport and distribution of fish, and the provision of input supplies. To meet the second objective, the project would strengthen the three fisheries agencies of the Ministry of Natural Resources - the Philippine * Fisheries Development Authority (PFDA), the Bureau of Fisheries and Aquatic Resources (BFAR), and the Fishery Industry Development Council (FIDC). Project funds would finance (a) an area development subproject, comprising the construction of physical facilities in seven sites, including landing areas, jetties, ice plants, offices, auction halls, bulk fuel storage and related facilities
/1 Front-end fee amounts to $331,034.
This document has a restricted distribution and may be used by recipients only in the performance of their official duties, Its contents may not otherwise be disclosed without World Bank authorization. - ii -
Project and the provision of carrier boats, vehicles and input Description. supplies, and (b) training programs, technical assistance (cont'd) and vehicles for PFDA, BFAR and FIDC. The area development subproject would be implemented by SEATI and operated under private management.
The project would benefit directly about 2,500 participating small-scale fishermen who would realize higher incomes for their catch through better marketing, improved quality of fish, reduced spoilage and, to some extent, increases in productivity from the integration of input supplies with market outlets. The strengthening of the operations of the fisheries agencies would lead to improved policy direction in fisheries development, better assessment and management of fisheries resources, improved research and extension, and more effective enforcement of fish conservation regulations.
The main risks associated with the proposed project are: (a) the innovative approach to establishing the corporation to implement the development subproject; (b) the present weakness of the fisheries agencies; (c) the lack of reliable data on existing fish resources which are believed to be over-exploited; and (d) the sensitivity of the benefits of the motorized fishing craft to relatively small decreases in the price of fish. To address the first issue, the Government has contracted with a competent private firm, experienced in fish marketing, to manage the corporation. To address the second issue, the project provides for a comprehensive program to strengthen the existing institutions. The third issue would be addressed in the project throughiprovisLons for improved fishery resource surveys, marine studies and strengthening of the marine enforcement and conservation capabilities of BFAR to ensure a more orderly exploitation of resources. Historically, revenue from fish sales has increased more than inflation and the risk associated with price sensitivity is not expected to be great. In addition, motorized crafts are a small component, and returns to the corporation are much less sensitive to changes in revenues. Although the risks associated with the project are high, Bank support is justified because of the extreme poverty of the project beneficiaries; in addition, municipal fishermen have so far received little effective assistance from the Government. - iii -
Estimated Cost: Foreign Local Total …---- ($ million) =
Area Development 4.6 8.4 13.0 BFAR 3.8 1.6 5.4 PFDA 1.4 0.5 1.9 FIDC 0.7 0.3 1.0 Studies by MNR - 0.5 0.5
Total Base Cost Estimate 10.5 11.3 21.8 e~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Physical Contingency 0.6 0.8 1.4 Expected Price Increases 5.4 8.0 13.4
Total Cost /1 16.5 20.1 36.6
Front-end fee 0.4 - 0.4
Total Financing Requirements 16.9 20.1 37.0
Financing Plan: Foreign Local Total - ($ million)…
IBRD 16.5 5.5 22.0 Government/PFDA - 14.3 14.3 Private Participant - 0.2 0.2 Subborrowers - 0.1 0.1
Total 16.5 20.1 36.6
Front-end fee .4 - .4
Total Financing Requirements 16.9 20.1 37.0
Estimated Disbursements; Bank FY FY83 FY84 FY85 FY86 FY87 FY88 FY89 FY90 ------($ million ) ------
Annual 1.1 2.4 4.3 5.2 3.9 3.7 1.7 0.1 Cumulative 1.1 3.5 7.8 13.0 16.9 20.6 22.3 22.4
Economic Rate of Return: 24% and 36% for the area development corporation and motorized fishing boats, respectively.
Staff Appraisal Report: No. 3387-PH, dated April 19, 1982.
/1 Total costs include identifiable taxes of about $350,000.
REPORT AND RECOMMENDATIONOF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTIONAND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF THE PHILIPPINES FOR A NATIONAL FISHERIES DEVELOPMENT PROJECT a~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
1. I submit the following report and recommendation on a proposed loan to the Republic of the Philippines for the equivalent of $22.4 million to help finance a national fisheries development project. The loan, which includes a capitalized front-end fee of 1.5% on the Bank loan, would have a term of 20 years, including 5 years of grace, with interest at 11.60% per annum. Part of the loan proceeds, $12 million, would be relent by the Government to a fisheries corporation at the same interest rate and over the same grace and repayment periods as the Bank loan. The Government would bear the foreign exchange risk, and the corporation would pay a foreign exchange risk fee to the Government. The balance of the loan would be allocated by the Government to the Ministry of Natural Resources for the institution-building component.
PART I - THE ECONOMY /1
2. An economic report, entitled "The Philippines: Domestic and External Resources for Development" (No. 2674-PH), was distributed to the Executive Directors under SecM79-822, dated November 16, 1979. A special report, "Aspects of Poverty in the Philippines: A Review and Assessment" (No. 2984-PH), was distributed to the Executive Directors on December 1, 1980 under SecM80-919. An economic mission visited the Philippines in September 1981 and is now preparing its report./2 Country data are given in Annex 1.
Performance in the 1970s
3. During the 1970s, economic performance improved considerably, raising the trend GNP growth rate to 6% at the end of the decade. The ratio of fixed investment to GNP rose from 16% to 25% during this period. Half of this increase was in the public sector; the ratio of public fixed investment to GNP rose from 1.5% to 6.5% during the decade, reflecting substantially expanded revenues and improved implementation capacity. Export growth was accelerated, particularly in nontraditional manufactures, while growth in
/1 This section is substantially the same as that contained in the President's Report for the Textile Sector Restructuring Project which was approved by the Executive Directors on April 20, 1982.
/2 Expected to be distributed to the Executive Directors in May, 1982. imports of oil and consumer goods was restrained. Overall, expansion in agricultural production was quite rapid, and rice deficits were eliminated in the second half of the decade. Population growth slowed in the 1970s. However, the economy still has a number of structural problems. Most importantly, the efficiency of investment has been low, particularly in manufacturing industry producing for the domestic market; industrial employment has not expanded rapidly enough; and poverty is still widespread.
4. The economy's structural problems are reflected in its balance of payments. Improvements achieved in the early 1970s were more than offset by a sharp deterioration of the Philippines' terms of trade since 1975, stemming from the oil price increases, accelerated international inflation, and depressed prices for major export commodities. Consequently, the Philippines has had to rely heavily on foreign borrowings to finance the imports needed to maintain growth and investment levels. To hold the external deficit at a sustainable level in the coming years, additional structural adjustments in the balance of payments will have to be achieved, primarily through reduced dependence on imported oil, increased efficiency of investment, and improved performance of the industrial sector.
Development Strategy
5. The Government's Development Plan for 1978-82 has as objectives the rapid expansion of productive employment; improvements in economic, social and regional equity; and provision for the basic needs of the population. The agricultural strategy emphasizes food production, crop diversification, and stronger linkages with processing industries. The industrial strategy calls for promotion of export industries, development of small- and medium-scale industries, regional dispersion of industrial growth, increased efficiency of investment, and selected large-scale projects. The Plan includes social development targets in education, housing, health, and family planning. In addition, the Plan outlines development strategies for each of the country's 13 regions. A recently completed Food and Nutrition Plan, which complements the Development Plan, aims at eliminating malnutrition by 1990 through increased food production and nutrition programs.
6. The Development Plan elaborates the policy directions pursued by the Government in recent years and is broadly in line with the Bank's assessment of the country's development priorities. In view of changes in the international economy, the Government has, in 1980, adjusted the Plan and revised the growth targets downwards. A Development Plan for 1983-87 is now under preparation.
Macro Issues for the 1980s
7. As noted above, the Philippines faces several fundamental long- standing development problems which will need increased attention during the 1980s. The four most important of these are reduction of population growth, poverty alleviation, employment generation, and increased efficiency of investment. - 3 -
8. Population Growth. The Philippines has achieved an impressive reduction in population growth from 3% in 1970 to about 2.4% in 1980./l Nevertheless, rapid population growth is still straining available land resources, aggravating already serious employment and poverty problems, and burdening the public budget with a high growth in demand for basic public services. Further reduction of population growth is, therefore, vital for thc. country's development. The Philippines has an active family planning pzc:gramwhich has expanded rapidly during the 1970s. However, participation in the family planning program is still low by East Asian standards, and the number of new acceptors has reached a plateau as the program has faced the increasingly difficult problem of extending into rural areas.
9. Poverty Alleviation. Despite satisfactory economic growth during the 1970s, the incidence of poverty remains high at 40-45%. Income distri- bution continues to be very skewed, and a small elite is conspicuously wealthy. Regional disparities remain pronounced, with the incidence of poverty reaching 60-70% in the least developed regions. Large numbers of people, especially in the rural areas, which account for about 80% of the poor, still suffer from malnutrition and lack safe water, basic education and health facilities. An increasingly unfavorable man/land ratio, the resulting expansion of cultivation into marginal lands, limited employment opportunities in the industrial sector, and the sharp deterioration in the external terms of trade have put downward pressure on real incomes. Although the Government instituted several programs during the 1970s that should directly improve the lives of the poor, most of these were implemented on a large scale only toward the end of the decade, and will require several years to achieve a marked impact. Key steps needed to alleviate poverty will be the development of rainfed agriculture, more balanced regional development, rapid expansion of manufacturing employment, continued improvement in basic public services, and further reduction of population growth.
10. Employment Generation. Growth of productive employment, partic- ularly in the industrial sector, has lagged behind the rapid expansion of the labor force, and considerable underemployment exists. During the 1970s, the agriculture and service sectors had to absorb an excessively high proportion of new entrants to the labor force. Manufacturing employment stagnated in the first half of the decade, and picked up only slightly thereafter as labor- intensive export production grew. Overseas employment, especially in the Middle East, increased rapidly, providing a temporary income opportunity. As the absorptive capacity of the agricultural sector is limited, employment generation in manufacturing will have to increase considerably in the 1980s.
/1 This figure is based on a more recent survey than the data in Annex I. - 4 -
11. Efficiency of Investment. While private and public investment rose sharply during the last decade and have reached reasonable levels, the accompanying expansion of the economy's real output has been relatively low. In addition, the low rate of industrial job creation indicates that, on average, investment has not been labor-intensive enough. The low efficiency and low labor-intensity of investment have been caused by the distortive effects of past trade, industrial, and financial policies on the allocation of capital. In view of tight resource constraints to be faced in the 1980s, the efficiency and labor-intensity of investment will be critical determinants of future growth in output and employment.
Sectoral Issues
12. The Philippines' macro-economic performance reflects achievements and problems at the sectoral level. The more important of these are summarized below for the agricultural, industrial, and energy sectors.
13. Agriculture and Rural Development. Although there has been con- siderable variation among subsectors, the trend growth rate of the agriculture, fishery, and forestry sector was about 5% during the 1970s, which is quite high by international standards. The Philippines, once a chronic importer of rice, began to export modest quantities in 1977, and rice self-sufficiency appears assured for the 1980s. Production of fish and nontraditional export crops, such as bananas and coffee, has also expanded rapidly. However, the development of rainfed agriculture, which is of critical importance for raising the incomes of the rural poor, has lagged behind. Technologies to increase yields of corn have been developed only recently, while multiple cropping systems are still at an early stage of development. Productivity in the important coconut export sector remains low because the recently introduced program to replace overage trees has not yet attained rapid progress. Furthermore, population pressure on the arable land is steadily increasing, and soil erosion in hilly areas that have been logged over or settled is a serious problem.
14. The Government has provided substantial support for rural develop- ment. Agricultural production has benefitted from the introduction of high- yielding varieties, improved credit, extension, and irrigation programs. Rural infrastructure programs in water supply, electrification and health services have also been expanded significantly. An agrarian reform of rice and corn land, instituted in 1972, is well advanced.
15. While these programs have achieved considerable improvements, the gains have been uneven among regions, crops, and farming systems. Difficult issues remain to be addressed if the living conditions of the rural poor are to be improved. Solutions to the interrelated problems of low incomes and poor soils in marginal settlements will require the development of tree cropping and mixed farming technologies, resolution of land tenure questions, and substantial upgrading of the administrative capability of the agencies concerned. Steps are also needed to reduce poverty among subsistence fishermen, coconut farmers, and sugar cane workers. - 5 -
16. Industry. Although industrial and trade policies were improved in the early 1970s, manufacturing industry grew only at about the same rate as GDP, and its growth pattern remained unsatisfactory during the decade. Excessive protection and artificially low cost of capital have led to low efficiency of investment and stagnation of manufacturing employment in industries producing for the domestic market. The introduction of export promotion measures in the early 1970s led to extremely rapid growth in exports of nontraditional manufactures, which rose from about $50 million in 1970 to $2.1 billion in 1980. Nontraditional manufactures now account for over one-third of the country's total exports. However, the export expansion has been concentrated on a few items, and backward linkages with the rest of the economy have been limited due to the high cost and low quality of domes- tic inputs. Consequently, nontraditional manufacturing export industries have developed as an outward-looking enclave in an otherwise heavily protected economy.
17. The objectives of the Government's industrial policy are to accelerate growth of output and employment, sustain the high growth of manu- factured exports, reduce import dependence of domestic industry, improve the efficiency of investment, and promote industrial development outside the Manila area. Since industries producing for the domestic market still account for more than 80% of manufacturing investment, output, and employ- ment, restructuring of home industries as well as continued export expansion are needed to achieve these objectives. In 1979, the Government initiated a series of fundamental policy reforms designed to improve the performance of the industrial sector. The first phase of the reform program, which is currently being implemented, focuses on reducing protection through tariff reform and liberalization of import licensing as well as strengthening export promotion. The Government is preparing a second phase of reforms that will address shortcomings in the industrial incentives and promotion system.
18. Energy. Another sector critical for the success of the Philippines' structural adjustment effort is the energy sector. Since the 1973-74 oil price increase, the Philippines has made a considerable effort to reduce its dependence on imported oil. The Government has not only passed on oil price increases to consumers, but it has also increased taxes and levies on oil products with the result that domestic oil prices are considerably above import parity. These price increases combined with direct conservation measures resulted in a reduction of commercial energy consumption in 1980 and in 1981. Steps to increase and diversify domestic energy supply have also continued and include development of hydroelectric, geothermal, coal, and nuclear energy. Limited domestic petroleum production also began in 1979. However, due to the long gestation period of energy projects, domestic energy production still constituted only 17% of total commercial energy consumption in 1980. In response to the "second oil crisis", the Government is accelerating its program for domestic energy production but further taxing and pricing initiatives will also be needed to restrain demand. - 6 -
Domestic Resource Mobilization and Allocation
19. Domestic Savings and the Financial Sector. During the 1970s, gross national savings expanded considerably, reaching 22.5% of GNP and financing about 80% of total investment. However, the savings ratio needs to rise by another 2-3% of GNP in order to maintain investment levels while simultan- eously limiting the current account deficit and the country-s reliance on foreign savings. In addition, interest rates and other financial incentives affecting the labor-intensity and efficiency of investment, the flexibility and competitiveness of the financial system, and the maturity of lending all needed to be increased. Hence, in 1980-81 the Government introduced a comprehensive set of financial reforms. Interest rates are being substan- tially decontrolled, and revised monetary, fiscal, and rediscount policies are being introduced. Legislation to encourage multipurpose banking has also been adopted to reduce the present excessive specialization and fragmentation of the financial system and to increase competition.
20. Public Finance. During the 1970s, the Government raised the overall level of public expenditures by 5% of GNP and increased the shares going to economic services and investment. At the end of the decade, total government expenditures had reached 18% of GNP, with public investment equalling 6.5% of GNP. The expansion of public expenditures has made possible improvements in basic infrastructure, particularly in transportation, power and irrigation, as well as expanded programs in urban development, health and family planning. At present, the size of the public investment program is appropriate, and its composition is, with a few exceptions, broadly consistent with the country-s development priorities.
21. In the last few years, however, public investment has been cons- trained by the availability of resources, outdated contracting regulations and rigid budget execution procedures which were introduced in anticipation of a tight revenue situation. Problems were particularly acute during the period of high inflation in 1979 and 1980, and they caused the Government actually to underspend its capital budget. As resource constraints are likely to remain tight during the 1980s, further strengthening of investment programming and budgeting procedures will be needed to concentrate resources on the highest priority projects.
22. The rapid expansion of public expenditures has been made possible by a program of systematic tax reform. The proportion of revenue coming from domestic taxes has been raised through increases in indirect taxes and improved collection, thus reducing dependence on cyclically volatile taxes on international trade. The tax ratio was raised by three percentage points to 13.3% of GNP during the decade, but has remained about constant in the last few years. Continuation of a strong revenue effort, both by the Government and government corporations, will be necessary to finance further expansion in infrastructure and social services. Further tax reforms are needed to raise the elasticity of the revenue system, to improve its equity by increasing the proportLon of revenue coming from direct taxes, and to eliminate remaining distortions in economic incentives. -7-
Balance of Payments Adjustment and External Capital Requirements
23. The 1979-80 oil price increase has considerably tightened the long- term balance of payments constraints for the Philippines. The share of oil in total merchandise imports increased from 12% in the early 1970s to 29% in 1980. The current account deficit widened to $2.1 billion in 1980, equivalent to 5.8% of GNP. If growth and investment rates are to be maintained, accelerated structural adjustments in the economy and the balance of payments have become essential to hold the external deficit at a sustainable level. Considerable reforms have already been introduced with respect to trade, industrial, and financial policies (see paras. 17 and 19), and improvements are under consideration in energy policy. Additional policy measures will be needed in these areas as well as resource mobilization and investment programming. Implementation of necessary adjustment measures should make it possible to sustain economic growth at 6.0-6.5%, mainly through improved performance of the industrial sector. However, policy measures will require a number of years to effect the needed structural improvement in the balance of payments. The current account deficit, therefore, is expected to remain in the range of $2.0-2.5 billion annually during the first half of the 1980s, while declining in relative terms to about 4% of GNP by the mid-1980s.
24. The Philippines raised its external borrowing sharply to finance the balance of payments deficits incurred after the 1973-74 oil price increase. During the second half of the 1970s, net disbursements from medium- and long- term loans doubled to $1.2 billion in 1980 and the debt service ratio stood at 20% in 1981. Substantial additional foreign capital will be needed during the period of adjustment to the 1979-80 oil price increase, and net disbursements from medium- and long-term loans will have to double again in the next five years. If the Philippines can sustain the strong export performance of the recent past, the debt service ratio would remain at about 20%.
25. Official sources are expected to provide about 43% of the Philippines' gross external capital in the early 1980s. The last Consultative Group Meeting, held in January 1981, agreed that it would be reasonable for the Philippines to seek official development assistance (ODA) of about $1.2 billion during 1981, a slight increase over the ODA commitments it received in 1980.
26. As noted above, progress has been made in domestic resource mobilization. However, because the deterioration in the terms of trade has increased the Philippines' external financing requirements, and many projects planned for ODA have low foreign exchange costs, the necessary resource transfer can be achieved only through some financing of local costs of projects and non-project lending. - 8-
PART II - WORLD BANK OPERATIONS /1
27. As of March 31, 1982 the Philippines had received 78 Bank loans (of which two were on Third Window terms) amounting to $2,967.55 million and six IDA credits amounting to $122.2 million. IFC investments totalled $143.8 million. The share of the Bank Group in total debt disbursed and outstanding is currently about 11%, and its share in total debt service is about 8%. These ratios are expected to be about 18% and 12%, respectively, by 1985. Annex II contains a summary of IDA credits, Bank loans, and IFC investments as of March 31, 1982 as well as notes on the execution of ongoing projects.
28. The volume of World Bank lending to the Philippines has increased substantially from an average of about $90 million per year in FY71-75 to an average of $420 million in FY77-81. Although the Bank has financed projects in virtually all sectors of the economy, particular emphasis has been given to agriculture, which has accounted for more than one-third of total Bank/IDA lending. Another fifth of Bank lending has been for the transportation sec- tor. Lending for power, industry, and social sectors followed in declining order of size. The sectoral allocation of Bank lending remained fairly stable throughout the 1970s. Pronounced changes took place only within infrastruc- ture as lending for transportation and power declined in the second half of the 1970s, while lending for water supply and urban development was initiated during this period.
29. Within sectors, however, considerable changes have taken place in Bank lending. In agriculture, lending initially focused on expanding the irrigation system, credit programs, and other services to support rice production. More recently, efforts have been made to diversify agricultural production through loans for treecrops, livestock, and fisheries, and to assist low-income areas through integrated rural development projects. In the industrial and financial sectors, the Bank initially concentrated on streng- thening individual development finance institutions and on providing for the credit needs of small and medium industries. In the last two years, however, industrial and financial lending has been broadened to support the implemen- tation of needed policy reforms. A structural adjustment loan was made in September 1980 in support of trade and industrial reforms. Improvements in financial sector policies were the basis for the May 1981 Industrial Finance Loan, which also introduced a new institutional concept to broaden the reach of Bank lending by channelling loans through an "apex unit in the Central Bank.
/1 This section is substantially the same as that contained in the President-s Report for the Textile Sector Restructuring Project, which was approved by the Executive Directors on April 20, 1982. - 9 -
30. While overall implementation ot bank-financed projects in the Philippines has been satisfactory, disbursements have been slower than antici- pated. Disbursement performance is somewhat below average 'or the region and has shown a slowly deteriorating trend over the past few years. Implementa- tion problems increased in the later 197Us, reflecting, in part, administrative problems caused by high inflation and tight budget constraints (para. 21). They also result from the changes in the scope of thle Bank's lending operations; a substantial increase in the number of projects, new areas of lending, an emphasis on institution-building, and efforts to reach specific target groups and deprived regions have all made implementation a more demanding task than in the past. The first project implementation review was held in May 1980, at which time, among other issues, the relatively poor disbursement performance was discussed. Steps were subsequently taken to correct some of the administrative problems which were discussed with the Government during the review. A second review, held in February 1982, provided a useful follow-up and exchange of views on problems still being experienced in project implementation and loan disbursement. During this review, the Government and the Bank agreed that similar reviews would be held in future on a regular basis.
31. The Bank's future lending program has been designed to assist in achieving the major objectives of the Government's Development Plan (para. 5). Particular emphasis is being given to supporting poverty alLeviation efforts and to bringing about needed structural adjustments in the economy. Economic and sector work is being closely integrated with lending operations. Future project, sector, and structural adjustment loans will be designed to address the wide variety of technical, institutional, and policy issues facing the Philippines. Additional structural adjustment loans are planned to support further reforms in trade, industry, and other key policy areas. In sectoral terms, agriculture and rural development will continue to account for the largest share of lending, with emphasis on food production and programs to increase the incomes of the rural poor and rehabilitate existing cash crops. Substantial assistance will be given to industry through further subsector loans aimed at restructuring or developing specific subsectors; through increased financial and technical assistance to small and medium industries, particularly outside the Metro-Manila area; and through continued industrial finance projects utilizing the recently introduced "apex" concept. Increased effort is also planned over the next several years to develop domestic energy resources and to strengthen the institutions responsible for developing and managing energy supplies. The Bank's support for projects in education, health, family planning, water supply, and urban development will aim at improving basic services and supporting employment creation, particularly in less advanced areas of the country.
32. This Ls the fourth loan to the Philippines to be presented to the Executive Directors this fiscal year. Loans for communal irrigation and coal exploration, and a third loan for small and medium industries have been appraised and are sch.eduled for Board presentation in the coming weeks. - 10 -
PART IllI- THE FISHERIES SECTOR
Resource Base
33. The Philippines has a long coastline and extenisivemarine and inland waters, and is well-endowed for fish production. To date, marine operations have been concentrated mainly on capture fishing in coastal waters, resulting in over-exploitation of available resources in some of the areas. Comprehen- sive data on assessment of fish stocks and their sustainable levels of produc- tion are not available, although some work on this is under way. Present indications are that overall marine yields are close to the maximum, except for tuna.
34. Nevertheless, production from marine waters can be expanded through mariculture, which is already being practiced on a limited scale. Moreover, marine resources can be considerably better managed with a view to sustaining existing yields. Inland fisheries provide an even greater potential for expanding production. There is a large area available for development, and significant increases in yields can be achieved from existing fishponds through improved technology and other inputs.
Production and Contribution to the Economy
35. Fisheries production, which increased at an average annual rate of about 5% during the 1970s, amounted to an estimated 1.6 million tons in 1979, valued at some P 10.5 billion ($1.3 billion) or 4.8% of GNP. Most of the fish is consumed locally, as it is a major source of animal protein in the Filipino diet. Per capita consumption of fish was estimated at 34 kg in 1978, or 60% of all meat consumed. Exports of tuna, shrimp, squid and other higher value species have been increasing significantly in recent years; they amounted to about $92 million in 1979, or about 5% of total fisheries production. In terms of quantity, imports have been well in excess of exports during the 1970s, reflecting the rising domestic demand for fish.
36. Marine fisheries accounted for about 80%, inland (rivers, lakes and reservoirs) fisheries 12%, and aquaculture the remaining 8% of total produc- tion during 1977-79. Some 500,000 municipal fishermen, 42,000 commercial fishermen, and 194,000 people in aquaculture are engaged in fisheries produc- tion. An additional 55,000 persons are employed in fish processing. Municipal fishermen comprise subsistence and other small-scale producers who fish from boats of 3 gross tons (GT) or less. Commercial fishermen are larger-scale producers using boats of more than 3 GT who are legally required to fisn o,l, in waters deeper than 13 m (7 fathoms) and beyond 3 km from the coast.
37. The contribution of municipal fishermen to total production has been estimated at 55-60%, with commercial fishermen accounting for the remaining 40-45%. As of 1979, there were 2,133 licensed commercial fishing vessels. The number of fishing vessels operated by municipal fishermen has been estimated at 186,000. - 11 -
38. Problems associated with poor handling and marketing facilities, and low prices for their catch (para. 39), together with the general absence of alternative employment, have relegated municipal fishermen to the lowest income group in the country. Recent socio-economic surveys indicate that the average household income of municipal fishermen was less than half the poverty threshold income for all households in 1978. Declining availability of sustainable fisheries resources in some of the coastal waters, owing to overfishing and growing competition from commercial fishermen operating in these waters, can only be expected to aggravate the problem.
Marketing
39. Although there are more than 100 landing sites spread throughout the provinces, the existing infrastructure and facilities in support of marketing are inadequate. The Navotas Fishing Port and Fish Market in Manila is the only zommercial fishing port in the country. Fisheries production by municipal fishermen and other small-scale producers hlas been affected by inadequate landing and marketing facilities, poor handling of fish, and unfavorable prices received for fish sold. Lack of ice, improper methods of fish handling, and poor insulation of the vessels result in significant losses, mainly in terms of poor quality fish, which consequently fetch lower prices. To avoid any significant deterioration of quality, and because of inadequate marketing centers nearby, fishermen have no recourse but to sell either directly to consumers or to middlemen/buyers either at sea or at their usual landing places, often at unfavorable prices. Limited access to high-priced urban markets as well as the lack of ice and cold storage facili- ties also require that the catch in excess of local fresh fish consumption demand (about 30-40% of total fisheries production) be sold for sun-drying, salting, smoking and fermenting, for which fishermen receive lower prices.
Institutional Support
40. The Ministry of Natural Resources (MNR) is responsible for fisher- ies development through three fisheries agencies: the Bureau of Fisheries and Aquatic Resources (BFAR), the Philippine Fisheries Development Authority (PFDA), and the Fishery Industry Development Council (FIDC).
41. BFAR is the agency responsible for the formulation and enforcement of regulations for the proper management and conservation of the fisheries resources, including issuance of licences for fishing vessels and permits and leases for fish ponds. In addition, BFAR is responsible for fisheries extension and training, research and demonstration activities, preparation of fish production programs and compilation of fisheries statistics. PFDA establishes and manages fishing ports and provides facilities and support for fish handling and marketi-ng. FIDC is a planning and policy-making body, responsible for formulation and coordination of fisheries policies, inter- agencv planning for fisheries development, preparation of the Integrated Fisheries Development Plan, promotion of investment in the fisheries industry, and coordination of Government and private sector efforts for fisheries development. - I', -
42. The respective functions of the agencies have not been well delineated, and this has led to duplication and overlapping of some important programnsand activities. Other major factors which have hampered the perfor- mance and operations of the agencies are a lack of skilled staEf, inadequate funding by the Government and organizational problems within the agencies. As part of the proposed project, FMNR would undertake a reorganization of its fisheries services in order to rationalize its activities and delegate responsibility in the field.
43. Other important institutions supporting fisheries development include: (a) the Development Bank of the Philippines, the Land Bank and rural banks, which provide credit to fishermen and fish companies, and (b) researcl and training centers comprising the Southeast Asia Fisheries Development Center, the University of the Philippines, Central Luzon State University, UNDP's Brackishwater Demonstration and Training Centers, the Philippine Council for Agriculture and Resources Research, the International Center for Living Aquatic Resources Management, and FAO's South China Sea Project.
Development Plans and Priorities
44. The Government accords high priority to the development of fisheries. Its objectives for the sector in the 1980s are to expand fisheries production to meet domestic consumption needs and export demand, improve the efficiency of fish production, distribution and utilization, achieve proper management and conservation of the fisheries resources, and promote and coordinate the interests of the private and public sectors to ensure the sound development of the fisheries sector. Production is targeted to increase annually by 5.5% to about 2 million tons a year by 1983 with municipal fisheries contributing 50%, commercial fisheries 37%, and aquaculture and inland fisheries the remaining 13% of the projected increase. To increase production, municipal and other small fisheries would be assisted through credit programs for investment in fishing boats, gear and other fishing supplies, and aquaculture would stress yield increases with less emphasis on expanding the Fishpond area. Yield increases would be achieved by expanding farms for the production of fingerlings and upgrading the quality of technical extension support.
45. Efforts by the Government to assist fisheries to date have included technical assistance and credit programs for the construction and equipping of fishing vessels, the establishment of ice plants and develpment of brackish- water ponds, aquaculture research, fisheries training, and the establishment of the Navotas Fishing Port and Fish Market and small fish landing sites in the provinces. These programs have been oriented towards commercial fishermen and larger-scale fishpond operators. Measures to improve the incomes of municipal and other small fishermen, which have hitherto not been supported by the Bank, have been limited to credit schemes for the purchase of boats and engines. These schemes have had little success mainly because credit programs did not benefit concurrently from improved extension and marketing. Many beneficiaries considered the loans provided as government grants which need - 13 - not be repaid, and some of the beneficiaries reportedly were unable to sell their catch owing to inadequate local market outlets. Small fishermen and fishpond operators could best be assisted by projects integrating the provision of improved landing and marketing facilities with input supplies, including credit for their purchase, and technical extension support. This approach, which the Government now wishes to adopt as part of its efforts to assist small fishermen, would be incorporated in the proposed project.
46. Major projects to be implemented over the next few years include the establishment of a fisheries complex in North Palawan financed by the Asian Development Bank (ADB), the Fisheries Training Project and Third Livestock and Fisheries Credit Project (para. 49) being financed by the Bank, and the construction of five regional fishing ports to be financed by Japan. The Government also plans to expand and improve the facilities of the Navotas Fishing Port, and establish an additional five regional fishing ports, about 100 small fish landing sites and a fisheries complex in Zamboanga during the 1980s.
47. In order for BFAR, PFDA and FIDC to cope with their assigned responsibilities fully and effectively, they need to be strengthened consid- erably. High priority should be given to developing BFAR's capability in properly assessing and managing the marine fisheries resources and to providing its field officers with increased mobility to carry out statistics collection, enforcement of fishing regulations and other activities pertain- ing to fisheries conservation and extension support. Training would be the priority need of FIDC and PFDA, the former for national policy formulation and project preparation, monitoring and evaluation, and the latter for the management and operation of fishing ports and market facilities. The proposed project would assist in this task.
Previous Bank Experience in the Fisheries Sector
48. The Bank's lending for the fisheries sector has been aimed at assisting the Government to achieve its objectives of increasing production and improving the efficiency of fishing operations and quality of the catch. Three projects were wholly for fisheries development. Six other projects included funds for other purposes in the agriculture sector. The first group of projects comprises the First and Second Fisheries Projects (Loans 891-PH and 1270-PH, respectively), and the Fishery Training Project (Loan 1786-PH), and the second group the Third Livestock and Fisheries Credit Project (Loan 1894-PH), First, Second, Third and Fourth Rural Credit Projects (Loans 432-PH, 607-PH, 1010-PH, and 1399-PH, respectively), and the Small Farmer Development Project (Loan 1646-PH).
49. The first two fisheries projects, financed by Bank loans of $11.6 million and $12.0 million, respectively, provided funds through DBP for boats and equipment, shore facilities, new and rehabilitated fish ponds and related technical assistance. Under the first project, the fish ponds generally showed significantly higher yields than estimated during appraisal. On the other hand, the marine sector appears to have achieved little better - 14 -
than half of the incremental fish production estimated at the time of appraisal. The second project generally met its objectives of increasing the volume and improving the quality of the fish catch, but the profitability of the fishing boats was reduced by the escalating cost of fuel. The major lessons learned from these projects include the need to provide some flexibility in the financing of specified investments so as to enable project lending by DBP to respond to changes in the needs of the fishing industry as they arise, and.to undertake project reporting and sample surveys in the early phase of project implementation in order to provide for proper evaluation of the project following its completion. The third project wholly for fisheries - the Fishery Training Project - is still in the early stages of implementation.
PART IV - THE PROJECT
50. The proposed project was prepared by FIDC, with the assistance of FAO/CP, and was appraised in September 1980. Negotiations were held in Washington from April 5 to April 13, 1982, with a Philippine delegation led by the Honorable Teodoro Pena, Minister of Natural Resources. A Staff Appraisal Report, No. 3387-PH, dated April 19, 1982, is being distributed separately. Supplementary project data are provided in Annex III.
Objectives
51. The proposed project is designed to help municipal (small-scale) fishermen and to improve sector management through institution-building activities. To achieve its first objective, the project would assist municipal fishermen in one of the poorest regions of the country through the establishment of adequate marketing facilities for the efficient collection, transport and distribution of fish and the provision of input supplies. To meet the second objective, the project would strengthen the operations of the three fisheries agencies of the Ministry of Natural Resources: BFAR, PFDA and FIDC.
Description
52. Over an eight-year period, the project would provide funds for the following:
(a) the development of fish handling and marketing facilities, including the construction of landing places, ice plants, ice and chill storage, carrier boats, marketing and other supporting on-shore facilities in seven cities: Bulan, San Jacinto, Miaga, Cataingan and Placer in the Masbate/Ticao area, with some 25,000 fishermen, and Catbalogan and Santo Nino in Western Samar, with 10,000-12,000 fishermen. Project funds would also provide input supplies to fishermen, comprising mainly fishing boats with engines, hull and engine replacements, sails and fishing gear, and - 15 -
(b) institutional support to BFAR, PFDA and FIDC, including technical assistance, training, and equipment. Funds provided for technical assistance would be used to employ consultants required by PFDA and FIDC pending completion of the training of their staff under the project. Practical and academic training for staff would be undertaken locally and overseas. Funding for equipment would be mainly for boats, vehicles, and communications, fish processing, field extension and office equipment.
* Implementation and Organization
53. The Area Development Component ($23.2 million including contingen- cies). PFDA has established a subsidiary corporation to operate the area development subproject. A suitably qualified private firm has been selected to manage the corporation under a contract with PFDA. The Corporation's Board of Directors includes representatives nominated by the Government and by its private shareholder. A general manager and two deputy managers (one for operations and one for finance and administration), with qualifications acceptable to the Bank, would be provided by the private firm to manage the corporation (Section 3.06 of the draft Project Agreement). A General Manager was nominated prior to negotiations. The corporation would engage a qualified engineering firm to prepare final designs and tender documents for the facilities and equipment to be procured, and also to assist in evaluating the bidding documents and in supervising the construction, installation and trial operations of the facilities and equipment for the area development subproject (Section 2.02 of the draft Project Agreement). All land required for the area development component has been acquired (Section 3.05 of the draft Loan Agreement).
54. After completion of construction at the seven project sites, corporate operations would comprise the following: (1) operation and main- tenance of the project's physical facilities and equipment; (2) provision of input supplies to fishermen selling fish to the corporation; (3) buying fish and transporting them to urban markets and (4) supervising auction sales of fish at project facilities. The corporation would, as part of its operations, establish a credit-in-kind program supplying inputs to fishermen marketing their catch through the corporation, at the equivalent of 14% p.a., which is expected to be positive in real terms (Section 3.05 of the draft Project Agreement). Proposals to change the rate would be discussed with the Bank. A profit-sharing arrangement among the corporation, equity holders and the participating fishermen would be instituted.
55. The Institution-Building Component ($13.4 million including contin- gencies). During negotiations it was agreed that the proposals for organiza- tional changes for BFAR, PFDA and FIDC would be submitted to the Bank for review by September 1982 and that the procedures for implementing these changes would begin by December 31, 1982. Implementation would be substantially completed by December 31, 1983 (Section 3.07 of the draft Loan Agreement). - 16 -
56. A Project Unit (PU), which would supervise the implementation of the institution-building component, including training of staff and procurement of goods would be established within MNR (Section 3.08 of the draft Loan Agreement). It would be comprised of an Assistant Minister of MNR as Chairman, the Director of BFAR, the General Manager of PFDA and the Executive Director of FIDG. Decisions and other actions of the PU would be carried out by a secretariat which would also be within MNR (Section 3.08 of the draft Loan Agreement). The secretariat would include members from MNR, BFAR, PFDA and FIDC. The establishment of the PU and its secretariat would be a condition of loan effectiveness (Section 6.01(c) of the draft Loan Agreement). To assist in the determination and coordination of the training needs of the three fisheries agencies, the PU would hire a training specialist, with qualifications acceptable to the Bank, and, by December 31, 1982, prepare a training program for the staff of BFAR, PFDA and FIDC (Section 3.09 of the draft Loan Agreement). The PU would establish a monitoring and evaluating system satisfactory to the Bank, and would participate, in June 1984, in a review with the Bank and the fisheries corporation, to assess the progress of the project (Section 3.06 of the draft Loan Agreement). The PU would also prepare and submit to the Bank annual progress reports and a Project Completion Report on the project (Section 3.04 of the draft Loan Agreement).
Project Costs and Financing
57. The total financing requirements of the project are estimated at $37.0 million including taxes amounting to about $350,000, and the capitalized front-end fee. Approximately $23.2 million (including contingencies) would be allocated for the area development component and $13.4 million for the institutional strengthening component. The estimated foreign exchange cost is $16.9 million, including the front-end fee, or 46% of the total financing requirements. The cost estimates are based on prices updated to December 1981, and include a physical contingency of 12% and a price contingency of 57% of total base cost plus physical contingencies based on the expected price increases as follows: (a) 10% in 1982 and 8% in 1983-86 for local costs, and (b) 8.0% in 1982, 8% in 1983, 7.5% in 1984, 7% in 1985 and 6% in 1986 for foreign costs.
58. The proposed Bank loan of $22.4 million (including front-end fee) would finance about 60% of the total project cost net of duties and taxes, and would cover 100% of foreign exchange costs plus $5.5 million of local costs./l The Government would provide $14.3 million, the private sector participants in the equity of the corporation to implement the area development component would provide up to $0.2 million, and subborrowers for fishing supplies $0.1 million. The Bank funds earmarked for the area development component
/1 Justification for local cost financing is provided in para. 26 of this report. - 17 -
($12 million) would be onlent to the corporation under a Subsidiary Loan Agreement between the Government and the corporation, on terms and conditions satisfactory to the Bank (Section 3.01(c) of the draft Loan Agreement). The execution of the subsidiary Loan Agreement would be a condition of loan effectiveness (Section 6.01(b) of the draft Loan Agreement). Technical assistance under the institutional strengthening component is estimated to require about 150 months of internationally recruited consultants at about $10,500 a month, including fees, international travel and subsistence; and 36 months of local consultants at about P 20,000 (about $2,500) a month.
Procurement
59. In order to ensure that one contractor assumes overall responsibil- ity for synchronizing the civil works and equipment installation, the estab- lishment of landing facilities, ice plants, ice storage, chill rooms, slipway and repair shop, buildings, other structures and development of the sites for the area development component, costing about $11 million, would be carried out under a single contract in accordance with the Bank's guidelines for International Competitive Bidding (ICB). To enable the participation of small local contractors, however, sub-contracting of the civil works at the various sites would be allowed. For locally manufactured goods, a preference margin limited to 15% of the import price (c.i.f.) of such goods, or their prevailing customs duty, whichever is lower, may be applied in the evaluation of bids. The engineering firm which will prepare detailed designs, specifications, and tender documents for all the facilities, and assist in evaluating bids would be selected from prequalified firms acceptable to the Bank (Sections 2.02 and 2.03 of the draft Project Agreement). The contracts for the on-shore facilities and the engineering firm would be subject to the Bank's prior approval.
60. The fisheries corporation would procure all goods for the area development project. The wooden-hull carrier boats costing about $500,000 would be procured from prequalified local shipyards in accordance with the Goverment's local competitive bidding (LCB) procedures satisfactory to the Bank. LCB would likewise be applied to the procurement of the fishing boat hulls ($1.0 million), engines ($0.3 million), sails ($0.2 million), pick-up trucks and insulated trucks ($0.4 million). Communications equipment, spare parts for fishing boat engines, fishing gear and other minor equipment items would be procured through the Government's local procurement procedures that are satisfactory to the Bank (para. C of Schedule 1 to the Project Agreement).
61. The Project Unit (PU) would procure all the items financed under the institutional strengthening component. BFAR would purchase a research vessel to replace its existing one ($900,000). It is expected that this would be a used vessel. Any refitting required would be done on the basis of the recommendations of a qualified marine surveyor. All the scientific equipment required for research and extension would be grouped under a single lot ($0.8 million) and procured through ICB. ICB would also be applied to the - 18 -
24 four-wheel drive vehicles, 7 cars, 400 motorcycles, 3 insulated trucks, pickup trucks, mobile crane, and tractor with scoop loader, which would be purchased as a group. A preference margin limited to 15% of the c.i.f. price of imported equipment, or prevailing customs duty, whichever is lower, may be applied to locally manufactured equipment. Hulls and engines for the patrol and inspection boats would be procured separately. Construction of hulls ($0.2 million) would be awarded to prequalified local shipyards based on LCB. To ensure their timely procurement, it is anticipated that the construction of the hulls would be awarded to three or more builders. The engines ($0.2 million) would likewise be procured through LCB. Local shopping would be used to procure the communications and other minor equipment (Schedule 4 of the draft Loan Agreement).
Status of Engineering
62. Land for fish landing facilities and ancillary structures has been leased by PFDA under a 50 year renewable contract. Feasibility grade designs, layouts and drawings have been prepared for all seven sites. Construction quantities have been estimated for all structures and all hydrographic work done.
Disbursements
63. Disbursements would be made on the basis of full documentation. Disbursements would be made against 50% of expenditures for civil works, 100% of foreign expenditures for directly imported equipment, vehicles, vessels and materials, 100% of local expenditures, ex-factory, for locally manufactured items; 65% of local expenditures for locally procured items; 100% of expenditures for consultants for studies, engineering designs and supervision, 60% of expenditures for local training; and 100% of foreign expenditures for foreign training.
Lending Terms and Conditions
64. The Bank loan of $22.4 million would be repayable over 20 years, including 5 years of grace, at an interest rate of 11.60% per annum. The Government would onlend $12 million of the Bank loan to the fisheries corporation under the area development subproject (para. 58) at the same rate of interest and with the same grace and repayment periods as for the Bank loan. Interest accrued during the grace period would be capitalized. The Government would bear the foreign exchange risk and the corporation would pay a foreign exchange risk premium on amounts withdrawn and outstanding. The corporation would also pay the commitment charge of 0.75% on the undisbursed balance of the loan.
Benefits and Justification
65. Although the impact of the institutional strengthening component is long-term and wide-ranging and cannot be easily quantified, its major benefits for the production and utilization of fish would include: limiting the exploitation of the fisheries resources by preventing overfishing and - 19 - fishing by illegal methods; improving product quality by improving fish handling and processing techniques; and improving marketing information. Major benefits of the area development subproject would include: an increase in the fish catch of about 700 tons annually valued at some P 8.9 million (approximately $1.1 million); employment for about 200 permanent workers and 80 man-years annually of casual labor to be provided by the corporation which would market fish from about 2,500 municipal and other small-scale fishermen; increases in the income of participating fishermen through higher prices realized for the catch; increased efficiency in fishing operations; lower marketing costs; better quality fish, and reduced spoilage of fish from the provision of improved inputs for fishing and marketing facilities.
66. The higher prices received by the participating fishermen, averaging about 10% more than that currently paid by the middlemen-buyers, would amount to about P 2.5 million (about $310,000) per year. Nonparti- cipating fishermen would also benefit to the extent that the fish prices offered by the middlemen-buyers would increase as a result of the higher prices paid by the corporation. Other beneficiaries would include the local workers engaged to construct the various subproject facilities, which would require about 43,000 man-days of labor, and the local fishing industry, which would generally benefit from the ice, cold storage, transport and boat repair facilities provided by the corporation.
67. Under the area development subproject, the financial rate of return (FRR) on the corporation's investments is estimated at about 19%. The FRR on the investments for the motorized fishing boats with fishing gear, which account for the major part of the input supplies to fishermen, is estimated at about 32%. The economic rates of return are 24% and 36% respectively. A sensitivity analysis to determine switching value at which the rate of return would fall below 14% was carried out. Returns are most sensitive to changes in revenues and operating costs, particularly for motorized fishing boats. However, the marketing of fishermen's catch through the corporation would reduce significantly the risk that the rate of return on their investments would fall to the opportunity cost of capital.
Risks
68. This project carries unusually high risks, mainly because the operating results of the area development subproject, being the first of its kind in the Philippines, would be subject to many uncertainties. In addition, MNR and its fisheries agencies have no experience in implementing Bank-assisted projects, and the management within BFAR is at present weak. The major uncertainties which would confront the area development subproject would be, firstly, the extent to which the corporation is able to perform efficiently and successfully, including breaking into the existing marketing system in a manner which would prove benefical to fishermen without seriously disrupting the present trading pattern. This will depend on its ability to engage competent and experienced senior staff, especially managers, who are well acquainted with the fisheries operations in the subproject area. Breaking into the existing marketing system, bound as it is by an intricate web of social and economic relations between fishermen and the middlemen fish buyers, will be a major challenge. Secondly, any delays or errors in the design or construction of the subproject facilities, which would postpone the start of marketing operations or restrict their expansion would - 20 -
in turn adversely affect the corporation's operating results. Major delays in construction would also result in significant cost overruns for the facilities. Thirdly, since reliable estimates of the fish resources and their sustainable levels in the subproject areas are not available at present, future catches may be smaller, resulting in less fish for the corporation than is anticipated. This possibility is recognized in the project design, which emphasizes improved marketing rather than increased production. Finally, project benefits are sensitive to changes in the price of fish. However, since revenue from fish sales in the past has increased more than inflation the risk associated with price sensitivity is not expected to be great. These risks are acceptable because the target group of project beneficiaries is living in a depressed area, and because past attempts by the Government to assist them through credit programs have been largely unsuccessful.
PART V - LEGAL INSTRUMENTS AND AUTHORITY
69. The draft Loan Agreement between the Republic of the Philippines and the Bank, the draft Project Agreement between the Bank and the fisheries corporation, and the Report of the Committee provided for in Article III, Section 4(iii) of the Articles of Agreement of the Bank, are being distri- buted to the Executive Directors separately. Special conditions of the project are listed in Section III of Annex III. Additional conditions of effectiveness include: (a) the execution of the Subsidiary Loan Agreement between the Government and the fisheries corporation (Section 6.01(b) of the draft Loan Agreement); and (b) the establishment of a Project Unit and its secretariat (Section 6.01(c) of the draft Loan Agreement).
70. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank.
PART VI - RECOMMENDATION
71. I recommend that the Executive Directors approve the proposed loan.
A. W. Clausen President
Attachments
April 30, 1982 Washington, D.C. - 21- ANNEXI TPage I of 5 pages TABLE 3A PHILIPPINES - SOCIAL INDICATORS DATA SHEET
PHILIPPINES REFERENCEGROUPS (WEIGHTEDAVETAGES LAND AREA (THOUSANDSQ. KM.) - MOST RECENTESTIMATE)- TOTAL 300.U MOST RECENT MIDDLE INCOME MIDDLE INCOME AGRICULTUhAL 90.8 1960 lb 1970 /b ESTIMATE lb ASIA & PACIFIC LATIN AMERICA& CARIBBEAN
GNP PFR LAPITA (US1) 15U.0 240.0 600.0 1136.1 1616.2
ENERGYCONSUMPTION PER CAPITA (KILOGr.AMSOF COAL EQUIVALENT) 159.1 292.9 355.9 1150.6 1324.1
POPULATIONAND VITAL STATISTICS POPULATION, MID-YEAR (THOUSANDS)27372.0 36852.0 46748.0 URBANPOPULATION (PERCENT OF TOTAL) 30.3 32.9 35.8 40.8 64.2
PUPULATIUNPROJECTIUNS PUPULATIOh I. YEAR 20UO (MILLIONS) 75.2 STATIONARi PUPULATIUN(MILLIONS) 125.0 YEAR STAT1ONARYPOPULATION 1S REACHED 2075
POPULATIONDENSITY PER SQ. KM. 91.2 122.3 155.8 373.1 34.3 PER SQ. KMI.AGRICULTUkAL LANG 360.0 472.0 502.6 2382.8 94.5
POPULATIONAGE STRUCTUKE(PERCENT) U-14 YRS. 44.6 45.5 44.3 39.8 40.7 15-04 YRS. 52.4 51.6 52.6 56.7 55.3 65 YRS. AND ABOVE 3.0 2.9 3.1 3.5 4.0
POPULATIUNGROWTH RATE (PERCENT) TOTAL 2.7 3.0 2.6 2.3 2.4 URBAN 3.8 3.8 3.6 3.8 3.7
CRUDEBIRTH RATE (PER THOUSAND) 45.7 39.2 34.4 29.7 31.4 CRUDEDEATH RATE (PER THOUSAND) 15.6 10.8 8.2 7.5 8.4 GROSS REPRODUCTIONRATE 3.3 2.8 2.3 1.9 2.3 FAMILY PLANNING ACCEPTORS, ANNUAL(THoUSANDS) .. 191.7 650.0 USERS (PERCENT OF MARRIEDWOMEN) .. 2.0 37.0 44.1
FOOD AND NUTRITION INDEX OF FOOD PRODUCTION P'ER CAPITA (1969-71-1O0) 102.0 101.0 114.0 123.7 108.3
PER CAPITA SUPPLY OF CALUFIES (PERCENT OF KEQUIREhENTS) 97.0 102.5 107.7 112.6 107.6 PROTEINS (GKAMSPER DAY) 45.0 50.0 53.0 62.5 65.8 OF WHIU ANIMIALAND PULSE 17.0 20.0 21.0 19.7 34.0
ChILD (AGES 1-4) MORTALITYRATE 15.6 9.6 6.3 4.8 7.6
hEALTh LIFE EXPECTANCYAT BIRTH (YEARS) 51.U 57.3 61.6 64.0 64.1 INFANT MORTALITYRATE (PER THOUSAND) 98.0 80.0 65.0 50.2 70.9
ACCESS TO SAFE WATER(PERCENT OF POPULATION) TOTAL .. 36.0 43.0 45.9 65.7 URBAN .. .. 66.0 68.0 79.7 RURAL .. . 33.0 34.4 43.9
ACCESS TO EXCRETADISPOSAL (PERCENT OF POPELATION) TOTAL .. 57.0 59.0 53.4 59.9 URBAN .. .. 76.0 71.0 75.7 RURAL *' *- 44.0 42.4 30.4
POPULATIONPER PHYSICLAN .. .. 2758.2 4428.7 1728.2 POPULATIONPER NURSING PERSON .. 3840.0 3115.3 2229.7 1288.2 POPULATIONPER HOSPITAL BED lOTAL 1134.1 821.8 558.0 588.5 471.2 URBAN 536.2 392.7 .. 579.6 558.0 RUKAL *- *- * 1138.5
ADMISSIONS PER HOSPITAL BED .. 30.0 .. 36.7
HOUSING AVERAGESIZE OF HOUSEHOLD TOTAL 5.8 5.9 URBAN .. 6.2 RURAL .. 5.8
AVERAGENUMBER OF PERSONS PER ROOM TOTAL .. 2.3 UR8AN *. 2.1 RURAL '. 2.4
ACCESS TO ELECTRICITY (PERCENT OF DIELLINGS) TOTAL 16.5 23.2 36.0 DRBEA .. 60.4 82.0 RURAL *- 6.8 10.0 - 22 - PageANNEX 2 I of 5 pages
TABLE 3A PHILIPPINES - SOCIAL INDICATORS DATA SHEET
PHILIPPINES REFERENCE GROUPS (WEIGHTED AVE AGES - MOST RECENT ESTIMATE)- MOST RECENT MIDDLE INCOME MIDDLE INCOME 1960 /b 1970 /b ESTIMATE /b ASIA & PACIFIC LATIN AMERICA & CARIBBEAN
EDUCAlION ADJUSTED tNtULL14ENT RATIOS PRLIMARY: TOTAL 95.0 114.0 105.0 99.8 101.7 MALE 98.0 115.0 102.0 100.6 103.0 FEMALE 93.U 113.0 107.0 98.8 101.5
SECONDARY: TOTAL 26.0 50.0 56.0 53.5 35.3 MALL 28.0 59.0 65.0 58.4 34.9 FEMALE 25.0 42.0 47.0 48.6 35.6
VOCATIONAL ENROL. (1 OF SECONDARY) 15.0 .. 34.0 21.1 30.1
PUPIL-TEAChER RATIO PRIMARY 3t.0 29.0 31.0 34.2 29.6 SECONDARY 27.0 33.0 36.0 31.7 15.7
ADULI LITERACY RATE (PERCENT) 71.9 82.6 88.4 86.5 80.0
CONSUMPTION PASSENCER CARS PER THOUSAND POPULATION 3.0 7.6 8.9 12.7 42.6 RADIO RECEIVERS PER THOUSAND POPULATION 21.9 46.6 43.5 174.1 215.0 TV RECEIVERS PER THOUSAND POPULATION 1.4 10.9 19.1 50.6 89.0 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSANDPOPULATION 17.0 13.6 21.2 106.8 62.8 CINEMA ANNUAL ATTENDANCEPER CAPITA 0.6 .. 7.6 4.3 3.2
LABOR FURCE TOTAL LABOR FORCE (THOUSANDS) 10893.2 13478.1 16608.5 rFIALE (PERCENT) 34.4 33.1 32.3 37.4 22.6 AGRICULTURE (PERCENT) 61.0 53.0 46.7 50.2 35.0 INDUSTRY (PERCENT) 15.2 16.0 16.9 21.9 23.2
PAKTICIPATION RATE (PERCENT) TOTAL 39.8 36.6 35.5 40.2 31.8 MALE 52.1 48.6 47.6 49.8 49.0 FEMALE 27.4 24.4 23.2 31.1 14.6
ECONOMIC DEPENDENCY RATIO 1.2 1.3 1.3 1.1 1.4
INCOME DISTKIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY hIGHEST 5 PERCENT OF HOUSEHOLDS .. 25.1 hlGHEST 20 PERCENT OF HOUSEHOLDS .. 54.0 OWWEST20 PERCENT OF HiOUSEHOLDS .. 5.2 LOWEST 40 PERCENT OF HOUSEHOLDS .. 14.2
POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 260.0/c RURAL .. .. 195.07E 193.7 187.6
ESTIMATED RELATIVE POVERTY INCOME LEVEL (USI PER CAPITA) URBAN .. .. 266.0/c .. 513.9 RURAL .. .. 200.07w 234.3 362.2
ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) UKBAN .. .. 32.0/c KURAL .. .. 41.07; 32.2.
Not available Not applicable. NOTES
/a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among the indicators depends on availability of data and is not uniform.
/b Unless otheriise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1976 and 1979.
/c 198U.
Revised June, 1981 ANNX I - 23 - Page 3of 5pages
DEFlINITIONS OF SOCIAL INDICATORS
N---es Although the daaacdnoa fomeuoe :tensily lo~dged the eoss auhnttho n eibl nsol acls hente hatted efntbet nainli oprshe eeme or ohs ltof snand fsdsode .iir an.o. pt sdh d..e.n.ruenic i ni-eons the dat. The data see,
The .e.ee.. g.... Pens117 tesoanntpomtthe1 ~ he ahjcotonunysadIll onunun group ith oumeuhat high., sorge.. o--r than the c.unhty grump of thesobleoonuosy eo-pt ion 'Capihai nlu .. .il -nponte grou h:b "hdiM oe mnthl ofollco and Middle Cash' is chosen hacaus ftar e eonoo-uiooraafiiniiaal -In the trers-c grouP data nhr a-ena9ee are ppito osighned." unioct n-n fun eah idicanr- end h.-n onip hben
one tod-itr.Iana tim amon..g the county od orfaen-e-ao
Total - Totl aiate rea copo~isi land area and intn anr rho o or i odd by he et o oushorf hi op ite Ibads
ire oToPs,pstrs, -aket and botcher gand-n or nolie Sefllou 1978 data habililaoo.- uno- -. 1. oeinel aerenb eotpraetysa e by as 1-s ore physic Ian F-nbllshreo y.... on. nhni-pshlpun GNP PER CaPITA VlI - GItP par tapirs setIsatee at --nn sarkos prices ne dial neon ant on included -ina hospitals, ho.r.. , loude beelb tlndby aecoes ehod as World hank Atlas h19h-79 bassl )19th, adedotnresnnprannysatdh haca btb lot r 1979 dsta. efia eiaer,tne.ndus u hii mc dsnion end p..oId, a 1hisled rant c stoical tallitiea. 0 Poersars ENERGYTCONSUMPTIONf PEA CAPITA- Ira coo-uoption of oneclenegy 'coltca-upseIoe F hosiasincods `Oos prinetupelte..e.aI h..spitaLs, sod liptnie, petroheos, naurlm and byd,r-, n-loer ean gerthe-1 tier- and nasal hnephtalt 1-1ta t Ir.rura boepi Inl and ediscat sod sateroity trnitlyt ho Atiogre.. of c-ti eqW-vlen per coyote; 1960, 1970, sod 1979 oe--e . p-oislhrrd Sne- itar holde onyune ttl.
f... hc-pitale dtolded bh chs neber of bsdm. 0 ~~~~~~~POPULATIONtiNl VITAL, ISATSICS N Tonl Poulatno hd-h er nhuesns t he f July 1; 1960, 1971. and 1979 7111101 dons. berate hiss o~~~~_f-tebhld 1p-...hpr -nusrcld -ttl ura..ed ruts1- lrbsr (perentPnulothn oftotal;- pati ua ouain Aiubnohousehold ... ssleo.f agcp fhdhoids. mA hreTlnn uir .hierso- deihicloos oh uncuna may i.. .. u .pnah.... dteen thef unOaa-hhodru niomyo a o ennhddh amog nuune 196h, 1970, mud 197da. nba h...ebod Son otaioc-1 purposes Poyust;o Potenice A ersrnmeroyyon e 00 hn sd rural A-r.sege o
tonl. population by 0gm mod eso ane ttnhhueaesbi cslt d ol ns esonn y.notlnssnlde-n1-prseeI arantrsaso
tot eupocancyanlie bith ..... sto nith country's per o pins inneAces-ctnct enntt~ odoaloat-tna.ubm edrrl lenriand emoleloft mpennuny aeblir,o an 77.1 ers. Tepr-Cooneirion doelig iheeotOyi thgqatr esesfhr fertilily rsne alto ha e three 1-neisa-toing decline in nf totl, -bhoo,enld total d_nsi hoa reepe-Iu-ly f1mno!timy soodi,hog nomos len-1 ond pesi imnily -imnin ptrformsoos Eahcunr beto asaged nie n,ihe tire une coebinoniona of -muelty EDUCoTION and isorminop trer. for o..er. . n purpse AdrusnedtEurnil...I hatl Snatioarnrotoaco-lu thn. oooypopulaion there no no grouth istr. Pr imr- cho - onlml sod immal - Gross ninth1, mole end issah nbshoup hieua -n tohbedmanho-e, andoln rI noIseIfrl"ueor egma - bsyimot = enl s..T s. naseo re.peotto- 'h'I'lotsrooatmot .TIs i erbien-d onl afm et7ito rate derli-en rmr colaeppltin;nral .; 1 ldscude aged 6-11 nhe repha.ese.. beor f -,tr -e rpoitm rsts, h-s each generenoun years but djuetod foe differen heogthe of ytisryednto;fee ninmtelositsl aJ anly. h hninr ouatoiee conrte mint o-inersl do..stino enoI"n e Zemsd iLtD pellto 7 eanisaned no the basis of nhe prjected chratrtattos oII th:e:poploo stuns moe pupils ar elmoabout-its on icisi enbool age.I in rha post 2000, ord rhrrne of deobins fifertility leto norI pae S.enordarthauI - ltotal moletd female - Computed ss shns esud,r aeo J.eneI.li. e.nsorqisa es four- years of pproo.rd pftr h5tafht nea str ioaypoplaio te teen bed - The roa one- stniorypr-ruop ides genrl Lmahm. or- teatber trhimg. iostmnti ... fee Ppmpth siro has beeny rearhed.i usually fi 12 no 17yeruSa;onepodm e...... s ass g.eteesiy
Per so. bkn.- hid-ysar population per .,..rs kilometer (100 he--ram of Tu-aciosa surulle... irens ortr.feudn) oaILma lmncuh Lton1 aea., 19t0h, 19Th and 1979 data. hmulodo r-nnhel1, loduannish, on other proras, shich opseece hodspad- paert.bm.aarlc- Ioralao-copontdasahone Lfnagi-ulorl .. Imnd smtlyoradsp....s-t ni soodary ims... iss only;19b1 i97 sod1978 data. Pumil-soe ra n-rtan a emdarn-ot tdoc nohot PuuaiorAm nretonre ir Icnn- Children Il-hi years) .onkhug-age. 715- memn.adsnodr .lnidinidad by -ucees nf isanh-r in the i pers.and retinad(tS y....s..dnnen)ss. pencestiges otoid-ye., .e.- ncrnspuoInghn iio;iA. .1t, sad 1979 dana. huaItroAd.- aeta m Licsrsta adults habit to reed sto erstel Puoaho rnmth hale rrcri- tonl.- dAimu" enmesh rate fitoa tad- aspreut f tota adult laim aed 15 yeses sod most. yearpoplaronsfurl9h-hl iNAO1-7O and 19Th-T7 PPorolaion Crotch hats nErcenti -rbem- A-auiB.. goth r.ees of urban topw- CdiffT latoosfuiNi-A, rA6TI ad97-79. Psesese Cmo mnnbiadomuais - asseeie npehes aso, trade tinh mamhs husd rma lInt- births pine husr f mdraorssnt Ice I'll nprss;ocoraebisa, ere a 5 ppano;196h, 1970, sod 1979 dan. inlAeo hnithes Crude leach Sanspe tram tbuadi.. - Am.o.I deaths Per thousads f eid-y... sadho tesnrs 1 (per tho....sd opulatiul - Al typos ofrei-hor fee -adir ,popa1isih; 19t0. 197, andei979 dane. tre ar o Sers1 pu~blhi per th-o...d -aho;esldes s-- 5 orpp Cross hemrodonnium AmeA- otge ntbar of da-ghtos mean mil beer ho Iicesse.d receho-s hm nnriesd Io yase oheo rsgsst-nim, tf eadho
tiliyraes; soaly tins nigh l -yeraseo9h n 99 ot orueresaashed5is Bhg Family ylsoait -JAnepotort,maos irosad - aetisi rather'of acnepenr TV Rsetsan-ea hoer nhoi-ad empulanim)- it-arelomsfo bsdoss c of thton-no_ru d-nhs udrsmit.s ofna ionlfemhlp plas..img progrm.genera pub!in pe irhoosdfomesus tldee -Lnse V seoe
.11 -triedg. B--- - L. .... 1ianlynuhtcthn eord enadtg earl ess.I i neHdmP Pat WAOSRtItTmIiON mu he "dehly" If It mpp.ars an.. least foatlessoe- Soda t PF. Pedon er Capita (19t~9-7,1-lll - Indm of pee ,aph,, -oat Chosm Am.us Alnetdeons 'SE is-ia oar ter - h.ead am the sabee of pIdoioo l Food n-seditios. Producrmesonhodss an Feedtaded tcknets sold duritg the peer, hmludiag adeiseh..s I. drln-is rho-a Ia 00 calendaryearbais Cu-InoInIeo--r pehery goods heg. Iua"am sad otile rIe insceadofsuaho htoaodhblsadcunid m-- son te. nofeseod, mes are sanldad ggegt produh-u o-f su omotory Le based on L.ABORFORCc nethneAL -oraga prodoes peric oights; 9Sti-t5, 19701, and 1979 date. Tots1 Labo Prtehth...ads - fo..o.sminelly suite parsons. imuhdtI Pe artsrlyofoinsIeresi resi-hresct - Coeparad ferom ared fortes an .imptsbusetadm osssos stmdsat,tct, per day. Anahieble upphiss coepriss doe..ethI pndmn-in, Dmpmets lass nor r 1ehe960, 1970 sd 9979 dmia. espnt,ad hanesho so A.Sr s mph,9,te -eolteoa fee,d ,seds, Ps-a menei) l-Peei fshatrts.: pettotgeIa oi tons1 hebmo fort. qatonlie use in fed pmnoe..hig, ad lose isdiat ibhotioc Sqioe- Aghi pt.amrot-I - L,bm- ions to ferehag forestry, funting sod memre msetimtedby P019based npphumianedfoommlnt-fishing as p.eresongs mf nme Ibri-n;19h hO odiT11tdate, nis so hath nmid-pn oi po" o Ieoseue oyinihts,,aeIdsryIeco - Lao oret stig,n Itrrr _amfsnemrs sad eso dietrihuti-o of popitrimo, aod a11-thg iT pennrn for masse as anAd!%sotohcin .eter and Bae. preugof Aett1 Astor faeet; h1960 toosahoid lenei hAl-gO 91 7 o 1977 dana 1975 sod 1979 dens.. Fersetas 1ri of 2rrmehn e9(rsee o- dat - r ctef -eh per os pita Petrhria7!tlmomte- hooas- imnal "sh. sa famel1- Psrninhftasms ne epmly of fomd pem day. Net sopply o feud is deft hod sabme.- he- srHnhsprae Ieuada totl, sale sd Tsmal Iags ferness quiremeIs for all ...... e estblished by USA pr-nido fur titoreperoso-gee of =onl,slesdfemae mplcm f shi ages ..sapenth-sy; alo...essn mc t0 grate mel ts- potI per dayted 20 gBas of anima sod 1960, 1970h. ed 1979 daca. These are base.d or ILC's martiripasiss 055- pos Irti,ootiobhI grams ehmald ha to1-a Proosan. These stn-Ifeon g-e tutr f the popaIlato, sod Long name tread, A
soiproei as ma'osg finn the -eld, propose.d by hAd ho the 4Thrd Ecmooml D.enedenoy Satin - Sas of pmpmitim- a-dar 15 tad 65 and ms Word PFod homey; 1961-At, 197h mmd1977 daa to ohs totem tahur forts. Pa aiarts anot fom -ismal and nalse Pruies supply olfehoo de- nho-d hesr nial an ussh rsprdy; 19th1-AS, 1970 sod 1977 data. INOM DISTSIshT'fl - ~~~~~~~~Chiild1aa-4h morcalun hen u!too hausa) -amoL deaths Pe -thou...od It Perneons o fohosts. hu-m hbunt Ln tes sed i,dh - aeri-ed by reh..es age grou h-A pers, tu othildr- It thus age group; for moa denehopiognos eero,ooen1 ecn,pors 0pret orri ean ttes. dens derive from lhf tables; 1960, h970 and 1979 data. of phouebotids,I 0pr.t .e. 0p-.,.dp.- 0Pr-
HEALTH POVERASYPARGST GROUtPS Life Sm-rcnann- Bint hoetysh.. Anersge u.-bef o yers.. of life retiningTefieng etsnsseomapnlasmaue fpney heosis, actbihrt 1960, 1970 so 99dc.sd should b. e tniomndsu osdeeltnh oag trcheossod lIes birthsj. .. aAbsohose penerny nume IoL is the oe- Ioe helme hai.hu a sif1a Anaeetfe ae bennet ohboacsmh-rms ta. amd macal - mHtrttusLIyaeiuh dinpn semtlnnfn esmists s e ha of pWmpl (cmcl urba, sod roeeh sith re...ot-bFe no safe affdedabp1.fftas es-srappp hilde crete..d surfate. ostesor isratdbute ostotd Osie Raltin- Ponen Ant- CrocI (USh mar rasiteS - rhbs sad torh1 ofterPepnisPophnoa ootareeemI.. per.o. imnome f ch,nmuotry. Erhun lne Is deehoed from the -- I ffsei rennpenhntt.ormo te otetrsmm otsmybehhl Ah duntn orhger00to ino ehra.aes moeldre t.bphog oIi..o redamhastesmpta ostinrra ra
hores ofneaPaua mrstm m uhm-irisl. ar f sod. easld-' the noientho psd ddie prposa,at ... mithent treatm ytI,of.bmmattathet Enoel an muc at te
PometasasPesoa Pminm d..in .:.idapueheo pretnop..ysi- these qa..i feesh meinr L nholP a amiecet leos'di.e yL
Peeml Ptya iemem -arPtm pPers t-iPolaimid bynds by mite p-tof ntinphngi meleeudfst-lsgm daa -1uesa,hprennioi-rounces, - - 24 -
ANNEX I Page 4 of 5
PHILIPPINES - ECONOMICINDICATORS
Amount (million US$ at Annual growth rates (%) current prices) Actual Projected Indicator 1979 1976 1977 1978 1979 1980/a 1981 1982 1983 1984 1985 1990
NATIONAL ACCOUNTS Gross domestic product 28,854 7.1 6.2 5.9 5.9 4.7 5.8 6.3 6.3 6.3 7.1 8.3 Agriculture 6,991 8.6 5.0 4.8 5.3 4.3 5.2 5.2 5.0 5.0 5.0 5.0 lndustry 10,174 10.0 7.7 6.4 6.7 5.8 6.5 7.2 7.5 7.5 8.5 10.0 Services 11,689 3.7 5.7 6.3 5.5 5.0 5.6 6.2 6.0 6.0 7.0 8.5
Consumption 21,860 4.3 5.2 4.6 4.8 4.2 5.4 5.2 4.9 5.1 5. 7.0 Gross investiment 8,576 8.0 0.7 13.3 7.4 4.8 6.3 6.3 6.3 6.3 7.1 5.3 Exports of .NFS /b 5,528 19.9 17.6 1.6 7.4 11.3 10.2 10.7 11.2 10.6 10.8 10.5 Imports of GNJFS 7,110 1.3 5.3 13.2 10.3 5.2 6.6 6.7 6.5 6.6 6.8 7.2
Cross national savings 6,665 -2.0 11.3 8.3 7.7 3.1 ------
PRICES GDP deflator (1972 = 100) 183.6 198.8 210.6 250.8 296.9 ------Exchange rate (US$1 =) 7.45 7.41 7.38 7.39 7.52 ------Export price index (1978 = 100) 92.6 95.8 100.0 124.6 140.3 149.9 160.0 170.5 183.3 195.7 258.7 Import price index (1978 = 100) 91.6 94.2 100.0 117.4 142.2 157.0 170.8 185.2 197.1 210.6 289.3 Terms of trade index (1978 = 100) 101.1 101.7 100.0 106.1 98.7 95.5 93.7 92.6 93.0 Q2.9 S9.4
Share of GDP at market prices (I) Average annual increase (%) (at current prices) /c (at constant prices) 1960 1970 1975 1980 1985 1990 1960-70 1970-75 1975-80 1980-85 1985-90
Gross domestic product 100.0 100.0 100.0 100.0 100.0 100.0 5.1 6.1 5.9 6.3 7.6 Agriculture 28.1 27.8 29.0 26.8 25.0 22.0 4.3 4.3 4.8 5.0 5.0 Industry 25.8 29.6 33.5 35.5 37.7 40.6 6.0 8.6 7.6 7.5 9.1 Services 46.1 42.6 37.5 37.7 37.3 37.4 5.2 5.4 5.7 6.1 7.7
Consumption S5.3 79.2 75.8 74.5 72.4 68.7 4.8 5.5 5.2 5.2 6.5 Gross investment 16.3 21.5 31.0 30.1 29.2 30.5 8.2 11.5 6.5 6.8 7.6 Exports of GNFS 1.8 19.4 18.5 19.4 24.7 27.5 5.8 3.2 10.0 10.7 10.0 Imports of GNPS 10.6 19.7 25.3 24.0 26.2 25.4 6.8 6.8 8.0 6.6 6.9
Gross national savings 16.2 20.5 25.3 23.1 25.4 29.2 7.4 9.7 - - -
As , of ODP 1960 1970 1975 1980 Labor Force in 1978 Millions (%)
PUBLIC FINANCE Aericulture 7.4 44.4 Current revenues 9.R 9.5 13.9 12.8 Industry 2.7 16.2 Current expenditures 9.6 10.9 12.3 9.6 Services 5.6 33.0 Current surplus 0.2 -1.4 1.6 4.1 Unemnployed 1.1 6.4 Capital expenditure 2.3 1.9 3.2 3.2 Foreign financing - 0.1 0.3 1.5 Total Labor Force 16.8 100.0
1960-70 1970-75 1975-80 1980-85 1985-90
OTHER INDICATORS Annual GNP growth rate (X) 5.1 5.6 5.9 6.3 7.7 Annual GNP per capita growth rate (%) 2.0 2.7 3.2 3.6 5.1 Annual energy consumption growth rate (V) 7.4 6.2 4.2 4.7 4.0
ICOR 4.5 4.7 4.6 4.5 4.1 Marginal savings rate 0.285 0.330 0.26 0.32 0.35 Import elasticity 1.33 1.12 1.20 1.05 0.90
/a Preliminary estimate. /b Hlistorical figures are official estinates based on 1972 weights. In relation to the composition of Philippine exports in the late 1970s these estimates give undue weight to stable or declining exports of raw commodities such as copra, sugar, and logs, and insufficient weight to rapidly growing exports such as nontraditional manufactures and cocontit oil. bank staff estimates of export volume based on 1978 weights are shown on Attachment 3b. /c Projected years of constant prices.
East A;ia & Pacific Regi nal Office November 1981 - 25 -
ANNEX I Page 5 of 5 pages
BALANCE OF PAYMENTS AND EXTERNAL CAPITAL AND DEBT (US$ million, at current Prices)
Actual Est. Projected 1977 1978 1979 1980 1981 1982 1983 1984 1985
Summary of Balance of Payments
Exports of goods and services 4,161 4,838 6,177 7,863 9,084 10,71. 12,830 15,360 18,370 14,220 Of which: exports of goods 3,151 3,425 4,602 5,788 6,518 7,89;J 9,630 11,710
Imports of goods and services 5,248 6,323 8,108 10,348 12,076 13,680 15,620 17,820 20,210 13,170 15,100 Of which: imports of goods 3,915 4,732 6,142 7,727 8,810 10,050 11,510
730 Transfers (net) 260 312 355 434 500 550 610 660
-1,110 Current Account Balance -827 -1,173 -1,576 -2,051 -2,490 -2,420 -2,180 -
390 420 Direct investment (net) 216 171 99 45 290 320 350
1,310 920 MLT loans (net) 662 891 1,091 1,032 1,370 1,600 1,540 official-source loans (net) 332 333 449 375 851 940 1,050 1,120 1,150 90 -230 Private-source loans (net) 330 501 642 657 519 660 490 300 Other capital (net) /a 113 56 -193 593 455 300 300 300 530 overall Balance /b 164 -54 -579 -381 -375 -200 - 200
International reserves (end-year) /c 1,525 1,883 2,423 3,155 Reserve as months of imports 3.5 3.6 3.6 3.7
External Capital and Debt
Gross Disbursements 1,376 1,968 2,385 2,047 Concessional Loans 88 120 183 178 Bilateral 62 96 113 101 IDA 2 1 3 2 Other multilateral 24 63 67 75
Nonconcessional Loans 1,287 1,848 2,202 1,R69 Official export credits 123 121 152 8 tBRD 99 160 204 221 Other multilateral 30 47 81 83 Private sources 1,035 1,520 1,765 1,557
External Debt Debt outstanding and disbursed 5,003 6,199 7,137 8,554 Official-source 1,423 1,895 2,265 2,710 Private-source 3,580 4,304 4,872 5,844 Undisbursed debt 2,601 4,017 4,305 5,476
Debt Service Total service payments 762 910 1,028 1,259 Of which: interest 183 270 486 659 Payments as % of exports of goods and services 18.3 18.8 16.6 16.0
Average interest rate on new loans Official-source 7.5 5.5 5.5 6.9 Private-source (DRS) 8.4 9.0 10.5 14.7
Average maturity of new loans Official-source 18.6 22.8 23.3 21.2 Private-source (DRS) 9.0 10.2 11.1 9.9
/a Short-term capital, monetization of gold, allocation of SDRs, and errors and omissions. /b EquLals change in net international reserves. T7 Gross reserves of the Central Bank ("International reserves," IFS).
East Asia and Pacific Region Novemher 1981 - 26 -
ANNEX II Page 1 of 18 pages
THE STATUS OF BAIIK GROUP OPERATIONS IN THE PHILIPPINES
A. STATEMEHT OF BANK LOANS AND IDA CREDITS As of March 31, 1982
Loan or Credit Amount (less cancellations) Number FY Borrower Purpose Bank IDA Undisbursed
Twenty-six Loans and three credits fully disbursed 485.82 32.20 984-PH 1974 Rep. of the Philip. Aurora-Penaranda Irrigation 9.50 0.16 998-Pit 1974 DBP I 50.00 0.43 1034-PH 1974 National Power Corp. Power 61.00 0.51 1035-Pd 1974 Rep. of the Philip. Population 25.00 7.83 108U-PH 1975 Rep. of the Philip. Tarlac Irrigation 17.00 2.87 1102-PH 1975 Rural Development 25.00 4.88 1154-PtH 1976 Magat Irrigation 42.00 5.81 1190-PH 1976 DBP II 75.00 1.29 1224-T-PH 1976 Education III 24.73 2.23 1227-PH 1976 Chico Irrigation 50.00 25.80 1272-T-PH 1976 Manila Urban 10.00 2.99 1282-PH 1976 Manila Urban 22.00 6.58 1269-PH 1977 Second Grain Processing 11.50 4.04 1353-PH 1977 Third Highways 95.00 44.98 1367-P1t 1977 Jalaur Irrigation 15.00 5.55 1374-P.I 1977 Fourth Education 25.00 6.64 1399-PH 1977 Central Bank of the Fourth Rural Credit Philippines 36.50 12.30 1414-Pil 1977 Rep. of the Philip. Nat. Irrig. Syst. Improvot. 50.00 30.25 1415-Pit 1977 Provincial Cities Water Sup. 23.00 7.89 1421-P1I 1977 Rural Dev. Land Stlmt. II 15.00 6.93 1460-PA 1978 National Power Corp. Seventh Power 58.00 30.63 1506-Pt1 1975 Rep. of the Philip. Smallholder Tree Farming 8.00 5.90 1514-PH 1978 Philip. National Bank PDCP V 30.00 5.15 1526-PH 1978 Rep. of the Philip. Nat. Irrig. Syst. Improvmt. II 65.00 48.30 790-Pit 1978 Rural Infrastructure 28.00 21.09 S.8-PI1 1978 Education 2.00 0.88 1547-Pil 1978 Nat. Electrif. Admin. Rural Electrification 60.00 1.05 1555-P1I 1978 Philip. National Bank PISO 15.00 1.05 1567-Pil 1978 Rep. of the Philip. Magat II 150.00 22.97 1572-PH 1978 Industrial Investment III 80.00 25.20 1615-PH 1979 Manila Water Supply II 88.00 78.14 1626-PH 1979 National Extension 35.00 30.10 1639-PH 1979 Magat River Multipurpose 21.00 14.22 1646-PH 1979 Small Farmer Dev. (Land Bank) 16.50 10.12 1647-PtH 1979 Second Urban Development 32.00 21.65 1661-Pil 1979 Highways IV 100.00 97.44 1710-PH 1979 Water Supply II 16.00 16.00 920-PH 1979 Water Supply II 22.00 19.17 1727-PH 1979 Small & Medium Industry II 25.00 0.36 923-PH 1979 Population II 40.00 39.30 1772-PH 1980 Samar Island Rural Devel. 27.00 23.92 1786-PH 1980 Fisheries Trng. (Educ. VI) 38.00 37.31 1809-PH 1980 Medium-Scale Irrigation 71.00 67.06 1814-PH 1980 tianila Sewerage & Sanitation 63.00 57.18 1815-PH 1980 Rainfed Agric. Dev. (Iloilo) 12.00 11.21 1821-PH 1980 Third Urban 72.00 60.59 1855-PH 1980 Third Ports 67.00 65.11 1860-Pt! 1980 Rural Roads Improvement 62.00 57.86 1890-Pit 1981 Watershed Management 38.00 36.48 1894-PH 1981 Third Livestock & Fisheries 45.00 33.90 1903-PH 1981 Structural Adjustment 200.00 3.96 1984-PH 1981 Central Bank of che Industrial Finance (Apex) 150.00 149.88 Philippines 2030-PH 1981 Rep. of the Philip. Elem. Educ. Sector Loan 100.00 100.00 2040-Pil 1982 Rep. of the Philip. Ag. Support Services 45.00 44.97 2067-PH/a 1982 Rep. of the Philip. Urban Engineering 8.00 8.00
TotaL 2,967.55 122.20 1,546.57 of which has been repaid (Bank and third parties) 236.50 Total now outstanding 2,731.05 122.20 Amount sold 24.34 of wtiich has been repaid (third parties) 23.06 1.28 - Total now held by Bank and IDA (prior to exchange rate adjustments) 2,729.77 122.20 Total undisbursed 1,346.55 79.56 1,426.11
/a Not yet effective. - 27 - ANNEX II Page 2 of 18 pages
B. STATEMENT OF IFC INVESTMENTS As of March 31, 1982
F ecal Amounts ($ million) ar Company Loan Equity Total
1963 & 1973 Private Development Corporation of the 15.0 4.4 19.4 Philippines 1967 Manila Electric Company 8.0 - 8.0 1967 Meralco Securities Corporation - 4.0 4.0 1970 Philippine Long Distance Telephone 3.7 .8 4.5 Company 1970 & 1972 Mariwasa Manufacturing, Inc. 0.8 0.4 1.2 1970 Paper Industries Corporation of the - 2.2 2.2 Philippines 1971 & 1977 Philippine Petroleum Corporation 6.2 2.1 8.3 1972 Marinduque Mining and Industrial 15.0 - 15.0 Corporation 1973 Victorias Chemical Corporation 1.9 0.3 2.2 1974 Filipinas Synthetic Fiber Corporation 1.5 - 1.5 1974/1979 Maria Christina Chemical Industries, Inc. 1.6 0.6 2.2 1974 Republic Flour Mills Corporation 1.2 - 1.2 1975 Philippine Polyamide Industrial 7.0 - 7.0 Corporation 1976/1980 Philagro Edible Oils, Inc. 2.6 0.2 2.8 1977 Acoje Mining Company, Inc. 2.3 1.2 3.5 1977 Sarmiento Industries, Inc. 3.5 - 3.5 1978 Cebu Shipyard and Engineering Works, Inc. 2.1 - 2.1 1979 General Milling Corporation 4.0 1.1 5.1 1980 PISO Leasing Corporation 5.0 0.1 5.1 1980 Ventures in Industry and Business - 0.3 0.3 Enterprises, Inc. 1980 Consolidated Industrial Gases, Inc. 4.5 - 4.5 1981 Loans to Seven Corp. for SMSE 18.5 .7 19.2 1981 Philippine Assoc. Smelting & Refining Corp. - 5.0 5.0 1981 Davao Union Cement Corp. 16.0 - 16.0
Total gross commitments 120.4 23.4 143.8
Less sold, acquired by others, 53.5 12.6 66.1 repaid or cancelled
Total commitments now held by IFC 66.9 10.8 77.7
Total Undisbursed 34.5 0.8 35.3 - 28 - ANNEX II Page 3 of 18
C. STATUS OF PROJECTS IN EXECUTION /1 as of March 31, 1982
Agricultural Sector
Credit No. 472 Aurora-Penaranda Irrigation; $9.5 Million Credit and Loan No. 984 $9.5 Million Loan of May 14, 1974; Date of Effectiveness: August 22, 1974; Closing Date: December 31, 1981
The project was completed on December 31, 1981 and preparation of the Completion Report is well under way. Work on the Canili and Diayo dams and the transbasin canal was completed in 1975, about one year ahead of schedule. However, difficulties in the award of construction contracts delayed the start of improvement works in the Penaranda service areas which were further hampered by severe typhoon damages in 1978 and 1980. Due to cost increases, delays in construction and reduced cropping intensity resulting from the overall shortage of water in the Upper Pampanga River Irrigation System, the internal rate of return is expected to be considerably lower than the appraisal estimate of 17%. The last consignments of O&M equipment are being delivered.
Loan No. 1080 Tarlac Irrigation, $17.0 Million Loan of January 27, 1975, Date of Effectiveness: April 30, 1975; Closing Date; June 30, 1982
The project is now about 90% complete. Full completion is expected by December 1982, a two-year delay in the original schedule, caused mainly by managerial problems and late preparation of the designs for the drainage works. The closing date has already been extended by one and a half years to June 30, 1982, and it is expected that the Government will request a further extension to complete the project works. The area developed is likely to be some 20% less than originally planned, mainly because of flooding from the Chico, Camiling and Agno rivers. Costs are higher than anticipated, partly due to the delays referred to above, and the economic rate of return is now likely to be close to 10% compared with an appraisal estimate of 15%.
Loan No. 1102 Rural Development; $25.0 Million Loan of April 16, 1975; Date of Effectiveness: July 28, 1975; Closing Date: December 31, 1983
Overall project execution is well advanced. The irrigation works are substantially completed, except for two communal systems which are planned for completion by the end of 1982. After initial delays in the award of construction contracts for the roads component, progress in project execution
/1 These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any problems which are being encountered, and the action being taken to remedy them. They should be read in this sense, and with the understanding that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution. - 29 - ANNEX II Page 4 of 18 has now improved with the mobilization of contractors on three national and one provincial road contracts. Completion of the roads component is now planned for mid-1983, about three years behind the appraisal schedule. The closing date has therefore been extended to December 1983.
Loan No. 1154 Magat Multipurpose Project; $42.0 Million Loan if August 7, 1975; Date of Effectiveness: November 4, 1975; Closing Date: June 30, 1983
Civil works by local contract and force acount for rehabilitation and new construction of canals, drains and access roads are progressing well, and the project is over 90% complete. All contracts have now been awarded, but some of the work has been postponed until the end of the rainy season. The water management training is continuing satisfactorily. Due to earlier delays in contract award, budgetary constraints and typhoon damage in 1980, project completion is expected to be delayed by about two years over the original schedule of June 30, 1982.
Loan No. 1227 Chico River Irrigation Project; $50.0 Million Loan of April 8, 1976, Date of Effectiveness: July 19, 1976; Closing Date; December 31, 1984
Although the project was scheduled for completion in June 1980, it is now only about 54% complete. Work started slowly due to late procurement of equipment for force account work. Further delays were caused by: changes in design which resulted in rebidding the three major contracts for the diversion dam, the main canal and the river siphon; severe and repeated typhoon damage; and problems of right-of-way acquisition. Work on the diversion dam was suspended for over four months because of security problems in the area. The project is now scheduled for completion in June 1984, a four-year delay over the appraisal estimate, and the closing date has therefore been extended to December 31, 1984. Towards the end of 1981, in an effort to accelerate project implementation, the National Irrigation Administration created a special task force, reorganized and strengthened the project organization and brought in additional equipment and materials.
Loan No. 1269 Second Grain Processing Project; $11.5 Million Loan of July 2, 1976; Date of Effectiveness: October 4, 1976, Closing Date: June 30, 1983
The loan is fully committed and the closing date is expected to be met. The loan has disbursed rapidly since the end of 1980 after a slow beginning which led to a two-year postponement of the closing date to June 30, 1983. The post-harvest study on grain losses is expected to be completed in early 1982. - 30 - ANNEX II Page 5 of 18
Loan No. 1367 Jalaur Irrigation Project; $15.0 Million Loan of February 14, 1977; Date of Effectiveness: May 12, 1977; Closing Date: December 31, 1982
The project is about 85% complete. Remaining major construction activities include the improvement of the Santa Barbara diversion dam by contract, the repairs of the existing right bank of the Jalaur diversion dam, and on-farm facilities, including some additional works by force account. The National Irrigation Administration expects to complete all construction works by the end of July 1982. The Government intends to use the anticipated balance of $4 million for the detailed engineering of the Jalaur multipurpose storage dam for Stage II of the project. A draft feasibility report is being reviewed by the Bank.
Loan No. 1399 Fourth Rural Credit Project; $36.5 Million Loan of April 11, 1977; Date of Effectiveness: June 2, 1977; Closing Date: December 31, 1982
The escalation in fuel and machinery costs during 1978 and 1979, accompanied by a sharp fall in sugar prices, substantially reduced the subloan demand, particularly for four-wheel tractors, power tillers and light trucks. Another major problem has been the growing arrears of several rural banks resulting in many of them being ineligible for project lending. To compensate for this, in November 1979, the project's scope was broadened to include new categories of investments and new lending channels (private development banks); however, their impact on the disbursement rate has been modest. Effective January 1982, the institutional arrangements for project imple- mentation have been further widened to include private investment corporations to lend, on a selective basis, for project-supported investments. The lending terms have also been suitably rationalized. As a result, the pace of subloan commitments is expected to accelerate; however, the undisbursed balance of the loan ($12.8 million) may not be fully utilized by the extended closing date of December 31, 1982.
Loan No. 1414 National Irrigation Systems Improvement Project; $50 Million Loan of May 13, 1977; Date of Effectiveness: August 9, 1977; Closing Date: December 31, 1982
Progress in project implementation has been slow due to shortage of staff and design problems at the outset, which caused delays in the finaliza- tion of designs and preparation of bidding and contract documents for the Abulog diversion dam and drainage works in Leyte. Shortages of fuel and construction materials, which initially caused major delays, were eventually overcome. Implementation improved in 1979 as a result of better planning and organization and less complicated contract procedures. However, project execution was severely delayed in 1980 and 1981 due to inadequate and, in certain cases, late release of counterpart funds. Corporate funds have now been approved, and in part released, for the 1982 construction program. Final project costs and benefits are expected to be in line with original estimates. Project benefits may be lower than estimated due to inadequate water, particularly in Region 1. The project is now expected to be completed in December 1984, about three years behind the appraisal estimate. - 31 - ANNEX II Page 6 of l1
Loan No. 1421 Second Rural Development (Land Settlement) Project; $15.0 Million Loan of June 10, 1977; Date of Effectiveness: October 27, 1977; Closing Date: December 31, 1982
A Cabinet subcommittee has been appointed to examine proposals for a public land management policy emerging from an interagency workshop held in August 1981. Feasibility studies have been completed for two of the three settlements proposed for a follow-on Bank-financed project. Satisfactory progress is being made in land allocation and titling and project infra- structure; however, some titling and infrastructure works are expected to extend beyond the current loan closing date. A recent promising start has been made on the credit program and this should gather momentum. Progress in the agricultural development component has been promising, as reflected in the adoption by settlers of improved techniques, in the extent of areas now under cultivation, and in reported improved yields. The reforestation component of the project has, however, been neglected. In view of the status of some project components, the Government is expected to request an extension of the loan closng date by twelve months, to December 31, 1983.
Loan No. 1506 Smallholder Tree Farming and Forestry Project; $80.0 Million Loan of January 23, 1978; Date of Effectiveness: May 11, 1978; Closing Date: December 31, 1982
Physical progress on the DBP tree farming component continues to be satisfactory, and area commitments have reached approximately 82% of the project's target. The BFD pine plantation component at Abra has been seriously affected by insect attack resulting in the need to reconsider plans for development and to initiate work on pest control measures and the use of alternative tree species. The PCARR forestry research program is progressing well and the draft Wood Industries Development Study has been submitted to the Ministry of Natural Resources. Disbursement continues to be behind schedule, principally because of procurement difficulties over vehicles, infrastructure and equipment.
Loan No. 1526 Second National Irrigation Systems Improvement Project: $65 Million Loan of March 15, 1978; Date of Effectiveness: June 20, 1978; Closing Date: December 31, 1984
Topographic surveys, planning and design for most of the project works have been completed and construction is under way. Overall implementa- tion progress is slow due to delays in finalizing the design for diversion works and drainage systems in Regions 9 and 12, slow bureaucratic processes in bidding and award of contracts, and inadequate and belated release of counterpart funds in 1981. Corporate funds have now been approved for the 1982 construction season, and the project is expected to be completed in 1985. - 32 - ANNEX II Page 7 of 18
Credit No. 790 Rural Infrastructure; $28 Million Credit of April 21, 1978; Date of Effectiveness: July 21, 1978; Closing Date: December 31, 1983
Construction of rural water supply systems and health stations is proceeding satisfactorily with about 360 water wells and 53 health stations now completed. The construction of San Jose Port is expected to be completed by mid-1983, allowing for the repair of typhoon damages. Work has progressed well at the port of Culasi, but completion is delayed due the continuing settlement of the storage platform. Construction of Dumaguit port is behind schedule, as is construction of the irrigation components which were held up by inadequate support facilities, ineffective farmer organizations and failure of farmers to collaborate with project staff. However, remedial measures have now improved the situation and the service area has been increased to about 10,400 ha. About 35 km of roads have been constructed through force account, construction contracts have been awarded for 300 km of roads and the detailed design of the remaining roads is well under way. The total length of village roads has been reduced from the appraisal estimate of 1,390 km to about 1,200 km. Project completion is now planned for December 1984, about two years behind the appraisal schedule.
Loan No. 1567 Magat River Multipurpose Project - Stage II; $150 Million Loan of May 23, 1978; Date of Effectiveness; August 24, 1978; Closing Date: December 31, 1983
Progress is good. The first stage of river diversion has been successfully achieved and excavation is substantially complete. Construction of the main dam is making excellent progress. Concrete work for the spillway started slowly and suffered from interruptions due to breakdown of the cranes, but the contractor has made up for lost time and is once more nearly on sche- dule. Work on resettlement of the population to be displaced by the reservoir is excellent, with work on one of the three new villages nearly complete. The project is expected to be completed on schedule.
Loan No. 1626 National Extension Project; $32.0 Million Loan of December 21, 1978; Date of Effectiveness: March 26, 1979; Closing Date: June 30, 1983
After a slow start due to the reorganization within the Ministry of Agriculture (MOA), the project is being further delayed by management and financial constraints. Implementation in the regions is now the responsibility of the Regional Directors, and performance varies depending on the motivation of the Director. The Minister of Agriculture has now been requested to ensure that Regional Directors are fully conversant with the Project-s objectives. The influence of the Project Manager - the Director of the Bureau of Agricultural Extension - has been reduced since his agency become a staff bureau. A shortage of local funds during the latter half of 1981 affected progress detrimentally. Procurement problems persist, as it is unlikely that the President's Office will allow the import of the full quota of vehicles designated for the project because of their increased cost and drain on limited fuel resources. MOA will request that surplus vehicle funds - 33 - ANNEX II Page 8 of 18 be used for other purposes, including additional motorcycles and visual aid materials, and increased travel and gasoline allowances for all field technicians. This request is expected to be received by the end of June 1982 and will be reviewed at the next supervision scheduled later in the year.
Loan No. 1639-PH Magat River Multipurpose Project; Stage II Irrigation; $21.0 Million Loan of January 26, 1979; Date of Effectiveness: April 25, 1979; Closing Date: December 31, 1983
Implementation started early in 1980 and progress is generally satisfactory. All major contracts have been awarded and some are ahead of schedule. All construction equipment has been procured and delivered to site. Completion is now expected by the end of 1984, eighteen months behind the appraisal estimate. The major constraint is the overall shortage of local funds which is being carefully considered by the Government.
Loan No. 1646 Small Farmer Development Project through the Land Bank of the Philippines; $16.5 Million Loan of January 26, 1979; Date of Effectiveness; April 25, 1979, Closing Date: June 30, 1983
The pace of sub-loan disbursements to small farmers continues to be slow due to LBP's cautious approach to lending resulting from poor collections under past sub-loans and to the delay in the reorganization of field offices caused by belated government approval of LBP's proposals. In addition, there has been a backlog in loan withdrawals in respect of disbursements to second priority (non-agrarian reform) beneficiaries. The field office reorganization and and other institution development measures are, however, expected to be carried out in near future. Procedural difficulties which held up withdrawals under the infrastructure component have also been resolved, and the line agencies have started sub-project implementation. The disbursements under the infrastructure component are expected to start in May 1982. The loan is expected to be fully drawn by December 31, 1983, an 18-month delay over the appraisal estimate of June 30, 1982.
Loan No. 1772 Samar Island Rural Development Project; $27.0 million Loan of February 1, 1980; Date of Effectiveness: May 21, 1980; Closing Date: June 30, 1985
Bidding on road construction has been delayed due to political disturbances on the island. Port work is proceeding satisfactorily but the irrigation program has been delayed due to withdrawal of one of the sites because of technical objections by the settlers. Alternative sites are now being reviewed by the Bank. The construction of village wells is progressing satisfactorily, and a pump maintenance problem was corrected by providing specialized service tools under the project. The formation of water users associations, and the collection of water charges, have begun slowly but are gaining momentum. The program of schistosomiasis control is proceeding on schedule, as is the Catubig Valley development study. - 34 - ANNEX II Page 9 of 18
Loan No. 1809 Medium-Scale Irrigation; $71.0 million Loan of March 28, 1980. Date of Effectiveness: June 25, 1980; Closing Date: December 31, 1986
The consultants engaged to develop the design of the dams have now started compiling design and construction standards for irrigation structures and facilities. However, detailed engineering design of the diversion dams is behind schedule due to unavailability of drilling rigs to conduct sub- surface investigations. Force account works have been started. Construction contracts have been awarded for three of the 12 major contract works. Diffi- cult working conditions in the project areas and inadequate communications facilities have resulted in poor response to invitations for competitive bidding from prospective contractors. This is likely to cause further delays in the implementation schedule.
Loan No. 1815 Rainfed Agriculture (Iloilo); $12.0 million Loan of March 28, 1980; Date of Effectiveness: June 25, 1980; Closing Date: June 30, 1986
In spite of the complexity of the project, the Ministry of Agri- culture's project management is making fair progress. The multi-agency set-up of this project requires close financial monitoring, which needs further improvement. The 1981 wet season multiple cropping target of 6,000 ha under the Kabsaka methodology has been achieved. For the success of the coming 1982 wet season target of 16,000 ha, much will depend on the effectiveness of the farmers' training sessions, the selection of farmer leaders and the mobility of the field staff. The mobility of the coordinating management staff has now improved with the provision of new vehicles funded through the National Extension Project. The project has not to date been able to purchase its own vehicles due to restrictions imposed by the Presidential Office. Several project components are seriously affected by the inadequacy or delay in the allocation and/or release of local funds.
Loan No. 1890 Watershed Management and Erosion Control Project; $38.0 Million Loan of August 4, 1980; Date of Effectiveness: October 30, 1980, Closing Date: December 31, 1986
In spite of funding restraints which affected project implementation in 1981, the reforestation component achievement is close to target, and, with the allocation of funds for 1982 now available, this progress should continue. Road works are behind schedule, as vehicles and equipment procured under the project have not yet been delivered, and the use of hired equipment has been plagued with problems. Project staffing levels proposed by NIA have been reduced by 32%, and the proposed salary grades of key management personnel have also been reduced. The Bank is monitoring this situation closely to determine its possible effect on project implementation. The contract for the Magat Feasibility Study was signed in November 1981. The forest protection pilot project is behind schedule due to the late release of funds in 1981. - 35 - ANNEX II Page 10 of 18
Loan No. 1894 Third Livestock and Fisheries Credit Project; $45.0 Million Loan of August 4, 1980; Date of Effectiveness: November 5, 1980; Closing Date: June 30, 1984
Tbe project is progressing well and cumulative disbursements have ben slightly ahead of schedule. Estimated commitments over the medium term indicate that this trend should continue. In general, lending for fishponds and hog production has exceeded appraisal estimates, while lending for seagoing vessels and some types of cattle has lagged. (Village level cattle schemes have substantially surpassed appraisal estimates.) Studies being C4i Lied out 1, _-td Bureau of Animal ladustries should be under way shortly, and institutLonal strengthening of the Development Bank of the Philippines is currently in progress. The need for a study on fishing gear technology to be handled by the Fishery Industry Development Council is being reviewed, but a review of maritime regulations is expected to start shortly.
Loan No. 2040 Agricultural Support Services; $45.0 million Loan of August 25, 1981; Proposed Date of Effectiveness: November 10, 1981, Closing Date: December 31, 1987
This loan was signed on August 25, 1981 and was declared effective in November 1981. New agencies have been established, and existing agencies organized to implement the 24 components of the project. Delays have been encountered due to confusion over the designation of responsibilities between the Central Office, the staff bureaus and the Regional Offices following the 1980 reorganization of the Ministry of Agriculture and non- release of scheduled local start-up funds in 1981.
Transportation Sector
Loan No. 1353 Third Highway Project; $95.0 Million Loan of January 12, 1977; Date of Effectiveness: March 30, 1977; Closing Date: December 31, 1983
Overall, the project is about 65% complete and two and half years behind schedule because of slow procurement, poor performance of many contrac- tors, and inadequate planning for the use of local funds. The Ministry of Public Highways was poorly managed. However, it was merged in 1981 with the Ministry of Public Works and its operations are now improving. Further efforts are, however, required to strengthen its management, and a short-term action program was agreed in detail in 1981 with the Ministry of Public Works and Highways (MPWH) in order to tighten the project implementation. MPWH has adhered to the schedule of the action program, and works on national and minor road contracts are now progressing satisfactorily. The road maintenance and restoration programs have been reduced in scope to establish more realistic targets. Procurement of road maintenance equipment, tools and other machinery has been completed. Consultants for supervision of construction of roads and workshops are in place and the road and ferry feasibility studies have been completed. The technical assistance advisors to MPWH completed their assignment in November 1979 and training advisors to MPWH completed their work in March 1980. Overall, the project is likely to be completed by mid-1983, the revised completion date. - 36 - ANNEX II Page 11 of 18
Loan No. 1661 Fourth Highway Project; $100 Million Loan of March 9, 1979 ; Date of Effectiveness: June 15, 1979; Closing Date: December 31, 1983
After long initial delays caused mainly by slow procurement,the implementationof this project has now started to progressmore rapidly. MPWH has adhered, with some minor delays, to the action program agreed upon in May 1981, and has recently made significantprogress by awarding nine of the ten national road constructioncontracts. Nevertheless,the overall delay now amounts to at least a year. The detailed engineeringfor constructionof workshops is well under way. Pilot maintenanceprograms for four regions have started and procurementof maintenanceequipment is under way.
Loan No. 1855 Third Ports Project; $67 Million Loan of June 13, 1980; Proposed Date of Effectiveness: September11, 1980; Closing Date: June 30, 1985
Bids for almost all project components have been received and evaluated. The soil consolidationwork at the Port of Cebu is virtually complete. Contracts for the main constructionworks at the ports of Iloilo, Cebu and Zamboangahave been awarded and mobilizationis under way. The contract for the main constructionwork at the Port of Cagayan de Oro is still under evaluation. Arrangementsfor constructionsupervision are still not satisfactoryand the Government is attemptingto improve its field supervision organizationwith the help of technicalassistance consultants.
Loan No. 1860 Rural Roads ImprovementProject; $62 Million Loan of June 13, 1980; Proposed Date of Effectiveness: September8, 1980; Closing Date: June 30, 1985
Initial progress in preparingthe 1981 rural roads program has been slow due mainly to a delay in providingtechnical assistance services to the implementingagency. Due to delays in preparing and reviewingdetailed engineeringfor rural roads, no constructioncontracts started in the 1981 dry season, putting the project about nine months behind schedule. Recently, the Ministry of Local Governmenthas awarded contracts for the first year-s program packages,and the works are now starting. Contracts for improvement of the national road in OccidentalMindoro have recently been awarded, and the contractorsare mobilizing. Consultingservices for the technicalassistance component are now under way.
Education Sector
Loan No. 1224-T Third EducationProject; $25 Million Loan of April 8, 1976; Date of Effectiveness: July 29, 1976; Closing Date: June 30, 1982
The main componentof the project,which is the development, printing and distributionof 27 million primary and secondarytextbooks and teachers manuals in five subject areas, has made good progress. The project - 37 - ANNEX II Page 12 of 18 has met its goal of producing and distributing 84 titles to schools, amounting to over 31 million copies. Over 56,000 teachers have been upgraded. A delay in the completion of a central facility for the Textbook Secretariat, resulting from change orders and price escalation, has caused a one-year delay in project completion. Two hundred seventy thousand dollars of the loan was cancelled in March 1982 due to misprocurement when a contract was not awarded to the lowest bidder.
Loan No. 1374 Fourth Education Project; $25.0 Million Loan of March 25, 1977; Date of Effectiveness: June 9, 1977; Closing Date: December 31, 1983
Implementation of the project is now some 18 months behind schedule. Rapid price escalation and high credit costs in the 1978-80 period resulted in a slow-down in building activity, the rescinding of an important contract and renegotiation of others, thus delaying implementation of the project's other physical components and dependent educational objectives. The problem is being resolved, and in the process EDPITAF has devolved implementation responsibilities to recipient institutions. The closing date has now been extended for two years to December 1983. Overall project utilization of Technical Assistance Specialists is only 20%, while over 80% of Fellowship time has been committed. Enrolments are about on target and other educational developments at UPLB and VISCA are proceeding satisfactorily. There is some tendency to proliferate fields of specialized study and the National Governing Board of the PTC-RD system has not functioned as planned in reviewing important changes in policies and programs.
Loan No. 1786 Fisheries Training Project; $38.0 Million Loan of February 1, 1980; Date of Effectiveness: May 19, 1980; Closing Date: June 30, 1985
Overall physical implementation is behind schedule by about six months mainly due to the transfer of detailed implementing responsibility from EDPITAF to the respective project institutions, and to delays in Presidential approval of civil works contracts (P 2.0 million each). Uncertainties over where management responsibilities would lie are expected to cause further delays. Seven of the 13 civil works contracts have now been awarded and technical assistance is in progress. The Fellowship program is being implemented on schedule, but the recruitment of consultants has been slow, also affected by the transfer of implementing responsibility and the delay in the release of the Obligation Authority for project funds to recipient institutions. This release is expected shortly. The Bank has recommended that an interministerial task force be created to review the management difficulties and other issues which are hampering project implementation.
Loan No. 2030 Elementary Education Sector Loan; $100.0 Million Loan of August 25, 1981; Proposed Date of Effectiveness: November 10,1981; Closing Date: December 31, 1986
This loan was declared effective in November 1981. The project has made a good start, and project planning is proceeding well. The main - 38 - ANNEX II Page 13 of 18
difficulties anticipated would arise from the Government's complicated procurement, payment and accounting procedures. These difficulties should be minimized by the transfer of expertise from EDPITAF to the Ministry of Education, which is responsible for project implementation.
Urban Sector
Loan No. 1272-T Manila Urban Development Project; $10.0 Million and Loan No. 1282 $22.0 Million Loans of June 9, 1976; Date of Effectiveness: December 9, 1976; Closing Date: September 30, 1983
On-site infrastructure is about 90% complete and 4,800 plot titles have been awarded with another 4,000 scheduled by September 1982. Improved water supply is delayed and now expected by last quarter 1982. The sewer outfall should be completed by February 1983, the R.10 road in late 1983 and the C.2 road by april 1984. The site will be turned over to the local government shortly.
Loan No. 1415 Provincial Cities Water Supply Project; $23 Million Loan of May 13, 1977; Date of Effectiveness: September 9, 1977; Closing Date: June 30, 1983.
Overall project implementation is about one year behind schedule. Major contracts have been awarded; however, due to unforeseen delays in well drilling and late deliveries of pipes, progress has been slow. All major contracts have been let, and better progress is expected through 1982. Work has started in four of the six project cities, and contractors are mobilizing in the remaining two. The construction cost is expected to be close to appraisal estimates; however, project completion is expected to be delayed by about one year.
Loan No. 1615 Second Manila Water Supply Project; $88 Million Loan of July 26, 1978; Date of Effectiveness: December 21, 1978; Closing Date: December 31, 1983.
The project suffered a late start because of initial delays in approvals of contracts in source development which delayed the construction of the Bank-financed distribution system component. Nearly all the major contracts have now been let and no further slippage is expected. However, because of the high cost of money, many contractors have delayed mobilization on their contracts. A water rate increase of P 0.25 plus a 10% waste water disposal charge were implemented on July 1, 1981.
Loan No. 1647 Second Urban Development Project; $32.0 Million Loan of January 26, 1979; Date of Effectiveness: April 26, 1979; Closing Date: June 30, 1984
In Manila, problems in funding contracts and poor coordination between executing agencies, which caused considerable delays and cost over- runs (50% over appraisal estimates), are now being resolved. Physical works 39 -ANNEX II page 14 of 18 are expected to be completed by early 1984, 15 months behind schedule. In the regional cities, after an initially slow start due to staffing and political problems, work is underway on all sites and completion is expected at the end of 1983.
Credit No. 920 Second Provincial Cities Water Supply Project; $22 Million Loan No. 1710 Credit and $16 Million Loan of June 27, 1979; Date of Effectiveness: November 30, 1979; Closing Date: December 31, 1985.
The 50 Water Districts required under the project have been formed. Work is under way on the development of a financial planning and control system, and consultants have started the preparation of a comprehensive management assistance and training proposal. A new institution, the Rural Water Supply Development Corporation, has been created, and is now preparing a list of materials to be procured for rural water supply.
Loan No. 1814 Manila Sewerage and Sanitation Project: $63.0 million Loan of March 28, 1980; Date of Effectiveness: September 10, 1980; Closing Date: December 31, 1985
The project is proceeding well, with no major problems. Detailed designs for the Tondo Pumping Station have been completed, and tenders for sanitary sewers in Dagupan and Pandacan awarded. The organization for the combined sewer program is in place; staffing and training plans are being prepared; and equipment for the water quality monitoring program has been approved for procurement.
Loan No. 1821 Third Urban Development Project; $72 Million Loan of June 2, 1980; Date of Effectiveness: September 25, 1980; Closing Date: December 31, 1984
Problems of funding and land acquisition have slowed the project. Disbursements are now 60% of that projected at appraisal, and show an improving trend. The problem of land for sites and services is expected to be resolved shortly and contracting is expected to start later this year. Overall costs are stable. Progress on finalizing policies for ZIP, and precise agreements with local governments have been slow, but are now about to be implemented. Preparation of the next phase of basic services programs is progressing well.
Loan No. 2067 Urban Engineering Project; $80.0 Million Loan of February 24, 1982; Date of Effectiveness: May 26, 1982; Closing Date: June 30,1985
This loan was signed in February 1982 and is expected to be effective in May 1982. Most of the consultants have been selected. - 40 - ANNEX II Page 15 of 18
Power Sector
Loan No. 1034 Sixth Power; $61.0 Million Loan of July 31, 1974: Date of Effectiveness: November 15, 1974; Closing Date: March 31, 1982
The Pantabangan generating plant was commissioned in April 1977, and the transmission facilities are now expected to be completed by April 1982, about four years behind schedule. The main delays in the execution of the transmission system have been due to the slow pace of engineering design and preparation of tender documents, and delays in procurement. The revised project cost estimate is 53% higher than the appraisal estimate. The closing date of the loan was postponed from June 30, 1981 to March 31, 1982 to allow additional time for payment of retention monies to contractors.
Loan No. 1460 Seventh Power Project; $58.0 Million Loan of August 9, 1977; Date of Effectiveness: January 6, 1978; Closing Date: December 31, 1983
Project implementation is now two years behind schedule, mainly due to delays in the construction of the load dispatching center. The revised project cost is now estimated at $100 million (including additional works), 8% higher than the original estimate. Due to delays in procurement, and because of additional works authorized by the Bank, the closing date of the loan has been extended to December 1983. NPC has still been unable to meet the 8% rate of return target provided in the Loan Agreement and the Government has yet to provide specific assurances that appropriate action will be taken to remedy this. This problem is being followed up by the Bank.
Loan No. 1547 Rural Electrification; $60.0 Million Loan of May 10, 1978; Date of Effectiveness: August 17, 1978; Closing Date: September 30, 1982
The project is substantially complete, with about $1.2 million uncommitted. These funds are to be used by NEA for the purchase of equipment and materials for its 1982 program. NEA's lending to cooperatives for power development has increased by over 50% in the last two years, and its financial results and condition continue to be satisfactory according to unaudited financial statements for 1981. However, NEA's collation of the financial results of its client cooperatives shows that a number are in financial difficulties. The Bank is monitoring the situation closely, and is pressing NEA, as the regulatory agency, to take all necessary remedial steps through rate increases improvements in management, or other appropriate measures. - 41 - ANNEX II Page 16 of 18
Industrial Sector
Loan No. 1514 Private Development Corpor4tion of the Philippines (PDCP); $30 Million Loan of February 9, 1978; Date of Effectiveness: June 23, 1978; Closing Date: September 30, 1982
The loan is now fully committed and disbursements as of March 31, 1982, stood at $24.9 million. The project progress is satisfactory. The closing date might be postponed by one year to allow for completion of disbursements.
Loan No. 1555 Philippines Investments Systems Organization (PISO); $15 Million Loan of May 8, 1978; Date of Effectiveness: May 12, 1978; Closing Date: December 31, 1982
The loan is fully committed and disbursements ($13.9 million as of March 31, 1982) are proceeding at a satisfactory rate.
Loan No. 1572 Third Industrial Investment Credit Project through the Development Bank of the Philippines: $80 Million Loan of June 6, 1978; Date of Effectiveness: September 15, 1978; Closing Date: June 30, 1982
DBP's SMI program is operating satisfactorily; the loan allocation of $29.7 million for this component has been fully committed. However, commitments under the loan for medium/large industry financing ($50 million) and related disbursements are slower than anticipated at appraisal. The closing date might be postponed by 18 months to allow for completion of disbursements.
Loan No. 1727 Second Small and Medium Industries Development Project; $25 Million Loan of June 27, 1979; Date of Effectiveness: November 9, 1979; Closing Date: June 30, 1983
The IGLF component ($24.5 million) was fully disbursed by October 1981 and overall progress of the project is satisfactory. Disbursements under the MASICAP component ($0.5 million) are slower than anticipated because of the recent reorganization within the Ministry of Trade and Industry. However, this component is expected to be completed before the current closing date.
Loan No. 1984 Industrial Finance Project; $150 million Loan of May 28, 1981; Proposed Date of Effectiveness: July 28, 1981; Closing Date: June 30, 1985.
Satisfactory progress has been made in achieving the main objectives of the project. The Apex Development Finance Unit of the Central Bank has been successful in meeting the institutional aspects of the project: the - 42 - ANNEX II Page 17 of 18
commercialLoan Agreement for $100 million was signed on August 7, 1981 on favorable terms); issues discussed during negotiationsrelating to individual participatingfinancial institutions(PFIs) are being dealt with; and subsidiaryloan agreementswith individualPFIs are being negotiatedand finalized (after due consultationwith the Bank). Commitmentsby the three participatingfinancial institutions(PFIs) have started and good progress is also being made in identifyingand appraising new PFIs. Progress made so far is in line with expectations,except that the pace of commitmentsis slower than anticipatedat appraisal.
Structural AdjustmentLending
Loan No. 1903 StructuralAdjustment Loan; $200.0 million Loan of September 25, 1980; Date of Effectiveness: November 14, 1980; Closing Date: June 30, 1985
Considerableprogress has been made in implementingthe Government's industrialdevelopment program in support of which the loan was made. The first stage of the Government'sfive year program of tariff reform and trade liberalizationbecame effectiveon January 1, 1981; the second stage of this program became effective on January 1, 1982. Studies are under way to review and improve the Government'sindustrial incentives and promotion system; and subsector developmentprograms are under preparationto assist domestic industriesto adjust to the tariff reform and trade liberalizationmeasures. The two requirementsfor the releaseof the second tranche of the loan were met by the Government in July 1981. The second tranche was subsequently released and, with the exception of the $5 million technicalassistance component, the $200 million loan has been fully disbursed.
Population Sector
Loan No. 1035 Population;$25.0 Million Loan of July 31, 1974; Date of Effectiveness: November 13, 1974; Closing Date: December 31, 1982
With the exception of some constructionin Regions 6 and 9 and water supplies to rural health units, the project has been substantiallycompleted. The balance of the loan is expected to be committedby mid-May of this year, and all works and procurementcompleted by the closing date of December 31, 1982. This is, however, dependentupon the release of 1982 project funding by the Budget Ministry. Project implementationis now being handled by the Ministry of Health, whose performanceis gradually improvingfollowing the dissolutionof the previous Project Management Service at the time of the original closing date (December31, 1979). A major cause for concern, however, is the project accounting,of which very little has taken place. This situationhas been brought to the attention of the Minister of Health and is being very closely supervisedby Bank staff. All project-related training activitiesand staff recruitmentprograms have been completed. - 43 - ANNEXII Page 18 of 18
Information, education and communication activities are substantially com- pleted, and management information services and technical assistance are expected to be completed by September of this year.
Credit No. 923 Second Population Project; $40.0 Million Credit of June 27, 1979; Date of Effectiveness: October 15, 1979; Closing Date: June 30, 1985
The earlier slow pace of implementation is now improving with the Ministry of Budget's advance release of funds to cover the carryover activities of CY80 and those scheduled for 1981. The release of the 1982 project funds has been delayed, however, by the Ministry of the Budget. All sites required for scheduled civil works have been acquired and surveyed, arrangements for construction management and monitoring are being finalized and the procedures designed to encourage community participation for Barangay Health Station development under the first project are being applied to those under the second project. Implementation of the Primary Health Care component has attained notable momentum; however, activities in training, IEC and pro- curement lag far behind the appraisal schedule. Greater decentralization of the implementation responsibilities at regional, provincial and municipal levels in recent months is expected to accelerate the pace of project implementation. - 44 - ANNEX III Page 1 of 2
PHILIPPINES
NATIONAL FISHERIES DEVELOPMENT PROJECT
Supplementary Data Sheet
Section I: Timetable of Key Events
(a) Time taken to prepare project: 14 months
(b) Agency which prepared the project: FIDC, with the assistance of FAO/CP
(c) First presentation to the Bank and first mission to consider the project: August 1979
(d) Departure of appraisal mission: September 1980
(e) Completion of negotiations: April 13 1982
(f) Planned date of effectiveness; September 1982
Section II: Special Bank Implementation Actions
None
Section III: Special Conditions
1. The Borrower would:
(a) by September 30, 1982, submit the proposal for the reorganization of BFAR, PFDA and FIDC to the Bank for review (para. 55);
(b) by December 31, 1982, begin the procedures for implementing these organizational changes (para. 55);
(c) by December 31, 1983, substantially complete the reorganization (para. 55);
(d) establish, prior to loan effectiveness, a Project Unit (PU) and secretariat within MNR to supervise the implementation of the institutional strengthening component (para. 56); and
(e) onlend $12 million of Bank funds to the fisheries corporation under a Subsidiary Loan Agreement, on terms and conditions acceptable to the Bank (para. 58). _ 45 - ANNEX III Page2 of 2
2. The fisheries corporationwould:
(a) be managed by a General Manager and two deputy managers (one for operations and one for finance and administration),to be provided by the private managing company, with qualificationsacceptable to the Bank (para. 53);
(b) engage a qualifiedengineering firm to prepare designs and tender documents for the area developmentsubproject and to supervise construction,installation and trial operationsof the facilitiesand equipment (para. 53); and
(c) establisha credit-in-kindprogram for fishermen in accordancewith terms and conditions acceptable to the Bank (para. 54).
3. The PU would hire a training specialist,with qualifications acceptable to the Bank, by December 31, 1982. The PU would also prepare a training program, acceptableto the Bank, for BFAR, PFDA and FIDC, establish a monitoring and evaluationsystem satisfactoryto the Bank, and participate,in June 1984, in a review, with the Bank and the fisheries corporation,to assess the progress of the project (para. 56).
t
Co
~J 41
CA,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~2
9LU
L.U UO
UJ 0 >~~~~~~~~~~~~0A
La~~~~i
z o zi_w
:r~~~~~~~~~~~~~J(
N~~~~w