Document of The World Bank

FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. P-6759-PAN

MEMORANDUMAND RECOMMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL BANK FOR RECONSTRUCTIONAND DEVELOPMENT Public Disclosure Authorized

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED LOAN

OF US $35.0 MILLION

TO

Public Disclosure Authorized THE REPUBLIC OF

FOR A

BASIC EDUCATION PROJECT

FEBRUARY 29, 1996 Public Disclosure Authorized

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY AND EQUIVALENT UNITS

US 1.00 = 1.00 Balboa (B)

FISCAL YEAR

January 1 - December 31

SCHOOL YEAR

March-December

GLOSSARY OF ACRONYMS

CEFACEI Family and Community Center for Initial Education (Centro Familiar y Comunitario de Educaci6n Inicial) FES Social Emergency Fund (Fondo de Emergencia Social) IDB Inter-American Development Bank IFARHU Institute for Training and Progress in Human Resources (Instituto para la Formaci6n y Aprovechamiento de Recursos Humanos) MOE Ministry of Education (Ministerio de Educaci6n) PAU Project Administration Unit UNDP United Nations Development Programme FOROFFICIAL USE ONLY

PANAMA BASIC EDUCATION PROJECT LOAN AND PROJECT SUMMARY

Borrower: Government of Panama (GOP)

Implementing Agency: Ministry of Education (MOE)

Poverty: Program of Targeted Interventions. The project will target the poorest 185 townships (corregimientos) in the country as defined by housing, education, health and nutrition indicators.

Beneficiaries: Not applicable

Amount: US$ 35.0 million.

Terms: Standard amortization term, grace period, and interest rate for fixed-rate US dollar single currency loans with an expected disbursement period of 3-6 years.

Commitment Fee 0.75% on undisbursed loan balances, beginning 60 days after signing, less any waiver.

Financing Plan: See Schedule A.

Net Present Value: Not Applicable.

Staff Appraisal Report: Report No. 15109.

Map IBRD No. 27496

Project ID: PA-7832

This document has a restricted distribution and may be used by recipients only in the performance of their ofTicialduties. Its contents may not otherwise be disclosedwiihout World Bank authorization. I I MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF PANAMA FOR A BASIC EDUCATION PROJECT

1. I submit for your approval the following memorandum and recommendation on a proposed loan to the Republic of Panama for US$ 35.0 million to help finance a Basic Education Project. The loan would be at the Bank's standard amortization term, grace period, and interest rate for fixed-rate US dollars single currency loans, with an expected disbursement period of 3-6 years. The total project cost is estimated at US$ 58.0 million.

2. Background. The Panamanian economy is among the more prosperous and stable in Central America, with relatively high socioeconomic indicators. Its two percent annual population growth rate and fertility rate of 2.9 percent are the lowest in the region, and GDP per capita is high, at US$ 2,600. But these statistics mask a highly inequitable income distribution. In 1989, the poorest 20 percent of the population received just two percent of national income, the lowest share in Latin America. This group has seen its relative position worsen since 1980, when it received nearly four percent of national income. The economy is highly segmented, between the dynamic, internationally-oriented service sector, which generates about 75 percent of GDP, and the domestically-oriented sector, characterized by policy-induced rigidities and low productivity. While Panama's wealth has cushioned it from the worst economic consequences of its failure to undertake structural adjustment, the country is paying for economic mismanagement in the forrn of missed opportunities.

3. Generally good indicators for basic education hide a skewed expenditure pattern and management shortcomings evident in poor quality and inadequate coverage. Basic education is defined as two years of preschool, primary (grades 1-6) and lower secondary (7-9) cycles. The gross enrollment rate at the primary level is 105 percent, but only 28 percent in preschool and 77 percent at the lower secondary level (grades 7-9). Sectoral spending has been consistently high in recent decades, and continues to be high today, at 5.1 percent of GNP and 16.4 percent of total public expenditures. But public resource allocation for education has the effect of heightening disparities in income distribution. Higher education serves ten percent of all students, but it receives almost one third of public education resources, while the 1.7 percent of education expenditures allocated to the pre-primary level is far below international levels ( spends 3.6 percent, and spends 6.1 percent). This is a common issue in many countries in the region where a fixed share of budget resources is constitutionally mandated for higher education. The Bank has started a policy dialogue with the Government to search for a more rational allocation of budget resources among the different levels of education.

4. Problems of educational quality are not as obvious as they are in many other countries in the region. Panama has a well qualified teaching force, and a relatively low student-teacher ratio of 25:1. Good textbooks are available in the market, and teachers can select and recommend to their students those that are most suitable for the curriculum. But the quality of education is not even. Students in the low-income brackets cannot 2 purchase their books and usually do not find them in school libraries. Multigrade classes are taught by teachers without specialized training in the methods of multigrade teaching. Since multigrade classes are typical of remote rural communities, it is generally the children of the poor who attend such classes and receive an education of lesser quality. This results in low efficiency of basic education, where it takes an average of 13 years to complete the nine-year cycle. Little infonnation is available on student achievement, and consequently, there is no sound basis on which to identify needs for change. The Government thus plans to provide textbooks for poor students, and specialized training and teaching materials for multigrade teachers. It will also develop a student achievement evaluation systemi.

5. Inequities also exist in the availability of educational benefits for the poor. Enrollment rates are high at the primary level, but very few children have access to pre- school services, even though early educational experiences have long been recognized as improving student performance at the primary level. Pre-school education promotes school readiness, lowers repetition and dropout rates, and improves development of academic skills in primary school. Pre-primary education is offered mainly in kindergarten classes attached to primary schools. A non-formal program, the Community and Family Centers for Initial Education (CEFACEI), has been started by the Government on a small scale, using community volunteers as educators and facilities available in the community. Non-formal models of preschool education have been proven to be highly effective, at a considerably lower cost than the formal models, But the CEFACEIs lack an appropriate curriculum adapted to the culture of the disadvantaged. The kindergarten curriculum is not easily handled by unqualified community educators, and it does not provide for parental involvemrentin the early development of the child. The Government has requested the Bank's assistance to provide low cost pr -school education services targeted to the poor, and the project will expand the CEFACEI system of pre-school education and provide it with child-centered developmental activities, adequate educational materials, and practical training for tihe conmunity educators.

6. Children in rural areas are often forced to drop out of school at the end of the primary cycle, unless their parents can send them to the nearest town for the upper grades of basic education (grades 5-9). While it is the Goverrunent's policy for all children to complete the basic cycle, many are effectively denied access because of poverty. The Government operates a program of scholarships for primary and secondary students through the Instituto para la Formaci6n y Aprovechamiento de Recursos Humanos (IFARHU), and has decided to establish a new budget line for scholarships entirely targeted to the poor.

7. The Ministry of Education (MOE) has an adequate institutional structure for administration and supervision of the public school system, at the central, provincial and district levels. However, it lacks a robust information system, and its capacity for planning and policy-making is poor. A proposed reform of the education system has been in preparation since 1979, when a Commission was created for that purpose by the National Assembly. In June 1995, the National Assembly passed the Education Law which would: (a) reinforce MOF's role in defining educational policy; (b) create an advisory body to the MOE, conposed of representatives of parents, the Catholic church, MOE and the teachers union; (c) extend provision of free education to two years of pre-school; and, (d) provide 3

a framework for strengthening the role of the community in education and deconcentrate some of MOE's functions. These provisions are fully consistent with recommendations reflected in the Bank's sector report (Report No. 13701-PAN, March 17, 1995) discussed with the Government in May 1995. The Government has requested the Bank's assistance in strengthening its planning and policy-making capacity through the financing of a series of policy studies to support the medium- and long-term reforms.

8. Primary school infrastructure compares favorably with that of many other Latin American countries, but maintenance has been neglected. At the primary level, about 350 classrooms are severely deteriorated and need to be replaced. About 1,700 classrooms need varying degrees of repair or rehabilitation.

9. Government Strategy. The development goals of the Government of Panama are a globally integrated economy and a more equitable society, driven by sustainable private sector growth. The new Administration's economic program, "Public Policies for Social Development with Economic Efficiency", focuses on: (1) private sector development and employment creation; (2) fiscal adjustment and public sector modernization; (3) poverty alleviation and human resources development; and (4) environmental conservation. The Government's strategy for mitigating poverty and inequality consists of four chief elements. The first is the introduction of conditions that will revive sustainable growth. In this context, the economic program emphasizes reform policies that will mitigate the bias against employment creation and reduce the high cost of the consumption basket. In addition, the incentive framework will be altered to encourage increased agricultural production and employment opportunities in the countryside, where most of the poor are located. The second facet of the strategy is to improve efficiency and equity in social expenditures, especially in education and health, targeting subsidies to the most vulnerable groups. Third is the introduction of social safety net mechanisms like the ongoing Social Investment Fund, for the financing of community-generated social development projects. The fourth facet is institutional modernization and capacity-building of the public sector for the efficient use of public resources.

10. Consistent with the economic program, the Government's strategy for the education sector assigns top priority to basic education and to ensuring equitable access for the poor to the full benefits of education. In line with these priorities, the short-term strategy calls for providing opportunities for poor children in rural and marginal urban areas to receive quality educational services to achieve effective learning, and to complete the nine years of the basic cycle. For the same purpose, the Government has decided to extend access for the poor to pre-school education, in order to enhance their readiness and increase their success in primary and lower secondary education, thus reducing grade repetition and promoting efficiency of educational investments. The project will address these Government concerns through the reorientation of the scholarship program, the teacher training and textbook programs and the pre-school education program.

11. In the longer term, the Government is contemplating deeper reforms of the education system involving more equitable financing of educational costs, more active participation of parents and NGOs in the management and financing of the schools, updating the basic education curriculum to make it more relevant to the needs of society 4 and the demands of the economy, and developing MOE's institutional capacity for planning and policy-making.

12. Project Objectives. The objective of the project is to improve the quality, efficiency and equity of the Panamanian system of basic education. Specific objectives are to assist the Government in: (a) improving the quality of basic education; (b) improving equity in access to basic education services for lower income children in rural and urban marginal areas; (c) expanding coverage of pre-school education through community- based, non-formal models; and (d) reinforcing the planning, supervision and policy-making capacity of the Ministry of Education. The project would focus on the poorest corregimientos containing 41 percent of the school population in grades 1-9.

13. Project Description. In order to achieve these objectives, the project includes the following three components: (a) Improvement of Quality of, and Expansion of Access to, Primary and Lower Secondary Education (US$ 44.4 million or 77 percent of total project costs) would include: (i) in-service teacher training to upgrade the pedagogical capacities of nearly 4,000 teachers serving in the rural areas, with emphasis on multigrade teaching techniques; (ii) provision of textbooks and teaching materials for about 700,000 poor students, including the purchase and distribution of textbooks for children in rural and urban marginal areas and development and distribution of educational materials for multigrade classes; (iii) reorientation of the scholarship program to target an additional 3,500 poor students per year; (iv) development of an education assessment system; and, (v) rehabilitation of some 2,000 classrooms; (b) Expanding Non-Formal Pre-School Education (US$ 5.6 million or 10 percent of total project costs) with community participation and integration of health, nutrition, and education services at the local level, through the CEFACEI model and a pilot mother-to-mother model; and (c) Strengthening the institutional capacity of the Ministry of Education (US$ 8.0 million or 13 percent of total project costs) through: (i) developing planning and policy- making capacity by conducting policy studies on community participation, optimization of budget resource allocation among the different levels of education, and delegation of MOE's functions to regional offices; and, (ii) development of a management inforrnation system (MIS).

14. Project Implementation. The project would be implemented over five years by MOE through its regular line departments. Adequate administrative capacity exists in the central ministry offices and in the provincial and district offices to implement and supervise implementation of the project components. A project team will be organized for each component within the respective department, and a MOE advisory committee will provide guidance. A smallProject Administration Unit (PAU) will be established under the Secretary General of the MOE and will have general coordination responsibility for project implementation. A PAU Director has already been appointed to the Bank's satisfaction. The PAU will serve as the liaison between the Bank and the MOE line units, and it will be responsible for administration of the project. Scholarships will be implemented by IFARHU. To assist in the construction and rehabilitation of classrooms in the rural areas, MOE will enter into agreement with the Social Emergency Fund (FES). In existence for four years, FES has recently been restructured with technical assistance from IDB and UNDP. The Bank's appraisal mission concluded that IFARHU and FES have adequate institutional capacity to implement their respective subcomponents. A 5

breakdown of estimated costs and financing is shown in Schedule A. Amounts and methods of procurement and disbursement are shown in Schedule B. A timetable of key processing events and the status of Bank Group operations in Panama are provided in Schedules C and D, respectively. The SAR, No. 15109-PAN. is also attached.

15. Actions Agreed. During negotiations, the Government agreed to: (a) conduct Annual Project Reviews with an Annual Project Implementation Review Report, and prepare an Annual Implementation Plan for the following year starting in July 1997; (b) furnish to the Bank, during the month of August 1996, a budget and an investment plan for, and the targets to be achieved in, the implementation of the project in 1997, and exchange views with the Bank on said budget, plan and targets, by no later than September 30, 1996; (c) conduct a mid-term review in 1999; and (d) follow the Bank procurement guidelines for all procurement of goods and services under the project and also apply the Special Provisions for the procurement of goods and consultant services, which differ from the national procedures, to project implementation; (e) maintain within MOE a Project Administration Unit with functions and responsibilities satisfactory to the Bank; (f) ensure that the PAU is staffed at all times with essential staff satisfactory to the Bank; and (g) include (i) in MOE's budget separate lines covering fees for pre-primary community educators (promotoras and madres lideres) and operating and maintenance costs of the schools included under the project; and (ii) in IFARHU's budget a separate line covering the scholarships for primary and lower secondary students.

16. As conditions for effectiveness, the borrower will: (a) submit a detailed project implementation plan for 1996 for all components: (b) provide evidence that a budget line has been included in the 1996 Government's budget for promotoras, scholarships and operating and maintenance costs; (c) provide evidence that the revolving fund has been established and that the deposit for the first three months of expenditures for project implementation has been made; (d) put into effect the Operational Manual; and (e) ensure that the implementation agreements between MOE and FES, and between MOE and IFARHU have been signed.

17. Project Sustainability. The project design is based on the agreed objectives of improving the quality of basic education and ensuring that children from the more disadvantaged strata have access to the system and receive the maximum benefit from their educational experience. This is the country's top priority for the sector and has strong backing from the Government, the teachers union, and the legislature. Community participation, especially in the operation of the pre-school education component, will also contribute to enhancing the project's sustainability. Incremental recurrent costs would account for less than one percent of the projected sector budget in the last year of project implementation, an amount well within the limits of the Government's financial capacity.

18. Lessons from Previous Bank Involvement. This is the first Bank operation in the Panamanian education sector. Successful education projects in Latin America have been characterized by simplicity and clarity in design. The objectives of each component should be as independent and measurable as possible, with explicit timetables for key actions. These lessons have guided the establishment of the components and the monitoring indicators of this project. 6

19. The use of poverty indexes has proven effective in focusing investments on the poor. However, when a poverty index classifies geographical areas too broadly, such as states or provinces, poverty pockets may not be identified and served. Therefore the poverty index has been refined for the current project. While it originally classified only districts by poverty level, it now classifies the corregimientos (the third administrative level of the governmental system; Panama has 9 provinces, 67 districts, one region and 510 corregimientos') by poverty level. The proposed project will focus on the poorest 185 corregimientos.

20. Research and Bank operations have shown that kindergarten and early childhood development programs can improve school readiness, lower repetition and drop out rates and improve academic performance at higher levels of education. Disadvantaged groups (rural children and children from families with low socio-economic status) benefit the most. Reaching the home environment and encouraging parental involvement also appear to strengthen the impact of the interventions. The proposed project would expand the informal CEFACEI model (community-administered,pre-primary centers staffed by a community-chosen educator with or without formal training) in areas of dense population and train rural mothers to stimulatetheir pre-school children in areas of socialization and pre-school learning. The project will also finance the production and broadcasting of radio programs to address parents about child rearing practices. As these activities indicate, the project would focus exclusivelyon disadvantaged groups and involve parents.

21. Experience in Latin America has shown that the viabilityand sustainabilityof improvements in student achievement depend in large part on the Government's monitoring and assessment capacity. As in most developing countries, official educational achievement data collection is almost non-existent in Panama. The proposed project would create an education assessment system to provide the necessary information for improving the overall quality of the education system. Due to its inherently controversial nature, the establishment of such a system requires strong institutional and public support; the proposed project would address this issue by incorporating teacher training and a publicity campaign for the evaluation program. This component would be used to monitor the impact of all project components on student achievement. The results of the pilot test, administered in year one to students that have not yet benefitted from the project, will be compared with the results of the test administered in year four to students of the same schools, that will have received the services provided under the project.

22. Rationale for Bank Involvement. The project is fully consistent with the Bank Group's Country Assistance Strategy for Panama and the Bank's policy objectives. The Country Assistance Strategy, discussed by the Board on February 7, 1995, with the Panama Rural Health Project, adopts a selective strategy focused on reviving sustainable growth and poverty alleviation. The strategy calls for a two-pronged approach. On the one hand, the ongoing Economic Recovery Loan would be the key instrument to promote restoration of a viable medium-term fiscal framework and elimination of policy distortions

iPanama has 9 Provinces,67 Districtsand 1 regionand, until 1993,it had 510 Corregimientos. In 1993, the countyseat of the districtof Santiagode Veraguaswas split, and the new corregimientoof wasformed, so todaythere are officially511 corregimientos. This documentuses data from the original510 corregimientos. 7 required to mount an efficacious poverty alleviationstrategy. On the other hand, the lending program should be devoted to direct interventions in support of poverty alleviation, especiallythrough the development of human resources. The Bank's priorities in human resource development are to expand coverage and improve the quality of basic education and health. The Bank recently approved a Loan to support a Rural Health Project (Loan 3841-PA), which provides for health care and nutrition supplementation for children and mothers in the same disadvantaged groups targeted by the pre-school component of the proposed project. The proposed project will focus on poverty alleviationby providing students in the most depressed areas of the country with essential educational inputs like textbooks and other learning materials, and access to the benefits of pre-primary and basic education. In doing so, the project will also enhance the efficiencyof the basic education system and increase the effectiveness of public expenditures on education. The proposed project was prepared taking into account the programs of other major aid agencies. The 1DB has financed a technical education loan for the upper secondary level, and continues to focus on that age group. USAID used to be an important source of external assistance to the education sector, but has reduced its activities, leaving a large gap in assistance.

23. Environmental Aspects. The project will have no direct environmental effects, and has been classified as C.

24. Program Objective Category. The project falls under the Program Objective Category of Poverty Reduction and would support a program of targeted interventions as part of the Government's national policy of equitable access to education opportunities, by channelling resources especiallyto poor and rural areas, thus contributing to poverty reduction and the development of human resources. Townships were chosen as targeting units so that project interventions can have the maximum effect in poor areas. The project will target the poorest corregimientos (185 out of 510, containing 41 percent of the school population from grades 1 to 9) in accordance with a composite poverty index. The Index is composed of key indicators of three variables: housing, education and health.

25. Participatory Approach. As the parental role is crucial in early childhood development, this project incorporates parents in the delivery of the pre-primary curriculum. The project will support community-administeredCEFACEIs, and give parents and communities a prominent role in selecting teachers and administering the funds to pay the community educators. Teachers' unions, which have a strong influence on the education system in Panama, have been consulted during project preparation.

26. Project Benefits. The main benefits of the project will be an increase in future earnings due to improved productivity, especially for students from low-income families and rural areas. This will result from improvements in the quality of education and a more equitable and efficient allocation of resources. The internal rate of return (IRR) for the Improving Quality and Equity in Basic Education Component (77 percent of total project costs) is high, at 19 percent.

27. The project will also produce significantsavings through the expansion of the low cost non-formal preschool program. The new program will benefit 22,000 children. The cost of pre-school education per child will be reduced by more than 50 percent, from 8

US$288 to US$124 per annum. Thus, estimated savings in expenditures for pre-school education is US$3.6 million per annum. The expansion of the community-based pre- school system will have additional indirect benefits for women by providing them employment opportunities as child-care providers and by freeing mothers' time for wage- earmingjobs.

28. Another source of major savings would come from expanding access to lower secondary schools through the reallocation of existing scholarships for poor students, so that they can attend schools outside of their towns, which currently have extra capacity. If more schools were to be built to accommodate the same number of students near their homes, the total cost would be approximately US$19.5 million. Over the life of the project, the program would provide financial support up to 9,600 students from rural low-income families, at a cumulative cost of US$3 million, allowing them to relocate and attend upper grades of lower secondary schools where there is currently extra capacity. The savings, therefore, derive from the fact that more students would be accommodated without the need to build additional schools.

29. Project Risks. This is a relatively low risk project. The main risk arises from the lack of experience of the Government, particularly in the education sector, in implementing Bank projects. This risk will be attenuated through: (a) the adoption of a simple PAU structure; (b) the establishment of a solid base-line data base needed for project monitoring; (c) the appointment of experienced managers to head the PAU; (d) the preparation of a detailed manual of project operating procedures; and (e) the provision of technical assistance within each component and intensive supervision.

30. Recommendation. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank, and I recommend that the Executive Directors approve it.

James D. Wolfensohn President

Attachments

Washington, DC February 29, 1996 9 SCHEDULE A Page 1 of 1 PANAMA - BASIC EDUCATION PROJECT Project Cost Summary (US million)

A. hnprovementof Qualityand Access in Basic Education In-ServiceTeacher Training 2.15 0.12 2.27 EducationalMaterials 1.14 3.90 5.04 AssessmentSystem 1.18 0.89 2.07 Scholarshipsfor poor students 11.67 - 11.67 Primary SchoolRehabilitation 17.49 0.85 18.34 Subtota1Impr.vcn.entofQua1ityandAccessin.asicEducai.. -- 3 75 B. ExpandingNon-Formal Pre-School Expandingthe CEFACEIProgram 4.07 0.76 4.83 Mother-to-MotherPilot Program. 0.24 0.15 0.39 -ubtutalc ga4inomP-:: -c 4 ,31 - -1 5.22 C. InstitutionalStrengthening ManagementInformation System 1.89 2.79 4.68 Dev.Planning & Supervisioncapacity 0.21 0.10 0.31 Policy Making Studies - 0.58 0.58 ProjectCoordination & Management 1.18 0.35 1.53 S:Sbto 46stit ... I.. - :- - : ::3.28 :- : 31. 7.09

TOTALBaseline Costs 41.22 10.47 51.69 PhysicalContingencies 2.08 0.52 2.60 Price Contingencies 3.08 0.64 3.71 TOTAL:-PROJCT: CST - 46.,l 11.63 778.0

Financing Plan =(USmillion) oal -reign Total -- Governmentof Panama 23.00 0 23.00 IBRD 23.37 11.63 35.00 TOTAL 46.37 11.63 58.00 10 SCHEDULE B Page 1 of 2

ProcurementArrangements (IS million) Maeory ::..th:,T.~anTTAL Fi'nance

Civil Works 11.6 7.11 18.7 (9.2) (5.6) (14.8) Equipmentand Furniture 3.3 1.02 4.3 (3.3) (1.0) (4.3) Training - - 3.43 - 3.4 (3.4) (3.4) EducationalMaterials 5.44 1.15 0.6 - 7.1 (5.4) (1.1) (0.6) (7.1) T.A., Consultants' Services and - 5.47 5.4 Studies (5.4) (5.4) Scholarships & Promotoras Fees - - - 16.9 16.9 Incremental Operating Costs - - - 2.2 2.2

TOTAL - 8.7 12.7 17.5 19.1 58AJ

Figures in parenthesesare the respectiveamounts financed by the Bank. Due to rounding the numbersmay not add up. ICB - InternationalCompetitive Bidding; NCB - National CompetitiveBidding.

IncludesUS$5.0 million equivalent,for lump sum, fixed-pricedcontracts for works valued less than US 250,000,to be awardedon a national shoppingbasis, and US$2.1 million equivalentfor direct contractingfor works valued less than US$ 50,000in scatteredand distant rural areas. 2 Shoppingprocedure, includes $870,00school furniture, $40,000 officeequipment, $60,000 vehicles,and directcontracting $30,000. 3 Transportationand per diem for trainees. Not subjectto procurement. 4 IncludesUS$ 3.0 million equivalentfor textbooksand teachers' guides and US$ 2.1 million equivalentfor classroomlibrary books to be procuredfollowing ICB 2-stageprocedures. 5 Printing services. 6 Printing servicesthrough shoppingprocedures. Includescontracts for short and long-termconsultants in PAU. 11 SCHEDULE B Page 2 of 2

PANAMA- BASIC EDUCATION Withdrawals of the Proceeds of the Loan

Category Amountof the % of Expenditures Loan allocated to be financed (Expressed in US$)

(1) Worksunder Part A.5 of the 13,500,000 78% Project

(2) Goods (other than 4,300,000 100% of foreign expendituresand 95% EducationalMaterials) of local expenditures.

(3) EducationalMaterials 5,400,000 100% of foreign expendituresand 100% of local expenditures. (4) Printing Services 1,100,000 100%of local expenditures.

(5) Consultants' Services and 8,400,000 100% Training

(6) Unallocated 2,300,000

TOTAL 35,000,000

Estimated Disbursements Timetable

Fiscal Year 1997 1998 1999 2000 2001 2002 Annual 5.5 6.8 9.4 7.9 3.2 2.2 Cumulative 5.5 12.3 21.7 29.6 32.8 35.0 12 SCHEDULE C Page 1 of 1 PANAMA - BASIC EDUCATION PROJECT TIMETABLE OF KEY PROJECT PROCESSING EVENTS

Time taken to prepare: 6 months Prepared by: Ministry of Education, with the assistance of Ruta Social and the Bank First Bank mission: December 1994 Appraisal mission departure: June 1995 Planned date for effectiveness: August 1996 List of relevant PCRS and PPARS: None 13 SCHEDULE D Page 1 of 2

STATUS OF BANKGROUP OPERATIONSIN PANAMA

A. STATEMENT OF BANK LOANS (As of December 31, 1995)

32 loans fully disbursed 505.63

Of which SECALs,SALs, and ProgramLoans

Ln. 2357-PAN 1984 Panama Structural Adjustment I 60.20 Ln. 2768-PAN 1987 Panama Structural Adjustment II 49.83 Sub-total 110.03

Ln. 3438-PAN 1992 Panama EconomicRecovery 120.00 59.01 Ln. 3686-PAN 1994 Panama RoadsRehabilitation 60.00 56.46 Ln. 3841-PAN 1995 Panama RuralHealth 25.00 25.00

Sub-total 205.00 140.47

Total 710.63 Of which has been repaid 441.32

Total now held by Bank 269.31

Amount sold: 9.21 Of which has been repaid: 9.21

Total Undisbursed 140.47 140.47

a> Not yet effective.

* SAL, SECAL,or ProgramLoan.

MdeS: LA2C0 File: N:\MdeSilva\disbursekpanama\PA-1 2-95.xls January 22. 1996 * 14 SCHEIDULE D Page 2 of 2

PANAMA STATEMENT OF IFC INVESTMENTS as of December 31, 1995 (in Millions US$1

Fiscal Original Gross Commitments Held Held by Undisbursed Years IFC IFC Partici- by Pantici- (including) Committed Obligor Type of Business Loan Equity pants Total IFC pants Participants

1971 Corp de Hotelero a/ Tourism 1.21 0.27 1.48 - 1 978 Vidrios Panamenos a/ Glass Factory 2.40 1.40 3.80 1 979/85/86 Bco. Latino Americano de Exportaciones, S.A. Money & Capital Market 47.33 2.50 - 49.83 2.09 1993 Banco Continental Credit Line 5.00 - 5.00 5.00 - 3.27 1995 ^ Manzanillo Transport & storage 25.00 - 35.00 60.00 25.00 35.00

Less Cancellations, terminations, repayments and sales 50.94 2.08 - 53.01

.;: v:. ;s.'..*.ew wi ,.. ..."ss...... tS. ... i.:>.-,'

Pending Commitments:

...... l 0 l .... ~... B g ~~~~~~~Mg~ . .. etS;2s...... g

a/ Investments which have been fully canceiled, terminated, written-off, sold, redeemed or repaid. b/ Gross Commitments consist of approved and signed projects. c/ Held Commitments consist of disbursed and undisbursed investments. REPUBLICADEL PANAMA DIVISIONPOLITICO - ADMINISTRATIVA:1990

BOCAS DEL TORO 38. Las Huacas 80. Rio Indio BOQUETE RENACIMIENTO 202. Chcpigana BOCAS DEL TORO 39. 81. San Jose del General 117. Boquete (Cabecera) 159. Rio Sereno (Cabecera) 203. Garachine I. Bocas del Toro (Cabecera) 118. Caldera 160. Breh6n 204. Jaque 2. BahiasAzul OLA PORTOBELO 119. Palmira 161. Canas Gordas 205. Puerto Pifna 3. Bastimentos 40. Old (Cabecera) 82. Portobelo (Cabecera) 162. 206. Rio Congo 4. Calov6borao Santa Catalina 41. El Cope 83. Cacique 163. Plaza de CaizAn 207. Rio Iglesias 5. 42. El Palmar 84. Puerto Lindo o Garrote 120. La Concepci6n(Cabecera) 164. Santa CruL 208. SambG 6. Tobobe 43. 85. 121. Aserrio de Gariche 209. Seteganti 44. 86. Maria Chiquita 122. Bugaba SAN FELIX 210. Taimati 123. Cerro Punta 165. Las Lajas (Cabecera) 211. Tucuti 7. Changuinola (Cabecera) PENONOME SANTA ISABEL 124. G6mez 166. Cascabel 8. Almirante 45. Penonome (Cabecera) 87. Palenque (Cabecera) 125. La Estrella 167. Hato Corotu 9. 46. Canaveral 88. Cuango 126. San Andres 168. Hato Culantro 212. El Real (Cabecera) 47. Cocl6 89. Miramar 127. Santa Marta 169. Hato Jobo 213. CHIRIQUIGRANDE 48. ChiguiriArriba 90. Nombrede Dios 128. Santa Rosa 170. HatoJuli 214. Paya 10. Chiriqui Grande (Cabeccra) 49. El Coco 91. Palmira 129. Santo Domingo 171. Hato Pil6n 215. Pinogana 11. Canquint6 50. 92. PlayaChiquita 130. SortovA 172. 216. Pucuro 12. Guoroni 51. Rio Grande 93. Santa Isabel 131. Volcan 173. Quebrada de Loro 217. 13. Mununi 52. Rio Indio 94. Viento Frio 174. Salto Dupi 218. 14. Piedra Roja 53. Toabre DAVID 175. San Felix 15. 54. Tulu A 132. David (Cabecera) CEMACO COMARCADE 133. SAN LORENZO 219. Cirilo Guaynora COCLECOLON SAN BLAS 134. 176. (Cabecera) 220. Lajas Blancas COCLE COLON 95. Ailigandi 135. Chiriqui 177. Boca chica 221. Manuel Ortega AGUADULCE COLON 96. Nargana 136. Guaca 178. Boca de Balsa 16. Aguadulce (Cabecera) 55. Barrio None 97. Puerto Obaldia 137. Las Lomas 179. SAMBU 17. El Cristo 56. Barrio Sur 98. Tubuala 138. Pedregal 180. Camar6nArriba 222. Jingurud6 18. El Roble 57. Buena Vista 139. San Carlos 181. Cerro Banco 223. Rio SAbalo 19. Pocri 58. Cativa 140. 182. Cerro de Patena 59. Cincito CHIRIQUI 141. 183. Emplanada de Chorcha ANTON 60. Crist6bal 184. San Juan 20. Ant6n (Cabecera) 61. 99. Alanje (Cabecera) DOLEGA 185. San Lorenzo CHITRE 21. Cabuya 62. Lim6n 100. Divala 142. Dolega (Cabecera) 186. Soloy 224. Chitre (Cabecera) 22. El Chiru 63. 101. El Tejar 143. Dos Rios 225. La Arena 23. El Retiro 64. Puerto Pil6n 102. Guarumal 144. TOLE 226. Monagrillo 24. El Valle 65. 103. 145. Potrenillos 187. Tole (Cabecera) 25. Juan Diaz 66. Salamanca 104. Quer6valo 146. Potrenillos Abajo 188. Alto Caballero LAS MINAS 26. Rio Hato 67. SanJuan 105. Santo Tomas 147. Rovira 189. Cerro Cana 227. Las Minas 27. 68. Santa Rosa 148. Tinajas 190. Cerro Iglesias 228. Chepo 28. Santa Rita BARU 191. Cerro Puereo 229. CHAGRES 106. (Cabecera) 192. 230. El Toro lA PINTADA 69. (Cabecera) 107. Limones 149. Gualaca (Cabecera) 193. Chichica 231. Leones 29. La Pintada (Cabecera) 70. Achiote 108. Progreso 150. Homito 194. Lajas de Tol 232. 30. 71. El Guabo 151. Los Angeles 195. Maraca 31. El Potrero 72. La Encantada BOQUERON 152. 196. Pefia Blanca LOSPOZOS 32. Llano Grande 73. 109. Boquer6n (Cabecera) 153. Rinc6n 197. Potrero de Cahia 233. Los Pozos (Cabecera) 33. 74. PinSa 110. Bagala 198. 234. El Capuri 75. Salud Ill. Cordillera REMEDIOS 199. Sitio Prado 235. NATA 112. Guabal 154. Remedios (Cabecera) 236. ElCedro 34. Nata (Cabecera) DONOSO 113. Guayabal 155. Cerro Iglesias 237. La Arena 35. Capellania 76. (Cab.) 114. Paraiso 156. DARIEN 238. 36. El Caho 77. Cocle del Norte 115. Pedregal 157. Hato Chami 239. Los Cerritos 37. GuzmAn 78. El GuAsimo 116. Tijeras 158. Lajero 200. La Palma (Cabecera) 240. Los Cerros de Paja 79. 201.

Reference for IBRDMap 27496 OCU 285. 332. El Cacao CHIMAN SAN MIGUELITO 469. 241. Ocu (Cabccera) 286. 333. El Cortezo 378. Chiman (Cabecera) 427. Amelia Denis de Icaza 470. Zapotillo 242. Cerro Largo 287. Palmira 334. Flores 379. Brujas 428. Belisario Porras 243. Los Llanos 288. Pefia Blanca 335. Guanico 380. Gonzalo Vasquez 429. Jose Domingo Espinar MONTIJO 244. Llano Grande 289. Rio Hondo 336. 430. Mateo lturralde 471. Montijo (Cabecera) 245. Pefias Chatas 290. San Jose LA CHORRERA 431. Vietoriano Lorenzo 472. Arenas 291. San Miguel 381. 473. Gobemadora 292. Santo Domingo PANAMA 382. Barrio Col6n TABOGA 474. 246. Parita (Cabecera) 293. Sesteadero ARRAIJAN 383. Amador 432. Taboga (Cabecera) 475. Leones 247. Cabuya 294. 337. Arraijan (Cabecera) 384. Arosemena 433. 476. Llano de Catival 248. Los Castillos 295. 338. Juan D. Arosemena 385. 434. 477. Pil6n 249. 339. 386. El Coco 478. 250. Paris LOS SANTOS 340. Santa Clara 387. Feuillet 479. (Mariato) 251. 296. Los Santos (Cabecera) 341. Veracruz 388. Guadalupe VERAGUAS 252. 297. El Guasimo 342. Vista Alegre 389. Herrera ATALAYA RIODE JESUS 298. La Colorada 390. Hurtado 435. Atalaya (Cabecera) 480. Rio de Jesus (Cabecera) PESE 299. BALBOA 391. Iturralde 436. El Barrio 481. Las Huacas 253. Pese (Cabecera) 300. Las Cruces 343. San Miguel (Cabecera) 392. 437. La Montaiuela 482. Los Castillos 254. Las Cabras (Este) 301. 344. 393. Los Diaz 483. 255. El Pajajo (Norte No. 1) 302. Los Angeles 345. La Esmeralda 394 Mendoza 256. (Norte No. 2) 303. Los Olivos 346. 395. ObaMdia 438. Calobre (Cabecera) SAN FRANCISCO 257. El Pedregoso (Oeste No. 1) 304. 347. Pedro GonzAlez 396. 439. Barmizal 484. San Francisco (Cabecera) 258. (Oeste No. 2) 305. Sabana Grande 348. 397. 440. Chitra 485. o Panamaes 259. Sabana Grande (Sur No. 1) 306. Santa Ana 398. Santa Rita 441. 486. 260. Rinc6n Hondo (Sur No. 2) 307. Tres Quebradas 442. El Potrero 487. 349. Capira (Cabecera) PANAMA 443. La Laguna 488. San Juan SANTA MARIA 350. Caimito 399. San Felipe 444. La Raya 261. Santa Maria (Cabecera) 308. Macaracas (Cabecera) 351. Campana 400. 445. LaTetilla SANTA FE 262. 309. Bahia Honda 352. Cermefio 401. Santa Ana 446. La Yeguada 489. Santa Fe (Cabecera) 263. El Rinc6n 310. 353. Ciri de los Sotos 402. La Exposici6no Calidonia 447. Las Guias 490. Calovebora 311. Corozal 354. Ciri Grande 403. Curundu 448. Monjaras 491. El Alto 312. Chupa 355. El Cacao 404. Betania 449. San Jose 492. LOSSANTOS 313 El Cedro 356. La Trinidad 405. Bella Vista 493. GUARARE 314. 357. 406. Pueblo Nuevo CAEAZAS 494. Gatucito 264. Guarare (Cabecera) 315. La Mesa 358. Lidice 407. San Francisco 450. Cafiazas (Cabecera) 265. El Espinal 316. Las Palmas 359. Villa Carmen 408. 451. Agua de Salud 266. 317. 360. 409. Rio Abajo 452. 495. Santiago (Cabecera) 267. GuarareArriba 318. Mogoll6n 410. Juan Diaz 453. Los Valle 496. Canto del Llano 268. CHAME 411. Pedregal 454. 497. La Colorada 269. PEDASI 361. Chame (Cabecera) 412. Anc6n 498. La Pefia 270. 319. Pedasi (Cabecera) 362. Bejuco 413. LA MESA 499. La Raya de Santa Maria 271. LlanoAbajo 320. 363. Buenos Aires 414. 455. La Mesa (Cahecera) 500. 321. Mariabe 364. Cabuya 415. 456. 501. LAS TABLAS 322. 365. Chica 416. San Martin 457. Bor6 272. Las Tablas (Cabecera) 366. El Libano 417. 458. Llano Grande SONA 273. POCRI 367. Las Lajas 459. San Bartolo 502. Sona (Cabecera) 274. Bayano 323. Pocri (Cabecera) 368. SAN CARLOS 503. Bahia Honda 275. 324. El Canafistulo 369. 418. San Carlos (Cabecera) LAS PALMAS 504. Calidonia 276. 325. 370. 419. El Espino 460. Las Palmas (Cabecera) 505. Cativ6 277. El Manantial 326. Paraiso 371. Sora 420. El Higo 461. 506. El Maranon 278. El Mufioz 327. 421. 462. Corozal 507. Guarumal 279. El Pedregoso CHEPO 422. 463. El Maria 508. La Soledad 280. TONOSI 372. Chepo (Cabecera) 423. La Laguna 464. El Piro 509. 281. 328. Tonosi (Cabecera) 373. Cahita 424. 465. El Prado 510. Rio Grande 282. La Palma 329. 374. 425. 466. El Rinc6n 511. 283. 330. Cahas 375. El Llano 426. San Jose 467. Lola 284. Las Palmitas 331. 376. Las Margaritas 468. Prixvae 377. Reference for IBRDMop 27496 ISPC 27Z' I

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Report No: P- 6759 PAN Type: MOP