Document of The WorldBank FOR OFFICIAL USEONLY ReportNo. 43170-NP PROJECTPAPER ONA PROPOSEDADDITIONAL FINANCING(GRANT) INTHE AMOUNT OFSDR 16.4 MILLION (US$27MILLIONEQUIVALENT) TO NEPAL FORA SECONDRURALWATER SUPPLY and SANITATIONPROJECT April 11,2008 SustainableDevelopment Unit South Asia Regional Office This document has a restricted distribution and may be usedby recipients only inthe performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. CURRENCYEQUIVALENTS (ExchangeRateEffective = March 17, 2008) CurrencyUnit = NPR NPR 1.00 = US$0.015863 US$l.OO = NPR 63.04 FISCAL YEAR July 16 -- July 15 ABBREVIATIONS AND ACRONYMS ARCS Audit ReportComplianceSystem NGO Non-GovernmentalOrganization B/C Ratio BenefitCost Ratio NPC NationalPlanningCommission Board RuralWater Supply and Sanitation NPV Net PresentValue FundDevelopmentBoard CAS CountryAssistance Strategy N R S . NepaleseRupees DDC District DevelopmentCommittee PAD ProjectAppraisal Document DDP District DevelopmentPlan PDO ProjectDevelopmentObjective ERR Economic Rateof Return PIP ProjectImplementationPlan FM FinancialManagement RTI Right to Information FMIS FinancialManagementInformation RWSSFDB RuralWater Supply and SanitationFund System DevelopmentBoard GDP Gross Domestic Product RWSSPI RuralWater Supply and SanitationProject GoN Government of Nepal RWSSPI1 SecondRuralWater Supply and Sanitation Project IDA InternationalDevelopment SA Service Agency Association IP ImplementationPlan/ Indigenous SAC Social AccountabilityCommittee People IPDP IndigenousPeopleDevelopment so Support Organization Plan ISN Interim StrategyNote SRLF SanitationRevolvingLoanFund ISR ImplementationStatus and Results SWAP Sector Wide Approach Report M&E Monitoring andEvaluation VDC Village DevelopmentCommittee MIS ManagementInformationSystem wsuc Water Supply and SanitationUser Committee MoU Memorandumof Understanding WSUG Water Supply and SanitationUser Group MPPW Ministry of PhysicalPlanningand WTSS Women Technical Support Services Works FOR OFFICIAL USEONLY TABLE OF CONTENTS CURRENCY EQUIVALENTS...................................................................................................... ii ABBREVIATIONS AND ACRONYMS....................................................................................... ii Project Paper Data Sheet ................................................................................................................ i v I. Introduction ........................................................................................................................ -1 I1. Background and Rationale for Additional Financing .US$27.00million.......................... 1 I11. Proposed Changes: .............................................................................................................. 5 IV. Consistency with Country Assistance Strategy (CAS)/Interim Strategy Note (ISN) .........5 V. Economic Analysis .............................................................................................................. 6 VI* Appraisal of scaled up project activities: ............................................................................. 6 VI1. Expected Outcomes ............................................................................................................. 7 VI11. Benefits and Risks:.............................................................................................................. 7 IX. Financial Terms and Conditions for the Additional Financing........................................... 9 Annex 1: Implementation Plan...................................................................................................... 10 Annex 2: Revised Key Performance Indicators ............................................................................ 12 Annex 3: Economic Analysis ........................................................................................................ 13 Annex 4: Financial Management Risk Assessment ...................................................................... 16 Attachment 1:FMRisk Rating Summary ...................................................................... 19 Annex 5: Governance and Accountability Action Plan................................................................. 21 Annex 6: Statement of Loans and Credits ..................................................................................... 23 Annex 7: Country at a Glance ....................................................................................................... 24 This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not be otherwise disclosed without World Bank authorization. PROJECTPAPERDATA SHEET Date: April 11, 2008 Team Leader: Tashi Tenzing Country: Nepal Sector Directormanager: Constance A. Project Name: Second Rural Water Supply and BernardJunaid Kamal Ahmad Sanitation Project - Additional Financing Country Director: Susan G. Goldmark Project ID: P I10463 Environmental Category: B Recipient: Nepal Responsible agency: Rural Water Supply and Sanitation FundDevelopment Board oYes x N o Have these been approved by Bank management? oYes o N o I s approval for any policy exception sought from the Board? oYes x N o Revised project development objectives/outcomes: The Project Development Objectives have 1 not been revised. In addition to the outcomes expected under the original Project, the outcome under the Additional Financing would see the completion of the total scheme cycle and commissioning of rural water supply and sanitation facilities in 582 communities benefiting some 407,400 additional people. Development Phase activities (including social capital development) would be completed for an additional 450 schemes. Social accountability and community score cards systems will be institutionalized. It i s also expected that a rural water supply and sanitation sector monitoring and evaluation system will be established and made operational within the Government system prior to the close of the extended Project period. It i s also envisaged that the Parliament will enact an Act to make the Board a regular sector institution. Does the scaled-up or restructured project trigger any new safeguard policies? No. OP 7.50, "Projects on International Waterways" will not be triggered as it was not triggered in the original Project. The Additional Financing would only support locally confined ground water aquifers or smaller detached spring sources for the water supply schemes just as in the original Project. For Additional Financing [ ] Loan [ 3 Credit [XI Grant For Loans/Credits/Grants: Total Bank financing (US$m.): 27.00 Proposed terms: Standard thers - Communities i v NEPAL: Second Rural Water Supply and Sanitation Project (RWSSP 11)- Additional Financing (P110463) Project Paper I. Introduction 1. This Project Paper seeks the approval of the Executive Directors to provide an additional grant in an amount of US$27 million to the Nepal: Second Rural Water Supply and Sanitation Project [RWSSP 11; Project ID: P071285; Cr. No. 3911-NEP]. The proposed additional financing would support cost overruns and scaling up of RWSSP I1activities. 2. With the additional financing, the Project Objectives and design will remain the same as in the original Project. The expected outcomes envisaged under the Project will not only be achieved but enhanced significantly due to the expansion of project activities to additional remote rural communities. 11. Background and Rationale for Additional Financing US$27million - (a) Original Proiect: 3. The total (original) Project cost was US$41.50 million equivalent, of which an IDA credit has financed US$25.30 million. The credit was approved on June 1, 2004 and became effective on January 17, 2005. The primary objectives of the Project are: (i) to improve rural water supply and sanitation sector institutional performance and mainstream the "Board" (Rural Water Supply and Sanitation Fund Development Board) approach in the Government's system, and (ii) to support communities to form inclusive local water supply and sanitation user groups that can plan, implement, and operate drinking water and sanitation infrastructure that delivers sustainable health, hygiene and productivity benefits to rural households. The Project adopts a community driven development approach to the delivery of rural water supply and sanitation services. The communities are assisted by Support Organizations, primarily Non Governmental Organizations (NGOs) to plan, design and implement their water and sanitation facilities. 4. The original Project included the following components: (i) strengthening and operation of the Board; (ii)selection and construction of water supply and environmental sanitation schemes; and (iii) institutional development studies. The original project expected to complete 1,355 rural water supply and sanitation schemes in four batches (Batch V to VIII) by the closing date of August 31, 2009. The project also included 48 schemes carried over from the first Nepal Rural Water and Sanitation Project (RWSSP I). The original project (RWSSP 11) expected to serve a total population of 813,000. However, due to cost overruns the original Project funds would be able to complete only 881 schemes serving a population of 683,064. (b) Performance of the Proiect: 5. The Project Development Objective (PDO) has been rated "Satisfactory/ Moderately Satisfactory" for most of the time. Overall, the Board's approach has been yielding positive results at the community level. Despite some implementation challenges, it has demonstrated that it i s effective and can reach beneficiaries in remote rural areas. Nevertheless, the delays in implementation of the Rural Water Supply and Sanitation Sector Monitoring and Evaluation (M&E) system and tabling the Bill to make the Board a regular sector institution to the Parliament were the primary reasons for the current "Moderately Satisfactory" rating for the PDO. The Implementation Progress (IP) rating i s also currently "Moderately Satisfactory". The Board has made good efforts to reduce implementation delays and has improved implementation significantly; still delays continue to persist in completing the actions agreed with the implementation support missions. 1 6. Since the Mid-Term Review, the Board has demonstrated that it can accelerate implementation within a short span of five months - implementation delays have been reduced from 11to 4 months. The Board has recruited a long-term technical advisor and has developed a strategy to improve overall project performance. It has carried out a thorough delay analysis, and developed a "color coding system" to flag implementation issues so that focused attention can be provided to resolve them. The Board has also recognized the need to improve its contract administration by being stricter on timelines. To make its internal management more effective, the Board has developed and i s implementing service standards for staff at all levels. Further, from Batch VI11onwards, the Board plans to reduce the number of Support Organizations (SOs) by allocating more schemes per SO. This would reduce the Board's work-load and thus, help mitigate delays. Further, the Board i s in the process of upgrading its Management Information System (MIS)which would help improve its overall efficiency. With the above strategy and the current country situation where mobility i s not as big an issue as earlier, Project Implementation i s expected to continue to accelerate. MPPW and the Board are finalizing a procurement plan to recruit a consultant to develop the sector M&E system which i s expected to be functional by July 16, 2009. The Board i s in the process of converting the above strategy into a concrete Action Plan which would demonstrate that it i s able to complete the Additional Financing activities by the Project closing date. 7. Project implementation includes four phases: Pre-development, Development, Implementation and Post-Implementation. Overall implementation progress to date, after three years of project effectiveness, shows that 75 percent of the schemes have completed the Development Phase. However, due to frequent strikes and "bandhs" affected by political instability, the progress of schemes under the Implementation Phase has been slow. So far, of the 1,127 schemes undergoing the development and implementation phases, 544 schemes have been reported to be completed to deliver improved water supply and sanitation services to about 400,000 people under the Project. Household latrines have been built in about 34,000 (Batch V and VI) households which represent more than 88 percent of the households that did not have sanitary latrines before the Project. The legal covenants are in compliance and there are currently no major fiduciary issues. (Pease refer to ISR sequence# 7 for details). 8. The participating communities have not only benefited from improved water supply, but also from time savings (averaging three hours per day) from fetching water as it i s brought closer to their houses. In addition, with the project supporting women's groups (women's technical support services (WTSS)) women are able to use their time saved for (i) various productive purposes to generate income (including poultry farming, vegetable gardening, goat raising etc.); (ii) devoting more time to child care and family chores; (iii) personal hygiene; and (iv) attending non-formal education classes supported by the Project. With health, hygiene and sanitation education, and the availability of a community-managed Sanitation Revolving Loan Fund (SRLF), which provides funds for purchasing non-local construction materials, sanitation coverage is also increasing. A few villages under the Project have been declared "open defecation free". 9. Sustainability of the Project i s very likely as it follows the basic approach (with improvements) that was tried and proven under the first project (RWSSP I). results of sustainability studies-carried out after five years of operation of schemes underThe Batches Iand I1of RWSSP Iindicate that 89 percent of the schemes were institutionally, socially, financially and technically sustainable. This i s in stark contrast to the sustainability of traditional schemes, particularly gravity schemes-implemented through a top down approach -where 56 percent of water points require major repairs and 21 percent need complete rehabilitation'. 10. Coordination with Local Government: The Board coordinates with Central and Local Government bodies at all critical points of scheme preparation and implementation in line with Government policies, including support to the concept of decentralization. The Board's annual plans are approved by the National Planning Commission and it ' Source: Government of Nepal, National Planning Commission, February 2007, Rural Infrastructure Reconstruction & Rehabilitation, Preliminary Investment Plan, Draft Final Report; page 9, paragraph 22. 2 provides progress status on monthly basis to the Ministry of Physical Planning and Works (MPPW) e The Board has made mandatory provision of selecting and supporting only those schemes that are included in the District Development Plan (DDP) approved by the District Development Committee (DDC). To illustrate this, a recent study carried out by the Board, on a sample of 154 schemes, revealed that 55 schemes were included in original DDC plans while the rest were approved by DDCs upon the request of SOs. e The Water Supply and Sanitation User Group (WSUG) formed for the implementation of the schemes are registered at the DDC under the Water Resources Act. The above referenced study also revealed that, out of the 154 schemes, in 141 cases DDCs/ VDCs (Village Development Committees) were involvedinregistration of WSUGs; e The Support Organizations (SOs) are required to share information regarding the signing of scheme agreements, scheme costs, andprogress with the local government. e The representatives from the local bodies play an active role in: (i)formation and registration of WSUGs, (ii) opening of WSUG Bank Accounts (iii)development of community action plans, and (iv) in mitigating community disputes related to water supply schemes (such as water source disputes). e There is a provision to include the technical staffs of VDCs and DDCs in the community level technical training organizedby the Board. 11. The Government of Nepal (GoN) has tabled a Bill in the Parliament to make the Board a regular sector institution. GoN has not'only provided adequate operating funds to the RWSS sector Monitoring & Evaluation (M&E) Unit in the Ministry of Physical Planning and Works (MPPW) for the current fiscal year but has also indicated that it has adequate funds available from its own resources to finance the expenditures yhich were planned to be financed by DFID under the original project, which never materialized. 12. Overall disbursements as of March 15, 2008 are US$17.14 million or about 67 percent of the credit amount. The Board has already awarded contracts for an additional committed amount of about US$3.20 million and earmarked US$13.60 million for contracts to be awarded. 13. A review of the project costs revealed that water supply scheme costs had increased as compared to the estimates made at appraisal. These were primarily due to increases in the average scheme size (the actual scheme population was around 700 compared to an estimated population of 600 at appraisal) and an increase in hardware costs arising from a sharp rise in the prices of pipes, cement, fittings and other construction materials. An update of the cost estimates suggests that US$49.30 million (against the original estimate of US$41.50 million) i s required for completing all Batch VI1 schemes prior to project closing, i.e. a funding gap of US$7.80 million. 14. Since the Project i s implemented in overlapping batches, in addition to completing Batch VI1 schemes, the Board expects to complete the implementation phase of Batch VI11 schemes, the development phase of Batch IX schemes and the pre-development phase of Batch X schemes. In total (cost overrun and scaling up activities) would, therefore, require an additional IDA grant of US$27.00 million. (c) Rationale/Reasons for Additional Financing: 15. The request for Additional Financing i s to address: (i) overruns3 and (ii) up the cost scale DFID had in principle committed to provide US$S.O million to the Project; however, due to political changes and the fact that DFIDreviewed its overall areas of support to Nepal this funding did not materialize. Increases in the cost of construction materials (pipes, fittings and cement) and implementation delays during the conflict have contributed to the cost overruns. 3 number of water supply and sanitation services in rural areas so as to maximize positive development impacts in unserved and/or underserved remote areas. Additional Financing i s viewed as the best option mainly because it: I s a quick and available means of funding the cost overruns to allow the Board to complete its ongoing schemes and deliver water supply and sanitation services to the rural communities where it has already begun work; Allows the Board to continue its good governance practices that apply streamlined objective eligibility criteria to select schemes and support organizations in a transparent manner to deliver water supply and sanitation services, and to do away with ad hoc decisions. Without funding, there is a risk that these good practices would be discontinued and the task of rebuilding them would not be easy; 1 I I 1 Actual and/or Projected Additional Financing Batch 1 1 1 OriginalPAD Schemes No* of Population Schemes No*of Population Schemes No.of Population ImplementationPhase IV (fromRWSSPI) I 48 I 28,800 I 47 I 35,562 I V 244 146,400 315 233,986 I I I II II II I I II VI 330 198,000 350 246,160 VI1 359 215,400 169 122,356 1 231 161,700 VI11 II 374 II 224,400 IIII IIII I 351 II 245,700 II Total ImplementationPhase 1,355 813,000 881 638,064 Dev't Phase IX* 400 280,000 Pre-Dev'tPhaseX* 400 280,000 Total 1,355 813,000 881 638,064 1,382 967,400 * During the period of Additional Financing, the Board plans to complete the development phase (DP) of 450 Batch IX schemes and the pre- development phase (PDP) of 500 Batch X schemes. As some scheme dropouts are expected inthe subsequent phases, preliminary estimates are that about 400 schemes in each batch will successfully complete the implementation phase serving an average per scheme population of 700 people. The completion of DP and PDP of Batches IX and X. respectively, paves the way to contribute towards achieving the total estimated implementation phasepopulationcoverage shown above. 16. The additional financing required would be about US$32.10 million, of which contributions from: (i) the communities are estimated at US$3.90 million; (ii) Government the US$1.20 million and; (iii) about US$27.00 million. IDA 4 17. The Board's approach has been yielding positive results at the community level. Although there have been some implementation challenges, overall it has demonstrated that it i s effective and can reach a large number of beneficiaries. The impact so far has been consistent with the expectations set out in the Project Appraisal Document (PAD). The success of this approach to the rural water supply and sanitation sub-sector has been widely acknowledged, and it has helped to define an effective demand-driven approach to service delivery through an inclusive participatory process in which the communities are empowered to make informed decisions about their future, including water supply and sanitation schemes. 18. The Board's approach yielded results at the community level even during the difficult country situation. The political transition in April 2006 has opened a new chapter in the history of Nepal. The signing of a comprehensive peace agreement in November 2006 lays out a roadmap to a lasting peace and the construction of a new governance structure. It also creates a better environment for investment and economic growth, as well as for the government to deliver services and development projects in remote and previously security-affected areas. Against the backdrop of the security problems over the last decade, Nepal remains the poorest country in South Asia with average per capita Gross Domestic Product (GDP) of US$270 (2005). There i s a need to widely accelerate the good practices to reach as many communities as possible so that they can have a share of the peace dividends quickly. 111. Proposed Changes 19. Project Development Objectives (PDO), design andor scope: N o changes are envisaged inthe PDO and the project designunder additional financing. The scope of the Project would be expanded to include additional schemes. (Implementation plan i s in Annex 1). The size of schemes implemented to-date had an average population of 700 compared to the size of a scheme estimated at 600 during appraisal. Monitoring indicators: While monitoring the Project, the key indicators for the first objective were not found to be suitable and the indicators were revised . These revisions need to 20. be formalized. The revised indicators which would apply to the original as well as the additional funding are attached as Annex 2. 21. Social Audits and Community Livelihoods Program. The Additional Financing would help the Board to strengthen its initiatives to set up a social audit committee and community score card system throughout the Project areas. It will also help to further facilitate the Board's initiative to link women's groups with commercial banks and the private sector for business development so that WTSS group members can maximize the benefits from the income generating activities they undertake using their time savings. Please refer to Annex 5 for Governance and Accountability Action Plan. 22. Financial Management and Procurement: The Board has a robust financial management system. The institutional arrangements for financial management will remain unchanged. Regarding procurement, the IDA Procurement Guidelines of May 2004 (revised October 2006) would be made applicable to the additional finance as well as to the original project activities after approval of the additional financing. 23. Closing date: To enable adequate time to complete the scaled up activities, the current closing date of August 30,2009 i s proposed to be extended to December 31,2010. IV. Consistency with Country Assistance Strategy (CAS)/Interim Strategy Note (ISN) 24. Since there are no major changes to the original PDO and design, activities under the Additional Financing are consistent with the Nepal CAS. This i s very much in line with the Interim Strategy Note (ISN) for Nepal discussed at the Board in February 2007. Particularly, in The indicators were difficult to measure due to the lack of sector information which was outside the purview of the Project. Further, the reforms sought a consistent sector guideline and that was not reflectedby the indicators. In fact, the original indicators for PDO 1were shifted to PDO 2 where it i s measurable. 5 the Executive Summary it states "It (Nepal) has shown great strength in mobilizing community level energy to implement development programs. When the government needs to respond to rising expectations of the people in service delivery and build credibility of the state as a developmental institution, it would only be sensible for it to work with the strength of the communities. Successful community-based programs can and should be scaled up." The rural water supply and sanitation (RWSS) projects i s a successful community driven program. V. EconomicAnalysis 25. An economic analysis has been completed for the Additional Financing (cost overrun and scaling up of activities). Economic rates of returnhave been calculated for each technology separately, for all water supply schemes, and for the project as a whole. Results of the economic analysis are summarized in the table below. The primary benefits that are quantified are the time savings due to reductions in time needed to collect water and the increased availability of safe water. Data from schemes completed under Batches N to V I of RWSSPII are used to estimate scheme costs (For details please see Annex 3). The ERR estimates are downwardly biased since health benefits are not incorporated into the calculation of benefits. Furthermore, the benefits of activities funded under Batches IX and X are not included as implementation phase activities as the implementation phase of these batches will not be funded under the additional financing. The total Project will result in a NPV of NRs. 1,362 million and an ERR of 25.69 percent. Therefore, the expected net present value exceeds the opportunity cost of capital. ERR for individual schemes range from a high of 57 percent for shallow tubewells to a low of 13percent for lift schemes. Economic analyses are undertaken for each scheme during the planning phase to ensure that only schemes that are economically viable are undertaken as part of the Project. VI. Appraisal of scaled up project activities 26. (a) Environmental Category: B - Same as for the original Project. The scaled up activities include an increase in the number of schemes that would be undertaken by the Board following the Environmental Management Plan under the original Project. (b) Exception to Bank policies - None required. 27. Social Safeguards: The Additional Financing i s expected to have limited negative impact and substantive positive social impact. IDA'SOperational Policy (OP/BP) 4.12 that governs involuntary resettlement would not be triggered. There would not be any land acquisition or involuntary resettlement under the Additional Financing. Where land has been required during RWSSP 11, it was managed through voluntary donation or mutually agreed sale. Clear procedures are incorporated into the RWSSP I1 Project Implementation Plan (PIP) as guidance in cases where land i s donated for water supply schemes. A standard Memorandum of Understanding (MoU), developed for the Board by a Legal Expert, shall be used by all SOs where legal transfer of land i s deemed unfeasible because of the small size of land involved. It will be legally binding for the parties and for the descendants of the affected land owner and will preclude any future disputes over the land and water source in question. These procedures will ensure that the donation i s completely voluntary and does not cause loss of livelihood to the donating household. It will also ensure that the donated land i s registered in the name of the Water Supply and Sanitation Users Group. 6 28. OP/BP 4.20 (Indigenous Peoples). Under RWSSP 11, the Board prepared and costed out an indigenous people's development plan (IPDP) that lays out a set of actions to ensure that Indigenous People's (IP)groups get equitable access to project benefits. These actions include: translation of project communication materials into the main IP languages for dissemination by NGOs working for the project; commissioning of segments for the Board's on going radio program to be prepared and broadcast in Indigenous People's languages; NGO selection criteria that include having staff with ability to speak the relevant local IP language; inclusion of indicators in MIS that will track percentage of IP households getting access in relation to the percentage of IP households in the physical area served by the water source(s) being harnessed by the scheme etc. These guidelines will also apply under the Additional Financing. 29. Environmental Safeguard: As in the case of the original Project, adverse environmental impacts under the Additional Financing will also be limited. RWSSP I1 implementation has shown that the environmental issues are minor/simple that they can be easily addressed through scheme planning, design and can be managed by the users. The environmental issues are usually related to: (i)risks of destruction or degradation of source and other components of schemes by flood and landslide, (ii) depletion of water source (drying up or reduced flow particularly during the dry season), and (iii) water quality issues (biological, chemical includingarsenic in groundwater, and physical). A simple Environmental Management System internalizing environmental screening, water quality testing, EMAP preparation and compliance checks within the overall system of scheme planning, development and implementation has been introduced in RWSSP 11. The pre-feasibility form internalizes environmental aspects: screening i s mandatory for consideration of a scheme by the Technical Appraisal Committee; the Environmental Management Action Plan (EMAP) i s the 7th step (Plan) in the Community Action Plan; detailed designs incorporate EMAP measures and screening recommendations (SO designs, SA checks twice during this phase and include additional measures if necessary). Water quality of a scheme i s tested at a number of stages in the scheme cycle (pre-development, development and implementation phases), and independent monitoring done by SA are also required to check environmental compliance. In order to ensure the supply of quality water during the operational stage, visual monitoring by the community and Village Maintenance Worker through proxy-indicators has been introduced. RWSSP I1at present i s aiming to link environmental and water quality information with its Project MIS. The same approach will be applied in the additional financing emphasizing and strengthening implementation effectiveness of these measures. 30. OP 7.50 "International Waters": This policy i s not triggered because the Additional Financing will only support investment for abstraction of water from locally confined ground aquifers or smaller detached springs just as in the original Project, and hence will not have any impact on international waters. VII. Expected Outcomes 31. In addition to the outcomes expected under the original Project, the outcome under the Additional Financing would see the completion of the total scheme cycle and commissioning of rural water supply and sanitation facilities in 582 communities. Development Phase activities (including social capital development) would be completed for an additional 450 schemes. Social accountability and community score cards systems will be institutionalized. It i s also expected that a rural water supply and sanitation sector monitoring and evaluation system will be established and operationalized within the Government system prior to the close of the extended Project period. It i s also envisaged that the Parliament will enact an Act to make the Board a regular sector institution. VIII. Benefits and Risks: 32. Benefits: The project is expected to serve a rural population of approximately 407,400 by 2010/2011 with improved drinking water and sanitation services with the Additional Financing. Another 560,000 people will receive some support under the project in terms of community mobilization activities and sanitation services. These additional 560,000 people will come under 7 Batches IX and X for which the additional financing will cover soft-ware costs for the pre- development and development phases, but implementation phase activities will not be covered under the Project. The primary project benefits that are envisaged include: (0 Time savings arising from reductions in time spent in collecting water which allows women more leisure for rest, childcare and engaging in income generating activities thereby improvingthe quality of lives of women and children. (ii) Increasedavailability ofsafewater aswellas sanitation facilitieswhicharelikelyto result in significant health benefits and reduced medical expenditures for the population. Availability of larger quantities of water may also allow more water use in home gardens, small animal husbandry, livestock production and other water-requiring activities that increase food consumption or purchasing ability. LinkingWTSS groups with commercial banks and the private sector for business development are expected to help scale up and maximize returns to income generating activities undertaken usingthe time savings. (iii) ImprovedhealthknowledgeandbetterhygienepracticesimpartedthroughtheHealth and Sanitation Education component of the project which will also contribute to the improved health outcomes. (iv> Institutional strengthening and sustainability by transferring ownership and management of assets to the communities, strengthened capacity of NGOs to plan and deliver rural water supply services and building capacity for the execution of the program by the government. 33. By scaling up project activities, it i s not envisaged that the achievement of the PDOs will be jeopardized; rather, it would be strengthened. With the peace agreement amongst the political parties, the general expectation i s that the environment for development will be enhanced. Nevertheless, the situation i s still volatile and the trend of calling strikes/"bandhs" at short notice could affect mobility within the country. This would jeopardize the monitoring and supervision of the project at the sites. In view of this the Board i s in the process of creating Social Audit Committees and community score cards. These are expected to minimize such risks. Risks RiskMitigationMeasures RiskRating 1. Parliament may not enact the Bill As the Seven Party coalition government has M presented to it by Government after it tabled the Bill it i s expected that consensus convenes as certain factions may not will be achieved and the Bill be enacted. agree to mainstreamthe Board in the RWSS sector 2. Government may be reluctant to The Government is keen for a Sector Wide M implement an effective Sector M&E Approach (SWAp) in the RWSS sector, system and linking future budget emphasizingthe importance of establishing a allocations to performance. sector M&E as one pre-requisitefor a SWAp, would help mitigate the risk. Further, the government has already established a sector M&E Unit in the Ministry of Physical Planningand Works. 3. Due to the transitional political Much is outside the control of the Project. H and sensitivesecurity situationas well however, efforts will be made to desigi the as frequent and unpredictable strikes supervision and monitoringof schemes to rely and bandhs, mobility to rural sites on social audit committees and community could be restricted resulting in score cards to avoid delays. implementationdelays 4. The Board becomes reluctant to The Board will review the existing staff salary M pay its staff at competitive market using appropriate measures such as market salary scales thereby rendering it surveys to determine the staff salary scales. unable to recruithetain competent The existing objective criteria for selection of staff. Frequent turnover of Board Board members and (SOs)/(SAs) will be members and political interference in reviewed and improved. The process of 8 the selection of Support Organiza- selection of SOs is being outsourced. tions (SOs)/Service Agencies (SAs). Overall RiskRating M IX. FinancialTerms and Conditionsfor the AdditionalFinancing 34. The additional financing will be on standard IDA grant terms, instead o f the IDA credit terms applicable for the original operation. 9 I. Annex 2: RevisedKey PerformanceIndicators Nepal: Second Rural Water Supply and SanitationProject - Additional Financing The Board, the Government and the Task Team have agreed at Mid-Term Review (MTR) of RWSSP I1 to revise the original performance indicators for development objective 1 to properly reflect and be able to measure the achievement of this PDO. This revision i s not caused due to the Additional Financing; but it i s seen as an appropriate and efficient means to formalize GoN's request that the indicators be revised as follows: Objective I: Indicators are: (i)Establishacommonsetofguidelinesforallprojectsinthesector; (ii)disadvantagedminimumcost recovery normof 20 percent and 10percent for poor and Sector wide groups; (iii)NationalPlanningCommission(NPC) andMPPWeffectively monitor andevaluatethe sector and (iv) Government links budget allocation among competing approaches to evaluate outcomes. Objective 2: The indicators are: (i)Percentageincreaseinnumberofhouseholdswithimprovedaccesstowatersupply; (ii)Percentageincreaseinnumberofhouseholdswithimprovedaccesstosanitationfacilities; (iii)Number of schemes in operation and functioning with community operation and maintenance; (iv) Percentage decrease (from baseline) in the prevalence of diarrheal disease morbidity among young children; (v) Percentage increase (from baseline) in the number of individuals that practice hand washing with soap at critical junctures; (vi) Percentage of population in the project area with water supply points that can be reached within a 15 minute round trip walk from their residence; (vii) Percentage of population in the project area with access to hygienic sanitation facilities within 30 m of their residence; (viii) Fit between the caste and ethnic profile of households inthe catchment area as measured in the initial social mapping and the caste and ethnic profile of the households actually served by the system; and (ix) Number of water supply and sanitation users' committees (WSUCs) with greater than the stipulated number of women members. 12 Annex 3: Economic Analysis Nepal: Second Rural Water Supply and Sanitation Project - Additional Financing Summary of Benefits and Costs 1. Benefits; The project i s expected to serve a rural population of approximately 407,400 by 2010/2011 with improved drinkmg water and sanitation services with the Additional Financing. Another 560,000 people will receive some support under the project in terms of community mobilization activities and sanitation services. These additional 560,000 people will come under batches IX and X for which the additional financing will cover soft-ware costs for the pre- development and development phases, but implementation phase activities will not be covered under the project. The primary project benefits that are envisaged include: (i) Time savings arising from reductions in time spent in collecting water which allows women more leisure for rest, childcare and engaging in income generating activities thereby improving the quality of lives of women and children. (ii) Increased availability of safe water as well as sanitation facilities which are likely to result in significant health benefits and reduced medical expenditures for the population. Availability of larger quantities of water may also allow more water use in home gardens, small animal husbandry, livestock production and other water-requiring activities that increase food consumption or purchasing ability. Linking WTSS groups with commercial banks and the private sector for business development are expected to help scale up and maximize returns to income generating activities undertaken using the time savings. (iii) Improved health knowledge and better hygiene practices imparted through the Health and Sanitation Education component of the project, which will also contribute to the improved health outcomes. (iv) Institutional strengthening and sustainability by transferring ownership and management of assets to the communities, strengthened capacity of NGOs to plan and deliver rural water supply services and building capacity for the execution of the program by the government. 2. Costs: Cost estimates for the proposed project have been computed based on existing data from batch I V - V I of RWSS 11. The base year for the costs i s 2007/08. Per capita scheme costs are summarized in Table 1. Shallow Tube Rainwater Phases Gravity Well DugWell Harvest Lift Dev't phase software (NRdcapita) 246 161 158 371 371 Dev't phase hardware (NRskapita) 246 87 89 63 71 Total Dev't phase (NRdcapita) 491 248 247 434 443 Imp.Phase software (NRdcapita) 296 143 134 443 443 Imp.Phase hardware (NRskapita) 2,668 608 1,774 2,124 2,087 Total Imp.Phase (NRskapita) 2,964 751 1,908 2,567 2,530 Total (NRdcapita) 3,455 999 2,155 3,001 2,973 13 3. Because health and institutional benefits are difficult to assess due to inadequate data, the economic analysis will focus on the time-savings generated by the proposed water supply investments. As the project i s demand-based, past experience under RWSSP I1and feasibility of technical options according to geographic conditions i s used to estimate the number of schemes and the types of technologies. It i s estimated that a total of 582 schemes will be completed under the Additional Financing. Seventy-six percent of these schemes will be gravity schemes, 4 percent will be shallow tube wells, 5 percent will be dug wells, 2 percent will be rainwater harvesting schemes and 12 percent will be lift schemes. Key Assumptions The key assumptions are: Benefits and costs have been forecast over a 20-year horizon from the first year of the project in 2007/08. Border prices have been estimated by applying the standard conversion factor of 0.9 to all domestic expenditures and benefits. The opportunity cost of capital i s 12percent. Population growth i s assumed to be 1.5 percent. The present population served b y the scheme i s assumedto be 700 households. The average household size i s assumedto be 5.3 persons. Average rural agricultural wage rate for women i s assumed to be NRs. 70/day. The corresponding wage rate for men i s assumed to NRs. 100/day. Time saved: As per the finding of the DetailedDemand Assessment Study it i s assumed that the 25 percent of time savings by women i s used in economic activities, 41 percent of time for household activities and self-improvement (adult education) and the remaining 34 percent i s leisure time. For men it i s assumed that 33 percent of time savings i s used in economic activities, 20 percent on household work and self- improvement and 47 percent on leisure. Economic activities are valued at 100 percent of the rural wage rate, household activities and self-improvement are valued at 50 percent of the wage rate and leisure activities are valued at 25 percent of the wage rate. Average time savings from Batch I V - V I schemes (3 hours and 24 minutes per household for gravity schemes, 1hour and 36 minutes for Shallow Tube Well, 2 hours and 36 minutes dug well schemes, 3 hours for rainwater harvesting schemes and 2 hours and 18 minutes for left schemes) i s assumed as the daily time savings. Summaryof ERRandNPVEstimatesby Technology 5. Economic rates of return have been calculated for each technology separately, for all water supply schemes, and for the project as a whole. Results of the economic analysis are summarized in the table below. The ERR estimates are downwardly biased since health benefits are not incorporated into the calculation of benefits. Furthermore, the benefits of activities funded under Batches IX and X are not included as implementation phase activities as the implementation phase of these batches will not be funded under the Additional Financing. The total project will result in a NPV of NRs.1,362 million and an ERR of 25.69 percent. Therefore, the expected net present value exceeds the opportunity cost of capital. ERR for individual schemes range from a high of 57 percent for Shallow tube wells to a low of 13 percent for lift schemes. Economic analyses are undertaken for each scheme during the planning phase to ensure that only schemes that are economically viable are undertaken as part of the project. 14 Shallow Tube Dug Rainwater Lift Gravity Well Well Harvesting Scheme All Schemes Project ERR 40.15% 56.64% 45.38% 18.13% 13.00% 37.42% 25.69% NPV (MillionNRs.) 1,685 49 94 9 7 1,845 1,362 B/C Ratio 2.83 4.35 3.21 1.37 1.06 2.63 1.85 Table 3: ProjectCosts 15 Annex 4: Financial Management Risk Assessment Nepal: Second Rural Water Supply and Sanitation Project - Additional Financing Adequacy of Financial Management (FM)Arrangements 1. The Rural Water Supply and Sanitation Fund Development Board has been in operation for the past 12 years and has successfully implemented RWSSP Iand i s executing RWSSP 11. The Board i s committed to serve the rural communities and ensure accountability of the funds disbursed to them. The Board has been functioning well under the management of the seven- memberBoard of Directors including the Executive Director. The Boardhas the authority to hire staff directly from the market through open competition. The responsibilities and duties of the key staff are delineated clearly to ensure that financial transactions are initiated, approved and executed at different levels. The current team of finance staff has been with the Board for a long period - turnover of staff has not been an issue. The FMstaff are conversant with the Bank's FM policies and procedures. Financial Administration Rules of the Board i s adequate to ensure appropriate controls over Project transactions. The Board has recently made a decision to separate the procurement function from the Administration and Finance Division and place it directly under the oversight of the Deputy Executive Director. This will allow the Administration and Finance Division to focus more closely on improving the implementation of the FMaspects of the Board. Overall, the FM arrangements for the Project are adequate for implementation. The Board has in place a well functioning Financial Management Information System (FMIS) and financial transactions are now automated. Adequate controls are in place. 2. From the financial management perspective, based on current assessment, the FM risk remains "Modest" and the FM performance rating in the latest ISR i s "Satisfactory". Nevertheless, based on the Bank's assessment and the observations of internal and external auditors, there are some areas that the Board needs to improve, for example, further strengthening of the implementation of its internal control system. These actions include improving the contract monitoring system to enable the Board to effectively track the contract amount, total billed amount, advance settlement amount and paid amount. This system i s expected to have controls on the settlement of mobilization advances of various contracts through subsequent running bills. Another area where the Board should improve i s the timely appointment of internal auditors. Although several issues related to hiring of internal auditors have been addressed, timely appointment still remains a concern. The Board i s now committed to ensure that internal auditors are appointed on time. Training of Support Organizations (SOs) i s another area where the Board could further strengthen the financial management capacity of SOs. The Board, in its governance system, has an arrangement for detailed review of SO accounts to ensure that the funds provided to the SOs are used for the intended purposes and to help them to improve their capacity to maintain good accounts. 3. During the last implementation support mission in December 2007, a few actions were agreed to address the above deficient areas. These actions focused on improving contract monitoring system, internal control system, organizing training for SOs and undertaking impact assessment of the Board's intervention in capacity building of SOs and WSUGs. The Board has started to initiate these actions which are progressing satisfactorily. Attachment 1provides the FMRiskRating Summary. Disbursements 4. IDA disbursement as of March 2008 under the ongoing Second Rural Water Supply and Sanitation Project i s US$17.14 million or 67 percent of the total credit of US$25.30 million. The remaining amount under the credit i s expected to be fully disbursedduringFY2008/09. The 16 Board has already awarded contracts for an additional committed amount of about US$3.20 million and has earmarked US$13.60 million. An update of the cost estimates shows that US$49.30 million i s required for completing all Batch VI1schemes prior to Project closing. This suggests a funding gap of US$7.80 million to complete all Batch VI1 schemes. The Additional Financing will address: (i) cost overruns and (ii)scaling up the number of water supply and sanitation services in rural areas so as to maximize positive development impacts in unserved andor underserved remote areas. The additional financing required would be about US$32.10 million, of which contributions from: the community i s estimated at about US$3.90 million, the Government US$1.20 million and IDA about US$ 27.00 million. Disbursements will continue to be report-based. External Audit 5. The Office of the Auditor General audits the accounts of the Board. There are no pending audit reports. Audit report for FY2006/07 was submitted in mid-March, within the 90- days grace period. The Board i s further strengthening its financial information system in order to prepare quality financial statements. The issues of reconciliation in the audit report submitted for FY2006/07 have been discussed and rectified. The Board i s committed to improve the system incorporating the comments from IDA. Issues raised by Auditors during FY2006/07 audit were mainly related to improving contract monitoring system and improving the internal control system by maintaining logs of vehicle management. These are part of FMimprovement action plan. The following audit reports will be monitored in the Audit Report Compliance System (ARCS): Implementing I Agency Audit Due Date I - . Audit Auditors Board Project FinancialStatements Private Sector Audit Firm 6 months after the end appointed by the Office of the of fiscal year (January Auditor General(OAG) 15") Board Entity (Board) Financial Private Sector Audit Firm 6 months after the end Statements appointed by the Office of the of fiscal year (January Auditor General(OAG) 15") Implementation ProgressReport 6. There are no pending implementation progress reports. In general, the trimester reports have been submitted reasonably on time. The most recent report was for the first trimester of FY2007/08 was submitted on January 2, 2008. IDA made some observations on the financial report, which needs to be resubmitted. In general, reports have been of acceptable quality. In the interim, the current processes and financial reports are adequate. Disclosure of Informationand Corporate Governance 7. With recent enactment of the Rights to Information Act, 2007, disclosure requirements under the Project are expected to be even more transparent and all information readily available for public disclosure. The Board will post in its website all available guidelines, procedures, and other key information related to the rural water supply and sanitation project. Specifically, the Board has agreed to disclose the following through its website: Overall RWSS Sector Budget, Allocation by Activity and Budget Line, Procurement Plan; Procurement Complaints Mechanism; Trimester Implementation Progress Reports (approved versions); Invitation for Expression of Interest, Bid Documents, and Request for Proposals, Minutes of Pre-bid Conferences, Contract Awards; and Annual Audited Financial Statements. 17 1 Supervision 8. Progress of project implementation will be continuously monitored b y the Rural Water Supply and Sanitation FundDevelopment Board and IDA. The implementation of the Project will be closely supervised from the Nepal Country Office. The Board will submit Project progress every trimester. Action plans agreed will be closely monitored to ensure implementation. The key FM fiduciary work are: (a) periodic visit at cost centers for ex-post reviews, and if any ineligible expenditures are noted, report to the FMS for further remedial action; (b) review audit reports and prepare summary of reports; and (c) participate in supervision missions and keep the Team and the Board informed of financial management issues or improvements. 18 d E c c X cl cl cl E cl E - E cl d8 5 .eE M E cl x zc) E Annex 5: Governanceand Accountability Action Plan Nepal: Second Rural Water Supply and SanitationProject -Additional Financing 1. Governance reforms in Nepal have been considered essential for sectoral interventions supported by the Bank. The Government's efforts towards reforms include enactment of the new Anti-Corruption Act in 2002, enactment of the Public Procurement Act in 2007 and Right to Information (RTI) Act in 2007. However, enactment of Acts and formulating policies alone are not sufficient, and their implementation i s the key to success. RWSSP I1 will support the implementation of these Acts through the execution of the Project. 2. Ongoing Governance and Accountability Initiatives: The Rural Water Supply and Sanitation FundDevelopment Board (the Board) has been operating in a very transparent manner to date. Specifically, transparency and accountability have been maintained through the following ongoing initiatives: 0 The Water Supply and Sanitation Users Committee (WSUC) i s the apex body formed by the Water Supply and Sanitation Users' Groups (WSUG) in a participatory and inclusive manner from among themselves with a mandate to coordinate and implement the project activities. Consideration has been given towards the wardcluster as well as adequate gender and ethnic representation in such committees to ensure social inclusion. These committees are held accountable to the WSUG on the project activities, including procurement financial matters. During the signing of tripartite (WSUC, SO and the Board) agreement for the Implementation Phase, a mass meeting of users' i s organized at the community level in the presence of Support Organization (SO) personnel and the respective Portfolio Manager (PM) from the Board. All the details of the contract including its financial aspect, procurement process for maintaining transparency in community are explained at this meeting. Similarly, the SO staff also conducts pre-implementation phase training to the WSUC and other interested members of the community regarding the scheme details and its financial matters. Moreover, the Board, right from its inception, has made a mandatory provision of maintaining a display board in each participating community informing the users at large about the project financing and components of the scheme. Similarly, the Board also has mandatory provision for community procurement, community management of resources and maintaining books of accounts. This helps to create user ownership of the Project. Apart from the financial audit carried out by independent auditors appointed by the Board, there i s also a provision of social audit in the community by the WSUC which explains the financial details (income and expenditure) of the project at a mass meeting. Adaptation of all these provisions in the communities has made the Project more transparent and has minimized the chances of corruption or embezzlement of resources. 3. The Board will continue to operate under the above illustrated action plan and will improve it as and when necessary. GoN and the Board have agreed to take specific actions on the following aspects: 0 Disclosure of Information: Ensure full implementation particularly of the disclosure provisions in the recently enacted Public Procurement Act 2007 and RTI Act 2007. In this context, the Board will disclose the following information, inter alia, in its website: (i) Agreed Procurement Plan; (ii)Procurement Complaints Handling Mechanism, (iii) Trimester Implementation Progress reports, (iv) Annual Audited Financial Statements, (v) 21 Technical and Financial Manuals, (vi) List of Schemes, (vii) List of selected SOs and SAs, (viii) All Procurement related documents (EOI, TOR,RFP, awards of contract, etc.) External Complaints: Develop a functioning, independent and credible system to deal with external complaints on procurement, fraudcorruption. Monitoring: Strengthen further the monitoring mechanism and seek ways of improving independent third party monitoring of compliance with the agreements with the Bank and the relevant provisions made in the Law of the Land together with assessing impact on outcomes. 4. schemeSocialmonitoring through Social Audit Committees, which comprise of local people of Accountability Committee (SAC): The Board i s practicing social appraisal for level high moral standing and reputation among the community and representing different social disciplines (e.g. school teacher, social workers, local leaders etc.). Furthermore, the Board intends to make use of the Social Accountability and community score card concepts being promoted by the Bank in its major projects; learn from the field experiences for improving governance and social accountability aspects throughout the scheme cycle. 5. MonitoringIndicators for Complianceto the Above Agreements and for Impact on Outcomes: The Bank will monitor implementation of the above arrangements and actions, through inter alia, the following: Disclosure of information will be supervised mainly through: (a) checking the frequency and comprehensiveness of website updates; (b) checking the distribution of materials to key participating civil society groups and NGOs; and (c) checking the comprehensiveness of information available at public information kiosks. Functioning of the complaints handling system and the system of sanctions and remedies will be supervised mainly through: (a) periodic review of statistics based on records kept on the Board's website; and (b) field level checks to ensure that problems are being reported and acted upon. 22 Annex 6: Statementof Loansand Credits Nepal: SecondRuralWater Supply and SanitationProject-AdditionalFinancing Difference between expectedandactual Original Amount inUS$Millions disbursements Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm.Rev'd P105860 2008 PAF I1 0.00 100.00 0.00 0.00 0.00 100.00 0.00 0.00 PO99296 2008 Irrigation& Water Rural 0.00 50.00 0.00 0.00 0.00 50.00 0.00 0.00 PO95977 2008 RoadSector Development 0.00 42.60 0.00 0.00 0.00 42.60 0.00 0.00 P107558 2008 Education For All Additional Financing 0.00 60.00 0.00 0.00 0.00 60.00 0.00 0.00 PO90967 2007 Second HigherEducation 0.00 60.00 0.00 0.00 0.00 60.00 0.00 0.00 P100342 2007 Avian InfluenzaControl 0.00 18.20 0.00 0.00 0.00 17.00 -4.00 0.00 PO74633 2005 Educationfor All Project 0.00 110.00 0.00 0.00 0.00 72.30 0.00 0.00 PO93294 2005 NP. Economic ReformTA 0.00 3.00 0.00 0.00 0.00 1.60 5.00 0.00 PO40613 2005 NepalHealthSector ProgramProject 0.00 50.00 0.00 0.00 0.00 18.20 0.00 0.00 PO83923 2005 Rural Access Improve.& Decentralization 0.00 32.00 0.00 0.00 0.00 27.30 9.00 0.00 PO84219 2004 NP Fin Sector Restructuring(Phase 11) 0.00 75.50 0.00 0.00 0.00 20.50 29.00 0.00 PO81968 2004 Poverty Alleviation Fund 0.00 40.00 0.00 0.00 0.00 15.90 0.00 0.00 PO71285 2004 RuralWater Supply & SanitationProject 0.00 25.30 0.00 0.00 0.00 8.70 -5.00 0.00 PO71291 2003 NP FinancialSector Technical Assistance 0.00 16.00 0.00 0.00 0.00 7.90 28.00 0.00 PO43311 2003 POWER DEVELOPMENT PROJECT 0.00 74.80 0.00 0.00 0.00 68.60 37.00 0.00 PO82646 2003 CommunitySchoolSupport Project 0.00 5.00 0.00 0.00 0.00 3.77 0.00 0.00 PO50671 2002 NP: TelecommunicationsSector Reform 0.00 20.40 0.00 0.00 0.00 8.70 41.00 0.00 Total: 000 78280 000 000 000 0 00 NEPAL STATEMENT OF IFC's Held and Disbursed Portfolio InMillions of U S Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 1996198 Bhote Koshi 1.89 0.00 0.00 0.00 1.89 0.00 0.00 0.00 1994 Himal Power 21.47 0.00 2.92 0.00 21.47 0.00 2.92 0.00 2001 ILFC - Nepal 0.00 0.30 0.00 0.00 0.00 0.30 0.00 0.00 1998 JomsomResort 4.00 0.00 0.00 0.00 4.00 0.00 0.00 0.00 Total portfolio: 27.36 0.30 2.92 0.00 27.36 0.30 2.92 0.00 ApprovalsPendingCommitment FY Approval Company Loan Equity Quasi Partic. Total pendingcommitment: 0.00 0.00 0.00 0.00 23 Annex 7: Country at a Glance Nepal: Second Rural Water Supply and SanitationProject-Additional Financing South Law- Nepal Asia income DevcIopnrenldlamand. 27 7 l,4%3 2.m3 290 766 B W Lfe eipeetancy 8 0 1.143 1,%2 T 2 7 17 18 2 8 21 ? J GNI Grow ptr .--I primary capita enrolfmeiit 31 16 2s 30 i 63 54 58 56 62 75 45 90 84 75 49 5.3 61 126 110 1c2 123 1!S 109 123 1os Yb V#6 2005 2006 2 % 4 5 7 4 61 15 0 27 2 r a 9 303 11 7 22 3 15 1 1.3B 104 137 12.4 11 1 14 4 212 33 7 553 -44 -5 4 2 2 2 4 0 4 0 7 a 4 20 5 53 7 44 4 a 4 6 6 5 3 30 4 la3 B i986-96 9996-06 2005 2006 2006-40 (0 werow onnu* Urowffrk GDP 5 1 3 6 2 7 3 9 4 4 GDPper -pita " 6 1 3 0 7 -0 1 2.0 &patsuf p m l s and ~ervicea STRUCTURE of the ECONOMY 1986 2005 2006 1% cf GEPI GmwLhaf capital and GDP (%) I &ricultiire E1 5 40 5 38 2 39 E lndusrry 1: 9 22.3 110 "1 1 I4anutanunng E 2 9.4 7 7 40 a 7 7 Serviceo 3 17 37.2 39 5 Hobsehold h a consumptionexpenditure PO 5 77 0 77 4 78 T Generalgost %ai cons~ni~hon erasndrture 3 1 9 2 tu 2 I D 1 I n i p m of goods and 8erb E@$ 23 3 35 8 32 6 37 7 $986-96 199fi-06 2005 2006 iawerapewmual gror/ihl I Growth of expurts and Imports (Ut I egricunure 2 s 3 3 3 0 1 7 Industry 7 5 3.1 1s 3 5 Manufacsunnq 13 0 1.9 3 6 1, Services E 3 3.5 1.4 -5 9 Householafina consumpsionexpenditure GenernlgovY final consuniDScaneggendture Gmos capial fomalm? inipow or goods arz! 5 2 ~ ~ 2 5 N5te ?0@6data are prcliniinar,~eshniates Th s bbls wol5 produced froni mu DeveiopmenrEconorr ca LD& da:abase * The dianionds5how tour hey indicntcrs inme colrntrf I n bold) compared wth its income-groupaverape If data are miss ng, the dianwW will &eincomplete 24 1986 1996 2005 2006 I a, a I 19 0 9 2 e a 6 144 7 8 4 8 - ? E L 2 3 8 3 4 : 1 15 8 a4 4 I -16 0 7 4 0 2 0 -9 2 -6 3 -0.8 -1 7 TRADE 1986 1996 2005 2006 Export and import levels (US$ mill J 153 602 532 665 2.503T ood and ive anininis 35 190 94 end kqetable ails 4 68 71 2% 579 601 Tora i m w m car) 472 1.350 2 2 0 t l Food 60 :1t 7t 54 102 475 .io3 277 M A ln?301tpuce index(2000=1OOJ Terms of trade [2&W=7001 BAIAWCEof PAYMENTS {us*$IT7i;frQtlSl 1986 1996 2005 ZOO6 Current accuunt balance to GDP 0%) hports of gcods and serwes 328 1.032 3 1,231 Ir?pQKSaf sooas and sewices 535 *l,h<& - # 3 2411 2.851 * T Resourcebalance -237 .1.218 -8,621 Netsncanis -3 8 23 ER Net cunent transfers 113 329 1.356 ? 742 Current account baI111~e -127 -243 1BO 190 175 2:6 -150 $06 Changes in net reserves -43 27 -10 -298 Mento: Resrrvw dxLding gold &'S$ mt!bans) 93 615 1484 z 760 Conusrsioal mie :DES l ~ ~ ~ l l / i ' S $ / 13.5 55.5 722 72 4 EXTERNAL DEBT md RESOURCE FLOWS