Document of The World Bank FILE COPY FOR OFFICIAL USE ONLY Repor No. P-2597-BD REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE PEOPLE'S REPUBLIC OF BANGLADESH FOR THE SECOND DACCA WATER SUPPLY AND SEWERAGE PROJECT June 13, 1979 This document has r restricted dibution ad may be ued by recipients only in the peWormance of their official duties. Its contents may ndot therwise be disclosed without World Dank authorization. CURRENCY EQUIVALENT The Bangladesh Taka is officially valued at Tk 33 to the Pound Sterling. The Pound now floats relative to the US Dollar and consequently the Taka-US Dollar rate is subject to change. The rate below has been used throughout this report except where otherwise stated. US$1.00 = Taka 15.5 Taka 1.00 = US$0.0645 MEASURES AND EQUIVALENTS mm - millimeter (0.04 inches) m - meter (39.37 inches) km - kilometer (0.62 miles) ha - hectare (10,000 m or 2.47 acres) Sq. K - square kilometer (0.386 sq. miles) 1 - liter (0.22 Imperial Gallons or 0.264 US gallons) lcd - liters per capita per day gcd - gallons (Imperial) per capita per day cum - cubic meter (220 Imperial gallons or 264.2 US gallons) mld - million liters per day (0.220 million Imperial gallons per day or 0.264 million US gallons per day) ml - million liters or 1,000 cubic meters mgd - million imperial gallons per day ABBREVIATIONS AND ACRONYMS ADB - The Asian Development Bank AIC - Average Incremental Cost DPHE - Department of Public Health Engineering DMC - Dacca Municipal Corporation ECNEC - Executive Committee of the National Economic Council ERR - Economic Rate of Return GOB - Government of Bangladesh GON - Government of the Netherlands MLGRD - Ministry of Local Government Rural Development and Cooperatives PEC - Project Evaluation Committee WASA - Water Supply and Sewerage Authority FISCAL YEAR July 1 - June 30 BANGLADESH FOR OFFICIAL USE ONLY SECOND DACCA WATER SUPPLY AND SEWERAGE PROJECT Development Credit and Project Summary Borrower: People's Republic of Bangladesh. Beneficiary: Dacca Water Supply and Sewerage Authority (WASA). Amount: US$22 Million Equivalent. Terms: Standard. Relending Terms: The IDA credit will be on-lent from GOB to WASA at 7 percent per annum over a period of 25 years, includ- ing 5 years of grace. GOB will bear the foreign exchange risk. Purpose: The project will provide water supply and sewerage facilities to meet Dacca's urgent needs. Specifically, the project will assist in financing: metered tube wells and water mains, storage tanks, service connections with meters, leak detection equipment, and secondary sewers. Consultancy fees are provided for supervision of project works as well as feasibility studies for a follow-up project. The project includes a training component, directed mainly towards operational staff. The project will benefit well over a quarter million urban pDor through provision of additional connections, public standpipes and sewers. Direct benefits of whole- some water supplies and shorter waiting times at public hydrants will be supplemented by indirect environmental and public health benefits. The project faces no special physical risks. The institutional risks are somewhat greater, however, and full support of GOB and maintenance of strong management will bet necessary to achieve the financial improvement objectives of the project. Thisdocument has a restricted distribution and may be used by recipients only in the performance [rci ir official duties Its contents may not therwie be diskosed without Woddbnk authoiERsion. Estimated Project Costs: Local Foreign Total ---- US$ Million----- Equipment and Civil Works 6.4 10.0 16.4 Consulting Services 1.4 2.5 3.9 Training 0.1 0.3 0.4 Land Acquisition 0.3 - 0.3 Physical Contingencies 1.2 1.9 3.1 Price Contingencies 3.2 2.6 5.8 Subtotal Net of Duties and Taxes 12.6 17.3 29.9 Duties and Taxes 11.8 - 11.8 Total Project Cost 24.4 17.3 41.7 Financing Plan: GOB IDA Total (Net of t-axes and duties) ----US$ Million---- 7.9 22.0 29.9 F.sti.nat i_sbursements: FY80 FY81 FY82 FY83 -------US$ Million------- Annual 9.5 10.0 2.0 0.4 Cumulative 9.5 19.5 21.6 22.0 Economic Rate of Return: About 5 percent. Appraisal Report: Bangladesh - Second Dacca Water Supply and Sewerage Project, June 13, 1979, Report No. 2443b-BD. INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND IECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE PEOPLE'S REPUBLIC OF BANGLADESH FOR THE SECOND DACCA WATER SUPPLY AND SEWERAGE PROJECT 1. I submit the following report and recommendation on a proposed credit to tlhe People's Repub]Lic of Bangladesh for the equivalent of US$22.0 million, on standard IDA termns, to help finance the Second Dacca Water Supply and Sewerage Project. The proceeds of the Credit would be relent to the Dacca Water Supply and Sewerage Authority for 25 years, including 5 years of grace, with interest at 7 percent per annum. To cover advance payments for equipment, and mnaterials, retroactive financing of up to US$250,000 is provided for payments after March 1, 1979. PART I - THE ECONOMY 2. A Basic Economic Report on Bangladesh, entitled "Bangladesh: Development in a Rural Economy" (Report No. 455-BD, of September 15, 1974) was distribated to the Executive Directors on October 1, 1974. An economic mission visited the country in June 1978; its report entitled "Bangladesh: Current Trends and Development Issues" (Report No. 2245-BD) was circulated on December 15, 1978. Background 3. When Bangladesh became independent seven years ago, the newly formed Government inherited a shattered economy: the country had lost a large number of its academic and business elite, while much of the physical infrastructure had been demolished. Agricultural and industrial production and trade had come to a standstill. Attempts to revive the economy were complicated by the necessities to fashion a national government out of a provincial administra- tion, to establish development institutions serving agriculture, industry, trade, and banking, and to reorient agriculture and industry to the changed market conditions. 4. Thne first years of independence were difficult. Bad harvests in 1972-73 were followed by damaging floods in 1974. Bangladesh's terms of trade worsened considerably as prices of foodgrains, petroleum, fertilizer and cement rose sharply. The production of jute, the predominant export, stagnated. Inflation, declining real wages, labor unrest and political instability added to the troubles. During this early period, relief rehabilitation and consolidation of Government authority were unavoidably the paramount concerns of poLicy makers. 5. Economic improvements in recent years, together with greater political stability, signal a significant shift in the circumstances of Bangladesh and somewhat brighten its economic prospects. The present -2 - time can be characterized as a period of consolidation of the country's economic recovery from the shocks of the early 1970's. It is also a period which offers planners and policy makers an opportunity to focus anew on the longer-term needs of development. In recognition of its need for a funda- mental reorientation of policies, the Government wisely chose to put off a new Five Year Plan by two years. The current Two-Year Plan (FY79 and 80) has given GOB officials time to carefully consider the development strategy and policies to be incorporated in the next Five Year Plan beginning in July 1980. Recent Developments and Near-Term Prospects 6. The most notable recent development has been the parliamentary elections held in February 1979. Since 1975, Bangladesh had been governed under martial law and without a parliament. In the recent elections, some 29 political parties and groups contested the 300 seats in the National Assembly. Roughly two-thirds of the seats were won by the Nationalist Party headed by President Ziaur Rahman, who had previously been confirmed as President in the election held in June 1978. The Assembly will have substantial powers, including control over the country's finances. Martial law was lifted fol- lowing the convening of the new Parliament in March 1979. One area in which the Government is expecting a salutary effect is in the investment climate; it is hoped that both domestic and foreign investors will be encouraged. It is also anticipated that the Government will soon be able both to take major decisions on important policy issues and to implement programs that have been pending the outcome of the recent elections. 7. FY78 was a relatively good one for the economy. Mostly as the result of a large grain crop, which recovered from the substantial decline in the previous year, and a 10% increase in industrial output, GDP grew by 7.8% in real terms after only a 1.7% rise in FY77. For the third year in a row, Bangladesh was spared major droughts, floods or cyclones. Foodgrain output reached a record level of 13.1 million tons. The favorable results in agri- culture are explained not only by good weather but also by constructive Government actions resulting in sharply increased supplies of fertilizer, other agricultural inputs and credit, and larger and more efficient procure- ment effort, at prices attractive to farmers. Results for wheat have been particularly encouraging. Jute output also increased substantially in FY78, partly due to the Intensive Jute Cultivation Scheme (IJCS) which, in only a few years' time, has risen to cover 500,000 acres and is expected to cover one million acres in the current year. However, raw jute prices remained high due to increased demand and the depletion of inventories in prior years. These high raw jute prices and an increase in jute workers salaries were major factors contributing to the jute mills' continued large financial losses. 8. The strong upturn in industrial output occurred because of a revival in consumer demand, an increase in investment, and improved availability of imported raw materials. Capacity utilization in industry was stimulated by increased demand for jute goods and cotton textiles, by an intensification of construction activity, and by a liberalized import policy for industrial raw materials and spare parts. - 3 - 9. It is still too early for an accurate assessment of the economy's overall performance in FY79. Present indications are that agricultural pro- duction will be below last year's level, mainly due to adverse weather. A low level of foodgrain procurement, food imports below projected levels, and high offtake rates have led to the possibility that food stocks could fall to undesirably low levels in the coming months. Remedial actions are now now underway to accelerate foodgrain import deliveries. Investments in the public and private sector -- particularly in manufacturing -- have shown some growth momentum, and the construction sector appears to be booming. Wheather the overall GDP growth rate for the year will still be ahead of population growth is uncertain. 10. Recent fiscal and monetary developments present a mixed picture. Last year's acceleration in economic growth and imports engendered rapid growth in government revenues, which rose by about 25% in FY78. Current expenditure meanwhile rose at about the same rate, reflecting partly a sub- stantial upward adjustment in the very low salaries of government personnel. The net result was only a small increase in the current surplus. At the same time, development expenditures also rose rapidly. In spite of increased aid disbursements, deficit financing amounted to Tk 1.1 billion, about 9% of cur- rent revenue. Inflation again became a problem, and this is a worrisome aspect of current developments in Bangladesh. Overall liquidity continued to rise during FY78 and began to have its effect on the price level. The cost of living increased by some 15% in FY78 as compared to 1% in FY77. Seeking to keep inflation under control, the Government drew up a balanced budget for FY79. But in spite of continued growth in current revenue and large aid disbursements, there may still be an overall deficit. Reasons for this include an apparent underestimation of the cost of the fertilizer sub- sidy, the still heavy weight of the food subsidy, and the dampening effect of wage increases on the revenue transfers by the public corporations. Expan- sionary factors include the stepped-up grain procurement program, expanding agricultural credit, and increasing financial needs of the private industrial sector. It: will be hard to contain the combined effect of these potentially inflationary factors during the current year. Monetary and credit restraint, and most importantly, increased efforts in domestic resource mobilization will be required in order to create the conditions for balanced future growth. 11. The most significarnt development in the FY78 balance of payments was a 56% increase in import payments after a low import level in FY77. Almost one fifth of this increase consisted of an increase in grain imports needed to bring food stocks to a safe level; the remainder provided much of the wherewithal for accelerated GDP growth: fertilizer, cement, spare parts, industrial raw materials and capital goods. There was also a sizeable increase in consumer goods imports. 12. Although export earnings rose in FY78 by 8%, the surge in imports resulted in a more-than-doubling of the trade deficit--from $405 million in FY77 to $852 million FY78. (It should be noted, however, that this was less than FY75 and FY76 deficits which averaged $950 million.) The increased export earnings in FY78 represented a continuation of a trend that began with - 4 - the 1975 devaluation. The main determinant of last year's improvement was a 16% increase in export prices, especially of traditional exports such as jute and tea. Although raw jute exports declined due to supply shortages, jute goods exports were buoyant, mainly due to fiber shortages in inter- national markets, some substitution of jute for synthetics, and government incentive policies, including special export bonus subsidies. Jute and jute product exports still account for about 70% of total Bangladeshi exports. The growth of minor and non-traditional exports in FY78 was modest as com- pared with the previous year. 13. An increasingly significant development in recent years has been the upward trend in workers' remittances, mostly from migrants to the Middle East. These remittances amounted to an estimated $83 million in FY78 and are projected to reach $100 million this year. An offsetting effect, however, has been the loss of trained Bangladeshis. This had led both to higher costs for skills in short supply and to delays in implementing certain projects. (An analysis of this labor migration and its costs and benefits is currently underway; this study is being financed under the Bank's central research program.) 14. The balance of payments for the current year, FY79, is likely to be marked by a slower growth in imports. The trade deficit is nevertheless likely to be larger than last year's, partly because of an expected 5% deterioration in the terms of trade after an improvement of 22% in FY78. With development expenditures projected to continue to rise, both the Bank and Government anticipate an FY79 current account deficit slightly over $1 billion. In view of the settlement of certain short-term liabilities and amortization payments on medium- and long-term debt, the total gap to be covered by foreign aid disbursements is estimated at almost $1,100 million. Structural Conditions and Development Issues 15. Notwithstanding recent gains, especially in foodgrain output and per capita GDP growth, the salient conditions of Bangladesh are still mass poverty; a unique environment prone to natural disasters; and dependence on aid, not only for investment financing but also for food and other recurrent inputs. Life expectancy is short, child mortality is high, and human fertil- ity remains largely unchecked. A large part of the adult population is illiterate, ill-fed, ill-housed and underemployed. Although the economy has largely recovered from the shocks suffered in the early 1970's, in a number of areas it has yet to reach the FY70 levels. In FY78 per capita income ($91), domestic savings (3% of GDP), per capita rice production (notwith- standing last year's record crop) and average nutrition levels remained depressed below their pre-independence levels. The investment ratio (13% of GDP in FY78) was restored to about the FY69 rate, after some years of depression to considerably lower levels. And the country remains critically dependent upon foreign aid, which covers some 75-80% of public investment. 16. Bangladesh has not been self-sufficient in food for over two decades. In spite of foodgrain imports averaging 1.8 million tons annually in recent years (1.3 million tons in FY78), nutritional levels are believed to be in- adequate for half the population. Farm holdings are small and fragmented. - 5 - The density of population on the land is already extremely high, and land- lessness is on the increase; almost half the rural population (comprising nearly 90% of Bangladesh's 85 million people) is landless or virtually land- less. Population growth is continuing at a rapid pace--about 2.7% annually. The country's resources are essentially its land, water, and people. Other natural resoures, except for natural gas deposits, are meager. The infra- structure remains inadequate, and the lack of managerial and administrative skills has hindered the country's ability both to plan and to implement its policies and projects effectively. 17. Confronted by the formidable structural conditions and constraints, the Government is currently using the period of its Two Year Plan (TYP), as noted above, to rationalize certain policies and to clarify its medium- and longer-term development strategies. The TYP itself recognizes population control and rural development as top priorities. A nationwide framework for family planning services has been established, and experiments have been made with various types of rural development models. Steps have been taken to provide incentive prices for foodgrains through appropriate procurement policies, to reduce the levels of producer and consumer subsidies and to improve the working of public sector corporations, most notably in the jute manufacturing sector. Greatesr scope is being given to the private industrial sector. The Government has established a Project Implementation Bureau as a means to help speed up the slow pace of project implementation. The beneficial results of these reforms are not always readily apparent, and in a number of cases will take considerable time to show. The TYP itself is, of course, unlikely to change the course of development, since its period is too short and most of the development budget during these two years (83%) is preempted by ongoing projects. Moreover, the TYP's targets in the fundamental areas of employment creation and popuLation control are unrealistic. A further weakness is that the TYP does not clearly indicate which economic projects have been weeded out nor what criteria are to be used to make decisions about abandoning such projects during the remainder of the TYP period. 18. The TYP document lists five important areas where the policy makers must make critical choices: (i) the respective roles of the public and private sectors; (ii) the organization of agricultural producers; (iii) the goals of the national education policy; (iv) the role of subsidies in agri- cultural prices; and (v) the respective roles of foreign aid and domestic savings in development financing. While outlining alternative solutions for these major problem areas, the document does not present a full analysis of the options. Moreover, it only raises the question of the creation of non-farm employment for those who can no longer be absorbed by agriculture. This problem is assuming increasing importance and requires concentrated Government attention. Other key issues requiring urgent and detailed atten- tion include pricing policy, improvement in levels of domestic savings, expansion of export earnings, greater efficiency in project preparation and implementation, and means to improve public sector management. 19. Although work on both the Perspective Plan (1980-2000) and the Second Five Year Plan is still in a preliminary stage, present indications are that the Government will give emphasis to the following: (i) legal and - 6 - institutional changes to bring about a rural orientation and decentraliza- tion of planning; (ii) achievement of food self-sufficiency by 1985; (iii) employment creation and population control; (iv) drastic reductions in subsidies and other means to mobilize domestic resources; and (iv) a major new effort to reduce illiteracy. It remains to be seen, of course, what specific new modalities will be devised for achieving these broad objectives. But clearly these are all central objectives, and much of IDA's own economic and sectoral work program is currently addressed to the analysis of rural development (including the dynamics of demographic growth), food production, trade policy and industrial development prospects, and domestic resources mobilization. Considerable attention is also being given, par- ticularly by IDA's resident mission, to finding ways and means to improve aid coordination and project implementation. 20. It appears to be generally appreciated, therefore, that in the preparation of a development strategy and plan with realistic short and medium-term targets, a clear set of priorities and a consistent resource allocation pattern will need to focus on the following key areas: First, and central to any program to raise living standards, is the need to check the rapid growth of population. The main specific task is to increase effec- tive delivery of family planning services, while continuing to motivate families to practice birth control. The second key area, because of its large potential for supplying food requirements and providing a broad dis- tribution of benefits, is the need to increase agricultural productivity. IDA is currently collaborating with the Government in the formulation of a medium-term crop production plan. Farm yields are far below what is environ- mentally and technologically feasible. The main constraints -- inadequate incentives, inefficient delivery of inputs, and the slow progress of rural development programs -- are essentially administrative in nature. The rural power and social structure compound the inherent difficulties in mounting and administering large programs that will reach effectively the many mil- lions of people that live in Bangladeshi villages. These difficulties must be tackled with great resolve and singleness of purpose if they are to be overcome. Third, exports and supporting agricultural and industrial devel- opment are essential to the country's future economic vaibility. In this connection, improved efficiency of the jute industry, expansion of labor- intensive industries based on local raw materials (e.g. tea, fish, leather, paper, spices, fruits, vegetables and handicrafts), and the promotion of new industrial export products are essential elements of a successful export strategy. The fourth key area is to increase domestic resource mobilization. While the potential for increased public and private saving beyond the rate of growth of the economy may be limited, some margin should be possible through measures to increase taxation, improve tax administration and reduce the very large subsidies to public corporations. The Government has been considering new means to mobilize additional domestic resources. At the June 1978 meeting of the Bangladesh Aid Group, the Government announced its decision to establish five committees to consider the following issues: (i) gradual elimination of the food subsidy; (ii) rationalization of the rate structure of public transport agencies; (iii) economic pricing by public utilities; (iv) reduction in agricultural input subsidies, including the fertilizer subsidy; and (v) improvement in the financial performance of public sector enterprises. The committees have recently concluded their work and reported their recommendations to the Government. Furthermore, a detailed survey of the jute industry was recently completed; this should lead to a mod- ernization program and eventually to improved management practices, increased labor productivity and better financial performance. The final report of the Taxation Enquiry Commission was also submitted to the Government in early 1979. A start will be made to implement some of the recommendations of both the resource mobilization committees and the Commission in the context of the FY80 budget to be submitted to the Parliament on June 2, 1979. 21. While these elements of a development strategy are not the only requirements to improve the economy, they are among the most important and will themselves place heavy demands on an understaffed and overburdened development administration. The fifth area, therefore, is to strengthen the administration and to economize on the demands placed upon it. Where admin- istrative capacity is limited, administrative controls in such matters as industrial policy, pricing, food policy and trade should be minimized to the extent feasible and consistent with social objectives. There remains considerable scope also for administrative economy in these and other areas and through greater decentralization of authority and responsibility. 22. External Capital RLequirements. Even with significant improvement in its domestic resource mobilization , Bangladesh will continue to need substantiaL external assistance to support its development efforts. In the short run, such support is even becoming more important in view of the fact that the pace of development: expenditures has begun to accelerate. It is roughly estimated that aid clisbursements, which amounted to $797 million in FY78, should rise to $1,095 million in FY79. These would comprise $250 mil- lion of food, $520 million of commodities and $325 million of project aid. Since Bangladesh began the year with an aid pipeline amounting to $1,912 million, it should be possible to disburse about $625 million from that pipe- line. Hence, about $470 miLlion of disbursements from new aid would be necessary. To yield disbursements at this level in FY79 and to build up the pipeline for FY80, required FY79 commitments are estimated at approximately $1,600 million. On the basis of donor pledges and indications given at the January 1979 Aid Group meet-ings, and taking into account actual and prospec- tive commitments by other donors, it appears that this target will be realized. It is important to stress that Bangladesh's capital requirements must be met to a large extent by external assistance, at least for the time being, if economic growth and execution of current development plans are not to be slowed for lack of financial resources. At the same time, the Government must strive to increase exports, to be prudent in the use of foreign exchange, and to make increased efforts to increase domestic resource mobilization. Finally, in the context of the above-noted limitations of Bangladesh's devel- opment administration, it should be recognized that substantial improvements in administration are likely to take many years. Hence, the Government, IDA and other external assistance agencies will have to tailor their requirements in terms of project design, preparation and implementation to these adminis- trative realities. And in all cases, particular priority should be given to those sectors and those types of financial and technical assistance where instituticnal improvements are most needed. PART II - BANK GROUP OPERATIONS IN BANGLADESH 23. Bangladesh became a member of the Bank and IDA in August 1972. Ini- tially, Bank Group operations in Bangladesh concentrated on the reactivation of uncompleted projects, financed under credits made originally to Pakistan, before 1971. Eleven such credits, amounting to US$148.2 million (including US$44.1 million for the repayment of amounts that had been disbursed under the corresponding previous credits to Pakistan, and net of cancellations) were made to Bangladesh. In addition, as of May 31, 1979, 32 new credits, excluding the consolidation credit of US$31 million referred to in paragraph 24, have been made, totalling US$900.7 million. Of these, US$500 milLion have been for seven program credits. The project credits have emphasized agricultural development, but also included amounts for population, telecommunications, transport and industry. On June 18, 1976 Bangladesh became the 105th member of the IFC, and IFC's first investment (Highspeed Shipbuilding and Engineering Co., Ltd.) was approved on May 10, 1979. 24. Agreement has been reached between Bangladesh and most of the bilat- eral and multilateral donors, concerning the assumption by Bangladesh of portions of the debt contracted by Pakistan before Bangladesh became indepen- dent. This will lead to some increase in debt service and, while the debt service ratio is not expected to exceed 20% before the late 1980's, it could do so thereafter, unless careful debt management policies are pursued and aid is provided on appropriately concessional terms. With respect to the Bank Group, Bangladesh agreed to accept liability for portions of IDA credits extended for projects visibly located in Bangladesh and completed before independence. Based on this agreement, a consolidation loan of about US$54.9 million, and a consolidation credit of about US$31.0 million were signed on February 14, 1975. The Bank Group's share of Bangladesh's outstanding external debt is not expected to rise significantly above the! present level of about 27% over the next few years. 25. Annex II contains a summary statement of IDA credits and the Bank loan made to Bangladesh as of April 30, 1979, and notes on the execution of ongoing projects. While disbursement of the program credits has proceeded satisfactorily, project credit disbursements have lagged somewhat owing inter alia to delays in the release of local funds, approval of contracts, employ- ment of consultants, and appointment of staff. The Government has taken some steps to eliminate bottlenecks and the results are now being reflected in improvements in project implementation and disbursement performance. However, serious implementation constraints remain because of shortage of qualified staff, over-centralized bureaucratic procedures and organizational deficien- cies. Progress is being made on these issues. For example, at the Govern- ment's request, IDA is providing assistance to improve organization and proce- dures, especially in the ministries and agencies dealing with agriculture and water resources. Furthermore, the Government has taken actions including improved procedures for recruitment of civil servants and increased emphasis on training - which are important not only as steps towards gradually improv- ing the quality of public administration, but also as evidence of its aware- ness of the problem and concern to do something about it. On the organizational side, the Government is in the process of establishing planning cells in the main ministries and agencies and is strengthening the Planning Ministry. In this connection, IDA is providing assistance both under specific projects and under three Technical Assistance Credits (Credit 490-BD, 622-BD and 872-BD). 26. Of the 25 new project credits totalling US$400.7 million, 14 credits totalling US$241.5 million have been directed towards agriculture and rural development (excluding subprojects of the Technical Assistance credits allo- cated to this sector). Their basic objective is to support the delivery of inputs, including assured waiter, through quick yielding projects with low capital intensity. While the pace of implementation has been disappointing so far, the fundamental need to improve agricultural productivity means that projects geared to the rural sector should remain the cornerstone of future IDA lending. However, in the short term, the rate of planned lending for agriculture will be a function of progress in improving the currently limited absorptive capacity of the project executing agencies. At the same time, greater efforts in institution building are being made through closer super- vision and technical assistaince where necessary. Some progress has already been made in correcting problems in ongoing projects. Over the next year, proposed credits for rural works and low-lift pumps are expected to be ready for consideration. 27. Industry has been the main beneficiary of the seven program credits approved to date. For the reasons given in paragraph's 34-39 of the Presi- dent's Report and Recommendation on the Seventh Imports Program Credit (P-2373-BD, dated November 29, 1978), program lending to Bangladesh will continue to be required whilie efforts are made to correct basic structural weaknesses in the economy. Nevertheless, the share of program lending in total lending on a year-to-year basis is planned to decline gradually during the next few years. The industrial sector has also benefitted from DFC and small industry projects and a fertilizer production project. IFC is currently in the process of identifying suitable investment opportunities. 28. Ihe enormity of Bangladesh's population problem makes this an ex- tremely high priority sector, limited only by its absorptive capacity. The first population project (Credit 533-BD) is now making encouraging progress, and the second population project has now been approved. Improved education and availability of trained imanpower are also crucial. Past lending in this field has emphasized agricultural and technical training. A vocational train- ing project has been approved this fiscal year. Future operations, while maintaining a similar basic emphasis, are also expected to include assistance for primary education and management training. 29. Given Bangladesh's immense needs, specific efforts to identify and prepare projects in agriculture, transport, industry, energy and power, and telecommunications are now underway. In this connection, particular emphasis will be placed upon those possible projects which provide infrastructure for the rural sector, which process or provide outlets for its products, or which reduce the strain on Bangladesh's foreign exchange resources. Such projects could make significant contributions towards supporting Bangladesh development - 10 - efforts. In view of Bangladesh's difficult foreign exchange position, IDA credits should cover all foreign exchange costs. However, all external lenders are inhibited from achieving the levels of resource transfers appro- priate to Bangladesh's economic circumstances by difficulties in the prepara- tion and implementation of development projects. The Government's capacity to carry out projects is constrained, inter-alia, by a low domestic savings rate. In these circumstances, and in order to direct IDA lending to those sectors - such as agricultural and rural development - where the percentage of foreign exchange costs is relatively low, the financing cf local currency expenditures is also justified. 30. In addition to lending, economic and sector work provides the basis for continuing dialogue between the Bank Group and the Government on develop- ment strategy, and for the coordination of external assistance within the framework of the Bangladesh Aid Group. Recent activities in this area have concentrated on food policy, industrial investment strategy, and increased domestic resource mobilization. 31. The scope and complexity of Bangladesh's development problems will continue to strain the physical, human, and financial resources of an already overburdened development administration. Since substantial improvements will take many years, external assistance agencies, including the Bank Group, will have to tailor their requirements in terms of project design, preparation and implementation to the administrative realities. They will also have to con- template higher amounts of technical assistance and supervision than is the case in many other countries. Nevertheless, there are opportunities for making significant progress in improving economic conditions for the people of Bangladesh. Although progress is bound to be slow and will require pains- taking efforts, these efforts are nonetheless worth making. PART III - THE WATER SUPPLY AND SEWERAGE SECTOR Sector Characteristics 32 About a third of Bangladesh's area lies on the Ganges/Brahmaputra Delta; rainfall, concentrated in the monsoon period, generally exceeds 1,500 mm annually. This combination of abundant rainfall and great rivers entering the country, along with a generally porous subsoil, ensures that water is plenti- ful either from surface or underground sources. About 56% of the 83 million people now have reasonably safe supplies of tubewell water but the remainder still depend on easily contaminated surface sources such as streams, tanks and dugwells. 33. Most public water supplies use groundwater which requires less treatment and therefore is generally cheaper than surface water. Groundwater supplies are adequate for present needs. However, interest in surface water sources is growing especially in the cities of Dacca and Chittagong because of the possible long-term limitations of local aquifers in relation to rapidly increasing urban requirements. Therefore, studies will be undertaken to determine the extent to which aquifers can continue to be safely exploited (para 46). - 11 - 34. Urban sanitation in Dacca is unsatisfactory. Only part of the pop- ulation has access to a water borne sewerage system; elsewhere night soil conservancy is prevalent with direct disposal to fields. Pit privies and septic tanks are used to a very limited extent. Compared with the 56% of the population having access to wholesome water, only about 8% benefit from waste disposal services. This compares with an average access level of 38% to water and 33% to waste disposal in all developing countries. 35. Sector development was interrupted by the war of independence in 1971 but has gradually improved over the past five or six years; during this period investment in water sapply and sewerage has been about 7% of GOB development expenditures, a level which is unlikely to increase in the near future given the urgent and competing claims of other sectors of the economy. Institutions 36. GOB exercises control of the sector through the Ministry of Local Government, Rural Development and Cooperatives (MLGRD). The agencies operat- ing under NIGRD are the Department of Public Health Engineering (DPHE), the municipalities and the Water and Sewerage Authorities (WASAs) in Dacca and Chittagong. Supporting these agencies' activities are several international organizations. WHO and UNICEF have been active in the rural areas where an extensive program for the provision of hand pump tubewells is in progress. The total cost for this program up to 1978 has been US$47 million, including US$14 million for rural sanitation. Funding is committed to 1980, but the program extends up to 1985. Water supply projects in Barisal, Bogra, Comilla, Jessore ancd Mymensingh are being prepared for consideration by the Asian Development. Bank. Projects have been completed in Dacca and Chittagong with IDA support and IDA has participated in preparation of further projects for both cities. In addition, GOB has obtained assistance from the Government of the Netherlands (GON) for a feasibility study for a project in Khulna and intends to approach GON for similar support in Rajshahi. GOB has indicated that they will seek financial support from IDA if projects emerge for Khulna and Rajshahi. 37. I)PHE develops and executes water supply projects countrywide (Dacca and Chittagong excepted) and operates and maintains waterworks throughout the rural areas. In urban aLreas, DPHE generally turns over operational and maintenance responsibilities to the municipalities. In Dacca and Chittagong, the WASAs have responsibility for all aspects of water supply and sewerage. In the rural areas no charge is made for water consumed. In municipalities, including D)acca and Chittagong, a charge is made for water consumed by house connections; but this charge frequently covers only a small percentage of the cost of operation, maintenance and depreciation. The remaining costs are covered from the Government budget. Water from standpipes is provided free of charge to the users. The Water Supply and Sewerage Authority of Dacca (WASA) 38. Under the management of a Chairman WASA functions as a semi- autonomous entity under MLGRD. The Chairman is assisted by a secretariat, a commercial division and two engineering divisions, one dealing with - 12 - project planning, design and construction, and the other with operation and maintenance. This organization, created only recently, is appropriate for WASA's needs and will facilitate future operational improvement. Prior to any new reorganization, WASA will afford IDA a reasonable opportunity to exchange views thereon (Section 3.03(b) of the Project Agreement). Training 39. The steady increase in water supply and sewerage facilities in the country places a strain on maintenance resources. In the rural areas, replacement of obsolete hand pump tubewells amounts to 37% of the current program. Ordinary day-to-day maintenance is subject to delays because the number of repairmen is insufficient. Trained operators for tubewells, water treatment plant and sewage pumping stations in the urban areas are scarce and training facilities and instructors are needed for training of additional sl a Ef . 40. Training, mostly directed at the upper levels of the organization, was provided under Credit 368-BD and supplemented by other multilateral and bilateral donors. The training element in the proposed project is direcl:ed at the operational staff, and focusses on the development of a suitable in- house training capability. Chittagong WASA will contribute 1:o the planned joint training effort. Ultimately, the training organization may develop into a nationwide vocational training center for the sector. WASA will appoint a training officer by December 31, 1979 who will prepare proposals for the establishment of a training program for WASA staff (Section 3.03 (c) of the Project Agreement), and will carry out an overseas fellowship program satisfactory to the Association (Section 3.05 of the Project Agreement). Problem Areas 41. Water borne diseases and those arising from unsanitary conditions represent one of the country's major health problems. The health benefits of improved sanitation gradually brought about by hygiene education are critically dependent on access to safe water and improved sewerage systems. Only Dacca has a water borne sewerage system and the improvements and extensions to it, completed under the first project with IDA support, have extended the main sewerage system throughout 75% of the city area. 'rowever, the benefits which the system offers are not being realized as quickly as had been hoped. Householders in some areas have been reluctant to take connections, being satisfied to continue using septic tanks. To overcome this problem WASA will enforce connections for households within 100 feet of a sewer or charge for sewerage services regardless of whether or not they are actually connected (Section 4.05(c) of the Project Agreement). 42. Extensions to the water supply system during the period 1964-1979 failed to keep abreast of the population increase during the same period (fr,ra about 680,000 inhabitants in 1964 to about 2.5 million inhabitants in 1979). Per capita water supply in Dacca, which had reached a level of 13 - about 110 'Lcd in 1964, dropped to a level of about 86 lcd in 1979, although total production increased from about 75 mld in 1964 to about 214 mld in 1979. Experience with Previous Project 43. Under the previous Credit 368-BD (1973; US$13.2 million) IDA provided financial support for the provision of 46 tubewells, 200 kilometers of water mains, rehabilitation of a small (13 mld) surface water treatment plant and 200 kilometers of sewers plus ancillary elements in Dacca. Execution of the project was slow. Technical problems included slow delivery of materials, contractual difficulties, slow customs clearance, and delays in supplying electric power to sewage pumping stations. These problems mostly reflected weak senior management. With the appointment of a dynamic Chairman two years ago, discipline has improved and technical difficulties are being overcome. 44. Ihe project had also been plagued by financial problems. However, in response to a continuing dialogue between WASA and IDA, these problems have gradually abated, and in the last two years tariffs have been sufficient to cover operating and maintenance expenses, interest charges and deprecia- tion. Further progress is necessary and feasible. Under the project, WASA's financial position will continue to improve as the effects of the program formulated in consultation with IDA begin to be felt (paragraphs 54-63 below). PART IV - THE PROJECT 45. The proposed project was prepared by Dacca WASA with the assistance of consultants and Bank StafE and was appraised in November/December 1978. The Staff Appraisal Report No. 2443b-BD dated June 13, 1979 is being distri- buted separately to the Executive Directors. Negotiations were held in Washington on May 14-16, 1979. The Government of Bangladesh and WASA were represented by a delegation headed by Mr. Anisuzzaman, Secretary, MLGRD. A Supplementary Project Data Sheet is attached as Annex III. Project Objectives 46. The proposed project is an interim measure to prevent a major water shortage for the population in WASA's service area during the next 5 years. Additional water will be provided to maintain a level of supply of about 90 lcd. Complementary objectives of the proposed project are: (a) extending the distribution system to an additional 300,000 people who are now without convenient access to safe water; (b) improving the quality of water service to about 600,000 present consumers through removal of system deficiencies, mainly in the old city; (c) eKtending sewer service to about 300,000 inhabitants in areas already served by trunk sewers constructed under the first project; - 14 - (d) preparing a long-term planning and feasibility study for a third water supply project; (e) achieving managerial and financial improvements. The above feasibility study concerned with the development of Dacca's long- term water supply and sewerage project, will assess Dacca's future water supply requirements, will determine the most economic source of water, and will estimate the cost of the project. It will also include a comprehensive tariff study. Project Description 47. The project will provide 24 tubewells and associated water mains and storage tanks to improve distribution of water, around the city fringes and in the congested old city. The daily supply would be increased by 40% from 214 mld to 300 mld. Small diameter sewers will be added to secure the full benefits of the trunk sewerage system developed under the first project. The project will also provide for 25,000 new service connections with meters, and 25,000 meters for existing connections as well as leak detection equipment. There will also be provision for training and consultancy services, including those required for the planning and feasibility study for the third (long- term) project. Project Costs 48. The cost of the project is as follows: Foreign Local Total ----US$ Million----- Equipment and Civil Works 10.0 6.4 16.4 Consulting Services 2.5 1.4 3.9 Training 0.3 0.1 0.4 Land Acquisition - 0.3 0.3 12.8 8.2 21.0 Contingencies (i) Physical 1.9 1.2 3.1 (ii) Price 2.6 3.2 5.8 NET PROJECT COST 17.3 12.6 29.9 Duties and Taxes - 11.8 11.8 TOTAL PROJECT COST 17.3 24.4 41.7 The estimates for equipment and civil works are based on bids for similar equipment recently obtained in connection with the first project (Cr,e-dii: 368-BD) and on the cost of comparable work undertakufi hijring 1978. Phy- sical contingencies of 15% and price contingencies of 7% per year on the foreign cost and 10% on the local cost were allowed for. The cost of engineering is estimated on the basis of US$8,000 per man-month for foreign consultants and Tk 4,000 per man-month for local consultants. Duties and taxes have been added in accordance with local regulations. - 15 - Project Implementation 49. WASA will be responsible for project implementation. It will be assisted by consultants in design, drafting of bidding documents, bid evalua- tion and construction supervision. Project construction will be carried out by local contractors. All construction is straightforward and local contractors are experienced in this type of work. The bulk of construction is expected to be completed by mid-1982 and project completion in all respects is scheduled for December 31, 1982. Financial and Institutional Improvements 50. WiASA's financial situation has been less than satisfactory for many years with Low rates of return and insufficient internal cash generation. WASA's rate of return on net fixed assets in operation reached 0.6% in FY76, 1.7% in FY77 and 1.7% in FY78, and it is expected that it will only break even in FY7'3. Internal cash generation financed on an average 14% of WASA's investments. However, this level of internal cash generation could be reached only because WASA's debt service requirements have been insignificant, leaving most of the depreciation charge available for investment financing. 51. Thie main reasons for WASA's unfavorable financial performance to date are the following: (a) inadequate tariff levels; (b) inadequate metering resulting in excessive consumption by unmetered customers and difficulty in detecting unauthorized connections; and (c) inadequate billing and collection. The Government and WASA have recognized that a decisive improvement effort is required for WASA to become a financially viable and soundly managed utility. The major elements of WASA's improvement program have been agreed during negotiations, and are explained below (paras 52-59). 52. Tariffs. In response to continual urgings, WASA raised tariffs to their present level in 1978. In accordance with WASA's tariff structure, which was introduced in FY76, residential consumers are heavily subsidized by industrial and commercial customers who are being charged about twice to four times the residential tariff. This practice is reasonable. However, further improvements in tariff structure are possible. Accordingly, the consultants to be hired to prepare a third water supply and sewerage project for Dacca (paragraph 46) will also carry out a comprehensive analysis of water and sewerage tariffs. 53. While some improvement in WASA's financial performance is expected to result from increased operational efficiency. In addition, however, tariff increases will be required to reach financial viability. To achieve this goal, the following agreemenits have been reached: - 16 - (a) GOB and WASA will set and maintain rates for water supply and sewerage services at levels which will provide suf- ficient revenues to: (i) cover operating expenses, including taxes, if any, and interest; (ii) provide for adequate maintenance and depreciation; and (iii) meet repayments on long-term debt in excess of depre- ciation and any increase needed in working capital (Section 4.04 of the Project Agreement). (b) The water and sewerage tariffs will be reviewed in connection with the annual budget procedures and the results of such reviews will be forwarded to IDA for comment (Section 3.02 of the Development Credit Agreement). (c) A water tariff increase for metered and unmetered connections -averaging 40% is a condition of Credit effectiveness (Section 5.01(c) of the Development Credit Agreement). 54. Metering and Waste Detection Programs. Although metering of water consumption has been introduced and developed during implementation of the first project (Credit 368-BD), about 75% of residential consumption as well as the water provided through standpipes is unmetered. With so much consumption unmetered, losses can only be estimated; and WASA's estimate of 22% of produc- tion is conservative. 55. To correct this deficiency, WASA will: (a) prepare a program to detect and prevent waste in its water system, WASA will submit this program for IDA's review and comment by October 31, 1979, and thereafter carry it out in accordance with appropriate engineering practices (Section 3.02 of the Project Agreement); (b) maintain task forces to discover and eliminate unauthorized connections, and monitor the effectiveness of these task forces (Section 4.05(b) of the Project Agreement); and (c) install meters on all new connections (about 25,000) under the proposed project and establish and maintain a program for installation of meters on existing connections (about 25,000) (Section 3.04 of the Project Agreement). 56. Billing and Collection. WASA's billing and collection record for non-Government customers is unsatisfactory. In the past, WASA collected only about 65-70% of its billing. However, GOB has made administrative arrange- ments which have already resulted in improved payments. These arrangements - 17 - include payments by Dacca Municipal Corporation for water supplied through standpipes and deducting water charges from salaries of employees residing in Government housing for remittal to WASA. 57. To further improve its billing and collection, WASA will take satisfactory measures as described in paragraphs 63 and 64 below, by January 1, l980 to improve its billing procedures and collection performance, and will report periodically on the progress of such measures (Section 4.05(a) of the Project Agreement). For non-Government customers these measures will include: (a) reorganizing WASA'sE revenue department with the objective of minimizing the number of persons involved in the prepara- tion and issuance of consumer bills and identifying the responsibility for failure to realize collection of the billed amounts; (b) slepping up its program for disconnecting delinquent accounts; and (c) introducing procedures to warn delinquent customers of imnpending disconnection. As an indication of the effectiveness of these improvement measures, WASA will take all steps to ensure that the following minimum targets are realized: By the end of Collected Bills as a Percentage Fiscal Year of Bills Sent Out 1980 70% of Taka value and number of invoices 1981 75% " "' 1982 80% it 1983 85% " " " By the end of FY83 at the latest, WASA will review with IDA the total progress made in improving its billing and collection of receivables from non-Government customers, and mutually acceptable targets for the period after FY83 will be agreed among GOB, WASA and IDA which will be designed to lead to the maximum achievable percentage in WASA's collection of such receivables. 58. With respect to rec:eivables from Government agencies, GOB will con- tinue to pay, or cause to be paid, promptly to WASA: (a) charges for water supplied through public standpipes by DM4C at not less than the prevailing domestic rate; and (b) charges for all water supplied by WASA to the various departments and agencies of the Government and its employees residing in Government-provided housing. 59. Future Improvement.. As an indication of the success of the above- mentioned measures as well as GOB's willingness to permit WASA to adjust its - 18 - tariffs as and when required, WASA will take all necessary steps to ensure that the following rate of return targets on non-revalued net fixed assets in operation are realized: FY80 3% FY81 2% 1/ FY82 2% T/ FY83 : 5% 60. Fixed Asset Revaluation. In the past WASA has not revalued its assets. This results in a provision for depreciation that does not reflect adequately the cost of asset replacement and does not provide an appropriate basis for judging the adequacy of tariff levels. To rectify the situation WASA will, in consultation with IDA, develop by FY81 a method of revaluing its assets and will introduce asset revaluation not later than the start of FY82. 61. Borrowing. WASA's debt/equity ratio is low (39/61 in FY79) and the debt service coverage is expected to remain within reasonable limits. To ensure that WASA will continue to borrow on reasonable terms, WASA will not incur any long-term debt unless its 12-month net revenues out of the 15-month period preceding the intended borrowing cover at least 1.25 times the maximum future debt service requirements on all its long-term debt (Section 4.06 of the Project Agreement). WASA will also refrain from borrowing short-term funds other than for working capital, in the ordinary course of its business (Section 4.07 of the Project Agreement). Audit 62. WASA's accounts are audited annually by an independent firm appointed by MLGRD. Due to delays in appointing auditors, WASA has not been able to issue audited statements within six months of the close of the fiscal years as required under Credit 368-BD. To assure that in the future auditors are appointed in a timely manner and that audits are carried out on a con- tinuing basis, GOB and WASA will appoint an auditing firm acceptable to IDA at the start of each fiscal year (Section 3.04 of the Development Credit Agreement and Section 4.02 of the Project Agreement). Appointment of auditors for FYs79 and 80 is a condition of Credit effectiveness (Section 5.01(c) of the Development Credit Agreement). Spare Parts 63. In order to ensure that purchase of spare parts is in line with requirements, WASA will maintain in a separate fund an amount sufficient to cover estimated payment for spare parts for the ensueing three-month period (Section 4.03(b)) of the Project Agreement). GOB has confirmed that it will promptly provide foreign exchange for this purpose as and when necessary. 1/ Reduction in rate of return due to increase in WASA's assets which, in the initial stage, do not yield their full benefits. - 19 - Procurement 64. All contracts for equipment, materials and meters will be awarded under international competitive bidding procedures in accordance with the Association's guidelines. Exception will be made for items costing less than US$15,000 having an aggregate value not exceeding US$350,000, which can be procured through international or local shopping on the basis of at least three price quotations (Project Agreement Schedule, paragraph A.3). The bulk of expenditure would be for pipes, mainly asbestos cement and PVC for water mains. The sewers are mainly in the smaller diameters for which vitrified clay pipes are ideal, and Bangladesh's small clay pipe industry may be able to compete successfully. In evaluating bids for equipment and materials, domestic manufacturers would be given the standard 15% preference on the c.i.f. price, or the prevailing duty, whichever is lower. Disbursement 65. Disbursements under the proposed credit would cover: (a) 65% of civil works; (b) 100% of equipment procured overseas, 100% of locally manufactured equipment (ex-factory), and 50% of equipment procured locally; (c) 100% of training; and (d) 100% of engineering services (Development Credit Agreement, Schedule 1). The Credit is expected to be disbursed by June 30, 1983 (Development Credit Agreement, Section 2.04). Financing 66. I'he Credit of US$22 million would finance 74% of the total project cost of US$29.9 million (net of duties and taxes). It would cover all foreign cost (US$17.3 million) and US$4.7 million of local cost. GOB would finance US$19.7 million, of which US$11.8 million represent duties and taxes. The Government contribution net of duties and taxes would be in the form of equity. GOB would relend to WASA the proceeds of the proposed Credit for a term of 25 years, including 5 years of grace, and at the interest rate of 7% per year. GOB would bear the foreign exchange risk. Execution of the Subsidiary Loan Agreement between GOB and WASA is a condition of Credit effectiveness (Section 5.01(a) of the Development Credit Agreement). To cover advance payments for equipment aLnd material needed for the construction of tubewells, retroactive financing f'or such payments made after March 1, 1979 up to US$250,000 is allowed (Development Credit Agreement, paragraph 4 of Schedule 1). - 20 - Project Approval 67. Approval of the Project Proforma by GOB's Project Evaluation Committee (PEC) and the Executive Committee of the National Economic Council (ECNEC) are necessary to ensure inclusion of the project in Bangladesh's Annual Development Program and authorization for incurring expenditures. Government approval of the Project Proforma ista condition of Credit effec- tiveness (Section 5.01(b) of the Development Credit Agreement). Benefits and Risks 68. Without the project, per capita supplies of water would drop to about 70 lcd from the present 90 lcd. Supplies would, perforce, become intermittent throughout the area of supply instead of being generally available throughout the 24 hours. Areas which have trunk sewers available would be unable to benefit from them because of the lack of subsidiary sewers. Deteriorating standards would be reflected in an increase in the risk of disease especially in relation to diarrheal diseases and skin diseases, where reasonable standards of personal hygiene are so important. 69. No economic rate of return can be calculated that would provide an adequate measure of the benefits to the community of having a sanitary water supply system and improved sewerage. A proxy economic rate of return was estimated conservatively assuming that the incremental revenue accruing to WASA from the project represents the minimum level of benefits that will be realized. In calculating incremental revenues it was assumed that DMC would pay for water supplied through public standpipes at domestic rates. Pro- jections on receipts have been made conservatively having regard to past experience. Even on these conservative assumptions, the ERR was computed to be about 5%. 70. The physical risks involved in the project are, if anything, rather less than those normally expected with operations of this type, since the work is less difficult than that carried out under the first project, and is in the same general area with substantially the same soil conditions. Full Government support will be required to ensure that the intended improvements to WASA's finances and general administration will be achieved. PART V - LEGAL INSTRUMENTS AND AUTHORITY 71. The draft Development Credit Agreement between the People's Republic of Bangladesh and the Association and the draft Project Agreement between the Dacca Water Supply and Sewerage Authority and the Association and the recom- mendation of the Committee provided for in Article V, Section l(d) of the Articles of Agreement are being distributed to the Executive Directors separately. 72. Special conditions of the project are listed in Section III of Annex III and include as conditions of effectiveness: (a) implementation - 21 - of a tariff increase averaging 40%, (b) appointent of auditors for FYs 79 and 80, (c) execution of the subsidiary loan agreement between GOB and WASA, and (d) approval. of the Project Proforma. 73. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 74. I recommend that the Executive Directors approve the proposed credit. Robert S. McNamara President June 13, 1979 - 22 - ANNEX I T-J BAMGUNU - SOCIAL INDICATORS DATA SHEET RPERUNCE GROUPS (ADJUSTD AVERAGES BAIRADIE La LAND ARMA (TOUIISAND SQ. EN.) - KOST RECENT ESTIMATE) TOTAL 144.0 SAN SAME NEXT HIGHER AGRICULTURAL 101.1 IDST IUCENT GEOGRAPHIC INCOHE INCOME 1960 Lb 1970 Lb ESTIIATE lb REGION /c GROUP jd GROUP Le GNP PER CAPITA (US$) 40.0 60.0 90.0 167.4 182.9 432.3 ENERGY CONSUNPTION PR CAPITA (KILOGRAMS OF ODAL USUIVALZNT) .. .. 28.0 65.7 88.9 251.7 POPULATION AND VITAL STATISTICS TOTAL POPULATION, KID-YRAU (MILLIONS) 53.9 70.8 82.7 UNl-M POPULATION (PERCUT oP TOTAL) 4.8 6.4 9.2 12.8 15.0 24.2 POPULATION DENSITY PER SQ. Dt. 374.0 492.0 574.0 85.2 46.8 42.7 PER SQ. D(. AGRICULTURAL LAND 566.0 730.0 818.0 322.6 254.1 95.0 POPULATION AGE STRUCTURE (PERCENT) 0-14 YnS. 44.3 46.4 46.2 44.0 43.6 44.9 15-64 TnS. 52.5 51.0 51.1 52.9 53.3 52.8 65 YnS. AND ABOVE 3.2 2.6 2.6 2.9 2.9 3.0 POPULATION GROWTH RATE (PENCENT) TOTAL 2.7 2.8 2.1 /f 2.2 2.4 2.7 URJU .. 6.2 7.4 4.2 4.0 8.8 CRUDE BIRTH RATE (PER THOUSAND) 49.8 50.3 49.5 45.1 44.3 42.2 CRUDE DEATH RATE (PER THOUSAND) 27.2 22.9 28.1 17.3 19.7 12.4 GROSS REPRODUCTION BATE 3.5 3.1 .. 3.2 2.9 3.2 FAMILY PLtANNING ACCEPTORS, ANNUAL (TmUSANDS) .. 345.6 655.1 USERS (PERCENT OF MARRIED RNE) .. .. 4.7 13.7 14.6 14.2 POOD AND NUTRITION IMDEX OF MO4 PLODUCTION PER CAPITA (1970-100) 106.2 100.0 93.7 95.6 96.4 104.3 PER CAPITA SUPPLT OF CALORIES (PERCENT OF UQUIRDEETS) 89.0 89.0 93.0 91.1 92.3 99.5 PROTEINS (GUINS PER DAY) 42.6 .. 58.5 49.6 50.0 56.8 OP HIIICE ANIMlAL AND PULSE 9.2 .. 8.0 12.6 13.9 17.5 CHILD (AGES 1-4) MORTALITY RATE .. .. .. .. .. 7.5 H:IALTH LIFP EXPECTANCY AT BIRTH (YEARS) 38.7 43.3 45.0 43.1 45.8 53.3 INFANT MORTALITY RATE (PER THOUSAND) .. .. 140.0 99.5 102.7 82.5 ACCESS TO SAFE WATER (PENCUT 0O POPULATION) TOTAL .. 45.0 56.0 30.0 26.4 31.1 URBAN *- 13.0 22.0 66.3 63.5 68.5 RURAL .. 47.0 61.0 17.2 14.1 18.2 ACCESS TO EXCRETA DISPOSAL (PZRCT OP POPULATION) TMTAL .. 6.0 5.0 15.7 16.1 37.5 IRAN .. .. 40.0 66.9 65.9 69.5 RURAL .. .. .. 2.5 3.4 25.4 POPULATION PER PHYSICIAN 10000.0 /b 7600.0/h 11000.0 8830.8 13432.7 9359.2 POPULATION PER NURSIII PENLSON 110000.0 /h 72030.0/h 56070.0 8479.3 6983.3 2762.5 POPULATION PER HOSPITAL BED TOTAL 11000.0 Lj 8120.0 /i 5200.0 1624.5 1157.6 786.5 URBAN .. .. .. .. 183.3 278.4 IUJRAL .. .. .. .. 1348.8 1358.4 ADMISSIONS PER HOSPITAL BED .. .. .. .. 19.5 19.2 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL .. .. .. .. 5. 2 URBAN .. .. .. .. 4.8 RURAL .. .. .. .. 5.3 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL .. .. .. URBAN .. .. .. .. 1.8 2.3 RURAL .. .. .. ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL .. .. .. .. 25.9 28.3 URBAN .. .. 3.0 .. RURAL .. .. .. .. 8.7 10.3 - 23 - ANNEX I BANGLAU - SOCIAL 11ICATORS DATA SHEET REFERENCE GROUPS (ADJUSTED AVERAGES BANGLADESH / - MOST RECENT ESTIMATE) SAME SAME NEXT HIGHER MOST RECENT GEOGRAPHIC INCOME INCOME 1960 Lb 1970 Lb ESTIMATE lb REGION Lc GROUP Id GROUP /e EDUCATION ADJUSTIU ENROLLMiET RATIOS PRIMARY: TOtAL 47.0 61.0 73.0 59.1 62.9 75.8 FINALE 26.0 42.0 51.0 38.4 45.9 67.9 SECONDARY: TOTAL 8.0 19.0 25.0 19.9 14.4 17.7 FEMALE 1.0 8.0 11.0 9.9 8.8 12.9 VOCATIONAL (PERCENT OF SECORDART) 1.0 1.0 .. 1.5 6.6 7.4 PUPIL-TEACHER RATIO PRIMARY *- 49.0 50.0 38.2 38.5 34.3 SECONDARY .. 26.0 24.0 23.5 19.8 23.5 ADULT LITERACY RATE (PERrIIT) 21.6 .. 23.0 35.6 36.7 63.7 CONSUMPTION PASSENGER CARS PER THDUSAND POPULATION .. 0.4 0.4 / 2.2 3.1 7.2 RADIO RECEIViRS PER THOUSAND POPULATION .. 6.0 .. 14.9 31.1 71.1 TV RECEIVERS PER THOUSAND POPULATION .. .. .. .. 2.8 14.1 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POEULATION .. .. 5.0 6.4 6.0 16.3 CINEMA ANNUAL ATrENDANCE PER CAPITA .. .. .. .. 1.4 1.6 EMPLOYMENT TOTAL LABOR FORCE (THOUSANDS) 19400.0 24500.0 26200.0 FEMALE (PERCENT) 15.2 16.5 17.0 21.3 24.2 28.0 AGRICULTURE (PERCENT) 87.0 86.0 78.0 62.8 60.7 54.1 INDUSTRY (PERCENT) 3.3 3.5 .. PARTICIPATION RATE (PERCENT) TOTAL 36.0 34.6 34.4 35.8 39.8 37.8 MALE 58.7 55.8 55.3 52.4 53.3 50.3 FEMALE 11.4 11.8 12.1 15.6 19.6 20.9 ECONOMIC DEPENrDENCY RATIO 1.3 1.4 1.4 1.3 1.3 1.3 INCOME DISTRIWSUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS 18.3 /k 16.7 /1 18.6 20.3 19.5 HIGHEST 2tl PERCENT OF HOUSEHOLDS 44.5 Lk 42.3 j .. 42.8 45.1 48.9 LOWEST 20 PERCENT OF HOUSEROLDS 6.9 /k 7.9 .. 7.3 5.7 5.9 LOWEST 40 PERCENT OF HOUSEHOLDS 17.9 /k 19.6 /1 *- 19.3 16.8 15.7 POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN .. .. 110.0 80.2 88.5 155.9 RURAL .. .. 90.0 67.2 71.9 97.9 ESTIMATED R1LATIVE POVERTY INCOME LEVEL (USS ETER CAPITA) URBAN .. .. .. .. 100.8 143.7 RURAL .. .. 29.0 39.8 42.0 87.3 ESTIMATED POPULATION BELOW POVERTY INCOME LEVEI. (PERCENT) URBAN .. .. 61.0 50.3 46.0 22.9 RURAL .. .. 70.0 44.6 48.0 36.7 Not available Not applicable. NOTES /a The adjosted group averages for each indicator are population-weighted geometric means, excluding the extreme values of the indicator and the moat populated country in each group. Coverage of countries among the indicators depends on availability of data and 1s not unitorm. /b Unless otherwise noted, data for 1960 refer to any year between t959 and 1961; for 1970. between 1969 and 197]; and for Most Recent Ettimate. between 1973 and 1977. /c South Aeia; /d Low Incomw ($280 or les per capita 1976); /e Lower Middle Income ($281-550 per capita, 1976); /f The 1970-75 growth rate is abnoorully low due to the effects of the war of independence and the 5ass populatimo wovemnt across Ohe borders during that period. Presently, the average population grovth late is estimated at 2.8S per annum; aI Av. 1961-65; /h Registered, not all practicing in the country; /i Govt. establishuents onlly; / 1972; /k 1963-64; IL 1966-67. September, 1978 - 24 - DEFINITION4S OF SOCIAL IE±fCAIgS Page 3 S=:g The adjusted group averqage for each indicator are papualtion-wmlghted geometric meanms, excluding the extreme values of the indicator and the most populated country io each group. Coverage of countriese among the indicators depends on availability of data and ie not uniform. Due to lack of data, group averages for Capital Surplus Oil Exportrer and indictatra of access to water and excreca dispasal, houaing, income distribution and poverty aer a,Lple populotion-weighted geometric means without the exclusion of extras values. LAND AREA (thouoaod Oq. kx) Population par hospital bed - total,_jjrba.l_ -d royal - curo total, Total - Total surf ace area comprising land area, an inland waters. urban, and rural) divided by the:.r respective nuacec of hospital cods Acri-ulturai - most recent estimate of agricultural area used temporarily available in public end private general and specialized hospital end rc- or permoanently for crops, pastures, market and kitchen gardens or to habilitatlon centers. Sospitals are establishments permanently staffed by lie follow, at least one physician. Establiabmants providing principally custodial cars are net included. Rural hospitels. however, inclode health and sedl- -NFPEFR CAPITA (101) - COP per capit estimates at torrent market pricee. cal centers not permansently staffed by a physician (boo by a medical as- calcuiated by acme conversion method as World Bank Atlas (1975-77 basis); aistant. nurse, midwife., etc.) which offer Do-patient accofo.datioo and 1960, 1970, and 197y data. provide a limited range of medical facilities. Admieslana Per hospital bed - Total number of admissinon to or discharges iNfERCT CONSLKMPTIONS PER CAPITA - Annual consumption of comemrcial energy from hospitals divided by the number of beds.. (coal and lignite, petroleum, netural gas and bydro-, nuclear and gao- thecal electricity) io kilograms of coal equivalent per capita. WOISING Aereas s ise of household (persona oar household) - total, urban, and rural - POPULATION AND VITAL STATISTICS A household consists of a groop of individuals who share living quartesr To tal oopolation. mid-yea (i lilona) - As of July 1; if not available, cod their "in malIs. A boardec or lodger may or may noot he included in uvorogo of two nod-yearestimateso; i9ht, 1970, and 1977 data, the bousehold for atatistica1 purpoase. Statistical deinitions of houx- Urban population loercent of total) - Ratio of urban to total populs- hold vary. tion; different definitions of urban areas may affect comparability Av.azas number of persons par roes - total. eban. end coral - Averageum of deta among countries, bet of parenne per room in all, urban, and rural occupied conventional Population de..nity dwellings, respectively. Dwellin.gs seclude non-permxet structures and Poto. ho. - Mfid-ynoo population psr square kilumater (iDO hoctar..) unocopied parts. of total area. Access to electricity (percent of Swellings) - total, urban, and rural - Per k. h. agriculture land - Computed ac above for agricultural land Conventionai dwellings with electricity in, lvinig quarters en percentage only, of total, ora.and ruralI dwellins reapectively. FPop-ltioc aR. tructure (percent) - Children (0-if years), working-age (15-hi yearn), and retired (65 years and over) as percentages of mid- EDUICATION poor popoI.la-o AdJusted enrollment ratios Populution growth rate (percent) - total, and urban - Compound aunnual Primary school - total, and female - Total and femole enro11l.o.t of all ugee growth roren of total and urban mid-year populations for 1950-6f, at the primary level as percectages of reopectively primary uch-ol-ge 1960-70, and 1970-75. Populations; normally includes children aged 6-11 yearo but adjuated for Crude birth rate (per thousad) - Annual live birtbs per thousand of different lengths of primary educa.tion; for countrien with universal ed.- old-yoor population; ten-year arithmetic averags. ending in 1960 and cation enrollment may enceed 100 psrcent since sone pupilo arc helco or 197 ncd floe-year average ending io 1975 for moat recent estimate, above the official school age. Crude death rate (per thousand) - Annual deaths per thousand of mid- Secondary school - total, and female - Computed as above; secondary edoca- year population; ten-year arithmetic averages ending in 1960 and 1970 tion requires at meest four years of approved primary instruction; pr- and five-year acerage ending in 1975 for most recent estimate. vides general vocational, or teacher training instructions for pupils Gross reproduction rate - Average number of daughters a woman will hear .usully of 12 to 17 years of age; correspondence courese a,re generally in her .or-aI oeproductive period if she experfencee present age- excluded. opocific fertility raten; -uaully five-year averages ending in 1960, Vocationel enrollmet rperent of secondary) - Vocutio...l institutions in- 1970, und 1975. clods tehnicl inutrial, or other programs which operate independently Ponily planting - acceptors, annual (thousands) - Anna"l number of or as de:partments of secondary institutions. occptoro of birth-control devices under auspices of uationa.l family Pupil-teacher ratJoio -primary. and_.secondary - Total studetos enrolled in planning program. primary and seodry leesdivided by numbern of teachers to the trs racily plaoning - uner. (percent of married women) - Percentage of spondig levels.. married ...e. o f child-bearing age (15-44 years) who use birth-control Adult literacy rate (Percent) - Literate adults (able to read and unito)o devices tc all --rred women in sans age group, a percentage of total adult popolatlon aged 15 yra- andOer PFOOD AND NUTRITION CONSUMIPTION Indon of food production par capita (19701) - tnden number of pee Passenger cars (per thousand Population) - Pacenangr oars -oprioe motortc capita annual production of allfoo c oi ties. tseting lees than eight persons; excludes sahulances, hearses and military Per capita oupp ly of talories (percent of renuirsments) - Computed from vehicles. energy oquivalant of net fond supplies available in country par ..pita Radinro ivr (per tho...a.d Popuiation) - Ail types of ro..alvers for radio per day. Available supplies comprise domestic production, imports lens broadcasts to general public per thousand of population; encludes unIcens..ed ecyorto, and changes in stock. Net supplies exclude animal feed, seeds, receivers in countries and in years when registration of radio sets was, in quontitien used in food process.ing, and lass.es in distribution. Re- effet; dera for recent years say net be comparble since most cauntrien quireneeto were estimated by PAD based on physiological needs for nor- abolished licensin.S .oI activity and health considering environmental temperature, body TV receivers (per thousand pnpulationj - TV raeeves Sfor broadcast to genard. weights, gc aed tago diotributinne of population, and allowing if per- public par thousand population; excldes unlicensd TV receiver io com-- cent for waste at household level, tries and icn years when registration of TV sets was in effect. Per capita oupplyI of.orotedin (grrams per day) - Protein content of par Niewenaper circulation (per thousan.d population) - Shows the average circula- capita oer supply of fod e day. Net supply of food is defined as tion of "daily general interest newspaper". defioed as a periodical publi- above. Riequil-teme for all contries established by USDA provide for catIon devoted primarily to recording geneal. new. It is roosidered to o olnino ailow...ce of 60 grams of total protefn per day and 20 grams be "daily" if it appears at least Dour times a week. of unbmol and pulsa protein, of which 10 grams should he animal protein. Cinema, annual attendance per capita per year - Based on the number of tickets Tieso otndrdst ar lowe that those of 75 grams of total protein and sold during the year, including admiesiona to drive-in cinevuan and mobile 23 gon of aimal protein an an overage for the world, proposed hy unite.. PAOD ic the Third World Pood Survey. Per capita protein supply from animal and pulse - Protein supply of food DIPIOXNRSI derived from aninals and pulses in grams per day. Total labor force (thous.ands) - Economically active persone, including armed Child (.ag.. 1-4) mortality rate (per thousand) - Annual deaths per thous- fortes and unemployed but excluding housewives, students, etc. Defini- and in age group 1-h years, to children in this age group. tions in various countries are noct comparable. Famale (percent) - resale labor force as percentage of total labor force. HEALThi Agriculturs (percent) - Labor force in fsrming, foreetry, hunting and fishing Life eopectunoy at hrth (pears) - Average number of years of life as percentage of total Labor force. rcooining ot birth; usua lly five-year averages ending in 1960, 1970, industry (percent) - Labor forte in mining, construction, mnaufacturing and -od 1975. electricity, water mod gas as percentage of total labor force. Ilurt morcality rtet (per thousand) - Annual deaths of infants under participation rate (percent) - tctal, male. aod fml Total, main, end one yea of age per thounand live, birhts. aa labor force as percentagee of their repective population.. Acc..n to safe water (percent of population) - total, urban, and tonal - These are TLOan adjusted participation ratea reflectingae-c Number of people (total, urban, and rural) with resonable aco...n to otruoctre of the ppoltuic-, ord long tine trend. oufe water supply(icue treated outface waters or untreated but fconomic dependency ratic - Ratio of population under 15 aod h5 and over to uncontaminated water such as that from protected borsholas, springs, the labor force in age group of IS-hi years. and san ita rywall) sa p-ro-tx5e of their respective populationa. In an urban area a public fountain or standpost located not more INtOKE DISnTRIBUTON than 200 me ters from a house may be considered as being within rt- -Prerentage of private income (bothoin.cash andkind) recei.vred b y richest -coblea.no f that hou... In rural area reasonable. .....s would perucn richest 20 percent. poorsoc 20 pa-ceot, ad por 0ci percen imply that the housewife or members of the household do not have to of households. opsod a disproportionate pact of the day in fetching the family's watoro...da. ' POVETY TARDtT DROUPS Access to socreta dinposal (Percent of population) - total, urban, and Estimated absolute poverty income level (US4 oar caoita) -rban and rural - rura1 - Number of people (total, urban, and rural) served by extreta Absolute poverty income level ina that ineams level below, which a minimal dioponal 00 porcantages of the ir respective populations. Ecreta sut~trci...xliycdequar diet plus essen..tial nr-fo-d r-quirom tn in not diopou n. ay include the collection and disposal, with or without affordable, ttrotenet, of human encret. and waste-water by water-borne, systemo Estimated relative Poverty income level (Uf$ per capita) _- urban and rural - Ir the une of pit privies and nimhiar iostallations. Relative powerty incone level is th.t i-oome level Ie.. than oe-rhlrd Poooicpr physician - Population divided by number of practiicig per capita personal incom of t"hiencountry.e phyoftiano qualified from a medical school et university level, Estimated population belo povert inoeleve pret - urban and rural- Popuutio pernooninc erao - Ppulaion ividd bynumbr ofPercent of population (urban and rural) wh. ore either "absolute poor" or practicing cab. and finale graduate nurses, practical nornes, and "relative poor" whichever Is greater. uoiotont nurse.. Econumic and Social late Division Eoon..mic Analyslo and Projectiorn Department - 25- (Amounts in millions ofTU.S Wfara Actual Estimated 1960- 1965- 1913- Av. Av. 1967-69 ~1972/73 ~1974/75 197/7 17/81965 1970 1978 1967-69 1974/75 1977/78 NATIL ICAL ACCOUNTS~ __97_7 97/8 _ In Constant 1972-1973 Prices & Eacha.ssg Rates ~~-erae Annual Groth Estes As Percent of GDY I,rosi Domestic Product 3,012 5,833 6,514 7,25 7,833 4i 3.3 6.1 98.5 101.8 101.1 hot, from lermo of Trade(-- 89 - -117 -148 -88 1.5 -1.8 -1.1 rcs lcrrertic Income 6,101 5~~~~~~~,833 6,3-97 7,107 i774-5 5.6 2.5 5.8 100.0 10oi0. 0 100 .0 mpc'se (inc]. Nfs) 879 747 703 506 791 20.6 6.8 0.7 14.4 11.0 10.2 E~Xports I (import capacity) 598 369 197 243 315 12.3 -14.6 -3.2 9.8 3.1 4.1 Resouirce GaLp 281 378 -506 2~63 464.6 7.9 -7 Consumption Expeniditures 5,668 5,817 6,404 6,764 7,521 5.7 3.6 5.2 92.9 100.1 97.1 - Invcstment (incl. stocks) 714 394 499 660 700 13.3 8.8 12.2 12.9 7.8 9.0 D,mestic Savings 433 16 -6 343 22 4.3 10.0 72.0 6.8 -0.1 2.9 National Savings 416 32 10 378 279 8.7 20.5 56.3 7.1 0.2 3,6 M4ERCHNADISE TRADE Annual Data at Current Prices As Percent-of Total Imports C'apital goods . 100 135 227 318 . 22.9 . 16.8 23.5 Intersmediat,e goods 6~r2fuels) .. 176 386 270 459 . 219. 304 41 Thsels and related materials 2. 04 3. of which: Petroleum . 23 155 141 166 . . 48.5 . 10.0 1.3 Cnumption goods 428 726 406 .. L -:. 42.8 3* Intel Merch. Imports (cilfl 3~~57 727 1,402 865 1,349 12.2 100.0 100.0 Exports Primary products (oswl. fuels) . 145 119 220 203.. . 7.0 40.9 40.8 Thels and related materials cf which, Petroleum 'soufarturd god . 195 239 240 294 . .. 8.5 .. 59.1 59.2 1'vtaI MorTh~ Exorts (fob) 48M 3M 5-8 4r60 4r97 7._9 000.0 1005.0 Tourism and Border TradLe /-rehandise Trade Indices Average 1972-73 = LO Export Price Index 61 100 133 118 137 . .. 6.5 io.ptrt Psides Index 52 100 215 189 180 . .. 12.5 Tbrms of Trade Index 118 100 62 62 76 .. .. 5.6 Exports Volume Index 148 100 80 115 107.. . 1.5 C.ALIFh ADDED BY SECTORAcua Data at 1972-73 Prices and Exchange RaLtes Average Annual Growth Rates Ar; Percent of Total Agriculture ~~~~~~ ~~~3,542 3,403 3,712 4,020 4,318.. . 4.8 59 59 57 Industry and Mining 420 412 466 582 642 . .. 9.2 7 7 8 Service ~~~~~~ ~~~~~1,050 1,848 2 146 2 264 7.4 34 34 35 Total 5,012 5,663 6,324 7,044 7,605 6.1 100 100 100 PUELIC PINANCE As Percent if<> (Central Goverument) Current Peceipto 317 280 469 563 665.. . 34.2 5.3 7.2 8.5 Cu.rrent Expenditures 365 364 419 464 553.. . 16.8 6.1 6.4 7.1 Budgetary Savilngs -48 -84- 530 T99 112 -0.8 0.F8 1.4 0t0cr Public Sector . . . .. . . Pub',lic Sector Investment 421 239 248 516 514 . . 10.3, 7 .0' 3 . 8 6'.6 US $ million LI CR EN XPENDITU'RE DETAILS Actual Estimated DETAIL ON At Av. 1977/78 P anLd EP. As I Total Current Expend.) 1969/70 1972/73 1974/75 196/77 1977/78 PUBLIC SECTOR Two-Year Plan 7. of Total Education .. 1. W~ 12. 1. TVSTETPORM(1978/79 -1979/80) Otter Social Services . 4.5 3.6 4.2 4.9 Social Sectors 287 13.2 Agriculture and Agriculture 600 27.6 Other Economic Services . 5.0 12.5 6.6 7.0 Industry and Mising 380 17.5 Administratton and Defense . 70.4 57.1 61.5 61.2 Power 314 14.4 Oither . 4.6 12.3 15.3 13.9 Transport and communications 387 17.8 Total Current PxTpenditures 100.0 100. 0 10 0. 0 100'.0 Other 206 9.5 _______________________________________________________________________________ Total Expendituresendiures 2,174 7 100.0O. SELECTED INDICATORS 1960- 1965- 1973- FINANCING, (Calculated from 5-year averaged data) 1965 1970 1976 Average ICOR .. T7 12.89 PatlIc S.ctor Savings 557 25.6 Import Elasticity . 1.23 1.11 Program aid counterpart 838 38.6 Its-ginal Domestin Savings Bate . 0. 2 2 0.05 Foreign Project Aid 605 27.8 Marginal National Savings Rate . 0.35 0.05 Oth2er (incl. dom. borrowing) 174 8.0 Total Finantcing 2,174 100.0 LABOR PORTE AND Total Labor Force Value Added Per Worker (19 72 - 73 Prices & Exc. Rates) OUTPUJT PlER WORKEEBI Millions coTta 19 61 -73 In U.S.Dollars Percent of AvergE 197 73 1960-/61 1972/73i9 60/61 1972/73 Growth Bate 19 69/70 19 72/73 19 69/70 19 72/73 Growth Rate Agriculture 16.1 20.5 85 -76 2.0 .. 166 ..76 Industry 1.0 1.8 5 7 5.0 .. 229 ..105 Service 1.8 3.9 10 15 6.7 .. 484 ..222 Total 1-8.9 26-.2 1IO00 10 2.(48 2? 10o0 -4. not applicable - n1 Dr negligible not available - less than half the smallest unit shown Note: Figures ate son fiscal year basis (JulY I--utage &O).Data prior to 1972/73 pertaia to erstWhile East Pakistan. /I Plan targets. - 26 - AM=lE I kIL P Pf Wf*L AUMDA 7 M 7W96/7C 19zym 1Y/9/4 -.7n LW/ l - 1 975 S hR3 B8,XANCE OF PA..TS tp,ort (incl. Ns) 515 369 358 529 581 6.48 13 7 7J :Portf (incl. NFS) -639 -747 1,402 -957 .1,4Z7 _1,779 9.8 Rimura B UlNn 7) 71 -378 _,O'r26 IU 7.4 Interest (net) I Oirect L-rb,,ect Incom Wo&rkers' Rmitt-e I 45 7 66 83 93 Cutrten Diret Dora (n t iffivlal Oiaptt1 81esote 482 397 229 3M 4C0 13 6 Puoblic N&9T 17 la Piublicr ents 726 527 273 411 685 5 2 -N; fls-25 -16 -8 -54 ; Oteber YbL Lace. Di.butrot. -8-.-Y-c. NMt Dl.b-rS,t. C pitcl Tr s-.cti* n.. ..i -205 334 -44 16 -23 Cheg £8 Mt RAecreec (-- iecceMe) .. -20 -196 -80 24 25 AOtuS1 icnd pet-ld Octisene Cree. Rzeat-cc. (-nd p.riod) ;07 263 293 269 244 L2_10S 1974/75 1975/76 1976/77 1977/78 P"AbND DEBT StI. 228 1,366 1.812 2,065 2,556 OiLT t & Urautt-l C 514 368 338 452 IntereSt on Public Debt - 10 21 25 27 Repay"nts o- public Debt _ 25 78 17 51 u,bl'c 0,LT Loans Total Fublic Debt S,,ice. 35 99 42 78 IORD - - - - Other Debt Service (ret) 1SR. 68 150 50 211 Total Debt Service (ret) Cthcr le,tilt teccl 11 87 84 74 Govecc t. 204 678 200 376 bt-dn n nErport Ehrning (9) suppliers 55 17 2 11 Fi.n -cl Inetit.tioe- - - 5 13 P'oblic Debt Service 9.8 22.4 7.9 13.7 BOodo _ - Tota1 Debt Service PFblic LO" .e. .. n - _ _ TDScDIre.ct, I-st. Inc Totl Public M5L Lo -338 932 3411 A-verge Terrm of 7nblio Debt Aetoal Debt Cet.taUdisa or J-e 30. 197E In.t. % Prior Tear DO&D 2.0 1 5 1.4 1.3 51'L D71" D_bw pil c nt Amort as 9 Frior Ye_r. DO 5.0 5.7 0.9 2.5 W.rld ock. IDA 554 21 7 IBRD Debt Out. 9 Dibureed Other 'altiloteral 64 2.5 a. t Public Debt OlD - 4.0 3.0 2.7 2.2 Ooverncerte 1 746 68 4 " e % Public Debt service - - 1.6 7.5 4.4 Roec1lec 11 4.3 Finactil 1oetitutione 26 1.0 IDA Debt Oot. & Disbarsed Bonds " c i Publie Debt O& 7.1 18.7 21.0 22.7 21.7 Pnblic Debts n.e.i - - " * Pnblic Debt Service - 2.3 2.0 7.5 4.9 Tat 71 Pblic N9T Debt r_ 10.0 Othr 14LT Debt, Shert-twm Debt (disb. o.,) wet applicable e Staff estixte wOt *availbhe - nil or gligible but *F i3.de ctntl7 -- le. tb n half the hut looSaded in tetal aflleet uuit sboer N-m.aCt- 1978 - 27 - ANNEX II Page 1 THE STATUS OF BANK GROUP OPERATIONS IN BANGLADESH A. STATEMENT OF BANK LOANS AND IDA CREDITS (as of April 30, 1979) US$ Million Amount (net of cancellations Loan or and exchange adjustments) Credit Un- Number Year Borrower Purpose Bank IDA disbursed One loan and eight credits fully disbursed 54.9 329.1 - 339 1972 Bangladesh Cyclone Area Reconstruc- tion (replaces Credit No. 228-PAK of 1971) 25.0 2.5 340 1972 Bangladesh Chandpur Irrigation II (replaces Credit No. 184-PAK of 1970) 13.0 1.0 341 1972 Bangladesh Tubewells (replaces Credit No. 208-PAK of 1970) 14.0 1.9 343 1972 Bangladesh Telecommunications (re- places part of Credit No. 145-PAK of 1969) 7.3 .3 367 1973 Bangladesh Chittagong Water Supply (replaces Credit No. 42-PAK of 1963) 7.0 .1 368 1973 Bangladesh Dacca Water Supply and Sewerage (replaces Credit No. 41-PAK of 1963) 13.2 407 1973 Bangladesh Education (replaces Credit Nos. 49-PAK and 87-PAK of 1964 and 1966) 21.0 4.3 408 1973 Bangladesh Highways (replaces Credit 'No. 53-PAK of 1964) 25.0 5.6 409 1973 Bangladesh Technical Assistance 4.0 .1 410 1973 Bangladesh Cereal Seeds 7.5 5.1 424 1973 Bangladesh Inland Water Transport Rehabilitation 8.7 1.1 487 1974 Bangladesh Second Telecommunications 20.0 13.1 527 1975 Bangladesh Ashuganj Fertilizer 33.0 7.2 533 1975 Bangladesh Population 15.0 11.7 542 1975 Bangladesh Barisal Irrigation 27.0 23.7 - 28 - ANNEX II Page 2 A. Bank Loans and IDA Credits to Bangladesh (Cont'd) US$ Million Amount (net of cancellations Loan or and exchange adjustments) Credit Un- Number Year Borrower Purpose Bank IDA disbursed 605 1976 Bangladesh Karnafuli Irrigation 22.0 14.9 621 1976 Bangladesh Agricultural and Rural Training 12.0 10.5 622 1976 Bangladesh Technical Assistance II 7.5 6.0 631 1976 Bangladesh Rural Development 16.0 14.5 632 1976 Bangladesh Bangladesh Shilpa Bank 25.0 14.4 676 1977 Bangladesh Imports Program V 75.0 2.8 724 1977 Bangladesh Shallow Tubewells 16.0 16.0 725 1977 Bangladesh Muhuri Irrigation 21.0 19.9 729 1977 Bangladesh Extension and Research 10.0 9.9 735 1977 Bangladesh Inland Water Transport II 5.0 4.4 752 1977 Bangladesh Imports Program VI 75.0 20.4 765 1978 Bangladesh Jute 21.0 19.4 787 1978 Bangladesh Foodgrain Storage II 25.0 25.0 825 1978 Bangladesh Small Scale Industry II 7.0 7.0 828 1978 Bangladesh Agricultural Research 6.0 6.0 864 1978 Bangladesh Drainage and Flood Control 19.0 19.0 /a 866 1978 Bangladesh Imports Program VII 75.0 62.1 872 1978 Bangladesh Technical Assistance III 10.0 10.0 890 1979 Bangladesh Oxbow Lakes Fisheries 6.0 6.0 /a Total, 54.9 1,023.3 365.9 of which has been repaid 0 0.4 - Total now held by Bank and IDA 54.9 1,022.9 Total undisbursed 0 365.9 365.9 /a Not effective. - 29 - ANNEX II Page 3 C. PROJECTS IN EXECUTION 1/ Multi-Sector Project Cr. No. 339 Cyclone Area Reconstruction Project: US$25.0 Million Credit of October 18, 1972; Effective Date: January 17, 1973; Closing Date: June 30, 1979 After a very difficuLt start, the project is expected to be com- pleted by late 1979, about four years behind schedule. Parts A, F, and G (Inland Water Transport, Coastal Fisheries, and Cyclone Warning System) have been completed for some time. Parts D and E (Primary and Feeder Roads) have been substantially completed. Work on the completion of Part B and C (Tele- communications and Cyclone SheLters) appears to be proceeding satisfactorily. A request for an extension of ithe Closing Date is currently under consideration. Agricultural Projects Cr. No. 340 Chandpur Irrigation II Project: US$13.0 Million Credit of October 18, 1972; Effective Date: January 17, 1973; Closing Date: December 31, 1979 The project is expecited to be completed by late 1979, three years behind schedule. Delays have been due to major flooding, labor problems, shortages of materials, equipment breakdowns and rebuilding the embankment as a result of rapid river erosion during the construction phase. While problems remain, substantial progress has been made both in physical construc- tion and agricultural development. The main regulator is operational and major agricultural development has started. Cr. No. 341 Tubewells Projeczt; US$14.0 Million Credit of November 6, 1972; Effective Date: January 13, 1973; Closing Date: September 28, 1979 Because of a slow start, project implementation is about 18 months behind schedule. Nearly 3000 wells have now been drilled, and verticality problems have already been corrected by the contractors. Pumphouse construc- tion and engine/pump installation is proceeding satisfactorily. Agricultural development for 2400 wells started in the winter 1978/1979. Project audit for 1975/1976 has been received while audit for 1976/1977 is being awaited. 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any problems which are being encountered, and the action being taken to remedy them. They should be read in this sense, and with the under- standing that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution. - 30 - ANNEX II Page 4 Arrangements for extending consultant's services have been agreed. A request is currently under consideration for an extension of the closing date to permit the financing of, inter alia, distribution channels in order to increase the effectiveness of the project. Pending the outcome of this review, the Closing Date has been initially extended to 9/28/79. Cr. No. 410 Cereal Seeds Project; US$7.5 Million Credit of June 29, 1973; Effective Date: January 30, 1974; Closing Date: December 31, 1979 There has been an improving trend in project implementation during the past two years. Seed sales and quality are good. Contract growers' interest is high. Staff morale has also improved considerably. Civil works are underway but are being delayed by shortages of local funds. Machinery for seed processing has been ordered. Tender documents for the final list of machinery and equipment are undergoing final revision after IDA comments. Staff housing is about 80% complete. On the other hand, vacancies still exist in the staff to supervise contract growers. With fifteen trainees presently being trained, most of the planned overseas staff training programs are well underway. Cr. No. 542 Barisal Irrigation Project; US$27 Million of April 29, 1975; Effective Date: February 24, 1976; Closing Date: December 31, 1980 Project civil works continue to make good progress and are expected to be completed on schedule. The problems delaying procurement of 60 primary and 2,500 secondary pumps have been resolved and it is expected that some 25 primary pumps will be installed during the current boro season. A target area of 24,000 acres of irrigation for the present dry season using some 608 secondary pumps is to be attempted. Cr. No. 605 Karnafuli Irrigation Project; US$22 Million of January 28, 1976; Effective Date: February 24, 1976; Closing Date: December 31, 1980 The project had been behind schedule due to initial delays in hiring project consultants. The consultants for the irrigation portion of the project began work in September 1976, but their effectiveness was limited by delays in procurement of vehicles and equipment and in the assignment of local consultants to assist in the design work. After a period of good progress, project civil works have again slowed down due to shortages of local Taka. If adequate additional funds are alloted, the project could still be completed on schedule. Cr. No. 631 Rural Development Project; US$16.0 million of June 3, 1976; Effective Date: August 3, 1976; Closing Date: December 31, 1981 The project was designed as a pilot application of the rural devel- opment approach pioneered at the Comilla Academy in the mid-sixties. It - 31 - ANNEX II Page 5 aims at introducing accelerated agriculture and rural development in seven thanas in Bogra and Mymensingh Districts. It provides financing inter alia for rural roads, minor irrigation, buildings, storage, rural credit and strengthening of rural cooperatives. The project became effective on August 3, 1976. Initially, despite some teething problems, the project was progressing satisfactorily. But by June 1977, the following weaknesses became apparent: (i) lack of cooperation between the various ministries and agencies involved; (ii) lack of effective organization and ineffective super- vision of the project by the implementing agency, the Integrated Rural Devel- opment Program (IRDP); (iii) basic deficiencies in the cooperative system (complex regulations and procedures); (iv) inadequate training of project personnel; and (v) conflicting government policies in the field of rural credit. In. November/December 1977, IDA, in association with IRDP, undertook a comprehen,sive review of the project, and an Aide Memoire, setting out an action program to overcome these problems, was presented to the Government in December 1977. Mhe Government has made a concerted effort to implement the recom- mendations of the Aide Memoire prepared in December 1977. A full-time Project Manager has been appointed uno is assisted by three assistants responsible for credit, cooperatives and traLining, respectively. International recruitment is being used to obtain for IRDP technical assistance in project management, supervision, and monitoring. At the field, two district managers, for Bogra and Mymensingh, have been appointed to work full time on project activities. Budgetary and procedural changes have been introduced to enable participating government agencies to be fully responsible for the implementation of the projects subcomponents. This, together with a revitalized coordinating com- mittee of Secretaries of the Ministries concerned has greatly improve coopera- tion. ImpLementation of the physical aspects of the project such as rural works is proceeding satisfactorily but project beneficiaries are, so far, yet to receive tangible benefits in the form of increased farm inputs or farm equipment. A proposal has recently been approved to amend the Credit Agree- ment to finance incremental fertilizer needs for the project instead of incremental credit for fertilizer. Cr. No. 724 Shallow Tubewells; US$16 Million of July 1, 1977; Effective Date: December 9, 1977; Closing Date: December 31, 1981 Bids for engines and pump sets for all 10,000 wells have been received and are being reviewed by the Bangladesh Agricultural Development Corporation's Tender Committee. A consultant for workshop management has been hired and the preparation of tender documents for workshop tools and machinery is at an advanced stage. Construction of 3 out of the 5 project zonal workshops has been completed. Thana irrigation maps are yet to be reviewed by consultants. - 32 - ANNEX II Page 6 Cr. No. 725 Muhuri Irrigation; US$21.0 Million of July 1, 1977; Effective Date: January 6, 1978; Closing Date: June 30, 1983 Delays occurred initially in obtaining Government approval of the project budget, establishing the project fund, completing arrangements for hiring the engineering consultants, and signing a contract with the Contractor who will construct the Feni Regulator. The contractor, with the Bangladesh Water Development Board (BWDB) approval, has signed in August 1978, a contract with the Implementation Assistance Team to participate and assist in construc- tion work. A BWDB engineer has been appointed as Project Manager and has set up office in Feni township. The Contractor has started construction site development and assembly of staff. Cr. No. 729 Extension and Research Project; US$10 Million of July 1, 1977; Effective Date: January 6, 1978; Closing Date: April 30, 1981 *The project is making good progress since it became effective January 6, 1978. Pre-qualification of contractors for the construction of training unit at Bogra and Santahar has been advertised while detailed draw- ings and cost estimates have been submitted and forwarded to IDA for review. Procurement of essential project vehicles and equipment is progressing satisfactorily. Suitable salary scales are now approved and DEM has been requested to proceed immediately with filling of posts for crop production specialists and district training officers. In the case of Project Imple- mentation Unit/Sub-Unit (PIU/PISI), gazetted officers have been appointed in late September 1978; selection of senior staff (Class III and IV) has been completed but appointment awaits Government's clearance. On agricul- tural extension, a consultant has been appointed to review unification of extension services. Village Extension Assistants (VEAs) have already been relieved of non-extension duties. The Ministry of Agricultural has also requested the Planning Commission to increase the taka allocation of the project to Taka 65 million. Cr. No. 765 Jute Project; US$21 Million of February 8, 1978; Effective Date: April 14, 1978; Closing Date: June 30, 1983 Project progress is generally satisfactory. The project organiza- tion appears to be succeeding in generating enthusiasm among farmers and Jute Farmers Associations are becoming effective. The value of credit in cash and kind has increased substantially, and repayments are progressing satisfactorily. The project technological package is reported to be signficantly increasing per acre yields. Cr. No. 787 Foodgrain Storage II Project; US$25 Million of April 12, 1978; Effective Date: September 29, 1978; Closing Date: December 31, 1982 Effectiveness was delayed by almost three months due to delays in Government approval of the project budget. However, work on site selection, - 33 - ANNEX II Page 7 land acquisition, and preparation of tender documents has been proceeding satisfactori].y and physical p-rogress of the project is not expected to be effected by t:his delay. Cr. No. 828 Agricultural Research Project; US$6 million of June 16, 1978; Effective Date: November 15, 1978; Closing Date: December 31, 1984 Effectiveness was delayed by two months, due to delays in approval of the project budget. Meanwhile contracts with architects for design of facilities have been signed, and technical working groups established respon- sible for drawing up research programs in specific fields. Cr. No. 864 Drainage and Flood Control Project: US$19.0 million Credit of December 22, 1978; Closing Date: June 30, 1984 This credit is not yet effective. Cr. No. 890 Oxbow Lakes Fishery Project; US$6 million of April 3, 1979; Closing Date: June 30, 1984 This credit is not y et effective. Industry and Imports Program Credits Cr. No. 527 Ashuganj Fertilizer Project; US$33 Million Credit of February 11, 1'975; Effective Date: December 19, 1975; Closing Date: December 31, 1982 The project is being cofinanced by the Asian Development Bank, KfW, and the Governments of Iran, Switzerland, UK and US, providing a total of US$109 million equivalent in addition to the IDA credit. Site preparation work including the necessary dredging and filling was completed on schedule. however, based on the soil analyses undertaken by two specialist consulting firms, further preparation of the site was undertaken to protect the plant against earthquake risks. Currently the project is about 32 months behind schedule due primarily to the additional site preparation and initial slow progress in (a) placing orders for time-critical items and (b) planning for construction. Process engineering and procurement have progressed substan- tially and the Project is now in the construction phase. The soil compaction work has been completed and work is progressing on the critical compensatory foundation works of the Project. Revised estimates indicate that due to the need for adclitional site work, the delays and the currency fluctuations, costs will be substantially higher than lender funds currently available. Arrange- ments are being discussed among the Government and the various cofinanciers to raise the additional funds required to complete the Project. The fertilizer company has terminated the contract of the consultants who had been providing management assistance, and has hired a new firm to provide assistance during the construction phase. A contract with a second firm for provision of assistance during the operations phase was signed in May 1979. - 34 - ANNEX II Page 8 Cr. No. 632 Bangladesh Shilpa Bank Project; US$25.0 Million of May 20, 1976; Effective Date: November 8, 1976; Closing Date: June 30, 1981 As of April 30, 1979, Bangladesh Shilpa Bank (BSB) has committed about US$23.5 million from the credit, for 96 subprojects. Disbursements were about US$6.0 million and QAR had been approved for an additional US$8.4 million. Cr. No. 676 Fifth Imports Program; US$75 Million of January 25, 1977 Effective Date: February 24, 1977; Closing Date: March 31, 1979 As of April 30, 1979, disbursements were US$72.2 million and QAR had been approved for an additional US$1.4 million. The cretdits Closing Date has been extended by three months to enable GOB to process reimbursements from IDA under Procedure Case I. Cr. No. 752 Sixth Imports Program; US$75 Million of November 30, 1977; Effective Date: January 13, 1978; Closing Date: December 31, 1979 As of April 30, 1979 disbursements were US$43.3 million and QAR had been approved for an additional US$23.6 million. Cr. No. 825 Small Scale Industry II Project; US$7 million of June 16, 1978; Effective Date: September 15, 1978; Closing Date: March 31, 1983 Progress has started in training commercial bank staff, distributing circulars to commercial bank branches describing project procedures, and adver- tising the availability of funds for small industry loans. Staff of the Small and Cottage Industries Corporation have been assigned to begin preparation of subsector and area studies for small industry promotion. Cr. No. 866 Seventh Imports Program: US$75.0 million Credit of December 22,; 1978; Effective Date: January 8, 1979; Closing Date: December 31, 1980 Education Projects Cr. No. 407 Education Project; US$21.0 Million Credit of June 29, 1973; Effective Date: September 27, 1973; Closing Date: December 31, 1980 Progress on the Agricultural University component of the project is about 75% complete but 30 months behind schedule. The academic complex facilities and staff housing are now virtually completed. About half of the hostels will be completed in December 1979 and the remainder by June - 35 - ANNEX II Page 9 1980. The auditorium, gymnasium and stadium are scheduled to be completed by October 1979, two months before the Closing Date. A number of new pro- grams intended to improve the practical skills of students and increase their involvement in research and extension have been introduced. Civil Works for The Teclnnical Education component, although 30 months behind schedule are practically complete. Procurement of equipment is only 60% complete because of the time-consuming procedures of the Supplies Directorate. Efforts to revise curricula and improve quality of teaching staff are being made. However, action has yet to be taken to complete the facilities at Joydeppur intended to be used for the training of technical teachers. (Construction of this facility is not part of the project). Cr. No. 621 Agricultural and Rural Training Project; US$12.0 Million of March 25, 1976; Effective Date: June 30, 1976; Closing Date: June 30, 1981 Implementation of civil works is about three months ahead of sched- ule but has slowed recently due to shortage of local funds. Completion is about 60% on weighted average. Tenders for instructional equipment were invited in mid-December. Training of teachers for the Agricultural Train- ing Institutes (ATI's) has been set back by a recent transfer of instructors to the extension staff to benefit from a recent upgrading of positions, which was not extended to the ATI staff. Little progress has been made on the recruitment of technical assistance experts, the development of revised curriculum, or the in-service training of extension staff. Population Cr. No. 533 Population Project: US$15 Million Credit of February 11, 1975; Effective Date: September 25, 1975; Closing Date: December 31, 1]980 Tlne project is being cofinanced by six co-lenders providing a total of US$25 million equivalent in addition to IDA credit. Some progress has been made in project implementation. Tenders have been received for all construction packages except: the Family Welfare Visitors' Training School in Khulna and Faridpur. Scrutiny of bids received for four tenders are underway. Recruitment of staff training teams is under progress while local consultants have started working with Project Finance Cell to strengthen the central accounting system. Government is considering implementing manage- ment study recommendation for strengthening district level organization. Over 60 out of 91) medical doctors deputed from the Health Division of the Ministry of Health and Family Planning to Population Division and Family Planning Division (PCFD) have joined. Deputation of another 100 doctors is expected shortly. On the other hand, proposals to strengthen the Building, Planning and Design lJnit (BPDU) are still pending with the Health Division while pro- gress on service statistic system has been discouraging. - 36 - ANNEX II Page 10 Transport Projects Cr. No. 408 Highways Project; US$25.0 Million of June 29, 1973; Effective Date: September 27, 1973; Closing Date: December 31, 1979 There are two major elements of the project which are not yet com- pleted, these being construction of the new Roads and Highways Directorate (RHD) headquarters building and paving of the Feni bypass. Progress on the RHD building is satisfactory, and appropriate steps are being taken to remedy constructional deficiencies previously noted. Progress on the Feni bypass paving has improved, and the contractor should complete before the closing date of the Credit on December 31, 1979. Cr. No. 424 Inland Water Transport Rehabilitation Project; US$8.7 Million Credit of August 10, 1973, as amended by Amending Agreement of October 17, 1975; Original Credit Effective Date: September 27, 1973; Supplementary Credit Effective Date: March 19, 1976; Closing Date: December 31, 1979 Procurement of spare parts and equipment under the Original Credit has been substantially completed. The two lighterage tankers provided under the Supplementary Credit have been operating since January 1978, transfering crude oil from the mother tanker, "Banglar Noor", to the ERL refinery at Chittagong. However, Bangladesh Shipping Corporation (BSC) has experienced some problems in maintaining the tankers' cargo pumps and manufacturers' service engineers are now in Chittagong. IDA has agreed to finance under the credit additional Technical Assistance to improve tanker operation and maintenance. There appears to have been a significant improvement in the oil transfer operating over the past few months. Cr. No 735 Inland Water Transport II Project; US$5.0 Million Credit of September 30, 1977; Effective Date: March 13, 1978; Closing Date June 30, 1980 The Credit became effective on March 13, 1978 three and a half months behind the original schedule. Lists of spare parts for BIWTA vessels, navigation aids and for hydrographic equipment, and for BIWTC cargo vessels have already been prepared and most items agreed. The selection of con- sultants required for the execution of the project has proceeded very slowly. However, contracts with two consulting firms have now been signed, and work on selection of additional required consultants is underway. - 37 - ANNEX II Page 11 Telecommunications Projects Cr. No. 343 Telecommunications Project; US$7.3 Million Credit of November 15, 1972; Effective Date: January 17, 1973; Closing Date: June 30, 1979 The Project was originally financed as part of Credit No. 145-PAK of 1970, and goods valued at US$2.2 million had been received prior to sus- pension of (disbursements. Three of the four microwave systems have been commissioned. The fourth microwave system, equipment for which was ordered together with the microwave systems under Credit 487-BD, is expected to be commissioned during June 1979, completing the project four years behind schedule. The Closing Date has been extended from December 31, 1975 to June 30, 1979. Cr. No. 487 Second Telecommunications Project; US$20.0 Million Credit of June 26, 1974;, Effective Date: July 23, 1974; Closing Date: June 30, 1979 After initial delays, action has been taken on the procurement of all items except the national trunk automatic exchanges (TAXs) and the inter- national telephone exchange. Technical specifications prepared by the T&T and assist in tender evaluation and subsequent supervision of their installation. Delay in procurement of the exchanges is likely to delay project completion until June 1981, two years behind the original estimate. Physical progress of other works although behind schedule has begun to improve. The T&T Board was established in July 1976 but little progress has been ac-hieved in meeting project institution building goals including transfer to the Board of responsibility for its accounts (currently main- tained by Comptroller and Auditor General) and introduction of a commercial accounting system within the Board. The Rules and Regulations defining the Boards power have not yet been issued leaving the Board with less autonomy than the prior Director General of the Telephone and Telegraph Department. However a new ordinance covering the T&T Board has recently been issued and preparation of revised rules and regulations for the Board is underway. A request for extension of the Closing Date is currently under consideration. Technical Assistance Credit Cr. No. 622 Second Technical Assistance Project; US$7.5 Million of April 8, 1976; Effective Date April 14, 1976; Closing Date: June 30, 1980 Credit funds were almost fully committed. However, failure of the Government and consultants to reach agreement on the staffing of a planning assistance project resulted in the release of about US$1.0 million of addi- tional funds for commitment. These funds have now been committed for additional subprojects. - 38 - ANNEX II Page 12 Cr. No. 872 Third Technical Assistance Project: US$10.0 million; Credit of December 22, 1978; Effective Date: January 19, 1979; Closing Date: June 30, 1982 About US$2.1 million has been committed for three technical assistance subprojects. - 39 - ANNEX III BANGLADESH SECOND DACCA WAIER SUPPLY AND SEWERAGE PROJECT SUPPLEMENTARY PROJECT DATA SHEET Section I: Timetable of Key Events (a) Time taken to prepare project: N/A 1/ (b) Agency which prepared project: Dacca WASA (c) Project first presented to IDA: October 1978 (d) First IDA mission to review project: October 1978 (e) Departure of appraisal mission: November 1978 (f) Completion of negotiations: May 9, 1979 (g) Planned date of effectiveness: September 11, 1979 Section II: Special IDA Implementation Actions None Section III: Special Conditions (a) WASA's revenues are required to be sufficient to cover operation and maintenance, interest and depreciation or debt payment service, whichever is greater (paragraph 63(i)); (b) WASA will review its tariff and budget proposals annually wiLth IDA (paragraph 63(ii)); (c) WASA will implement improved billing and collection pro- cedures and report periodically on progress (paragraph 63(iii)); (d) GOB will ensure DMC's prompt payment of water provided tlarough public standpipes (paragraph 63(iv)); 1/ The components included in the project were identified in the Master Plan prepared by consultants several years ago. - 40 - ANNEX III (e) WASA will maintain task forces to eliminate illegal connections, leaks and wastage (paragraph 63(v)); (f) WASA will either enforce sewer connections for premises within 100 feet of a sewer line, or charge for such connections regardless of whether or not a premise is actually connected (paragraph 63(vi)); (g) WASA will establish a fund for spare parts and GOB will provide foreign exchange for this purpose as necessary (paragraph 63(vii)); (h) Conditions of effectiveness (paragraph 70) would be: (i) implementation of a tariff increase averaging 40%; (ii) appointment of auditors for FYs 79 and 80; (iii) execution of the subsidiary loan agreement on behalf of GOB and WASA; (iv) the approval of the Project Proforma by the Executive Committee of the National Economic Council. IBRD 14205 ic U KURMITOLA SA . 0uJ~~ KALYNU GRAN|-gl0,}W 2 AN ES di~~~~~~~~~~~~~ . , / ,0 f4 . : S. WIRPUR- IBRAHIMPJR ~ oir~ KALLYAN PUR AGARGAON A < ,/S---fo!- 0 7p of' d'2enrge/-°# 3 Th,. nrap her be.n prepsred by the World B-nks stff erclur,oey for rte onS,ec |MPURA f the rerdes of the reort to wh,nh t s attached he d..ent,tt,.ns u-ed and the 1MERADIA n dth a t t f e r 06~~~6 O'~~~~~~~~~~~~~~~~' BANGLADESH w tt X AR CillY OF DACCA + X Second Water Supply andSdewetrage Project \> (\Nater System)/ Proposed project areas \ Firsi project area boundary \ , \ Existing:\ \ \H Water mains C) Tule wells ZS Tanks A Million gallon tanks Roads -.------+Railways Rivers \\ X~~ATUtLLA) 0 2 3 4 5 6 Kilometers IBRD 14206 (81H N ,MAKKt f9 r X / - -- t -