FILE C PY DOCUMENT OF INTERNATIONAL DEVELOPMENT ASSOCIATION Not For Public Use Report No. P-1277-BA REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE UNION OF BURMA FOR AN INLAND WATER TRANSPORT PROJECT June 11, 1973 This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report.- Currency Unit - Kyat (Ky) Through December 1971 - US1 = Ky 4.7619 Ky 1 = US$0.21 Ky 1,000 = US$210.00 Ky 1,000,000 = US$210,000.21 From December 1971 to February 1973 - US$1 = Ky 5.3487 Ky 1 = US$0.19 Ky 1,000 = US$186.96 Ky 1,000,000 = US$186,961.32 Fron February 19, 1973 - US$1 = Ky 4.8138 Ky 1 = US$0.21 Ky 1,000 = US$207.74 Ky 1,000,000 = US$207,736 Fiscal Year October 1 - September 30 INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE UNION OF BURMA FOR AN INLAND WATER TRANSPORT PROJECT 1. I submit the following report and recommendation on a proposed development credit to the Union of Burma for the equivalent of US$16.3 million on standard IDA terms to he:Lp finance a project for the rehabilita- tion of the fleet of the Inland Water Transport Corporation (IWTC). The major part of the proceeds of the credit (US$15.82 million) would be relent to the IWTC for 15 years, including 4 years grace, with interest at 6 percent per annum. PART I - THE ECONOMY 2. The latest economic report entitled "The Economy of the Union of Burma" (R72-257) was distributed to the Executive Directors on November 28, 1972. The following paragraphs reflect the Summary and Conclusions of that economic report, updated with information obtained by a mission which visited Burma in January/February, 1973. Country data are provided in Annex I. 3. Burma is the largest country in the south-east Asian mainland and the country is rich in natural resources. However, most of this wealth is yet to be developed and Burma, with a per capita income of well below $100, is among the least developed countries. 4. Burma came out of the second World War and the struggle for inde- pendence in 1948 economically devastated and politically divided. The fifties were a period of turbulence, both political and economic. When the present government came to power in 1962, its major objectives were to unify the country and complete the social transformation of the economy which had begun in the forties. The government is acutely sensitive to foreign influence and, over the past decade, Burma isolated itself from external pressures by maintaining a policy of strict neutrality, limited use of external assistance and restrictions on travel. 5. By and large, the government has made notable progress in the attainment of its social and political objectives. Insurgency is still a problem particularly in the hill and border areas but there is probably greater stability now than at any time since independence. Nationalization of all the major sectors with the exception of agriculture has been accom- plished. (Reasonable efforts have been made to settle compensation claims and progress is evident.) Agrarian reform has given the peasants virtual ownership of the land and eliminated major inequalities in the pattern of land-holdings. In the effort to attain self-sufficiency, most of what little investment there has been has gone into the development of the industrial sector. This transformation has been accomplished at the cost of some economic disruption and its benefits are yet to be reaped. 6. The government's major success has been in the provision of ad- vanced social services 'or a population of about 30 million. Efforts were made to raise the standard of living by reducing inequalities in the distri- bution of income, keeping the prices of basic commodities stable and widen- tng the scope of education and health services. The uniform pricing policy for thne domestic consumption of rice ensured the improvement in nutrition, particularly in the hill areas. Disparities exist but incomes are more or less equally distributed and, in the fields of health and education, Burma has achieved successes surpassing those of much richer countries. It Tiust be pointed out, however, that these successes have been accomplished at the expense of dynamic economic growth. Over the past decade, the rate of growth barely kept pace with the population which is growing at around 3 percent per annum. 7. The performance of the major sectors has been disappointing. Agri- culture directly provides about one-third of GDP and much of secondary and tertiary activity is also based on agricultural products. Over the past decade, the real rate of growth of agriculture (after allowing for fluctua-- tions due to weather) was less than two percent per annum. The government's policy towards agriculture has been mainly dictated b-Y equlity and welfare considerations. Very little investment has gone into agriculture and the programs recently introduced to increase agricultural productivity have met with 1limited success. 8. Over the decade, industry received the lion's share of public sector investment and in recent years several new factories came on stream includ- ing paper, cement, textiles and fertilizer. However, most of industrial pro- duction, which accounts for 12 percent of GDP, consists of the processing of agricultural products, and the growth of industrial output is only around 4 percent per annum. The poor performance of the sector is partly due to the slow growth of agriculture and the decline in imports of pro- ducer goods. However it is also a consequence of inadequate policies governing the operation of the sector. Inadequate attention to replacement aand maintenance has led to decapitalization trends in many branches of in- dustry. The lack of financial and managerial autonomy also contribute to poor capacity utilization and low labor productivity. 9. The functioning of the nationalized trade sector is highly in- efficient. This has created artificial scarcities and given rise to a flourishing black market. Inadequate transportation and power shortages are also factors adversely affecting production. 10. Price stability has been an important objective of the government and a reasonable degree of price stability was achieved over the decade. The cost of living index for Rangoon shows an average rate of increase of 4 percent per annum between 1962 and 1972. Careful management of monetary and fiscal policies was an important instrument in containing inflation. For the first half of the decade, the budget was more or less balanced and - 3 - expenditures have been invariably cut back to avoid excessive reliance on deficit financing. However, over the past five years, the budget has been showing widening deficits. The overall deficit in 1972 was 32 percent higher than in the previous year. Until 1971, the government had been able to hold monetary expansion to a modest two percent per annum. This was possible by rapidly drawing down net external reserves. In the early part of the sixties, gross reserves were at the comfortable level of nearly 8 months of imports. By 1972 gross reserves were equal to about 3 months of a much reduced level of imports and net reserves were zero. Consequently, although the level of deficit financing last year was not much higher than the average of the past three years, its inflationary impact could no longer be cushioned by a fall in reserves. 11. The foreign trade and balance of payments position provide the most striking illustration of the continued deterioration of the economy. Rice is the major export and the most serious consequence of the stagnation in rice production coupled with an expanding population has been the drying up of the export surplus. In the early sixties, Burma exported a million and a half tons of rice a year. Since then exports fell steadily to less than 400,000 tons in 1968 and 1969 which were poor crop years. In recent years, there was a recovery to about 700,000 tons but this is well below the pre-war average of 3 million tons. Exports of teak and minerals which have good market prospects have dwindled; mineral production is one-tenth the pre-war level and teak production stagnates at the pre-war level. As a result, the dollar value of Burma's exports is below the pre-war level and its purchasing power for imports is but a fraction of what it was before the war. 12. The decline in imports was less pronounced than in exports but the policy has been to restrict imports to basic essentials. In 1971, the value of imports of goods amounted to $177 million compared to $228 million in 1963. Consumer good imports (mainly of milk products, wheat and textiles) accounted for 15 percent of the total. Raw materials, spare parts and equip- ment accounted for the rest. The balance of payments in 1972 showed an over- all surplus of $8 million compared to a deficit of $33 million in 1971. Un- fortunately, this did not result from improvement in the external sector. Imports were reduced by 10 percent while exports had increased by 4 percent. The current account deficit of $45 million was largely financed by a substan- tial increase in foreign loan disbursements. 13. The conclusion that economic performance has been poor is inescap- able. At the same time, it must be realized that achievement of a higher growth rate has not been a major objective of the government. The level of investment and savings has been and still is low, accounting for 12 percent and 8.6 percent of GNP respectively. Mtoreover, resources were mobilized primarily for the accomplishment of the government's social and political objectives. The fact remains, however, that policies dictated by other priorities have had depressing effects on economic growth. More importantly, the time has come when the lack of economic growth is endangering the social progress which has been made. -4- 14. The lKajor econoIlmic problems are the acute shortage of foreign exchange anda domestic savings, the inefficiency of state enterprises and the slow growtl of production. The government is aware of these problems and during the course of last year there was furthler evidence of the im- portance which tlLe government now attaches to economic development. hlus, acting upon the recommendations of price and wage committees, the govern- ment has substantially increased the prices of paddy and other major crops, the structure and level of wages has been revised and there is now much treater flexibility in the use of piece rates, bonus schemes and other producti-vity incentives. Interest rates on savings deposits have been increased anid the governmlent hopes that this measure together with the expansion of thie banking netwiork will induce more privrate savings. The cooDceratives are taking over retail distribution and it is hoped that this will bring about same improvements through the redluction in stocks and wTastage. The uniform selling price of rice has been abolished. Coopera- Lives arc to sell rice at a price covering cost providing the price does not exceed the ceilings set by the government. In the industrial and mining sectors several schemes hiave been introduced, and others are under considera- tion for improving efficiency. Taken together, all of these measures may not be ernough to reverse present trends. lost of them represent steps in the right direction. They also represent radical deFartures from previous policies and as suchs, they warrant support. 15. There are also other signs of change, as Burma emerges from its self-enforced isolation. Burna has greatly increased its diplomatic and trade representations abroad and its contact with international institutions, particularly the LrTIDP. Bunrma's approachi to the Banlc Group after a lapse of 10 years and its recent admission to membership of the Asian Development Bank are further indications of a renewed preoccupation with growth and of a willingness to accept foreign assistance to promote it. 16. lligher rates of economic growth will require improved policies and substantial increase in capital investment. In view of the present constraints to mobilizing greater resources for investment, reliance will have to be mna:e on long-term concessionary finance from abroad. There is no question about Burma's need for TIDA assistance nor of the country's ability to absorb Foreign aid in certain sectors effectively. Burma has never come anywhere near to exploiting its enormous resource potential; and, if the country is now (as it seenms to be) at a turning point, assistance at this time would be both timely and far-reaching in its effect. PART II - BANK GROUT OPEPATIONS 17. Burma became a merber of the Bank in 1952 and of IDA in 1962. Between 1956 and 1961, tthe Bank made three loans for transportation projects totalling $33.i miillion. A loan for the Port of Rangoon (Loan 140-BA) helped finance thie reconstruction of cargo Derths and storage facilities, and the - 5 - purchase of cargo-handling and port equipment for harbor operations. Two loans (Loan 139-BA and Loan 274-BA) helped finance the post-war reconstruc- tion and dieselization of the railways. All three projects were satisfactorily completed and the loans were fully disbursed by FY68. As of April 30, 1973, the amount outstanding was US$8.6 million (Annex II). If approved, the proposed credit, together with the proposed credit for the Third Railway Project, would be the first Bank Group operations in Burma since 1961. 18. The proposed Bank Group strategy is aimed at directly easing the most immediate constraints to growth and placing major emphasis on the development of the agriculture, forestry and mining sectors. Projects in these sectors will help to diversify production for export and thereby alleviate the critical shortage of foreign exchange. The rehabilitation of the trans- portation infrastructure also has high priority because inadequate trans- portation a:Lready forms an increasingly constraining bottleneck. The two projects presently proposed, have the added advantage that preparation work was far advanced and few institutional obstacles are anticipated. Both the Burma Railways Corporation and the Inland Water Transport Corporation are long-established institutions. 19. In preparing projects, priority will be given to projects which will be quick-yielding and quick to disburse. In addition to the two projects under consideration, three projects are currently being prepared in irrigation, forestry and mining. The irrigation project is likely to consist of the provision of pumps and the construction of minor flood pro- tection and embankment works in the delta area. This project is being prepared with the assistance of the FAO/IBRD Cooperative Program. The forestry project is likely to consist of the procurement of logging, handling and transportation equipment, the construction of access roads and the ex- pansion of storage facilities. The objective of the project is to speed up the flow of logs from the forest to the export market and local mills. This project is also being prepared with the assistance of the FAO/IBRD Cooperative Program. The mining project which is being prepared by the government is likely to consist of the procurement of equipment for small-scale tin mining and the establishment of collection and preparation facilities for tin and tungsten concentrates. These projects are likely to be appraised in the first half of FY74 and to be ready for presentation to the Executive Directors duiring the second half of FY74. 20. Looking further ahead, missions have recently been in Burma to identify projects suitable for Bank Group financing in the livestock and fislheries sector. Proposals for a possible airport and a telecommunications project have also been submitted by the government for consideration by the Bank Group. In addition, the Bank is expected to act as the Executing Agency for a UNDP-financed study of the feasibility of dredging an access channel to the Port of Rangoon. - 6 - PART III - TPE TRANSPORT SECTOR 21. Rail, air and sea transport are entirely nationalized. Some private sector activity is allowed in inland water transport and trucking and it is estimated that the private sector accounts for 80 percent of total trucking and about 50 percent of inland water transport. The private sector fleets are generally quite old and in poor condition, since the owners are not allowed to purchase replacement equipment and have great difficulty in obtaining spare parts. The stated Government policy is ultimately to bring all forms of mechanized transport in the public sector. The major public sector transport agencies are the Burmla Railways Corporation (BRC), the Inland Water Transport Corporation (IWTC), the Road Transport Corporation (RTC), the Burma Airways Corporation (BAC) and the Burma Ports Corporation (BPC). As far as the public sector agencies are concerned, BRC carries about 43 percent, UT rC about 32 percent and RTC about 25 percent of inland surface transport in terms of tons loaded. In terms of ton miles these figures are 48 percent for BRC, 44 percent for IWTC anid 8 percent for RTC. 22^. The largest cities are located on or close to the three main rivers which traverse the country in a north-south direction, and the estimated 5,000 miles of the inland waterways network are the most important mode of transportation. Before the war, the transport network also con- sisted of 2,100 miles of railways and 8,000 miles of roads, half of whiich were paved. After the. war, it was estimated that as much a.s 60 percent of the infrastructure and equipment were either destroyed or needed repair. By 1960, most of the prewar capacity had been restored but the sector still showed two main weaknesses. Firstly, the infrastructure had been rebuilt to pre-war standards and was not suitable for modern transportation and secondly, the equipment was over-aged. The situation called for major investments both in replacement equipment and in infrastructure improvement and expansion. 79w. Over the past decade, public investment in transportation doubled and accounited for 10 percent of total investment in 1971. In the first half of the decade, ean!)asis w.as given to rehabilitation projects. MIore recently, priority has beeni given to projects that enable the agencies to maintain andl cxpand their capncity. The distribution of investment appears to have been realistic, writh the three major modes of transport (rail, road and inland water *ransport) receiving about 90 percent of the total. T-owever, the level of investment has not Iheen sufficient to maintain capacity. As a result, eqtuipment has been kept in use beyond its normal economic life andI the fleet is considerably over-aped. The Lqclc of forign exchange has curtailed the procurement of necessary sparc parts and maintenance pro,'rarns hlave been cut back puttinll incrcasin,- numbers of vehicles out of use. Visible evidence of thie condition of t-le infrastruicture and equipment lends credibility to the view of the transport agencies th)at thie actual level of investment was half of what was actually needed. 24. By 1971, railway route-miles had reachad about 95 percent of the pre-war level. The railways have also undertaken a modernization program and1 diesel locomotives not. account for 30 percent of the total. The IWTC - 7 - provides regular passenger/cargo and cargo services on the major navigable rivers. No significant developments have taken place in inland water transport although some river marking and dredging is required and many of the vessels are over-aged and in a state of disrepair due to lack of spares and workshop capacity. Over the past decade, very little attention has been given to roads, most of which are narrow, poorly aligned and incapable of accommodating modern traffic. The pre-war capacity of the Port of Rangoon has been restored and no capacity problems are foreseen, since port traffic is well below pre-war levels. However, the instability and shallow draft of the access channels have been of concern to the authorities and the possibility of dredging an access channel through the outer bar is being considered. The Rangoon International Airport was completed in 1955 and since then no major improvements have been made in civil aviation infrastructure. Of the 42 airfields in Burma, 50 percent have gravel runways and can only accommodate DC3's. 25. There is little reliable information on traffic flows and transport demand in terms of ton and passenger miles. Most of the traffic flows along the valleys of the main rivers. Agriculture, including livestock, forestry and fishery, accounts for 70 percent of the tonnage moved, with industry and mining accounting for the remaining 30 percent. According to official estimates, the total demand for transportation has been growing at 4.7 percent per annum, but overall the volume of traffic handled by the public transport agencies has been declining over the past five years. This is mainly due to the decrease in serviceable capacity. So far major disruption nas only been avoided because of the slow growth in production but inadequate transport- ation is a serious obstacle to growth and unless a major rehabilitation program is undertaken soon, even the modest 4 percent annual growth of output envisaged over the next four years will be unachievable. 26. The problem is primarily one of lack of foreign exchange as manage- ment and technical standards are generally good. However, some improvements in operational efficiency and transport planning are called for. The three main agencies (BRC, IWTC and BPC) inherited a sound organizational structure and, faced with the constraints of insufficient capital and a lack of financial and managerial autonomy, the agencies have done extremely well in keeping their equipment running and maintaining the quality of service. Any major investment in transportation will bring into focus the need for improved planning and coordination. So far, this has not been much of a problem because there was so little investment. As an initial step, the proposed credits make provision for technical assistance in improving both operational efficiency and investment policy. TJTC will receive assistance in improving accounting, costing and management information. In the case of the Railways, studies will be carried out on the optimum timing for phasing out steam locomotives, the adequacy of facilities for the maintenance and overhaul of diesel locomotives, and the necessity for track doubling. BRC will also be required to improve the preparation of operational and management statistics and anpoint a working group to recommend operational improvements. - 8 - PART IV - ThE PROJECT 27. In recognition of the urgenicy to undertake the rehabilitation and modernization of the railwav and inland water transport sectors, the Govern- ment submitted proposals for consideration by tihe Bank Group in September 1971. Following, the visit of an economic mission in the spring of 1972 and a project preparationr mission in September 1972, two missions visited Burma in January/February 1973 to appraise the projects. A report entitled "Appraisal of an Inland Water Transport Project" (Clo. 171-BA) is being circulated separately. A summary of the credit and project is attached as Annex III. 28. At the negotiations, held in Washington in April, 1973, the Govern- nient of the Union of Bu-rma was represented by U Clit Moung (Deputy Minister of Planning >and Finance), UJ M'aung Maung Illa (Deputy Executive Director, Union of Burma Bank), U lila Maung (Director General, Planning Department), U Tun Shein (Managing Director, Burma Railways Corp.), U Lila Vin (Managing Director, Inland Hater Transport Corp.), U Kyaw Khine (Deputy General Manager, Burma Railways Corp.) and U Ngwe Nyunt (Deputy General Manager, Inland Water Transport Corp.) . 29. The Inland Water Transport Corporation's (IWTC) Investment Plan for the 1971/72-1974/75 period calls for an outlay of about 11S_25.8 million equivalent with a foreign exchange component of US$17.5 million. The proposed project consists of the last two fiscal years, from 1974 through 1975 (and spillover to 1976), of the investment plan of the IWTC, and costs US$24.0 million equivalent with a foreign exchange component of about USS16.5 riillion equivalent, of wihich US$15.82 million would be covered by the proposed credit. The balance of the foreign exchange requirement would be provided from the Government's own resources for on-going operations. In addition, the proposed credit would finance the procurement of essential navigational aids costing about US$0.48 million for the Waterways Department (WD) of the Ministrv of Transport and Communications (MOTC). The total proposed credit would, tlherefore, amount to US$16.3 million equivalent. 30. The main purpose of the project is to enable IWTC to rehabilitate its vessels and to provide adequate facilities for repairs and maintenance. The project includes: rehabilitation of the fleet through procurement of engines, spare parts and materials; rehabilitation of dockyard facilities through procurement of equipment, machinery and tools; procurement of six new passenger vessels to replace vessels that are obsolete or which were lost in a 1968 cyclone; provision of radio conmunications equipment and accounting machines, and technical assistance in management accounting ancd modern welding techniques for the dockyards. The procurement of navigational aids and equipment for the Waterways Department is designed to improve the river system. (For details see Annex III.) 31. The IWTC, which would be responsible for the execution of the bulk of the project, is a state-owned corporation operating on Burma's major navigational. waterwvays. On the Irrawaddy and Chindwin rivers, and in the - 9 - agriculturally rich areas of the Delta, the Aralcan and Moulmein, where inland water transport is virtually the only surface mode, IWTC provides regular passenger and cargo services. Like BRC, IWTC functions as a depart- ment of the government for all practical purposes within the Ministry of Transport and Communications (ITOTC). The Managing Director exercises his power through various departments. 32. The management of Il!TC is generally satisfactory, although there is some scope for improving operations, particularly t'irough a better man- agement informiation system. The proposed credit provides for technical assistance for this. While rPTC has a skilled maintenance staff, maintenance is hampered by insufficient spare parts, materials, and essential equipment. Technical assistance is also called for to introduce modern welding techniques. With the technical assistance proposed in the project, the Il!TC will be competent to carry out the project. 33. The revenue and expenditure accounts of the IWTC show improving net results from operations during the years 1967-1972. During this period, gross revenue increased by 27 percent, while operating costs have increased by 11 percent. Cash generation from operations amounted to K 100 million during this period, but after providing for increased working capital and debenture interest payment, only K 50 million remained. On the other hand, capital expenditure during the period amounted to K 98 million. Therefore the TWTC's own cash generation has been sufficient to meet one half of its capital expenditure. The financial prospects of IWTC are satisfactory. The forecast revenues are based on an expected growth of passenger and freight traffic at 5 percent per annum. No provision has been made for an increase in rates and fares. During negotiations, agreement was reached that during the period 1973/74 - 1975/76 operating expenses would not exceed 90 percent of operating revenues, and would not exceed 85 percent thereafter. It was also agreed that IWTC would incur further debt only if net revenues were at least 1.5 times debt service requirements. 34. All the items to be financed by the proposed credit would be procured through international competitive bidding except for spare parts for engines already in service (about US$1.6 million). In estimating the cost of the six passenger vessels, it has been assumed that they would be constructed abroad at a cost of US$2.85 million. However, some of these vessels could be assembled at a Government dockyard which has capacity but does not qualify for bidding in its own name. In order to encourage foreign bidders to make use of local dockyard facilities, the Association has agreed to allow a 15 percent preference margin on the portion of the work done locally. If as many as three vessels are assembled locally, the credit proceeds would finance local expenditures of not more than US$0.8 million. The procurement of navigational aids will be effected by the IWTC which will hand them over to the Waterways Department for installation. 35. The rehabilitation of IWTC's fleet would generate savings in the form of reduced maintenance costs and deferment of the procurement of new vessels. Rehabilitation of the dockyards will improve fleet maintenance and availability. The economic rate of return on the project is estimated at 24 percent. - 10 - PART V - LEGAL INSTRUMENTS AND AUTHORITY 36. The draft Development Credit Agreement between the Union of Burma and the Association, the Recommendation of the Committee provided for in Article V, Section 1(d) of the Articles of Agreement and the text of a reso- lution approving the proposed credit are being distributed to the Executive Directors separately. Article VIII of the draft Development Credit Agree- ment sets out the execution and delivery of the Subsidiary Loan Agreement between the Government and the IWTC as a condition of effectiveness. The provisions of the draft agreement conform to the normal pattern for credits for transport projects. 37. I an satisfied that the proposed development credit would comply with the Articles of Agreement of the Association. PART VI - RECOtSE4NDATION 38. I recommend that the Executive Directors approve the proposed development credit. Robert S. McNamnra President Attachment June 11, 1973 ANNEX I Page I of 2 pages COUNTRY DATA - BURMA AREA 2 POPULATION DENSITY 678.528 kmr, 28.9 million (1971/72). 42 per km2 Rate of Growth: 2.3% (from 1965/66 to 1971/72) 148.0 per km of arable land POPULATION CHARACTERISTICS 1970/71 (Selected Urban Areas) HEALTH 1970/71 Crude Birth Rate (per 1,000) 3 .8 Population per physician 9,177 Crude Death Rate (per 1,000) 11.1 Population per hospital bed 1,370 Infant Mortality (per 1,000 live births) 59.8 INCOME DISTRIBUTION DISTRIBUTION OF LAND OWNERSHIP % of national income, lowest quintile 7% owned by top 10% of owners highest quintile . . % owned by smallest 10% of owners ACCESS TO PIPED WATER ACCESS TO ELECTRICITY % of population - urban .% of population - urban - rural . . - rural NUTRITION 1969/70 EDUCATION '1970/71 Calorie intake as % of requirements 124 Adult literacy rate 70% Per capita protein intake 60 Primary school enrollment 88% 1/ GNP PER CAPITA in 197 2 Us $ 88 GROSS NATIONAL PRODUCT IN 1971/72 ANNUAL RATE OF GROWTH (7., constant prices) US $ Mln. % 1962-66 1966-71 1971-72 GNP at Market Prices 2011 100.0 2.6 4.1 2.8 Gross Fixed Investment 241 12.0 5.2 3.9 5.8 Gross National Saving 172 8.6 *- -4.1 13.3 Current Account Balance -45 -2.2 Exports of Goods, NFS 136 6.7 -9:0 -10.6 16.3 Imports of Goods, NFS 191 9.5 -8.0 -0.7 2.6 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1970/71 Value Added Labor Force V. A. Per Worker US$ Mln. % Mln. 7% US $ % Agriculture 829.8 37.7 7.6 69.7 109.2 54.0 Industry 275.2 12.5 0.8 7.3 344.0 170.0 Services 1094.4 49.8 2.5 23.0 437.8 217.0 Unallocated ._.._ Total/Average 2199.4 100.0 10.9 100.0 201.8 100.0 GOVERNMENT FINANCE 1971/72 G -General Goverunment Union Goverrnment Kyats Mln. % of % of GDP average Kyats Mln. % of d of average GDP GDP last three years G last three vears Current Receipts 8372 77.5 82.4 1959 18.1 18.7 Current Expenditure 8336 77.1 82.1 2429 22.5 23.2 Current Surplus 36 0.3 0.4 -170 3 Capital Expenditures 852 7.9 8.4 228 2.1 2.2 External Assistance (net) 222 2.0 2.2 1/ The per capita GNP estimate is at 1972 market prices, calculated by the same conversion technique as the 1972 World Atlas. All other conversions to dollars in this table are at the average exchange rate prevailing during-the period covered. not available not applicable ANNEX I Page 2 of 2 pages COUNTRY DATA - BURIiA MONfY, CREDIT and PRICES 1965 I1569 1970 1971 1972 (Million Kyatsoutstanding Money and Quasi Money 1896 1910 1881 1822 2119 Bank Credit to Public Sector 2012 2397 2616 3126 3759 Bank Credit to Private Sector 114 517 537 557 668 (Percentages or Index Numbers) Money and Quasi Money as 7. of GDP 24.5 19.6 18.5 17.4 19.6 General Price Index (1963 = 100) . Annual percentage changes in: General Price Index . Bank credit to Public Sector .- 16 9 20 20 Bank credit to Private Sector .. 422 20 BALANCE OF PAYMENTS 2969/70-1971/72 MERCHANDISE EXPORTS (AVERAGE 1968/6971971/72) 196 9/70 1970/71 1971/72 US $ Mln % (Millions US $) Rice & Rice Products 55.1 46.3 Pulses & Beans 8.5 7.2 Exports of Goods, NFS 13C.3 131.1 135.7 Animal Feedstuff 8.1 6.9 Imports of Goods, NFS 212.4 209.0 190.8 Teak 28.1 23.7 Resource Gap (deficit = -) -82.1 -77.9 -55. Base metal 5.8 4.9 Interest Payments (net) +0.4 -2.1 -8.8 All other commodities ia, 11.0 Workers' Remittances . . . Total 118.6 lOQ-O Other Factor Payments (net) Net Transfers 22.1 23.5 18.5 EXTERNAL DEBT. DECEMBER 31. 192 Balance on Current Account -59.6 -56.5 -4 US $ Mln Direct Foreign Investment Net MLT Borrowing Public Debt, incl. guaranteed 163.5 Disbursements 22.9 38.7 45.8 Non-Guaranteed Private Debt Amortization -19.7 -15-3 -17.9 Total outstanding & Disbursed 1=3 Subtotal 3.2 23.4 27.9 1/ Capital Grants . . . DEBT SERVICE RATIO for 1971/72 - Other Capital (net) 22.7 5.0 29.2 7 Other items n.e.i -11.3 -4.5 -3.8 Increase in Reserves (+) -45.o -32.6 +7.9 Public Debt. incl. guaranteed 18.0 Non-Guaranteed Private Debt Gross Reserves (end year) 101.1 63.9 61.9 Total outstanding & Disbursed Net Reserves (end year) RATE OF EXCHANGE /2 IBRD/IDA LENDING, March 1973 (Million US $): Through December 1971 IBRD IDA US $ 1.00 = 4.76 V.ats 1.00 = US $ C.21 Outstanding & Disbursed 10.2 Undisbursed Through February 1973 Outstanding incl. Undisbursed 10.2 US $ 1.00 = 5.35 '-yats 1.00 = US $ 0.19 1/ Ratio of Debt Service to Exports of Goods and Non-Factor Services. S/ 2irnce February 1973, US*l.OO = 4.81 Kyats 1 Vyat = US$0.208 not available not applicable June 11, 1973 South Asia Department ANNEX II STATUS OF BAITK GROUP OPERATIONS I1:l BIJRMA Statement of Bank Loans as of April 30, 1973 US$ Million Amount (less cancellations) Loai, No. Year Borrower Purpose Bank Undisbursed 139 1956 Burma Railway Board Railways 5.3 140 1956 Union of Burma Port 14.0 274 1961 Union of Burma Railways 13.8 Total 33.1 of which has been repaid 24.5 Total now outstanding 8.6 Amounts sold 2.7 of which has been repaid 2.7 - Total now held by Bank 8.6 Total Undisbursed ANNEX III Page 1 BUPR A - INLAND WATER TRANISPORT PROJECT CREDIT AND PROJECT SUMTARY Borrower: The Union of Burma Beneficiary: The Inland Water Transport Corporation (IWTC) and the Waterways Department (WD) of the MTinistry of Transport and Communications (2M0TC) Amount: US$16.3 million equivalent Terms: Standard Relending Terms: The Government would relend US$15.82 million out of the proposed credit to the IWTC at 6 percent per annum for 15 years including 4 years grace period. The remaining US$0.48 million would be utilized by the WD. Project Description: The project consists of the last two years, 1973/74 and 1974/75 (and spillover to 1975/76), of the four-year Investment Plan of the IWTC. The project is designed to rehabilitate the fleet and to provide adequate facilities for vessel repair and maintenance. It includes the following items: I. The purchase of: (a) about 120 engines for the rehabilitation of up to 90 vessels of various types with a view to standardizing equipment; (b) about 40 outboard engines for conversion of about 20 dumb barges of 600-ton capacity each into self-propelled barges for cargo transportation; (c) spare parts required for main and auxiliary engines of the IWTC fleet; (d) vessel repair materials, including steel plates and sections, electrodes, copper piping, foundry material, marine paints, etc., all urgently required to remedy a backlog of repairs; ANNFX III Page 2 (e) various types of equipment, machinery and tools required for rehabilitation and modernization of IWTC dockyards and other vessel repair facilities, (f) six passenger vessels to replace obsolete vessels and those lost in the Arakan area in the 1968 cyclone; (g) new accounting machines for the I1TC head office: (h) about 70 sets of slhip-to-shore radios with accessories; (i) navigational aids for the river systce for the Waterways Department in IMOTC. II. The construction of buildings for office use and training purposes. III. The improvement of management operations and the implementation of a management information system, and the introduction of modern ship repair and welding techniques, with appropriate technical assistance to accomplish these improvements. Estimated Cost: (A) Inland Water Transport Corporation US$ Million IDA Credit Item Foreign Local Total Amount 1) Re-engining program 5.39 2.70 8.59 5.80 2) Spare parts and repair materials 4.00 0.99 4.99 4.00 3) Dockyard equipment 1.11 0.29 1.40 1.11 4) 6 passenger vessels 2.85 0.80 3.65 2.85 5) Accounting machines 0.28 0.07 0.35 0.28 6) Radio communication equipment 0.23 0.06 0.29 0.23 7) Technical assistance 0.09 0.04 0.13 0.09 .8) Otlhers 0.70 2.03 2.73 9) Price contingencies 1.37 0.53 1.90 1.37 Total 16.52 7.51 24.03 15.82 (T;) 1Waterways Department US$ Million IDA Credit Item Foreign Local Total Amount 1) Navigational Aids 0.41 0.32 0.73 0.41 2) Price Contingencies 0.07 0.04 0.11 0.07 Total 0.48 0.36 0.84 0.48 ANNEX III Page 3 Financing Plan: US$ Million Local Foreign Total IDA - 16.30 16.30 Government - 0.37 0.37 IWTC 7.87 0.33 8.20 Total 7.87 17.00 24.87 Estimated Disbursements: IDA Fiscal Year US$ Million FY1973/74 3.900 FY1974/75 6.750 FY1975/76 5.490 FY1976/77 0.160 Procurement Arrangements: All items would be procured on the basis of international competitive bidding, except for certain spare parts for various engines estimated to cost about US$1.6 million. With regard to the evaluation of bids for vessel procurement, foreign bidders will be allowed a 15 percent preference margin on that portion of the work proposed to be performed in Burma to encourage use of a Government- owned dockyard. The credit could therefore finance local expenditures of up to US$0.8 million. Consultants: Expert services for improvement of processing of accounting and statistical information, and for modern welding techniques for the dockyards. Economic Rate of Return: 24 percent Appraisal Report: No. 171-BA, Dated May 31, 1973 INDIA .A- t-2~~~.1 H I I N D I A \\, KJ! 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