Document of

The World Bank

FOR OFFICIAL USE ONLY FILE COPY

Repor No. P-2574-BO

REPORT AND RECOMMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED CREDIT

TO

THE REPUBLIC OF BOLIVIA

FOR THE

OMASUYOS LOS ANDES

RURAL DEVELOPMENT PROJECT

June 4, 1979

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CURRENCY EQUIVALENTS

US$1.00 = $b20.0O (Bolivian Pesos)

$b 1.00 = US$0.05

WEIGHTS AND MEASURES

Metric System

GLOSSARY OF ABBREVIATIONS

BAB - Agricultural Bank of BoliviaCDF - Forestry Development CenterCONEPLAN - Ministry of Planning and CoordinationCORDEPAZ - Development Corporation of La PazDESEC - Center for Social and Economic DevelopmentFOMO - National Manpower ServicesIBTA - Bolivia Institute for Agricultural TechnologyIFAD - International Fund for Agricultural DevelopmentINBOPIA - National Institute for Handicrafts and Small IndustriesINC - National Colonization InstituteINFOL - National Institute for the Development of WoolMACA - Ministry of Peasant Affairs and AgriculturePAN - Northern Altiplano ProjectPIL - Industrialized Mfilk PlantSNC - National Road ServiceSNDC - National Community Development Service

FISCAL YEAR

January 1 - December 31

FOR OFFICIAL USE ONLY

BOLIVIA

Omasuyos-Los Andes Rural Development Project

Credit and Project Summary

Borrower: Government of Bolivia

Beneficiaries: A semi-autonomous agency (Project Unit) under theMinisterlo de Asuntos Campesinos y Agropecuarios (MACA),the Banco Agricola de Bolivia (BAB), the ServicioNacional de Caminos (SNC), and the Centro de DesarrolloForestal (CDF).

Amount: US$3.0 million equivalent

Terms: Standard

Relending Terms: Government would channel credits to farmers groupsthrough the Central Bank and BAB, which would receivean annual service charge of 3%. On-farm investmentcredits would have a 12% interest rate and a maturityof up to six years, including up to two years ofgrace; production credits, a 12% interest rate and amaturity of up to 15 months with no grace period.Terms for forestry investment credits would bedetermined on a case-by-case basis.

Project Description: The project would continue previous Bank efforts tofoster rural development in the Altiplano. It wouldfocus on increases in productivity and productionof small farmers thus improving their incomesand living standards. The project would consist of adirectly productive component including credit foron-farm investment, production inputs, forestry, andother productive activities; an infrastructure component,including upgrading feeder roads, and provision of watersupply and waste disposal facilities; and an administ-rative and technical support component providingtechnical assistance, extension services and productioninputs to participating farmers. The project design isconsidered to be of low risk because it is based onexperiences gained under the Bank's two ongoing ruraldevelopment projects in Bolivia.

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

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Estimated Cost;Investment Category Local Foreign Total

----- US$ million -----

1. Productive Investment 3.10 1.17 4.272. Infrastructure 0.45 0.24 0.693. Administrative &

Technical Support 2.14 0.55 2.694. Total Base Line Costs 5.69 1.96 7.655. Contingencies 1.18 0.50 1.68

Total Project Cost 6.87 2.46 9.33

Financing Plan:Government Beneficiaries IFAD IDA Total

Amount (US$ M) 2.2 0.1 4.0 3.0 9.3% of total 24 1 43 32 100

EstimatedDisbursement: Bank FY 1980 1981 1982 1983 1984

Amount 0.15 0.85 0.90 0.70 0.40Cumulative 0.15 1.00 1.90 2.60 3.00

Economic Rateof Return: 36%

Appraisal Report: Report No. 2475-BO, dated May 24, 1979.

REPORT AND RECOMMENDATION OF THE PRESIDENTOF THE INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDITTO THE REPUBLIC OF BOLIVIA FOR

THE OMASUYOS-LOS ANDES RURAL DEVELOPMENT PROJECT

1. I submit the following report and recommendation on a proposedcredit to the Republic of Bolivia for the equivalent of US$3.0 million onstandard IDA terms to help finance the Omasuyos-Los Andes Rural DevelopmentProject in Bolivia's Altiplano. The project would be co-financed by theInternational Fund for Agricultural Development (IFAD) with an amount ofUS$4.0 million equivalent.

PART I - THE ECONOMY

Introduction

2. A report entitled "Economic Memorandum on Bolivia" (No. 2195-BO)dated November 3, 1978, was distributed to the Executive Directors. Economicmissions have visited Bolivia in October 1978 and March 1979 to review currentdevelopments and discuss policy measures with the Government. Country datasheets are attached as Annex I.

Background

3. Despite the increasing importance of natural gas exports, as wellas significant mineral deposits, Bolivia remains one of the poorest countriesin South America. The majority of its population is engaged in traditionalagriculture; only a small part of the labor force is employed in the modernsector. The infrastructure of this mountainous country is primitive and theroad and rail networks reach only a fraction of the country. Most of the pop-ulation live in the inhospitable 3,000 to 4,000 m high plateau, the Altiplano,where physical conditions are very harsh.

4. The 1952 revolution sought to put an end to the dual structure whichhad characterized Bolivia's economy since colonial times, and to deprive thelandowning and mining oligarchy of its economic base. This objective waspartially achieved. Progress was made in eradicating feudal relations, dis-tributing the land and eliminating obstacles to social mobility, notablythrough an impressive effort in primary education. The agrarian reform andthe nationalization of large mines, however, were followed by falling produc-tion. GDP declined in the 1950s and did not recover to its pre-1952 leveluntil 1961. During the subsequent decade, output increased steadily at an

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average annual rate of around 5%, providing for per capita income increasesaveraging 2.5% p.a. As a result, GNP per capita, which had fallen by 24% inthe 1952-60 period, recovered to its 1952 level by 1970 and was more equallydistributed. However, the momentum of economic growth was again lost in1969/71, when political instability led to declining private investmentand deteriorating public finances. The deterioration of public financesreflected a structural problem in the economy. Bolivia's public sector isproportionately one of the largest in South America and a source of liveli-hood for a sizeable segment of the population. With scarce employment oppor-tunities in the private sector, pressures to expand public employment proveddifficult to resist. Large expenditures on wages and salaries, combined witha weak tax system, limited the resources available for public investment.Moreover, the inability of the public sector to generate adequate savingslimited its capacity to utilize available external capital assistanceeffectively.

5. From mid 1971 to mid 1978, political stability and the Government'sencouragement of private sector investment raised hopes for a more rapid paceof economic development. In addition, during the early 1970s Bolivia's ex-ports of petroleum increased considerably, and it was generally expected thatthis upward trend would continue in the future. Public investment and externallending decisions were largely based on this expectation which seemed reason-able at the time. The Government launched an ambitious public investmentprogram financed largely through external borrowing, expecting to have nodifficulty servicing the loans out of future petroleum revenues. Petroleumexports began to decline, however, in 1975, because of insufficient outputin the face of rapidly rising internal demand. Through 1976 this declinewas largely offset by increased exports of natural gas to Argentina, butin 1977 petroleum exports dropped to a point where current earnings fromhydrocarbon exports declined. At the end of 1978 petroleum exports came toa virtual halt. As a result, Bolivia has become even more dependent, onceagain, on exports of minerals, mainly of tin.

6. Since most of the ongoing public investment projects were initiatedwhen petroleum prospects seemed favorable, they cannot now be stopped withouteconomic loss. The Government has therefore tried to make up the exportshortfall through additional external borrowing. As a consequence, Bolivia'spublic debt outstanding and disbursed increased rapidly; the end-1978 estimateis US$1.8 billion. As a result of increased borrowing from commercial banksand suppliers, the structure of the external debt has worsened; the grantelement of new loans fell from 40% in 1974 to 16% in 1978.

Recent Economic Performance and Prospects

7. The Bolivian economy is going through a very difficult phase. Theoverall public deficit has increased from about 1% of GDP in 1974 to 11-12%in 1978. The current account deficit of the balance of payments has widened

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from 5.3% of GDP inr 1974 to 8.4% in 1978. 1/ During tite last two years,the rate of GDP growth has been declining and the rate of inflation accelera-ting. According to the La Paz Consumer Price index (the only official priceindex in Bolivia), prices increased by 10% in 1978; estimates made by theCentral Bank indicate an inflation rate of about 19%. Indications are thatthe rate of inflation has been increasing further in 1979. The new Governmentis expected to take measures in order to bring the rate of inflation down toan average of about 15% over the next years, the same as the average during1970-1977.

8. The service on external debt now absorbs about 30% of exports ofgoods and services. This ratio cannot be expected to improve during thenext few years and will probably fluctuate around 35%, an undesirable figurefor a country so dependent on a single export, tin, which is characterizedby wide fluctuations in demand and price. The country's balance of paymentsprospects are not encouraging for the immediate future. The volume of mineralexports has been stagnating and, even with production-st`mulating changes inmining taxes, no sharp increase in volume is to be expec ed during 1979 and1980. However, a more favorable environment for private mining enterprises,modernization investment in the Bolivian Mining Corporation, and greaterexploration efforts could bring about substantial increases in output andexports in the medium term. Non-traditional exports account for a smallshare of all exports and while encouragement is also required in this area,favorable effects will only in the longer term significantly affect exports.

9. Bolivia's most promising export potential lies in natural gas.Exports to Argentina are expected to increase as additional pumps begin tooperate on the pipeline during 1979. The construction of a natural gas pipe-line to Brazil could improve Bolivia's balance of payments position substan-tially. A letter of intent has been signed by the Bolivian and BrazilianGovernments, laying down the principles regarding the pipeline- While furtherstudies are required to prove the existence of sufficient gas reserves, oncethis is done the way would be open for an increase in total exports in theorder of 25-30% in the mid-1980s. The petroleum situation is less clear;exports cannot be expected to resume on a substantial scale before additionalreserves are confirmed.

10. In sum, while Bolivia's medium-term export prospects are moderatelyfavorable if efforts are made to promote them, it is difficult to see muchscope for improvement during the next two to three years. The vagaries ofinternational mineral prices will continue to have a decisive effect on thecountry's export earnings during that time.

11. The main internal cause of financial strain is the weak position ofthe principal state enterprises. Foremost among them is the State PetroleumCorporation, whose finances have been seriously affected by the Governmentkeeping domestic fuel prices at a fraction of the world market level. Sincethe Corporation is also one of the largest taxpayers in Bolivia its financialweakness is reflected in Central Government revenue shortfalls. Other statecorporations such as COMIBOL, which owns and operates the country's majormines, and ENAF, the National Smelting Corporation, which has embarked on alarge-scale investment effort, have large overall deficits which owing toconsiderable investment expenditures, low productivity and/or inappropriate

1/ These figures are but orders of magnitude because the statistics onwhich they are based suffer from considerable error, but they areindicative of a grave deterioration.

wage policies, rather than to depressed prices. The financial situation ofthe railroads has deteriorated because of severe damage resulting fromrecent floods. As noted above, because many of these investments are alreadywell advanced, it is unrealistic to expect a drastic decline in expenditureover less than two to three years; nor would such a decline be rational whenmany projects are expected to show satisfactory rates of return once they arecompleted. As on-going investment projects are gradually completed it shouldbecome possible to reduce the amounts spent and to bring public investment inline with the country's public savings and export capacity.

12. A new Government is scheduled to take office in August 1979. Thepresent administration considers itself a caretaker; this is the main reasonwhy some of the remedial actions that the present financial situation requireshave not been taken yet. The administration is fully aware of the seriousnessof the situation and has outlined elements of a stabilization program aimedat reducing the public deficit, narrowing the balance of payments deficit oncurrent account, and restricting external borrowing. The major measures con-templated are a much needed increase in the domestic price of petroleum pro-ducts and a series of tax and tariff adjustments. For the reasons outlinedabove and because of the temporary character of the present Government, sig-nificant improvement cannot be expected before late summer at the earliest.

13. Bolivia's creditworthiness for lending on conventional terms islimited at present. Emphasis should be given to projects in the hydrocarbonsector with a clearly identifiable effect on production for export. Becauseof the need to improve Bolivia's debt management--and the reluctance of com-mercial lenders to increase their exposure in the country--Bolivia will haveto limit its foreign borrowing to priority projects and make maximum useof soft-term lending from international institutions and bilaterals to getthrough the difficult next two or three years. We are following economicdevelopments very closely and are engaged in a detailed and frank dialoguewith the Bolivian authorities.

PART II - BANK GROUP OPERATIONS IN BOLIVIA

14. Although Bolivia is an original member of the Bank, it did notobtain any Bank Group financing until 1964. Because of Bolivia's restrictedcapacity to service external debt, Bank Group financing was, except for aUS$23.25 million Gas Pipeline loan, exclusively on IDA terms until Boliviastarted to export small quantities of natural gas and petroleum. In view ofpromising prospects for rapid expansion, Bolivia was graduated from IDA in1975. In 1978, however, it became apparent that the expectations of largepetroleum exports, and with it dynamic economic development, would not mate-rialize. Starting with the Ulla Ulla rural development project, financed inequal shares on Bank and IDA terms, Bolivia was made a blend country.Bolivia's economic situation has deteriorated significantly since then;petroleum production has declined and the country is expected to become anet importer in the near future. Development is still seriously constrained

by the dual structure of the economy; a large part of the population continuesto live in extreme poverty. Limited creditworthiness and low per capitaincome qualify Bolivia for IDA eligibility. To date, the Bank and IDA haveapproved 23 operations (10 credits, 12 loans and one blend operation) forBolivia amounting to US$313.8 million, of which 8 have been fully disbursed.

15. Bank Group lending to Bolivia has assisted in the development ofinfrastructure and social sectors. In the agricultural sector (7 operationsamounting to US$45.2 million), the Bank Group has helped the Governmentdeveloping a livestock industry, increasing agricultural production, improv-ing living conditions on the Altiplano, and promoting the development of thealpaca/llama industry; efforts to strengthen the Agricultural Bank of Boliviaas a development institution have met with limited success. In the powersector (5 operations amounting to US$53.4 million), the Bank Group has beeninstrumental in modernizing the sector, expanding electricity supply andsetting up a regulatory agency and a public power company, which has beenoperated in an efficient and financially sound manner. In the transportationsector, Bank Group assistance to the railways (3 operations amounting toUS$75.0 million of which US$3.3 million was cancelled) has helped to improvethe railways' quality of management, efficiency of operations and financialcondition; a US$23.3 million loan was made for the construction of a gas pipe-line from the Santa Cruz area to the border with Argentina; a US$25.0 millionloan for an aviation development project is assisting Bolivia's efforts todevelop hitherto isolated areas by providing efficient freight and passengertransportation; a US$25.0 million loan for a highway maintenance project ishelping Bolivia protect its investments in highways. In the mining sector(3 operations amounting to US$28.2 million), Bank Group participation hasaimed at increased production and improved sectoral coordination. A US$11.5million loan for a water supply and sewerage project, of which US$6.3 millionwas cancelled as two cities withdrew from the project, is improving servicesin 70 rural communities. A US$15 million loan for an education and vocationaltraining project is assisting Bolivia to develop its human resources in a moreeffective way. Finally, a US$17 million loan is helping Bolivia to improvethe living conditions of the urban poor in the city of La Paz.

16. Because of the narrow scope for private investment, IFC becameactive in Bolivia only in 1973 through an investment of US$400,000 in a firmproducing cables and plastic products. Three IFC investments since then havecontributed to the establishment of a local market for long-term securities:an equity participation of up to US$550,000 in Banco Industrial S.A. (BISA),in conjunction with a Bank loan of US$10.0 million for the same institution,to assist in financing medium-sized industrial and mining enterprises;US$337,500 in Banco Hipotecario Nacional to assist in the development ofmortgage banking; and a US$2.3 million investment in a plastics firm. Annex IIcontains a summary statement of the status of Bank loans and IDA credits inBolivia as of January 31, 1979, and IFC investments as of February 28, 1979,and notes on the execution of ongoing projects.

17. Bank Group lending to Bolivia during the recent past has been sup-portive of a broadly based Government effort to expand and upgrade Bolivia'seconomic and social infrastructure. Until recently, the Government had

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established an excellent record in providing the required counterpart financing;in general projects have been adequately carried out. However, the recentdeterioration in the public finances and the balance of payments have made itnecessary to reexamine Bank Group lending objectives. Special efforts will bemade in supporting projects that would help Bolivia to increase exports. Inthe longer run, Bank Group volume and composition of lending will depend on themeasures taken by the Government to raise additional revenues and to stabilizethe economy and improve the balance of payments.

18. For the period 1974-78, total official development assistance toBolivia has been as follows: Bank, US$216.4 million; IDA, US$23.7; Inter-American Development Bank, US$188.8 million, US Agency for InternationalDevelopment US$157.5 million, other, US$203.3 million. Net of undisbursedbalances, Bolivia's debt to the Bank and IDA in 1978 represented 7.2% of itspublic debt. Bank and IDA's share of the Bolivian debt service was 3.0% in1978.

PART III: THE AGRICULTURAL SECTOR

Background

19. Sector Characteristics. Agriculture in Bolivia contributes 25% toGDP and provides employment for about 60% of the labor force. Until 1973,agricultural growth was low, averaging 1.9% annually; since then, however,annual growth rates have reached to 4-6%. In spite of this improvement,domestic demand exceeds domestic production, resulting in a negative agricul-tural trade balance. Currently, agricultural products (mainly edible oils,lard, dairy products and wheat flour) account for about 25% of Bolivia'simports. Agricultural exports (sugar, coffee, fruits and lumber) were oflittle importance until 1970, accounting for less than 5% of total exports.Since then, with the rapid expansion of commercial farms in Santa Cruz,agriculture's share has gradually risen to about 15%. In addition to theseproducts, Bolivia has good potential for the production of tobacco, rubber,cocoa, oilseeds, and wool products of sheep, llama and alpaca.

20. The difference in soils and micro-climates of the three main pro-duction zones, the highlands (Altiplano), intermediate valleys, and lowlands,has resulted in a broad range of productive activities. In the Altiplano,farmers grow mainly potatoes, quinoa, barley and tubers and raise sheep,llamas, and alpacas and some dairy cattle. In the Valleys, a number ofsub-tropical crops are grown and there are some livestock activities. Inthe lowlands, the predominant crops are sugarcane and cotton, and there aremany medium and largescale livestock operations. The economic and socialcharacteristics of the sector are highly diverse. Agricultural production inthe Altiplano, largely based on subsistence, has remained stagnant at verylow levels. The small scale of farm operations, adverse climatic conditionsand low soil fertility impose stringent constraints on the application ofimproved technology. The subsistence economy contrasts sharply with thedynamic commercial agriculture in the lowlands, which has received the bulkof public and private investment.

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21. Policy Issues. Thus far, the Government of Bolivia has not designeda coherent agricultural development strategy. While Government soughtto expand the economy through hydrocarbon and mineral development, the agri-cultural sector received only little support after the large scale landreform of the early 'fifties, and there was no attempt to develop its produc-tive potential and export possibilities. Moreover, present policies havebeen a major obstacle to agricultural development. The most importantproblem is the Government's price policy. To support short-term interests ofthe urban consumer, the Government imposed price controls for most agriculturalproducts in the late 1950s. As a result, agricultural growth slowed down andled to increasing imports. Adoption of new technology and application ofmodern inputs were impaired, and productivity stagnated. The price differen-tial between Bolivia and neighboring countries encouraged considerablesmuggling, reducing the supply for the domestic market. While the Governmentrecently relaxed price controls on some commodities, further adjustments willbe necessary to provide sufficient incentives to the sector. Similarly, theGovernment's exchange rate and tariff policy constrain agricultural develop-ment. Although the general price level in Bolivia has increased faster thanthat of its major trading partners, the exchange rate has not been adjustedsince 1972. Export taxes, one of the most important revenue sources for theGovernment, are high and discourage exports; at the same time, tariffsincrease the prices of most imported agricultural inputs. In addition, theGovernment is selling large quantities of wheat and dairy products, which itreceives as grant from international donors, at prices below the world marketlevel thus discouraging domestic production.

22. In the last few years the authorities have recognized the negativeimplication of these policies and have sought to place more emphasis on theagricultural sector. The national development plan for 1976 to 1980 empha-sizes food production, eradicating rural poverty, and promoting agriculturalexports. However, until now the Government has failed to transform itsoverall planning objectives into a detailed sector strategy, and it has donelittle to prepare and implement policies that are conducive to agriculturaldevelopment. We intend to discuss the importance of policy changes with thenew Government scheduled to take office in August 1979 and we plan, in thiscontext, to carry out a detailed agricultural sector study.

Structural Constraints and Development Strategy

23. Promoting Resettlement. A major development constraint in Bolivia'sagricultural sector is the imbalance between its land resources and thedistribution of its rural population. While most of the country's peasantslive in the Altiplano and valleys, vast areas in the Oriente with fertilesoils and a favorable climate are not cultivated at all. The Altiplano andvalleys, which account for about 84% of the rural population, contribute only52% to agricultural production. The lowlands, on the other hand, whilecomprising only some 16% of Bolivia's rural population, contribute 48%.In the future, migration from Altiplano and valleys to the lowlands willbe increasingly important in expanding the agricultural frontier.

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24. So far, the experience of the Instituto Nacional de Colonizacion(INC) with organized settlements has not always been encouraging; the spon-taneous colonization process has proved more flexible in responding toeconomic opportunities than Government directed colonization projects.Spontaneous settlers, on the other hand, while more successful in raisingproduction, usually cause serious environmental damage. In view of theunfavorable experience with organized settlement and the necessity topromote migration on a large scale, the Government plans to concentrate itsefforts on spontaneous migration by providing low cost assistance for theconsolidation of spontaneous settlements and application of appropriatefarming methods.

25. Improving Resource Utilization. On most farms throughout Bolivia,productivity and land use intensities are low and could be increased sub-stantially. In Valleys and lowlands, large areas have fertile soils and afavorable climate but lack water during the dry season. Irrigation wouldallow double cropping and yield increases. The Government is aware thatdeveloping this potential requires sizeable public investments. With theassistance of IDB, it is preparing a pilot project for irrigation developmentin Bolivia's Chaco, the area south of Santa Cruz; and it intends to implementirrigation projects in the valleys of Cochabamba and Tarija.

26. A major resource of Bolivia's agricultural sector are the naturalpastures in the lowlands. With these resources, Bolivia has the potentialfor becoming an international supplier of beef. However, the country hashardly been able to meet its limited internal demand. While the Governmenthas, with the assistance of the Bank, implemented several Livestock projects,new long term loans are required for modernizing investments and intensifyingproduction.

27. Fostering Rural Development. The prevailing subsistence agricul-ture is a major obstacle to agricultural development in the Altiplano and animpediment to social progress. Production is based on traditional methods,fertilizer and graded seeds are practically not applied and modern farmmachinery non-existent. Poor living standards and social services reflect thelow level of economic development. With assistance from the Bank, the Govern-ment is attempting to alleviate the most urgent problems in the area. Assist-ance to farmers in the Altiplano concentrates on increasing productivityand raising incomes, based on limited investment costs per family and benefitsspread to the largest extent possible. In addition, promoting migration fromthe highlands to the lowlands will be an important component in these effortsto reduce the population pressure and prevent further fragmentation of smallfarms.

28. Upgrading Support Services. A critical constraint to themodernization of the agricultural sector has been the lack of an efficientagricultural credit system. This has affected predominantly small farmers,but also the commercial agriculture in the Oriente. The Banco Agricola deBolivia (BAB), the single most important source of agricultural credit, was

designed as an institution to benefit small farmers, but it has gradually

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concentrated its efforts on financing medium- to large-size operations.Currently, BAB faces serious financial and administrative problems.

Since BAB had to assume bad portfolios of commercial banks, a largepercentage of its outstanding loans is in arrears. In addition, BABhas excessively high operating costs. As a first step of a rehabilitation

program the Government recently paid off BAB's overdue debts and changed itsmanagement. The Bank has offered technical advice and is considering alivestock credit project in conjunction with a rehabilitation program.

29. Agricultural research and the extension service do not meet the

requirements of the sector. Research has not been concentrated on specificareas nor directed toward urgent problems. Also, research stations receiveonly limited financial support, and hence, are forced to operate mainly as -

commercial farms in order to generate income to sustain operations. The

extension service suffers mainly from financial problems. Budget cuts andlimited operational funds as well as salary reductions caused restrictions in

the supplied services and forced a large number of trained Bolivian personnelto leave the extension programs. To provide an institutional basis forimproving efficiency and coordinating research and extension the Governmentcreated the Bolivian Institute for Agricultural Technology (IBTA). In

addition, IDB is currently processing a proposed US$8 million loan to

expand and upgrade IBTA's operations.

30. Marketing. Marketing problems comprise mainly two areas--productquality and transportation. Lacking product quality has hampered exportsand promotes imports of products for high income consumers. For example,

processed milk is imported although Bolivia has the potential to produce ititself, and meat, a potential export product, cannot be sold abroad owing to,inter alia, bad quality and contamination. Insufficient transportation andstorage infrastructure in Bolivia makes product exchange difficult and expen-sive, and prevents regional specialization. The Government's export strategywill have to give more attention to identifying potential markets and productquality requirements. It is expected that the National Transportation plan,which is currently being prepared, will identify priority areas for theimprovement of the transportation network to facilitate access to productionareas and markets.

PART IV - THE PROJECT

31. The Government of Bolivia has requested an IDA credit to helpfinance a rural development project in the Altiplano provinces of Omasuyosand Los Andes. The project was appraised by a Bank mission which visited

Bolivia in October/November 1978. A report, entitled "Staff Appraisal ReportOmasuyos-Los Andes Rural Development Project", dated May 24, 1979, is being

circulated separately to the Executive Directors. A supplementary data sheetis presented in Annex 3. Negotiations took place in Washington from May 14to May 17, 1979. The Government of Bolivia was represented by Messrs. AlfonsoCriales, Cesar Carrasco, and Felix Fernandez; IFAD was represented byMessrs. Ferdinand Stoces, and Guy van Melckebeke.

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Background

32. The Bank has been supporting rural development in Bolivia'sAltiplano for some time. The first operation, a Bank loan of US$9.5 millionfor the Ingavi Rural Development Project in 1976, is benefiting about 4,000small farm families through on-farm investments, incremental productioncredits, and technical assistance in an area south of Lake Titicaca. Inaddition, most of the 10,000 families in the project area benefit fromimproved roads, health facilities, and drinking water and waste disposalfacilities. The second operation, a Bank and IDA credit of together US$18million for the Ulla Ulla Rural Development project in 1978, focuses ondeveloping the llama, alpaca, and sheep agro-business complex as well ashandicraft and marketing developments in an area north of Lake Titicaca.

33. Since the Ingavi Project was the first attempt in Bolivia tocoordinate rural development by cutting across institutional lines andprovide services on an integrated basics, initial progress was slow. Theproject suffered mostly on the production side because of the unprovenviability of its irrigation component and the lack of timely availability ofnecessary production inputs. However, more recently project implementationhas improved significantly after arrangements were made for strengthening ofthe project administration and for greater flexibility in project emphasisand approach. The Ulla Ulla project, which took into account the experiencesgained under Ingavi, is progressing satisfactorily. Both projects seem tohave a positive impact on the attitude of Altiplano farmers; local communitieshave become more sensitive to progress and indicate strong desires to parti-cipate in the development process.

Project Objectives

34. The proposed project would continue previous efforts by providingsimilar services to an area adjacent to Ingavi and Ulla Ulla. The projectaims at increasing incomes and living standards in two provinces of theAltiplano by increasing productivity and production, and providing basicinfrastructure and technical assistance. In addition, the project is ex-pected to facilitate the integration of subsistence farmers into the marketeconomy.

Project Description

35. Productive Component: Credit would be provided for on-farminvestment and working capital requirements in agriculture, livestock andforestry production. About 2,500 farmers, organized in farmer groups, areexpected to use funds for investments in livestock (cattle, sheep, andalpaca), corrals, sheds, silos, wells, pumps, equipment and farm tools.Tractors would be purchased by those farmer groups that could demonstratethe need as well as the capability to operate and maintain a tractor effi-ciently. Incremental working capital would be made available to about 6,000farmers, participating in farmer groups, to purchase improved seeds, agricul-tural chemicals, and to support productive activities such as fisheries.

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About 600 farmers are expected to participate in the forestry programwhich would provide fuel wood, poles, and construction wood.

36. Infrastructure: The project would improve and maintain about50 kilometers of feeder roads to facilitate communications and the flow ofgoods and services to and from the project area. Potable water supply andwaste disposal facilities would benefit about 6,000 families.

37. Administration and Technical Support: The project would makeprovisions to cover administrative costs including salaries for the Project Unitstaff, overhead cost, building, housing, equipment and machinery, and vehicles.In addition, provisions would be made for consultant services to providesupport for cheese and dairy production. A technical assistance deliverysystem would be established to transfer simple, low cost technology to indi-vidual farmers and farmer groups. To strengthen this system, the projectwould establish a training center for project staff and farmers. A model-farmwould be set up to demonstrate improved and appropriate technology to projectfarmers. The acclimatization facilities for cattle transfer from Bolivia'slowlands to the Altiplano and the input supply system, which have been estab-lished under the Ingavi Project, would be expanded to ensure timely availabilityof improved dairy cattle and farm inputs.

Project Implementation

38. Organization and Management: The proposed project, together withthe ongoing Ingavi Project, would be executed by an expanded and strengthenedIngavi Project Unit. The Government has issued a Project Decree and approvedthe statutes of the Project Unit; both are satisfactory to IDA. In addition,an assurance has been obtained that the Government would not modify decree andstatutes without IDA's concurrence (Section 6.01 of the draft DevelopmentCredit Agreement).

39. The Project Unit would consist of central administration andindependent Sub-Units for the technical implementation of the Ingavi andOmasuyos-Los Andes projects. The central administration and the IngaviSub-Unit would be located in Viacha, and the Omasuyos-Los Andes Sub-Unitwould be located in Huarina, a center of the project area. The centraladministration would consist of a Project Director, an administrative unit,a monitoring unit, and consultant services. The Project Unit's Board ofDirectors would be composed of representatives of MACA, the Ministry ofPlanning and Coordination (CONEPLAN), the Ministry of Finance, the Ministryof Public Health, CORDEPAZ, BAB, the Project Director and Sub-Directors,and representatives of project farmers. The representative of MACA wouldbe the chairman of the Board, and the representative of CORDEPAZ would bethe vice chairman. The Board would be primarily responsible for formulatingpolicy and project guidelines, and approving annual work programs and budgets.

40. The Project Unit would be headed by a nationally recruited GeneralManager with extensive experience in administration and agriculture. He wouldbe responsible for day-to-day activities and would coordinate the hiring of

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staff, preparation of annual work plans and budgets, participation of publicagencies in the project work and procurement of goods. The Government hasappointed a General Manager with qualification and experience acceptable toIDA; replacements of the Project Director would be made in agreement with IDA.The General Manager would be supported by a small core of highly qualifiedstaff and foreign consultants already hired under the Ingavi project. Inaddition, an internationally recruited specialist in cheese and dairyproduction would be employed by July 1, 1980 for twelve months on termsand conditions satisfactory to IDA (Section 4.04 of the draft DevelopmentCredit Agreement).

41. The General Manager would be supported by Sub-Unit Managers withqualifications acceptable to IDA. The Omasuyos-Los Andes Sub-Unit would bestaffed by one economist-statistician, one senior agriculturist, 18 extension-ists, five agriculture and livestock specialists, five credit personnel, andadministrative and support personnel. The extension service would be supportedby "promotores" as is done under the Ingavi Project. Assurances have beenobtained that replacements of the Sub-Unit Managers would be made in agreementwith IDA, and that the Government would provide sufficient incentives so thatthe Project Unit could attract and retain highly qualified staff. Farmerswould participate in project planning and implementation through a coordinatingcommittee comprising representatives of project staff and beneficiaries(Section 4.04 of the draft Development Credit Agreement).

42. Since inputs from commercial sources are scarce, the ProjectUnit would, initially, assure timely availability and quality of inputs toproject farmers. To this effect, assurances would be sought that the ProjectUnit establish a procurement committee, that it maintains the revolving fundfor input supply, established under the Ingavi project, and that the Govern-ment increase the fund from US$120,000 to US$200,000. The Project Unit wouldnot be subject to import restrictions, and import duties on goods imported bythe Project Unit would be paid directly by the Government or reimbursed to theProject Unit. During project implementation, farmers in the project areawould establish their own input supply system. The Project Unit would useits best efforts to establish, and provide technical assistance to a CentralCooperative, and would submit to IDA by December 1, 1982 a proposal outliningthe terms and conditions, including a timetable, under which the Project Unit'sinput supply program would be transferred to the Central Cooperative (Section4.06 of the Development Credit Agreement). The Project Unit would maintainseparate accounts for the input supply system and the cattle acclimatizationcenter, and it would establish competitive cattle prices at levels sufficientto recover its investments and operation cost (Sections 5.01 and 5.03 of thedraft Development Credit Agreement).

43. The Project Unit would enter into contractual agreements with theServicio Nacional de Caminos (SNC), and the Centro de Desarollo Forestal(CDF) to implement the road and forestry components. The signing of anagreement with the concerned entities, satisfactory to IDA would be acondition of disbursement for the component involved (Section 4.02 andSchedule 1 of the draft Development Credit Agreement). In addition, assur-ances have been obtained that the Government would cause SNC to (a) prepare by

- 13 -

April 1, 1980, a study, including a timetable, satisfactory to IDA, for theimprovement of feeder roads in the project area utilizing equipment from theIngavi project; (b) improve by December 31, 1980, the sections of the roadbetween Achacachi and Ancoraimes to ensure access throughout the rainyseason; and (c) maintain the project roads during and after the projectperiod (Sections 4.07 and 5.02 of the draft Development Credit Agreement).INFOL, INBOPIA, and the National Manager Service (FOMO) would promote farmerparticipation in handicraft activities; contractual agreements between theProject Unit and these institutions would have to be executed by April 1,1980 (Section 4.08 of the Development Credit Agreement).

44. BAB would be responsible for disbursement and collection of sub-loans. It is not expected that BAB's present financial problems would haveany bearing on the participation under the project since it acts only asfinancial agent for the Government. It would be a condition of effectivenessthat, satisfactory to IDA, (a) an agreement between the Central Bank and BAB,and an agreement between the Project Unit and BAB, have been signed; and (b)the Government has established a fund, amounting to US$100,000 equivalent inBAB, to execute the credit program, set rules and guidelines for its opera-tion and has instructed the Central Bank to replenish the fund as necessary.BAB would open a regional office in Huarina where the Omasuyos-Los AndesSub-Unit office would be located, and provide it with the necessary staff,furniture and equipment. Assurances to this effect have been obtained(Section 4.03 of the draft Development Credit Agreement). To avoid duplica-tion, the Government would coordinate the provision of credit in the projectarea so as to ensure that all credit would be provided by means of the project(Section 4.09 of the draft Development Credit Agreement).

45. Project Cost and Financing: The total project costs including pricecontingencies, expressed in mid 1979 prices are estimated at US$9.3 million ofwhich US$2.5 million, or 26%, represent foreign exchange costs net of importduties and taxes. The project costs are summarized in the following table:

Investment Category Local Foreign Total Foreign Exchange------- US$ million ----- ------ % -------

1. Productive Investment 3.10 1.17 4.27 272. Infrastructure 0.45 0.24 0.69 353. Administrative &

Technical Support 2.14 0.55 2.69 204. Total Base Line Costs 5.69 1.96 7.655. Contingencies 1.18 0.50 1.68

Total Project Cost 6.87 2.46 9.33 26

46. The proposed IDA credit of US$3.0 million would finance 32% oftotal project cost, the International Fund for Agricultural Development(IFAD) would provide US$4.0 million (43% of total project cost), the Govern-ment would provide US$2.2 million (24% of total project cost), and the

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beneficiaries would provide US$0.1 million (1% of total project cost). The

IDA credit and the IFAD funds would cover 100% of the foreign exchange cost

(US$2.5 million), and 65% (US$4.5 million) of local cost. The Governmentwould be the borrower and bear the foreign exchange risk. The IFAD loan

would be on intermediate terms, with an interest rate of 4% annually, andmaturity period of 20 years, including 5 years of grace. IDA would financeinfrastructure, administration and technical support, and a part of the

forestry program; IFAD would finance the credit program and the remainingpart of the forestry program. The legal documents would contain a cross

default and a cross effectiveness clause (Section 6.01, 6.02 and 7.01 of thedraft Development Credit Agreement). The appointment of IDA by IFAD ascooperating institution would be a condition of effectiveness (Section 7.01of the draft Development Credit Agreement).

47. Flow of Funds and Subloan Terms: Credit proceeds for componentsother than subloans would be channeled through the Central Bank to theProject Unit and participating agencies; credit proceeds for subloans wouldbe channeled through the Central Bank and BAB to beneficiaries on terms and

conditions satisfactory to IDA. BAB would receive a service charge of 3% onsubloans. Subloans would be made to farmer groups, all members of the groupwould be responsible for repayments. Subloan maturities for on-farm invest-ments would not exceed 6 years, with grace periods of up to 2 years.Subloan maturities for incremental production credit would not exceed 15months, with no grace period. Subloan terms for forestry would be determinedon a case-by-case basis. The interest rate on the subloans would be 12%,the same as that charged to small farmers elsewhere in Bolivia. Theinterest rate is slightly negative in real terms, given the expected rate of

inflation during the disbursement period. This is considered acceptablebecause the benefiting farmers are among the poorest in Bolivia; most ofthem would receive credit for the first time. Moreover, the project will besupervised closely enough to make diversion of funds unlikely.

48. Financial Analysis: The project would increase the incomes ofparticipating farmers significantly. The farm models indicate that thefinancial rate of return for the farmers' own capital would exceed 100%. Thehigh financial rate of return is explained by the small investment per family,its short gestation period and rapid production increases. Even with thesesubstantial increases, farmers' average per capita income at full proXjectdevelopment would remain significantly below the national average.

49. Marketing: Farmers in the Altiplano sell only a small portion oftheir agricultural output to the local markets. It is expected that theproduction increases under the project would raise farmers' marketable surplussubstantially. The marketing prospects for the various products producedunder the project are satisfactory. Future potato consumption in the La Pazarea is expected to increase considerably. The produced milk is expected to besold on the La Paz market, characterized by large unsatisfied demand for freshmilk, and to the PIL plant, provided the government raises its purchasingprice. The incremental quinoa production would be small and, in view of thepresent supply shortage, should be sold without difficulty. Livestock wouldbe sold through local commercial channels, and alpaca fiber would be sold

to INFOL, which is in charge of promotion of alpaca and commercializationof alpaca products and has purchasing centers throughout the Altiplano.

- 15 -

50. Procurement: Contracts for the purchase of equipment and vehicleswould total US$718,550, excluding contingencies. Individual contracts inexcess of US$100,000 equivalent would be procured through internationalcompetitive bidding according to IDA procedures. Purchases of less thanUS$100,000 would be procured through local competitive bidding according tolocal procedures, which would be satisfactory to IDA. Procurement of farminputs and cattle would be carried out by farmers through normal commercialchannels. Since road works (US$363,000, excluding contingencies) are spreadout within the project area and include mainly improvement of existing tracks,they would be undertaken by SNC on force account. Civil works (US$733,300,excluding contingencies) for project facilities would be carried out throughlocal competitive bidding procedures which would be acceptable to IDA. Assur-ances have been obtained on the above (Schedule 3 of the draft DevelopmentCredit Agreement).

51. Disbursement: IDA would disburse over a period of 4 1/2 years100% of foreign expenditures and 64% of local expenditures for the purchaseof equipment and vehicles (excluding tractors) for the Project Unit andCDF; 100% of expenditures for consultant services for the Project Unit;64% of local expenditures for civil works for roads, water supply and wastedisposal facilities, and operating costs for the Project Unit. For theforestry component, IDA and IFAD would disburse, at a ratio of 3 to 1, 100% offoreign expenditures, 80% of local expenditures, and 80% of subloans. Disburse-ment would be supported by normal documentation except those for works carriedout through force account which would be made against a certified statement ofexpenses, the documentation for which would be made available for inspectionby IDA during project supervision.

Justification, Benefits, and Risks

52. The proposed project would make an important contribution toimprove the standards of living in the Altiplano. Together with Ingavi andUlla Ulla, it would cover the whole Altiplano Norte. It is expected that theproject design, which has been based on low investment costs per beneficiary,would demonstrate suitable ways of successfully approaching problems ofBolivia's rural poor. The project's economic viability, demonstrated by anERR of 36%, proves that the Altiplano has production potential that can bedeveloped.

53. The project would benefit some 6,000 families who, until now, havereceived only limited assistance for economic and social advancement. Some85% of the project area's rural population belong to the poverty targetgroup, defined as the poorest 40% of the country's population. Increasedproduction under the project would help raise per capita incomes, currentlybelow US$100, to almost US$200, and it would help integrate project benefi-ciaries, who are mostly subsistence farmers, into Bolivia's market economy.Promoting more intensive farm cultivation methods is expected to decreasecurrent underemployment. At the same time, the Government program forreforestation and road maintenance would create temporary jobs for unskilledworkers.

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54. The value of incremental project production has been estimatedat US$7 million. Incremental project output, consisting mainly of marketablefood crops, would improve product supply in La Paz. Increased milk supply to

the PIL plant in La Paz, which is operating below its capacity using importedpowder milk, would assist in developing a dairy processing industry. Water

supply and waste disposal facilities, which would be provided under theproject, would improve the health situation of participating families. Theproject's institution building aspect would be particularly important. The

former Ingavi Project Unit would be expanded and could serve as a centraldevelopment agency for the implementation of future projects. The creationof a central cooperative that would take over some of the Project Unit'sfunctions, would establish a institutional model which could be successfullyreplicated in other regions of the country.

55. Since project composition and design is based on experiences ob-

tained under the two previous Bank operations in the Altiplano, the project

is considered to be of no more than average risk. The main potential problemwould lie in the difficulty of attracting and retaining a sufficient number

of qualified staff for the project unit. Failure to obtain the envisagednumber of extensionists would negatively affect the farmer's response totechnology changes and the yields they would achieve. Because of thispotential problem, project staffing has been kept at a minimum, and salarieswould be high enough to attract and retain qualified staff. Sensitivity

tests indicate that the rate of return remains high under various alternativeassumptions.

PART V - LEGAL INSTRUMENTS AND AUTHORITY

56. The draft development credit agreement between the Republic of

Bolivia and the International Development Association, and the report ofthe committee provided for in Article 3, Section 4(iii) of the Articlesof Agreements are being distributed to the Executive Directors separately.

57. Special conditions of the proposed development credit are listed

in Section 3 of Annex 3. Additional conditions of effectiveness would bethat, under the credit program, (i) an agreement between the Central Bank andBAB and an operational agreement between the Project Unit and BAB, satisfactoryto IDA, have been signed; (ii) that the Government had established a credit

revolving fund in BAB, amounting to US$100,000, for its operation; and(iii) that the Government has instructed the Central Bank to replenish the

credit fund, established in BAB, as necessary. In addition, all conditionsnecessary for the effectiveness of the IFAD loan would have to be fulfilled

and IFAD would have to appoint IDA as cooperating institution. It would be anadditional condition of disbursement that, under the forestry program, an

operational arrangement between the Project Unit and CDF, satisfactory to IDA,had been signed; under the road program, that an operational agreement betweenthe Project Unit and CNC, satisfactory to IDA, had been signed, and, withrespect to subloans for production capital, that the revolving fund, to bereplenished with repayments from these subloans, is depleted.

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PART VI - RECOMMENDATION

58. I am satisfied that the proposed development credit would complywith the articles of agreement of Institutional Development Association.

59. I recommend that the Executive Directors approve the proposed loan.

Robert S. McNamaraPresident

Attachment

June 4, 1979

ANNEX I- 18 - Page 1

TABLE 3ABOLIVIA - SOCIAL INDICATORS DATA SHEET

REFERENCE GROUPS (ADJUSTED AVERAGES90LIVIA k

LAND AREA (THOUSAND SQ. KM.) - HOST RECENT ESTIMATE)TOTAL 1098.6 SAME SAME NEXT HIGHERAGRICULTURAL 304.8 MOST RECENT GEOGRAPHIC INCOME INCOME

1960 Lb 1970 lb ESTIMATE Lb REGION Le GROUP 1d GROUP Le

GNP PER CAPITA (US$) 180.0 290.0 540.0 1066.7 432.3 867.2

ENERGY CONSUMPTION PEE CAPITA(KILOGRAMS OF COAL EQUIVALENT) 147.0 229.0 303.0 911.1 251.7 578.3

POPULATION AND VITAL STATISTICSTOTAL POPULATION, MID-YEAR

(MILLIONS) 3.8 4.9 5.9 f.URBAN POPULATION (PERCENT OF TOTAL) 29.2 32.3 34.0 57.9 24.2 46.2

POPULATION DENSITYPER SQ. KM. 3.0 4.0 5.4 25.6 42.7 50.8PER SQ. KM. AGRICULTURAL LAND 13.0 16.0 19.0 77.6 95.0 93.3

POPULATION ACE STRUCTURE (PERCENT)0-14 YRS. 42.4 41.9 41.6 42.0 44.9 42.9

15-64 YRS. 54.0 54.6 54.9 52.2 52.8 53.565 YRS. AND ABOVE 3.6 3.5 3.5 3.7 3.0 3.5

POPULATION GROWTH RATE (PERCENT)TOTAL 2.4 2.6 2.7 2.7 2.7 2.5URBAN 3.6 4.2 4.1 4.3 8.8 4.7

CRUDE BIRTH RATE (PER THOUSAND) 46.6 44.4 44.0 35.8 42.2 37.8CRUDE DEATH RATE (PER THOUSAND) 22.5 19.7 19.1 9.1 12.4 10.8GROSS REPRODUCTION RATE .. 2.8 2.8 2.6 3.2 2.5PAMILY PLANNING

ACCEPTORS, ANNUAL (THOUSANDS) .. .. 7.6USERS (PERCENT OF MARRIED WOMEN) .. .. .. 15.1 14.2 20.0

FOOD AND NUTRITIONINDEX OF FOOD PRODUCTIONPER CAPITA (1970-100) 80.9 100.0 110.8 102.1 104.3 107.3

PER CAPITA SUPPLY OFCALORIES (PERCENT OF

REQUIREMENTS) 69.0 76.0 77.0 103.9 99.5 105.3PROTEINS (GRAMS PER DAY) 43.0 46.0 48.5 60.3 56.8 63.0

OF WHICH ANIMAL AND PULSE 13.3 /R 14.0 14.4 26.7 17.5 21.7

CHILD (AGES i-4) MORTALITY RATE 11.0 7.4 .. 8.7 7.5 8.0

HEALTHLIFE EXPECTANCY AT EIRTH (YEARS) 42.3 45.3 46.8 62.6 53.3 57.2INFANT MORTALITY RATE (PERTHOUSAND) .. 154.0 .. 56.9 82.5 53.9

ACCESS TO SAFE WATER (PERCENT OFPOPULATION)

TOTAL .. 33.0 34.0 60.7 31.1 56.8URBAN .. 92.0 81.0 78.0 68.5 79.0

RURAL .. 2.0 6.0 34.9 18.2 31.8

ACCESS TO EXCRETA DiSPOSAL (PERCENTOF POPULATION)

TOTAL .. 12.0 .. 61.1 37.5 30.9URBAN .. 25.0 .. 80.3 69.5 45.4RURAL .. 4.0 9.0 25.4 25.4 16.1

POPULATION PFR PHYSICIAN 3900.0 2300.0 2120.0 1899.3 9359.2 2706.8POPULATION PER NURSING PERSON .. 2730.0 2370.0 1220.1 2762.5 1462.0POPULATION PER HOSPITAL BED

TOTAL 580.0 510.0 .. 422.3 786.5 493.9URBAN .. 200.0 .. 258.2 278.4 229.6RURAL .. 2400.0 .. 2281.6 1358.4 2947.9

ADMISSIONS PER HOSPITAL BED .. .. .. 25.6 19.2 22.1

HOUSINGAVERAGE SIZE OF HOUSEHOLD

TOTAL .. .. .. 5.2 .. 5.2URBAN .. .. .. .. .. 5.0

RURAL .. .. .. .. .. 5.4

AVERAGE NlTIBER OF PERSONS PER ROOMTOTAL .. .. .. 2.0 .. 2.0URBAN .. .. .. 2.1 2.3 1.5RURAL .. .. .. 2.7 .. 2.7

ACCESS TO ELECTRICITY (PERCENTOF DWELLINGS)

TOTAL 22.0 /b .. .. 51.2 28.3 64.1URBAN 76.0 7h .. .. 77.3 .. 67.8RURAL 8.0 h .. .. 12.8 10.3 34.1

ANNEX I

- 19 - Page 2

TABLE 3ABOLIVIA - SOCIAL INDICATORS DATA SHEET

REFERENCE GROUPS (ADJUSTED AVERAGES

BOLIVIA /a- MOST RECENT ESTIMATE)

SAME SANE NEXT HIGHER

MOST RECENT GEOGRAPHIC INCOME INCOME

1960 Lb 1970 Lb ESTIMATE Lb REGION /c GROUP Ld GROUP /e

EDUCATIONADJUSTED ENROLLMENT RATIOS

PRIMARY: TOTAL 64.0 68.0 74.0 103.5 75.B 99.8

FEMALE 50.0 56.0 65.0 102.9 67.9 93.3

SECONDARY: TOTAL 12.0 21.0 .. 37.2 17.7 33.8

FEMALE 10.0 18.0 .. 37.9 12.9 29.8

VOCATIONAL (PERCENT OF SECONDARY) 14.0 11.0 10.0 14.7 7.4 12.8

PUPIL-TEACHER RATIOPRIMARY 27.0 24.0 23.0 32.8 34.3 34.9

SECONDARY 13.0 17.0 .. 17.8 23.5 22.2

ADULT LITERACY RATE (PERCENT) 38.8 40.0 .. 74.9 63.7 71.8

CONSUMPTIONPASSENGER CARS PER THOUSAND

POPULATION 3.0 4.0 2.0 26.9 7.2 12.4

RADIO RECEIVERS PER THOUSANDPOPULATIoN 73.0 .. 78.0 173.5 71.1 104.5

TV RECEIVERS PER THOUSANDPOPULATION .. .. .. 69.4 14.1 28.1

NEWSPAPER ("DAILY GENERALINTEREST") CIRCULATION PER

THOUSAND POPULATION 27.0 42.0 25.0 72.8 16.3 45.2

CINEMA ANNUAL ATTENDANCE PER CAPITA .. .. .. 4.3 1.6 4.6

EMPLOYMENTTOTAL LABOR FORCE (THOUSANDS) 2000.0 L4 2300.0 2500.0

FEMALE (PERCENT) 18.9 14 19.5 20.4 21.4 28.0 25.7

AGRICULTURE (PERCENT) 67.0 65.0 65.0 37.8 54.1 46.2

INDUSTRY (PERCENT) 18.1 21.1

PARTICIPATION RATE (PERCENT)TOTAL 34.1 33.2 33.0 30.8 37.8 33.8

MALE 56.0 53.7 52.7 47.2 50.3 48.1

FEMALE 12.7 12.9 13.4 13.2 20.9 17.3

ECONOMIC DEPENDENCY RATIO 1.0 1.0 1.0 1.7 1.3 1.4

INCOME DISTRIBUTIONPERCENT OF PRIVATE INCOME

RECEIVED BYHIGHEST 5 PERCENT OF HOUSEHOLDS .. 36.0 .. 28.9 19.5 23.6

HIGHEST 20 PERCENT OF HOUSEHOLDS .. 59.0 .. 57.7 48.9 52.3

LOWEST 20 PERCENT OF HOUSEHOLDS .. 4.0 .. 3.2 5.9 4.3

LOWEST 40 PERCENT OF HOUSEHOLDS .. 13.0 .. 10.7 15.7 13.1

POVERTY TARGET GROUPSESTIMATED ABSOLUTE POVERTY INCOME

LEVEL (US$ PER CAPITA)URBAN .. .. .. 251.9 155.9 191.9

RURAL .. .. 134.0 200.6 97.9 193.1

ESTIMATED RELATIVE POVERTY INCOMELEVEL (US$ PER CAPITA)

URBAN .. .. 105.0 403.1 143.7 319.8

RURAL .. .. 75.0 258.0 87.3 197.7

ESTIMATED POPULATION BELOW POVERTY

INCOME LEVEL (PERCENT)URBAN .. .. 20.0 24.8 22.9 19.8

RURAL .. .. 85.0 65.2 36.7 35.1

Not availableNot applicable.

NOTES

/a The adjusted group averages for each indicator are population-weighted geometric means, excluding the extreme

values of the indicator and the most populated country in each group. Coverage of countries among the

indicators depends on availability of data and is not uniform.

/b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969

and 1971; and for Most Recent Estimate, between 1973 and 1977.

/c Latin America & Caribbean; /d Lower Middle Income ($281-550 per capita, 1976); /e Intermediate

Middle Income ($551-1135 per capita, 1976); If Provisional 1976 population census gives estimate

of 4.647 million; LI Av. 1961-65; /h 1963; /i 1965.

September. 1978

- 20 - ANNEX IPage 3

DEFINITIONS OF SOCIAL INDICATORS

Notes ;Ithough the data are drawn from sources generally judged the most authoritative and reliable. it should also be noted that they may not be fnter-nationally comparable botause of the Ick of rtandardized definitions and concepts used by different countries in collectiog the data The dat are. nonetheless,useful to describe orders of magnitude, indicate trends, and characterios certste major differeoces between co-ntries.

The adjiusted gronp averages for each indicator are population-weighted geometric means, excluding the ectreme values of the indicator end the meetpopulated country in each group. Coverage of countries among the indicators depends on availability of data sod is not unifrn. Due to lack of dta,grotp averuges for Capital Dorplus Oil fEporters and indicators of access to water and escreta disposal, housing, inc-e distribution and poverty aresimple population-oeighted genatrnir erans without the -ocl,,sion of eutreos valus

LAND ARiA (thousand q. kho) PPooiatio per hospital bed - total, urban and rural - Papulatios (total,Total - Total uuriace area comprisiug land urea and inland watere. urbas, and rural) divided by their respective snkber of hospital bedsAgricsltural - Host retest estimate of agricultural area used temporarily uvuiiable in public and private general snd specislieed hnspttaL and re-

or permaro-tly for crops, paitures, market and kitchen gardens or to habilittion centers. Hospitals urn establishments permanently staffed bylie fallow. at toast one physiclao. Eatabliuhents providing principally cus1tndsi

cue rac:nortnicoluded. Rural hospitals, howeve, include health and ma,di-GN oPER CAPITA (USS) - GNP per capita esticstes at current market prices, cal centers cot perma ently staffed by a physician (but by a medical a-

oalculuted by sarn conversion nenbod us World Bank Atlas (1975-77 basis); sietant, nurse, idwife, etc.) which offer in-patient accommodation ead1960, 1970, and 1977 data. prcvide a liited range of medical facilities.

Admissions Sen hospital bed -Total number of admissions to or disohergesENERGY CONSUMPTION PER CAPITA - Annual consumption of cocmercial esnrgy from hospitals divided by the number of beds.

(coal and lignite, petroleum, natural gas and hydro-, nuclear and geo-thermal electricity) in kilogrmas of coal equivalent per capita. HODSING

Average site of household (Persons per leasehold) - total, urban, sod rural-POPULATION AND VITAL SIATISTICS A bousehold consistn of a group of individuals who share living quartere

Total population, mid-year (=illions) - As of July 1; if not available, and their main neals. A boarder or lodger may or may not be included inaverage of two end-year estimates; 1960, 1970, and 1977 data, the houaehold for statistical purposes. Statistical definitions of house-

Urban population (pertent of total) - Ratio of urban to total popula- hold vary.Lion; different defiultioss of urban areas may affect comparability Average number of persons por room - total. urban. nd rural - Average nuof data aong countries. her of persons per coos it *ll, urban, asd rural occupied co.enetiomal

Population density dwellinge, respectively. Dwellings exlude mou-permanent st-u tuesa sdPer anq ho. - Hid-year population per square kilometer (l00 hectares) unoccupied pants.

of total area. Access tn electricity (percent of dwellings) - total, urban, and rural -Per sq. ek. agriculture lend - Computed as above for agnioultoral iand Conventional dwellings with slectricity in living qu-rtene as peree.tage

only. of total, urban, and rural dwelings respectively.Population age structure (percent) - Childrsn (0-14 years), working-age

(15-64 years), and retired (65 years and over) as percentages of mid- EDIUCATIOnyear pcpula,iom. Adl..t.d enrollment rutios

Population growth rate (percent) - total, nd urban - Compound annual Primary school - total, and female - Total and female enrollamnt of Lll agesgrowth rates of total and urban mid-year populations for 1950-60, at the pcinuey level as percentages of respectively primary school-age1960-70, and 1970-75. populations; normally includes children aged 6-11 years but adjusted fo

Crude birth rate (per thousand) - Annual live births per thausand of different lengths of prtimry dduostiom; fon countries with univereal edu-mid-year populuticn; ten-year arithmetic svetages ending in 1960 and cation enrollment may emceed 100 percent since some pupils are below or1970 and five-year average ending in 1975 for most recent estimate, above the official school age.

Crade death rate (per thoussnd) - Annual deaths per thousand of mid- Secondary school - total, and female - Computed as above; secondary educa-year population; ten-year arithmetic averages ending in 1960 and 197i tion requires at least four years of approved pria ry instruction; pro-and five-year average ending in 1975 f-r most recent estimate. videe general v-catloaal, or teacher training instructions for pupile

Groas reproduction rate - Average number of d ughters a woman will bear usually of 12 to 17 years of age; corneepondence courses are generallyin her normal reproductive period if sh esperiences present age- excluded.specific fertility rates; usually five-year averages ending in 1960, Vocational enrcll=ent toercent of secondary) - Vocational institutions iD-1970, and 1975. clod technical indestrisl, ar other programa which apecate indepandently

Family planning - acceptors, annual (thousands) - Annual naber of or as departments of secondary institutiona.acceptors of birth-control devices under auspices of nati.n.l family Pupil-teacher ratio - primary. and secondary - Total students enrolled implanning progra. primary and secondary levels divided by numbers of teachere in the corre-

Family pl.nniu - usera (persent of maried woman) - Per-ntage of spending levelsmrried women of child-bearing age (15-44 years) who use birth-control Adult literacy rste (percent) - Literate adults (able to read and vrite) a

devicens o all married women in sase age group, a percentage of total adult population aged 15 years and over.

FOOD AND NDTRITITN CONSUMPTIONIndex of food production per capita (1970-100) - Inde number of per Passenger cars iper thovsand population) - Psasenger cars comprise motor cars

capita annual production of all fond cors_odities. seating less than eight persons; encludes ambulances, hearses and militaryPer capitr supPly of calories (percent of requirements) - Computed from vehicles.

energy equivalent of net food supplies available is country per capita Radio receivers (per thousand population) - All types of reosivers for radioper day. Available aupplies comprise domestic production, imports less broadcasts to general public per thu..s.d of population; excludee unlicensedeuports, and changes in stock. Net supplies seclude nimal feed, seeds, receivers in countries and in years when registration nf radio sets was inquantities used in food processing, and losses in distributien. Re- effect; data for recent yearn may not be comparable since mast countriesquire=encs were estimated by FAO based on physiological needs for nor- abolished licensing.mO utcioity and health considering envirounental temperature, body TV receivers (per thousand population) - TV receivers far broadcset to genertweighte, age end sen distriburions of population, and allowing 10 per- public per thousand population; excludes unlicensed TV receivers in coun-cent for waste at household level, tries snd in years when registration of TV aets was in effect.

Per capita supply of proteis (eras per day) - Protein content of per Newspaper circalation iper thousnd population) - Shows the average nircula-capita net supply of food per day. Net supply of food is defined as tios of "daily general interest newspaper". defiued as a periodical publi-above. Requirements for all countries established by USDA provide for cation devoted primarily to recording general news. It is coneidered toa sinimur allowance

0f 6i gnaom of total protein per day snd 20 grema be "daily" if it appears at least four times a week.

of unimal and pulse protein, of bhich 10 grams should be animal protein. Cinema annual attendance per capita per year - Based on the number of ticketsTh .ee standerds er lower thou those of 75 grasm of total protsin and sold during she year, inoludins udnisions to driAo-in inemas ed mobil23 gra=s of animal protein an an average for the world, proposed by units.FAO in the Third World Food Survey.

Per capita pnocein supply from animal and pulse - Protein supply of fond EKPLOYMENTdicived iro aimals nud pulsess in gram per day. Total labor force (thousands) - Economically uctice per.n.. including armed

Child ( fgos 1-4) mortality rate (per thousand) Annual deaths per thous- forces and unemployed but sncludinog hoosewtives, etc. Dlu firi-and in ago group 1-4 years, to children in this age group. tioun in various countrien are not comparable.

Female (percent) - Female labor force as percentage of total labor force.HEALTH Agriculture (percent) - Labor force in faming, forestry, hunting and fishing

Life expectanoy at birth (years) - Average number of years of life as percentage of total labor force.reneiniog at birth; usually five-year avorages ending in 1960, 1970, Industry (percent) - Labor force in mining, construction, manufacturing and

and 1975. electricity, water and gas as percentage of total labor force.Infat mortality rate (pee thouseod) - Annual deaths of infants under Participation rate (percent) - total, male. and female - Total, male, and

one year of age per thousand live birhts. female labor force as percentages of tieir respective populations.Access to safe water (percent of Population) - totsl, urban, and rural - These ore IO's adjusted portitipatioc rates reflecting age-.ee

Number of people (total, urban, and rural) with reasonable access to structure of the popnlation, and lung tine trend.safn water supply (includen treated surface waters or untreated but Ecoso=ic dependency ratio - Ratio of population under 15 and 65 and oven to

ocotntinued wtoer such as that from protected bro.holos, springe, thn labor force in age group of 15-64 years.and o.nitary wells) as percentages of their respective populations.In or urban area a public fountain or standpost located nOt more INC0OdE DISTRIBDTIONthan 200 ot.eru from a house may be considered as being within reu- Percentage of private inco=e (both in cash and kind) received by richest 5

.sonbleaccess of that house. In rural areas reasons. able cess would percent, richest 20 percent, poorest 20 perceot, and pooreur 40 pernertitply that the housewif. or members of tho household do not have to of houueholds.upend a disproportionate part of the day in fetnhiug the faily'swater neds. POVERTI TARGET GROUPS

Access toaxcruta disposal foernent of population) - total, urban, and cannoted abeoiute poverty inucoe level (USS Per capita) - urban and rural -rural - Narber of people (total, urban, and rural) served by excneta Absolute poverty inco=e level Dn that income level below which a minil

disposal as porrcntages of their respective popuattions. Ecreto nutritionally adequate diet plus .s.ontial non-food requirenents is notdisposal may include the collection and disposal, with er without uffordablrtreatmeuL, of hbaan ourneta and vaste-water by water-borne nysteni Estimated relatioe poverty incoma leyel (OS) per capita) - urban and rural -or thi use of pit privieo and similar installations. Relative poverty inuone level is that income level less than one-third

Ppotion per yhysician - Population dividod by number of par-ticing per capita porsonal income of the cosutry.physicians qualified from a medical school at university level, Estimated population below poverty income level (percent) - urban and rural -

Population per nursing person - Population divided by number of Percent of population (urban and rural) who are either "absolute poor" orprouctcing mole and fe=ale graduate nmrses, practical nurses, and "relation poor" whirhener is groateraissitant-urues.

Econoic and Social lats DivisionEcono=ic Analysis and Projections Department

- 21 - ANNEX 1Page 4

BOLIVIA: ALANCE 07F PA NTS, EXTERNAL ASSISTANCE AND D01T

(trrent US dollars million.)

Actual Pr-lioni..I lj td1972 1973 1 1975 1976 197 1970 198-

A. Sumarv of blance of Da.ventS

Imiports (lncl. 9e731 -260.6 -509.2 -485.1 .667.3 -711.2 -627.9 -1,167.9 -2,066.3op,orta (Incl. 97S1 224.7 297.2 67.6 527.8 637.1 721.1 1 023. 3 1,919.9

teaurtee balance *35.9 - 12.0 12.5 -139.5 - 74.1 .-16.8 - 144.5 - 146.9

Fctor intore - 21.8 - 22.9 - 37.2 - 31.4 - 41.2 - 92.4 . 146.6S 264.0

et interast payments (- 13.4) ( 118.1(0) -1.6) 1- .1 ( 37 .1) 35.0 247.81Other factor service ince <net) (- 8.4) (- 4.9) (- 17.6) 6 - 5.5) 4- 38.31 (- 11.8) /- 16.21

Current tr.ns..rs os(t) 13.4 15.4 13.7 13.1 14.0 15.0 24.8 33.3

Current ccount balance 44.3 - 1-5 119.0 -137.8 -101.3 -184.2 . 266.5 - 377.6

Direct fotelac icvestmnnt - ~~~~13.4 4.6 16.7 53.4 12.1 11.0 13.3 17.8Official capital srants 8.U 10.0 9.0 10.35 20 1 1 3.4 20.0

Public 962T loansDinb ranmentn 122.5 37.0 108.0 150.4 292.2 427.5 446.2 685.9

Oeraymnnurst7ent- - 28.4 - 30 3 50 7 -56.6 -29.7 83.5 - 173 1 - 286.6lat diehorannets 94.1 6.7 37.3 93.8 222.5 344.0 273.1 399.3

Other 1lng-term lo-nODinb_raam nts 17.7 24.0 14.2 16.4 25.0 25.0 29.0 33.0

Ospepnents - 2.6 - 7.6 - 15.1 - 18.2 . 23.0 - 24.2 - 27.0 - 31.0Not diaburnenenan 15.1 16.4 - 0.9 . 1.8 2.0 1.3 2.0 2.0Capital traneactiona n.e.i. - 40.9 - 32.1 - 89.6 - 42.5 . 74.0 -163.4 - 18 6 - 24.8

ChanSe in net raserren - a1.6 13.9 -111.5 44.4 . 61.3 - 8.4 - 23.6 - 36.7Cranta and loana coefismantsTotal M6LT Io.n. 179.9 78.9 172.4 397.5 461.0 587.9 509.1 747.51BRD - - - 32.0 68.0 92.0 80.0 89.9IDA 8.0 6.0 6.2 7.5 - - 10.0 -Other mitilateral 27.0 11.2 35.0 104.6 80.4 15.3 95.0 95.0

Cover., eant 71.7 34.1 60.8 109.3 43.8 177.2 55.0 61.3Ouppliar- 40.1 16.6 13.8 4.4.2 464.3 55.5 30.0 75.7Pin.npioi ier titctlong 23.1 9.9 56.0 89.3 222.5 225.7 199.1 405.6

other 10.0 1.1 0.6 10.6 - 22.2 20.0 20.0

C. !--draodum ite-o

Grunt eItent of total co_it,nnnto (7) 32.2 36.5 39.7 19.0 19.2 13.9A-rarg intnrnat (74 4.9 4.9 5.6 6.8 6.9 7.2Average natority (y.orn) 19.2 22.0 25.6 17.6 15.0 12.4

Actual debt outstanding Public naternal Pro-iionalon Dec. 31, 1977 debt and debt entijn 1974 1975 1976 1977

D. Eto-rnci debt Dioburend onIy Porecnt

IBR1 42.1 3.1 A. Olediom- cud lone-ter debt (dinb.r.ad onto)IDA 54.8 4.1Othor -ltiloteral 94.7 7.0 Tot-l debt outst-nding (DOD end of peniod) 691.b 778.0 1,003.8 1,347.8Ocrerceecto 504.7 37.4 ItlnudLg undiabuta-d 809.4 1,206.0 1.3SS.9 2,089.8Suppliorn 89.9 6.7 Public debt service 68.0 80.2 104.6 135.6Pi-oncil in-titut.ons 438.8 32.6 Interest 17.3 23.5 34.8 51.6

Bocda 69.8 5.2Public dabt not 53.0 3.9 8. Debt b-rdenTotal public M63S debt 1,347.8 100.0

Debt service ratIo 10.8 15.2 16.4 18.8

E. Debt protile Debt carrion ratio /I 13.6 16.2 17.1 24.1Debt ser-ica:ODP 3.1 3.2 3.5 3.8

Total debt service 1978-80/totl DOD end of 1977 60.6 C. Tera

Intereat on DOD/OOD 2.5 3.0 3.5 3.8

D. -epedanto -ting for M8LT debt

Crose dlabornne. nt/icports (Lcl. of- 22.3 22.5 41.1 51.6Bet transfer/laporta (intl. nfs 7.8 10.2 26.1 35.0Net transfer(/gros diabarnemant 34.9 45.1 63.4 67.3

E. E.posurr

86RD DOD/total DOD 3.0 2.7 3.1 3.1Bank group dinb./total BOD 8.9 9.0 8.4 7.21BHO debt service/total debt .erv-J. 5.0 2.0 3.6 2.9B.nk Sroup debt .ervicn/total debt o-ryica 5.4 2.6 4.2 3.4

/1 Incvding vet ditrct i-veetnant incame.

- 22 -

ANNEX 1Page 5

BOLIVIA: 80030CaC DEKWLPINF DATA

(Ase.- Ln Us9 million)

Acta.-oiIoo Protectd 1970- 1974- 1977- 1980-otlooal ACco-t 1974 - 1975 1976 1977 1980 1985 1974 1977 1980 1955 1974 1977 1980 1985

Cenc...t 1977 Price. ic Million 05 Grwh Care A. Pecn f 057G-oce do-eti product 3 ,251l 3,202 3,412 3,564 4,129 5,347 6.3 5.2 5.0 5.3 99.7 100.0 101~.2 t100.1Gales fre torm of trade (9+ 9 -139 - 73 0 - 48 - 4 - - - U .3 0.0 - 1.2 - 0.1loose. de-etic Inc 3,760 3,063 3.339 3,564 4,081 5.343 7.2 71.2 4.6 0.1 100.0 100.0o 100.7 100.7

Imports (tool. nfl) ~ ~~~~~~~~~_576 702 740 928 937 1,213 7.6 12.9 4.7 5.3 18.8 03.2 23.0 22.7oos(o,of:), (le...rt capaity) 7445 5036 663 -721 -821 4.,127 14.9 -1.0 4.4 6.5 44.3 20.2 20.1 '21.1 -

losoarce gop ~~~~~ ~~~~ ~~~~-167 146 184 107 116 86 - - - - -5.5 3.0 2.9 1.4

Coouptioe enpe-ditores. 0.311 2,343 2,879 2,971 3,442 4,421 5.1 0.7 5.0 5.1 75.3 83.4 04.3 92.7In--t-n eorsdltur- (hod. stoks 502 666 644 700 735 1,008 0.7 4.3 2 .6 6.0 19.0 19.6 19.5 18.9

-oeoceioge 749 520 460 093 639 922 16.0 -7.0 2.5 7 .6 24.5 16.6 15.7 17.3-sine aLoge 719 489 433 516 530 779 18.9 410.5 1.4 7.,7 73.5 14.5 13.2 14.6 o

tt-rh-ndl- Trade

C.nomr -rble 9oode 52.7 67.5 62,7 64.9 90.6 159.2 23.7 7.2 11.8 11.4 12.2 9.9 I., 8.6C -sme ~-d,-ca.R0 gds 37 .7 60.3 560 61.8 113.0 208.4 40.3 17.9 22.4 13.01 8.6 8.9 10.0 11.2

P4005 ~~~~ ~~~~ ~~~~ ~~~~ ~~4.0 7.0 . 6.2 10 .0 01.9 38.1 1.7 17 .3 17.0 0.9 0.9 0.0 1.2Re- mateiall. goods 015.6 192.0 189.7 213.1 288.8 479.4 18.4 22.6 10.7 10.7 26.9 292 27.7 25.9Coitel god 177.2 223.7 235. 067. 377.8 699.2 2:7.9 14.7 12.2 13.1 41.2 36.6 36.2 3 7 .7

Other coode ~~~~~ ~~~~~ ~~~~42.0 52.2 67.4 17. 102.62 287.6 7. 0.0 11.4 1. 00 1. 56 1.T-tI eorhendioe ImPOrt. (.if) 430.0 602.9 637.6 750.9 1,542.3 1,955.7 22.6 19.3 12.6 12.0 100.0 100.0 100.0 .100.5

Ac eret of Tocl bE-oo-Prineo prod-.t 361.9 274.3 3899 513.6 675.2 1,301.3 18.7 12.4 9. 5 14.0 61.6 7.2 73. 75.2

Fuels ~~~~~~ ~~~~~~ ~~~~~223.4 188.0 105.4 134.9 238.8 429.9 103.3 -10.7 21.1 12.4 38.4 20.8 26.2 24.9c/ct Crud. petroletmn (~~~~~~~~~63.0) (63.4) (64. 0) (67.5) (119.6) (289.2) (47.87 (2.3) (21.0) (17.6) (10.7) (10.4) (13.1) (15.57

T-to -hrcoedios soP-te (fob) 587.2 462.3 570.3 64. 91r. 1,731.4 31j6 3T4 12.2 13,h 100.0 1000 i3 T

Nstbheodics Credo tedic..teport price loden 0~~~ ~ ~~~~ ~~~6. 74.2 86.0 100.0 117.7 169.8

Import prIce loden 8~~~ ~ ~~~~ ~~~5.1 95.6 96.7 100.0 124.6 10.4Toe of crdo oden 171 4 77.6 a8.9 100.0 94.5 99.6Enpor cu.L_n lden (1i-1. oft) 90.2 71.3 98.9 100.0 129.0 053.0

Volne Addd6 Sco An-oe Dot at 1977 Price. nod E-chon8 Rate. A-er.go Ae..ul Groth R-tee Ac Peroot of T.cl194 1975 1976 1977 1980 1985

Agricultur 554 591 612 620 715 891 5.0 3.8 4.9 4.5 18.2 17.4 1'.3 14.7Industr and i10ic

0900 a73 960 1,010 1,162 1,504 7.7 3.9 4.8 5.3 29.5 28.3 28.2 78.1

Osnc 1.597 1.738 140 1.934 2.252 2.952 6.0 6.6 5.2 5.:6 52.3 54.3 54.5 55.2Totl 3,051 3,202 3,412 3.564 4,129 5,347 6.3 5.3 5.0 5.3 130.0 130.0 100.0 100.7

PublIc Finace Perc-t of GDP Detil on.S Percen of Coto(Contro G-rremot 1974 1975 1976 1977 46110 OSocor Flre-Y..r PIco)Curret recipto 13.1 13.1 13.5 12. nnometProe 1970680Curentenedi tuL 13.8 106 16 05 rOltr 9.6POodgeterysc-ioge 2.3 25 1.9 2.4 KinIng cod hypdr...rbote 23.4blIc setrecoe9.3 5. 5 7.2 6.2 lentyedpwr25.3

Public fiord capitol fornatioo 6.9 11.3 1~~~ ~ ~~~~~~~~3.4 10.3 Treo or :en coIialos1.Poblic -erice.d ... i9 -ool eite 02,0

as tocol current enp-ndlt-re 1974 1975 19 76 1977Goode an erie 15.2 19.0 27.4 19.3 A. Percer or oteW.,. cd to_air 52.7 51.3 52. 0 52.0 Ftn-ocln 1977-980Tra..ofer pny-Ott 29.7 24.9 24.6 30PiAes o 20.331~Other 3.3 4.0 . 3.7 FoegIcre 0.TocI curet -opedil- tos oo.o 100.0 100.0 100.0 Publ10i eco 3970

100.0Selected Indicato 0970- 1674- 1977- 1980-

1974 1977 1980 1985bOOR ~~~~~ ~~~~~ ~~~~~ ~~~2.64 3.60 3.63 3.50Imprr releetlctoy ~~~~ ~~~~ ~~~~1.2 2.38 5. 1.

Averge -nioa ... 1 ring. rot 19.0 180. 13.0~ 14.40fterginel not-iol -aitgeot .42 - .34 .04 .20

aIa Adedrm oreLbor Foro and Ototrt P-n Rocker n Tho...aode 71 7u Totol Grwt.Rte In.7 Do ddre dPrc- of-k ece

150 97O17 97 76 190-19 7 970 197I 6 ~ 1970 1976ugricultore 1,307 ~~~~~~ ~~~~~ ~~~~1,459 64.0 58.0 19 349 -419 29.7 30.9

Ioduetrv nod nitiog ~~~~ ~~~ ~ ~~276 278 14.0 15.0 5.4 2,420 2,140 205.9 167.3S-mma _446 680 22.0 07.0 7 3 2.834 1U26 741.0 199.6CocI 2.329 2,507 100.0 100.0 3.7 1,176 1,356 100.0 100.7

ANNEX 1-23 - Page 6

CONTRACTED PUBLIC AND PUBLICLY GUARANTEED EXTERNAL DEBT, 1969-1977

(US$ millions)

1969 1970 1971 1972 1973 1974 1975 1976 1977/1

International Organizations 39.1 6.9 26.8 35.0 17.2 41.2 144.1 148.4 107.3

CAF - - 0.1 2.0 1.2 - 38.1 6.7 1.7TBRD 23.3 - - - - - 32.0 68.0 92.0IDA 7.4 1.4 6.8 8.0 6.0 6.2 7.5 - -

IDB 8.5 5.5 19.9 25.0 10.0 35.0 66.5 73.7 13.6

Governments 30.0 17.2 35.2 71.7 34.1 60.8 109.3 43.8 177.2

Argentina 3.2 14.3 4.3 4.2 3.4 2.9 3.4 4.6 50.0

Czechoslovakia - - 3.9 1.4 - - - 0.3 -Germany F.R. 1.7 1.4 - - - 28.6 - 5.2 21.7

United Kingdom 1.4 - - 6.8 - - 1.0 - -USA 22.7 1.5 25.3 40.0 26.5 28.8 26.9 26.3 75.5USSR - - - 15.9 - - 0.5 5.2 16.6

Others 1.0 - 1.7 3.4 4.2 0.5 77.5 2.2 13.4

Suppliers' credits 11.5 1.6 3.9 40.1 16.6 13.8 44.2 46.3 55.5

Argentina - - 1.6 5.1 5.9 1.6 1.7 0.3 1.9

Belgium - - - - 5.8 0.1 - - -Canada - - - - 3.7 1.9 - - -

Denmark 0.7 1.3 - 0.8 0.2 0.2 4.9 - -

Germany F.R. 3.9 0.3 - - - - 13.6 2.8 1.3

Israel - - - - 5.5 - -

Italy 2.1 - - 26.6 - - - - -

Japan - - 2.0 6.4 - - 10.8 19.5 10.3Spain 3.3 - - - - - - - -

USA - - - 1.1 0.9 1.9 2.4 - 25.2

Others 1.5 - 0.3 0.1 0.1 8.1 5.3 23.7 16.8

Private Banks 1.3 - 23.3 23.1 9.9 56.0 89.3 222.5 225.7

Brazil - - 12.0 7.9 4.7 13.5 - 13.7 7.7

USA 1.3 - 10.0 12.8 1.5 34.3 63.9 146.2 159.8

Others - - 1.3 2.4 3.7 8.2 25.4 62.6 58.2

Other 14.1 4.1 0.1 10.0 0.4 0.6 10.6 - 22.2

Nationalization (US ) - 78.6 - - 0.7 - - - -

Total /2 96.2 108.4 89.3 179.9 78.9 172.4 397.5 461.0 587.9

/1 Provisional/2 Net of adjustments and cancellations.

Source: Central Bank, IBRD Social and Economic Data Division.

ANNEX II- 24- Page 1 of 4

THE STATUS OF BANK GROUP OPERATIONS IN BOLIVIA

A. STATEMENT OF BANK LOANS AND IDA CREDITS (As of March 31, 1979)

-------- US$ million ------Loan or (Amount less cancellations)Credit # Year Borrower Purpose Bank IDA Undisbursed

Fully disbursed loans and credits 23.3 44.6

261 1971 Bolivia Livestock 6.8 0.8455 1974 Bolivia Mining/Manufacturing 6.2 0.8561 1975 Bolivia Agriculture 7.5 3.2762 1978 Bolivia Ulla Ulla Development 9.0 8.51121 1975 ENFE Railways 28.7 0.11211 1976 Bolivia Rural Development 9.5 7.61238 1976 ENDE IV Power 25.0 8.61290 1976 Bolivia Mining/Manufacturing 10.0 8.11324 1976 Bolivia Water Supply and

Sewerage 5.21 4.11331 1976 Bolivia Small-Scale Mining 12.0 11.01404 1977 Bolivia Education and Voca-

tional Training 15.0 12.91422 1977 ENFE Third Railway 35.0 21.81423 1977 AASANA Aviation 25.0 23.31489 1977 Bolivia Urban Development 17.0 16.81510 1978 Bolivia Ulla Ulla Development 9.0 9.01587 1978 Bolivia Highway Maintenance 25.0 25.0

Total 239.7 74.1of which has been repaid 7.5 0.9

Total now outstanding 232.2 73.2Amount sold 0.1 -of which has been repaid - 0.1 -

Total now held by Bank 232.2 73.2

161.6

ANNEX II- 25 - Page 2-of 4

B. STATEMENT OF IFC INVESTMENT (As of March 31, 1979)

Fiscal Amount in US$ millionYear Obligator Type of Business Loan Equity Total

1973 Plasmar, S.A. Cables and Plastic Product 0.3 0.1 0.41976 Banco Hipotecario

Nacional Capital Market 0.3 0.31976 Banco Industrial

S.A. Development Financing 0.6 0.61978 Molino Andino S.R.L. Plastic Products 2.3 - 2.3

Total 2.6 1.0 3.6Repaid, cancelled or sold 1.2 0.4 1.6

Held by IFC 1.4 0.6 2.0

C. PROJECTS IN EXECUTION

Credit 261-BO - Third Livestock Development Project, US$6.8 million, June 23, 1971;Effective Date: September 15, 1971; Closing Date: December 31, 1979.

The credit portion of the project has been almost fully disbursed;about US$400,000 for technical assistance remains to be disbursed and thecredit should be disbursed by the Closing Date.

Credit 455-BO - Mining Credit Project, US$6.2 million, January 18, 1974;Effective Date: June 18, 1974; Closing Date: June 30, 1978.

The project is proceeding satisfactorily and the credit should bedisbursed by the Closing Date.

Credit 561-BO - Agricultural Credit I, US$7.5 million, June 20, 1975;Effective Date: December 15, 1975; Closing Date: March 31, 1981.

Funds originally allocated for cattle are fully committed; creditdemand for grape production has been as anticipated, whereas demand for sheep,annual crops and sugarcane has been less than anticipated. Demand for sheepand annual crops funds is expected to accelerate; demand for sugarcane is notexpected to materialize.

Loan 1121-BO - Second Railway Project, US$28.7 million, June 5, 1975;Effective Date: August 6, 1975; Closing Date: December 31, 1979.

Project progress has been satisfactory with performance targetseither having been attained or exceeded. The loan is now almost fullycommitted.

- 26 - ANNEX II

Page 3 of 4

Loan 1211-BO - Ingavi Rural Development Project, US$9.5 million, March 8, 1976;Effective Date: October 7, 1976; Closing Date: June 30, 1982.

There have been delays in the implementation of some components ofthe project. Corrective measures have been taken, and project is now proceedingsatisfactorily.

Loan 1238-BO - Fourth ENDE Power Project, US$25 million, June 2, 1976;Effective Date: August 23, 1976; Closing Date: June 30, 1980.

The project has recently been delayed somewhat by poor performanceof local contractors and difficulties experienced in the transportation of amajor equipment component. Other components of the project have been proceed-ing satisfactorily.

Loan 1290-BO - Banco Industrial Mining and Industrial Credit Project,US$10 million, October 15, 1976; Effective Date: April 14, 1977;Closing Date: December 31, 1980.

After initial delays, the project is now proceeding satisfactorily.

Loan 1324-BO - Urban and Rural Communities Water Supply and Sewerage Project;US$11.5 million, October 15, 1976; Effective Date: December 10, 1976;Closing Date: June 30, 1981.

The Government has requested that the water supply and sewerageinvestments for the cities of Sucre and Potosi be cancelled inasmuch as thesecities are not prepared to proceed without substantial Government subsidies.In spite of initial delays, the other components of the project are nowproceeding satisfactorily.

Loan 1331-BO - Small-Scale Mining Development Project, US$12 million,October 15, 1976; Effective Date: July 15, 1977; Closing Date: December 31,1980.

Due to institutional managerial problems, the preparation ofsubprojects was delayed about 15 months. To facilitate loan utilizationa number of measures were taken in mid 1978; the first disbursement underthe credit component was authorized November 1978.

Loan 1404-BO - Education and Vocational Training Project, US$15 million,May 11, 1977; Effective Date: September 7, 1977; Closing Date: December 31,

1981.

The project has experienced some delays but is proceeding without

significant problems.

- 27 - ANNEX IIPage 4 of 4

Loan 1422-BO - Third Railway Project, US$35 million, June 6, 1977;Effective Date: September 29, 1977; Closing Date: December 31, 1981.

The progress of the project has been seriously impaired by therecent heavy rains and extensive floodings. A reduction in the project scopeis expected as the railways have to divert funds to repair damages. The Bankis discussing with the Government on how best to proceed.

Loan 1423-BO - Aviation Development Project; US$25 million, June 9, 1977;Effective Date: September 29, 1977; Closing Date: June 30, 1983.

The project is proceeding slower than expected but withoutsignificant problems.

Loan 1489-BO - Urban Development Project, US$9 million, November 30, 1977;Effective Date: June 22, 1978; Closing Date: June 30, 1983.

The project has been delayed nine months because of slow processingof subsidiary loan agreements. Most components are now proceeding satis-factorily.

Loan 1510-BO and Credit 762-BO - Ulla Ulla Development Project, US$9 millioneach, April 6, 1978; Effective Date: July 31, 1978; Closing Date: June 30, 1983.

The project is proceeding as scheduled.

Loan 1587-BO - Highway Maintenance Project, US$25 million, July 10, 1978;Effective Date: October 4, 1978; Closing Date: December 31, 1983.

Initiation of the maintenance works delayed six months becausebeneficiary has to concentrate on emergency measures to repair damages toroad system, caused by heavy rains and extensive flooding.

ANNEX IIIPage I

BOLIVIA

OMASUYOS-LOS ANDES RURAL DEVELOPMENT PROJECT

SUPPLEMENTARY DATA PROJECT SHEET

Section I:

Timetable of key events

(a) Time taken to prepare project: 12 months

(b) Agencies which prepared the project: Government, FAO/CP, Bank

(c) First Presentation to Bank: March 1978

(d) First Bank mission to review project: July 1978

(e) Departure of Appraisal Mission: October 1978

(f) Completion of Negotiations: May 17, 1979

(g) Planned Data of Effectiveness: October 1979

Section II:

Special Bank Implementation Actions

None

Section III:

1. IDA has obtained assurances that:

(a) the Government would not modify the decree and statutescreating the Project Unit without IDA's concurrence(para. 38); and that any replacements of the ProjectDirector and Sub-Directors would be made in agreementwith IDA (paras. 40 and 41);

(b) a "Procurement Committee" within the Project Unit to beresponsible for acquiring goods and services under theproject would be established, the Project Unit wouldcontinue to maintain the revolving fund for input supplyand the Government would increase this revolving fund toUS$200,000 to ensure sufficient and timely availability ofinputs for project farmers, and, for purposes of theproject, the Project Unit would not be subject to importrestrictions and import duties on goods imported by theProject Unit would be paid directly by the Government orreimbursed to the Project Unit (para. 42);

- 29 - ANNEX IIIPage 2

(c) the Government would provide the Project Unit staff withadequate incentives to ensure that the Project Unit couldattract and retain highly qualified staff (para. 41);

(d) the specialist in cheese and dairy production to becontracted by the Project Unit, would be employed by July1, 1980 under terms and conditions satisfactory to IDA(para. 40);

(e) the Project Unit would use its best efforts to establish,and provide technical assistance to, a Central Cooperative,and would submit to IDA by December 1, 1982 a proposal forthe transfer of the input supply system to the CentralCooperative; maintain separate accounts for the input supplysystem and the acclimatization center and establishcattle prices at sufficient levels to recover its investmentand operating costs (para. 42); and establish a CoordinatingCommittee in the Project area, consisting of project staff andrepresentatives of project beneficiaries, to ensure directfarmer participation in the execution and planning of theproject (para. 41);

(f) the Government would cause SNC to (i) prepare by April 1,1980, a study, including a timetable, satisfactory to IDA,for the improvement of about 50 km of feeder roads in theproject area utilizing the Ingavi Project road equipment;(ii) improve by December 31, 1980 the sections of theroad between Achacachi and Ancoraimes to ensure accessi-bility throughout the rainy season; and (iii) maintainthe project roads during and after the project period(para. 43);

(g) the Government would cause BAB to establish an office withadequate staff and necessary furniture and equipment inHuarina (para. 44);

(h) the Government, by April 1, 1980 would cause the ProjectUnit to enter into a contractral arrangement with INFOL,INBOPIA and FOMO for the promotion and development ofhandicraft activity in the project area (para. 43);

(i) the Government would coordinate the provision of credit inthe project area so as to ensure that all credit shall beprovided by means of the project (para. 44);

(j) the monitoring system to be established in accordancewith the IFAD Loan Agreement would be satisfactory toIDA.

- 30 -ANNEX IIIPage 3

2. Condition of effectiveness would be that:

(a) Under the credit program (i) a subsidiary agreementbetween the Central Bank and BAB and a contractualagreement between the Project Unit and BAB, satisfactoryto IDA, had been signed; (ii) the Government hadestablished a credit revolving fund in BAB, amounting toabout US$100,000, for the execution of the credit program,and set rules and guidelines for its operation (paras.44 and 57), and (iii) the Government has instructedthe Central Bank to replenish the credit fund, establishedin BAB, as necessary.

(b) All conditions necessary for the effectiveness of the IFADloan have been fulfilled.

3. Conditions of disbursement would be that:

Under the forestry program a contractual agreement between theProject Unit and CDF, satisfactory to IDA, had been signed;under the road program, that a contractual agreement betweenthe Project Unit and SNC, satisfactory to IDA had been signed(para. 43); and, with respect to subloans for productioncapital, that the revolving fund, to be replenished withrepayments from these subloans, is depleted (para. 57).

4. Condition of board presentation would be that:

The Sub-Directors for the Ingavi Project and also for theOmasuyos-Los Andes Project with qualifications and experienceacceptable to IDA, had been appointed (para. 41).

IBRD- 14079

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