Document of REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized FILE Document of COPY The World Bank FOR OFFICIAL USE ONLY REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO GUYANA FOR THE BLACK BUSH IRRIGATION PROJECT May 19, 1978 Report No. P-2335-GUA This document has a restricted distribution and may be used by recipients only in the perforinance of their offcial duties. Its eontents may not otherwise be disclosed without World Bank authorization.

2 CURRENCY EQUIVALENTS Currency Unit = G$1.00 Guyana dollar (G$) = US$0.39 G$1.0 million = US$390,000 US$1.00 = G$2.55 ABBREVIATIONS CARICOM - Caribbean Common Market CIDA - Canadian International Development Agency D & I Board - Drainage and Irrigation Board GMC - Guyana Marketing Corporation GRB - Guyana Rice Board GUYSUCO - Guyana Sugar Company IDB - Inter-American Development Bank IFAD - International Fund for Agricultural Development IRRI - International Rice Research Institute LDD - Land Development Division MAG - Ministry of Agriculture MARDS - Mahaicony Abary Rice Development Station UKODM - U.K. Overseas Development Ministry USAID - U.S. Agency for International Development GOVERNMENT OF GUYANA FISCAL YEAR January 1 - December 31

3 FOR OFFICIAL USE ONLY GUYANA BLACK BUSH IRRIGATION PROJECT CREDIT AND PROJECT SUMMARY BORROWER: Guyana BENEFICIARY: Ministry of Agriculture AMOUNT: US$10.0 million TERMS: 50 years, including 10 years of grace PROJECT DESCRIPTION: The project seeks to increase Guyana's export earnings through rice exports, in which the country has comparative advantage. Under the project, 6,000 families, of which 98Z fall below the poverty line, would benefit directly. Increased production of rice and food crops on about 75,500 acres of cultivated land would be achieved through rehabilitation and improvement of irrigation and drainage systems, and roads and on-farm development and improvement of agricultural supporting services. The project includes establishing new pumping plants, enlargement of main canals and distributaries, construction of rice drying and storage facilities, supply of farm machinery and maintenance equipment, applied research, seed production, training of extension agents and farmers, establishment of an extension service, and consultant services for design and construction of civil works and for strengthening agricultural development. The project faces three principal risks: (i) Government's ability to provide domestic financing; (ii) the Guyana Rice Board's ability to manage the rice industry properly; and (iii) shortage of experienced professional and technical staff. To help minimize these risks, Guyana would (i) utilize $2.5 million in local currency resources generated from a proposed line of credit from Canada for commodities, and the financing from all the other cofinanciers will finance a moderate proportion of local costs; (ii) secure technical assistance to strengthen the capabilities of the Guyana Rice Board; and (iii) secure in-service training of staff by project consultants. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

4 - ii - ESTIMATED COST: US$ Million Local Foreign Total % of Total Civil Works Buildings Equipment, including pumps Engineering and Supervision Consultant Services Extension, Research and Seed Production Project Preparation Facility Feasibility Study Contingencies: Physical Price TOTAL FINANCING PLAN: ---- US$ Million Total % of Total IDA IFAD USAID IDB Government and CIDA / TOTAL ESTIMATED DISBURSEMENTS: US$ Million FY79 FY80 FY81 FY82 FY83 FY84 IDA, Annual Cumulative Totals RATE OF RETURN: 13.0% STAFF APPRAISAL REPORT: Report No. 1714b, dated May 19, / Includes CIDA (US$2.5 million) in local currency.

5 INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT OF IDA TO THE EXECUTIVE DIRECTORS -ON A PROPOSED CREDIT TO GUYANA FOR THE BLACK BUSH IRRIGATION PROJECT 1. I submit the following report and recommendation on a proposed development credit to Guyana for the equivalent of US$10.0 million on standard IDA terms to help finance the Black Bush irrigation project. Cofinancing arrangements with the International Fund for Agricultural Development (IFAD), the US Agency for International Development (USAID), and the Inter-American Development Bank (IDB) for US$23.5 million are about to be concluded. In addition, it is expected that the Canadian International Development Agency (CIDA) will contribute US$2.5 million equivalent in local currency generated from a commodity import credit now being negotiated. PART I - THE ECONOMY 2. The Bank's most recent economic report (Economic Memorandum on Guyana, Report No GUA, dated June 7, 1977) was distributed to the Executive Directors on June 17, Updating economic missions have visited Guyana in August and November 1977 and in March Basic data are shown in Annex I. Background 3. The economic activity and population of Guyana are concentrated along a narrow coastal strip where sugar and rice are grown. With the exception of bauxite mining, the vast hinterland remains undeveloped. The more advanced mining sector has assumed increasing importance in the economy; both the sugar and rice industries are relatively efficient. Economic development has been retarded by a difficult physical environment, a limited resource base, and by sharp fluctuations in output and in income stemming from the vulnerability of the economy to exogenous shocks such as weather and fluctuations in international prices and demand. As a consequence, income, while fairly evenly distributed, is among the lowest (US$540 per capita in 1976) of any country in the Western Hemisphere. Real growth of the economy in recent years has been highly variable, but on average little more than the increase in population. Agricultural growth has been slow, export performance uneven. It has not been possible to reduce the persistent high level of unemployment which reached over 15% in Since independence in 1966, the development strategy of Guyana has been to increase the participation of the public sector in the economic activity of the country and to promote producer, consumer and marketing cooperatives. The Government has expanded state enterprises, created new stateowned financial institutions, and nationalized the country's bauxite/alumina and sugar industries. The growing role of the public sector is reflected in the increase of its share of gross domestic capital formation from 40% in 1968 to 90% in 1976.

6 -2-5. In recent years, the country's economy has been adversely affected by a number of changes in external economic conditions. A serious balance of payments situation developed in 1973 when adverse weather conditions and a depressed aluminum market led to diminished export receipts, forcing the Government into the Eurodollar market. The same year, public sector savings deteriorated sharply as a result of a large wage increase to government employees. The quadrupling of oil prices at the end of the year delivered the final blow, leaving the economy severely weakened at the beginning of 1974 with critical balance of payments and budgetary management problems. However, the boom in sugar prices later that year, an improvement in weather conditions and the strengthening of the world aluminum market, unexpectedly brightened the economic picture. As a result, average annual export receipts in 1974 and 1975 were more than double the level in 1973, more than compensating for the steep rise in the import bill. Real GDP grew by an annual average of 7% in 1974 and Moreover, the introduction of a progressive tax on sugar exports, with rates which rose with increasing world prices of sugar, permitted the Government to utilize the windfall to finance a major expansion in public sector investment in 1975 and to accumulate almost US$70 million in foreign exchange reserves. As a consequence, in 1976, despite the decline of sugar prices back to more normal levels and despite significant production shortfalls in bauxite, alumina and rice, resulting from poor weather, the authorities had sufficient resources available to maintain high import levels and to continue expanding the ambitious investment program begun in By the end of 1976, however, Guyana's gross foreign exchange reserves had been almost completely depleted. 6. With the end of the sugar boom, Guyana is belatedly confronting the full impact of the 1973 petroleum price increase. The necessary adjustment has been made particularly difficult by the fact that the temporary flood of sugar earnings led to a greatly expanded level of public sector investment and a resulting high import bill, neither of which can be sustained. In addition, a sizable expansion of Central Government current expenditures in 1976, coupled with the drop in sugar revenues, and continuing consumer subsidies led to a deterioration in gross public sector savings in 1976 to about 1% of GDP. This occurred at a time when the growing participation of the public sector in the economy and a shrinking private investment made a strong public sector savings performance important for financing investment at an adequate level. Investment reached almost 40% of GDP in One consequence of this was a current balance of payments deficit of over 30% of GDP. In absolute terms, the deficit exceeded US$135 million and gross international reserves fell from US$100 million to US$27 million during the year. Recent Economic Developments 7. While Guyana's balance of payments improved somewhat in 1977 as a result of commodity and travel restrictions introduced by the Government, the country continued to lose foreign exchange reserves. Exports declined from their already low 1976 level. Sugar exports were especially hard-hit by low world prices, a poor spring sugar crop in 1977, the loss of a bilateral contract, and the devastating impact of a 4-1/2-month long sugar strike. Rice exports also dropped in the first part of the year as a consequence of

7 -3- bad weather and resulting low production levels in 1976; despite record production levels in 1977, because of a late autum harvest, exports for the year as a whole did not show any increase over As a result, notwithstanding a 13% rise in bauxite and alumina receipts, total export receipts fell slightly below 1976 levels. The Government's attempts to contain imports last year through expenditure cutbacks and commodity and travel restrictions were successful in reducing imports; nevertheless, the current account deficit was about US$100 million in The terms of trade, although improved when compared with 1976, continued adverse to Guyana. Dwindling net capital inflows, affected by sharply reduced foreign exchange disbursements in the investment program, were inadequate to fill the gap. Increased short-term deposits at the Bank of Guyana from Venezuela and Brazil only partially compensated for dwindling net capital inflows. As a result, net foreign exchange reserves were highly negative and the country had accumulated about US$40 million in commercial arrears by the end of the year. 8. As a consequence of the import cutback, investment reductions, modest growth in bauxite/alumina output, and the reduction in sugar production consequent to the strike, real GDP growth fell by 6.2% in At the same time, the removal of some consumer subsidies, in addition to further import restrictions on consumer goods resulted in an estimated 11% rate of inflation in During 1977 the Government's import reductions were accompanied by an approximate 30% cutback in public sector investment. Essentially, the Government continued high-priority ongoing projects to which external financing was attached, and postponed the completion of other projects. Central Government financing of public corporation investment has been virtually eliminated, and only those corporations which generated their own internal and external financing are proceeding with capital spending. 10. Unfortunately, the Government's investment cutbacks were accompanied by further deterioration in public sector savings, reflecting the reduction in sugar revenues, losses in the operations of several public enterprises, as well as the impact of the minimum wage increase on the Central Government wage bill. As a consequence, despite cutbacks in Central Government current expenditures, public sector savings became negative in Accordingly, Guyana depended entirely on gross external inflows, domestic borrowing, and money creation to finance investment in Nevertheless, although gross external inflows declined, they were adequate to finance almost half of the total investment program. The accumulation of balance of payments arrears resulted temporarily in increased liquidity in the banking system, which the public sector used to help finance its budgetary deficit. This, of course, is not a sustainable method of financing public investment. The Development Plan 11. Guyana has recently drawn up its Third Development Plan for the period It emphasizes export promotion and production increases, and apparently constitutes the minimum investment necessary to maintain a momentum of development in the economy. Total public sector investment in the

8 -4- next three years ( ) is projected at about G$930 million and is expected to vary from 19% to 25% of GDP annually, about four-fifths of the level attained in Approximately four-fifths of total investment is allocated to the export-oriented productive sectors and related infrastructure. The projects in the proposed investment program include only those which are ongoing or for which external financing is likely to be secured. The proposed Black Bush irrigation project, and the Upper Demerara forestry project which has been appraised by the Bank, account for G$84 million of the G$460 million total outlay for new projects. 12. Agriculture, forestry and fishery are to receive about 36% of the investment program. Projects in these sectors would begin to yield returns and expand exports toward the end of the plan period. Projects in the manufacturing and mining sectors together claim about one-fourth of the plan outlay and are also expected to contribute to higher export earnings by Infrastructure projects in transport, communications and power which are considered essential to the development program have been allocated about one-fifth of the total investment in the program. 13. Among the projects included in the social sectors, education and training account for the bulk of the investment. A substantial proportion of the amount allocated to education would be utilized by the Bank/IDA-financed second education project. The remainder of the projects included in the program are of small magnitude. Since these projects are so numerous and widely dispersed, they are not readily susceptible to external financing. 14. Guyana's longer term prospects depend substantially upon the completion of export-oriented projects. The Government is particularly conscious of the role of these projects as a means of achieving sustained improvement in the country's economic position and is mobilizing resources, both internally and externally, to meet the needs of these priority investments. 15. In the years ahead Guyana will be faced with sharply increased amortization payments on the external public debt. Gross external inflows would have to average about US$100 million annually through 1980 if Guyana is to replenish its foreign exchange reserves to a suitable level and avoid difficulties in servicing its external debt. Mobilizing the required levels of public sector capital inflows will depend upon an improved capacity to prepare and execute projects and especially upon increasing the levels of public sector savings. In view of this situation, Guyana has entered into discussions with the IMF regarding the measures that will lead to effective domestic and external demand management. 16. Following the adoption of a comprehensive set of policies to restrain domestic demand and mobilize public sector resources, it should also be possible to mobilize the external resources needed to cover the external financing gap, eliminate the commercial arrears and begin the restoration of the foreign exchange reserves. However, even with the measures likely to be taken by the Government, including increasing revenues and reducing current expenditure growth, there will still be a domestic financing gap for the public sector investment program, unless external loans and credits cover a large part of local costs. The ability of Guyana to carry out its investment program without creating unacceptable pressures upon prices will require

9 government policies of substantial stringency, as well as the willingness of the international community to give additional assistance to Guyana. Moreover, the country's precarious external liquidity position in the immediate future and the country's low income level suggest that a high proportion of such external assistance should be offered on concessionary terms. 17. Guyana's growth in real GDP over the next two to three years is expected to be low, primarily because of the continuing constraint on the capacity to import. After 1980, it should be possible to maintain real growth rates of 4% to 5%, provided domestic policies are followed that encourage production and savings in both the public and the private sectors. PART II - BANK GROUP OPERATIONS IN GUYANA 18. The first Bank loan to the country was made in 1961 to the then British Guiana for agricultural credit and that loan has been repaid in full. Since independence in 1966, Guyana has received, net of cancellations, US$40.8 million in loans from the Bank and US$13.5 million in credits from IDA for eight development projects. Reflecting the development needs of the economy, past lending to Guyana has been for physical and social infrastructure. 39% of Bank lending has been for sea defenses, highways and power. Two education projects designed to improve secondary education and strengthen agricultural and vocational skills account for 33% of Bank lending to the country while assistance to agriculture and livestock development account for the remaining 28%. Annex II contains a summary of Bank loans and IDA credits as of March 31, 1978, with notes of the status of ongoing projects. There has been no IFC operation in Guyana. Recently, a refrigeration project has been proposed for IFC financing. 19. In general, while the execution of Bank Group projects has been satisfactory, the pace of project implementation has been slow. Shortage of skilled technicians, institutional weaknesses, lack of a central office to coordinate and monitor project implementation, and lack of enough resources to meet local costs account for delays in project implementation. Since all the ongoing projects (except for the Second Education project) were appraised before the substantial rise in world inflation in , these projects have been faced with substantial cost overruns to be met by Guyana. The Bank Group has been assisting the Government to obtain financing from external sources to meet the financing needs of some of these projects. As a result of these efforts, a financing package to meet the cost overruns of the Bankfinanced Tapakuma irrigation project is being worked out with the UK Overseas Development Ministry (ODM) and the OPEC Special Fund. 20. As indicated already, despite its resource potential, Guyana's development has been impeded by inadequate infrastructure, shortage of skilled manpower and institutional weaknesses, especially in coordinating and executing development projects. Consequently, earlier Bank Group operations in Guyana have been mostly aimed at strengthening both the physical and social infrastructure and the institutional setup in the Government. The two Sea Defense projects (Ln. 559 and Ln. 765) were designed to protect the coastal agricultural

10 lands and the country's administrative and population centers from tidal inundation. The Highway project (Cr. 301), while supporting agricultural operations, included technical assistance to the Ministry of Works in preparing a national transport development strategy. Acting as the executing agency of the United Nations Development Programme (UNDP), the Bank organized a transport sector study and helped in setting up the Central Transport Planning Unit. The Power project (Ln. 875), cofinanced by Canada and the UK, was designed to increase modestly the thermal generation capacity and integrate the national power system through frequency conversion and interconnection. Also it contained provision for training and institutional improvement. As in the case of the transport sector, the Bank, acting as the executing agency of the UNDP, organized a survey of Guyana's hydropower potential. 21. With a view to developing a relevant educational system and reducing manpower constraint, the Bank Group has assisted Guyana with two education projects (Cr. 139 and Ln. 583 for the First Education project and Cr. 544 and Ln for the Second Education project). These projects included multilateral secondary schools, community high schools and teacher training facilities, and emphasized agricultural education and rural training. The second education project includes the development of curricula for technical institutes, fellowships for technical teachers and a study to assess the effectiveness of the vocational and technical education and training system in meeting Guyana's needs. This study would help identify priorities for longterm investment in education and training. 22. The Bank Group has financed two directly productive projects, namely, the Livestock project (Cr. 221) and the Tapakuma irrigation project (Ln. 1016). Both these projects seek to utilize Guyana's land resources so that the country can fulfill its role as the food supplier to the CARICOM while developing efficient livestock and rice production systems. The Livestock project has helped to reduce imports of meat and dairy products and is expected to lay the basis for an export-oriented livestock industry. The investment already made in the agricultural development program in the Tapakuma irrigation project has enhanced yields in rice, thus contributing to increased export earnings. In order to assess the potential in agriculture, a sector review was completed in 1977 under the Bank/FAO Cooperative Program. 23. The Bank Group's lending strategy for the next two years is aimed at projects which would increase production for export as rapidly as is feasible. Within this overall strategy, emphasis has been placed on development of agriculture and forestry. Together with the ongoing Tapakuma irrigation project and the IDB-financed Mahaica-Mahaicony-Abary irrigation project, the proposed Black Bush irrigation project would help utilize the country's agricultural potential and increase both export earnings and rural household incomes. Similarly, the recently appraised forestry project in central Guyana would not only utilize the abundant forestry resources and open up the interior of the country for settlement, but also contribute significantly to export earnings. These programs to expand export-oriented production require complementary investments in training and institutional improvements. Assistance in those areas is being arranged under programs financed by other bilateral and multilateral agencies.

11 24. The Bank Group has also sought to secure assistance for directly productive projects from other external aid agencies. In the proposed Black Bush irrigation project, as well as in the forthcoming forestry project, cofinancing from both bilateral and multilateral sources is being arranged, so that the IFAD, USAID, IDB, and CIDA will join IDA in financing the proposed project; it is also expected that the forestry project will bring together financing from the European Development Fund and the European Investment Bank. 25. Apart from these, a water supply and sewerage project for the capital city has been proposed for Bank financing. A feasibility study for this project financed by the USAID has been completed and the components for external financing are under review in Guyana. As the ability of the economy to execute development projects improves, it is expected that follow-up projects in agriculture and forestry will be developed for Bank Group assistance in later years. 26. As noted above (para 7), Guyana is at present in the throes of serious balance of payments difficulties. Until a package of measures to increase domestic savings has been adopted, it is difficult to consider Guyana creditworthy for appreciable amounts of lending on conventional terms. Even after such measures have been adopted, however, a substantial amount of Guyana's external capital requirements will have to be obtained on concessional terms, given the modest balance of payments prospects and the low level of per capita income. In view of this, Guyana is considered, for the time being, as having quite limited creditworthiness, warranting a blend of Bank and IDA resources from the Bank Group. On this basis and considering the high social priority and export orientation of the Black Bush irrigation project, it is proposed to make the Bank Group's contribution to this project on IDA's terms; for the future it is expected that modest amounts of Bank loans will also be proposed, always provided that the economic management of the country warrants it. 27. Bank Group financing accounts for about 8% of Guyana's total external debt outstanding and disbursed and about 4% of debt service. It is estimated that by 1980 the Bank Group's share of total external debt outstanding and disbursed would increase to 11%, and of total debt service to 5%. PART III - TIE AGRICULTURAL SECTOR AND RICE PRODUCTION IN GUYANA 28. Guyana's agricultural sector contributes about 25% to 30% to the GDP. Its share in the country's exports has varied between 37% and 55%, depending upon weather and international market prices. Output consists mainly of rice and sugarcane, which occupy 85% of the total crop area and employ about 70,000 or about one-third of the country's labor force. Development of livestock and fisheries has been receiving increasing attention in recent years. 29. Out of the country's total area of 53 million acres, land in agricultural use amounts to only about 3 million acres, while the rest is made up of wild forest lands or savannahs. The principal agricultural zone is along

12 -8- the coastal plains, which contain about 600,000 acres of arable land and almost 90% of the country's population. Development of this area has entailed extensive capital investment in sea defense, flood protection and drainage works, which account for 30% to 40% of the annual capital outlay for agriculture. 30. While sugarcane cultivation is mainly done by state-owned estates, rice production is dominated by small farmers. The distribution of holdings by size indicates that over two-thirds of the farmers have less than 10-acre holdings. Land tenure information is scarce. It is estimated that about half of the cultivated lands are state-owned lands leased to farmers; the remaining half are private freehold lands. While most of the farms are operated by freeholders or leaseholders, there is a relatively small number of landless agricultural workers. 31. From the mid-1960s to the early 1970s, agricultural output barely kept pace with population growth. The factors which accounted for this stagnation are several: with the expansion of rice acreage which largely accounted for the production increases, the supporting services needed to achieve higher yields were not fully available. The pricing policy adopted in the mid-1960s, which actually lowered farmgate paddy prices, had an adverse effect on production and led to a shift from rice to other crops. The widespread adoption of mechanization caused harvesting losses with traditional varieties which were not suited to modernized farming and the shortage of tractors and plows caused delays in land preparation and planting. Delays in land preparation and harvesting caused by inadequate drainage and wet lands have substantially contributed both to lower yields and poor quality rice. 32. In 1969 Government launched a rice modernization program. This, together with investments in irrigation and drainage development, introduction of high-yielding rice varieties and major increases in paddy prices paid to farmers since 1972, has reversed the trend and production of milled rice has more than doubled between 1973 and Rice production, which hit a 17-year low of 94,000 tons in 1972, increased significantly and reached 160,000 tons in There was a sharp decline in output in 1976 because of exceptionally heavy rainfall, but 1977 has turned out to be a banner year with an estimated output of 225,000 tons. 33. The rice industry employs about 75% of the agricultural labor force. Rice cultivation is mechanized even on small farms. Subsidized inputs, technical assistance and guaranteed prices provided by the Guyana Rice Board (GRB), as well as improved water control facilities, have contributed to increased rice output in recent years. Development of drainage and irrigation facilities is a precondition for increasing double cropping and improving rice yields. The expanding network of water control facilities has enabled double cropping of rice on 110,000 acres of rice lands. The Second Five-Year Plan ( ) and the forthcoming Third Development Plan ( ) have accorded high priority to the development of agriculture. A comprehensive plan to rehabilitate existing irrigation and drainage systems and construction of new

13 - 9 - systems, including roads and on-farm development, and improvement of agricultural supporting services for about 450,000 acres in the coastal area is being undertaken by the Government. The Bank-financed Tapakuma irrigation project (41,750 acres) in the northwest coastal region, the IDB-financed MMA irrigation project (98,000 acres) in the central coastal region, and the proposed Black Bush irrigation project (75,500 acres) in the southeastern coastal region form part of the comprehensive plan of agricultural development for export-oriented agriculture. 34. The Rice Modernization Program, which was completed in 1975, was assisted by the USAID. As part of the program, six large-scale drying and storage facilities were constructed and funds were provided for rice milling equipment. A new central rice research station was established and improved varieties of rice seed were introduced in an effort to improve quality. A follow-up project for further improving the rice industry has been proposed to the USAID. The proposed Black Bush irrigation project would be the Bank Group's second operation for improving field operations and land utilization and enhancing the export potential of the rice industry. 35. Inasmuch as it controls both the sugar and the rice industries, the Government plays a critical role in the agricultural sector. The principal agency charged with the responsibility for the rice industry and technical services is the GRB, which is a statutory body under the Ministry of Agriculture (MAG). GRB's agricultural support services and subsidized inputs are aimed primarily at increasing yields on small farms which constitute the mainstay of Guyana's rice industry. Apart from providing production credit to farmers, the GRB is the principal buyer, processor and marketing agent for rice. Under the marketing arrangement with CARICOM, the GRB obtains premium prices for its exports. Profits from export sales are used to provide subsidized inputs to the rice industry and price support for locally consumed rice. In addition to the GRB, the newly created Guyana Agricultural Cooperative Development Bank (AGBANK) provides credits to farmers. To deal with commodities other than rice, the Government has established the Guyana Sugar Company, the Guyana Marketing Corporation and the Guyana Agricultural Products Corporation to look after the production, processing and marketing of farm products. Through expanded facilities in the Guyana School of Agriculture and establishment of six rural training centers and an in-service training and communication center of the MAG as part of Bank/IDA-supported second education project (Ln and Cr. 544), the supply of agricultural technicians, teachers and agricultural staff will be increased. While agricultural extension is the responsibility of the MAG for all crops other than rice, the GRB is responsible for extension services in the rice industry. Given the agricultural potential of the country and the emphasis placed on agricultural development, available extension assistance is inadequate. It is estimated that out of 33,000 farm families in Guyana, perhaps only 25% receive the benefits of extension services and a national agricultural extension program is being launched by the Government. 36. Despite the predominance of small farms in rice production, Guyana's rice industry is highly mechanized. There is currently an average of one

14 tractor for 75 acres in the coastal zone. Notwithstanding the relatively large number of privately owned tractors and farm machinery, their utilization is low, because of lack of repair and maintenance facilities and because of the availability of GRB's machinery hire services at subsidized rates. This, in turn, has made it difficult for the GRB to properly maintain its equipment fleet and causes delays in harvesting and land preparation during periods of heavy rainfall, thus affecting yields. Also, inadequate development of feeder and farm-access roads causes delays in transporting paddy to the dryers and mills which lead to spoilage and deterioration in rice quality. Feeder roads and farm-access roads are currently being developed with assistance from the USAID and the European Development Fund. Assistance to improve machinery maintenance facilities is expected to be provided shortly by the UK ODM. 37. Given the relatively low capital intensity of schemes to rehabilitate and extend irrigation and drainage systems in areas already under cultivation, Guyana has given high priority to such investments over schemes for opening up new lands for settlement which would have a higher capital intensity and longer gestation period. Furthermore, the application of an integrated agricultural development approach to increase productivity of lands already cropped would not only help Guyana achieve its production targets in a cost-effective manner relatively quickly, but also bring improved delivery systems to Guyana's small farmers. The ongoing Tapakuma irrigation scheme and the proposed Black Bush irrigation project are based on this strategy. As in the case of the Tapakuma irrigation project, the proposed project is aimed at improving the incomes of small farmers whose present per capita income is less than US$75 per annum. PART IV - THE PROJECT Background 38. The feasibility study for the rehabilitation of the irrigation and drainage system in the Black Bush Polder and adjacent lands (see map) was financed by the USAID. A supplementary study to cover other lands abutting the Polder was financed by the Bank under the project preparation facility in The project was appraised in April A supplementary project data sheet is contained in Annex 3. A report entitled "Staff Appraisal Report, The Black Bush Irrigation Project: Guyana" (1714b-GUA) dated May 19, 1978 is being circulated separately to the Executive Directors. The credit was negotiated in Washington, DC from March 10 to 16, 1978 with a delegation led by Mr. Harold Wilkinson, Secretary to the Treasury. Project Objectives 39. The principal objective of the project is to build up Guyana's rice export potential quickly by improving the productivity of its numerous small farmers. The project would, over a six-year period, rehabilitate and extend irrigation and drainage facilities and provide on-farm development and agricultural supporting services in order to increase rice production over 75,500

15 acres in the Black Bush Frontlands (29,600 acres), Block III (19,400 acres) and the Polder (26,500 acres). Besides strengthening Guyana's comparative advantage as a major rice producer and exporter in the Caribbean, the project would directly benefit about 6,000 farm families, 98% of whom are below the relative poverty level annual income of US$180 per person. Lack of full water supply and suitable irrigation and drainage facilities, as well as inadequate agricultural extension services, have kept agricultural yields at a low level in the project area. The strongest impact of the project would be felt in the Frontlands where cropping intensity is the lowest in the entire project area and where, as a result of increased water supply and improved irrigation and drainage facilities, double cropping of rice would be achieved. Project Description 40. The proposed project is designed to rehabilitate and improve the physical infrastructure and agricultural supporting services, principally for small-scale farming of rice and food crops. The main components of the project are: (a) A new pumping plant (1000 cusec) on the Berbice River for transfer of additional water through the existing Torani Canal to the Canje River, rehabilitation of the Torani Canal, bank improvements on the Canje River, and two new pumping plants on the Canje River to serve Block III and the Frontlands; (b) enlargement of the main canals and distributaries in the Polder for conveyance of water to the Frontlands, rehabilitation and improvements of irrigation and drainage systems and roads and on-farm development in the Frontlands, rehabilitation of the main supply canal, the Seaford distributary and the main regulators into the watercourses in Block III, and improvement of existing facilities in the Polder to correct localized problems with irrigation and drainage on about 4,000 acres; (c) construction of a new project headquarters, rehabilitation and expansion of the two existing operation and maintenance stations, and provision of additional maintenance equipment; (d) construction of rice-drying and storage facilties, mainly in the Frontlands area, and provision of additional farm machinery and spare parts to meet the demands for land preparation and harvesting with the higher intensity of land use; (e) an agricultural development program including applied research for variety trials and fertilizer response on different soil types, production of improved seed and seed testing, and a training program for extension staff to develop an adequate extension service in the project area and provide training to farmers; and (f) consultant services to assist Government in implementation of the project with surveys, investigations, final designs, tender

16 documents, contract administration and supervision of construction, and to prepare a feasibility report for development of irrigation of the livestock cooperative lands adjoining the project area. The consultants would also assist with the agricultural development program. Project Implementation 41. The construction phase of the project would be completed in 1983 and full development of agricultural production would be reached in As in the case of the ongoing Tapakuma irrigation project, the MAG would be the executing agency for this project also. MAG would carry out the project through its various divisions responsible for irrigation, drainage and agricultural development. The agricultural development program of the project, including extension, applied research and seed production and equipment for rice production and processing, would be launched in the early phase of the project. GRB, which is already engaged in similar operations under the Tapakuma project, would cooperate with the project consultants in implementing the agricultural development program. It is expected that the early launching of this program would result in improved yields valued at about US$0.5 million in 1980 and about US$1 million by 1981 when civil works on major irrigation and drainage system would commence. The value of the incremental output would be US$4.5 million per annum when these works are completed in Within the MAG, the Hydraulics Division, under the policy direction of the Drainage and Irrigation Board, would have responsibility for engineering planning, construction of project works, and operation and maintenance of the completed project. The Extension Division would administer the extension and training program, leading to establishment of an extension service in the project area, and the applied research program for variety trials and fertilizer response on different soil types. A Plan of Operations for strengthening extension services in the project area and for implementing programs for training extension workers and farmers, fertilizer and variety trials, soil testing, and research on water management would be prepared with the assistance of consultants and submitted to IDA no later than June 30, Minimum acceptable standards for control of the quality of rice seed would be introduced for both private and public seed producers (Section 3.07 of Joint Project Agreement). GRB, which has the primary responsibility to provide technical assistance to rice farmers and for rice research, would participate in these programs with the MAG Extension Division. GRB would have the main responsibility for agricultural credit and the supply of fertilizers, chemicals and other inputs, machinery services for land preparation and harvesting, technical assistance for pest and disease control and production techniques, and the drying storage, milling and marketing of rice. The Land Development Division would continue to be responsible for administration of settlement schemes on land leased from Government, and the Lands Department would administer the granting and registration of freehold lands, leasing of government lands and collection of rent and land taxes. 43. The AGBANK would provide medium-term farm development loans, including funds for purchase of farm machinery, to farmers in the project area.

17 - 13- The Guyana Marketing Corporation would provide assistance in the distribution and marketing of food crops, as part of its national responsibility to improve the supply of food to local consumers. 44. The construction of major project works would be by a contract awarded through international competitive bidding. Small local firms would be given subcontracts for specific work items and for construction of buildings. On-farm development would be executed by the Hydraulics Division as a force account operation. GRB would supervise construction of the new drying and storage facilities. Government would provide drainage pumps which are already on hand. GRB would purchase tractors and mold board plows as a means to improve land preparation and priority would be given to the Frontlands for the use of farm machinery (Section 3.08 of Joint Project Agreement), since the present availability of farm machinery in the Frontlands is relatively low as compared to other project areas. 45. A consortium of local and foreign consultant firms would assist the Government in the implementation of the project and the agricultural development program. Consultant services for a total of 560 man-months have been provided for in the project and these services would be financed by the US AID. A project manager and a project engineer, appointed by the MAG, would supervise and manage field activities and operations, and coordinate the participation of all departments, divisions and boards at the project level. The appointment of the project manager and the project engineer and the employment of a team of consultants acceptable to the Association and under terms and conditions approved by the Association for implementation of the project works and agricultural development program under the project would be a condition of effectiveness (Sections 3.02 of Joint Project Agreement and 5.01 of Credit Agreement). 46. In order to ensure satisfactory accounting and audit of project finances, MAG would maintain separate accounts for operations financed under the project. HAG and its dependent departments, division and boards would maintain separate accounts for the project and for each of the main components. These project accounts would be audited annually by an independent auditor satisfactory to the Association; and the audited accounts and the auditor's report would be submitted to the Association within six months of the close of each fiscal year (Section 4.02 of Credit Agreement). The Government would arrange for the outstanding audit of GRB's accounts to be completed and for a satisfactory plan prepared for improving GRB's accounting system and financial management (Section 4.05 of Joint Project Agreement). 47. Preparation of a project completion report would be the responsibility of MAG. Monitoring of the project during execution would form an integral part of the project. To set up a monitoring system for the project, the Government of Guyana, after proper study, would submit a request to IFAD for technical assistance. Assurances were obtained that the Government would send IFAD and the Association proposals by not later than December 31, 1978, for establishing a satisfactory monitoring system for the project (Section 3.09 of Joint Project Agreement).

18 Cost Estimates and Financing Plan 48. The total project cost is estimated at US$42.8 million, net of taxes, of which $27.0 million (or 63%) would be in foreign exchange. Physical contingencies are estimated at US$4.1 million and price contingencies at US$11.2 million. The physical contingencies are estimated at 15% of the base cost estimate, and price contingencies, which amount to 41% of the base cost estimate, have been calculated on the basis of a rate of inflation of 9% for civil works and 7.5% for equipment until 1979, and 8% for civil works and 7% for equipment thereafter. A rate of inflation of 10% per annum was used in estimating the price contingencies for consultants and local staff employed on the project. 49. Apart from the proposed IDA credit of US$10.0 million, loans of US$10.0 million from IFAD, US$7.5 million from USAID, and US$6.0 million from IDB are expected to be approved shortly. In addition, it is expected that CIDA will contribute US$2.5 million equivalent in local currency generated from a commodity import credit now being negotiated. The terms of financing of the IFAD loan are yet to be determined, but it is expected that they would be concessional. The USAID's loan would be for 20 years, with 10 years of grace, with interest at 2% for the first 10 years, and 3% thereafter. The terms and conditions of the loan from IDB and the credit from CIDA are yet to be determined, but it is expected that they would be on concessional terms. The credit would become effective when the loan agreements with IFAD, USAID and IDB have been executed (Section 5.01 of Credit Agreement). 50. The IFAD loan and IDA credit totalling US$20.0 million would be used as a joint fund to finance civil works (US$10.32 million), equipment (US$3.84 million), and Project Preparation Advance (US$0.28 million), while the remaining amount of US$5.56 million would be unallocated. The loan from the USAID would be used on a parallel financing basis to finance construction of project headquarters, operation and maintenance stations, laboratory and drying yards and paddy storage buildings (US$0.80 million), equipment and spare parts for rice production and processing, on-farm development, extension, research and seed production and administration, engineering and supervision (US$2.16 million), and consultant services for the project, including preparation of a feasibility study for development of livestock cooperative lands (US$3.02 million); the remaining amount of US$1.52 million would be unallocated. The components to be financed out of the proposed IDB loan would be finalized at loan negotiations between Guyana and IDB. In the light of this, it might be necessary to revise the list of goods covered by the IFAD loan and IDA credit. External loans and credits would provide US$9 million equivalent for local currency expenditures. Of this, the IDA credit would provide US$1.5 million. The Government's contribution would finance US$6.83 million of local costs to cover the balance of estimated project costs. This contribution would finance US$1.6 million of local costs for staff and services for engineering and supervision; extension research, research and seed production, the feasibility study for a Stage II project; and to support the consultants and internal operational costs. An amount of US$5.3 million would be used to finance civil works local cost. The Government would be the borrower and carry the foreign exchange risk.

19 Summary of Costs and Financing Plan (US$ million) Costs Financing IDA/ Govt. & Other Local Foreign Total IFAD USAID Cofinancing Civil Works Buildings Equipment, including pumps Engineering and supervision Consultant services Extension, research and seed production Project preparation facility advance Feasibility study for cooperative lands Subtotal Physical Contingencies Price Contingencies Total Percentage Cost Recovery 51. The Drainage and Irrigation Ordinance of 1953 empowers the D & I Board to collect actual operation and maintenance costs and recover the full amount of capital investments from the beneficiaries. In practice, the farmers are assessed only the operations and maintenance charges, and collection of these levies has averaged about 15% over the years. As a result, Government has been subsidizing operation and maintenance costs for all irrigation projects at an annual cost of about US$400, On lands farmed under government leases, which account for about one-half of the project area, farmers object to repaying development costs on lands which they do not own. Under the proposed project, the Government would carry out a study, not later than six months before the estimated date of completion of each drainage and irrigation system in the project, for determining the extent to which the investment cost could be recovered over a period of 40 years. Such study would take into account, inter alia, users' ability to pay and the need to maintain economic incentives for them and the

20 appropriate interest rate to be used in the computation. The Government would review with the Association and IFAD the conclusions and recommendations of the study soon after this is completed. Assurances were also obtained that the adequacy of the charges would be reviewed with the Association and IFAD, at least once every two years (Section 4.06 of Joint Project Agreement). Markets 53. The project is estimated to increase annual production and exports of milled rice by 21,000 tons by 1985, bringing total rice exports by Guyana to about 200,000 tons. 54. While CARICOM has provided a ready outlet hitherto, it is not expected that CARICOM will continue to absorb Guyana's rice exports at the present level of premium prices. The annual rice import requirement of CARICOM is currently 150,000 tons, and Canada, Cuba and the Central and South American countries together import 250,000 tons. With the projected demand increases, Guyana should be able to market the increased output, provided the quality of Guyanese rice is further improved and an aggressive marketing strategy is adopted. 55. Both the GRB and the Government are aware of the need to improve the quality of rice to expand exports. In order to ensure quality, additional drying and storage facilities are being established under the project and the USAID has under study a proposal to establish additional storage capacity. Assurances have been obtained that the Government would assist in the improvement and expansion of rice mills in the project area and would, for this purpose, take measures adequate to enable the provision of credit on reasonable terms to owners of these mills and take all action necessary to maintain reasonable returns for rice millers that will permit improvement in the quantity and quality of rice milled in the project area (Section 4.04 of Joint Project Agreement). As the volume of rice for the export market expands, the GRB would strengthen its marketing organization with suitable specialists. A study financed by the USAID, which is now in progress, would analyze GRB's marketing strategy and institutional capability and make recommendations to improve the rice marketing system. Assistance for strengthening the marketing services would be obtained as needed by the Borrower from external technical assistance agencies. 56. The additional output of 5,200 tons of food crops from the project would be absorbed internally. The small incremental production of about 400 tons of sugar by the project would be absorbed by existing markets. Procurement 57. Contracts for the main project works (US$15.6 million) and imported equipment (US$3.8 million) to be financed under joint financing arrangements would be procured through international competitive bidding in accordance with Bank Group guidelines. Local procurement of minor items of equipment and supplies would be let on the basis of local procurement procedures acceptable to the Association. Equipment to be imported with IDA/IFAD financing would

21 include irrigation pumps, and equipment, such as draglines, graders, and shop and servicing equipment for operation and maintenance of project works. Consultant services to be financed by the USAID would be under terms of reference satisfactory to the Association. Domestic manufacturers in Guyana would be accorded preferential treatment in bid evaluations, limited to 15% of the c.i.f. price of imported goods or the actual tariff application, whichever was lower, and regional preferences for other members of the Caribbean Common Market (CARICOM) would be limited to 15% of the c.i.f. price of non-regional goods or the difference in tariffs, whichever was lower. Disbursement 58. The IFAD loan and IDA credit would be disbursed against 66% of the total expenditures for project works and 100% against the foreign cost (c.i.f.) of directly imported equipment. For imported equipment purchased locally, the disbursement would be at 85% of costs and for the ex-factory cost of equipment, materials and supplies manufactured locally, the disbursement would be at 90%. The credit would include the refinancing of the Project Preparation Facility loan of US$280,000, made to Government in April Benefits and Risks 59. The project would directly benefit 6,000 farm families, of whom 83% operate farms of less than 10 acres. Family labor of these small farmers would be utilized in food crop farming as well as in double cropping of rice. Net incomes of small farmers with 3.5 acres (i.e. 58% of the farms in the project area) would increase from the present level of US$40 per capita to about US$70 per capita. The cropping intensity would rise from the current level of to and 6,500 acres of unutilized land in the area would be developed. 60. The primary benefit of the project at full development would be an incremental production of 21,000 tons of milled rice annually for the export market. Export earnings resulting from this source are valued at US$8.2 million annually. In addition, the project would produce 5,200 tons of food crops destined for the domestic market. The value of these crops is estimated at US$0.9 million annually. 61. In addition to these benefits, the project would generate secondary, unquantified benefits in terms of additional part-time and full-time employment in commercial services related to processing and marketing of the increased agricultural production in the area. Increased availability of food crops in the domestic market would help the country improve nutritional levels and achieve self-sufficiency in food. 62. The project would help upgrade the production skills of farmers. The creation of additional drying and storage facilities under the project would not only help reduce crop losses, but also significantly improve the quality of the milled rice for export. Improved facilities in the GRB's maintenance station in the project area would help salvage a substantial amount of GRB's equipment which is currently inoperable.

22 The project is designed to rehabilitate existing irrigation and drainage systems and no significant environmental impact is expected from it. However, since occurrence of schistosomiasis is a risk associated with such projects, the Government has taken note of the need to watch the situation in the project area in order to keep it free from occurrence of such diseases. 64. On the basis of the quantified benefits directly attributable to the project and assuming an export price of rice at the world market level and a shadow exchange rate of US$1=G$3, the project's economic rate of return would be 13%; without shadow pricing foreign exchange, this rate of return would be 12%. The rate of return, with shadow pricing, would still be 11% if an increase of 10% in project costs and a reduction of 10% in project benefits were assumed. To the extent that the CARICOM market can absorb until 1986 the increased production from the project at the existing level of preferential price for Guyana's rice, the rate of return would be 17%; without shadow pricing of foreign exchange, this rate of return would be 15%. 65. Project implementation would be exposed to three basic risks. Firstly, the Government's ability to provide local currency financing on a timely basis to meet the project's requirements is limited. The amount of external financing of the local currency costs of the project recommended herein should ensure availability of funds to meet local cost needs. The second element of risk relates to the ability of the GRB to properly manage the rice industry on the production and processing side as well as the marketing side. External technical assistance to the GRB to strengthen its management and marketing capabilities would be arranged by the Government to overcome this risk. Assurances designed to strengthen the GRB have been obtained by the Association (Section 4.05 of Joint Project Agreement). A third risk is shortage of experienced professional and technical staff for implementation and management of the project. This would be partly overcome by in-service training which the project consultants would be required to provide. PART V - LEGAL INSTRUMENTS AND AUTHORITY 66. The draft Development Credit Agreement between Guayana and the Association and the Joint Project Agreement between Guyana, the Association and the International Fund for Agricultural Development and the Report of the Committee provided for in Article V, Section l(d) of the Articles of Agreement are being distributed to the Executive Directors separately. 67. Special conditions of the credit are listed in Annex III. Additional conditions of effectiveness are: (i) execution and delivery on behalf of Guyana of the Joint Project Agreement and the agreements providing for the loans IFAD, USAID and IDB; (ii) employment of project consultants; and (iii) appointment of a project manager and a project engineer.

23 I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 69. I recommend that the Executive Directors approve the proposed credit. Robert S. McNamara President Attachments May 19, 1978

24 MANhX I GUYANA - SOCIAL INDICATORS DATA SHEET Page 1 LAND AREA (THOU KM2) GUYANA REFERENCE COUNTRIES (1970) TOTAL MOST RECENT TRINIDAD AGRIC ESTIMATE JAMAICA BARBADOS & TOBAGO GNP PER CAPITA (US$) 230.Q** 360.0** 540.0** POPULATION AND VITAL STATISTICS POPULATION (MID-YR MILLION) POPULATION DENSITY PER SQUARE KM PER SQ. KM. AGRICULTURAL LAND VITAL STATISTICS CRUDE BIRTH RATE (/THOU, AV) CRUDE DEATH RATE (/THOU,AV) INFANT MORTALITY RATE (/THOU) /a LIFE EXPECTANCY AT BIRTH (YRS) GROSS REPRODUCTION RATE POPULATION GROWTH RATE (%) TOTAL *** 1.9*** 1.4*** 0. 2 ** 2.1 URBAN URBAN POPULATION t% OF TOTAL) AGE STRUCTURE (PERCENT) 0 TO 14 YEARS TO 64 YEARS YEARS AND OVER AGE DEPENDENCY RATIO ECONOMIC DEPENDENCY RATIO 1.6/a 1.sj /a 1.3 FAMILY PLANNING ACCEPTORS (CUMULATIVE, THOU) USERS (% OF MARRIED WOMEN) EMPLOYMENT _ _- TOTAL LABOR FORCE (THOUSAND) _ /a o.0/a LABOR FORCE IN AGRICULTURE (%) Lg 30:9 33.Or UNEMPLOYED (% OF LABOR FORCE) 8.oLb /a 17.9/& INCOME DISTRIBUTION % OF PRIVATE INCOME RECOD BY- HIGHEST 5% OF HOUSEHOLDS 18.a/C s/b HIGHEST 20% OF HOUSEHOLDS 468s5C * LOWEST 20% OF HOUSEHOLDS 4.. a. LOWEST 40% OF HOUSEHOLDS 14...L. DISTRISUTION OF LAND OWNERSHIP = _- X OWNED BY TOP 10% OF OWNERS X OWNED BY SMALLEST 10% OWNERS HEALTH AND NUTRITION POPULATION PER PHYSICIAN /c POPULATION PER NURSING PERSON :O w 400.0/b POPULATION PER HOSPITAL BED 440.0/d PER CAPITA SUPPLY OF - CALORIES (% OF REQUIREMENTS) PROTEIN (GRAMS PER DAY) / B OF WHICH ANIMAL AND PULSE e 64.0 DEATH RATE (/THOU) AGES EDUCATION ADJUSTED ENROLLMENT RATIO PRIMARY SCHOOL B iio.o/d SECONDARY SCHOOL o YEARS OF SCHOOLING PROVIDED (FIRST AND SECOND LEVEL) VOCATIONAL ENROLLMENT (X OF SECONDARY) ADULT LITERACY RATE (S) HOUSING PERSONS PER ROOM (URBAN) , i.o/l I.L OCCUPIED DWELLINGS WITHOUT PIPED WATER (%) / f ACCESS TO ELECTRICITY 6 (% OF ALL DWELLINGS) L RURAL DWELLINGS CONNECTED TO ELECTRICITY (%) CONSUMPTION RADIO RECEIVERS (PER THOU POP) 85.0 tos.o PASSENGER CARS (PER THOU POP) ELECTRICITY (KWH/YR PER CAP) NEWSPRINT (KG/YR PER CAP) A T SEtt NOTES AND DEFINITIONs ON REvERSE

25 ANNEX I Onloas otherwise noted, data for 1960 refer to any year between 1959 and 1961, for 1970 between 1969 and 1971, and for Moat Recent Estimate between 1973 and bese perid nddi.e to emigration population growth rate L. lower than tha rate of natural incrnase. 000Trinidad and Tobago h.s bean aelectad as an objective country since it is one of the daveloped coan trina of the carlbb.a. Cnac Market, and it shares siilar probiama and da-elorenst objectives with Gu~yana. GUYANA 1960 /a Ratic of population under 15 and 65 and over to total labor force; /b Inlucidas pareon aesking work for the firet time; /c , -uloding aalf-enplyed poraon in the high intone bracket; /d IA includes Aaeredia- population; Lb Ratio of population under 11 end 61 and over to total labor force; /0 Aa percentage of empioyment; /d 1967; /n Total, urban and rural. MOST RECENT ESTIIATf, /- Mainly Persn... a.king Job for tha float timer; /b 1972; Ic avnga. JAMAICA 1970 /a Data based on official definition. which incldes thoaa willing to work, but nut ectively e..ekiag eaployment; lb ; L In.maids only. RARBADGOS1970 Ratio of population under 15 and 60 end one. to labor force eoa-; /b Incam recipienta;. Regiatered. not oil pr-ctiting in the country: Id Covermeent peraonnel, including nidwives; Ia 1966; /f Total, urban and rural; jj Inside only. TRINIDAD & T~OBAGO 1970 Y years; /b Iau1oding nidwlv-e; /c ; /d Co,eranent naintained and aided echcoole only; - n otal, urban an;d rurol; /f Inaide only; /L RB, May 11, 1978 land Area (than bin 2 ) BEPCNITION1 OP BOCIAL DIDIOCATORS ~~~~~~~~Porloiun ear noseecrson - PupuIetbon divided by nsb-r of pract icino Total - Total outface area -oprleins land area and inland waters. el n female grduate oaa "traind" or 'certified' nuss nd ueric.j-os- recen.t earner of arclvrlarea eand tenporarily or pasma- atailiary persnnl with trainina or superienco. unetly for crpe, Pastu-e, earket & kitchen gardens or to lie fallow. Posuatiom ear b-arital bed - PapuIetion dicidad by v-b-r of hospital beds avala.ble in public and private general and apetiliaed hospita1 and pgtp oar calta (1L01 - GNP.per capita astisatee at current market prices, rababilitation centers; ea1ldes nuralg homes and establialneents for cacltd by eanc -reo memthod as World Bank Atlas ( baais3; coatdia1 and prevetiva c.ar. loa0; 1970 sad 1976 data. Me c..nita auei f are oftt requirements) - Coeprtd from enegy eqialn cint food soppliea availabl e. In outry per capita per day; i'eiaiop n vcl ccicc,aalable Iouafo ad-ermllion; ua of July first: if not -nilable, overag upplisa unaprisa dommtin prduction, iporta lesa ep-rts, ard changas Lt atck; eat supplies seclude animal foed, eands, qoanitiesuaad oftw cud-y-s erltte 1)60, 1970 end 1976 data, in food procseing and loasea In distrhutlom; raquir-ta wer estimated by PAD based on physiolgleal needa for uno-i activity And bealth cesaid- Popula tio arr. - _pr ar... lot - Mtid-yaar population per squar bilomtar srag envirooasatal temperaturs, body weights, age and sax disttrbutions of (10hctrs f total area. population, and ellowig lit mot waste at ha-aae-bhld level. Ponltio damaiv - pe nu eof kr ci iro. land - Computed as abov, fur Pat revile sung1, no ertt (gramsbnan - Proei r "tt of Pencpt agrliou~lturl lea,d onlly." net spl offade day,;met su!pply ovf.fod Ia deftedt as above; ~raqufeatsfor eli nacetnies eatabliebad by USDA Eronasi ~aercb Bevic vital t-taispoide for s minima ellamnce of hi grasa af total prccaiu pen day, sad Crude birth rare Pear thousand, avrage - Annoal lion birtbs par thoneend of 00 graa of a-nmal and Pu1sa protein, of chick 10 gre should he animal oid-y_r pupulecion; te-yeuo,orickheavic sna-gsa andicins an 1970, protein; theas -A-sded are lonr then tan- o 75 gr- tof tota p-ttei atd fiv-yea overge -edgin 1975 for net recent -atleato. and 23 gram of animal protein asamavrge for tha world, poopoed by FAD Crude ~death rate ra to-sad. averae - Annul deatha per thousad of aid-year In the Third Wdorld Pond BSrry. population; te-pas- sitim,stic averagesenading in and 1970 eod fire- Pe ant rosacontfrmaimlad.22lan - Protein supply of fond year aaregs nding n 1975For netrcn etmt.drived fra anisl and puse i g. m per day. Infant =ertaitr rts9 ic/r.ho9) - A-u-I deatha of intents coder one Peer of age Bethrae/tou a Annul doaths per thoueand in age g-op 1-4 pe touad lion birth. years, ta childe Ithia age group; suggested as an indicator of Lifancactaatr a both fore) - Aver..ga atnbar of years of life rminin atmlntio. birth; usully five-year average ending in 1960, 1970 and 1973 fox developtag ouwtrise. Edonetion Gro- renrodotion rat - Average canke of Live daghters a woman will bean Adluatedarlmn ea-ermr col-rrlsa fala spr in h, rmnnal reroduction period if she nexrge_re prasent ag-pcotantgs. of primr aoolaepuuain includes childrn aged 6-11 year fertility rtete;pually five-year vrage ending io 1960, 1970 and 1971 but adjuatad for different lengtha of primary Macsties; for cntries with for deeopn c-wrrine. oni-eral educa tion, naro11mat may.exed 10%X ane smem pupils are below Popolatbom gowin rate It - tota - Compoond ennul growth rates of ea-year or abwe the ftfinia1 school age. popu1-lato for , andii Adbtd Iaalen ratio - secondry enh.. - Compotad as above; secondary Ponoacio nooch rte Ct -uba - Computed Ilke grath rate of total educationreeie atia ecyaso pprovd primary imatroctine; population; diff-cent definition of urban area map affect comparability of provides genanal, vocaional or teacher training inatrrutiona far pupils data among r-eri-ra of 12 to 17 yaa-ra of age; o.errep-ada cura.. aon g-11rall amoodd. Urbanoplto ftf!tota) - Ratio of orbsa to total population; diff.arnt Years of ahoieewddfirtndscdlvl)-ttalpaso dafiiio ofurba area may affeot coeparsbillty of data asmn -antrias. schooling; at aemaylvl l aatias istuto ma hepartially er completely seclue. hen at 'coeret) - Childr- (I-14 peara), *working-age (15-bkyas64vctoa stro_ ixa 1of M -erada ) - V-raronl One rar-ions inclde an rtired (61 years and nea) as percetagee cf mi-erppulatbon. tcebinal, iodnatri1 on other progra which operat ludpapndently or a haademd-c _ratio - Ratio of population under 15 and 61 and ovr to those doparosnts of aetondary instirtutins of agra 15 bhroogh 6-4. Adult literac race MT - Lit-tat adults (able to read and -ite) as petrononc denedeocy atio -Ratio of popolatioo under I sod 65 and over to cenage of total adult population aged 15 years andoer rho lab-or-oro in age group of 15-hA years. feailo nlannina-acreocare founularive. thou) - Cumulative ounhen ci acceptors pt.. Ocualaofg... H~~! of hirt-noccre devics undmoauspice of na Ioa fanly P1aoic -gu-a Proaeroom (ucheal - Averge nbke of Pers ons per r-u in occupied since ince ption. coustfaaa d-eifag to urban areas; dmnilinfe e-iude non-permanect 'oivly innr -arc ftu mria esn Percantagas of marriod woman of aruursed onoo-piad parra. cbil-borir ag (1-44yeas) ho ne irth-rootrol devices to all married 0ccnpnd dw nawthou erd w r MC -Occupied co-cntionel dwelling wmerc 0,~ aae ago group. in orban and ruraaras ithot innide on outside piped water ferilitina Epunloyment epercentage ofalocpisd Oceatoeetrct HT ci al dweligs liica) - Conven1tiona dwellings with Total Ishoc torce (th-noano - Econunically atti- parsons, inotndi.g aned ciecticity it Giving quarters as percot of total dwrlinga io urbac aod fo--e and unemployed but eaclding hoc..eni-ne, studeta, etc.; deoinjiri- rurl areas. is variue coutries era not cooparabla. fral1dwwelln once oelcoct-l loxp-td as abov for rura lborxoc nagiutr (TI - Agrioultural labor force. (in farming, foreetry, deellings ny hning. end ofilahior as prcetg rttllbrcr Inmlpdf flbrfre%) - om-plopd are usually defined a. persons wh. Consotia are able end milling to tehe a Jab, out of a Job on e given day, remained ont Radio receivers fear thou noes - All types of receivers for rado br-edrst of.ajor, aed see king work foo a specified minimom Period not exce eding one to general public per thousand of PpoplatIon; s-oldes onliceased receivers webk; may not be cemparable between countrisa dna to different definitgona incoare and in area when registration, of radio sets was Is effect; of uneployed ead4sorc of data, e.g., employment office etattlatg, espla date for racat years may oat b, caprs.able aine most cowtrie. abolished serape, cmpuleor coeplaymeni i..naurea. licens.ing. pasege crsferthoucw asegrcr cpmrie moto.r cr seating lore datrihuion -Percentage of private ioncoe (both in cask and kind) lestenight Persona; secludes hulam1 ea hearse and militar txcxlv4 by rithast II, richest 10, punrent 20%, ad P-not 40% no han- vkcls hol1ds. Electricity fkwh/reercr l- Annul oasateption of fadn-tria1, tmmercia.) Di."Ib.q2-a ~ ~ of ~ I ~ ~ ~ ~~~~~~pblc ndpivn dlc atty toi kilewat hour Per..Pit.,g'sal Diarribrion ofland owsrshloparc...tageo of land owned by w-althiest 10% base.d on praducio daa ithout allowanc for leases in grids hut allo-- and poorest 10%. of lead anners. log fo aniports sad a.porta of elactririty. He. I th end H-mp,itt~~~~~~~~~~Nesela ike/yr ear eas) - Par capita s-41e cnaptnibon in hologram uorition _ad,an sstimated From dossestin predatico plus car imparts of nasmapint. xuulti hsinian P,e - Population divided by cute.r of practicing physoisi.. qualified fro a madi-i s.obun at university lanai.

26 ANNEX I Page 3 of 4 pages ECONOMIC INDICATORS GROSS NATIONAL PRODUCT IN 1977 ANNUAL RATE OF GROWTH (%, 1970 prices) US$ Mln. % GNP at Market Prices Agriculture, fishing Gross Domestic Investment and forestry Gross National Saving Mining and quarrying Current Account Balance Manufacturing and Exports of goods, NFS processing Imports of Goods, NFS Construction Services GDP at factor cost OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1975 Value Added Total Employed V. A. Per Worker US$ Mln. % ('000) % US$ % Agriculture Mining & Quarrying Manufacturing Other Total/Average GOVERNMENT FINANCE (Central Government) (G$ Million) Est Current Receipts Current Expenditures Budgetary Savings Capital Revenue Capital Expenditure Overall Deficit MONEY, CREDIT and PRICES (Million G$ Outstanding Period) Money and Quasi Money Bank Credit to Public Sector (net) Bank Credit to Private Sector (Percentages or Index Numbers) Money and Quasi Money as Z of GDP General Price Index (1970 = 100) a/ Annual percentage changes in: General Price Index Bank Credit to Public Sector (net) Bank Credit to Private Sector NOTE: All conversions to dollars in this table are at the average exchange rate prevailing during the period covered. a/ Annual Average. not available not applicable - Zero

27 -23- ANNEX I Page 4 of 4 pages TRADE PAYMENTS AND CAPITAL FLOWS BALANCE OF PAYMENTS Est. MERCHANDISE EXPORTS (AVERAGE ) (Millions US$) US $ Mln. 4 Exports of Goods, NFS Sugar Imports of Goods, NFS Bauxite and alumina Resource Gap (deficit = -) Rice All other commodities Interest Payments (net) Total Workers' Remittances Other Factor Payments (net) Net Transfers Balance on Current Account Direct Foreign Investment EXTERNAL DEBT, DECEMBER 31, 1976 Net MLT Borrowing Disbursements US $ Mln. Amortization Subtotal Public Debt, incl. guaranteed Capital Grants Non-Guaranteed Private Debt - Other Capital (net) Total outstanding & Disbursed Other items n.i.e Increase in Reserves ( increase) DEBT SERVICE RATIO for 1977a/ Gross Reserves (end year) Net Reserves (end year) '4 Fuel and Related Materials Public Debt, incl. guaranteed 14.2 Imports Non-Guaranteed Private Debt - of which: Petroleum Total outstanding & Disbursed 14.2 Exports of which: Petroleum IBRD/IDA LENDING, Dec (Million US $): RATE OF EXCHANGE IBRD IDA Since October 1975 Outstanding & Disbursed US$1.00 = G$2.55 Undisbursed = US$ Outstanding incl. Undisbursed a/ Ratio of Debt Service to Exports of Goods and Non-Factor Services. not available not applicable - zero

28 ANNEX II Page 1 of 4 pages STATUS OF BANK GROUP OPERATIONS IN GUYANA A. Statement of Bank Loans and IDA Credits (As of March 31, 1978) Loan or Credit Amount (or Less Cancellation) No. Year Borrower Purpose Bank IDA Undisbursed Five loans and one credit fully disbursed (Loans 285, 559, 583, 765 and 875 and Credit 139) Guyana Livestock Guyana Highway Guyana Irrigation / Guyana Education II Total (net of cancellations) of which has been repaid Total now outstanding Amount sold 0.8 of which has been repaid 0.8 Total now held by Bank and IDA I/ Total undisbursed / Prior to exchange rate adjustments B. Statement of IFC Investments (As of March 31, 1978) There have been no IFC investments in Guyana.

29 ANNEX II Page 2 of 4 pages C. Projects in Execution 1/ Cr. No. 221 Livestock Project; US$2.2 Million Credit of November 27, 1970 Effective Date: April 15, 1971 Closing Date: December 31, 1978 Progress in executing the project has been slow due to the absence of appropriate institutions to promote livestock development among farmers who are unaccustomed to utilizing debt financing for on-farm investment. Widespread cattle rustling and farmers'/ranchers' uncertainty about the financial attractiveness of the investment package offered have also affected project performance significantly and only about 50% of the IDA credit funds have been disbursed so far. Arrangements have been worked out between the Association and Guyana to accelerate the granting of long-term leases and to include lending for dairy farming under the project and the Closing Date of the project has been extended to December Since prospects for disbursing credit to the private sector are dim, IDA has approved financing of additional Government ranches and a large Government dairy farm, as well as a dairy settlement scheme, comprising about 27 dairy settlers. Cr. No. 301 Highway Project: US$4.4 Million Credit of April 26, 1972 Effective Date: November 15, 1972 Closing Date: June 30, 1978 Start of construction was delayed until July In view of the contractor's unsatisfactory performance, the Government, with the Association's approval, has been executing the works on "force account." However, progress has been slow and only about 65% of the work has been completed to date. Lack of cement and construction materials in recent months as well as mechancial problems afflicting the truck fleet have caused delays in project implementation in recent months. The Ministry of Works is in the process of remedying this situation. The project is likely to be completed by December 1978 and the Closing Date may have to be extended by nine months, i.e., to March 31, Ln. No. 875 Power Project: US$6.0 Million Loan of January 12, 1973 Effective Date: May 8, 1973 Closing Date: December 31, 1978 This project for which cofinancing has been provided by UK-ODM, CIDA and the Bank has encountered delays in implementation and cost overrun of about 36%. Difficult relations between project consultants and the Borrower resulted 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any problems which are being encountered, and the action being taken to remedy them. They should be read in this sense, and with the understanding that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution.

30 ANNEX II Page 3 of 4 pages in delays in project engineering and implementation and the engineering cost of the project increased by 98%. The Bank reallocated its loan to meet the increased engineering costs and the ODM and CIDA contributed a larger share of the equipment and construction costs. Completion of the project is now expected in June Because of inadequate tariff levels, GEC made no contribution to its 1976 construction program and its rate of return was negative; however, new tariff structure and levels granted by the Government effective January 1977 has resulted in about 46% overall increase in the company's revenues in 1977, allowing GEC to earn a 10% rate of return. Attrition of qualified personnel of GEC and inadequate availability of local funds continue to affect project implementation. Ln. No Tapakuma Irrigation Project; US$12.9 Million Loan of June 25, 1974 Effective Date: May 27, 1975 Closing Date: June 30, 1980 The project continues to be about 18 months behind schedule due to a delay in contracting consultant services for final design and supervision of construction and agricultural development. Surveys, planning and design have continued to progress. A civil works contract for the Tapakuma and Somerset-Berks irrigation and drainage works and roads has been signed and construction started in January Preparation of final designs are underway for the Johanna Cecilia and Supenaam extension areas. Cost of civil works for the project has increased about 130% over the appraisal estimate. In view of the financial circumstances of Guyana, efforts are underway to secure additional external assistance to meet the cost overrun. The agricultural development phase of the project is progressing and applied research and seed production programs are proceeding well. The applied research and extension services provided by the project contributed to yields which were the highest in the country in the spring and autumn crops of A program for extension training is helping to resolve the scarcity of local agricultural staff, as well as serve as a model for extension activities throughout the country. Availability of scarce technical staff in the agronomic and civil engineering fields, however, will constitute a growing constraint as project implementation proceeds. Ln. No. 1106_ Second Education Prolect; US$8.0 Million Loan and US$4.0 Million Cr. No. 544 Credit of May 9, 1975; Effective Date: July 8, 1975 Closing Date: June 30, 1980 The project encountered major delays in appointing consulting architects, engineers and quantity surveyors. Construction has started on the Caribbean Animal Technician Training Center, and the institution is expected to be ready for occupancy in September Construction contracts for all other project institutions are expected to be signed during 1978, and it is now estimated that the project should be completed about two years later than originally scheduled. The major problem causing delays in design and construction of project institutions is the ineffective administration of the civil works component by the Project Unit. Preparation of master furniture and equipment lists is proceeding satisfactorily. Curricula and syllabi for the community schools have

31 ANNEX II Page 4 of 4 pages been completed and those of the new secondary Teachers' Training College are nearing completion. Specialists' services have been secured in the areas of Rural Training, Agricultural In-service Training and Communication and Social Studies. There is a delay in the implementation of the fellowship program and only five fellowships have been granted up to now.

32 ANNEX III Page 1 of 2 pages GUYANA BLACK BUSH IRRIGATION PROJECT Supplementary Project Data Sheet Section I: Timetable of Key Events (a) The project was prepared in two stages in about 5-1/2 years. (July 1971-February 1976). (b) A firm of consultant (Harza Engineering Company-Aubrey Barker Associates) prepared the project. (c) The project was proposed to the Bank in April (d) A preappraisal-cum-appraisal mission departed in March (e) The negotiations were completed on March 16, (f) The planned date of effectiveness is November 30, Section II: Special IDA Implementation Action None Section III: Special Conditions (a) Conditions of effectiveness would be (i) execution of the agreements providing for the IFAD, USAID and IDB loans for the project (para 49); and (ii) employment of project manager and project engineer and consultants to provide professional and technical services for design engineering, supervision of construction, extension training, applied research, etc. (para. 45). (b) Other assurances are that: (i) adequate level of credits would be given to farmers and privately owned mills and profit margins for milling would be maintained, and priority would be given to Frontlands for use of farm machinery (paras. 43, 44 and 55); (ii) a plan of operations would be prepared by June 30, 1979 for strengthening extension services and applied research, and standards for control of quality of rice seed would be introduced and applied specifically to the State Seed Farm in the Polder (para. 42);

33 ANNEX III Page 2 of 2 pages (iii) MAG, its dependent departments, divisions and boards would maintain separate accounts for project expenditures, which would be audited annually, and reports of audited accounts would be submitted to the Association promptly (para. 46); (iv) GRB would review and improve its accounting system and financial and marketing management capabilities (paras. 46 and 65); * (v) a progressive system of project charges would be levied on project beneficiaries and the system of charges would be reviewed with the Association every two years (para. 52); and (vi) Guyana would submit proposals to IDA and IFAD not later than December 31, 1978 to set up a monitoring system for the project (para. 47).

34

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