Document of The World Bank FOR OFFICIAL USE ONLY FILE COPY CI3 -19 Report No. P-3110-PAN REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO AUTORIDAD PORTUARIA NACIONAL (APN) WITH THE GUARANTEE OF THE REPUBLIC OF PANAMA FOR A SECOND PORT PROJECT May 25, 1982 i This document bas 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 authorizaion. CURRENCY EQUIVALENTS Currency Unit = Balboa (BW. 1) US$1 = B/. 1 Note: The issue of Balboas is restricted to coins; The U.S. dollar (US$) is accepted as currency. PANAMA FISCAL YEAR January 1 - December 31 UNITS AND MEASURES 1 meter (m) = 3.28 feet (ft) 1 kilometer (km) 2 = 0.62 mile (mi) square kilometer (km ) = 0.386 square mile (sq mi) 1 metric ton (m ton) = 1.1 US short ton (sh ton) ABBREVIATIONS APN - Autoridad Portuaria Nacional (National Port Authority) BLADEX - Banco Latinoamericano de Exportaciones (Latin American Export Bank) COFINA - Corporacion Financiera Nacional (National Finance Corporation) GDP - Gross Domestic Product GNP - Gross National Product ICB - International Competitive Bidding IDB - Inter-American Development Bank IFC - International Finance Corporation MIPPE - Ministerio de Planificacion y Politica Economica (Ministry of Planning and Economic Policy) PCR - Panama Canal Railway Ro-Ro - Roll-on/Roll-off UNCTAD - United Nations Conference on Trade and Development UNDP - United Nations Development Programme USAID - United States Agency for International Development FOR OFFICIAL USE ONLY PANAMA SECOND PORT PROJECT LOAN AND PROJECT SUMMARY Borrower: Autoridad Portuaria Nacional (APN) Guarantor: Republic of Panama Amount: US$24.4 million equivalent (including capitalized front-end fee). Terms: 15 years, including 3 years of grace at 11.6 percent interest per annum. Project Description: The proposed project would upgrade and increase the capacity of the ports of Cristobal and Coco Solo Norte and provide technical assistance for carrying out the works and training of APN staff. The project would include: (a) Cristobal: Rehabilitation of existing piers, strengthening and extension of an existing wharf and conversion to container handling, alongside wharf dredging, installation of a new fender system and a roll-on/roll-off ramp, and provision of equipment, including two specialized container handling gantry cranes, fork-lift trucks, chassis trailers for containers and a weighbridge. (b) Coco Solo Norte: Rehabilitation of head quay and berthing structures, conversion of two finger piers to accomodate general cargo and roll-on/roll-off container traffic, alongside pier dredging, installa- tion of a new fender system, a gatehouse and a weighbridge, construction of an administrative office and paving of open container storage areas. (c) Training and technical assistance in management, planning and operational practices. Risks: The project would involve no unusual risk. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without Wofld Bank authorization. - il - Estimated Cost: Item Local Foreign Total ----------US$ million…--------- Civil Works 9.3 10.1 19.4 Cargo Handling Equipment 1.4 10.1 11.5 Engineering and Supervision 0.5 1.3 1.8 Technical Assistance and Training 0.6 1.4 2.0 Base Cost Estimate 11.8 22.9 34.7 Physical Contingencies 1.1 1.2 2.3 Price Contingencies 2.1 4.3 6.4 Subtotal 15.0 28.4 43.4 Duties and Taxes 4.5 - 4.5 Front-End Fee 0.4 0.4 Total 19.5 28.8 48.3 Financing Plan: (US$ millions) Local Foreign Total Bank - 24.4 24.4 Government 7.3 1.5 8.8 APN 12.2 2.6 14.8 UNDP - 0.3 0.3 19.5 28.8 48.3 Estimated Disbursements: (US$ million) Bank Fiscal Year 1983 1984 1985 1986 Annual 6.2 11.8 5.9 0.5 Cumulative 6.2 18.0 23.9 24.4 Rate of Return: 25 percent Staff Appraisal Report: No. 3481b-PAN dated May 21, 1982 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE IBRD TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO AUTORIDAD PORTUARIA NACIONAL (APN) WITH THE GUARANTEE OF THE REPUBLIC OF PANAMA FOR A SECOND PORT PROJECT 1. I submit the following report and recommendation on a proposed loan to Autoridad Portuaria Nacional (APN) with the guarantee of the Republic of Panama for the equivalent of US$24.4 million to help finance a Second Port Project. The loan would have a term of 15 years, including 3 years of grace, with interest at 11.6 percent per annum. PART I - THE ECONOMY 1/ 2. A report entitled "Panama's Development in the 1980s: A Special Economic Report" (2306-PAN) was distributed to the Executive Directors on July 31, 1979. A Bank economic mission visited Panama in September 1980. A draft of its report was discussed with the Government in April 1982, and the report will be circulated to the Executive Directors shortly. The mission's findings are reflected below. Country data sheets are attached as Annex I. 3. Although Panama continues to be adversely affected by sharp increases in petroleum prices, it has managed to reverse the decline in per capita GDP experienced during 1974-77. GDP grew by an average 5.5 percent in 1978-81, double the rate of population growth. In 1978 the service sectors--banking, commerce, transport, communications and storage--were the most dynamic, while in 1979 manufacturing and public utilities were the fastest growing sectors. Construction recovered strongly in 1980; during 1981 it fell slightly but banking, commerce, and other services showed great buoyancy during both years. Unfortunately, agricultural output has not increased since 1977. 4. The Government's three main concerns since 1968 have been to eliminate rural poverty, to increase national control over the economy, including the Panama Canal, and to create new sources of economic growth and exports. Social programs in health and education were extended to most areas, and an agrarian reform program was initiated. The second goal was achieved by the U.S.-Panamanian Treaty by which the administration of the old Canal Zone reverts to Panama. Major investments were undertaken in transport, tourism, international commercial infrastructure, water supply and sewerage, and power, mostly to provide support for expected private activities. Power and most telecommunications facilities were nationalized. New State enter- prises were created for export crops such as sugar, citrus, and bananas; and a State-owned cement plant was built. Self-sufficiency in basic foodstuffs such as rice, corn, and beans was also accorded high priority. 5. The Government's social programs have had considerable success in enhancing the quality of life in Panama, as reflected in demographic, health and educational indicators. Infant mortality declined by 20 percent between 1968 and 1976, while fertility rates fell from 131.3 per thousand in 1971 to 114 per thousand in 1975. Access to potable water for the rural 1/ Panama's fiscal year is the same as the calendar year. - 2 - population increased from 43 percent in 1970 to 63 percent in 1976. The proportion of the population enrolled in schools of all types increased from less than one-quarter to over one-third between 1968 and 1978. Despite these achievements, estimates indicate that some 21 pcrcent of the urban and about 30 percent of the rural population continue to live in poverty. 6. As regards the Government's economic programs, the Colon Free Zone and hydroelectric prn ects have been quite successful, in the first case by increasing employment and earnings from export of services, and in the second by reducing the burden of rising petroleum costs. Perhaps the most successful of Government programs was a major change in the banking legisla- tion in 1970. This has attracted almost a hundred banks to Panama; it is now a major regional Eurodollar Center. Other programs involving direct production by the public sector or affecting private sector decisions have been less suc- cessful. Agricultural programs have led to self-sufficiency in rice and increased the output of milk, but have had less impact on the output of beef, and feed grains. State sugar mills have increased output but they usually operate unprofitably. Similarly, State enterprises in tourism and cement together with the sugar operations, have been a burden on the fisc. The public enterprises' direct competition with private enterprises and some uncertainties relating to Government labor and price policies adversely affected the climate for private investment. Recent improvements in the dialogue between the Government and the private sector and a more flexible approach to labor and price policy appear to have increased private sector confidence. 7. The high level of outlays for economic and social infrastructure, coupled with the substantial losses of State enterprises, resulted in signi- ficant increases in public external borrowing, despite periodic efforts to strengthen the public finances. The public sector deficit increased from 4.4 percent of GDP in 1970 to over 15 percent of GDP in 1978. In 1979, the deficit fell to 11 percent of GDP, largely as a result of a reduction in investment. At the end of the year, Panama's disbursed external public debt which had reached 77 percent of GDP in 1978 fell to 74 percent of GDP; but interest on the debt continued to absorb about 40 percent of current revenues of the central Government. 8. This alarming situation prompted the Government to take action. During 1980 a series of actions reduced the public sector deficit significantly. These measures included increases in taxes on gasoline and cigarettes and in maritime and corporate registration fees, improvements in income tax adminis- tration, elimination of several income tax exonerations and reductions in current and capital transfers to decentralized agencies and public enterprises. The reduction of these transfers resulted in increases in the prices of 19 basic items including milk, bread, and tomatoes, and rental rates charged by the State Machinery Pool. Some profitable agencies, e.g., the telecommunications company and the Colon Free Zone, were required to increase their transfers to Central Government. An emergency public employment program which had grown to employ over 17,000 people by the end of February 1980, was discontinued on that date. In conjunction with favorable sugar prices, a major increase in canal revenues, and very buoyant tax revenues, these measures reduced the deficit to less than 6 percent of GDP in 1980 -- successfully meeting the targetted reduction required under the IM.F Standby Agreement. Panama's next - 3 - program--again supported by the IMF--had a ceiling of 6 percent of GDP (US$215 million) for the 1981 deficit, and for the second year in a row the Government was able to complete its program successfully. The IMF Board has approved another Standby in support of a financial program for 1982 which includes a public sector deficit ceiling of 6 percent of GDP. 9. The strategy for recovery and growth of the economy now requires that private capital and entrepreneurs provide the buoyancy in economic activity that the public sector can no longer provide given the ceiling agreed with the IMF. New opportunities have indeed been created for the private sector. The past high level of public investment has provided an expanded physical infrastructure. Investments in hydropower are reducing Panama's dependence on expensive imported petroleum. Panama's workforce is among the best educated in the area. There is social tranquility, and tax incentives and financing facilities for industry are readily available. In agriculture, recent increases in support prices and provision of credit facilities are designed to realize the potential for increased production and exports of beef, fruit, cocoa, and coffee, and for replacing imports of vegetable oils and dairy products. 10. The prospects for growth also depend on the use of land and facilities reverting to Panama and on the nigher earnings to be received by Panama under the new Canal Treaty. Implementation of the Treaty began on October 1, 1979 and will be completed on December 31, 1999, when the Canal and all ancillary facilities will revert to Panama. Already the ports of Balboa, Cristobal and Coco Solo Norte, two abandoned airfields, much valuable land, and most service outlets of the former Panama Canal Company's supply division have reverted to Panama. The reverting land makes even more feasible a spatial orientation in development strategy which emphasizes the metropolitan area, bounding the Canal and traversing the isthmus from the Atlantic to the Pacific, as the best site for activities to take advantage of Panama's excellent geographic location. The Government is actively planning the conservation and further development of infrastructure in this area for expanded private sector activi- ties which would generate employment, revenues and rents adequate to pay for these investments. 11. The longer-term outlook for the Panamanian economy seems favorable, given its geographic advantages, educated workforce, low population/land ratio, and large hydroelectric potential. The medium-term outlook will depend on the policies affecting certain critical domestic issues and on the performance of the international economy. The critical domestic issues include rising urban unemployment, the size of the public external debt, the relative roles of the public and private sectors, and the climate for private investment-- especially as regards price and wage policies. The Government is now keenly aware of these issues. It has developed and is continuing a dialogue with businessmen, and has adopted more flexible approaches to price controls and recognizes the need to reduce its direct involvement in activities which not only compete with the private sector, but often operate at a loss. In addition, it is pursuing a program to attract internationally-integrated assembly industries by simplifying procedures for establishing plants and granting incentives and by training labor in response to the specific manpower require- ments of incoming firms. 12. During the last two years the Government has acted decisively to reduce the relative size of the public sector deficit. As a result, public - 4 - external debt has fallen compared to GDP. Nevertheless, continued caution will be prudent. The public external debt was still about 67 percent of 1980 GDP, and during 1981 interest payments on this debt equalled about 7.5 percent of GDP, a major cost to the economy. By end 1980, about three quarters of the public external debt was owed to private banks, bondholders, and suppliers--the overwhelming proportion of it at floating interest rates-- and less than 15 percent was owed to multilateral development institutions. For reasons of debt management as well as employment generation, the recent government actions will be vital to ensure that growth continues in a stable financial environment. The Bank will be monitoring the impact of recent measures and is continuing a dialogue with the Government as it seeks to reduce the losses of public enterprises, while encouraging higher growth and greater employment. On the basis of the strong fiscal action taken by the Government and the favorable longer-term outlook Panama is considered creditworthy for Bank lending. PART II - BANK GROUP OPERATIONS 13. The Bank has to date made twenty three loans to Panama totalling US$356.1 million (net of cancellations). Of these, 12 loans for US$147.0 million, are fully disbursed (two for roads totalling US$13 million; one for an airport project for US$20 million; four for agriculture totalling US$9.0 million, three for power for US$76 million; one for ports for US$24 million. and one for fisheries for US$4.9 (net of cancellations). Ongoing operations include one project for livestock credit; one for development of tropical tree crops, two for development banking; two for highway maintenance and rehabilita- tion; two in the power sector (for generation, transmission and distribution); a project to support energy planning and petroleum exploration; one to help develop the water supply and sewerage sector; and a loan for the urban develop- ment of Colon. The most recent of these loans, for road rehabilitation, was approved by the Executive Directors on June 23, 1981. 14. IFC has made three investments in Panama. The first was a commitment in 1971 to acquire US$0.3 million of equity in the Corporacion de Desarrollo Hotelero, S.A. and to lend to the Corporacion US$1.2 million to build a new international hotel. The second is a commitment in December 1977 to lend US$2.4 million and acquire US$1.4 million in equity in Vidrios Panamenos, S.A., the first glass container factory in Panama. These projects have been satis- factorily completed. The third is a commitment in 1979 to acquire US$2.5 million in equity in the Banco Latinoamericano de Exportaciones (BLADEX), a regional export bank promoted by the Government of Panama. 15. Satisfactory progress of the overall implementation of ongoing projects is reflected in the steady increase in Bank disbursements, from US$17.0 million in FY79 and US$16.1 million in FY80, to US$31.0 million in FY81. Disbursements in the first nine months of FY82 have reached US$24.6 million. Annex II contains a summary statement of Bank loans and IFC invest- ments as of March 31, 1982, and notes on the execution of ongoing projects. - 5 - 16. Bank lending to Panama is designed to support the Government's development strategy particularly as regards the further development of Panama's infrastructure and service industries and the diversification of production and exports. Specifically, the Bank assists those sectors in which it can make a special contribution in terms of (i) developing policies and institutions, (ii) removing infrastructure bottlenecks, and (iii) better utilizing the country's natural resources, including its geographic location. In addition to the proposed project, projects under active consideration for Bank lending are a second water supply project, which would support the reha- bilitation of the water and sewerage systems in downtown Colon, Panama City * and smaller urban centers; an engineering project which would assist in the assessment and preparation of a copper mining project (Cerro Colorado), a development banking project as well as further development of the power sector and livestock production. 17. Both the USAID and the IDB have invested substantial amounts in agriculture and social services (including family planning in the case of USAID). Past lending patterns are likely to persist, at least as regards the social services, because the Government prefers to borrow on concessionary terms for these sectors, while utilizing other assistance for projects which are expected to result in more immediate economic benefits. In addition to agriculture and social services, the IDB is financing road construction, industry and telecommunications, sectors in which it is likely to continue lending. The IDB also participated with the Bank in the financing of the Fortuna Hydroelectric Project, is financing a rural electrification program and is expected to cooperate with the Bank and other sources in financing the preparation of the Cerro Colorado copper mining project. USAID expects to concentrate its efforts on manpower training and projects oriented toward environmental protection. USAID is also lending for alternative sources of energy (other than petroleum). 18. The Bank's share of Panama's publicly guaranteed external debt out- standing and disbursed was 5.8 percent at the end of 1980 and the Bank's share of public external debt service was estimated at 3.7 percent in 1980. These percentages are expected to increase slightly in the 1980's. PART III - THE TRANSPORT SECTOR The Transport System 19. Panama, a long, narrow country, is divided lengthwise by mountain ranges and across by the Panama Canal. As a result, the country has developed along two main axes: one along the Canal and the other along the lands on the Pacific Coast, particularly in the western part of the country. To the east of the Canal lies the relatively unexplored region of the Darien. Except for the sparsely-populated Caribbean coast and the Darien where air travel and coastal shipping are the only means of transportation, Panama's domestic traffic is basically moved over highways (97 percent of freight and 99 percent of passengers). The most important international transport facilities, in addition to the Panama Canal itself, are the Omar Torrijos International Airport at Tocumen near Panama City, the ports on the Canal, and the Pan-American Highway. - 6 - 20. The metropolitan region (adjacent to the canal) accounts for about 70 percent of the country's GDP and thus plays a dominant role in the country's economy. Growth in the economy of this region is focused on exports of light manufactured goods, particularly from the Free Zone in Colon. Efficient cargo movement through the major ports of Balboa and Cristobal is an important requirement for this growth. 21. Public investments in the transport sector accounted for 22 percent of the total public investment in 1970-73, but only 15 percent in 1974-80. Road investments accounted for the major portion (62 percent) of transport investments in the past decade with airports accounting for 21 percent and ports 17 percent. The transport system in Panama is now considered broadly adequate for the economic activity in the country. 22. The Ministry of Planning and Economic Policy (MIPPE) is responsible for overall coordination and planning for the sector as there is no ministry of transport. While this system may have certain advantages in Panama, MIPPE has not, so far, carried out the coordinating role effectively, nor is it organized to do so because it does not have the necessary staff or appropriate data. The Office of Sectoral Planning within MIPPE is being reorganized to enable it to coordinate sectoral planning and budgeting, and this effort is being supported by the Road Rehabilitation Project (Loan No. 2020-PAN of July 24, 1981). Highways 23. Panama's highway network totals some 8,400 km, of which about 2,700 km are paved, 3,20Q km gravelled and 2,500 km are earth feeder roads. This network is the responsibility of the Ministry of Public Works, which has about 6,500 employees. Road development has been concentrated, in the last decade, on paving and improving the roads with more heavy traffic. While the overall road system grew by 25 percent between 1969 and 1980, the paved and gravel road networks grew by almost 77 percent and 167 percent respectively. 24. Total freight traffic increased by 5.6 percent annually in the period between 1970 and 1980, from 590 million ton-km to 1,015 million ton-km, and, in the same period, total passenger traffic grew by 6.5 percent annually from 2,956 million passenger-km to 5,531 million passenger-km. Aviation 25. International passenger traffic is handled almost entirely by the Bank-financed Tocumen (Omar Torrijos) International Airport, which in 1981 served almost one million international passengers. Capacity of this airport is currently underutilized, and with good airline scheduling no further expan- sion should be required in the near future. Twelve foreign carriers operate combined passenger and cargo services, and six carriers offer all-cargo services. There are two Panamanian carriers in the international business: the Government-owned Air Panama and the privately-owned Compania Panamena de Aviacion. -7- Railways 26. Since the completion of the Canal, railways have not played a significant role in transportation in Panama. There are three small railway companies with a total of about 400 km of route: The Panama Canal Railway (PCR); the Chiriqui Land Company Railway, which is integrated into the Standard Brands banana production system; and the Chiriqui National Railway, which is gradually being phased out and has only 30 km of track remaining. The most important of the three is PCR, the ownership of which recently reverted to Panama and has been under the management of APN, although a separate railway authority is being established. In 1980, PCR carried about 450,000 passengers and about 100,000 tons of cargo between Panama City and Colon. Passenger traffic has been steadily decreasing while freight traffic has remained fairly constant. A British consulting firm has carried out a study of the railway with a view more clearly to define its future role. Pipeline 27. A 130-km trans-isthmian pipeline to transport mainly Alaskan crude to the eastern seabord of the United States is under construction. This pipeline should reduce congestion in the Panama Canal and reduce oil shipping cost. It will not affect domestic transport demand and will be financially self-supporting. The Maritime Subsector 28. Total cargo volumes handled by all the ports in Panama are large; in 1980 traffic amounted to about 46.1 million tons, but most of this consisted of oil transshipped at two special facilities in the western part of the country, while only 2.1 million tons was general cargo. 29. The main feature of the maritime subsector is the Panama Canal. Built early in this century, the Canal receives about 13,000 ocean-going and 4,000 small vessels per year, or about 46 vessels per day. Because of their central location on one of the world's main ocean routes, the Canal ports of Balboa (on the Pacific coast) and Cristobal (on the Atlantic) receive a larger number of ship calls than most other ports in the world, but these calls are often just to collect bunker fuel, and combined total general cargo volumes at both ports are quite small (about 850,000 tons in 1981). About 900,000 tons of dry cargo are handled at the three other ports of Almirante, Puerto Armuelles and Bahia Las Minas. Coco Solo Norte, a former US Navy base facing Cristobal on the Atlantic entrance to the Canal, can conveniently serve Colon and its Free Zone. The naval base has fallen into disrepair but the port's basic structures are still sound. Very little use is made of this port at present. Five minor port facilities (Colon Muelle 3, Folks River, Aguadulce, Pedregal and Darien) combined handle about 300,000 tons per year. 30. The majority of the general cargo is, therefore, handled at Balboa and Cristobal and this traffic is expected to increase at an average rate of about five percent per year. Both ports have adequate berth space to accom- modate projected increase in traffic. Containerization of cargo has rapidly increased in recent years. In 1975 only 10 percent of Cristobal's cargo tonnage was shipped in containers, while in 1981 53 percent was containerized; the number of containers increased at an average rate of 29 percent to about -8- 33,000 in 1981. Lack of specialized facilities and equipment for handling containers in Cristobal constrains handling efficiency. Balboa has two container handling cranes and a higher proportion (60 percent) of its traffic is containerized. This equipment is considered adequate to handle projected traffic. The port also includes a ship repair facility, which APN is reactivating through a concession agreement with an experienced French- Panamanian firm. 31. The main institution in the port subsector is APN. APN was formed in 1974 and was given the power to plan, design, build, operate and improve all national ports, and to set and collect tariffs as well as contract loans. The basic law of APN was formed with the advice of an UNCTAD expert on port administration and is satisfactory. APN has a strong Executive Committee comprising the Minister of Commerce and Industry (Chairman), the Ministers of Public Works, Finance and Planning, as well as one representative each from the port workers and the port users. 32. The staff of APN has grown rapidly since its formation; in the initial stages of the first Port Project (Loan No. 1114-PAN of May 27, 1975) the institution employed less than 100 people, a figure which reflected both the relatively small volumes of traffic handled and the fact that the general management philosophy was based on running the port operations through various concession agreements. The staff has now increased to almost 4,000 people mainly because Balboa and Cristobal were added to APN's responsibilities in 1979, and in these ports APN employees (as opposed to concessionaires) carry out most port operations. 33. The current organization of APN includes the appropriate range of operating and advisory departments. The main problem with the organization is that too many of these departments, as well as individuals, (about 25), report directly to the Director General--who, therefore, is involved excessively in day-to-day operations. APN is also short of trained staff and productivity has to be increased, and accounting and management systems have to. be improved. In conjunction with the execution of the proposed project, APN plans to carry out a reorganization which will group the divisions into five directorates encompassing the major groupings of activities. This plan is sound and would be reinforced by additional action including: hiring of additional technical staff; appointment of an Operations Director (Section 4.05 of the draft Loan Agreement); improvements in finance and accounting; improvements in management procedures; and staff training. The proposed project includes components for technical assistance and for training APN's staff. Bank Assistance to the Sector 34. The Bank, to date, has helped finance six projects in the transport sector in Panama and it served as the Executing Agency for the UNDP-financed National Transport Survey which was completed in 1974. The Bank's first operation (Loan No. 123-PAN), in 1955, involved a loan of US$5.0 million for roads. The second operation (Loan No. 264-PAN), in 1960, involved a loan of US$7.2 million for the construction of ten feeder roads. The third (Loan No. 783-PAN), in 1971, was a loan of US$20.0 million to the Civil Aviation Authority to help finance the construction of a new runway and terminal at Tocumen (Omar Torrijos) International Airport. The fourth (Loan No. 1114-PAN), in 1975, was -9- a loan of US$24.0 million for the construction of a new fishing port at Vacamonte. The Bank's fifth loan, in 1978, (US$12.0 million Loan No. 1565-PAN) helps finance a highway maintenance project. A sixth loan (US$19.0 million Loan No. 2020-PAN of July 24, 1981) assists in financing Panama's Road Maintenance and Rehabilitation Program. These last two projects are still under implementation. In addition, the Colon Urban Development Project (US$35.0 million Loan No. 1878-PAN of August 7, 1980) includes components for the widening of a road serving the Colon metropolitan area, container storage facilities for the port of Cristobal, a bus terminal for the City of Colon, and a study of urban transport management, railway personnel training and the completed study of APN organization. This latter will assist in APN's reorga- nization (para 33 above). 35. Loan No. 1114-PAN for the construction of the fishing port at Vacamonte was the Bank's first operation in the port subsector and its first loan to APN, the Borrower for the proposed project. There was minor delay in inviting bids for civil works. Only one bid was received (from a Japanese firm) and according to Panamanian law this necessitated rebidding. The same contractor was again the sole bidder and was awarded the contract in August 1976. The rebidding process resulted in a seven-month delay. During construc- tion, damage to the breakwater due to abnormally high waves, its repair, and problems with the supply of reinforced concrete caused additional delay. With energetic efforts on the part of APN, the contractor and the consultants it was possible to complete the project less than a year behind schedule. However, this delay coupled with the appreciation of the Japanese yen vis-a- vis the US dollar resulted in a 36 percent cost overrun. In addition, unfore- seeable developments in the international tuna fishing industry have reduced the anticipated benefits from the tuna transshipment component. The economic rate of return is now estimated at 10 percent as against the appraisal estimate of 15 percent. The institutional improvements aimed at were fully realized. The Project Completion Report was issued in June 1981. 36. In agreement with the Government, the Bank's current strategy for the transport sector focuses on projects which: (a) support the internationally oriented service sector in the Metropolitan Region; (b) capitalize on and support the initiative of the private sector; (c) avoid heavy capital investment; (d) preserve or extend the useful life of existing facilities; (e) emphasize the best use of existing capacity through improved pricing, maintenance, operational and management practices; and (f) are financially self-supporting either directly through tariffs, or indirectly through sectoral tax policies. The proposed project reflects this strategy. - 10 - PART IV - THE PROJECT 37. The proposed project is based upon findings of a study of the develop- ment prospects for the country's main ports, including a twenty year Master Plan study of the ports of Balboa, Cristobal and Coco Solo Norte, and a fender systems study for these ports, carried out by consultants: Tippetts, Abbett, McCarthy and Stratton (TAMS, USA) in association with Lopez-Moreno (Panama) and R. R. Nathan Associates (USA). The project basically consists of the high priority investments identified. 38. The project was appraised by missions in March and September 1981, and March 1982. Staff Appraisal Report No. 3481b entitled "Staff Appraisal Report-Second Port Project" dated May 21, 1982 is being circulated separately to the Executive Directors. Negotiations were held in Washington in April/May 1982, and the Panamanian delegation was led by Mr. Aristides Valdonedo, Director General of APN. Project Objectives and General Description 39. The basic objective of the proposed project is to assist APN in meeting the challenges created by the provisions of the 1978 Canal Treaty under which the international ports of Balboa and Cristobal, and Coco Solo Norte were reverted to Panama and are now operated by APN. Specifically, the project represents the first five year investments for Cristobal and Coco Solo Norte in the Master Plan and is designed to: (a) rehabilitate and make the most economical use of the reverted port facilities at Cristobal and Coco Solo Norte; (b) support the immediate investment requirements, particularly those needed to deal with the rapidly expanding volume of container traffic; and (c) strengthen APN as an institution so that it may fully meet its expanded responsibilities. 40. The physical components of the project would consist of improvement, strengthening and extension of existing wharves and piers and provision of container cranes at Cristobal and rehabilitation of the port of Coco-Solo Norte. Technical assistance and training to improve port operation and administration would also be provided. Project Description 41. Cristobal: The project would ease container handling in the conven- tional berths at Piers Nos. 7 and 8, and provide specialized, efficient container handling berths at Piers Nos. 9 and 10. The civil works proposed for the conven- tional berths would provide a better traffic flow as a result of repairs made to the piers and transit sheds and paving and improvements to the road access. For the container cargo handling berths, the civil works proposed would strengthen and extend the existing wharves, provide a Roll-on/Roll-off (Ro-Ro) ramp and - 11 - dismantle and remove existing transit sheds to allow efficient movement of containers from shipside to the paved container storage area (being constructed under Loan 1878-PAN). Container handling equipment, consisting of two gantry cranes for Wharf No. 10, chassis trailers and other items for use within the port would permit speedier and more efficient handling of container cargo. 42. Coco Solo Norte: The project would upgrade the port both for general cargo and Ro-Ro traffic. Works would include dredging alongside the piers, repairs to existing head quay, finger piers and berthing structures, addition of new fender systems, paving of open storage areas, installation of a bunker- ing system, construction of a central administration building and additions and improvements to service roads and provision of utilities. The northern side of the port would be rehabilitated and the paving of the piers extended, existing transit sheds repaired and derelict buildings removed. The southern side would be converted to accomodate Ro-Ro traffic, including the removal of minor structures, extension of the paving of the pier and provision of paved open areas for container storage and installation of a gate house and a weighbridge. 43. Training and Technical Assistance: The training component would consist of providing training equipment, fellowships, expatriate training specialists and local training instructors. APN's training capability would be improved and three years of its five-year training plan for port administration, operation and maintenance would be executed. Detailed training programs, involving 54 man-months of expatriate and 96 man-months of local expertise, were agreed at negotiations. The technical assistance component would provide about 68 man-months of advisory services to improve data processing and records management; payroll, budgeting, costing, accounting, inventories, equipment maintenance and materials systems; and procurement and personnel procedures. Engineering and supervision would involve about 326 man-months. Project Execution 44. The project would be executed by APN, assisted by consultants, over a period of three and one-half years. Consultants have been hired with Bank concurrence to carry out the detailed engineering, preparation of bid documents and bid evaluation. Consultants for supervision of construction would be hired by November 1982. The project would be completed by the end of 1985. APN's Financial Situation 45. Until 1981 APN had earned a profit in all years since its creation. However, since 1979 its profitability declined because of increasing expenses on the Canal Ports, interest costs and having responsibility for PCR. After a year of experience with the Canal ports, APN increased port tariffs in late 1980 which increased revenues by about 28% during 1981. However, due to general cost increases, the net income from port operations was not sufficient to offset the increased losses of PCR and interest cost. As a result APN incurred a net-loss of about $1.7 million in 1981. Under the terms of the Canal Treaty, Panama is required to maintain PCR in good operating condition until the year 2000. Start- ing in 1982, and until PCR ceases to be under the operational responsibility of APN (para 26 above), the Government would provide APN with sufficient funds to meet the operating cash deficit of the railway (Section 3.02 of the draft Guarantee Agreement). - 12 - 46. APN needs to increase revenues to meet rising operating costs and contribute to the cost of APN's development programs. In order to meet its financial targets and recover a share of the benefits accruing to port users, APN plans to review its operating costs and the structure and level of its tariffs at least once every two years. The first such review would be completed in time to introduce tariff adjustments by January 1983 to provide additional operating revenues of about 15%. 47. Financial projections indicate that with the above mentioned tariff increase, and with projected tariff adjustments at two-year intervals, APN would be able to make the required contribution to the project, meet its debt service obligations, and still have sufficient funds to allow for needed increases in working capital. In addition, APN will be contributing funds to the port component of the Colon Urban Development Project. During project implementation, APN's other investments would not exceed US$1.9 million equivalent in FY 1983 and US$1.5 million equivalent in any fiscal year there- after without Bank approval (Section 5.07(a) of the draft Loan Agreement). The relatively heavy investment program will increase APN's debt service obligations and borrowing should be monitored carefully during project imple- mentation. APN would not incur, before completion of the proposed project, without Bank approval, any long-term debt (maturity after more than one year) if the debt service ratio falls below 2 (Section 5.06 (a) of the draft Loan Agreement). 48. The Government's policy is that APN should be financially self- sufficient. Profitability targets will have to be defined initially in terms of working ratios, since APN's fixed asset values do not include the facilities at the Canal Ports and, thus, costs are underestimated as they do not include depreciation on these assets. Since October 1979 APN has been in charge of port areas and port facilities, including buildings, installations and equip- ment by law. According to the Panamanian constitution, port areas are public domain the ownership of which cannot be transferred to any public or private agency. The Government is in the process of transferring to APN the custody of the port areas and the ownership of all port buildings, installa- tions and equipment operated by APN. These transfers would be completed by June 30, 1983 (Section 3.05 of the draft Loan Agreement). APN would value all its fixed assets and, by December 31, 1984, record them in its books. There- after APN would revalue its fixed assets at least once every three years according to methods satisfactory to the Bank (Sections 5.04 (a) and (b) of the draft Loan Agreement). Starting in 1985, when all APN's assets are properly accounted for, APN would adjust its rates and charges from time to time in order that it would achieve a rate of return in any fiscal year of at least 8 percent on its average net fixed assets in operation. In the interim tariffs would be adjusted to achieve a schedule of financial objectives, based on working ratios (Section 5.05(b) of the draft Loan Agreement). Project Cost and Financing 49. Total project cost is estimated at US$48.3 million equivalent including contingencies, the front-end fee and US$4.5 million of taxes and duties, with a foreign exchange component of US$28.8 million. Cost estimates for civil works are based on detailed engineering and unit prices for ongoing - 13 - civil works in Panama; those for mechanical equipment are based on recent quotations and purchases. Average consultant services costs for technical assistance, inclusive of air fares and subsistence, are estimated at about US$9,600 per man-month, for training $4,300 per man-month, while that for engineering and supervision would be about US$5,500 per man-month. 50. The proposed loan of US$24.4 million represents about 50 percent of total project cost and would finance about 85 percent of the foreign exchange cost. UNDP has agreed in principle to provide US$0.3 million equiva- lent to finance technical assistance and detailed engineering. The Government would contribute US$8.8 million equivalent, and APN US$14.8 million equivalent to the project cost. The Government would provide its contribution on a loan basis, with repayment to commence after project completion and geared to APN's profitability. Procurement and Disbursement 51. The project civil works are expected to be executed under three basic contracts. Two (one for each port) to be awarded on the basis of international competitive bidding (ICB), in accordance with Bank guidelines, while the third contract to cover the demolition of the transit and freight sheds at Cristobal, estimated to cost about US$700,000 equivalent, would be under local competitive bidding procedures acceptable to the Bank. Prequalification will be required for civil works contracts under ICB estimated to cost US$500,000 equivalent or more each. Equipment would also be procured on the basis of ICB. Contracts for goods estimated to cost less than US$200,000 equivalent each, but not exceeding US$1.4 million in the aggregate, may be procured under local competi- tive bidding procedures acceptable to the Bank. Contracts for the advisory services and engineering consultants for preparation of detailed engineering, bid documents and bid evaluation were completed prior to negotiations upon terms and conditions satisfactory to the Bank. 52. Disbursement for the project civil works would be on the basis of 45 percent of total expenditures, those for equipment procurement on the basis of 86 percent of foreign expenditures. For consulting services and technical assistance, disbursement would be on the basis of 63 percent of total expendi- tures and for training, on the basis of 43 percent of total expenditures. Retroactive financing of up to US$200,000 equivalent in respect of consultants' services would be made. Disbursements, which would be made under normal documentation, are expected to be completed by the end of 1986. .Monitoring 53. The proposed project would assist in improving APN's productivity and cost effectiveness. Targets indicating the effectiveness of the port operations have been developed, and the aci.ievement of these targets would be regularly monitored during project implementation. - 14 - Benefits and Risks 54. The main benefits of the project would be increased efficiency of the operation of the project ports resulting in reductions in labor, main- tenance and operation costs, savings in ship service time and reductions in shipping costs, recapture of lost transshipment business, increases in APN's revenues, employment generation, mainly in the Free Zone in Colon, and improve- ments in APN's management and operations. The economic rate of return for the Cristobal component is estimated at 25 percent and for Coco Solo Norte, 24 per- cent. The overall economic rate of return of the proposed project is estimated * at 25 percent. 55. The project is less than usually dependent on general traffic growth and is thus reasonably well insulated from the current world economic stagnation. A risk analysis, covering variations in costs of execution, timing, and capture of benefits gave an 80% probability of an ERR above 17Z. One specific case assuming a 50% cost overrun, all benefits delayed one year, and the benefits from ship waiting time reductions and transshipment earnings halved still gives an ERR of 12%. The chances of such a low rate of return occurring are calculated at less than 2%. The project does not involve any unusual risk. PART V - LEGAL INSTRUMENTS AND AUTHORITY 56. The draft Loan Agreement between the Bank and APN, the draft Guarantee Agreement between the Republic of Panama and the Bank and the Report of the Committee provided for in Article III, Section 4(iii) of the Articles of Agreement are being distributed separately. Special conditions of the loan are listed in Section III of Annex III. 57. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 58. I recommend that the Executive Directors approve the proposed loan. A. W. Clausen President by M. Qureshi Attachments May 25, 1982 -15 - Annex I TABLE 3A Page 1 of 6 PANAMA - SDCIAL INDICATORS DATA SHEET PANAMA REFERENCE GROUPS (WEIGHTED AVE9AGES .AND A-REA (THOUSAND so. l KM.)O- 5ST RECENT ESTIMATE)-a TOTAL 7j.1 MOST RECENT MIDDLE INCOME MIDDLE INCOME AGRICULTURAL 17.3 1960 /b 1970 /b ESTIMATE /b LATIN AMERICA & CARIBBEAN EUROPE GNP PER CAPITA (USS) 330.0 710.0 1,730.0 1616.2 2609.1 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 438.3 888.7 947.0 1324.1 2368.4 POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (THOUSANDS) 1095.6 1465.0 1,835.0 URBAN POPULATION (PERCENT OF TOTAL) 41.3 47.7 53.6 64.2 53.2 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 2.8 STATIONARY POPULATION (MILLIONS) 4.0 YEAR STATIONARY POPULATION IS REACHED 2070 POPULATION DENSITY PER SQ. KM. 14.2 19.0 23.3 34.3 80.6 PER SQ. KM. AGRICULTURAL LAND 76.0 89.0 101.6 94.5 133.9 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 44.0 43.4 40.4 40.7 30.1 15-64 YRS. 51.8 52.9 55.5 55.3 61.5 65 YRS. AND ABOVE 4.2 3.7 4.1 4.0 8.3 POPULi TION GROWTH RATE (PERCENT) TOTAL 2.8 2.9 2.3 2.4 1.5 URBAN 4.3 4.4 3.6 3.7 3.1 CRUDE BIRTH RATE (PER THOUSAND) 40.6 36.3 30.7 31.4 22.9 CRUDE DEATH RATE (PER THOUSAND) 10.0 7.4 5.8 8.4 9.1 GROSS REPRODUCTION RATE 2.8 2.5 1.9 2.3 1.6 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. .. 15.0 USERS (PERCENT OF HARRIED WOMEN) .. .. 47.0 FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 88.0 94.0 97.0 108.3 119.8 PFR CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 101.0 106.0 101.0 107.6 125.7 PROTEINS (GRAMS PER DAY) 58.0 61.0 61.0 65.8 92.5 OF WHICH ANIMAL AND PULSE 26.0 30.0 32.0 34.0 39.7 CHILD (AGES 1-4) MORTALITY RATE 8.8 5.6 3.1 7.6 3.4 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 62.4 66.4 70.3 64.1 68.9 INFANT MORTALITY RATE (PER THOUSAND) 90.0 53.0 47.0 70.9 25.2 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL 46.2 70.0 79.0 65.7 URBAN 89.5 98.0 93.0 79.7 RURAL 9.6 43.0 63.0 43.9 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. 78.0 85.5 59.9 URBAN .. 87.0 97.0 75.7 RURAL .. 69.0 73.0 30.4 POPULATION PER PHYSICIAN 2732.3 1585.4 1223.3 1728.2 973.3 POPULATION PER NURSING PERSON 3460.Oc 1447.6 1405.7 1288.2 896.6 POPULATION PER HOSPITAL BED TOTAL 257.7 327.1 250.9 471.2 262.3 URBAN .. 286.4 185.8 558.0 191.8 RURAL .. 1583.4 1125.8 ADMISSIONS PER HOSPITAL BED .. 26.0 21.0 .. 18.2 - HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL 4.7 4.9 URBAN 4.4 .. RURAL 4.9 .. AVERAGE NUMBER OF PERSONS PER ROOM TOTAL 2.4 2.2 URBAN 2.1 1.8 RURAL 2.6 2.5 ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL 44.0 52.4 URBAN 82.7 90.4 RURAL 11.3 16.0 -16 - Annex I TABLE 3A Page 2 of 6 PANAMA - SOCIAL INDICATORS DATA SHEET PANAMA REFERENCE GROUPS (WEIGHTED AVERA9ES - MOST RECENT ESTIMATE) MOST RECENT MIDDLE INCOME MIDDLE INCOME 1960 /b 1970 /b ESTIMATE /b LATIN AMERICA & CARIBBEAN EUROPE EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 96.0 105.0 88.0/d 101.7 105.9 MALE 98.0 108.0 89.071i 103.0 109.6 FEMALE 94.0 103.0 86.071 101.5 102.2 SECONDARY: TOTAL 29.0 39.0 116.0/d 35.3 66.3 MALE 26.0 36.0 106.07; 34.9 73.2 FEMALE 31.0 41.0 125.071d 35.6 59.5 VOCATIONAL ENROL. (t OF SECONDARY) 28.0 32.0 31.0 30.1 28.4 PUPIL-TEACHER RATIO PRIMARY 29.0 27.0 28.0 29.6 26.8 SECONDARY 23.0 21.0 23.0 15.7 23.6 ADULT LITERACY RATE (PERCENT) 73.0 78.3 .. 80.0 75.4 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 15.0 31.1 39.7 42.6 83.9 RADIO RECEIVERS PER THOUSAND POPULATION 148.8 157.0 160.3 215.0 181.6 TV RECEIVERS PER THOUSAND POPULATION 10.0 96.9 120.1 89.0 131.1 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION .. 88.7 81.1 62.8 123.8 CINEMA ANNUAL ATTENDANCE PER CAPITA .. 4.8 *- 3.2 5.7 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 358.9 501.2 619.9 FEMALE (PERCENT) 21.1 25.9 25.9 22.6 32.9 AGRICULTURE (PERCENT) 50.9 41.6 33.8 35.0 34.0 INDUSTRY (PERCENT) 13.7 16.1 17.8 23.2 28.7 PARTICIPATION RATE (PERCENT) TOTAL 32.8 34.2 34.6 31.8 42.3 MALE 50.6 49.6 50.3 49.0 56.5 FEMALE 14.2 18.1 18.2 14.6 28.5 ECONOMIC DEPENDENCY RATIO 1.5 1.4 1.3 1.4 0.9 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS .. 17.8 HIGHEST 20 PERCENT OF HOUSEHOLDS .. 52.7 LOWEST 20 PERCENT OF HOUSEHOLDS .. 2.1 LOWEST 40 PERCENT OF HOUSEHOLDS .. 9.5 POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 349.0 RURAL .. .. 183.0 187.6. ESTIMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 442.0 513.9 RURAL .. .. 287.0 362.2 385.1 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 21.0 RURAL .. .. 30.0 Not available Not applicable. NOTES /a The group averages for each indicator are population-weighted arithmetic means. 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 1976 and 1979. /c 1963; /d The primary and secondary enrollment ratio in 1978 are too low and too high, respectively, since a partial change to eight years "basic school allocated too many students from the primary to secondary track. The data are now being adjusted to reflect the new system. M4ay 1981 -17 - Annex I DFNTMOF SOC INDICOtATORS Page 3 of 6 Nones: AlthoUgh the data ara drgen frtor sour.es geoersIly judgsd tie meet atho-istIliw ..d rlae,it should aa be notd tbt tier usy not bs inte-- natio_lly comparbl he_ae f the lack of standardined dafinitie and ..oenePt. used lby diff scant coutries in collecting the data. The data n, oe the1b... useIful no desc.ribe orders of magnitude, indiasna ten.ds, sad chrneteoraemJor difteceec... bstree- outis The referaRe.. gops are 515 the san country g ..o0 of the sohisce ...uery ted (2)I a-oarr gtrap .ith sonhat bighst aveag inoom thor the onuetny Snoop of the eabjnt uauntry, (acce.Pt for "Copitel Surplu Oil Eaputtaca" neop whet 'Middl. ee-an Nonrtb iftios ad Hiddls East' L chosen becaus of srre snoonuaafIniis.I, the ref et Elanno data the aveage are population sighted cnIthanic nuan for eu.h idiAet- end eho.- only -h-r ss)otin of the ouetnies in aInphoedt for that indioeur Sis the -rag of -ennist ssan h. ludi-sto.. depends o the cttilsbltY ofIdta and is oat unfom,cation ne beenerczised in reictinea e of on iodioator in anunha. Tha.. av-uge ..e on...ly ...fu1 incoparing the tausof ore irdieta at I time aso the coun.try and Slesrmaoope. LAND0 AM0 (thoaea.nd eq.ha.) Pouaro artsptOo 1cnl -but, onuoutot1 - Population (toici. Tonal - Total ratfeos area c piinglad srne od iolaod waters, urban, and lSditdId by chirt r-sp-rni- nmbet of boepina1 beds Aariloltural - fE-tint ot eeric.ulnualrae used t-porarily or permaeatly atia Loi pub'ic uod yrt-te. geonr. an.d opsciclioad boapitel andre for cropa, p-snte, eart and kitoh.. gardens ot to Iin fallow; 1979 dnta, hbuilitatio..c..nttr. Nepital. eon oatahliahn..ote permanetly tadfsd by enI. lee ore physician' Ertoblinbae.ots providi.n principaly1 ua1 CoP tEn CAPITA. (03$) - CNP pet capita atinatee at ...rrent m-rk pnioss,. ..I- dial caI are rot included, Ru-I hoepitnala, bh.or,.n..a..at N nulata~~~~~~~~- ..d by sam corveson methd as World Bar Atlas (1977-79 basis); 1960, andmeia ceorart permanstly staffed hy aIpysiian(bun bya l97S, end 1979 data, meia eIotuon, ree adwIfe; er.) ahich offer o-ainacrs- dtnatpewdeaIland reaga f rdica.fciitee oPraat- ENousY CONSUMPTIYON PER CAPITA - A-ouAI -ouupnioa of oettial eney Sna tical purpoe ebph hosPitals inLad flO priocipal/ganrI b-upitala, nod lignite, perlu,ntural a. and hydro-. ro1lsr and geotherma elec- an1ua opnl,lclo us hoepict. codmdisan tuiy trioitny) in kilogrm of cosi qioltaJet per copita; 1960, lops, and 1079 cencar. SPec.iaud boepitie am. inoludd only under totl.l d.ta. Adn.issno pr -porottl Sod - T-tl number of edm.i...o to or disoherurs Ero. hopitula dividd by the numbar of beds. POPULIATION AND VITAL. STATISTICS Tortl PoouIutioo. Mid-Yea (tho..s. de) A of July 1; l96S, 1970. und 1979 HOUSING data, ~~~~~~~~~~~~~~Averag iCnof sousehId ,(osreno par houshold) - torn, -urban . ad rural Urbe oueio rcon fttl Ranio of urban to rtonA population; A house!hold oniteof a S rop o ditiol h hr litian qaner diffrntdft inition ofubn rn me pffect omporubility of date and choir mai -,Ie. A b'ardrr or ladgen nay or nay not ha includedI amn oottiae; ISh9 1970, aud 1979 data, the .. houahld for _nrinctoLe popons PnlioPra,:teoniun Arer..enn.ebr of por.a.. Pc roes-totu. urba.. und trura - Ave.ag nS. Porulution in Year 2500 - Crtpopueionpotio ionsIar base.d un 1980 bar of parsone pro roon in all urban, cod rural cocupiAd nna total pw polalonby gs and ton an thir catrnlity end fertility rtates d..llinge, rep-tnire1y. brelins nludr o-nmaene utmsad Prnjot iaopaemtros for eurtlity tatee compris of three Isr-le aesu- urcoovyird parts, ing9 life saernny at birth lont ich co Frys a is.pita no-m A.oess ta fl-otriolty oetoant of d ealirne) - total. ucbn. and cuIa - _levs f nd5 maaiftI enpeteny etoi iniag an 77.5 ynars. The pera- Cnn.tsniocal do-llIega utob eontic ty ielivinyg' ..ttr. a pe.Irnsro retste for fertility race Ila hove tire levls-uI n decline is of cta.., urban, nod .rura daulliogs epc iay fertility n.ooding to Lee_n lat and pac family pluanin psrdnm-ce tuob hf-try La tin eeeigosd un of thrss Aloe cebinati- of nertulicy EDUCATION and fetility trode f on projniniLa Purpose. Adiusatd Enrollmen Ratios stanionur' ponuLatian-T.In e sntionay ppln thea ienL rwh ic rme,sho - onteth. .mIlI and f aal - Cross total, eals end f-1a th. birth ratsI is equal to thedeth rats, and olae the g st trs re- enolen fal tgea the primaty Iao-Ia prntgeof rarp-etin nan ontat.Thi Is hhiowd only sfter fertilitymE dsoo Lon primary enhool-ag poplstios; normaly icludas childoen agd 61 ths tsplacmstlas ofuitnt repraduntio rate, h-e -.ah ge-rtiani Ynts but Idjustsd for different legtho of primary aduotlar; foe of Wwmn eise islf etaoly The stationar pepulatin ales-: ems n ris with ueiver-el ednation erilmeet ney enned 100 perrert intimated or rho haste of the prajanoed chrnocatirite. of the . puLotr uloc sass pupile are bslowra above the offloCal school age. in the yea 2005. ud the rate of deobine of f-rtility mr orola-Sondstshol-ttl,ml n female -ICmotda hoasnary meet avel, edction rqires ateat foryears of appr pimary iaatru Lona; Ysa stationay parulani.r is mooted - The yea rise stationay proletino previdee geea, toainel, or tancherfta RfginsrotioafortpopC else hoe bmea mahod, aelly of 12 to 17 years of age; carr...pondse rsrus t generaly PnwaiaDamitynald. Pe.s, ha k. -Mid-ysat populating per qeate kilomete (150 inaa)o Ynnaa elma eieof f eodar) - Pronioral inatinrti..s tote1 area 95 17 n 17 aa molds t.hnoIo. ioduatnis,h or ot'her pragn which operte imdapeed Per sehqa, iatrl ad-Coptda abov foregin tr -lr early or a departmete of s-uedar i_mtoriaa. only;17 1,96,1970 and 19781 dana, Pp nlte..uhen rtit=- reimn and s-nedary Total tdeeta enro1lld in PoolaterbeeSeratre arso - hlrn(0-14 yeats), -wonag-u0a (15- pimary and eody levl divided by number of teachers Lo the 964 years), and reamed (65 yers and owe) asprnaagso mid-year poPo- ...e.ednglva latien l9Ob0, 1970, and 1979 date. Aduli lIteayrte (r n)-Literate dales (rhls en read a4 -ine) Pon..lacior Groo hoe (nercert) - total - aaeu alroet rtee nof total sdd- uIap.....rta5 of ntal. sdlt poaaieAged 15 year and evr. year popelstla far 195C-60, 1960-705. ed 1970.-79. PoowlattarCfownih boa: 'P' It-uban- hnA1 growth rates of urhee pnpu- COOOSOGTION lanles fa 195-60,1960-'70t, ad1970-79, Peeera- Cera (pec rhous...droatn-Pa..ssenger . car .apisa ment. Crude Bioth hoe Sntt_nan) _ nulILv births per thoweed of mid-year oars seting lae ho sih pros;eedas hm"-nm.bea and populno; 95 17,au 99 ae mii tar: vhle Cruds Dnth blte Soar thousand)- A-aca detbe per thoIusds of mid-prt Radio eewr orthuadnuain)-All types of rcIvers ~:f- oradio palnin;lOs 1970, and 1079 date b-udat ogerlpbi par tho..e.nd of pplto;anae n Gross stupuntion be-vnga nubero agtr wa ilhar linroerd snIw... ini onatie and in L y-are char regiatrati of oadi. hat ---Ie reProdactv period if she eaperione preen- fg-psii r- Iea. we in affect dat fort tean par y orn he ompateiaI simo nil ity rates; onally five-year nvrg ading io 1906, 1907, and 197P. meen nontis =hlea lr ig Famiy Plannoing - Aneetars. danoalSchoses A-1Ata raiie of anrapoore TV Reoo.. r Star. thusn o ation) - TV recivers for bTeadont ta of bio-onadco uneaapcsof naioa family plarelg Plprogem gnRalpbi e rasn oelto;seadsolneedT svr PamiltPl~cn-Year loercnt ofmetAldwen -Prctaeof maried iuoutine and in y-nr nhaa raina of TV sees -a in effect, amec of chialdb-h ig ge(1t5-4f4 yaewh. use bitob-rantro davi.ss to oesa.iolno nttosn ou-u,anin) -ihw the averag ni all married rm i sam sge group. tuaiaa 'ul eerlitrenrwpp , defined as a perliadina publiatian devoted ptdisrily on -acrdin genera tos It is nanidetd FOOD AND oNcyTcOo no ba "daily" if it appears en leat fear. tIme A nea. tae ff od LtdoIo peCtit, 5L969-lYS -Ine of put capita anua Cinem Annua Atteodneeea ann Is er-esd athe.ubro poduotiu ofalfo =omdtine, Preduction ealudse sand and feed and tiheut meld duorig the year.inludn disoan driv- in cioa LI I y.alndr ..a basis. Ca-dities cower primary gode (e.gS .. -uaa end mebila units.. isedof suar hich are edible end contain nutients Ss.. ..ff- amad teaer enlda),Aggregate praduontio of6each.crrtny Is based an 1tABO1 PORa natioa avetg padune price weights; 19b-65 1970, end 1979 dana. Total Labo bro2s- (thou-ade)- toomlaly tir- plros,ialdn Par o.Pita surely of calaies Snrrenot of .. rsirssts) -opeted from aread foc_o and eeo_pluyd but maladig hoeseives, tadete, ata., onargy qui-alrt of oat food eupplis aI eilsbl i Loroy pee ospina orming popalatie of all apse. Do0 inins in wa-i...e ar.mories are pan day. Availabla suppliescopte dometic roaoe .ipot .le nu amt ahe 1960, 1970 and 1979 data. quatite usd infod lpoesig, sad losses in dieribucor Buita siun oren- lbor farce in feoming. f-retry, bunting and sets were estimated by PAO base.d on phyalulogios1.. nede for "se"al sati- fsigaprrtgs. of ttna1 labor force ; 1960, 1970 and 1979 data. itry and health cesideviug noimeomarr1 tempareture, body owighte. age Indutry (cm )- Labor fot i iag narnin Asaat an ndistribution of popolatio, and u11wiog 10 percentI or ease ot an 'lnnty, e.e.nd...a.p.nng of totallao fonts; 1960. house.hold level; 1961-65, 1907, and 1977 data 1970 sad 1979 aa Pe ait. sPpoly of n-rons (aton ne day) - Protsin onetnt of Per o.pita P-tnin.insirBne nret - tonal. ala. and femal - Partinipatioe Or nat eapply of food pardY. Oat supply of food is defied e above, s- activity rata ar coptdasttl ae n Il aorfrse quImomnn for all cotoiem established by USDA provide for mimie ersngm fta,al n fea1a papaIiai of all same rsspatiVmly; alla1=o of 60 reas of ntal. prorate par day and 25 gRams of animal and 1960, 1970. and 1979 data. The.m are bh.e.d or ILO's ps..tiipatiem rates poo Trtein, of which 10 grs shoud be anima pro iai. These sued- teflecr ag-mn structure of the popuIatine, end long time tread. A ceeae _oe thea oboes of 7 raeof tonal prutnie and 23 grum of row eIt imes era from 1 1 .ainl ore... anmlprotein. as se .....g for the arid, Plprapoed by lAo in the Third P"noi Oaden Yro- Ratio of .papolaio ande 15 And 65 end ae World Pood Suovy; 1961-65, 1970 and 1977 dta.t t ithental labor oo.t PeLsia rti "aPl from rdmLedoLea - Protein ..pply of food de- rive frmanml andpuse io granapoeday; 1961-65, 1970 end 197P7da.ta, tCoa DISTRflBUTION Chid sme -65tlatalty bin 'P (n t hoasad) - Au-aI deaths pet thonnd inL P-rona ofPirt I ncom (boh i ceeh lendkInd)-b i-ed by ricet tries date dariwad from lifa tables; 1960, 1970 and 1979 dtne. of housholds. HMTH ~~~~~~~~~~~~~~~~~~~~POVEIT TORORT GROUPS LIfe, Carectsryr:at Lmb (innte - Awaruge ruehet of pasts of life reaining Th. folowiag stinatre arc very appr..mt me Iu of poraty lereLs, abit;196, 170 Sand 197 dane. an hould he ineprtd t ceIdII loair taf ea mortality hoe (oa thousad) .-anal deaths of tefarns under ... y55t temaadAelte ovrty' icahe tove (YIN ie aon rbnad ua of age one thousad lirn births. thl_tad poverty IosLawn is thenincme evaibelo whic ad miIma Acros in ade ater(rerent f nocAtin)-etotl uban, and rura - ta- AbuItri Ptinly idaqun -e dnpLumt esetial I.-fa, haeteme:t is an he o ppla (to!tAl, urban, andurlqnthrtnnal.nca ndaelftdbe :-t- -PP' U" -d- r--td --f-- t-r. . ..l-tdb.t .. ot.Aitd iEtI-atd blnti-s Povrty I...a Levol (Sl ear canine) -.urba and rours, no -ah s then ftm protected boeholes, springs, and sitary -e as) .Renal relative poverty banns leve Is on-third of uwrage per ospita per.a.nagee of -p ... eaptriv pouti- s t o. an0 urbanf ares .a publi porsoml inocn of the country. Urbo- ve is derived from nba rura considered as baing rithia -eaenble eaa that house In trura area level wih adjuaet &Ic bighat cost of lining in urbanaes tt E.~~~~~~~~~~~slte-td Poplan blowAbsout Poverty InoevL" (retreat) - ushne rssesnbIlIa..... would imply oht tehaoif.s or asebers of tha house holdanrul-ProeofppataSaanndua)rhae"bsue Asnu hreto spend a dispreputionats par of tie day Ia fetching the puoh.-b".t nmenfprl(total. unac and total)Isatd by eacren dispsla percentages of their oaeciepapulation, Car.ter diepoesl -ep i-lda tbs culls.nLon aed disposal . 0itb or nithon tr-tmet, of h-.a nonran.ctmn n.oilDaatvae and- vete-we by watar-barns syseu_ or the ... of pin prWivie and siml fo eioanlysi end PmojenDt.ninneDsartse Ponlatio p ra hysca - PopuLation divided by nuber of Practicing phyei- _______ f__ I__ h__ . : y ...Io p-ttigMay 1981 PnoLation FeOreino Po=te- Ppetn " dividebynmrofpatcg alaan felagreuae nrss *prcrualrars" andy esitaonuea Population : 1.835 million (mid-180) Ann.x I GN7 Per ropitaa USS1,730 (1980'- - s- Page 4 of 6 PANA A - ECON(Z41C INDICATORS Amount Annual Grovth Rates () j/c (million US$ At Indicator current pricse) Actual Pro1ected 1975 1975 197b 1977 1978 1979 1980 1981 1.! 1982 1983 1984 1985 1986 NA¶TIONAL ACCOUNJTS Le Gross Domestic Prod.ct ls 1,934.2 0.6 -0.3 4.6 6.5 7.0 4.9 j.6 5.O 4 4 4.2 4.2 5.0 Agriculture 334.6 4.6 -0.7 7.7 -0.5 -1.8 1.1 -1.2 2 7 2.8 2.8 2.6 2.6 Industry 414.4 -5,6 -13.1 2.4 4.0 13.6 6.4 -1.4 5. 5 5.5 5.8 6.0 6.5 Services 1,185.2 19 4.2 4.5 9.3 8.2 4.0 6.6 5.3 4.5 4.0 4.0 5.0 Consusption 1,466.9 -5.0 .4.8 14.5 2.3 13.8 -6.0 7.0 4-3 3.8 3.8 3.8 4.9 Gro3s Investment 607.9 10.0 4.0 -25.3 33.5 -6.2 6.2 -5.6 6.3 6.2 6.2 6,1 9.4 Exports of CNFS 851.5 1.4 5.0 11.4 9.4 8.3 34.1 1.2 0.6 2 0 1.9 2.3 4.5 I.port. of GNFS 992.1 -4.2 -1.6 3.7 14.1 14.9 51.0 0.8 -1.2 -0.6 1.0 1.2 11.4 Gross Natio.al Savings 446.5 61.4 -2.4 -30.0 38.2 -30.6 40.1 -13.5 8.8 9.5 6.8 6.7 3.7 PRICES GDP Deflator 4.7 4.0 4.0 4.2 11.0 13.8 10.4 9.0 8.0 7.0 6.7 Exchange Rat. 5.0O 1. 5.0 1.0 1- .0O 1.0) 1.0 1.0 I10 1.0 1.0 Share of GDP at Market Prices () Average Annual Increase (%) (at current prices) /b (at constant 1960 prices) i§oO 197e 1975 1960 1985 1990 1960-70 1970-75 1975-a0 1980-85 1985-90 Gross Domestic Product 100.0 100.0 100.0 100.0 100.0 100.0 8.0 4.9 4 5 4.5 5.0 Agriculture 23.3 19.4 17.3 15.0 13.5 11.7 5.3 2.7 1.1 2.7 2.0 Industry 18.6 21.8 21.4 17.4 17.4 17.0 9.1 3.0 2.3 5.8 4.5 Services 58.1 58.8 61.3 67.6 69,1 71.3 8.5 6.3 6,0 4.5 5.7 Co.sumption 88.9 76.9 75.8 75.3 76.0 76.0 7.0 3.9 3.6 3.13 4.5 Gross Investment 16.3 26.4 31.4 27.3 35.0 25.0 13.6 5.1 0.6 6.4 5.5 Exports GNFS 30.6 37.3 44.0 47.6 31,2 37.0 9.8 3.8 12.5 1.4 3.0 Imports GNFS 35.9 40.6 51.3 50.2 37.6 40.0 10.3 2.1 8.3 1.1 5.0 Gross National Savings 8.1 20.5 23.2 20.1 18.6 22.0 1556 12.4 -1.7 9.8 6.9 As 7. of GDP 1960 1970 1975 1980 PUBLIC FINANCE (Public Sector) Current Revenues 16.1 21.1 29.0 30.2 Current Expenditures 14.9 18.9 26.0 26.7 Current surplus (+) or deficit (-). 1.2 2.2 3.0 3.5 Capital Expenditure 3.7 6.6 13.2 8.9 Foreign Fina-cing 1.9 3.7 9.8 6.7 1960-70 1970-75 1975-80 1950.85 1985-90 OTHER1 INDICATORS OPN Grouth Rate (%) 8.0 5.2 2.5 4.5 5.0 GNP per Capita Growth Rate (7.) 5.0 2.4 0.0 2.0 2.6 Energy Consu=ption Gro-th Rate (7.) /s -- -. -- 1.9 1.9 ICOR 2.4 5.4 6.4 5.4 5.0 Marsinal Savings Rate 0.23 0.43 -0.15 0.38 0.29 Import Elasticity 1.29 0.43 1.9. 0.28 /d 0.9 /a At market prices/cocponents are expressed at market prices, not at factor cost. 7W Projected years at constant prices (1980-1990). 7T Grouth rates are for GDP in 1960 prices. 7r 0.7 for 1981-1985; the lower 1961-198, rate stems from fall in imports expected after 198J nfcer heavy build .p of nt ok. in 1779 and 1980. 7e Oil imports grouth rate. /f Preliminary May, 1982 Population : 1.835 million (mid-1980) /a Annex I GNP Per Capita: USS1,730 (1980) - 19 - Page 5 of 6 PANAMA - EXTERNAL TRAD Amount Annual Growth Rates (7. (million uS$ at (at constant 1977 prices) current Prices) Actual - Projected Indicator 1975 1975 1976 1977 1978 1979 1980b 1981 198 1983 1984 1985 1986 ECTERNAL TRADE Merchandise Exports 267.3 42.0 -19.3 9.4 -1.7 -6.6 10.7 3.9 3.8 4.5 5.0 4.8 4.5 Primary 134.3 36.9 10.3 8.0 2.3 -12.4 18.6 3.7 3.0 3.4 3.9 3.3 3.0 Manufactures and other 133.0 47.6 67.8 10.2 -10.6 12.3 6.1 7.2 8.8 9.5 9.8 10.0 7.4 Merchandise Imports 815.6 11.6 -11.1 -4.1 5.8 3.1 7.3 2.3 2.7 3.0 3.2 3.3 3.1 Food 59.7 29.5 18.5 38.1 8.5 4.6 13.0 4.4 4.4 4.6 4.6 4.4 4.4 Petroleum 334.5 20.6 -24.7 -9.1 -19.6 -21.0 -9.0 -5.0 -3.4 -2.4 -1.9 -1.4 -0.9 Machinery and Equipment 156.6 15.2 6.9 -19.4 21.0 27.9 16.0 4.0 3.9 3.8 4.2 4.1 4.4 Manufactures 176.9 -11.7 8.7 -3.2 17.1 4.4 11.5 3.6 3.6 3.6 3.6 3.6 4.0 Raw Materials 87.9 23.5 -35.0 24.1 28.1 59 14.5 4.9 4.8 4.8 4.8 4.8 6.5 PRICES Export Price Index 93.2 95.3 100.0 104.0 116.1 128.9 129.0 155.2 168.5 183.9 200.3 213.5 Import Price Index 92.5 96.8 100.0 105.8 132.4 161.0 178.5 195.7 211.4 228.3 245.9 261.3 Terms of Trade Index 100.0 98.5 100.0 98.3 87.7 80.1 72.2 79.3 79.7 80.6 81.5 81.7 Composition of Merchandise Trade (N.) Average Annuel Increase (e) (at current prL2cs) (at constant 1977 pricea) 1960 1970 1975 1980 1985 1990 1960-70 1970-75 1975-80 1980-85 1985-90 Exports 100.0 100.0 100.0 100.0 100.0 100.0 n.a. n.a. -3.5 4.3 4.5 Primary .73.9 74.2 50.2 66.5 65.9 65.6 4.9 3.5 2.2 Manufactures 26.1 6.0 14.6 24.7 29.4 32.0 19.5 9.1 10.0 imports 100.0 100.0 100.0 100.0 100.0 100.0 n.a. n.a. 2.2 2.9 3.8 Food 14.7 8.5 7.3 8.3 7.2 7.0 22.0 4.5 4.0 Petroleum 9.9 19.0 41.0 28.8 26.1 25.0 -14.0 -3.0 0.2 Machinery and Equipment 22.1 27.5 19.2 20.4 22.0 22.0 12.2 4.0 4.0 Others 53.3 45.0 32.5 42.5 44.7 46.0 6.3 4.0 4.8 Share of Trade with Share of Trade with Share of Trade with Industrial Countries (D:) Oeveloping CountrieR (%) Capital Surplus Oil Exporters (_.) 1960 1970 1975 1980 1960 19719 7 1960 1970 1975 1980 DIRECTION OF TRADE DIRECTION OF TRADE Exports , 99.0 89.6 74.8 79.0 1.0 10.4 24.6 20.0 0.0 0.0 0.6 1.0 Primary n.a n.e 96.7 n.a. n.a n.a 2.3 n.s. n.a n.a 1.0 n.a. Manufactures n.a n.a n.a n.a. n.a n.a n.e n.a. n.a n.a n.a n.a. Imports 74.9 61.3 41.4 63.7 24.7 20.7 18.9 6.5 0.4 18.0 39.7 29.8 /a 1981 World Bank Atlas __ Estimated May, 1982 Poplultio : 1.835 rillioc (mid-1980) Ie -20 - Annex I GNP Per Capita: US$1,730 (1980) Page 6 of 6 PANAMA - BALANCE OP PAYMENTS. EXTERNAL CAPITAL AND DEBT (millions usf at current prices) Actual Projected 1975 1976 1977 1978 1979 8 1980 /e 1981 /f 1982 1983 1984 1985 1986 BALANCE OF PAYMENTS Exports of goods and services (NT) 851.5 827.7 908.7 946.7 1,140.7 1,614.8 1,608.0 1,800.6 1,985.9 2.209.3 2,461.1 2,742.0 Of which: Merchandise f.o.b. (330,8) (270.6) (235.5) (235.4) (334.1) (373.4) (339-3) (391.6) (432.0) (488.2) (545.9) (608.0) IDpOrts of gnods and services (NP) 992.1 976.8 997.8 1,076.8 1,380.0 1,702.9 1,785.0 1,977.8 2,165.9 2.374.3 2,600.0 2,847.6 of which: Merchandise f.o.b. (821.9) (784.3) (784.1) (862.0) (1.095.6) (1.344.6) (1,374.0) (1,522.5) (1,667.2) (1,827.6) (2,001.5) (2.192.0) Net Transfers -5.0 -3.9 -2.3 -1.3 17.2 -12.6 -26.1 2.7 3.7 4.7 5.7 6.0 Investment Incone (Net) -20.8 -53.8 -61.4 -85.0 -78.6 -143.9 -180.0 -194.1 -187.1 -208.6 -232.5 -264.8 Current Account Balspce -166.4 -206.8 -152.8 -216.4 -300.7 -244.6 -383.1 -368.6 -363.4 -368.9 -365.7 -364.4 Official Capital Net 79.2 290.2 256.3 513.9 Ia 191.6 230.9 80.5 215.4 242.0 269.2 298.8 300.0 Anortiszatio 27.5 41.9 86.9 440.5 189.6 203.2 300.5 267.2 379.4 332.1 331.8 337.0 Disburserent 106.7 332.1 343.2 954.4 381.2 434.1 381.0 482.6 621.4 601.3 630.6 637.0 Private Capital (Net) lb 61.4 -141.1 -167.2 -383.8 49.9 13.0 65.2 129.3 124.8 108.4 83.1 77.0 Monetary Capital Net Ic 175.7 30.7 4.9 -167.5 -2.9 -24.8 76.8 23.9 -3.4 -8.7 -16.2 -12.6 Unidentified private inflow, errors & omissions -149.9 27.0 58.8 253.8 62.1 25.5 160.6 - - - - EXTERNAL CAPITAL AND DEBT Gros. Disbursement 249.0 375.1 341.2 986.4 /a 381.2 434.1 381.0 Official Grants 8.6 13.7 7.7 4,7 19.3 1.0 7.0 Conceesional loans 25.6 24.9 24.2 19.2 28.9 12.6 ..a. Non-concessional loans Official Export Credits n.a n.s n.a n.a n.a n.a. m.a. IBRD 25.8 24.1 14.1 11.8 17.0 20.4 31.0 Other Multilateral 12.4 14.7 16.0 32.1 29.9 47.6 n.n. Private 172.2 290.6 279.6 901.5 286,1 352.5 n.a. Public external debt /d Debt Outstanding and disbursed 564.8 774.2 1,104.6 1,356.2 1,909.8 2,089.7 2,276.3 official 194.7 262.6 337.0 390.3 461.4 493.9 555.4 private 370.1 511.6 767.6 965.9 1,448.4 1,595.8 1,720.9 Undisbursed Debt 192.9 353.3 340.6 495.1 513.9 476.2 450.4 Debt Total Service Payments 72.4 105.0 165.7 571.0 401.0 500.5 480.0 Interest 41.2 60.4 78.4 129.5 211.0 303.0 280.3 Payments as , Exports 7.3 12.7 18.2 60.4 35.2 44.7 29.9 Average Interest Rate on New Loans - - - - - Official 5.6 6.6 8.0 5.3 6.2 9.3 Private 9.2 8.7 8.4 9.4 11.2 11.0 0.a. Average Maturity of New Loans (years) Official 21.5 18.5 18.5 17.8 19.1 17.0 17.0 Private 7.8 6.5 7.0 10.3 12.1 8.0 8.0 (a pnamaundrtoo lare ~financing of ihe debt in198 7 Estimewtd an the difference between the resource gap and official capital nti. 71 195~~~~antOl figres,1981-1985 amout required to balance th, acut, i.e., *to avoid deflating the ec~,Coun.try Progr,ams I 7d DOD at beginning of the year. Latin America and the Caribbean My pr 9li8i2ary 7-t Estitasted Nay 1982 - 21 - ANNEX II Page 1 of 5 THE STATUS OF BANK GROUP OPERATIONS IN PANAMA A. STATEMENT OF LOANS (as of March 31, 1982) US$ Million Loan (less cancellations) Number Year Borrower Purpose Amount Undisbursed 12 loans (1953-80) Fully disbursed 147.0 - 1280-PAN 1976 IDAAN Water Supply and Sewerage 12.0 2.0 1397-PAN 1977 BNP Livestock Credit 8.0 4.3 1470-PAN 1977 IRHE Power 42.0 23.5 1565-PAN 1978 Republic Highway of Panama Maintenance 12.0 1.9 1641-PAN 1978 COFINA Industrial Credit 15.0 3.6 1672-PAN 1979 BNP Tropical Tree Crop Dev. 19.0 15.1 1778-PAN 1980 IRHE Power 23.0 15.9 1878-PAN 1980 Republic of Panama Urban 35.0 34.2 1954-PAN 1981 Republic Energy Planning of Panama and Petroleum 6.5 6.5 1955-PAN 1981 COFINA Industrial Credit II 20.0 19.9 2020-PAN 1981 Republic of Panama Road Rehabilitation 19.0 19.0 Total (less cancellations) 358.5 of which has been repaid 45.7 Total now outstanding 312.8 Amount sold 9.2 of which has been repaid 9.2 0.0 Total now held by Bank 312.8 Total undisbursed 145.9 - 22 - ANNEX II Page 2 of 5 B. STATEMENT OF IFC INVESTMENTS (as of March 31, 1982) Fiscal Amount in US$ Million Year Loan Equity Total 1971 Corporacion de Desarrollo Hotelero 1.2 0.3 1.5 1978 Vidrios Panamenos, S.A. 2.4 1.4 3.8 1979 Banco Latinoamericano de Exportaciones, S.A. - 2.5 2.5 Total gross commitments 3.6 4.2 7.8 less cancellations, terminations, repayments, and sales 0.5 0.3 0.8 Total commitments now held by IFC 3.1 3.9 7.0 Total undisbursed - 0.1 0.1 - 23 - ANNEX II Page 3 of 5 C. STATUS OF PROJECTS IN EXECUTION (as of March 31, 1982) I/ Loan 1280: Water Supply and Sewerage Project; US$12 Million Loan of June 9, 1976; Date of Effectiveness: July 15, 1976; Closing Date: July 30, 1982. Project execution has been slower than estimated at appraisal due in part to changes in the management of the Borrower (IDAAN). As a result of the changes, there were delays in the selection of the consultants to carry out the engineer- ing of the Colon treatment plant and the rehabilitation of the Chorrera treatment plant, the largest components of the project. Construction of all project components started during 1978 and is proceeding well, and no further delays are expected. Improvements in the accounting and commercial systems have been carried out: asset inventory and valuation has been completed and the billing and collection system improved. IDAAN has been financially sound largely as a result of substantial increases in water rates in 1976 and 1977. In addition, IDAAN recently modified its tariff structure and increased its rates. Loan 1397: Second Livestock Development Project; US$8 Million Loan of April 28, 1977; Date of Effectiveness: February 1, 1978; Closing Date: August 31, 1982. After a slow start progress is picking up. Changes in the milk legisla- tion required in connection with the project involve a modification in the method of determining milk grade and thus'the price paid to producers: the grade of milk is now determined by the standard of on-farm buildings. The modified legislation will require that producers be paid according to the quality of milk produced. The legislation was approved in 1978 and the Govern- ment is taking steps to ensure its implementation scheduled for 1982. In 1981, the Bank agreed to modify the livestock breeding farm component which was to be carried out in an autonomous state farm that has now become part of a military base; it is now being carried out in five different research extension farms of the Ministry of Agriculture. Action is also being taken to hire consultants to implement staff training and assist with implementation of the new milk pricing legislation. Loan commitments are behind appraisal estimates due to delays in commitments in 1977, the year of the Canal Treaty ratification. However, as of March 31, 1982 about 45 percent of project funds had been disbursed. The Loan is expected to be fully committed by end-1982 and dis- bursed by end-1984. 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any prob- lems which are being encountered and the action being taken to remedy them. They do not purport to present a balanced evaluation of strengths and weaknesses in project execution. - 24 - 24 - ~~~~ANNEX II Page 4 of 5 Loan 1470: Fourth Power (Fortuna Hydroelectric) Project: US$42 Million Loan of July 1, 1977; Date of Effectiveness: February 8, 1978; Closing Date: December 31, 1983. All major contracts have been awarded. The underground civil works, financed by the IDB, have suffered delays in the excavation work partly resulting from un- foreseen geological problems in the tunnels and underground cavern. The project is now expected to be completed in April 1985 with a delay of some 24 months. Construction of the dam, which is now expected to be completed in October 1982, is proceeding without major problems, albeit with a delay of about 6 months. Procurement of equipment and transmission is proceeding without problems. There will be an increase in the project cost because of the longer construction period and the changes in the power house design due to the geological problems encountered. Efforts are also being made to resolve existing organizational and managerial problems. Loan 1565: Highway Maintenance Project: US$12 Million Loan of June 30, 1978; Date of Effectivness: October 2, 1978; Closing Date: March 31, 1983. The project started about one year behind schedule due to delays in field- ing a team of consultants, instead of a consulting firm, as a consequence of a change in government policy. A group of seven experts is now working in Panama in two pilot provinces. Procurement of maintenance equipment and spare parts is underway and project is now progressing steadily, though slower than planned. Nationwide implementation of standard maintenance procedures and a new maintenance management system started in 1981, following testing in two pilot provinces. Procurement of maintenance equipment and mechanics tools is complete. Programs for overhauling equipment and procuring spare parts are underway. Additional assistance on equipment and workshop management has been included under Loan 2020-PAN. Loan 1641: Development Banking Project: US$15 Million Loan of January 23, 1979; Date of Effectiveness: September 25, 1979; Closing Date: December 31, 1982. The loan only became effective on September 25, 1979 because of delays in obtaining Government guarantees covering COFINA's exposure in several enter- prises in excess-of the Iimits stipulated in COFINA's Policy Statement. The problem has been resolved and implementation is progressing satisfactorily. The Loan is now fully committed. Loan 1672: Tropical Tree Crop Development Project: US$19 Million Loan of April 25, 1979; Date of Effectiveness: July 25, 1979; Closing Date: June 30, 1985. The coffee and cocoa components are proceeding satisfactorily. The banana component has suffered delays because of a change in management in one of the key implementing organizations, the Banana Corporation of the Pacific (COBAPA) which led to a deterioration of its finances and technical capability. The Ministry of Agriculture has assumed responsibility for the banana component and plans to provide a solution to existing problems are being discussed with the Ministry. Progress of the component will be closely monitored. - 25 - ANNEX II Page 5 of 5 Loan 1778: Fifth Power Project: US$23 Million Loan of January 30, 1980; Date of Effectiveness: April 22, 1980; Closing Date: December 31, 1983. Procurement and implementation are proceeding on schedule. Loan 1878: Colon Urban Development Project: US$35 Million Loan of August 7, 1980; Date of Effectiveness: August 14, 1980; Closing Date: June 30, 1984. Project implementation is progressing satisfactorily except for the housing component. The site originally selected for part of the component does not meet with the beneficiaries' preference. An alternate site has been selected and work is expected to progress steadily. Loan 1954: Energy Planning and Petroleum Exploration Promotion Project: US$6.5 Million Loan of April 23, 1981; Date of Effectiveness: July 21, 1981; Closing Date: December 31, 1984. After initial delay appointment of consultants has progressed and some of them are already in the field. Loan 1955: Second Development Banking Project; US$20 Million Loan of April 22, 1981; Date of Effectiveness: July 21, 1981; Closing Date: June 30, 1985. Progress of this project is satisfactory. There is active demand from entrepreneurs and commitments are expected to be completed by the end of 1982. Loan 2020: Road Rehabilitation Project; US$19 Million Loan of July 24, 1981; Date of Effectiveness: October 13, 1981; Closing Date: December 31, 1985. Due to initial delays resulting from a change of the Ministry of Public Works' management, the project is about a year behind schedule. Detailed engineering for the first year's roadworks is now almost complete. Contractors have been prequalified and bids are being prepared for four road sections. Consultants' proposals for technical assistance to the equipment maintenance service are being evaluated and a program of expanding vehicle weight control has been started. Generally, the project is now progressing satisfactorily. - 26 - ANNEX III Page 1 PANAMA SECOND PORT PROJECT SUPPLEMENTARY PROJECT DATA SHEET I. Timetable of Key Events (a) Project Preparation - Preappraisal (1) Project prepared by: APN, assisted by consultants (2) Initial request for Bank financing: 1979 (3) First Bank mission to consider project: July 1979 (b) Appraisal Mission Departure: March 1981 Post Appraisal Missions: September 1981 and March 1982 (c) Negotiations Completed: May 3, 1982 (d) Loan Effectiveness Planned: September 1982 [I. Special Bank Implementation Actions None contemplated. III. Special Conditions Assurances were obtained that: 1. APN would appoint an Operations Director and additional technical staff (para. 33); 2. During project implementation APN's other investments would not exceed US$1.9 million in FY 1983 and $1.5 million in any fiscal year thereafter, in addition to the on-going Colon Urban Development project, and would not incur any long term debt, if debt service ratio falls below 2.0, without Bank approval (para. 47); 3. The Government would transfer to APN the custody of port areas and the ownership of all port buildings, installations and equipment operated by APN (para. 48); 4. Starting in 1985, APN would adjust its tariffs in order to achieve a rate of return of at least 8 percent on its average net fixed assets in operation, periodically revalued in accordance with a methodology satisfactory to the Bank. In the interim, tariffs would be adjusted to achieve a schedule of financial objectives, based on working ratios (para. 48); and 5. Efficiency indicators of port operations would be regularly monitored (para. 53). IbRD 15796R P A N A M A SECOND PORTS PROJECT C RS F A N SE, 4, NAto opoZo 66A,Th$~~ _ __^ :< '0'~~~~ -~~~~~ . c 3<., ,t/' 'O200Zt 4c:e.e60 > 9 go ,too-DAt - 0 2 1, -60t{ -2! ~ t s? ? ? ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ooc 54 a F A t i F / C nJ e F 7 // r 7S96 33 \> "0~~~~~~~~~~~~~~% H ER ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~ C CA L ) K P A F C f A N~~~~~~~~~~~~~~~~~~~~~~~~AA IBRD- 15797R MAY 1982 PR(,PC,SED FEfqCE~~~~~~~~~~~~~C 00~POSE FI NG E F Por ofCoco Solo NorPteR Improvements t..,.Jl rr-I E3 Existing Structures t.Ca n [ = ~~~~Roads O 4V\)UX --A5 Ie__ al \ X < w\ r X E - ~~~~~~~~~~~~~~~~~~~~N IC A Z G 4s METERS / 0 50 100 150 200\ \ / C0 150 300 450 600\ \ (l Al>n FEET ~ ~ ~ ~ ~~ ec . \... AIA ~~~~~~7' mphdh ear steWGX n UiRrulm o h o /nel(||QN ar~~~~ Ch ae rrerp owlhw saU d h -ma1uue n h bmaddriesb7 (0mrhnayOm>lmpm /˘lo@Monsz \f c / ca OlAl IBRD- 1 5799R M~~AY 1982_ 200ot0 fl CLON RAILWAYSTIO FREE ' \t: j \ , / X /f (/ Bgi, 0 ~~~fo/ks 02lver gGy m 2 Project Area Project Comnponent Done Under (LocJn lB78-PAN) t\ Future Development 12FL EXisting Structures Roidwoys O 100 ,2100 300 400 dootop 0tOp0 oF tOow °d FEEr do ettOtot toy C . % l0\ ! / / 3 3 C@| F8t~~~~~~~~~~~~~~~~~~~NCARAOU liJ 2 \ I SPORTS i // l >1 W '°~~~~~~~~~~~~~~~~~~~~~Ca,oo> rrbbeo, Sea/ |odOottot tOe /od Ftoeto ofIELD OLON CC r 7O1f d fd h Te/fer ts or o t do_ ottttr o4ezss s> of ott oo1 /o/ond eles- .} * a-pD*Oof YSehnSQvteSses t 11 // / / / | ( / \orgorits/ foa r if ic l9Cae anc Ocea o' > || // v , | | / ~~~~~~~~~~~~~~~~~~~~~~~~815- 8,J NE 1901