LOftAJ r60q -co5 RESTRICTED Report No. TO-64 6a This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION APPRAISAL OF AN EDUCATION PROJECT IN EL SALVADOR May 20, 1969 Education Projects Department CURRENCY EQUIVALENTS U. S. $1 = 2. 5 colones 1 colon = U. S. $0. 40 Colones 1, 000, 000 = U.S. $400, 000 UNITS OF LENGTH AND AREA 1 km 0. 62 mile 2 I m 10.8 sqft 1 km = 0. 39 sq mile APPRAISAL OF AN EDUCATI3N PROJECT IN EL SALVADOR TABLE OF CONTENTS Paragraph Number BASIC DATA SUIIqARY i -x 1. INTRODUCTION 1.01 2. BACKGROUND 2.01 3. THE EDUCATION AND TRAINING SYSTEM 3.01 The Structure of Education 3.01 The Administration of Education 3.03 Enrollment 3.06 Primary Education 3.07 General Secondary Education 3.09 Industrial Secondary Education and Vocational Training 3.16 Agricultural Secondary and Post-Secondary Education 3.18 Commercial Secondary Education 3.20 Primary Teacher Training 3.21 Secondary Teacher Training 3.23 Higher Education 3.25 Television Education 3.26 Education Research 3.29 Foreign Aid 3.30 4. EDUCATIONAL FINANCE 4.01 5. THE NEED FOR EXPANSION AND IMPROVEMENT OF SECONDARY EDUCATION 5.01 Manpower Need 5.01 The Educational lNeed 5.10 This report is based on the findings of an appraisal mission composed of M4essrs. N. Hultin (general education), R. McYiahon (technical education), P. Oltmanns (architect), F. Lethem (economist) and A. G. Apodaca (FAO, agricultural education) which was in El Salvador in March 1968. TABTU2 OF CONTENTS (Cont.) Paragraph Number 6. ThE PROJECT 6.01 General Description 6.01 Secondary Schools 6.04 Technical Institutes 6.o8 The National School of Agriculture 6.12 Staff 6.13 Costs 6.18 Loan 6.22 Building Construction 6.23 The Implementation of the Project 6.31 7. CONCLUSIONS AND RECOMMENDATIONS 7.01 ANEXES 1 - Chart - Structure of Education, 1968 2 - Chart - Ministry of Education, Organization, 1968 3 - Graph - Primary and Secondary School Enrollment, 1960-1975 4 - - School Enrollment by Grade, 1965 and 1975 5 - - Primary and Secondary Education. Students Entering and Finishing, 1960-1965. 6 - Table - Total Recurrent and Capital Expenditure on Education (1966). 7 - - Projected Recurrent Expenditure in Government Schools 8 - Graph - Central Government Recurrent Expenditure on Education by Main Sector 9 - - Central Government Tax Revenues and Recurrent Expenditures with Total Expenditures on Education 10-a & b - Tables - Present and Projected Enrollment and Output in General, Industrial, Commercial and Agricultural Public and Private Secondary Education, 1965 and 1975. Project Schools 11 - Table - Sumnary of Costs 12 - Chart - Implementation MAP - El Salvador, showing Population and Secondary Schools Distribution EL SALVADOR BASIC DATA - 1967 Size of Country: 21,000 km2 Population: 3.15 million Density: 150 persons per km2 Population Growth 1950-61: 2.8% p.a. Estimated Population Growth 1961-67 3.7% p.a. Labor Force Growth 1950-61: 1.9% p.a. * Gross Domestic Product: US$890 million Sector of Origin: Agriculture 26% iMianufacturing 20% Construction 3% Commerce 24% Others 27% GDP Per Capita: US$283 Average GDP Growrth Rate (1960-65) 7.2% p.a. (in real terms) 1966 GDP Growth Rate: 5.6% Primary school enrollment as percentage of' appropriate age group 63% Secondary school enrollment as percentage of appropriate age group 15% Literacy rate: 47% Annual Educational Expenditure per capita (1966): US$9.6 GLOSSARY Plan 3Bsico - A three year junior general secondary course (grades 7-9). Bachillerato - A three year senior general secondary course (grades 10-12). A??Th2JSA'AL OF AN EDUCATICN PRWOECT IN E SALVADOR SUI'TIARY i. The Government of El Salvador has made a reauest to the Bank for financial assistance to expand and improve secondary education and agricul- tural post-secondary education. ii. The project consists of the construction and equipment of 17 sec- ondary schools and the addition of facilities to 10 existing secondary schools and one agricultural institute as well as the provision of equipment to 2 technical institutes. The schools would offer, in addition to academic edu- cation, industrial, agricultural or commercial options. The project would increase enrollment in public general and technical secondary schools to 535000 by 1975 by adding 15;500 new places and provide 32% of the graduates from public secondary schools. iii, The ratio of applicants for admission to secondary education to the number of available seats would be sufficiently high to provide entrants of adequate quality. Graduates of the schools should have good chance of finding suitable employment, iv. The supply of secondary school teachers would be sufficient pro- vided the proposed training program at the new teacher-training college in San Andres is implemented and 75 scholarships are awarded as a part of the project for the training of teachers in agriculture, industry and commerce - partly on courses abroad. A number of project schools principals would also be trained in modern school administration, v. The proposed project would permit the implementation of a new and improved school curriculum with increased teaching of science and vocational courses at secondary level and an improvement in post-secondary agricultural education. The schools would be supplied with up-to-date and reasonably priced equipment. vi. Competent architects, engineers and contracting firms are available in El Salvador but technical assistance is needed for execution of the pro- posed expansion of the agricultural institute. vii. All procurement for civil works, furniture and equipment would be subject to international competitive bidding procedures. viii. The project would be administered by a special project unit. The Bank would approve the selection of the director of such unit. ix. The proposed project would cost about US$8.4 million equivalent over an implementation period of five years, 1969-1973. The foreign exchange -component of US$4.9 million equivalent, including interest during construction, is 58% of total project cost. The estimated construction costs are reason- able, The government's capital contribution to the project and the consequent increase in recurrent expenditure would be within the capacity of the government to provide out of its own resources. - ii - x. The project is suitable for a Bank loan in the amount of USt4.9 million equivalent, equal to the foreign exchange component of the project. S . . APPPA1SAL OF AN EDUCATION PROJECT IN EL SALVADOR 1. EITRODUCTION 1.01 In October 1966 the Bank group received a request from the Government of El Salvador for financial assistance to expand and improve general, industrial and agricultural secondary education and secondary teacher train- ing and to construct an educational television institute. The project had been identified by a Unesco mission, and was prepared with assistance from the Bank and Unesco. It was appraised in November/December 1966 by a Bank mission. However, in 1967, a new Salvadorian cabinet decided to revise the request by transferring secondary teacher training and TV-education to a USAID project and by including more industrial, agricultural and commercial education in the proposed Bank project. 1.02 This report is based on the findings of an appraisal mission com- posed of I4essrs. M. Hultin (general education), R. IvicMahon (technical edu- cation), P. Oltmanns (architect), F. Lethem (economist) and A. G. Apodaca (FAO, agricultural education) which was in El Salvador in IMarch 1968. 2. BACKGROUND 2M01 El Salvador is the smallest of the six Central American Republics. It covers an area of 21,000 km2 and no place in the country is further away than 180 km by road from the capital, San Salvador. The population was es- timated to be 3.15 million in 1967. The birthrate is high and an annual population increase of 3.7% is expected. There are indications, however, that family planning is gaining wider acceptance. A birth control program was recently started and population groweth rate is therefore, expected to decline. The country has, with 150 persons per km , one of the highest population densities in the Americas. The area around the capital is par- ticularly densely populated but elsewhere the population is fairly evenly distributed. About 60% of the population is rural. The official language is Spanish. 2.02 El Salvador's economy consists of a group of growing modern activ- ities and a large subsistence agriculture, with a wide gap between the two. The former includes manufacturing and commerce concentrated in three urban centers and an export-oriented segment in the agricultural sector. The per- formance of subsistence agriculture has not matched the demand for food irn the country during the last decade. The Gross Domestic Product remained stagnant during the late 1950's but has showm an upward trend during thhe last five years as shown in the following table: - 2 - _Total and Per Capita GD in El Salvador GDP % Per Capita % Year Million $ Increase GDP $ Increase 1961 578 - 228 - 1962 641 10.9 244 7.0 1963 671 4.7 247 1.2 1964 746 11.1 265 7.3 1965 797 6.8 272 2.6 1966 842 5.6 277 1.8 2.03 Agriculture is the largest single factor in the economy, accounting for 26% of the GDP in 1967. During the early 1950ts, rising coffee prices sustained a growth of the GDP. In the late 1950's a drop in coffee prices led to a slovwdownl and a shift to cotton plantations. The increase in cotton exports coupled with the recovery of coffee prices and the expansion in Central American trade, has been the cause of the recent growth of GDP. However, more modest prospects for exports over the next few years may lead to a substantially slower rate of growth for the economy. 2.04 Manufacturing has grown at an annual average rate of 11% since 1960, and now accounts for 20% of the GDP. This growth has been greatly helped by the creation of the Central American Common Market. Foreign in- vestors have been attracted by good market conditions. The construction sector is likely to show an increase due to the government housing program now underway, 2.05 About 32% of El Salvador's population are economically active. Of the estimated labor force of 807,000 in 1961, about 60% were agricultural workers and 22% semi-skilled or skilled indusStrial workers. The wage level has remained fairly stable as has the price level. The industrial laborers in the urban centers receive rates varying from the equivalent of US$0025 to US$0.33 per hour with US$1.30 per day as the legal minimum. 2,06 El Salvador prepared a F-ive-Year Econamic Development Plan for the period 1965-1969, planning an increase in real GDP of 6.5% per year. Although this rate was achieved in 1965 and 1966, there may be a deceleration during the rest of the Plan period, due to the slaoer rate of foreign investments in industry, and the likely decline of agricultural exports. 3. THE EDUCATION AND TRAINING SYSTE14 The Structure of Education 3.01 Primary education requires six years (Annex 1). An examination qualifies for admission to secondary schools. General secondary education is offered as a three-year junior secondary course (Plan 3asico) followed by a two-year senior secondary course (Bachillerato). The latter is taken by candidates for university admission. It has now been decided to extend thi Bachillerato course by one y*:r. 3' .CX2 iupils completing primary or junior secondary education are of- fered vocational education at secondary level in schools of several types. The government has recently decided to phase out industrial and agricul- tural schools at the junior secondary level and raise the entrance level of primary teacher training institutes to completion of senior secondary education (Annex 1). Existing higher education institutions are also show,n on the chart. The Administration of Education 3.03 Administration is centralized under the Ninistry of Education which has been reorganized with Unesco assistance to achieve higher effi- ciency in planning, imhplementation of school reforms, school construction and supervision (Annex 2). 3.04 The reorganized NLinistry of Education has a separate planning unit which cooperates with the government's Planning Council. The Council, which includes educational experts, does the overall planning and coordi- nates foreign aid while the Ministry?s planning unit is responsible for detailed planning and project execution. 3.05 There are no regional or local school boards in El Salvador and the authority of the school principals is very limited. Many schools have parents' associations which show much interest in education and contribute financially to the schools, providing for additional school buildings, a part of the teachers' salaries and school equipment. Enrollment 3.06 Between 1960 and 1967 enrollment in primary education increased from 300,000 to 412,000, a 37% increase and in secondary education from 33,000 to 60,400 about 83% (Annex 3). However, this expansion is moderate if considered in relation to population increase; enrollments of appropriate school-age groups increased frcm 55% to 63% in primary education and from 11% to 15% in secondary education during this 1960-67 period. Secondary school enrollment in El Salvador is compared with some other American countries in the 1960ts in the following table: Secondary School Enrollment as a Percentage of Relevant Age Group Country Percentage Guatemala 9% El Salvador 15% Nlexico 17% Brazil 22% Argentina 40% U.S.A. 93% It is estimated that primary school enrollment by 1975 will have grown to 595,000, or 76% of the relevant age group, and secondary school enrollment to 143,000 or 26% of the age group (Annex 4). Pablic secondary schools would enroll 53,000 students. -4- Primary Education 3.07 There are about 2,400 public and 100 private primary schools. On average there are 160 students per school and 31 per class, figures which compare favorably with many developing countries. Mhe numbers of boys and girls are almost equal. Urban schools contain 70% of the total enrollment although less than 40% of the population is classified as urban. Rural schools often go no further than second grade which implies that a considerable number of rural students leave school with no more than two years of education. The overall dropout rate is, therefore, high and only 20% of those entering Primary 1 graduate six years later (Annex 5). Twenty percent of students are repeaters. Of the primary teachers, 45% have not received an adequate professional training and many work only part-time whereas others work extra hours to an extent incompatible wiith full effi- ciency. Primary education is free, although parents' associations often pay voluntary contributions (para. 3.05). 3.08 The standard of primary education is being raised, and dropout reduced by the construction of schools offering a full six-years course, by the adoption of a new curriculum to better satisfy the needs of the country and by raising teacher quality. A large primary school building program - 1,600 classrooms - financed by USAID has been completed. General Secondary Education 3.09 In 1967 general secondary education was provided by 95 public coeducational schools (Institutos Nacionales de Educaci6n)_>7 and more than 200 private unaided schools. The total enrollment was 42,700 (fairly evenly divided between public schools and private schools), of which 55% were boys and 45% were girls. Five thousand of these were enrolled in night schools All townships of any importance have secondary schools and these are accessible by bus or by other means of transportation from most parts of the country. Boarding is, therefore, not provided. The capacity of most rural schools is, however, limited and there is an unevenness of opportunities between provinces. The secondary schools in the capital, San Salvador, offer five times as many openings per primary pupil as the schools in some eastern provinces. The overall index of opportunity for those few who finish primary education has, however, been high. Two primary graduates out of three have found a place in grade 1 of secondary education. Improved primary education with higher promotion rates will triple the number of primary school graduates in 1966-1975, which will cause greater pressure for secondary school admission and raise the standard of secondary education. */ All Central Government schools. - 5 - 3.10 Secondaiv- education has expanded rapidly since 1945 and has led to the proliferation of many small and uneconomic units. The average pub- lic school has 220 students and the average private school less than 100 students, enrollments which penrit only an academic program and make oper- ation expensive. Government has now decided on a new curriculum with a wider range of subjects and on larger school units. Dropouts and repeaters are common in secondary education; the problem is not as serious as in pri- mary education (Annex 5) but it creates small and, therefore, uneconomic classes in the upper grades. The output from general secondary education is also hampered by a comparatively low rate of passes ((70-80%) in the final examinations in the third and fifth grades. The introduction of a new curriculum should, therefore, be combined with a revision of the examination system. 3.11 The purpose of the schools has been almost solely preparation for university with the curriculum based on the humanities. The new curriculum will provide for more science teaching and for vocational options in industrial, agricultural and commercial subjects, to broaden the concept of secondaryr education. Instructional television will form an integral part of the new teaching in Plan Basico schools. 3.12 Eighty-two pU'blic secondary schools in El SalvadorlX occupy rented private buildings which were originally intended as pri- vate houses and are adaptable to teaching of academic subjects only. Most public schools lack equipment for the teaching of science and practical subjects. The supply of textbooks is also insuffici.ent. A few private schools are of high quality but the majority are inferior to the public schools in all respects. Oral teaching and learxing by rote is characteristic of the whole secondary school system. The over- all standard is very low but a general improvement in both public and private schools should result from current Unesco and USAID assistance in school supervision and teacher training and by the development of new curricula. 3.13 Public secondary education is free but many parent associations pay voluntary contributions of 5 to 10 colones a month per student to improve education (para. 3.05). Tuition fees in private schools vary from 20 to 45 colones a month per student. 3.14 Data on the availability of secondary school teachers is very limited. Part-time teaching is frequent as well as teaching on overtime. Of a total of 2,200 general secondary school teachers, about 1,100 are teaching mainly in public schools. Xost teachers will need upgrading to teach the new curriculum. Gradual abolition of the part-time teaching system is necessary. 3.15 At present 80;Ž% of the graduates fram the two examination levels in general secondary education proceed to further education. The few who enter the labor market have until now had no serious difficulties in findings jobs although employers criticize the graduates for unsuitable education and lack of vocational orientation. - 6 - Industrial Secondary Education and Vocational Training 3.16 In 1967 enrollment in technical secondary education including schools offering industrial training, fine arts and domestic science was 1,800. Industrial education and training is provided in one public and two private institutions. The two private institutions are the Colegio Salesiano "Santa Cecilia" at Santa Tecla and the Instituto Tecnico Rical- done at San Salvador both operated by the Salesian Order; the standard of these institutions is high. The one public institution, the San Sal- vador National Technical Institute (Instituto Tecnico Industrial), suffers acutely from poor management and neglect over a number of years. However, a new Director has recently been appointed, Japanese technical assistance obtained and recurrent finance for operating the Institute substantially increased. To ensure satisfactory development of this Institute the main outstanding requirements are that the technical teaching staff should be improved both in numbers and quality, new equipment acquired, and certain existing buildings remodelled. Two additional public industrial schools have recently been constructed and will be brought into use when furnished and equipped. There are no fees in public schools but students in private schools pay about 45 colones a month. 3.17 The National Department of Apprenticeship in the Ninistry of Labor has managed an apprentice program since 1962 which combines on-the- job training in private enterprises with formal instruction during the evenings. About 5,000 apprenticeship contracts have been made. The liaison between the Department of Apprenticeship and private enterprises is good. Agricultural Secondary and Post-Secondary Education 3.18 Agricultural education is given at the National School of Agri- culture at San Andres (Escuela Nacional de Agricultura) which accepts stu- dents who have completed a full secondary education. Current enrollment is 250. A small agricultural school at junior secondary level is being d phased out. 3.19 The San Andres School is fairly well-equipped and staffed by qualified professors, some with university education and post-graduate degrees. However, most of the professors would benefit from training in course preparation and teaching methods. The existing buildings suffice for current enrollment but do not permit further expansion. Graduates from the Agricultural School have been in great demand and usually find good employment. Commercial Secondary Education 3.20 With the exception of the National Commercial School which offers accountancy and secretarial courses, commercial secondary educa- tion is given in private schools. Of the 60,400 students enrolled in 1967 in all types of secondary schools, 10,000 or 17% were fol- lowing commercial courses. The quality of courses offered varies; secretarial courses are satisfactory but employers have great difficulties in finding staff qualified for modern business methods in accounting and bL,:^ikeeping. The overall school output would seeml high ccmpa-red writh the estimated nwumner or jobs, but unemployment among the graduates is not found because almost all students are girls some of whom never enter the labor market whereas others stay only a short time in their office jobs. Primary Teacher Training 3.21 Primary teachers have until now been trained in seven national and 46 private training colleges of secondary level in poorly equipped buildings originally intended for private houses. There has been an unplanned growth in total enrollment which has resulted in over-production. The government has, therefore, decided to close several national colleges and concentrate the training in one new national college in San Andres at post-secondary level with up-to-date facilities recently constructed with financial aid from UTSAID. The annual output would be reduced from 2,2C0 to 1,000, which is considered sufficient. 3.22 The new post-secondary course requires two years. Shorter in-service courses are available for untrained teachers. Secondary Teacher Training 3.23 The teaching staff in public general secondary schools is approxi- mately 1,100 of whom less than half should be regarded as fully qualified. The projected rise in enrollment by 1975 of 27,000 in those schools over the 1967 figure of 19,000, would require an additional staff of 1,900 teachers for replacement and new posts during the period 1968-1975. In addition, 100 teachers in practical subjects would be needed for expanded public technical education. 3.24 Secondary teachers are trained in the department of education at the National University but the annual supply is less than ten and will presumably not exceed thirty in the projected period. The Catholic University intends to start teacher training but it will take some time until the impact of such training is noticeable. A more important source of secondary teachers is the new teacher training college in San Andres (Ciudad Normal Alberto I4asferrer) which has facilities for both primary and secondary teacher training. It has a new plan of studies and technical assistance is being given by USAID for curriculum revision and staff training. An annual intake of 200 primary teachers on one or two year courses for training as Plan Basico teachers and of 125 Bachilleres on three year courses for training as Bachillerato teachers would be sufficient to cover the public schools' demand up to 1976 and would require 775 of the collegets 1,200 places. Industrial teachers can be trained in sufficient numbers in the Ricaldone Institute and commercial teachers at the National University, but this training needs to be complemented by a period of practical experience. There are few suitable facilities for such experience in ml Salvador and teachers in industry and commerce should, there- fore, receive a part of the practical training abroad. Agricultural teachers should be trained partly at the Andres Agricultural School and partly abroad. Higher Education 3.25 Apart from the secondary teacher training college, higher education is offered at the National University (Universidad Nacional de E1 Salvador". the private Catholic University (Universidad Catolica Jose S. Canas) ;v al; - 8 - a small school for social studies. The National University has an annual intake of 1,550 students and an enrollment of 5,500. The projected enroll- ment at the end of the decade is 6,000 with an annual intake of 2,000. The private university has just started its activities with an annual intake of -400. The projected enrollment is 1,500. Annex 1 shows the university courses offered. A higher technical institute (Instituto Tecnologico Centroamericano), partly financed by the United Kingdom, is under construction and will give two and three year courses at post-secondary level for approximately 300 stu- dents starting in 1969. Higher education absorbs at present almost all grad- uates from general senior secondary schools and the projected increased intake will require expansion of senior secondary education. Television Education 3.26 The government has decided to introduce television into its educa- tional system simultaneously with the new curricula to improve the quality of classroom instruction and to upgrade and train teachers through an inten- sive program of in-service teacher education. After an experimental period, the first application of instructional television is planned to train some 2,000 teachers for service in junior secondary schools. At the same time, production of broadcast lessons in the general curriculum at the junior sec- ondary level with special emphasis on science subjects, mathematics and English will be started. In a later phase it will be extended to serve pri- mary school teachers and to provide better learning opportunities for the children at these grade levels. The final phase of instructional television development would provide literacy education fcr out of school youths and adults and continuing adult education. 3.27 A special department within the iMinistry of Education has been created to develop instructional television, to acquire necessary facilities and to administer the program. The many problems of television teacher and technical staff training are recognized as well as the problem of coordinat- ing television instruction with the general curriculum. A firm organiza- tional base will, therefore, be developed and television instruction will expand gradually through a five-year plan as its capabilities and resources increase. 3.28 The T.V project forms part of a USAID education development program and close cooperation will be established between TV instruction and teacher training by locating the TV center at the teacher training college in San Andres. Education Research 3.29 A government laboratory to develop simple tools and equipment for basic science teaching appears promising in its activities and should play an important role in raising the quality of science teaching. No other ex- perimental activities exist although the country will, in due course, benefit from the development of textbooks and teaching aids now being assisted in other Central American countries by international organizations. -9 Foreign Aid 3.30 Between 1960-1967, El Salvador has received foreign financial assistance for the construction of primary schools and a teacher training college (U.S.) for laboratory equipment (Unicef) and for the construction and staffing of the State University (Inter-American Development Bank, Central American Bank, Ford and Rockefeller Foundations). Technical as- sistance has been given for television education, for teacher training, agricultural education, curriculum improvement, textbook pro- duction (U.S.) and for technical education (ILO and Japan). A Unesco team is now helping in the field of educational planning, teacher training, administration and finance. A post-secondary technical institute is being built with U.K. assistance. 3.31 Additional aid is being considered for primary education, teacher training, curriculum improvement and educational television (U.S.) and for university education (Inter-American Development Bank and Central American Bank). 4. EDUCATIONAL FINANCE 4.01 Betuween 1960 and 1966 total goverment expenditure on education increased from ?33.3 million to /62.5 million, or from 2.3% to 3.0% of GDP. Taking account of private expeniditures on education, amounting to an esti- mated 09.5 million, total education expenditure was about US$9.60 per capita, or 3.4% of GDP in 1966 (Annex 6). The share of GDP spent by the govern- ment on education may seem small compared to the 3.9% spent by Colombia and the 5.5% spent by Guyana - two other W.esteln Hemisplhere countries with a GDP per capita in the $250 range. It represents nevertheless a heavy burden on the country's public resources, since tax revenues also constitute a low proportion of GDP; in 1966, only 9.8%. 4.02 As a result of the accelerated growth in the number of school age children, primary education expenditures grew at 9% per year and claimed 2/3 of the 1960-1966 increase in government recurrent expenditures on education. During the same period, expenditure on general and technical secondary education decreased from 8.5% to 6.9% of the Ministry of Education recurrent expenditure, the recurrent cost per student decreasing meanwhile to 0160 by 1966. Total expenditure per secondary school student was ac- tually higher - 0210 - as a result of parents' voluntary annual contriou- tions. This higher sum is, however, also insufficient and below the minimum necessary for good quality teaching in terms of both staff and material expenditure. 4.03 The Ministry of Education wvill have to invest about 085 million in 1969-1974 or 014 million per year to achieve the projected expansion of public education. This amount is above the financial capacity of the coun- try and foreign assistance is needed. If projected foreign - 10 - aid is taken into account, the government would have to finance about 010 million per year from its own resources - an increase of 40% above the average in 1965-1967. It is only after 1975 that effects of the family planning program would be felt in primary education enrollments and re- sulting investments. 4.04 Enrollment and cost projections suggest that between 1966 and 1975 recurrent expenditure on secondary education caused by the planned expansion will increase by 15io a year against 6% a year for primary educa- tion and will result in a better balance between the financial allocations to the different types of education (Annexes 7 and 8). Assuming full-time secondary teachers, adequate maintenance and sufficient supply of teaching material the recurrent costs per student in the new general secondary schools may reach 0300 per year, which would be an appropriate figure under present circumstances (para. 6.20). 4.05 The projected expansion in government schools will cause an in- crease of total public educational expenditure from 062.5 million in 1966 to an estimated ll6 million by 1975 (Annex 9 and table below). The table has been constructed for illustrative purposes only, on the assumption that the government will adopt new revenue measures and follow a policy of moderate growth in recurrent expenditures other than for education. Public recurrent expenditures on education would thus increase from 27% to 32% of tax revenues - and fron 2.6% to 3.6% of GDP - which seems to correspond to the Governmentts allocation of priorities. Growth of Public Education Expenditures, 1960-1975 (in milrions of colones) 1960 1966 1975 Actual Actual Projected 1. Capital expenditures 1.8 7.3 10.0 2. Recurrent expenditures a. Ilinistry of Education 29.8 50.1 90.0 b. Pensions 1.4 3.6 11.5 c. Other Ministries (incl. agriculture) .3 1.5 4.5 Total 31.5 .2 _10 670 of whichl: Proposed project - - 7.0 3. Total public expenditure on education 33.3 62.5 116.o 4. Tax revenues 156.0 206.0 330 5. GDP 1,420.0 2,109.7 3,000 6. Tax revenues as % of GDP 11.0 9.8 11 7. Education (2) as % of GDP 2.2 2.6 3.6 8. Education (2) as % of tax revenues 20.2 26.8 32 - 11 - 5. T`l NEED FOR EXPANSION ANTD IMPROVEMENT OF SECONDA.Y EDUCATION MIanpower Need 5.01 On the basis of alternative projections of GDP, occupation struc- ture and educational requirements, and after evaluation of the manpower projections made by the National Planning Council, and the CSUCA (Consejc Superior Universitario Centroamericano), the following rates of growth in the stocks of educated manpower appear justified on economic grounds between 1967-76: Primary education 5 - 6% per annum Secondary education 5.5 - 6.5% per annum Higher education 4.5 - 5.5% per annum (with 25% as secondary teachers) 5.02 In terms of educational investment priorities, the major ga.ps and resulting potential constraints to further economic development in industry and agriculture are in secondary education. This is supported by discussiorB with public authorities and private enterprises which con- firm that current outputs of skilled workers and middle-level techmicians from schools and training centers are too low. In fact, the country has to attract workers from abroad to fill the gap. 5.03 There is considerable scarcity of qualified secondary teachers while qualified primary teachers are in oversupply. Programs to correct this situation have, however, started. (Paras. 3.21, 3.24). 5.04 The government has planned an expansion of public secondary education with increased emphasis on industrial, agricultural and com- mercial training to meet the manpower requirements, although limited financial resolurces and a shortage of qualified teachers may prevent full coverage. The enrollment in all types of secondary education ex- cluding primary teacher training is projected to increase from 47,000 in 1965 to 143,000 in 1975 (Annex 10-a) and the government would provide one- third of the new places or 32,000 in public schools. The total annual out- put from the two exaination levels (Plan Basico and Bachillerato) would increase by 22,400 from 10,400 in 1965 to 32,800 in 1975 (Annex 10-b). Eight thousand of the graduates would come from upper secondary educaticn with 3,900 having a prevocational or vocational education. 5.05 The supply of graduates to the labor market is considerably less than school output because many secondary school graduates proceed to fur- ther education, some girls do not enter the labor market and evening schcO' students are already in the labor market. 5.06 Taking into account the reduction factors mentioned in para. 5.0> the estimated aggregate supply at the current rate of secondary school grl2d- uates entering the labor market in 1967-1976 is compared with the supply from the proposed expanded school system in the table that follows. It ,'E' shows how the labor market demand. would be ret. - 12 - 1967-1976 iwt' i"6 Aggregate Labor 1967-1976 S)tnortage C-) .-rma F&hdcatiGr. ievel I4arket Demand Aggregate Sppply Surpls ()-i With With At Expanded At Expandedi Current School Current School Rate Systen Rate Sys.m_ Ceneral and Commercial: Junior secondary (Plan Basico) 47,000 19,000 35,000 -28,000 -12,0Cc) Senior secondary (Bachillerato) 17,000 12,000 18,000 - 5,00G + li"'0 Dimiustrial: Junior secondary (Plan BAsico incl. apprenticeship schemes) 19,000 14,000 17,000 - 5,°00 - 2,'000 Senior secondary (Bachillerato) 4,000 1,000 3,000 - 3,000 - 1,000 Agricultural: Sec. and Post Sec. 1,500 700 1,100 - 800 - (I:! Total 88,500 46,700 74,l100 ' -lhC800 5.07 The estimated annual supply of school graduates at the end of the pro- ject period against the estimated annual labor market demand is shown in the . * 1 9 7 5 S U P P L Y Due to Planned From Other 1976 Expansion of Public and From Educational Level Demand Public Schools Private Schools Tota. General and commercial: Junior secondary 7,400 1,500 5,000 65 7C Senior secondary 2,600 700 2,300 3L0C' ) Total 10,000 7 Industrial: Junior secondary (Incl. apprenticeship schemes) 2,300 _ 2,200 2,20O0 Senior secondary 700 600 100 700 Total 3,000 2Ji0 Agriculture: Sec. and Post Sec. 500 400 - 13 - 5.08 The annual demand for high level manpower (including primary and secondary teachers) would require an annual intake of about 3,700 students into post-secondary institutes and universities. Nine hundred of those stll- dents would be provided through the planned expansion of public education while the remainder would come from other public and private schools. 5.09 The table in para. 5.06 reveals that the planned school expansion would considerably reduce the shortage of middle-level manpower in the period 1967-1976. Paras. 5.07 and 5.08 show that annual supply and demand at senior secondary and university level would be reasonably balanced at the end of the period considering the limited accuracy of manpower estimates. The govern- ment's secondary school program is justified from a manpower point of view and the increased emphasis it places on industrial and agricultural educa- tion is particularly important. The Educational Need 5.10 A qualitative improvement of the secondary system is urgently needed to raise the general standard in academic, agricultural, commercial and industrial schools. The number of repeaters, dropouts and failures in final examinations must also be reduced. The new curriculum for secondarY schools with emphasis on science and prevocational and vocational options which is being developed within the Ministry of Education should provide the improvement needed but also necessitates modern equipment and a well developed training program for teachers. 5.11 Most existing secondary schools occupy rented private houses and cannot be rebuilt or expanded to provide for adequate teaching of a new curriculum with practical as well as academic subjects or permit an economi- cal student:teacher ratio. A number of new schools of adequate sizes and modern design must, therefore, be provided. Ten secondary schools have suitable buildings and could be extended to accommodate larger enrollments. However, their laboratories and workshops lack equipment and the expansion must, therefore, be cambined with a complete provision of equipment. At thf San Andres agricultural school, improvement in instruction will require new buildings and modern equipment. 6. THE PROJECT 6.01 The project would comprises (a) The construction and equipment of 17 new secondary schools (ten Plan Basico, six mixed Plan Basico and Bachillerato, one Bachillerato); (b) The expansion of ten existing secondary schools (one Plan .asic five mixed Plan Basico and Bachillerato, four BachilleraLe6); (c) The provision of equipment to two existing technical (iiidiis- trial) secondary institutes; -14 - (d) The expansion of the agricultural institute in San Andres. The project would also include technical assistance to agricultural educatioo as well as 90 fellowships for the training of Salvadorian teachers in agri- culture, industry, commerce and of school administrators.(Annexes 10 and 11) 6.02 Estimated project costs by category are shown below: Estimated Project Costs % of Colones US$ Equivalent Total (million) (million) Local Foreign Total Local Foreign Total iture 17 new secondary schools 4.27 3.80 8.07 1.73 1.52 3.25 50 10 expanded secondary schools 1.44 2.55 3.99 0.58 1.02 1.60 25 Equipment to technical institutes - 0.61 0.61 - 0.24 0.24 4 Expansion Agricultural School San kAdres 0.83 0.88 1.71 0.33 0.35 o.68 11 Professional fees 0.53 - 0.53 0.21 - 0.21 3 Technical assistance and fellowships 0.15 0.91 1.06 0.05 0237 0.h2 7 7.22 8.75 15.97 2.90 3.50 6.40 100; Rounded 7.25 16.00 Contingencies 20% 1.50 1.75 3.25 0.60 0.70 1.30 Total 8.75 10.50 19.25 3.50 4.20 7.70 Interest and commitment charge during construction period - 1.75 1.75 - 0.70 0.70 Grand Total 8.75 12.25 21.00 3.50 4.90 8.40 42% 58% 100% Construction and site work represent 46% of the project costs; equipment, insurance and freight 36%; furniture 8%; technical assistance, professional services and fellowships 10%. 20% is added to the cost as contingencies (para. 6.18). (Annex 11) 6.03 The proposed project would be implemented during 1969-1973. It would raise public secondary school enrollment to 53,000 in 1975 by addin- 15,500 new places and the annual output from the two examination levels tc 14,000 by adding 4,500 new graduates (32%). Two private technical schools would increase their output by 100 and the agricultural institute by 55. her- students in the project's senior secondary and post-secondary schools would be distributed between options as shown as follows: Humanities 1,860 18,r Science 2,200 22% Industry 3,40 3 4$ Commerce 880 9% Agriculture i,670 l7,' Total 10,090 10O,-1 The annual output from vocational options would increase by 1,600 through the project. Secondary Schools 6.o0 The location of the proposed 17 new secondary schools together with an expansion oflOexisting schools would reduce the unevenness of opportunities for secondary education between provinces. Ten of the 16 senior secondary schools would offer prevocational or vocational education in addition to academic courses and constitute the first opportunity for students in many places to receive such education. The average school size of 700 students would permit economic operation of sufficiently di- versified academic programs. 6.D5 A new curriculum with greater emphasis on science and the needs in industry, agriculture and cormerce would be used in the project schools;l The teaching in junior secondary schools will be supported by integrated instructional television within a common program for all students. In seinor secondary schools the common core of subjects would be reduced and the students would devote 50% of their time to specializations such as industry (mechanical, electrical and auto engineering), agriculture, conm merce (accounting and secretarial courses), humanities and science. In industry and commerce the training would be vocational and permit the stu- dents to enter the labor market without additional formal training. In agriculture the education would be prevocational and should be followed by additional courses organized by agricultural organizations or by the San Andres Agricultural School. The four schools with agriculture would, however, all have farmland (10 hectares) as well as cattle for animal hus- bandry and the students would spend considerable time on the farm. The curriculum revision has started iith assistance from Unesco and USAID and its completion in 1969 would form a necessary condition for a successful execution of the governmentIs school reform. 6.06 All sites but orne for the proposed secondary schools have been acquired. They are adequate in size and suitably located within or on th-e outskirts of townships. 6.07 Schools offering junior secondary education only, would be pro- vided with classrooms for forty students, adidnistration office, staff- room and necessary stores, but would have only one workshop and laboratory each. A box system for science kits wvould allow the use of classrooms for a part of science teaching and reduce project costs considerably. The senior secondary schools in the project would have a full complement of classrooms, laboratories, workshops and libraries as well as necessary rooms for administration, staff and storage. The room utilization wolzi d - 16 - be high in all schools and the junior secondary schools would later on be used on a double shift basis. All schools would be designed for televised instruction in addition to conventional classroom teaching. Farniture and equipment for classrooms, laboratories, workshops and farms would follow standard lists. Dining and dormitory facilities are not needed. One care- taker house would be constructed in each of 17 schools but no other staff houses would be included in the project. Technical Institutes 6.08 Accommodation at the National Technical Institute including recentlyr completed construction is sufficient for 800 students, bUt mainly due to in- sufficient teachers and equipment (para. 3.16) present enrollment is only 40C, Supply of equipment and expansion of existing facilities included in the proposed project would enable the workshops and laboratories to be brought t.i a satisfactory standard sufficient for the use of 1,130 students, but a special teacher training program must also be developed (para. 6.15). 6.09 The proposed project would enable the private Colegio Salesiano Santa Cecilia to expand from its present enrollment of 450 students to 600 students by providing much needed equipment. Existing buildings are of good quality and suitable for the proposed expansion. 6.10 The private Instituto Tecnico Ricaldone has an enrollment of 50 students but could hold 200 students if existing buildings were provided with the equipment included in the proposed project. The development would includ-It a small technical teacher training department for an annual output of 30 teachers. 6.11 The Salvador Government has given assurances that private techni- cal schools receive annually more than 100 scholarships which would allow needy students to attend the senior secondary or teacher training courses. The National School of Agriculture 6.12 This will train middle-level technicians and a limited number of teachers in agriculture and enrollment would be expanded from 250 to 450 and output from 75 to 130. The project would provide additional classrooms, laboratories, workshops and general sciences facilities. Two dormitories art required to accammodate the additional students who are recruited from all parts of the country. The proposed facilities and equipment are acceptable and economic. Staff 6.13 The proposed expansion of industrial, agricultural and commercial education requires a unit for technical education within the Ministry, with responsibility for the broad plan of development of technical education, A department of secondary school supervision has therefore been created in the Ministry to be officially inaugurated in 1969 with sub-units for technii-c2 education. Six inspectors have been appointed and they will assist iii th)e implementation of proposed project. - 17 - 6.1,4 In order to ensure sound development of the sixteen senior second- ary schools in the proposed project each will need an experienced and well- trained principal. In El Salvador ther-e are inadequate number of persons of such experience and because of this the proposed project Itnciudes fellow^- ships for principals designated to enable them to study modei n methods of school organization and management in special courses and during visits abroad. 6.15 Assurances have been given by the Government of El Salvador that secondary teacher training will be carried on as described in paras. 3.24 and 3.26. Funds have been included in the project for fellowships which would allow about 75 teachers in practical subjects to attend courses par- tially abroad of an approximate length of one year and designed to upgrade their practical skills. The Salvadorian government has informed the Bank that the project schools will all be coinpletely staffed with full-time teachers no later than 1975 and budgetary provision will be made to commence this process in 1969, 6.16 The project includes one expert in agriculture education for 3 years who would assist in planning of workshops and laboratories and procuie- ment of equipment. 6.17 A close cooperation between industry, agriculture and commerce an.d the project schools is necessary in order to keep the practical courses up tc, date and integrate the schools with employers. The government has agreed during negotiations to form a national council with representatives from private and public agencies. The council will advise on curricula, teacher training, equipment, etc. and regularly visit project schools. Costs 6.18 Estimated construction costs, based on standard designs and unit prices derived from recent building experience, have been prepared for the buildings in the proposed project (Annex 11). Ten percent price increase allowance has been provided in the cost estimates of the project. Similariy, an allowance of 10% of the estimate has been made as a contingency to acccmr- modate unanticipated construction and site planning problems. 6.19 The foreign exchange component is estimated at about US,$4.9 millicn equivalent or 58% of total costs, including equipment, furniture and inteaiest and other related charges during construction. Imported materials form about 20% of the construction cost and 50% of furniture cost. Almost none of the instruction equipment required can be obtained in El Salvador. Educational equipment would be imported free of duty. 6.20 The project would represent 25% of the investment program and it would generate a recurrent cost of %7 million per year by 1975, representinTg 14% of the total estimated increase in public recurrent expenditures on education between 1966-1975. Of the total increase in public recurrent expenditures for secondary education, including the television developmert. about 70% would result from the project. - 18 - 5.D21 Expenditures for the project would be made over a five-year period. Before actual construction starts, an estimated expenditure of about US$0.5 million would be incurred (for site surveys, professional fees, etc.). Tne government intends to spend about US$2.5 million in each of the three con- struction years. After completion, an amount of US$0.3 million would be wqithheld for the defects and liability period of nine monthsz During the construction period monthlypayments should be made to the contractors ac- cording to their certified program and the rate of disbursement during the three years would be fairly uniform (Annex 12). Toan 6.22 A Bank loan of US$4.9 million equivalent would equal the estimated foreign exchange component and represent 58% of the total cost at US$8.4 millio;n equivalent. It is expected that the government would 'oe able to finance the remaining 42% or US$,3.5 million equivalent of capital expenditure. The loan would be disbursed for education equipment and for interest and related charges at 100% of the governmentts payments. The cost of technical assistance and fellowships would be reimbursed at 85%. Civil works contain a foreign exchange component of 20% and furniture of 50% which would be re- inbursed by the Bank. Any funds that are undisbursed at the completion of the project would be available for cancellation. Building Construction 6.23 The building industry has in the last six years met the demand without any unusual increase in material and labor costs except for the last year, when there was a 10% increase. The yearly value of building work throughout the country has increased since 1963 from US$13 million to US$17 million in 1966. There are about 40 contracting firms on the government's approved list. 6.24 There is no shortage of general labor, but skilled craftsmen are much needed. Local and imported material are in adequate supply. In generals the industry should have no difficulty in meeting the requirements of the proposed project. 6.25 Tendering for all government building is administered by a Tender Board in the Ministry of Works, which also appraises the contractors' quality and capacity to undertake the project. Insurance of construction work is tbe responsibility of the contractor, who will also be required to post a bond as a guarantee against his failure to complete the work. Building contracts would be awarded and furniture and equipment would be purchased after inter- national competitive bidding. 6.26 Architectural design and building construction vary widely in El Salvador. Outstanding quality can be seen, particularly in private housing and some public buildings in San 3alvador, but most other buildings leave 'llch to be desired. The Spanish style of architecture with thick, plastered walls and low-pitched tile roofing which is predaminant in most of the e.xisting construction work is, however, being replaced by concrete arid 8t`al construction. - 19 - 6.27 The government has built 1,600 primary classrooms (para. 3.08) and completed six secondary schools in the last three years. The construction standards of these schools are adeq~uate and the costs are very reasonable. The experience thus obtained would be used for the project. The buildings proposed for the project schools would have concrete block walls, louvered glass windows and steel roof trusses with asbestos roofing, For acoustic reasons the classrooms and laboratories would have suspended ceilings. Schedules for accommodations follow economic space standards and are con- sistent with functional needs. Capital costs (excluding contingencies) woulii be US$210 equivalent per student place in schools without industrial or agricultural options and US$320 equivalent in schools with those options. 6.28 The government does not provide any funds for maintaining school buildings. For the proposed project, the government has agreed to establish a maintenance uni-t within the Kinistry of Education and to include in its annual budget 1% per year of the replacement value of the buildings, which is adequate for the proposed simple structures. 6.29 In the past there have not been any by-laws or building codes. Three years ago, however, after a severe earthquake, a group of foreign specialists drew-up building regulations which went into effect recently. 6.30 There are four main sources of architectural services: (a) the National Planning Council, which is responsible for the execution of building projects proposed by the Ministries, has its own architectural section; (b) the Ministry of Education also has its own architectural department wihich in the past has been responsible for the design and construction of primary schools; (c) the Ministry of Public Works is responsible for all public building works and in the past has been engaged in some educational projects; (d) there are 14 architectural firms in the country. Although they are mainly engaged in design work for the private sec- tor, some of them have experience in school building design. The Implementation of the Project 6.31 The Ministry of Education has established a special unit to implement the project consisting of a director., two architects, accep'G able to the Bank, twio engineers, an educator, an accountant and adequate supporting clerical staff. The inspectors mentioned in para. 6.13 will participate in project implementation. The unit will prepare educational specifications for the schools and design standard school plans and workingS drawings in cooperation wiith architectural firms which are to adapt the standard drawiings to the individual school sites. The unit will give pa- ticular consideration to the use of integrated instructional televizion -tu' - 20 - specifications and school designs and closely cooperate with the Miinistry's television department. The unit will coordinate the design and supervision work of the M4inistry of Education and the Ministry of Works. The various other government departments will be asked to appoint officers with whom the project unit will maintain contact in order to ensure coordination and inter- change of information. The existing office for construction inspection in the Ministry of Education will be used for the project. It is staffed with sufficient and experienced building inspectors,. 7. CCNCLUSIONS AND RECMIDEMIATIONS 7.01 During the period 1967-1975 El Salvador's estimated requirement for middle-level manpower is 88,500 persons with secondary education (para. 5.o6). In order to meet this demand the existing school facilities need to be expanded (para. 5.09), 7.02 The proposed project would provide 15,500 new school places and increase the annual output from the levels of secondary and post-secondary education by about 4,700 graduates. Frcm the higher of those levels 1,600 graduates would have vocational training. The project would provide 321 of all graduates froa public secondary schools,(Para. 6.03) 7.03 The project would raise the general standard of secondary education and broaden the curriculum by providing modern school buildings with facili- tuies for efficient teaching of science and vocational courses (paras. 6.o5, 6.07). 7.o4 The number of primary school leavers would be sufficient to provide secondary school entrants of adequate quality (para. 3.08). 7.05 The supply of administrative staff and secondary teachers would be sufficient if proposed training programs are fully implemented (parasc 3.2h. 3.26, 6.i3, 6.15). 7.o6 The project schools would be distributed throughout the country to match demographic needs and reduce disparities between opportunities for promotion from primary to secondary education (para. 6.o4). 7.07 School building designs would conform to acceptable standards and ensure economic utilization. Furniture and equipment lists are adequate anid economical (paras. 6.07-6.10, 6.12). 7.08 There is a sufficient number of competent contractors in E Salvalo: to carry out the project. No shortage exists of competent architects and engineers but technical assistance would be needed for the agricultural- education items in the proposed project. The government agreed during Loan negotiations that private architects would assist in school design. (Paras. 6.16, 6.23, 6.24, 6.31) - 21 - 7.09 International competitive bidding would be used for all procurkiient in the proposed project (para. 6.25). 7.10 Satisfactory assurances have been obtained during negotiations that the following actions will be taken by the Government of El Salvador: (a) Implementation of a new curriculum in secondary schools of the project and investigation of examination content and procedures in secondary education in an effort to reduce the number of failures (paras. 3.10, 6.o5). (b) Introduction of full-time teachers in all project schools no later than 1975 and regular review and revision of the quality of the staff as well as full implementation of the proposed secondary teacher training program including a television scheme (para. 6.15). (c) Formation of a national council for industria1 agricultural, and commercial education (para. 6.17). 7.11 The govermment has set up in the Ministry of Education, a project unit for the execution of the proposed project consisting of the following full-time staff: a project director and two architects acceptable to the Bank, two engineers, an educator, an accountant and adequate supporting stalf (para. 6.31). 7.12 The project forms a suitable basis for the proposed Bank loan of US$4.9 million equivalent or about 58% of the project cost of US$8.4 millic¶x equivalent. Foreign exchange costs are estimated at US$4.9 million equiva- lent (para. 6.19). May 20, 1969 0 - EL SALVADOR:STRUCTURE OF EDUCATION, 1968 Vocational Schools * Vocation2l Schools (Industry, Commerce, Administration, (Industry, Commerce, Agriculture) Administration) Ran Basico ~~~~~~~~~~~~~~~~~~~~~~~~Economics, Education, Engineering, _____________ ~~~~~~~~~~~~~~~~~~~~~Humanities, Law, Medicine, Odontology, _ 1~~~~~~~~~~ 2 _3 4 5 6 Pharmacy, Social Science Primary Teacher Training't1 2 Primary Teacher Training Art School I 2 3 Secondary Teacher Training Agricultural Schoolt Agricultural School School storts at the age of 7. Nursmg School| Scho l of O - Examinations. 0 V - Restricted entrance to higher schools. V - General entrance to higher schools. Vocational schools at plan basico level are being phased out. Military School Military Academy ** A third year is being added and diversified education introduced. 2 t Primary teacher training and agricultural school at bachillerato level D are being phased out. zi (3R)IBRD-3819 X EL SALVADOR: MINISTRY OF EDUCATION ORGANIZATION CHART, 1968 |PLANNING AND COOPERATION WITH | INTERNATIONAL ORGANIZATIONS j { DIRECTOR GENERAL | < DIRECTOR GENERAL r EDUCATION | CULTURAL ACTIVITIES SUPERVISION DEPARTMENT OF DEPARTMENT OF DEPARTMENT OF DEPARTMENT OF DEPARTMENT OF POST SECONDARY EDUCATION PEDAGOGICS PHYSICAL EDUCATION EDUCATION TELEVISION PRE- PRIMARY SEDCOGICMUSI AND PRIMARY SECONDARY COUNCIL SPORTS ADULTEDUCATION PRIMARY lPEDAGOGICAL PHYSICAL CHOIR ADULT EDUCATION l TEACHER TRAINING lRESEARCH EDUCATION SECONDARY REMEDIAL PU8LICATIONS TEACHER TRAINING EDUCATION LlBRARIES SOCIAL STUDIES ARCHIVE MUSEUMS ZOOLOGICAL AND BOTANICAL GARDEN UNIVERSITY OF *EL SALVADOR Z (RlIBRD-3820 X April, 1968 ANNEX 3 EL SALVADOR:PRIMARY AND SECONDARY SCHOOL ENROLLMENT (THOUSANDS OF PUPILS) 600 - - 600 PRIMARY SCHOOL ENROLLMENT 76% OF | | / A~~~~~~~~GE 8,ROUP- 500- 500 63% OF AGE GROUP/ 400 - ---- _ t - - -400 -55% OF AGE GROUP 300 -00 _ I _ L. i 30 '60 '61 *62 '63 '64 '65 '66 '67 '68 '69 '70 '71 '72 '73 '74 '75 150 1 1 - - r r 1 150 ISECONDARY SCHOOL ENROLLMENT 2/0 OF ALGROUF 125 ~~~~~~~~~~~~~~~~~~~PROJECT TOTAL SECONDARY EDUCATION ENROLLMENT 150 OF 75 26 6 3 6 56 777826 09AGE GROUP 75 _GERAL SOARY P (OF WHICH 450/o GIRLS) ~ ~ ~ ~ ~ ~ ~ ~ ~'~\5 OF~ ... V..... ..N. '62656 6 6 5'6'7'8'9 7 7 7 7 7 '75 TE SECONDARY SCHOOLS(RI.:R:".." EL SALVADOR: SCHOOL ENROLLMENT BY GRADE, INCLUDING GENERAL SECONDARY, VOCATIONAL AND TEACHER TRAINING IN 1965 AND PROJECTED IN 1975 GRADES 5 C ~~~L -- ____ 1 4 SECONDARY . 3. PRIMARY ' 4 --- ----------1 2 o ~~25 50 7'5 loo 1 25 1 50 175 THOUSANDS OF PUPILS Dz NOTES, Total nun,ber of pupils in Primary Grades in 1965 was 361,000, in 1975 is to be 595,000. Total number of pupils in Secondary Grades in 1965 was 53,700, in 1975 is to be 143,000. M ___ _ _ . . . . aIB 6~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~- EL SALVADOR: PRIMARY AND GENERAL SECONDARY EDUCATION (THOUSANDS OF PUPILS) 140 _I-_ --T 1 4- PRIMARY GENERAL SECONDARY NUMBER OF PUPILS ENTERING PRIMARY I (P I) IN 1960 AND NUMBER OF PUPILS ENTERING SECONDARY I (SI) IN LEAVING PRIMARY 6 (P6) IN 1965 1961 AND LEAVING SECONDARY 5 (S5) IN 1965 120 \____ 12 _ _ - 100 -__ _. 10 80 ____-8 60 6 PASS LEAVING EXAMINATION 40 4__ _+_____ PASS LEAV N G EXAMINATION 4 20 2__ _ _ _ _ _ PASS LEAVING EXAMINATION 0 0 _ ___I___ GRADE Pl P2 P3 P4 P5 P6 SI S2 S3 S4 S5 YEAR 1960 1961 1962 1963 1964 1965 1961 1962 1963 1964 1965 > z 2 m x IBRD-3295 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ (~~~~~~~~71 ANEya 6 EL SALVADOR TOTAL RECURRENT AND CAPITAL EfEx-NDITU ON EDUCATrTION (196) Njillions of CoLones Publi.c IENpenditure: Ministry of Education 57.4 Teachers retirement benefits 3.6 Ministry of' Health .6 Ministry of Labor .4 Ministry of Agriculture .5 Total Central Government actual expenditure on education 62.5 Private Expenditure (estimate) 9.5 Total estirated expenditure on education 72.0 Gross Domestic Product 2,109.6 Total Central Government current expenditur 199.3 Total Central Govermneat tax revenues 206.o Tax revenues as % of GDP 9.8 Total estimated expenditure on education as % of GDP 3.4 Total Central Government actual expenditure on education as % of GDP 3.0 Total Central Government actual expenditure on education as % of tax revenues 30.3 May 1968 ANIEX 7 EL SALVADOR PROJECTED RECURRENT EXPENDITURE IN GOVERNMENT SCHOOLS (in millions of Colones) 1966-75 Average 1966 1975 Annual Type of Education (Actual) Pr_oected Increase Primary education 33.0 53.0 5.5% Secondary education 3.50 12.2 15.0%o (of which: technical, commercial and agricultural education) (.50) (2.9) 23.0%o Primary and Secondary Teacher Training 1.76 3.0 6.0% Higher education (transfers) 6.51 14.5 9.5% Other expenditures 5.34 7.3 3.5% (including TV) Total Ministry of Education 50.11 90.0 7.0% Pensions 3.6 11.5 /.0% Other Y4nistries 1.5 4.5 13X0% (of which: agriculture) (.53) (1.5) 12.0%f Total public recurrent expenditure on educat-on 55.21 106.0 7.5% May 1968 ANNEX 8 EL SALVADOR: CENTRAL GOVERNMENT RECURRENT EXPENDITURE ON EDUCATION BY MAIN SECTOR 60.00 24.00 50.00 20.00 40.00 16.00 PRIMARY EDUCATION 30.00 12.00 20.00 - 8.00 10.00 4.00 | ~~~HIGHER EDUCATION --_ 8.00 3.20 co ~~OTHER EXPENDITURE _s,/, w 6.00 __ __ /' _2.4 0 z 0 5.00 __ _ / PI /- 2.00 __ -j~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~- o 4.00 1.60 ' o 0c U, 3.00 __20 ___ _ __ _ 1.0_r° Z 0 J - / j ~~~~~~SECONDARY EDUCATION _ E 2.00 .80 cn owo ~ ~PRIMARY AND SECONDARY < ~~~~TEACffER TRAINING/ 1.00 40_ _____.40 .80 .32 .60 .24 .50 od.20 .40 -.16 TECHNICAL SECONDARY EDUCATION .30 - .12 SEMI-LOGARITHMIC SCALES .20 L I .08 '60 '61 '62 '63 '64 '65 '66 '67 '68 '69 '70 '71 '72 '73 '74 '75 .lE ACTUAL > -- PROJECTED - > IBRD -3810 ANNEX 9 EL SALVADOR: CENTRAL GOVERNMENT TAX REVENUES AND RECURRENT EXPENDITURES WITH TOTAL EXPENDITURES ON EDUCATION 350 140 3000 - 120 * E ~~~250 ioo 0-// 110 Z~~~ETALGVRMN TA Rz V CNTA GOENETTTLRCRETEPNIUE z 001 8,,--1 0 TOTAL PUBLIC EXPENDITURE ON EDUCATION E I I i 0~~~~~~~~~~~~~~~~ z ENRA GuvtNMAN I OTA PROECURNEXNDTURE 0 250 200 0~~~~~~~~~~~~~~~ CENTRAL GOVERNMENT< TOTALJECURETEDPNIUE o NET OF DEBT AMORTIZATION 0~~~~~~~~~~~~(RIBR- 81 AM0 10-a RL SAL7ALOR PRBSBNT MD1 PROJBCTED E01LUIBNT IN 802NRAL, IiO7STRIAL, COM CIA1 AND AORIUCLTUBAL P83LIC Akilt PRIVATB s5o0N01Y BDUCATION IN i965 ANO 1975 Nob-er of Nu-btr of Place Soocondn7 School Projected Soc. Schoo1 Projected I-corea Phnez it Scoter of Clooses ES-iotiea CGI1 Bnroent in 1565 Barolln3ct in 1975 tn SeUo.tary School Project Scchccl in -radoo inOrojpctlctoolr Poo60,ce Project S 0010 P17 Bzch. Totoi Ph. B Ba T. otal Scrolliens P1.74_3 B. P _1-S3 S4-S6 _3 S Sznt, Ana 1,330 990 5,320 l3,100 3,500 46,60 + 9,280 1. Seots inca (a) 720 3 030 18 9 230 loS " " tb) - 1,100 - 30 - 350 2. Ctrl ohoapa 720 - 18 _ 2000 A ohapea 9g0 140 1,o4O 4,100 1,000 5,100 + 4,o60 3. Ah-hacbepa 750 440 18 12 200 140 4. Atiquieay. 750 - 12 - 140 - oansocate 1,360 110 1,470 6,700 1,600 8,300 6,830 5. SoA-eeate 720 440 18 12 20D 140 6. Ar=enia3e 9 -11 Lh Lib-rtad 2,560 60C 3,160 8,9CO 2,8CC 11,70+ 8,5hO 7. st,. T-ela2_ 4 7.S. Q ladeq. U.44 - 10 110 6. SOt.e_tepeqon 600 - 15 - 160 - 26. Sta. Cecilia leoh,cioaj Ineftitoto 600 24 200 Sa Salvador 18,900 6,000 24,900 34,300 12,700 47,0MO o 22,100 0 9. Sea Saloedor 600 550 1S 15 160 175 10. Aoopa 60 - 15 - 160 - 11. flopeaga 720 - 20 - 175 - 12. Sac 313rco9 33 - 9 - 11lo 24. Nationl Thechiecl I_etit6te 1,030 35 - 260 27. Ri-ldone Teoheioal ITetitcto 200 8 60 Ohelaiecaago 700 60 060 4,400 1,100 5,S0o + 4,740 13. -ialaeteacgo 600 550 1S 15 160 175 ocacatlo 1 0 760 G0 870 4,SOD 1,200 5,70 + 4,830 14. Suchditoto 330 220 9 6 105 75 Cahbaa 370 60 430 2,900 600 3,500 a 3,070 1S. Shobasco 330 - 9 - 105 - 19. 8eooootcelqoe65 220 12 6 140 70 OuccJtea 2,050 220 2,270 7,600 2,300 9,9806 7,630 16. Santiago de Boric i50 - 12 _ 40 17. Jihuilisc- 450 - 12 - 140 - 23. eu-0atea 41. 560 12 15 140 180 Sea Miguel 2,020 710 3,530 7,600 2,300 9,900 a 6,370 18. Sce MiSgel (a) - 1,100 - 30 - 352 (r. t) 600 - 15 - :60 - La Pa. 950 100 1,050 6,100 1,600 7,700 + 6,650 20. Zaoeiecol,ca - 550 - 15 - ; 75 Ia Cnolon 630 S16 760 4,000 900 ,500 4,120 21. Ia lSlnon 60o U.S 1S to 160 210 Sea V...nte 1,040 90 1,130 4,900 1,100 6,000 o 4,870 22. Son Vi-te 15° 030 12 9 140 10 }iorazan 310 30 340 2,800 700 3,500 3 0,160 26. Sea PreanlcTt I/oera -140 _45 9 12 105 161 Total 37.600& 6;1 47.00 109.90C 1630 o96.2050 11,560 9,640 _/3.10 Agli.at-l ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~2il,S 2 AgeIl,aitprel. a60oals 70 200 270 Poet-ee. 450 &iencte 1,860 Soleace ~~2,220 Iad etrizl 3,680 Mgrtlttrel 1,220 (kgrio. paat-eea 6450) I/ 53,000 in Pablie .ee..dtAy echoele. 3/ 5,700 ai th..e plaee are in ulresdy exietooig hg ldtage och naould h eupplied alith eqip-t through IDA project. D..eedber 1966 0 ' I EL SALVADOR PREtShNT AND PROJECT VD OUTPUT AT EXAMINATION LEVEL IN GENERAL, INDUSTRIAL, CONMERCIAL AND AGRICULTURAL -UBLIC AND PiIVATE SEGONDARY EDUC.4AION IN 1965 AND 1975 Sec. School Output Output in Project Total ,oc. School Increase in Annual Sec. Project Schools Part in 1965 Schools in 1975 Cutput in 1975 School Output of Increase in Output Plan Basico Bach_llerato Plan Basico Bachillerato Plan Basico Bachillerato Plan Basico Bachillerato Plan Basico Bachillerato General 6,500 1,700 3,000 1,060 23,000 4,100 16,500 2,100 18% 44% industrial 400 50 - 960 100 1,200 - 300 1,150 - 84% Comimercial 1,300 350 - 230 1,700 2,200 400 1,850 - 12% Agricultural 20 70 (Sec. and Post-soc.) - 500 - 500 20 430 - 100% Total 8,220 2,170 3,O0O 2,750 2E,OO 8 o 16,580 + 5,830 18% 47% 10,390 5,750 32,800 Public schools 5,490 Eublic schools 14,000 Private " 260 E'rivate " 18,800 -a/ Includes fine arts and domestic science. December 1968 *. ANNEX 11 FL SALVAMOR: SUlOUAY OF OSTS ( ODLONBS) Lquipment Construction including and Insurance Foreign Structure Site WGrks Construction Furniture and Freight Total Exchange la Santa Ana lp PPLC 7,600 76,000 11,500 88,000 183,100 lb Santa Ana N BLI 38,000 380,000 57,000 862,500 1,337,500 2 Chalchuapa N P 22,100 221,000 42,000 51,000 336,100 a 3 Ahuachapan Zxp PBSL 25,800 258,000 57,500 91,000 432,300 4 Atiquisaya N P 18,100 181,000 34,500 47,000 280,600 5 Sonsonate N PbSLI 48,300 483,000 70,000 290,000 891,300 6 Armenia N P 15,700 157,000 30,000 46,o0o 248,700 7 Santa Tecla Bxp BSL 19,900 199,000 39,000 87,000 344,900 8 Quezaltepeque N P 20,500 205,000 39,000 51,000 315,500 9 San Salvador N PPSLC 39,900 399,000 74,500 121,000 634,400 10 Apopa N P 20,500 205,000 39,000 51,000 315,500 11 Ilopango acp P 9,100 91,000 21,000 51,000 172,100 12 San Marcos N P 15,700 157,000 30,000 46,ooo 248,700 13 Chalatenango N PBSLA 43,600 436,000 72,500 177,000 729,100 14 Suchitoto N PBSL 25,000 250,000 49,000 91,000 415,000 15 Ilobasco N P 15,700 157,000 30,000 46,0oo 248 ,7(0 16 Santiago de Maria N P 18,100 181,000 34,500 47,000 280,600 17 Jiquilisco N P 18,100 181,000 34,500 47,000 280,600 18a San Miguel (1) Exp bSLCI 27,800 278,000 67,500 410,000 783,300 18b San Miguel (2) N P 20,500 205,000 39,000 51,000 315,500 19 Sensuntepeque Bxp PBSL - 30,000 50,000 91,000 171,000 20 Zacatecoluca &xp bI 30,000 80,000 47,000 331,000 488,000 21 La Union N PESL 37,000 370,000 69,500 96,000 572,500 22 San Vicente xp P2SL - 20,000 45,000 91,000 156,000 23 Usulutan Exp SLA 22,700 227,000 51,500 185,000 486,200 24 San Salvador Technical Institute Map BI 17,300 173,000 36,500 527,100 753,900 25 San Andrea Agricultural Institute Map A 89,0OO 880,000 125,000 620,000 1,714,000 26 Santa Cecilia Technical Institute Eq bI - - - 276,000 276,000 27 Ricaldone Technical Institute Eq BI - - - 331,000 331,000 28 San Francisco Gotera N PbLSA 34.,90 349.000 63.000 190,000 636.900 Sub-Total 700,900 6,829,000 1,359,500 5,489,600 14,379,000 7,838,000 Professional Fees - 7% of Site Works and Construction Costs 527,000 Technical Assistance and FeUlowships 1.063.000 912.000 15,969,000 8,750,0oo Rounded 16,00o,o00 Appronimately 20% Contingency 3 250.00 00 Colones 19i50,000 10500,0 Interest and comnsitment charge during construction period 1.750,000 1,750o00C 21,000,000 12,250,000 U5 8,400,000 4,900,000 New New School Nxp School to be expanded Uq School to be provided with equipment P Plan Nasico N Pachillerato L Letras (Humanities) S Science C Conmmrce A Agriculoture I Industry December 1968 EL SALVADOR EDUCATION PROJECT IMPLEMENTATION CHART YEAR YEAR YEAR YEAR 9 MONTHS I 23L415[617 8 9I0III2 1 2 34151618 910112 1X234 _ 8.1 Mill _. 3 4 56 7 9 SURVEY AND 787....... ............23ti 89 PREPARATION OF SITES : ........................................................ I Access MASTER PLAN I | SKETCH SCHEME lo $0 5.6 Mill. FINAL DESIGN ' CONTRACT i I PREPARATIONjJ Jr $ 3 0 Mill. TENDER CONSTRUCTION,L FURNITURE AND ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I I Lj 1 I EQUIPMENT '~ r ~ v 7 v $ 0-54 Mill. U . )i- -- -~~~~~~~~~ I Fh~~~~~~~~~~~~~~~~~~~~~f-ects, and Liability Period Cumulative II ~ ~ ~ ~ ~ ~ ~~~1Practical Completion $ 25 Mill Mill6 $.Mi. . $0.3 Mill DISBURSEMENTS 4vv. -~~~~~~~~~~ ~~~~To+al 8.4 Million US. Dollars m j~~~~~~~~~~~~~~~~~~~~~~~~~~~~~rri (R)IBRD-4234 _~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~r CENTRAL-AMERICA 0. EL SALVADOR EDUCATION PROJECT DISTRIBUTION OF PUBLIC SECONDARY SCHOOLS & PROJECT SCHOOLS IfNHAB'lTANTS PER KM' -OVER 100 FROM 501 T00 1000 FROM 101 TO 5000 100 AND LESS /_ 0: ;; it 0 ,'1 ,) 0 ' ; : j , ,l: 00 0 0 0 0 0 PUBLIC SCHOOLS / 0 ;0Zl_ ;; 5 J 2 i000 0 9 . i j,, )> * ~~~~~~~~~EXISTING PUBLIC SECONDARY SCHO)OLS N~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ g : ' 0 0 \ 0 0: | _/ t0 0 000000 ' 0 | 4 , .t 0 0 00: 000 00 , 0 . 0 ; < s PPROJECT SCHOOL 0~~~~~~~~ a I- 0 5 { \ \* >:sensu.tepeque U~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 0~~~~~~~~~ -' , i,= piNTSAN IJANUARnole A LVA DO YN 1 61 S ~ ~ ~ ~ ~ Cmpw So Faci ~~~~AO1suo9qpd - 4 /~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~oe SCA Son vioeo-tt1 U I 5 1~~~~~~~~~~~~~~~~~Tpc 1. 1 '3 U~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ,0, qdl 4n Cd JANUARY 1969 IBRD 2eSALADR CIRRPMII V,MRR I I 0 0 a 2 iMEORANDUM ON RCENT ECONOIIC DEVE-DPEIMT AND PP£SPF1TS OF EL SALVADOR I. Summary and Conclusions 1. The Bankls latest economic report which dealt with El Salvador (VII163a3 "Economic Situation and Prospects of Central America'", dated June 5, 1967) observed that in view of the impending decline in exports, due to unfavorable world market conditions for the country's primary products (coffee and cotton), substantially increased public investment channelled primarily into agriculture and education were needed to diversify the economy, pomote import substitution and stimulate new exports. To achieve these objectives public sector savings would have to be raised, import demand restrained, and new external finance obtained. El Salvador was judged creditworthy for the US$130 million of new loan commitments estimated to be needed during the 1967-1970 period, much of whaich wras expected to be provided by official external lending institu- tions. 2. Not much was done to accelerate the development effort during the past two years, in which Government energies were absorbed with political consolidation and the preservation of the democratic processes. The Government is now increasingly aware of the long-term problems of the Salvadorian economy and appears more ready than before to act on them. It recognizes the need for structural diversification, -with in- dustries oriented more towards world markets and taking better advantage of domestic resources and skills. It also now recognizes more clearly the role to be played by the public sector through appropriate investment, fiscal and credit policies, and hence the need for increasing fiscal revenues and containing non-developmental current expenditures, to sustain an adequate level of investment: new revenue measures wiere taken in 1968, effort is now being made to improve tax administration, and the possibili- ties of new fiscal measures at a later date are being studied. However, the political consensus needed to realize larger investment programs is still uncertain. Although it is clear that a substantially stepped-up investment effort cannot be financed from domestic sources alone and will require additional external borrowing, there is considerable political opposition to further borrowing by the Government. It is also not clear how fast the Government will be able to move ahead in raising the needed domestic resources and improving its administrative and technical capacity to identify, prepare and implement investment projects in high priority sectors. In El Salvador, financial and "physical" capacity improvements are not independent: to the extent that good projects are proposed and carried out, it will be easier to mobilize domestic and external savings; conversely, adequate financing will make it possible to undertake and complete the studies necessary to increase the project content of the public investment program. 5; In th5e expectation th.t the covenr,-mrxnrt irL1l b3 successful in its e.*.re-ts t- sHiSe it'e absorptive capacity of the pubic sector and 4'ae puT.lic savings required to support a larger investment effort, El Sa2ador would continue to be creditworthy for the additional external bonrowing that would be required. The present debt service ratio is be- low 3 percent and is expected to reach about 6 percent in the late 19701s, on the basis of existing and prospective borrowing. axternal capital re- quirements of the public sector for the 1969-1972 period are estimated to amount to $20 million per year, on a disburseraent basis, if the investment plan is successfully implemented. A full scale program that would address itself adequately to the peculiarly difficult long-term problem of diver- sifying an economy which is already very densely populated, has a rapidly growing population and inadequate cultivable land would merit some conces- sional finance to moderate the very sharp increase in public savings that will be required to finance the expanded program and service a rapidly expanding external debt. II. Recent Economic Developments Production 4. During the five-year period of 1962-66 the Salvadorian economy experienced rapid growth, thanks to the expansion of coffee and to an un- precedented boom in commerce and manufacturing caused by the creation of the Central American Common Market. The average annual growth in GDP during this period was over 7 percent (about 6 percent in real terms), considerably higher than the 3.7 percent per annum rate of population growth. This growth rate was, however, lower in the last two years (1967-68) when it averaged only about 5 percent per year, in real terms barely at and perhaps below the population growth of some 3.8 percent per year. This recent slowing down of growth was caused by production diffi- culties in cotton and marketing difficulties in sugar coinciding with a drop in public investment. Contrary to plans, the level of public in- vestment expenditures decreased by about one-third during the two years as a result of inadequate domestic and external finance and limited capacity to prepare and izzplement projects. Only the industrial sector continued to expand rapidly during 1967-68; it contributed sufficiently to exports to permit, in conjunction with the restrictive import policy dis- cussed below, the maintenance of foreign exchange reserve levels. 5. Services account for over 50 percent of GDP, with "commerce" alone representing some 25 percent of GDP. Their share has increased since the creation of the Central American Common Mlarket. Over half of the labor force, however, is still engaged in agriculture, even if agriculture has been declining in importance. Although the proportions fluctuate considerably from year to year, agricultural production ac- counted in 1968 for about 26 percent of El Salvadorls Gross Domestic Product against 32 percent in 1961. During 1962-65, agricultural prod- uction increased by 5.5 percent per year on average overall, or by 2.5 percent if the main export crops--coffee, cotton and sugar--are excluded. 6. In 1966, a small decline in coffee and a sharp drop in cotton output--due to pests, exaggerated expansion of production into marginal lands and inappropriate use of insecticides and fertilizers--caused an absolute reduction in total agricultural production. In l96768, agricultural output reglstered a modcst increase, largaly due to goDod - 3 - coffee crops and, in a lesser measure, to the expansion in cereals (corn and rice), beans, fruits and vegetables, livestock and fishing. The cotton crisis, though, continued through 1968, with acreage and production again in sharp decline. Since coffee output was substantially in ex- cess of the quota assigned to El Salvador by the International Coffee Organization, the country had to sell some 15 percent of its coffee to "new markets'), reducing the average price received and coffee tax reve- nues. A grave surplus problem developed also for sugar, whose unsold stocks in the country increased substantially. They were estimated at the end of 1968 at about 900 thousand quintals, equivalent to over one-third of the average annual production and more than El Salvador's average annual exports of sugar. 7. The three main export products, coffee, cotton and sugar, continue to account for some 50 percent of total value added in agri- culture, as they did five years ago. Coffeels share has actually in- creased from one-third to almost 40 percent between 1962 and 1968. No major coffee diversification program has thus far been undertaken, mainly because under present credit, fiscal and price policies, the profitability of coffee has not yet been successfully challenged by any other agricultural product. One of the most promising "newt' products, rice, is already facing surplus problems, due in large part to improper selection of the type of rice to be produced for export and to inadequate marketing arrangements, with the result that the potentiality of Asian markets cannot yet be tapped. 8. Manufacturing production accounted in 1968 for 20 percent of GDP, against just over 15 percent in 1961. The average rate of growth in 1962-66 was 12 percent per year. In 1967-68, manufacturing continued to be the most dynamic sector of the economy, although its rate of growth, about 9 percent per year, was lower than in the earlier formative years of the Central American Common Market wlich has provided a sizeable market for Salvadorian manufacturers (only a very small amount of food- stuffs and textiles is exported outside the area). The most recent decline in the rate of growth reflects a slowing down in neighboring countries and the restrictive credit policy adopted because of balance of payments problems. 9. During the 1962-68 period, the industrial structure changed considerably. "New" industries, chemical and mechanical industries, in particular, expanded more than twice as fast as the overall industrial average. Population 10. Rapid population growth within a limited land area continues to underline the need for sustained diversification of the E1 Salvadorian economy. El Salvador has a population of some 3.3 million (mid 1968), growing at an estimated 3.8 percent per year, and a density of 400 people per square mile, making it the most densely populated country in Latin America after Haiti. Population growth has been accelerating during the 1950ts as fertility rates increased considerably in most age brackets. It is estimated that the acceleration in growth has continued after 1960, the year of the last census. As a result, the number of non-working people per economically active person (the dependency ratio) has increased: about 47 percent of the total population is now estimated to be less than 14 years old. 11. Although no population policy exists officially, a private Demographic Society, legally recognized since 1963, carries on a prografa of education in faxily planning with the tacit consent of the public au- thorities. The Society, a member of tlhe International Planned Parenthood Federation, makes use of Government clinics and provides services to over 40 thousand families, reaching some one thousand new families every month. The University of San Salvador offers training courses in demo- * graphy and family planning. Finance 12. During 1962-66 total public investment increased from 2.L per- cent of GDP in 1962 to 4.6 percent of GDP in 1966, reflecting significant investments in needed power and transportation facilities. However, El Salvador's public sector has proved unable in the last two years to sus- tain a substantial investment effort and thus support adequately needed structural changes in the economy and continued private sector expansion. 13. One of the principal reasons for the poor public investment performance has been the inadequacy of Central Government revenues and, hence, public sector savings for the needs of the public sector. Since 196h, when a substantial improvement in Government revenues took place following the introduction of an income and excise taxes reform, total tax receipts have stagnated. Direct tax revenues increased slightly (they accounted in 1965-68 for only 15 percent of total tax revenues) but im- port duty revenues declined due to the increasing proportion of duty-free imports under the Industrial Promotion Iawi and from the rest of the Com- mon I4arket. Coffee export tax revenues also declined, because of lower prices in the traditional markets and the export tax exemption granted to exports to "new" markets. Public sector savings available for investment have thus been falling. 14. In 1968, thanks to administrative improvements and the increase in the net worth tax, Central Government current revenues are estimated to have increased by some 2 percent over the previous year. However, an increase in current expenditures by over 8 percent--mainly for health and education and transfers to autonomous institutions to which the previous government had committed itself--resulted in another (25 percent) reduc- tion in Central Government savings. Despite increases in the savings of autonomous institutions, overall public savings in 1967-68 were some 10 percent below the 1965-66 level. 15. One effect of this poor fiscal psrforrmance was that public in- vestment fell in 1967-63 by over one-fifth below the levels of the previous two years. Only about half of the origineIl1y programmed expenditures were actually made, with tlhe rate of program achievement falling as low as 25 percent in the high priority agricultural sector; significant cuts also took place in transportation, health and housing. But shortages of public savings were not the only cause of this poor investment- performance, Other causes were inade',uate technical and administrative capacity (which resu'.ted in the prepar.ation of a vei-y siall number of investment projects and in severe difficulties atv the implementation stage) and an inadequate institutional and legal frameiork, e.g. failure to app.rove a drainage law essential for a comprehensive irrigation program and difficulties encountered by the Government in Parliament obtaining approval or ratification of loans, caused by both political opposition and cumbersome legal procedures. Fore-,.gn borrowing has bee-n correspondingly low in the most re-ent years. The pro- portion of public investment financed net from abroad was about 15 percent in 1967-68 compared to 32 percent of a higlher investment level in l965-66. 16. The "pipelinett of external finance to the country is also now unusually dry. Undisbursed loans from the Washington based agencies amounted to US$19 million at the end of 1968 aga-nst over US$43 million at the end of 1965. 17. TIonetary policies have been prudent throughout most of the 1960Ts, reflecting preoccupation with maintaining price stability and avoiding foreign exchange difficulties. -The money supply expanded on average by just above 5 percent per year. In 1966 there was substantial credit expansion to both public and private sectors, and a sharp loss in international reserves. But in the following year the Central Bank re- versed its liberal credit policy towards the Government and the private sector; raised commercial bank reserves from 20 percent to 30 percent of deposits; reduced the &mount of trade credit froma 40 percent to 30 per- cent of commercial bank's portfolios; imposed 100 percent prior deposits for certain imports (the prior deposit require-ment was dropped after approval of the Protocol of San Jose, at the end of 1968) and accelerated payments for imported merchandise by reducing the permitted maturity of import financing from abroad. The EIF has supported this credit restraint policy by means of stand-by arrangements in 1965 and 1967. 18. Althoughl current price indexes are inaccurate, prices appear to have remained relatively st3ble: the annual rate of price increase is estimated to have been of the order of 1 to 2 percent. Minimum wage regu- lations introduced to cover, first, farm workers and laborers hired for harvesting the principal export crops, then, industrial workers and, finally, government employees, have apparently not been very effectively implemented. 19. Since 1962 the Salvadorian balance of payments has had substan- tial current accolumt deficits, with a peak in 1966 when the excess of im- ports over exports of goods and services reached US$44 million, equivalent - 6 - to over 20 percent of total exports. The reason for these deficits was not an inadequate increase in exports (between 1962 and 1966 exports in- creased at a respectable average of 9g8 percent per year) but the fast growth of imports (15 percent per year during 1962-66), especially of intermediate and capital goods. Until 1965, large inflows of official and private capital more than offset the current account deficits and there was accumulation of international reserves. In 1966, however, although capital inflows expanded substantially, the excessive credit expansion caused reserves to fall by 25 percent, equivalent to one and a half month's imports. In the last two years, large coffee exports and rapidly growing exports of industrial goods to the other Central American countries, together with slowly rising imports--because of tight credit and the sharp drop in public investment expenditures--combined to reduce markedly the cuTrrent account deficits and to avoid any further decline in reserves so that at the end of 1968, net international reserves stood at US$41e0 Mil- lion equivalent to about twlo months' imports. Total external public debt outstanding, mainly long term, amounted to US$90 million (including un- disbursed) at the end of 1968. The IBRD holds about 45 percent of this debt. The debt service ratio is low, 2.9 percent, and has declined slightly in recent years. III. The Development Plan, 1968-1972 20. The GovernmentIs present objectives, embodied in a five-year development plan recently completed, indicate that it is aware of El Salvador's principal development problems and intends to deal with them more effectively than in the past. The target is to achieve a GDP growth of 6 percent per year in real terms, or slightly over 2 percent per capita annually, somewhat higher than the 5.5 percent overall and the 1.7 per capita growth rate in 1963-67. This more rapid growth is to be achieved in the face of less buoyant markets in the rest of Central America for Salvadorian exports. Consequently, the Plan outlines a pattern of develop- ment for the next five years that is characterized by a relatively more important role than in the past of the public sector, while thie private sector experiences a pause in its growth as the most important import substitution possibilities are being exhausted. This is reflected in the projected drop in the rate of growth of private investment and consumption (a policy of import restraint is to be followed), while public investment would recover sharply from the 1967-68 lows and current public expenditurest growth would pick up slightly, more markedly in health and education. The financial and physical capacity of the public sector is to be strength- ened in order to bring about important structural changes through a stepped- up, well designed public investment effort. 21. According to the Plan, agriculture is expected to grow only moderately during the next few years. Cotton acreage and output appear to have finally reversed their declining trend and a significant recovery is expected for the next few; years, thanks in part to the work of an Israeli mission in plague and insect control and training in insecticide use. But coffee output is not expected to increase much above the record level reached last year, while sugar output should decline somewhat. -7- Accelerated growth is expected in the rest of the sector, especially for rice, fruits and vegetables, livestock and fishing, which have shown in- teresting possibilities in the last two years. Major irrigation works as well as credit, marketing and storage facilities are planned to support this growth. As a result, agricultural output overall is projected to grow at 2.8 percent per year during 1968-1972, above the 1.9 percent average of 1963-67. 22. The future growth of the industrial sector depends in the short term on the continuing overall economic growth in El Salvador and in the rest of the Common Market. These two markets have been and still are the ones which absorb virtually all the Salvadorian industrial out- put. Some manufactured goods (foodstuffs, textiles) are currently ex- ported outside the area, and the possibility of expanding their exports to world markets, as well as developing new export lines is being explored, but no significant results are expected soon. The Plan projects industrial growth during 1968-1972 at 9.8 percent per year (compared with 12.5 percent in 1963-67), with most of the growth taking place in the new intermediate and mechanical industries. In view of the dynamism shown in recent years by the Salvadorian entrepreneurs behind the CACI common external tariff, this expected growth does not appear implausible. 23. The Salvadorian authorities recognize that the recent drop in public investment has had the two-fold negative effect of postponing the diversification of the economy and--in the short run--of reducing the levels of activity and employment. The Government has thus set sharply increased public investment targets for 1969-1972 (about 75 percent higher on a yearly basis than in 1967-68). The achievement of these levels will require that current efforts to improve financial and physical capacities of the public sector (including project preparation capacity) are successful. 24. Nhile both sectoral and overall targets of the plan appear realistic and the public investment prograra has a high project content, ssuostantial work rermains to be done to put most of the projects in "bankable" shape and measures have yet to be taken to ensure adequate finance for the expanded program. The actual level of public invest- ment and growth of GDP will thus most probably turn out to be below targets, as they were in 1968. 25. At the end of 1968 El Salvador approved the Prot=l of San Jose which called for a 30 percent surcharge on most imports from outside Central America. The yield is estimated at around uS$4.5 iYiLllion per year, or 5 percent of 1968 Government current revenues. This measure, comple- mented by the improvements being made in tax administration and by the rising savings of the autonomous public agencies, is expected to result in a substantial recovery in public savings in 1969 which should be adequate to sustain the increased level of public investment programmed for 1969. However, if investment targets for later years are to be met, direct taxes will have to be made to play a more significant role than at present so that tax revenues can become more responsive to income growth than they are now. - 8 - 26. Other measures will also have to be taken if the planned program is to be realized. The Government intends to improve substantially the administrative and technical capability of the individual Ministries and of the various entities responsible for the implementation of the public investment program, and good progress is being achieved in some sectors (e.g. education). But the job that the Government faces is a ver-y diffi- cult one. Constitutional ways to speed up the process of legislative ap- proval and ratification of development loans from abroad are also being solght. But the solution of this essentially political difficulty will depend ultimately on the ability of the Government and the opposition parties to agree that short-term political issues must not be permitted to continue to frustrate Government development initiatives. 27. To achieve its investment targets, the Government intends to make greater use of external capital to finance its increased investment 0 expenditures, According to the Government program, El Salvadorts public sector would require new development finance from abroad in the order of US$20 million per year (on a disbursement basis), over the next four years. Disbursement rates would thus be well above those of the recent past, when disbursements averaged about US$13 million per year, in 1963-67. If these were to materialize, the debt service ratio, calculated on reasonably conservative assumptions about terms of the additional borrowing, would double in the next decade and peak at about 6 percent in the late 1970 s, on the basis of the existing outstanding debt plus the planned 1969-1972 borrowing. By 1972 net foreign capital is planned to finance some 37 percent of public investment or 27 percent on average for the whole period 1968-1972. 28. The plan projects steadily increasing external current account deficits until 1972. Exports would increase at 7.5 percent per year (com- pared with 8.5 percenat during 1963-67) with the highest rates for chemical and miscellaneous manufactured products (to the rest of the Central American Common IIarket) and cotton. An export prorotion center has been recently established to try to open new lines of exports to world markets. Import growth is expected to average around 6.5 percent per year during the period (compared with 12 percent during 1963-67)o These trade projec- tions, particularly the one concerning imports and the plan forecast of large private and public capital inflows resulting in a steady build-up of international reserves, to a 1972 level about 50 percent above 1968, appear optimistic. 29. Monetary policy is to continue to be prudent, with an increase in money supply at or below the rate of increase in GDP. Bank credit would be mainly for highi priority, directly productive sectors, with only a limited amount of credit allowed for commerce and for financing of the public investment programa Consideration is being given to a new banking law and to the creation of an agricultural development bank which wo-uld channel domestic and foreign capital towards agriculture. One important issue is the revision of the interest rates level and structure that are, at present, not conducive to adequate mobilization of private savings and their allocation among the priority sectors of the economy. - 9 - 30. The plants declared aim of reducing the mortality rate would result in increasing further thle rate of population growth. Since popu- lation density and growth are already very high, careful attention would have to be given by the Salvadorian Authorities to formulating and im- plementing a comprehensive program of education in family planning; thus providing the prerequisites for some slowdown in population growth. IV. Conclusions 31. In its 1968-72 development plan the Salvadorian government has defined its major development objectives and how it intends to achieve them. It has also begun to talce steps to implement its intentions. How- ever, the very substantial effort called for, which has controversial and difficult domestic political implications, has yet to crystallize. 32. With the overall policies that have been followed by the Salvadorian authorities, El Salvador's creditworthiness has not been in question. But the country's recent development performance has been disappointing. There are now prospects for a considerably improved public investment performance: since increasing attention is being given to raising the absorptive capacity of the public sector. El Salvador should continue to be creditworthy for the additional external borrowing that such an accelerated development effort would require, if the savings ability of the public sector is sub- stantially increased; even so, El Salvador wiould merit some concessional finance to mitigate the very sharp increase in public savings that will be required to finance the stepped-up public investment expenditures and service the rapidly expanding external debt. Western IIemisphere Department May 21, 1969 I. BASIC DATA Area: 8,260 sq. miles Population 1968: 3.3 million Annual rate of growth, 1961-68 3.8% Population density per sq, mile lco Political Status: Self-governing republic Gross National Product 1968 (est.) 2,300 million Colones Annual rate of growth 1961-66 608% 1967-68 4.8% Per capita 1968, US$ 280 Gross Domestic Product 1967 (at market prices) 2,226 million Colones Agriculture 26% Manufacturing and mining 20% Construction 3% Services 1% Percent of GDP (at-market prices) 1967 1961-1966 Gross investment 14.8 14[8 Gross savings 10.9 12.8 Balance of payments current account deficit 3.9 2.0 Investment income payments 0.9 o08 Central Government c-urrent revenues 10.2 11.0 Public investment 3.8 3.7 Resource gap as % of investment 1967 1961-1966 26.4 25.o Money and Credit 1 Colon = US$0.40 1 US$ = Col. 2.50 Relationship to large monetary or customs area: Member of the Central American Common Market and Clearing House 1967 1961-1967 (annual rate of change) Total demand deposits 155.4 mill. Col. 3,7% Time and savings deposits 234.3 " " 16.0% Credit banking system to private sector 487.5 ' 4.7% M4oney supply 280.3 n 3.6% -2- *etrcl Government OD rations 1968 1961-1968 (annual rate of change) Current revenues 231.0 mill. Col. 3.9% Current expenditures 209.0 I th 4 9% Savings on current account 22.0 i It - 3.3% Capital expenditures 26.03 II 1*i% iMedium- and long-term External Public DeV , repayable in US dollars June 30, 1968 1968 Total (including undisbursed) 92.3 mill. $ (excluding undisbursed) 71.7 mill. $ Debt service 7.1 mill. $ Debt service ratio 2 9% Balance of Payments 1968 1961-1968 (annual rate of change) Exports 212.0 mill. $ i1.5% Imports 220.0 It " 9.0% Annual average 1961-1968 Net invisibles -19.0 mill. $ -17.0 Net current account balance -27.0 " "24.5 Commodity concentration of exports (coffee, cotton, slagar) 55% 65% XNet foreign exchange reserves 41.0 mill. $ 35.8 mill. $ II. SUPPORTING TABLES Table 1: EL SALVADOR: EXTERNAL PUBLIC DEBT OUTSTANDING AS OF DECEMBER 31, 1968 / Debt Repayable in Foreign Currency (In thousands of U.S. Dollars) Debt Outstanding December 31 1968 Source Disbursed Including only undisbursed TOTAL EXT NAL PUBLIC DEBT 77,233 102 ,86 Privately held debt 8 82 1 Publicly issued bonds 972 952 Financial institutions - United States 7,872 11,872 loans from international organizations 396o05 49,910 IBRD 27,506 IDA 7,399 8,ooo IDB 3,556 5,215 BCIE 800 6,o04 loans from governments 28,804 39,852 Canada 1,518 2,997 Germany - 2,563 United States 27,286 34,292 0 1/ Debt with an original or extended maturity of one year or more. Source: Statistical Services Division, Economics Department. 2 ZT, SLVU ,S k: STID-'TED FU1.TRE $?VCT- PP AEtTS C7T 9V'.z'H:AL rj1111 0u7:lN7.,103:Iv U;DLSBURSED S01 DECE0MBE 31, 1968 Debt Repayable in Foreign Currency (In thousands of U.S. Dollars) Debt Outstanding (Begin. of Period) Including Payments during Period Year Undisbursed Amortization Interest Total TOTA.L EXTERNAL PUBLIC DEBT 1969 97,634 4,893 2,755 7,648 1970 92s741 5,903 2,794 8,697 1971 86,838 5,606 2,613 8,219 1972 81,231 5,071 2,346 7,417 1973 76,161 4,899 2,112 7,011 1974 71,262 4,643 1,888 6,530 1975 66,619 3,824 1,743 5,566 1976 62,795 3,583 1,646 5,230 1977 59,212 3,385 1,523 4,908 1978 55,827 3,342 1,408 4,751 1979 52,485 3,434 1,278 4,712 1980 49,050 3,525 1,141 4,666 1981 45,526 3,637 999 4,636 1982 41,889 3,582 852 4,434 1983 38,307 3,646 715 4,361 Note: Includes service on all debt listed in Table 1 prepared lIay 13, 1969 with the exception of the following, for which repayment terms are not available: Total $4,952 Publicly issued bonds 952 Financial insti- tutions 4,000 Source: Statistical Services Division, Economics Department. Table 3: EL SALVADOR: POPULIATIO 195, 1961-66 a) Population Present in the Country (in millions) 1950 Census (June 13) 1,855,917 1961 Census (May lst) 2,51o,984 1961 (as of July lst) 2.53 1962 " "" " 2.63 1963 it " " 2,72 1964 i t II n 2.82 1965 " It it l 2.93 1966 31 "0 4 3. 1967 " TI " " 3.15 1968 n it H if 3.27 b) Rates of Growth Implicit average annual rate of growth 1950-61 2.8% Estimated average annual rate of growth 1961-68 3.8% Source: Direccion General de Estadistica y Censos: Tercer Censo de Pobla- ci6n and Boletines Anuales. Table 4: EL SALVADOR- GROSS DO9ESTIC PRODUCT BY SECTOR ORIGIN 1959-i967 (Ivfillions of Colones) Current Prices) _ ~~~~~~~~~~~~~~~~~~~~~~~~~~Prel. 195 9 1960 1961 1962 1963 1964 1965 1966 1967 hgriculture 461.0 449.3 465.6 537.o 522.8 569.7 579,6 573.9 588.6 IManufacturing 185.5 206.8 223.4 241.4 267.7 306.1 352.2 396.6 435.3 Hining 2.7 2,4 2.1 2.3 2,7 2c4 2.9 3.0 3.0 Const,ruction 44.2 47.0 47.2 39.7 48.2 57.0 62,0 74.7 71.5 Electricity and water supply 14.8 16.3 17.8 18c4 21.4 24,2 26.4 29e9 33.0 Tranaport, communications and storage 61.7 66.4 69.2 7501 77.2 85.6 89.5 91.2 95.0 Commerce 280.7 317.6 299.2 349.2 402.3 449.7 482,3 511.3 541.0 Financial intermediaries 19.8 21c3 23.6 26.3 25.7 31.3 33c4 38.2 42.0 Housing rent 75.3 80.3 70.4 69:7 71.4 72.9 78.1 81.4 85e5 Public administration 111.7 114,7 121.1 131.8 133.1 134.9 142.3 155.2 166.0 Personal services 92.2 98.o 104.4 111.7 121,1 132.8 143.6 154.4 165.1 Gross Domestic Product 19349.7 19420.0 1,444.1 19602.6 1,693.6 1,866.7 19992.2 2,109.7 2,226.0 Net Factor Income Payments - 8.8 - 7.3 - 8.3 -12.3 -12.8 -14.1 -17.1 -16,7 -20.6 Gross National Product 1,340.9 1412e7 19435.8 19590.2 1,680o,8 1385206 1,975,1 29093.1 2,205.4 Depreciation -68.2 -72.0 -72e2 -78.3 -84.1 -95.2 -98,9 - 104.1 - 111.2 N !lT L4ATIONAL PRODUCT 19272.7 1,340.7 19363.7 1,512o0 1596.7 1,757.5 1,876.2 19989.0 25094.2 I,Adirect taxes net of' oubsidies - 103.0 - 116.6 - loi.5 - 116.5 - 128.6 - 146.9 - 16809 - 162.5 - 166.9 NATT:ONAL INCOME 19169.7 15224.2 1,262.2 1,395.5 1,468.1 1,610,5 1,707.3 19826.5 19927.3 : c ew Central Bank, Table 5: EL SALVADOR: GROSS DOMESTIC PRODUCT BY TYPE OF EXPNDITURE, 1959-1967 (In millions of Colones, current prices) Prel. 1959 1960 1961 1962 1963 19614 1965 1966 1967 CONSWPTION 1,238i4 1 286.9 1,284.0 1,35.4 1,469.9 1,581.0 1 699 1 1 827 3 1 97 5 Private sector 11099,6 1,135.1 TIT:2 1,310.7 1 1 41.5 15 .J7 173 T4O Public sector 138.8 143.0 148.9 161.3 159c,2 162.5 172.6 183.8 207.5 IV\TE S DLaqT 127.8 219.4 191.8 194.4 214h6 317.3 307.8 361,2 329.9 Private sector I T1.o 1 215.6 226.7 7 Public sector 44.6 40.6 45.5 38.1 44.o 48.4 8o-8 98.8 72.3 Change in inventories -31.8 15.1 24.0 21:3 12.0 54.6 11*3 35.7 TRADE BALANCE 8.8 -64.4 1.3 8.o -30.14 -66.2 -48.o -1102 -79.4 Exports of goods and services 307 3723.9 377.97 76. 564. Imports of goods and services -298.7 -353.8 -322.6 -366.6 -440.1 -542.8 -576.9 -630.8 -643.5 STATISTIC DISCREPANCY - 25.3 - 21.9 - 32.9 14.7 39.6 34.6 33.3 31.5 - GROSS DOMESTIC PRODUCT 13149.7 1 4 121,14441 1 602.6 1693.6 67 1 992.2 2t 2 226.o Sou.rce: Central Bank. iUJ ;7Aj:O>int S-TYkIA63,1 ACGOTUNTS OF TIE CZEITRAL GCYOVEFNYflTIT 1965 KJ3,68 (Ordinary: Buidget; in millions of Colones) L965 1966 1967 1968 ;/ Current Revenues 224.5 223.5 226.9 231.0 Direct Taxes 4o.1 40.2 45.1 66.3 Indirect Taxes 172.4 169 8 166.8 15o.7 Other 12.0 13:5 15.o 14.0 Current Expenditures 175.7 191.2 195.9 208.7 Savings 48.8 32,3 31.0 22.3 Amortization Payments 7,9 7.7 3e0 3.3 External Debt Z7 .7 2.1 Domestic Debt 1.2 1.2 1.2 1.2 Investment Expenditures 2/ 55.9 5o.9 38.5 22.5 Surplus or Deficit -15]. -26.3 -1o.5 - 3.5 Financing 15.o 26.3 1o.5 3.5 Central Bank - 3.0 3.3 5-7 7 Foreign Loawns 17.4 8.2 7.1 3.2 Floating Debt 5. 4°.7 1.5 - 1.5 Other - 4.8 10.1 - 3.8 0.1 i/ Preliminary. 2/ Includes financial investment. N.B. For the years prior to 1965 there are no strictly comparable ac- counts. Source: Planning Office, Ministry of Finance and IBRD staff estimates. >.