FILE COPY The Document of FILE CvrP The World Bank FOR OFFICIAL USE ONLY Report No. P-231 8-LER REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF LIBERIA FOR A FOURTH HIGHWAY PROJECT May 5, 1978 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS US$1.00 = Lib $1.00 The official monetary unit is the Liberian dollar, with a par value equal to that of the US dollar. Apart from the Liberian dollar, the US dollar is a legal tender in Liberia. GOVERNMENT OF LIBERIA - FISCAL YEAR July 1 - June 30 GLOSSARY OF ABBREVIATIONS BT - Bureau of Transportation GDP - Gross Domestic Product MCIT - Ministry of Commerce, Industry and Transport MPW - Ministry of Public Works PPD - Planning and Programming Division FOR OFFICIAL USE ONLY FOURTH HIGHWAY PROJECT Loan and Project Summary Borrower: The Republic of Liberia Amount: US$13.8 million equivalent Terms: To be amortized over 20 years, including 5 years' grace, at 7.5 percent interest. Project The project seeks to assist Liberia in continuing to Description: develop its main highway system through the reconstruc- tion and improvement of two main roads which link Monrovia to central and south-eastern regions of Liberia.; Paynesville-Totota (71 mi) and Paynesville- Robertsfield (28 mi). The project would also provide technical assistance to continue to develop local capacit:y to plan and execute road maintenance. A feasibility study on the Gbarnga-Kolahun road (152 mi) and detailed engineering work on two other main roads, Ganta-Sanniquellie (25 mi) and Ganta-Tapeta (65 mi), would also be included. There are no major risks. Estimated Cost: 1/ ---------US$ million------- Local Foreign Total Reconstruction and Improvement of PaynesviLle-Totota Road 3.11 8.37 11.48 Reconstruction and Improvement of Paynesville-Robertsfield Road 2.28 6.14 8.42 Road Maintenance Program 0.76 2.39 3.15 Detailed Engineering Studies 0.10 0.38 0.48 Feasibility Study 0.08 0.47 0.55 Technical Assistance for Highway Planning 0.05 0.23 0.28 Baseline Costs 6.38 17.98 24.36 Contingencies 1.20 3.23 4.43 TOTAL PROJECT COST 7.58 21.21 28.79 1/ Net of taxes and duties. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World lank authorization. - ii - Financing Plan: ---------US$ millionn------- Local Foreign Total Bank - 13.80 13.80 Kuwait Fund - 7.41 7.41 Government 7.58 - 7.58 Estimated Disbursements: -------------US$ millions---------- Bank FY 1979 1980 1981 1982 Annual 2.6 5.1 4.1 2.0 Cumulative 2.6 7.7 11.8 13.8 Rate of Paynesville-Totota Road 20% Return: Paynesville-Robertsfield Road 22% Average of the two Roads 21% Appraisal Report No. 1827-LBR Report: Dated May 4, 1978 MAP: IBRD 13313 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TCi THE REPUBLIC OF LIBERIA FOR. A FOURTH HIGHWAY PROJECT 1. I submit the following report and recommendation on a proposed loan for the equivalent of US$13.8 million to the Republic of Liberia to help finance a fourth highway project. The loan would have a term of 20 years, including 5 years of grace, with interest at 7.5 percent per annum. The Kuwait Fund for Arab Economaic Development would co-finance the project on a parallel basis with a loan of about US$7.4 million equivalent. 1/ PART I - THE ECONOMY 2. A basic economic mission visited Liberia in March 1973. Its report "Liberia: Growth with DeveLopment - A Basic Economic Report" (No. 426a-LBR dated March 1, 1975) was distributed to the Executive Directors. An economic report on the "Current Economic Position and Prospects of Liberia" (No. 1642a-LBR) dated February :28, 1978 has been distributed to the Executive Directors. Structural Characteristics 3. The growth of Liberia's economy remains heavily dependent on the performance of the enclave sector consisting mainly of: (a) iron ore mines, (b) rubber plantations, and (c) forestry concessions. These enclaves are the main source of export earnings. Iron ore mining is by far the largest single activity in the enclave sector, accounting for about one third of gross domestic product at factor cost. There are only limited linkages be- tween the enclaves and the rest of the economy; as a result, the benefits of economic growth have been unevenly distributed. 4. Another dimension of structural imbalance is the disparity between traditional agriculture and the (monetized) modern sector. Traditional agri- culture has minimal inter-action with the rest of the economy; however, it supports the majority of the population - as much as 60 percent - who live at or near subsistence level. With a population of about 1.6 million, average per capita GNP in 1976 was US$450. While the enclave sector yields a per capita GDP of about US$2,500 compared to US$550 for the rest of the monetized economy, the great majority of the population who live in the traditional non- monetized sector have a per capita income of about US$100 per annum. To help redress these imbalances the Government is trying to increase its earnings from the concessions and use the resources to diversify the economy with increased participation by, Liberians. 1/ The precise amount and terms of the loan from the Kuwait Fund has not yet been determined. -2- Development Plan 5. The Government has prepared a Four-Year Development Plan covering the period July 1, 1976 to June 30, 1980. In preparing the Plan the Govern- ment was assisted by a planning team financed jointly by the Bank, the United Nations Development Program (UNDP), the United States Agency for International Development (USAID) and the Government (Reference: President's Memorandum to the Executive Directors, No. R74-61 dated March 25, 1974). The Plan identi- fies the basic, long-term objectives of Liberia's socio-economic development as: (a) diversification of production; (b) dispersion of sustainable socio- economic activities throughout the country; (c) greater involvement of Liberians in development activities; and (d) equitable distribution of the benefits of economic growth so as to ensure an acceptable standard of living for the people throughout the country. The average annual growth of real GDP during the Plan period is envisaged at around 6.8 percent. However, because of delays in the implementation of expected investments in iron ore mining and some slackening in demand for the country's main exports, the recent Bank economic mission has estimated that real growth during the four-year period is unlikely to exceed 3-4 percent. Total development expenditure is projected at US$415 million, of which US$251 million would be financed from foreign sources and US$164 million domestically. Firm commitments accounted at the start of the Plan for almost 60 percent of the expected foreign financing. However, the Plan is currently being revised to take account of developments during the first two years. This review is not yet complete but it is clear that the cost of the public investment program will increase substantially largely to reflect increased costs but also the inclusion of additional projects. Actual development expenditures over the first two years of the Plan are estimated at about $200 million. Given the financial, manpower and institutional constraints it is likely that the implementation of a number of the projects, as revised, will be delayed beyond the Plan period. 6. The Development Plan attaches high priority to the development of agriculture and basic infrastructure. The objective is to diversify and modernize agricultural production, increase productivity, improve associated rural economic activities such as marketing and processing, and provide social and physical infrastructure to promote income distribution and improve the quality of life in the rural as well as urban areas. The Government has already embarked on two important agricultural development projects in the Bong and Lofa counties which are being assisted by the Bank Group. Other projects in forestry and rubber are expected to start shortly which will lead to greater participation of Liberians in the development of the country's principal agricultural resources. At the same time the Government plans to expand water supply and electric power utilities in both urban and rural areas and to improve the road network, the inadequacy of which presently constitutes a constraint to growth. However, the shortage of adequately trained manpower at all levels is likely to prove the most important constraint to the Govern- ment's efforts to develop and diversify the economy. The Government is keenly aware of this and has adopted a number of policy measures, supported by the three Bank Group financed education projects, to tackle the problem. However, -3- by their very nature, these policies are likely to bear fruit only in the long term; over the short amd medium terms, the Government will have to rely heavily on foreign technical assistance. Recent Economic Developmen:s 7. During 1973-1975 Liberia, like most other developing countries, was hit by higher import prices and international inflation. While strong world demand for Liberia's major export, iron ore, brought large gains in export prices in 1974, the 1975 recession in the industrialized countries signifi- cantly reduced the demand Eor the country's most important export commodi- ties -- iron ore, rubber anad timber. With growth performance continuing to be largely a function of enclave activities, growth of real GDP -- which averaged about 6.4% a year in the 1967-1970 period has slowed down significantly and is estimated to be about 3.0% in 1976. Preliminary estimates indicate that GDP growth may have declined further during 1977. 8. Liberia has had a long history of sound fiscal management and public sector resources have not come under undue pressure during the past decade. A satisfactory growth in government revenues averaging about 13.5% per year between 1970-1975 enabled the Government to finance increasing expenditures. Recurrent expenditures during this period grew by about 10% while development expenditures increased nearly fourfold. However, public sector finances have recently come under increased pressure which is likely to continue over the medium term mainly because of an anticipated acceleration in the rate of growth of government expenditures coupled with a more moderate rate of growth in reve- nues. The rate of growth of government revenues is likely to be moderate in view of the anticipated lower GDP growth rate as well as the continued slack in world demand for iron ore. There may be scope for an increased revenue effort on the part of Government as well as improvements in the efficiency and pricing policies of the public corporations so as to ease the pressure on central government finances. In this context, Government has recently enacted a new Revenue and Finance Law and is also negotiating with the iron ore companies regarding its share in profits and future dividend distribution policies. Balance of Payments 9. During the 1964-1972 period, merchandise exports grew by 10% and imports by 5.9% annually in current prices. Thereafter, from 1972-74, mostly reflecting accelerated international inflation, imports rose by 29% annually, exceeding the 22% annual export growth. Oil imports increased from US$12 million in 1972 to US$56 million in 1974. From 1975 onwards the decline in the quantity of exports has been partly offset by favorable movement in the terms of trade but the trade surplus nevertheless declined from US$110 million in 1974 to US$61 million in 1976, while the current account deficit reflecting the substantial remittances of capital and other factor income from enclave operations recorded about US$93 million in 1976 as compared with US$30 million in 1974. The rising current account deficits have been financed mostly by private capital transactions. -4- Creditworthiness 10. Liberia's external public debt outstanding and disbursed was esti- mated at about US$199 million as of December 1976. Debt service payments as a proportion of exports of goods and non-factor services were estimated at 4.3% in 1976 as compared to 5.7 and 7.7% for 1974 and 1972 respectively. Debt service payments as a percentage of government revenues have also dec- lined from 24.3% in 1972 and 21.1% in 1974 to 13.4% in 1976. Based on the existing debt, both ratios are projected to increase gradually in the next few years as export earnings are expected to level off and the public revenues grow more moderately. The Bank Group share of the public debt outstanding and disbursed is presently about 18%. Liberia's debt service ratio through the 1980s is expected to remain relatively modest (below 10%) unless there is an unexpected deterioration in external conditions. In this context, it should be noted that Liberia's exports are highly concentrated in a few commodities (mainly iron ore and rubber) with unstable world market prices. Given the country's satisfactory performance in economic management and its modest debt service ratio, Liberia should be regarded as creditworthy for a significant amount of Bank lending, blended with some assistance from IDA. PART II - BANK GROUP OPERATIONS IN LIBERIA 11. The Bank has made 15 loans (including one Third Window loan) for projects in Liberia totalling US$84.5 million; there have been 6 IDA credits totalling US$30 million and one technical assistance grant of US$200,000 for development planning. IFC has made two equity investments totalling US$555,000 in the share capital of the Liberian Bank for Development and Investment (LBDI). The Bank loans have been mainly for roads, port expansion, power and LBDI; IDA credits have been for education and agriculture. Annex II contains a summary statement of Bank loans, IDA credits and IFC investments as of March 31, 1978 and notes on the execution of ongoing projects. 12. The objectives of Bank Group operations are: (a) to help Liberians to play a larger role in developing their own resources for the benefit of their own people; (b) to support policies and programs leading to broader sharing of the fruits of economic progress; (c) to help the Government in broadening the economic base and overcoming infrastructural constraints to growth; and (d) to assist the Government in mobilizing development resources from other external agencies. In furthering these objectives, particular attention is being paid to the need to expand the supply of trained manpower so as to relieve this potential constraint to development. 13. In line with the priorities established in the Government's Four- Year Development Plan, the Bank plans to give increasing emphasis in its lending program over the next few years to the agricultural sector. The Bank Group is co-financing with USAID two agricultural projects currently -5- under implementation in Bong and Lofa Counties. These projects are designed to assist a total of about 17,000 subsistence peasant farmers to diversify their production base and to increase their productivity and income through the provision of an integrated package of support services and infrastruc- ture. A rubber project has recently been approved which would lead to expanded exports, increased productivity and incomes for small and medium size farmers, strengthen credit and extension service and promote greater Liberian participation in the development of this sub-sector. A forestry project has been appraised which would strengthen the Government's forest service, initiate an industrial plantation program and help Liberia to better manage and exploit its forestry resources. 14. In infrastructure, a water supply project is under preparation which would rehabilitate and expand the Monrovia water supply system, extend water distribution to lower income groups in the metropolitan area, and help strengthen the management and finances of the Liberia Water and Sewerage Corporation. The proposed fourth highways project would rehabilitate about 100 miles of priority sections of selected primary roads and provide technical assistance for road maintenance. In addition, a feeder road project is under preparation which would help expand Liberia's feeder road network in support of the Government's agricultural and rural development programs. In the power sector, a fourth power project is under preparation which would expand the Liberia Electricity Corporation's thermal power generating facilities to meet demand until a new hydro-electric generating facility has been constructed and made operational around 1985. In the social sector, three education projects have been financed by the Bank Group. The first two projects aimed at improving secondary education, education planning and management, as well as extending the educational system to rural areas through the provision of secondary schools and 45 village community schools. The third project which was approved in May 1977 emphasizes vocational and technical training, and will assist in increasing the supply of trained manpower. The Bank is plan- ning to follow this up with a manpower sector survey. PART III - THE TRANSPORT SECTOR Sector Characteristics 15. The transport infrastructure consists of about 4,900 miles of road (of which some 1,450 miles are maintained by the enclaves), three railways totalling 300 miles maintained and operated as part of the iron ore con- cessions, four sea ports and about 15 airfields. Many of the enclave roads are available for public use; they are for the most part built and maintained to a high standard. Public roads on the other hand are - with the exception of some lengths of main road near Monrovia - inadequate in standard for the increasing traffic. The number of registered vehicles increased at some 11 percent per year over the decade 1960-70 but slowed down thereafter. There are currently estimated some 21,00 motor vehicles registered for use in the country, i.e. 14 per thousand population. -6 16. At present, the major transport flows reflect the pattern of eco- nomic activity; the transport demand i8 mainly based on iron ore and timber, followed by rubber and other agricultural products, fuel and imported goods. Railroads carry some 20-25 million tons of iron ore annually to the Ports of Monrovia and Buchanan; the shallow water ports of Greenville and Harper handle mainly log export, Road transport is unevenly distributed; more than half of all road transport, the predominant mode for passengers and goods other than iron ore, is concentrated around the Monrovia region and along the Monrovia-Ganta axis. Internal air transport is negligible and commercial coastal shipping non-existent. Sector Objectives and Constraints 17. The Government's objectives for the transport sector are presented in the National Socio-Economic Plan 1976-1980. They can be summarized as follows: (i) to improve road maintenance; (ii) to improve road access to the port of Monrovia; (iii) to upgrade key primary roads and extend the secondary road system to centers of agricultural development activities; (iv) to provide most urgent feeder roads to support rural development; (v) to increase port capacity in Monrovia and Greenville; and (vi) to modernize the international airport in Monrovia. More recently, the Government has also put emphasis on improving road links with neighboring Sierra Leone, under the auspices of the Mano River Union. 18. Under the Plan, total investments in the transport sector for 1976-80 amount to about US$150 million, or 36 percent of all investments. Foreign sources are expected to contribute about US$110 million and the Government, about US$40 million. Most of the investment in the sector, about US$138 million or 92 percent, is devoted to improvement of the neglected road network. About 120 miles of road construction was underway or completed in 1977. The plan also incorporates the Government's Five-Year Road Maintenance and Development Program (1973-77), developed with Bank assistance and esti- mated to cost about US$12 million. This is being implemented with financial assistance from the Bank, the African Development Bank, USAID and the Federal Republic of Germany. One purpose of the proposed project is to provide for the continuation of this program. The Plan also includes the construction of about 270 mi of feeder roads over the four-year period (150 mi by the Bank under the Third Highway Project and the remaining 120 mi financed by USAID). 19. Port investments are made on a case-by-case basis, and a master plan for port development is needed. The Plan does not consider the railroad sub- sector which is outside Government control. Air transport plays a minor role and its treatment in the Plan seems to be adequate. 20. The concept of integrated transport planning has only recently emerged in Liberia. There is evidence of a growing desire in the Govern- ment to coordinate transport development and to relate it to the overall development strategy. Formation of a centralized transport planning capac- ity has been hampered by a shortage of qualified and experienced personnel. The Government is considering a proposal to strengthen the Bureau of Trans- portation (BT) in the Ministry of Commerce, Industry and Transport (MCIT) to coordinate all transport: planning and management. With two divisions (one for Land Transport and Civil Aviation and a new one for Ports and Maritime Affairs), BT would need to be strengthened by several experts for two to three years. The Government is presently undertaking a study financed by UNDP, for which the Bank is the executing agency, to review the legisla- tive, financial, institutional and manpower implications of strengthening the Bureau of Transportation. The Highway Subsector The Highway Transport System 21. Liberia's public road network falls far short of the country's needs both in coverage and quality. There are only 230 miles of asphalt surfaced roads of which half are in the vicinity of Monrovia and other townships. Another 1,770 miles are classified as all-weather, but passage over many of these roads is uncertain in wet weather. Some 42 percent (1,432 miles) of the public road system consists of dry-weather roads and tracks. There are, in addition, 1,444 miles of private roads built and maintained by rubber and timber concessionaires. Some of those roads are available for public use. There are currently some 21,000 motor vehicles in use in the country of which about 60 percent are private cars and taxis, 25 percent are commercial vehi- cles and 15 percent are buses. Over the last 8 years, private car use has increased; the use of buses and commercial vehicles has fluctuated but not increased significantly. There are two trends, one for the size of commercial vehicles to increase, and the other an increase in the numbers of light buses. 22. Government policy encourages the free development of the road trans- port industry. Regulations govern only vehicle licensing, registration and inspection; t-riffs for intra-city taxi services; and vehicle weights and dimensions anu axle load limits. Other passenger transport and trucking for hire are free from regulations governing routes, tariffs, or entry into the industry. Although the situation in the industry is generally satisfactory with sufficient competition among carriers, a difficulty derives from the system of regulations dividing responsibility between MCIT (for vehicle licensing) and the Ministry of Justice (for remaining regulations) which is not an optimal solution. The need for a more rational administrative organi- zation will be discussed with the Government in the course of the proposed study of the reorganization of transport sector planning and coordination (see para. 20 above). Government Organization for Highways 23. The planning and execution of construction and maintenance of all classified roads in Liberia is undertaken from MPW headquarters in Monrovia. MPW has also responsibility for public buildings. The MPW payroll exceeds 4,000 employees and there are some 50 professional engineers and 20 architects in the Ministry. The senior staff is over burdened with responsibilities -8- while the employment of consultants and contractors for major works tends to reduce the opportunities for junior staff to gain practical experience of up-to-date road building techniques necessary to fit them for higher respon- sibilities. The proposed Fourth Highway Project embodies proposals to pro- vide junior professional staff with more opportunities to gain practical experience (see para 33 below). 24. Funding for road maintenance has increased considerably over the last two years (reaching about US$6 million annually) and is now at a level which is adequate for routine and periodic maintenance with some to spare to restore earth and gravel roads to a level at which they can be kept in good order by routine maintenance. But there are weaknesses in the planning and control of road maintenance operations. The consultancy to improve road maintenance, begun under the Second Highway Project, has shown benefits in improving the execution of road maintenance. In the extension planned as part of the proposed Fourth Highway Project, the consultants will concentrate on developing capacity for planning and supervision of road maintenance at the District level. 25. The amount of machinery and the workshop facilities for road main- tenance are now approaching an adequate level and a steady stream of trained plant operators, mechanics and road foremen are beginning to emerge from the consultants training scheme and the training school at Camp Mechlin which has been built up with aid from the Federal Republic of Germany. The numbers of such trained staff still fall short of the need. The need will increase still further with the forthcoming feeder road project and other projects for building and improving rural roads being assisted by external aid agencies. A possible extension of the training facilities will be considered as a part of the forthcoming feeder road project. 26. The Planning and Programming Division (PPD) of the Ministry of Public Works started operations in 1975. Its functions include the collec- tion and analysis of data on roads and road transport, the overall planning of the development of the road system, liaison with other government departments on transport policies and on traffic regulations, and individual studies to determine economic priorities and design standards. The Division, for instance, has functioned as a focus for interministerial planning for the forthcoming feeder road project which the Bank has under consideration for possible financing. Progress of PPD has been reasonably good. A transport economist and two scholarships were provided under the Third Highway Project, and increased assistance is included in the proposed project to help MPW to develop its capacity for highway planning. Highway Standards 27. The MPW does not have its own model specifications and standards for highway design, layout and construction. They rely heavily on US model specifications, and on each major road scheme designs are evolved based largely on US specifications modified by the consultants' experience. The rolling terrain of the country means that heavy earthworks may be neces- sary to provide alignments suitable for travelling speeds of 60 miles/hour. The extra cost of such earthworks must be balanced against savings in road user costs, mainly in journey times and possibly in improved safety. It is necessary therefore to establish appropriate design speeds and associated geometric standards for each particular scheme; this is being done as part of the Third Highway Project. The Construction Industry 28. Several international contractors maintain offices in Liberia and there is a lively interest in the prospects for major highway construction. The domestic road construction industry is represented by two small firms both currently engaged in USAID highway projects. Whilst these firms have a reasonable engineering competence, they are encountering difficulties in developing a capability in estimating, work planning, and financial control. With an expanding feeder road construction program, there is both the need and the opportunity to encourage the development of a viable domestic road con- tracting industry. Capital funds to assist the domestic contracting industry are available under the Bank loan to the Liberian Bank for Development and Investment (Loan 1323-LBR) and technical assistance is being considered as a possible component for inclusion under the proposed feeder road project. Past Bank Assistance 29. The Bank has financed three road projects for Liberia. The First Highway Project (US$4.25 million, 1964, Loan 368-LBR) consisted of reconstruc- ting two roads and supplying equipment for road maintenance. One road, Kle- Pujehun (44 mi) is in fair condition with increasing amounts of maintenance required. The other, Paynesville-Robertsfield (28 mi) was completed in mid-1969 but pavement failures rapidly became evident and the road has needed continuous repair to keep it in adequate condition to carry the increasing traffic. These failures derived from a weakening of the road base by the entry of surface water. This experience - a frequent one in the early days of bituminous road construction in all African countries - has provided a useful lesson on the care needed in selecting materials and in supervising the construction of such roads. The Second Highway Project (US$5.6 million, 1973, Loan 907/Credit 395-LBR) included technical assistance to improve road main- tenance and to review the domestic construction industry and the detailed engineering for U.N. Drive (5.4 mi) in Monrovia, the Totota-Ganta road (83 mi), the Paynesville-Robertsfield (28 mi) and Paynesville-Totota (71 mi) road. The project also included the construction of the Monrovia bypass. All the project components have been satisfactorily completed with a small cost overrun. The Third Highway Project (US$27.5 million, 1975, Loan 1156-LBR) began in August 1975 and is scheduled for completion at the end of 1979. Under this project, UN Drive in Monrovia and the Totota-Ganta road are being reconstructed and the Mesurado River bridge is being constructed in Monrovia. The project also provides technical assistance for the Planning and Program- ming Division of MPW and consultant services for feasibility studies on extension of the main road system from Ganta to Sanniquellie and Tapeta (90 mi) and a study of urban development in Monrovia. Also, a feeder road unit financed under the project is operating in Lofa County in support of the Bank-financed agricultural development project, which is being implemented successfully. - 10 - PART IV - THE PROJECT 30. The proposed project was identified by the Government and the Bank. Engineering studies for the construction work proposed under the project were undertaken by consultants Davies (Sierra Leone) financed under the Second Highway Project (Loan 907/Credit 395-LBR). The Government requested Bank Group assistance in financing the proposed project, which was appraised in June/July 1977. A report entitled, "Liberia: Fourth Highway Project," No. 1827-LBR dated May 4, 1978, is being circulated separately to the Executive Directors. Negotiations took place in Washington April 19-24, 1978. The Liberian negotiating team was led by Mrs. E. Johnson-Sirleaf, Deputy Minister, Fiscal and Banking Affairs, Ministry of Finance. Project Objectives 31. There are three principal objectives in the proposed Fourth Highway Project: (a) to continue to develop the main highway system of Liberia; (b) to continue to develop local capacity to plan and execute highway maintenance with increasing emphasis on management; and (c) to improve capacity of the Government for highway planning. Project Description 32. The project contains the following components: (a) Reconstruction and improvement of the Paynesville- Totota road (71 mi) and the Paynesville-Robertsfield road (28 mi); (b) Detailed engineering of the Ganta-Sanniquellie road (25 mi) and the Ganta-Tapeta road (65 mi); (c) Feasibility study of the Gbarnga-Voinjama-Kolahun road (152 mi); (d) Consultancy services for the planning and execution of road maintenance; (e) Technical assistance in highway planning to the Planning and Programming Division of MPW. - 11 - Construction - 33. The Paynesville-Totota road forms the first link of the main road from Monrovia traversing the country and connecting to the agricultural devel- opment areas in the north. The road was originally constructed in the early 1960s. There are some sections on which the pavement has failed and where reconstruction of the pavement will be necessary. But, over most of the length, pavement damage is as yet not widespread. Over these lengths, the existing pavement will be strengthened so that it continues to give good ser- vice for many years. A deflection survey proposed by the Bank was carried out between December 1977 and February 1978 to provide the evidence neces- sary to determine which sections need complete reconstruction and to plan a strengthening program for the remainder. There is as yet little experience in Liberia in the techniques of maintaining and strengthening asphalt surfaced roads. This component of the project provides the opportunity to introduce these techniques. The wcrk is to be done by contract and arrangements are to be made for Liberian engineers to be employed by the contractor so that they may acquire experience of using these techniques (draft Loan Agreement, Section 3.03). 34. The Paynesville-Robertsfield road connects Monrovia with the main international airport at Robertsfield and the area beyond Robertsfield. Faults in initial construction have required continuous efforts to keep the road in serviceable condition (see para 29 above). The deflection survey has shown that some 70% of the pavement will have to be reconstructed and the remainder can be restored by local repairs and strengthening. Detailed Engineering 35. Detailed engineering of the Ganta-Sanniquellie road and the Ganta- Tapeta road is conditional on the results of feasibility studies now in progress as part of the Third Highway Project (Loan 1156-LBR). Accordingly, a condition of disbursement of the proposed loan proceeds with respect to this component would be that the results of the feasibility studies have been reviewed and found satisfactory by the Bank (draft Loan Agreement, Schedule 1, para 4). Feasibility Study 36. The project includes a feasibility study for the.improvement of the Gbarnga-Voinjama-Kolahun road (152 miles). This main road connects the devel- oping areas of Lofa Count'y with the main road from Ganta to Monrovia. The feasibility study will be carried out in two stages - a-prefeasibility study to indicate the likely g,rowth of traffic and preliminary cost estimate, fol- lowed by detailed feasibility studies on selected road sections to indicate appropriate standards andl timing for improvement. - 12 - Road Maintenance 37. The consultants services for road maintenance constitute an exten- sion of the consultancy financed in the Second Highway Project (Loan 907/ Credit 395-LBR). Good progress has been made during the initial consultancy in the physical operations of maintaining earth and gravel roads. But it has proved difficult to introduce improved methods of planning and organizing road maintenance particularly at local level. The extension of the consul- tancy incorporates revised terms of reference which require the consultant to establish teams at three regional centers in order that they can have a greater impact of the management of road maintenance at local level. The project provides a total of about 35 man-years of consultancy services for road maintenance. It was agreed during negotiations that the Government would continue to allocate funds in the 1980-82 budgets adequate to meet the costs of routine and periodic maintenance of roads as required under its annual road maintenance programs and that it would review annually with the Bank the progress in carrying out the road maintenance programs (draft Loan Agreement, Section 4.05). Technical Assistance 38. Transport planning in Liberia has been limited so far to responses on an ad hoc basis to immediate and obvious transport needs. As the country moves into a phase of planned economic development the need is becoming appa- rent to plan the development of the transport system so that it keeps pace with development of other sectors. The need for more effective planning appeared first in the MPW and the proposed project makes provision for extending the technical aid to the Planning and Programming Division of MPW started under the Third Highway Project by a further 4 man-years. Project Cost and Financing 39. Total project costs are estimated to be US$28.8 million net of taxes and include 10% physical contingency and price contingencies varying from 7 to 9% per annum. Foreign costs are estimated to be US$21.2 million (74% of the total). The proposed Bank loan of US$13.8 million would finance the foreign costs of the reconstruction and improvement the Paynesville-Totota Road, the consultancy services for road maintenance, the detailed engineering study, feasibility study and technical assistance. The remaining foreign costs of US$7.4 million will be provided as parallel financing by the Kuwait Fund for the reconstruction and improvement of the Paynesville-Robertsfield road. The Government would finance the local cost of the project, estimated at US$7.6 million. In order to ensure continuity in consulting services for road main- tenance, it was agreed to provide retroactive financing of up to US$200,000 incurred after July 1, 1978 for road maintenance consulting services. - 13 - Implementation 40. The Ministry of Public Works will have responsibility for project execution. Project execution is expected to start in July 1978 and to be completed by July 1982. Construction works on both Paynesville-Totota and Paynesville-Robertsfield roads will be supervised by an international con- sulting firm, Davies, which was responsible for the detailed engineering. Procurement 41. Contractors for the reconstruction and improvement of the Paynesville-Totota road would be prequalified and the contract would be awarded on the basis of international competitive bidding in accordance with Bank guidelines. The employment of consultants provided under the project would be in accordance with normal Bank procedures. The average cost of consultants is estimated at T7sno,500 per man-inuntlh. The contract for the reconstruction and improvement of the Paynesville-Robertsfield road would be awarded on the basis of international competitive bidding in accordance with procedures satisfactory to the Kuwait Fund. Disbursements 42. Disbursements will be distributed as follows: (a) 72% of the cost of the civil works on the Playnesville-Totota road, totalling US$7.73 million; (b) 100% of foreign expenditure on consultant services for supervision of the civil works under (a) above, totalling US$0.7 million; (c) 100% of foreign expenditure on detailed engineering of the Ganta-Sanniquellie and Ganta- Tappeta roads, totalling US$0.38 million; (d) 100% of foreign expenditure on feasibility study on the Gharnga-Voinjama-Kolahun road, totalling US$0.47 million; (e) 100% of foreign expenditure on consultancy services for the road maintenance program, totalling US$2.4 million; (f) 100% of foreign expenditure for the technical assistance to MPW totalling US$0.23 million. An unallocated amount of US$1.89 million has been provided. Economic Evaluation and Benefits 43. The proposed project represents a balance between capital invest- ment aimed at direct improvement of the transport infrastructure and technical assistance aimed at improving the proficiency of local institutions related to the transport sector. The economic justification for the Paynesville- Totota road is based on savings in avoiding reconstruction costs, in vehicle operating costs and in road maintenance; for the Paynesville-Robertsfield road, the justification is based on savings in vehicle operating costs and road maintenance. The economic rate of return is estimated to be 20% for the Paynesville-Totota road, the cost of which is about US$11.5 million; and 22% for the Paynesville-Robertsfield road, the cost of which is about US$8.4 million. The weighted average economic rate of return on these components, which account for 82% of total project costs, is 21%. The sensitivity analysis shows that the returns remain well above 10-12%, the estimated opportunity cost of capita:L in Liberia, even if costs increase by 20% or benefits decrease by 20%. - 14 - 44. Paynesville-Totota is a section of the Monrovia-Ganta road, the backbone of the country's road network. The remaining section of this road from Totota to Ganta is being reconstructed under the Third Highway Project. This road provides the link from Monrovia, the capital city and principal port, to regions in the northwest and southeast; it also connects with the Ganta-Harper road in the east and is the only direct route to Guinea and Ivory Coast. The main traffic-generating activities in the areas directly served by the road through feeder roads are cash crop cultivation, rubber production and exploitation of timber resources. The project road traverses two populated counties (Montserrado and Bong) with increasing agricultural activity. There are about 90,000 acres cultivated in the hinterland of Paynesville-Totota roaa. Major crops are rice, 17,000 t; cassava 10,000 t; and sugar cane 14,000 t. 45. The Paynesville-Robertsfield road is an important stretch of the only coastal road providing the link between Monrovia and Buchanan, an impor- tant port and the second largest town in the country. The road also connects the country's main international airport with the capital. The main traffic- generating activities in the road zone are rubber plantations and the airport traffic. There are about 80,000 acres cultivated in the hinterland of Paynesville-Robertsfield road. The major crop is rubber, about 36,000 t/p.a. In addition, some 10,000 t of sugar cane and about 5,000 t of cassava and rice each are produced annually in the road vicinity. The production volume of other crops is marginal. 46. It is expected that, in the first round of distribution, the major beneficiaries of transport cost reductions will be the local truck owners and operators. The cost reductions will later be passed on to the farmers in the zone of road influence in the form of higher farmgate prices due to lower transport costs or slower increases in transport costs because of the competitive situation in the road transport industry. Consumers are also expected to benefit directly from reduced vehicle operating costs. Some benefits are expected to be passed on to passengers since there is competition in inter-urban passenger transport. The project is also expected to produce general benefits to other sectors, such as promoting an increase in agricul- tural production (in the roads' zone) and to the economy as a whole by improving part of the most important main road in the country. It is not feasible, however, to estimate quantitatively how the project benefits would diffuse to the Government, among the population and to different economic sectors. 47. The other elements of the project (consulting services for road main- tenance and technical assistance to MPW) were not included in the calculation of the economic rate of return. They are mostly an extension of technical assistance: (i) in the maintenance program of the Second Highway Project which has a 30% rate of return and (ii) in the Planning and Programming Division (MPW) which is geared to strengthen the Government organization in the transport sector, increase its efficiency and enable it to prepare future projects. - 15 - Risks 48. There are no major risks which may jeopardize the implementation of the project or the achievement of its objectives. PART V - LEGAL INSTRUMENTS AND AUTHORITY 49. The draft Loan Agreement between the Republic of Liberia and the Bank, and the Report of the Committee provided for in Article III, Section 4(iii) of the Articles of.Agreement, are being distributed separately to the Executive Directors. 50. Special conditions of the project are listed in Section III of Annex III of this Report. A special condition of effectiveness of the Loan Agreement would be that the Government and the Kuwait Fund have signed a loan agreement with respect to the reconstruction of the Paynesville-Robertsfield road. A condition of disBursement with respect to the detailed engineering work would be that the feasibility studies have been reviewed and found satisfactory by the Bank. 51. I am satisfied that the proposed loan would comply with the Articles of Agreement: of the Bank. PART VI - RECOMMENDATION 52. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President by J. Burke Knapp Attachments May 5, 1978 TABLE 3A ANNEX I LIBERIA - SOCIAL INDICATORS DATA SHEET Page 1 of 4 pages LAND AREA (THOU KM2) ------------------------------------------------ -------------- ~LIBERIA REFERENCE COUNTRIES (1970) TOTAL 111.4 MOST RECENT AGRIC. 6.2 1960 1970 ESTIMATE GHANA IVORY COAST JAMAICA** GNP PER CAPITA (US$) 170.0* 280.0* 4WYW0r- 430.0* 35b.o* 67D.0* POPULATION AND VITAL STATISTICS ____________ _____ _____ _____ POPULATION (MID-YR, MILLION) 1.0 1.3 1.6/a 8.6 5.4 1.9 POPULATION DENSITY PER SQUARE KM. 9.0 12.0 14.0/a 36.0 16.0 170.0 PER SO. KM. AGRICULTURAL LAND 163.0 217.0 258.01a 64.0 32.0 384.0 VITAL STATISTICS CRUDE BIRTH RATE (/THOU, AV) 44.4 42.8 43.6 49.8 46.1 38.5 CRUDE DEATH L-TE (/THOU,AV) 27.9 23.5 20.7 24.4 23.3 B.6 INFANT MORTALITY RATE (/THOU) .. 137,3 159.0/b 156.0 . 32.2 LIFE EXPECTANCY AT BIRTH (YRS) 36.5 41.0 43.5 41.5 41.0 67.8 GROSS REPRODUCTION RATE 2 3.6 2.7 3.2 3.1 2.7 POPULPTLON GROWTH RATE (%) TOTAL 3.3 3.3A* 33*** 2.6 3.4*** 1.4/a URBAN *- . 8.6/c 4.5 a7/.a 6.2 URBAN POPULATION (1 OF TOTAL) .- 26.2 27.6/b 28.4 28.0 37.1 AGE STRUCTURE (PERCENT) 0 TO 14 YEARS 37 2 a 40.7 41.6 46.9 42.5 4S.9 15 TO 64 YEARS 58.8:a1 56.0 55.0 49.5 54.8 50.4 65 YEARS AND OVER 4.0 ja 3.3 3.4 3.6 2.7 3.7 AGE DEPENDENCY RATIO 0.711 0.9 0.8 1.0 0.8 1.0 ECONOMIC DEPENDENCY RATIO 1.0/b 1.0/a 1.1/a 1.4 o. s/b 1.7 FAMILY PLANNING ACCEPTORS (CUMULATIVE, THOU) .. .. .. 10.9 . 49.8 USERS (% OF MARRIED WOMEN) .. .. . 2.0 EMPLOYMENT TOTAL LABOR FORCE (THOUSAND) 410.0 580.0 650.Oj 3300.0 2600.0 6oo.o/b LABOR FORCE IN AGRICULTURE (%) 81.0 72.0 .. 54.0/a 82.0 33.0 UNEMPLOYED (% OF LABOR FORCE) *- 20.0/b * 6.2 .. 17.5/b INCOME DISTRIBUTION X OF PRIVArE INCOME RECOD BY- HIGHEST 5% OF HOUSEHOLDS . 617/C .7 HIGHEST 20% OF HOUSEHOLDS .. 72.67? .. LOWEST 20% OF HOUSEHOLDS .. 5.37 ... LOWEST 40% OF HOUSEHOLDS 10.s7 .. .. . DISTRIBUTION OF LAND OWNERSHIP ______________________________ X OWNED BY TOP 10% OF OWNERS .. . . * . X OWNED BY SMALLEST 10% OWNERS .. .. .. . . HEALTH AND NUTRITION POPULATION PER PHYSICIAN 12000.0/C 11590.0 11000.0 12950.o/b 15320.0 2630.0 POPULATION PER NUR.ING PERSON 5710.0 7 4590.0 2640.0 1070.01W 2830.0/c 1710.0 POPULATION PER HOSPITAL BED 730.0 580.0 . 760.C 1150.0 240.0 PER CAPITA SUPPLY OF - CALORIES (% OF REQUIREMENTS) 86.0 84.0 87.0 96.0 108.0 103.0 PROTEIN (GRAMS PER DAY) 36.0 36.0 39.0/e 46.0 60.0 56.0 -OF WHICH ANIMAL AND PULSE .. iO.0/d .. 1O.0/c 18.0/d 29. 0C DEATH RATE (/THOU) AGES 1-4 29.0ta 18.2 21.0 . . 4.2 EDUCATION ADJUSTED ENROLLMENT RATIO PRIMARY SCHOOL 31.0 53.0 59.0/f 61.0 76.0 106.0 SECONDARY SCHOOL 2.o 9.0 11.0/f 11.0 11.0 30.0 YEARS OF SCHOOLING PROVIDED (FIRST AND SECOND LEVEL) 12.0 12.0 12.0 15.0 13.0 12.0 VOCATIONAL ENROLLMENt (X OF SECONDARY) 12.0 8.4 6.2/f 23.0 7.0 5.0 ADULT LITERACY RATE (x) 9S0/a 15.0 .. 25.0 20.0 82.0 HOUSING PERSONS PL, ROOM (UR3AN) 1./a/d OCCUPIED DWELLINGS WITHOUT PIPED WATER (5 . . ..... 78. 0/d ACCESS TO ELECTRICITY (X OF ALL DWELLINGS) 27.0 RURAL DWELLINGS CONNECTED TO ELECTRICITY (x) . . - . *- CONSUMPTION RADIO RECEIVERS (PER THOU POP) 77.0 132.0 156.0 78.0 * 376.o PASSENGER CARS (PER rHOU Pop) 1.0 11.0 8.0 5.0 10.0 39.0 ELECTRICITY (KWH/YR PER CAP) 101 , 330.0 509.0 338.0 95.0 825.0 NEWSPRINT (KG/YR PER CAP) 825 0.1 .. o 4 0.2 --- - ---S------------------------------------------------- - - --------- - ---F-------- - --V- - -E------ ---- sEE NOtES AND DEFINITIONS ON REVERSE ANNEX I Page 2 of 4 pages NOTES Unless oth-ruis noted, date for 1960 refer to any year between 1959 and t961, for 1970 beren 1968 end 1970, and for Most Recent Estirare becteen 1973 and 1975. * GNP pcr c-pita data are based on the World Bank Atlas methodology (1974-76 basis). ^* Jamaic. has been selected as an objective country since its GNP per capit is between two and three ti-ne that of Liberia in 1970, ite economic structure dopenda heavily on the mining sector; both to.ntrios are encouraging foreign investments, and Liberia's employment policy objective is o rcech the current level of J- mica' anpower training. *D. Ion to insigration popslatton growth rate is higher than rate of natural inoresse. LIBERIA 1960 /a 1962; /b Ratio of popolation under 15 and 65 and over to total labor force; /c 1964; /d 1956, city of Monrovis only. 1970 /a Retdo of populstion under 15 and 65 and over to total labor force; /b Unemployed and partially enployed; Ic Population, 1975 Bank Ocono-it Report. Higher incom,e tabculated an rsidual; inclodes e.patriatna; Id 1964-66. MOlT RECENT ESTIMATE: /a 1976; /b 1971; Ic 1970-71; /d Ratio of popuistion onder 15 and 65 and over to total labor force; /I 1969-72 averge; If 1972; LT 1975 ILO projection. GhANA 1970 /a E-cioding une-ployed; /b Registered, not a11 practicing in the country; /n 1966-68. IVORY COASIT 1970 Is 1965-70; lb Ratio of popolation under 15 and 65 and over to total labor force; /c Goverment. p.rnonnel colV incloding nidwivee; /d 1964-66. JAMAIlCA 1970 Ia Due to emigration population growth rate is lower than rate natural increase; /b late based on official definition uhich inclodes thoe tilliog to work bht not *ctivily seeking employent; /c 1964-66; /d Inside only. R9, Decenber 7, 1977 DfIN7TIONS OF SOCIL INDICATORS (Ponulat,o ear oureiej person - Popolation divided by tweber of pr-cticing Total - Total outface aroe comprising land area emd inland maele and f.es graduate nurss, "trained" or "certifIed" e and Agri.. - Mo.t rece- t satst of sgriooltural ersa ued teeporarlly or ps,ome- etfilfry pereosn-l with trining or enperience. nently for crops, pastures, earket & kitchen gardens or to lie fello. Poeplatiam ear hoasirtl bed - Popoletion divided by nnver of hospital beds aSttleblo in psblio and pri-ste genar I and speciaItted hospital s-d BlP tsr canits fill - Imp per capita adti at at current market prices * rehabiliration neetrs; 1enlodes oruriog homa and establihalnt- for tabulated by same coo- vrsio- method as World Bash Atlas (1973-75 basis); cnstodial ed pravencive cars 1960; 1970 and 1975 dt. Par cpdita surlyr of calories f2 of rer ir_ntal - ieputed from energy aquivaeet of s t food aupplia available in country per capit per day; populetios and vit-l tateistlo: available supplies canpri-e ddetic prodootion, tiporta lass aeporta, and Pesoulttio (Old-veer millionl -uAs of July fiet: if ot ailable, averag changa in stock; net supplies -clude nbial feed, seed qutitisauced of two and-year escinstest; ih60, 1970 and 1975 data, in food process i. g and losses in dietribhtion; requir-mns ars estimated by FAO based on physiolosical needs for norel ectivity atd hlth con id- (ult hiondeniy - r square ko - Kid-year popul-tion per aqara kiloastar stng eovirnntal teprature, body weights, age and as distribution- of etares) of total are. popIfetion, emd allowing Iv2 for wste t houehold level Poeclatbon denuicy - per enuere knn of aeri. land - Computed as sbove for Per capita eunly of Dre teim fare e tr datl - Protein coh nte of par c-pita sgclcultoral land only. met supply of food per day; set supply of food is defiiad as above; require- mtent for n11 countries satabliahad by 1SD8 Economic Rea-.ch Sarvi--t Vital -tetinticc provide for a mimi- a1llowace of 60 gr of total protdin per day, and fnds bhirth rate pe r thomaad,_ eraar - Annul live birth. per thoDsead of 20 gra of animal and poles protein, of whith 10 gr should be anil mid-year populetolo; coo-year ritl_tic avrages ending in 1960 end 1970, protei; times standards are I-r than those of 71 gr_s of toabl prtein and ftye-year nerage ending in 1975 for meat recent estite and 23 gre of aenI protein as s verage for the wend, prepased by Frt erode deth rate net thousad average - Annnal deatha per thoeaed of eid-yer in th. Third Wurld Pond Survey. population; ten-year aritiosatic averegas ending io 1960 end 1970 and fins- Per centr protein apply frnu animal aed p lse - Protein aPpply of fond year average ending In 1971 for meat retent estimte. d from animals and pless Sn gr. par day. Inf nt nortelity reta 1/thoul - Anonel desthe of iofsnts under one year of age Death rate (/thoo) ages 1-4 - Annual deaths per thoosnd in age group 1-4 per thousand live hircha. eyers, to children in this age group; sgea-ted as an indicator of Lifexp eoccanoy at birth (yr.) - Av-rage nbr of year of life r-sini an malutrition hirth; cautlly fine-year averages ending in 1960, 1970 and 1975 for dalop. t lie countrie E gdu ntioa lIne reproduction rate - verage nomber of live daughters a wOIIIll bear dueaL mat ratio - erimary school - BnrolLet of all age as per- ln hat normol roproductive period if she emperiesnoa present aga-ep-cifio cancegs of prirY sohool-g poulatiam; mooluda hildra aged 6-11 yara fertility rains; uaully five-year avarage ending in 1960, 1970 and 1975 but adjuted for differ nt lahgtg of primary education; for douetri1ea ith for developing countries. universal edCcadi.n, *nrolltmet a y emceed 110% since o pupils are below Pe>pulotion eroeth rats (7l - total - Compoaned annual growth vcee Of mid-year or above th offioel school ge. population for 1950-60, 1960-70 and 1970-75. Adlustd nrellant ratio - asendary school - Computed as ebowa; scondary Poeatiom acow7th rate (%) - urhs - computed like geC tth reI of total rducatien r qur1s a t lost four years of approad primary ia truc diom; population; different dafinitioms of urban rea -my aff-ct coparsbiliry of provides generel, votetion,l or tacher training piarurio t for pupils data ong co,rie. of 12 to 17 yrs of .; torrspPodane courses a gemaally scluded. frbee pupuleien (7. of tot-l) - Ratio of urban to total populatioe; differant Yara of *chollin proyidad ffirc and acond lansle - Total yer of dafitions of urban are-a m y affect c...p rbiliry of date aoS countris schooling; at scondary level, nonetienal inseruotmon may ha partially or cosplta ly bseluded. CAi; stuture (65en -Chlrn 0liyas) tvkin-sg (15-64 years), Vocaionlsrlmn to madel- oab lisiuin nld end retired (65 yssrn and ovr) as prc-taes of id-year pupulatV tehn i ind oh p whih op o intition i o d Ag dpndnye lo - Retio of population unde 15 and 65 atd ovr to those deparmens iolse ondry intitupnn hmhaP..id.an.lyD of abee 15 tbrough 64. Adult literacy ra te 1%) - Lterate adults fable to read and write) a p- hEconomic . diad nc r e ti - Eeri ofppltI ndrI n ed ovrto cecg ftlautPopultion aged 15 Yeace and aver. F_oilv elannino - aooncore fc,alativez 06001 - Cuoul-tive comber of acceptors Noosing of bircb-control devices under a.-pi-s of national family planning Progrm Persona e r roam forhas) - doerse nober of paraone par ream in occupied sneicPtIon. conventioo dellea n r asrbsines;b dwIng s.-ot lod oon-epman__en foully Dlan-ing - u ers f of m-rried women) - Percentages of married women f tructures and unooD--pid parts. rhild-rearing age (15-44 years) who use birth-onutrol device- to a11 mrried 9cutued dwelling without plead water it) - Ocoopied cnosetiomal dwellings women in seme s:e group. in urhec and nrel areas ithout macga or outside piped eater Eecibpciee R ELn - nt *-as persetcage of a11 o-cupied d_llmig. foeIho freg fouand) - coaicoly active Persoe, Secluding asmdelcritiniigqorrasprenofoalwligenubnad forces end unemployed but encluding hounavives, etodente ' , Winiti,ot In c icit ,i t of tec;d defintion rua a r it various countries are not coparable. rural -a Laborf rceIs a -iclture (1 Agiutural labor force (in far_ieg, furescty, dwelinga only.%- -Pt. a aov fr - hooting and fishing) s percentage of toCtl labor force. unployed f of labor foonel - Onemployed are us lly defined as perso w_ ho Ch.,Rpcion 7arc ableo end wlting to cake a job,out of at jncob ona givn day, ra n intd) ot Ra-di r ei-ra (Par thou h eop - All typma of receivers for radio brnd-tas of a joby 5, aod aesheg 0w7rb pfor a specified 07in, period sote r ecdig see0to t general publig par tiamad of pepelati_m; e_nldes odsli rer s weeb; may notbe comparableimiweem coustInadst dioffaeI afniimai voIcn s ani years whine registration of radio eats was is ffert; of unemployed nd source ef dta, e.g., empoyment office stettios, .-Pl. data for recen years may not be conPershle since moat cnetries abolished P fsabdearnars (fe r tho op) - Peennlgcr ca- omnprise mter care seating d a isrbuclioh -57 Perenag of% prvt noe b ncs edbn)ls tha sight proa eldsablne hearses and silitary retend. byrcet5,rcetSi,poorest 2Ot, end pooresc 4ot of hone- vehicle.. holds. t~~~~~~~~~~~~~~~~~l,actritirp fkahlrr_ea nap - hAnos' rameomption of industrial, masertial, Di:.tdrlb ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~pbit n private al1ntrininy In kit-atn hours par capita, generally Disribtio fln wesi P...eeteges of lend -snd by wealthiest 10% hand on predutien data, cithost alamemee for losses in grids but oln-- end punrsr lIt of lad ownrs io far i port and oeats f electricity. D 64th nd Nutrition Nv_nerint f Phe/tr pr ca t - Per capita 'Ynsal conuaption is kilegra Ponultion per physicia - Populetion dividnd by .sober of practicing prod--tioplu- n ti phyaftana qualified fram a. mdical -hohl at oniverity level ANNEX I Page 3 of 4 pages COUNTRY DATA - LIBERIA GROSS NATIONAL PRODUCT IN 1975 ANNUAL RATE OF GROW1!H (%, constant 19/1 prices) US$ Mln. S- 1967 -70 197c -74 1975 GNP at Market Prices 662.8 100.0 7.0 6.3 -4.3 Gross Domestic Investment 192.0 29.0 0.2 2.5 27.9 Gross National Saving 97.0 14.6 21.5 17.2 -52.4 Current Account Balance -95.0 14.4 Exports of Goods, NFS 403.7 60.9 9.7 2.2 -30.5 Imports of Goods, NFS 354.9 53.5 3.6 -2.6 3.5 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1975 Value Added Labor Force-/ V. A. Per Worker US$ MIn. , Mln. % ZA ,% Agriculture 196.6 25.0 0.470 79.0 418.3 31.6 Industry 2/ 349.1 44.3 0.018 3.0 19,394.4 1,465.2 Services 241.7 30.7 0.023 4.9 3,098.7 234.1 Unallocated . . 0.078 13.1 Total/Average 787.4 wi o.595 10.0 1,323.4 100.0 GOVERN IENT FINANCE General Government Central Government 3=n T)o ( GISS Mln.) % of GDP 197 197 196 -7 1975 1975 1970- 74 Current Receipts .. .. .. 125.3 15.9 17.4 Current Expenditure 78.1 9.9 12.1 Current Surplus .. .. .. 7.1 9. . Capital Expenditures .. .. .. 29.5 3.7 2.9 Erxternal Assistance (net) .. .. .. 12.5 1.6 1.0 MONEY, CREDIT and PRICES 1972 -1973 1974 1975 Tilion $ outstanding end periodT- Money and Quasi Money Bank credit to Public Sector 17.5 9.1 4.8 4.0 Bank Credit to Private Sector 47.4 54.2 71.8 76.8 (Percentages or Index Numbers) Money and Quasi Money as % of GDP General Price Index (1963 - 100) 3/ 131.0 156.0 187.0 212.5 Annual percentage changes ins General Price Index 3.9 19.5 19.5 13.5 Bank credit to Public Sector .. -48.0 -47.3 -16.7 Bank credit to Private Sector .. 14.3 32.5 7.0 NOTEs All conversions to dollars in this table are at the average exchange rate prevailing during the period covered. 1/ Total labor force; unemployed are allocated to sector of their normal occupation. "Unallocated" consists mainly of unemployed workers seeking their first job. 2/ Over 80% is accounted for by iron ore 3/ Consumer Price Index (Sept.Nov.1964 = 100) .. not available not applicable ANNEX I Page 4 of 4 pages COUNTRY DATA 4 LIBERIA BALANCE OF PAYMENTS 1/ MERCHANDISE EXPORTS (AVERAGE 1973-75) 1974 1975 1976 US $ Mln % (Millions US $) Exports of Goods, NFS 407.2 403.7 467.0 Iron Ore 250.8 67.3 Imports of Goods, NFS -316.1 -354.9 -423.2 Rubber 51.2 13.7 Resource Gap (deficit = -) 91.1 48.8 43.8 Diamonds 32.5 8.7 Logs and Lumber 15.7 4.2 Interest Payments (net) - 4.3 - 4.9 - 5.0 Coffee 4.5 1.2 Workers' Remittances 22.0 - 24.5 - 25.0 Cocoa 3.5 0.9 Other Factor Payments (net) -120.0 -145.0 -140.0 Net Transfers 24.8 30.6 32.9 All other Commodities 14.4 4.0 Balance on Current Account - 30.4 - 95.0 - 93.3 Total 372.8 100.0 Direct Foreign Investment 45.0 20.4 20.0 EXTERNAL DEBT. DECEMBER 31, 1976 Net MLT Borrowing - 12.3 1.7 27.0 Disbursements 5.1 18.0 45.0 US $ Mln Amortization - 17.4 - 16.3 - 18.0 Subtotal 32.7 22.1 47.0 Public Debt, Incl. guaranteed 199.1 Capital Grants .. .. .. Non-Guaranteed Private Debt --- Other Capital (net) - 1.0 - 0.5 ,. Total outstanding & Disbursed 199.1 Other Items n.e.i .. *- *- 2/ Increase in Reserves (+) - 1.2 - 73.4 - 46.3 DEBT SERVICE RATIO for 1976 - Gross Reserves (end year) . . . % Net Reserves (end year) Public Debt, Incl. guaranteed 4.3 Fuel and Related Materials Non-Guaranteed Private Debt Imports 56.4 48.3 .. Total outstanding & Disbursed 4.3 of which: Petroleum 53.2 44.4 Exports - - - IBRD/IDA LENDING, (December 31, 1976) (Million US $): of which: Petroleum - - IBRD IDA RATE OF EXCHANGE Outstanding & Disbursed 28.8 6.5 Undisbursed 37.6 10.5 Through - 1971 Since - 1971 Outstanding Incl. Undisbursed 66.4 17.0 US $ 1.00 = 1.00 US $ 1.00 = 1.00 1.00 = US $ 1.00 = US $ 1/ Preliminary estimate 2/ Ratio of Debt Service to Exports of Goods and Non-Factor Services. May 1, 1978 not available not applicable ANNEX II Page 1 of 6 pages THE STATUS OF BANK GROUP OPERATIONS IN LIBERIA A. STATEMENT OF BANK LOAINS AND IDA CREDITS (as of March 31, 1978) Loan or Credit Amount (US$ million) Number Year Borrower Purpose Bank IDA- Undisbursed Seven Loans and one Credit fully disbursed 23.9 2.6 305 1972 Republic of Lib. Education 7.2 1.6 306 1972 Republic of Lib. Agriculture 1.2 0.1 907 1973 Republic of Lib. Roads 3.0 0.2 1055 1974 Liberian Bank for Development Development and Finance Investment 4.0 0.3 577 1975 Republic of Lib. Agriculture 6.0 5.0 1150 1975 Liberia Electri- city Corporation Power 1.8 1.0 1156 1975 Republic of Lib. Roads 27.5 16.2 1323 1976 Liberian Bank for Development Development and Finance Investment 7.0 6.7 1266-T 1976 Republic of Lib. Education 4.0 2.9 1417 1977 Republic of Lib. Education 6.3 5.9 700 1977 Republic of Lib. Agriculture - 7.0 7.0 786 2/ 1978 Republic of Lib. Rubber Development 6.0 6.0 1544 2/ 1978 Republic of Lib. Rubber Development 7.0 7.0 Total 84.5 30.0 59.9 of which has been repaid 6.6 - Total now outstanding 77.9 30.0 Amount sold 0.4 of which repaid 0.3 0.1 Total held by Bank and IDA 77.8 30.0 Total undisbursed 40.2 19.7 59.9 1/ Prior to exchange adjustments. 2/ Not effective. ANNEX II Page 2 of 6 pages B. STATEMENT OF IFC INVESTMENTS (as of March 31, 1978) Fiscal Amount in US$ Million Year Obligor Type of Business Loan Equity Total 1966 Liberian Bank for Development Finance 0.250 0.250 Development and Company Investment 1977 Liberian Bank for Development 0.306 0.306 Development and Finance Company Investment Less Sold 0.001 0.001 Now Held 0.555 0.555 ANNEX II Page 3 of 6 pages C. PROJECTS IN EXECUTION Credit No. 305-LBR First Education Project: US$7.2 Million Credit of May 17, 1972; Effective Date: December 18, 1972; Closing Date: December 31, 1979 After initial delays in awarding civil works contracts, project implementation has progressed on schedule, and most of the project facilities are in operation. The education, manpower, and university planning components have been completed satisfactorily. The credit closing date has been extended to December 31, 1979 to allow for full disbursement of technical assistance funds. There will be a small cost overrun that will be met by Government. Project management has been good. Loan No. 1266T-LBR Second Education Project: US$4.0 Million Third Window Loan of June 7, 1976; Effective Date: July 8, 1976; Closing Date: October 31, 1980 Project implementation is proceeding satisfactorily. Most of the project technical assistance personnel are in post and candidates for fellow- ships have been identified. Equipment lists are being prepared and furniture and vehicles are being purchased. Construction of 29 of the 100 community school units is underway. There has been some delay in construction due to shortages of materials and an unusually long rainy season but the project is expected to be completed on schedule and within the appraisal estimates. Implementation has benefited from good project management. Loan No. 1417-LBR Third Education Project: US$6.3 Million Loan of May 26, 1977; Effective Date: July 13, 1977; Closing Date: December 31, 1981 The Division of Educational Facilities has been established and has been doing design work on project and non-project schools. Designs for the science and technology centers and Forestry Training Institute have recently been completed, about six months behind schedule due to site acquisition delays. Institutional aspects of project implementation, such as identifica- tion of fellowship candidates and plans for operation of the vocational training center, are proceseding satisfactorily. Project management has been good. ANNEX II Page 4 of 6 pages Credit No. 306-LBR Agricultural Development and Technical Assistance Project: US$1.2 million Credit of May 17, 1972; Effective Date: December 8, 1972; Closing Date: June 30, 1978 Implementation of the project suffered during the early stages due to financial, administrative and managerial problems but the situation gradually improved and all project objectives, except for the Pilot Rubber Scheme, were achieved. The replanted acreage under the Pilot Rubber Scheme is about 35 percent below appraisal estimates but the Scheme will be incor- porated into the Rubber Development Project. The rice research program has made good progress and will be continued under the Bong County Agricultural Development Project. Credit No. 577-LBR Agricultural Development (Lofa) Project: US$6 million Credit of August 1, 1975; Effective Date: May 26, 1976; Closing Date: December 31, 1981 The project is in its second year of implementation (the Credit became effective in May 1976, but key technical and managerial staff did not reach full strength until September-October 1976) and progress to date has been satisfactory. During the first cropping season, 75 ha of swamp rice, 76 ha of upland rice, 110 ha of coffee and 35 ha of cocoa will be developed. Project proposals for feeder road improvement, training of extension staff and farmers, input and credit supply, development of rural banking services and schistosomiasis surveillance are being implemented satisfactorily. Disburse- ment of IDA credit is behind schedule primarily because of late start of the project but expected to accelerate as project activities gather momentum. Government of Liberia has kept the project adequately funded and has given the required support. There has been a positive response from the project farmers. Credit No. 700-LBR Agricultural Development (Bong) Project: US$7 million Credit of December 29, 1977; Effective Date: March 15, 1978; Closing Date: December 31, 1983 Signing of the credit was delayed by several months due to staffing problems. Most of key project positions have now been filled and the project implementation has begun. Project startup activities (e.g. construction of office buildings and staff houses, staff recruitment) have been financed with funds provided from the project preparation facility. Loan No. 1544-LBR Rubber Development Project: US$7 million Loan and Credit No. 786-LBR US$6 million Credit, both of April 21, 1978: Not Effective; Closing Date: June 30, 1984 Project start up activities (e.g. staff training, nursery prepara- tion, acquisition of land, building plan) financed by the Government are making good progress and the project implementation is expected to commence on schedule. The project manager is in post and the financial controller has been appointed. ANNEX II Page 5 of 6 pages Loan No. 907-LBR Second Highway Project: US$3.0 Million Loan of June 13, 1973; Effective Date: December 28, 1973; C3losing Date: June 30, 1978; Credit No. 395-LBR IJS$2.6 Million Credit of June 13, 1973; Effective JDate: December 28, 1973; Closing Date: June 30, -1978 The design and -reconstruction of the Monrovia By-Pass has been com- pleted with a small cost overrun. The feasibility studies of the improvement of three roads in the vicinity of Monrovia are now completed; on two of the roads which are important links in the main highway network, reconstruction has been demonstrated as amply justified. Technical assistance in the Govern- ment's four-year maintenance program is already showing benefits in improved running surfaces on earth and gravel roads and plans are now being made to consolidate the gains and develop them still further by closer attention to the organization and planning of road maintenance. A study to determine how best to improve the efficiency of the local civil engineering construction industry has been completed. Loan No. 1156-LBR Third Highway Project: US$27.5 Million Loan of A.ugust 28, 1975; Effective Date: October 14, 1975; Closing Date: December 31, 1979 The construction of a major bridge and of an urban main road (5.4 mi.) in Monrovia and of a rural main road (83 mi.) has started and is pro- ceeding satisfactorily although initially somewhat hampered by bad weather and difficulties in the supply of materials. The feasibility studies of rural main roads and for an urban transport study in Monrovia are making good progress. A feeder road construction unit became operational in January 1977 and is operating successfully. Technical assistance in building up the planning department of the Ministry of Public Works is proving fairly effec- tive. Loan No. 1055-LBR Second Development Finance Company (LBDI) Project: US$4 Million Loan of December 3, 1974; Effective Date: January 3, 1975; Closing Date: June 30, 1979; and Loan No. 1323-LBR Third Development Finance Company (LBDI) Project: US$7 Million Loan of October 7, 1976; Effective Date: December 17, 1976; Closing Date: December 31, 1981 The Loan 1055-LBR helped LBDI meet its financial requirements through calendar year 1976. LBDI's loan approvals during calendar 1976 surpassed the projected level for the year. Commitments and disbursements were similarly above targets. Disbursement of Bank funds, in particular, has been faster than projlected. The loan is fully committed and 80% dis- bursed as of October 31, 1977. The Loan 1323-LBR, signed October 7, 1976, together with a loan from the African Development Bank, would cover LBDI's foreign resource gap for the period 1977 and 1979. ANNEX II Page 6 of 6 pages Loan No. 1150-LBR Third Power Project: US$1.8 Million Loan of August 1, 1975; Effective Date: October 20, 1975; Closing Date: June 30, 1979 The project finances technical assistance for establishing a long- range development plan and detailed investment program as well as for strength- ening the management of the Liberia Electricity Corporation (LEC) and train- ing its staff. Project implementation is proceeding satisfactorily, although the training program needs to be expanded to include practical training for middle-level staff. The financial performance of the utility has deteriorated and remedial measures are being taken to improve LEC's financial viability, e.g. tariff increases, improved financial controls, in connection with the proposed fourth power project. The Board of Directors recently replaced the Managing Director with another Liberian. LEC is actively seeking assistance from a foreign electric power utility to provide a management support team to replace expatriates who are leaving on the expiry of their contracts. ANNEX III Page 1 of 2 LIBERIA FOURTH HIGHWAY PROJECT Supplemental Project Data Sheet Section I: Timetable of Key Events (a) Time taken to prepare the project: 40 months (November 1974 to February 1978). (b) Agency which prepared the project: With respect to the road reconstruction component, Davies - Techsult (Sierra Leone) prepared the feasibility study and Davies (Sierra Leone) under- took the detailed engineering and the deflection survey, financed under the Second Highway project (Loan 907/Credit 395-LBR). Other project components prepared by the Government assisted by the Bank. (c) Date of the firsit Bank Mission to consider the Project: June 1975. (d) Departure of Appraisal Mission: June 22, 1977. (e) Negotiations completed: April 24, 1978. (f) Planned Date of ]Effectiveness: August 31, 1978. Section II: Special Bank Implementation Action None Section III: Special Conditions: The following special conditions are incorporated in the draft Loan Agreement: (a) the Government to arrange for employment of Liberian engineers by the contractor clnosen for the reconstruction and improvement of the Paynesville-Totota road so that they may acquire experience in the techniques of maintaining and strengthening asphalt roads (para 33); (b) the Government to allocate adequate funds in FY 80-82 budgets for routine and periodic maintenance of roads and review annually with the Bank the progress in carrying out the annual road main- tenance programs (para 37); ANNEX III Page 2 of 2 (c) the feasibility studies for the Ganta-Sanniquellie and Ganta- Tapeta roads to be reviewed and found satisfactory by the Bank (para 35, a condition of disbursement for the detailed engine- ering component); (d) the signing of the loan agreement between the Government and the Kuwait Fund (para 50, a condition of effectiveness). 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