eWorldBank 15·111 I I )lreet, N.W., Washington. D.C. 20433, U.S.A. • Telephone: (202) 393-6360 BANK NEWS RELEASE NO. 77/139 June 27, 1977 IDA NEWS RELEASE NO. 77/70 WORLD BANK AND INTERNATIONAL DEVELOPMENT ASSOCIATION ASSIST URBAN DEVELOPMENT PROGRAM IN EL SALVADOR The World Bank and its affiliate, the International Development Association, (IDA) are providing a total of $12.7 million to help finance a second urban developrrent project in El Salvador. The project wi 11 provide further support to the Governrrent's continuing plans to improve the living conditions of the lowest-income population. It is national in scope and will help to alleviate the still severe shortage of low-cost shelter in both the capital, San Salvador and in certain secondary cities. Some forty percent of the total population live in El Salvador's urban areas, in- cluding about 670,000 in San Salvador, and another 489,000 in the four largest secondary cities. The Salvadorean Foundation for Development and Low Cost Housing (FSDVM), one of the executing agencies of the present project, is achieving its objectives through self- help serviced sites and related programs with assistance from a previous World Bank loan in 1974. Some 4,000 serviced sites in seven cities have now been planned, designed and • constructed by FSDVM. The present project features various components, which wi 11 reach areas where grmvth is rrost rapid and shelter needs are greatest. The main objective is the provision of land, credit and technical skills for the lowest-income families. The project includes: the building of 8,000 serviced lots, with about seventy percent of the units located in the capital. The plots wi 11 be. provided with services including water, sewerage, streets, footpaths and optional electricity; about 400 sites for small industrial or commercial as well as residential use will be developed. Various community facilities, including hea]th clinics and schools wi 11 be provided at project sites; a pi lot scherre for improvemetlt of living conditions for about 800 households in a squatter settlement; credit and technical assistance for proprietors of small enterprises within marginal communities; and training and technical assistance to each of three executing agencies to facilitate execution of the project. In addition to the construction of the serviced lots, the project provides necessary social and economic infrastructure. About 6,450 man-years of employment wi 11 be generated during implementation of the serviced site component. The provision of low-cost housing to lOtJ-incorre households, who are currently paying excessive prices for a.,.iellings, will achieve an income redistribution effect. The serviced site component wi 11 reach families with incomes as low as $43 per rronth. The squatter upgrading component wil 1 reach families vJi th even lower incomes. The small business scheme component is designed to be highly labor- intensive, and will create about 4,800 jobs. The Republic of El Salvador is borrowing the $12·.7 million on the following terms: The World Bank loan is for $6.7 million for a term of 20 years including 4.5 years of grace ~ith inter~st at.8.2% per annum. The l~A credit.of.$6 mill ion is on standard IDA terms of • ~O years, 1nclud1ng a 10-year grace period. It 1s interest free except for a service charge of 3/4 of 1% to meet IDA's administrative costs. The Government wi 11 on lend $5.9 million of the loan and the entire IDA credit to the three executing agencies of the project. Note: Money figures are expressed in U.S. dollar equivalents. FOAM NO. 1121 (5-76) T EC HN I CAL D A T A PROJECT: COUNTRY: TOTAL COST: Second Urban Development Project Republic of El Salvador $24.5 million • BANK FINANCING: $6.7 mi 11 ion, for 20 years including 4.5 years of grace, with interest at 8.2% per annum I DA FI NANCI NG: $6 million, on standard IDA terms OTHER FINANCING: Government, $7.7 mi ]lion FSDVM, $1.3 mi 11 ion FEDECCREDITO, $2.1 million Private Power Companies, $0.7 mi 11 ion iMPLEMENTING ORGANIZATION: Salvadorean Foundation for Development and Low Income Housing (FSDVM), 18 Avenida Norte 633 (CABLE: FUNDASAL), San Salvador, El Salvador, which was created in 1970 to improve living conditions of the lowest income population and implemented the first project, is the executing agency for the serviced site component, including lot design, engineering, construction supervision and the im- plementation of construction loans. The pi Jot squatter upgrading component will be im- plemented by the Institute de Vivienda Urbana (IVU). The smal 1 informal business credit component wi 11 be implemented by the Federacion de Cajas de Credito (FEDECCREDITO). PROJECT DESCRIPTION: The project consists of: A. Serviced Sites. Approximately 8,000 serviced lots; about 70% of the units wi 11 be in San Salvador, the remainder in secondary cities or smaller to.vns. All plots will be provided with water, storm drainage, sewerage, streets, paved footpaths, and optional electricity. Development of about 400 sites for small industrial or commercial as well as residential use. Community facilities including multipurpose community centers, public markets, sports • fields, healtn clinics and schools will be provided at the project sites; B. Pilot Squatter Upgrading. A pilot scheme for the improvement of living conditions for about 800 households Jiving in a squatter settlementy through provision of secure tenure, basic infrastructure, community facilities, and credit for dwelling improvements; C. Small lnformaJ Credit. Credit and technical assistance for proprietors of smal 1 enterprises living within marginal communities. Loans for working capital, equipment and workshop construction or improvement. A complementary program of training and technical assistance for participants in the program; and D. Training and Technical Assistance. Technical assistance and training to each of three executing agencies to facilitate the execution and to deal with specific problems which might arise during its implementation and to evaluate project results. PROCUREMENT: International competitive bidding in accordance with Bank guidelines will be required for goods and services, estimated at about $10.7 million. This includes major civi 1 works, bui ]ding materials, equipment, and school furniture. Manufacturers located within the Central American Corrrnon Market (CACM) wi 11 be eligible for a preferential margin in international competitive bidding equal to 15 percent of the c.i .f. price of manufactured items or 50 percent of the tariff payable by non-CACM manufacturers, whichever is lower. Contracts for civil works, building materials and equiprrent which fal 1 below the equivalent of $120,000 could be procured through local procedures satisfactory to the Bank, up to the aggregate annunt o f . $6. 9 mi l 1 ion . CO~JSULTANTS: Estimated costs for consulting services are $880 and $5,000 ~er man-ITKlnth for local and foreign personnel, respectively. ECONOMIC RATE OF RETU~N: 18% ESTIMATED COMPLETION DATE: 1981 - 0 -