Documet of The World Bank FOR OMCIAL USE ONLY R_ot No. P-4083-CO REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO US$42.8 MILLION TO EMPRESA PUERTOS DE COLOMBIA S.A. (COLPUERTOS) WITH THE GUARANTEE OF THE REPUBLIC OF COLOMBIA FOR THE PORTS REHABILITATION PROJECT OCTOBER 24, 1985 I is doemw bha a redrkhd dldxma and nmy be md by redplemts only In the perfamawe of dmi Sdd ida. Its ftouts my n ot drwise be ddbor without Wrd lBnk athoaralom. CURRENCY EQUIVALENTS Currency Unit = Colombian Peso (Col$) ColSl = 100 centavos (ctv) Col$152.06 = US$1.00 (September 1, 1985) Col$1,000 = US$6.58 (September 1, 1985) AVERAGE EXCHANGE RATES ( Col$/US$) 1980 1981 1982 1983 1984 47.3 54.5 64.1 78.9 100.8 ABBREVIATIONS COLPUERTOS Empresa Puertos de Colombia S.A. MOPT Ministry of Public Works and Transport FVN National Highways Fund FNCV National Rural Roads Funds DNP National Planning Department DAAC Civil Aeronautic Administrative Department FAN National Acronautic Fund SENA National Service of Traineeship Fiscal Year January 1 to December 31 FOR OFFICIAL USE ONLY COLOMBIA PORTS REHABILITATION PROJECT Loan and Project Summary . Borrower: Empresa Puertos de Colombia S./A. (COLPUERTOS) Guarantor: Republic of Colombia Beneficiary: COLPUERTOS Amount: US$42.8 million equivalent Terms: Repayment in 17 years, including four years grace, with interest at the Bank's standard variahle rate. Project Description: This would be the Bank's first operation in the port subsector. The project's objectives are to (i) strengthen COLPUERTOS' managerial, financial, administrative and operational capabilities to improve port services and reduce operational costs; and (ii) upgrade port capacity by restoring port installations and increasing port productivitv so as to enable the public port system to cope with future traffic demand and ensure adequate support to Colombia's foreign trade. The proposed project consists of (a) civil works to rehabilitate existing port installations and to upgrade port utilities; (b) provision of heavy cargo handling equipment, workshon machinery and tools, second-hand tugboats, training equipment and material, and computer hardware; and (c) management, operational, engineering and training consulting services. Risks: The main risks associated with the project are the uncertainty regarding traffic levels and the possibility of COLPUERTOS not to achieve productivity targets. The civil works component is not particularly sensitive to these risks, and in the case of the equipment comoonent, the risks have been minimized by concentrating on replacement of obselete items. The project is associated with institutional changes aimed at restructuring the terms of compensation to vort labor and establishing a new pension svstem for port workers, to free COLPUERTOS from the heavy 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. - ii - financial burden imposed by the current practices. The changes envisaged will permit COLPUERTOS to reduce substantially labor costs and long-term pension obligations, while improving manpower effieiency, thereby enabling the enterprise to transfer these benefits to port users through better service and lower port charges. The Government and COLPUERTOS have already shown their comitment to these objectives by pursuing actively through negotiations with the port labor unions the necesbary changes to legally binding labor agreements, and by initiating the legal process to establish a pension system self sufficient in the medium-term and financially separated from COLPUERTOS. Estimated Cost: Local Foreign Total -US$ millio- Civil Works 12.10 11.10 23.20 Equipment - 17.20 17.20 Institutional Development 0.60 3.00 3.60 Project Supervision and Studies 0.90 3.60 4.50 TOTAL BASE COST 13.60 34.90 48.60 Physical Contingencies 1.40 2.80 4.20 Price Contingencies 2.20 5.00 7.20 TOTAL PROJECT COST I/ 17.20 42.80 60.00 Financing Sources: Proposed IBRD Loan - 4Z.80 42.80 COLPUERTOS' Own Resources 17.20 - 17.20 TOTAL FINANCING 17.20 42.80 60.00 Disbursements: Bank FY 86 87 88 89 90 91 Annual 5.0 11.0 13.0 7.0 4.0 2.8 Cumulative 16.0 29.0 36.0 40.0 42.8 Rate of Return: 38%. Appraisal Report: Report No. 5530a-CO dated October 24, 1985 1, Rounded to nearest integer. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO EMPRESA PIJERTOS DE COLOMBIA S.A. (COLPUERTOS) WITH THE GUARANTEE OF THE REPUBLIC OF COLOMBIA FOR A PORTS REHABILITATION PROJECT 1. I submit the following report and recommendation on a proposed loan to Empresa Puertos de Colombia S.A., with the guarantee of the Republic of Colombia, for the equivalent of US$42.8 million to help finance a Ports Rehabilitation Project. The loan would have a term of 17 years, including four years of grace, with interest at the Bank's standard variable rate. PART I - THE ECONOMY 2. An economic mission visited Colombia in July 1982 and its report (4444-CO) was distributed to the Executive Directors in August 1983. A mission to review the external sector and agriculture visited Colombia during April/May 1983, and its report (4981-CO) was distributed to the Executive Directors in April 1984. Macroeconomic policies were also reviewed in the President's Report (P4055-CO) for the Trade Policy and Export Diversification Loan of May 2, 1985. Country data sheets are presented in Annex I. A. Background 3. The Colombian economy has made considerable progress since the early 1950s, evolving from a largely agricultural and rural base, integrated and industrialized, into one that is more open. The growing economic activity, rapid rural-urban migration, increased participation of women in the labor force, and expanded public services have contributed to reductions in poverty and improvements in income distribution. Financial and capital markets have evolved pari passu with the growing needs of the economy, and the country has become an active participant in international capital markets. The state enterprises are few, follow adequate pricing policies, and many have some form of private sector participation. The country's energy balance has been changing in recent years and the country is expected to become a net petroleum exporter in 1986 and, increasingly, an exporter of thermal coal. 4. Export promotion has been a concern of the Colombian authorities for some time. Beginning in 1967 authorities adopted an outward-looking development strategy, expanding and diversifying exports. Export promotion policies, including frequent small devaluations of the peso, export tax rebates and other incentives were introduced and the authorities began lower- ing tariffs somewhat and relaxing capital market controls as a means of raising efficiency and increasing the profitability and competitiveness of Colombian goods in external markets. These measures were successful in relieving the foreign exchange constraint and stimulating growth and employment. B. Economic Performance During the 1970s 5. In the mid 1970's, the economy was subjected to strong inflationary pressures from a sharp increase in world coffee prices. The increased receipts from coffee exports, together with some official surrender of foreign exchange from illegal exports, caused a turnaround in the balance of payments. Incomes rose rapidly stimulating aggregate demand, and inflation accelerated. Economic growth also rose, and unemployment fell substantially in rural and urban areas. Largely as a consequence of increased coffee tax revenues, the public finances generated overall surpluses averaging about 1% of GDP during 1976-78 and, by the end of 1979, net official international reserves had risen to about US$4.1 billion, equivalent to about 12 months imports of goods and non-factor services. 6. While beneficial in many respects, the foreign exchange boom had some negative effects. The rate of currency devaluation was slowed and the conversion of export receipts into pesos was delayed to moderate the growth of domestic demand, with adverse effects on non-coffee exports. The Government also sought to check inflation by maintaining high reserve requirements and expanding controls over credit thereby reducing, in real terms, the financing available to the private sector through the official capital market. 7. The 1977-79 economic program was partially successful in restrain- ing aggregate demand growth, but relatively high inflation persisted. In response to increasing restraint on aggregate demand and troublesome financial market distortions, the authorities began in late 1979 to adjust the program. The rate of peso devaluation was advanced somewhat, and in early 1980 credit restraints were relaxed. At the same time, interest rates on certificates of deposit-and on lending therefrom-were freed from controls. To offset the inflationary effects of these measures, the authori- ties further liberalized import payments and adopted the policy of not expanding the subsidized selective credit operations of the Central Bank in excess of the resources captured from private savings for this purpose. Real GDP growth decelerated to 4% in 1980 from an average of almost 6% since 1960, unemployment started to creep up, and inflationary pressures continued. C. Recent Economic Developments 8. During 1981-83 the economic situation took a turn for the worse in part on account of external factors, with real GDP growth slowing down to 2.3% in 1981 and about 1% on average in 1982-83. Agricultural output was hard-hit as a result of low international prices, reduced input use and adverse weather. Industrial activity deteriorated on account of depressed aggregate demand, and unutilized capacity continued to increase, particularly in manufacturing. Unemployment reached almost 14% of the labor force at the end of the year, up from about 7% at the end of 1981. Inflation, however, slowed down in 1983 to a 20% average for the year, down from 28% in 1981 and 25% in 1982. 9. After experiencing a surplus for six years, a deficit of about US$1.4 billion emerged in the resource balance in 1981 and increased to average about US$1.8 billion in 1982-83. These deficits resulted mainly from a drop in exports in real terms: in addition to domestic factors, uajor reasons were the slowdown in world demand, major devaluations and import restrictions in neighboring countries, and the reduction in Colombia's coffee exports from their previous high levels. Net foreign exchange reserves declined by about US$1.8 billion in 1983 to about US$3.1 billion, equivalent to about six months of imports of goods and non-factor services. On the fiscal side, a slowdown in revenue growth, together with increased current expenditures resulting from a system of automatic transfers and large infra- structure investments in energy and transport led to growing deficits: the overall Central Government cash deficit grew from 2.1% of GDP in 1980 to 4.1% in 1983, while that of the consolidated public sector rose from 3.6% to 7.0%. 10. In 1983 the Government introduced policies to stimulate aggregate demand, and expand non-coffee exports. The rate of peso davaluation was accelerated; the housing construction industry was provided with incentives to mobilize more resources; and selective credit to the productive sectors was expanded. Temporary import restrictions were introduced for stabiliza- tion in addition to measures to reduce the fiscal deficit and ease distor- tions in the financial system. Thpse efforts were insufficient to reverse the deteriorating trends particularly in light of the tight international capital market. Colombia, unlike other Latin American countries, has not had a debt problem because of the high share of official debt in total debt out- standing and the term structure of such debt. Nevertheless, the Latin American debt problem produced a reduction in the credit lines available to Colombia and difficulties in obtaining medium-term loans needed to complete ongoing projects, which contributed in turn to further declines in foreign exchange reserves and to strains in the financial system. I1. During 1984-85 Government policy began to focus increasingly on: additional revenue and expenditure measures to contain the fiscal deficit and monetary expansion; acceleration of the exchange rate devaluations, further increased incentives to exports; measures to improve the profitability of the commerc l1 banking and to resolve the external debt problems of the private sector. The policy reforms began to take hold during the second half of 1984. Real GDP growth increased to 3.1%, the unemployment rate fell to 13% of the labor force at year's end while inflation was brought down to 16.4% on average in 1984. Merchandise exports grew at over 16% in nominal ters compared to 1983; the current account deficit in the balance of payments was reduced by about US$1 billion to 5% of GDP. The losses in foreign exchange reserves, which had accelerated during the first half of 1984, were reduced during the second half of 1984 and reserves remained at about US$1.8 billion (four months of goods and n.f.s. imports). The policies have been deepened in 1985 and the results to date, on the whole, have been positive. Inflation remains under control, while economic growth has picked up modestly, although the unemployment rate remains higher than in recent years. The balance of payments position has been stabilizing. D. Growth and Balance of Payments 12. With further adjustments during 1985-86, Colombia's growth prospects for the rest of the decade are good. The current account deficit of the balance of payments is projected to average about US$1.3 billion per year during 1985-B6, equivalent to about 4% 3f GDP. The deficit is projected to be financed by increasing disbursements of existing and new public and private sector loans and by direct foreign investment. By the end of this period, net official international reserves would have been maintained at a level of about four and a half months of imports of goods and non-factor services. This should be sufficient to support an average growth of real GDP of 2.5% during 1985-86. Total investment will have to be maintained at over 18.5% of GDP to complete energy and mining projects; and to avoid too large an increase in foreign indebtedness, gross domestic savings would need to average about 182 of GDP compared to 16.4% during 1981-84, with the public sector generating a significant part of the additional savings. Beyond 1986, real GDP growth should resume at near historical rates, about 4.5Z per year on average. The current account deficit should also improve rapidly from 1987 on as a result of increasing export proceeds from new non-traditional exports (particularly crude petroleum and coal), declining to some 1.6% of GDP by 1990. 13. Total gross external medium- and long-term capital requirements (including the private sector) are projected to total about US$5.6 billion for the 1985-86 period. Net foreign investment is expected to account for US$750 million during 1985-86, most of which would be to complete existing energy projects. About US$3.9 billion is expected from multilateral, bilateral and other sources, while about US$1 billion will be the new money needed from commercial banks mainly to complete petroleum and coal projects for export. At the end of 1984, Colombia's public and publicly guaranteed medium- and long-term external debt, disbursed and outstanding, amounted to US$8.0 billion (22% of GDP). The Bank/IDA share of this external debt i.e. excluding non-guaranteed privace was 22.8% which is expected to reach less than 25% by 1986. The public debt service ratio in 1984 was 23.5% and is expected to peak at about 30% in 1987 and then decline gradually to below 30% in 1990. The World Bank's share in M< public debt service (excluding non- guaranteed private) is expected to be less than 24% during 1985-86. With sound economic and financial management and the development of new export activities, Colombia is expected to maintain its creditworthiness through and beyond the 1985-90 period. PART II - BANK GROUP OPERATIONS IN COLOMBIA 14. The proposed loan, the 114th to be made to Colombia, would bring the total amount of Bank loans to Colombia to US$4,834.2 million (net of cancellations). Of this amount the Bank held, as of September 30, 1985, US$3,758.3 million; IDA made one credit of US$19.5 million for highways in 1961. Disbursements have been completed on 72 loans and the IDA credit. Before 1979, disbursements averaged US$86 million equivalent per year, but had increased to US$286 million in FY84 and to US$591 million in FY85, reflecting in part the higher level of commitments in the late 1970s and efforts to build the pipeline. While disbursements in Colombia have been slower than those recorded in the Latin American Region for similar projects, concentrated efforts to overcome problems to initiate project execution have resulted in a significant increase in disbursements during FY84 and FY85. Improving performance of social sector institutions in the execution of Bank- financed projects, the gradual containment of inflationary pressures and the -5- effects of the recently-introduced fiscal reforms, which should improve counterpart funding, all point to a higher level of disbursements in the future. IFC has made investments and underwriting commitments of US$144.2 million in 29 enterprises and as of September 30, 1985, it held US$67.3 million. Annex II contains a summary statement of Bank loans, the IDA credit and IFC investments as of September 30, 1985. 15. Since the initial loan in 1949, Bank lending to Colombia has become quite diversified. Although through the mid-1960s, 88Z of the loans made were for power or transport, since then the Bank has broadened its participa- tion in lending for agriculture and industry, and initiated lending for irrigation and watershed management, education, water supply, telecommunica- tions, urban development, petroleum development, export diversification, nutrition and health. By the late 1970s, 53% of the loans made to Colombia were for projects other than transport and power. Of the loans made since 1978, 35% were for power and transport, 16% for industry, 18% for agriculture and irrigation, 8% for water supply, 6% for urban, 4% for telecommunications, 2% each for petroleum development and export diversification and 8% for education, nutrition, health and multipurpose projects. The diversification was indeed a desirable aim as it helped provide close contact with a broader range of Colombia's development problems. The experience gained has served to identify areas in which the Bank's role can only be a marginal one and, thus, to enable lending to be focussed upon sectors in which the Bank's presence can have a meaningful impact. 16. The Bank's dialogue with the Government has focused upon the need to mobilize additional domestic resources, to diversify and expand exports, to develop rapidly the country's energy resources, and to free the economy from excessive controls. The discussions involved fiscal, interest rate and pricing policies, as well as incentives for exports and reduction in the level of effective protection. Positive results have been obtained particularly in the power sector, where power rates were increased sharply and a least-cost expansion was formulated and launched. Similar results have been achieved in respect of some other public services, including appropriate charges for water for irrigation and domestic use and petroleum prices. 17. The Bank has been supporting the Government's efforts to increase economic growth and exports with financial stability, raise utilization of domestic energy sources, provide key infrastructure, and improve the living conditions of the poor. More recently, in response to Colombia's adjustment process the thrust of the Bank's support has shifted towards loans to finance directly productive activities, such as agriculture and industry, support efforts to raise productivity, income and employment, increase and diversify exports and help develop renewable sources of energy through lending for hydropower and arranging associated cofinancing. Loans recently approved by the Board and in advanced stage of preparation reflect the emphasis on: (i) increasing output rapidly; (ii) reorienting production towards exports and efficient import-competing goods; (iii) supporting quick-yielding infrastruc- ture investments, particularly those that enable the use existing facilities more intensively; and (iv) increasing resource mobilization. -6 - 18. The Bank's lending in FY85 consisted of loans for agricultural diversification, small-scale industry, petroleum, development banking, water supply and sewerage and trade policy and export diversification totalling US$707.5 million. The trade policy project is designed to support the first phase of trade policy adjustments in Colombia. Besides the already approved public health project, work is underway on projects for water supply and sewerage, irrigation rehabilitation, electricity distribution, agricultural technology transfer, and financial sector management. In infrastructure, the Bank is stressing rehabilitation, modernization and a more intensive use of the existing facilities in ports rehabilitation, water supply and rural feeder roads. Finally, several projects in preparation will also support the Government's efforts to help the poorer segments of the population. Proposed lending for further rural development, agricultural credit, and water supply and waste, will help improve the standard of living of the poor, while being designed to make better use of existing capacity and reduce losses. 19. The operations of external lenders in Colombia are shown in Annex 1. While IBRD, IDB and bilateral sources provided about 752 of total external financing to Colombia in the 1961-72 period, their share has decreased since then to some 49% for the 1975-82 period and is expected to decline further to about 40% of external capital requirements during the eighties. IDB has given increased emphasis to energy-related projects, in addition to those for low-cost housing, urban and rural development, agrarian reform, university education, water supply, rural electrification and land erosion control, which are aimed at improving living standards of the lower- income population. In the future, it proposes to assist Colombia in develop- ing sources of domestic energy and in expanding productive sector activities to help generate increased employment. USAID has supported programs in education, rural development and small farm development, but is phasing out its program in Colombia. The Government of Canada, the Federal Republic of Germany and the Netherlands have also provided concessional financing for basic needs and regional integration projects. PART III - THE TRANSPORT SECTOR Characteristics 20. Colombia's advantage of having coast lines on both the Pacific Ocean and the Caribbean Sea is largely offset by the difficulty of movement between the coasts and the interior. The three massive ranges of the Andean Mountains running the length of two-thirds of the country pres it formidable obstacles to communication among its main population centers, which, until recently, developed as separate and somewhat isolated regions. The Magdalena River, until the mid-century, provided the only overland route between the - 7 - Central region and the Caribbean coast and, even so, with serious navigation- al problems during the dry season. In the 1950'a, however, under a drive toward Integration and modernization, the transport system began to evolve into a national network. The development of the country's railways, trunk highways and civil aviation has greatly improved inter-regional communication and national integration. 21. The effort to establish the basic transport infrastructure absorbed a considerable proportion of the country's public investment. Transport rep- resented about balf of the Central Government's investment in the late 1950s. More recently, with the basic infrastructure in place, transport's share has declined, and, since the late 1970s, it has been around 13Z. In 1984, the transport sector accounted for some 8X of the GDP, compared to about 5% in 1950. In the same year, the country's domestic surface transport system moved 25.4 billion ton-km of freight, of which 882 by road, 5Z by inland navigation, 42 by coastal shipping and 3Z by railways. Roads and aviation dominate passenger traffic, accounting respectively for 71% and 27Z of total demand, estimated at 17,250 million passenger/km in 1984. Infrastructure 22. Colombia has a road network of about 97,000 km (10,500 km paved), of which 25,000 km comprise the national highway system, 48,000 km are departmental roads and 24,000 km are rural roads. The planning, construction and maintenance of the roads network are performed under the Ministry of Public Works and Transport (HOPT) through its National Highway Fund (FVN) and National Rural Roads Fund (FNCV), in charge, respectively, of the national highways and the rural roads. The Departments perform their own road maintenance through their Secretariats of Public Works. 23. The railways system consists of 3,403 km (2,822 km Lurrently in service) of single track narrow gauge (0.914 meters) lines administered by the Colombian National Railways, a semi-autonomous state-owned agency. The trunk line between the Caribbean port of Santa Marta and Medellin-Bogota in the central highlands is 1,287 km long and carries over 70% of the total railway traffic. The Pacific line (187 km) serves only the Department of Valle, connecting the port of Buenaventura to the city of Cali. 24. The Magdalena and Cauca rivers, together with the man-made Canal del Dique (connecting the Caribbean port of Cartagena with the Magdalena river), constitute a major transport system totaling 1,366 km of navigable water ways, which account for almost all inland shipping. The traditional importance of inland waterway shipping, however, has decreased with the development of road and rail transport; the remaining river traffic is mainly hydrocarbons and other bulk commodities, such as cement and fertilizers, which originates at, or is destined for, the ports of Cartagena and Barranquilla. River transport moved about 2 million tons of freight in 1984, roughly the same volume as 30 years ago. Administration and maintenance of inland waterways are under the jurisdiction of MOPT. Freight services are privately operated. 25. Aviation transport in Colombia developed early in the 1920s, induced by the adverse topography and the inherent difficulties of surface transport. Air traffic is now a major passenger transport mode for both international and domestic traveling. There are presently in the Colombian territory 70 airports whose standards vary widely. Seven of the airports in mainland Colombia and one on the Caribbean Island of San Andres are equipped for international flights. Aviation is governed by the Administrative Department of Civil Aeronautics (DAAC), which is directly responsible to the President of the Republic. DAAC is financed by the National Aeronautics Fund (FAN), whose revenues originate mainly from user charges. 26. Maritime transport supports most of the volume of Colombia's foreign trade, which is moved mainly through its public and private sea- ports. Empresa Puertos de Colombia (COLPUERTOS), the national port authority responsible to the Ministry of Public Works and Transport, controls all the public ports, namely Buenaventura and Tumaco on the Pacific coast, Cartagena, Barranquilla and Santa Marta on the Caribbean Coast and Leticia on the Amazonas River. Besides the two private ports of Turbo and Puerto Bolivar on the Caribbean coast, there are privately operated berths at the public termi- nals of Cartagena and Barranquilla. There are no private port facilities on the Pacific Coast. The private ports and privately operated berths specialize in certain own-user bulk traffic, mostly coal, petrochemicals, hydrocarbons, fertilizers and cement. Total traffic at the public ports amounted to 9.7 million tons in 1984, of which 5.8 million moved through private berths and 3.9 million, basically general cargo, moved through the public terminals. Most of Colombia's seaborne trade is, and will likely remain, with the U.S., the industrialized European countries and Japan. Transport Planning, Coordination and Investment 27. MOPT is directly responsible for sector planning matters, including the preparation of the National Transport Plan. The Plan, which is periodically updated by MOPT's Sector Planning Office, defines the relative role of the distinct transport modes based upon demand projections by commodity type. It also outlines investment pr'grams and the corresponding financing sources for each subsector. The object'ves of the Plan are formulated in accordance with the broader goals established in the National Development Plan, prepared by the National Planning Depariment (DNP). DNP also coordinates with MOPT and other sector agencies the programming and budgeting processes for investments in all transport modes, except pipelines. 28. The sector priorities in place, largely shaped to accommodate the transport investment needs with the constraints arising from the reduced inflow of external resources and the tight fiscal situation, emphasize rehab- ilitation and maintenance of existing infrastructure and equipment, motor fuel substitution, transport safety and intermodal coordination to reduce transport costs and improve efficiency. They also call for investment polic- ies consistent with supporting productive and external trade oriented activi- ties, coordinated with cost-based pricing policies to mobilize resources through recovery of investments. 29. The financing of the transport sector is arranged through a combin- ation of (a) operatinr, revenues (38%); (b) earmarked taxes on oil products (35%); (c) budgetary contributions (13%); (d) domestic and external credit (7%); and (e) other sources (7%). Overall, sector funding policy emphasizes financial self-sufficiency for each subsector. In practice, however, its implementation has been weakened. The case of the railways-which have had - 9 - to resort to budgetary contributions to finance operating deficits caused by declining demand and operational inefficiency-and the existing cross-subsidies (between import and export tariffs in the ports, between freight and passenger tariffs on the railways, and between user charges for light and heavy vehicles on the highways) are becoming of major significance. Fuel Pricing 30. Colombia has maintained in recent years a policy of annual increases in fuel prices to adjust for domestic inflation and to reflect the corresponding opportunity costs. As of November 1984, the time of the last price increase, regular and premium gasolines were priced, respectively, at US$0.82 and US$0.93 (equivalent) per gallon, in line with the relevant inter- national levels. Rowever, the accelerated pace of devaluation since then brought current domestic fuel retail prices down to an average 25% below the equivalent international levels. Retail prices should be adjusted towards the end of this year, and more frequent increases are expected during 1986 to compensate for the exchange rate adjustment policy currently in place. Fuel price developments in Colombia are being monitored through specific provisions in a Bank loan to ECOPETROL, the national petroleum company. The Port Authority and the Public Port Operations 31. The National Port Authority, COLPUERTOS, was created in 1959 as the public entity in charge of the management and operation of public ports in the country, and the regulation and supervision of the private berths located in the vicinity of the public ports in the Caribbean coast. COLPUERTOS does not have jurisdiction over the private ports of Turbo (operated by the Federation of Banana Growers) and Puerto Bolivar (operated by the Colombian Coal Enterprise) as their regulation and supervision rest directly with the Government. In 1975, COLPUERTOS was restructured as a state-owned commercial enterprise under the Ministry of Public Works and Transport, with financial and administrative autonomy. The entity is governed by a Board of Directors in charge of the overall policy matters at national level and a General Manager with executive management functions. Each of the ports has its own Board and Manager with corresponding functions at the local level. The central office is charged with policy, budgetary, development and investment functions, while each of the ports is responsible for its own operations and administration. 32. COLPUERTOS' relations with its labor force are regulated by collec- tive labor agreements negotiated periodically between the enterprise and the port labor unions. These collective contracts are legally binding, and their terms and provisions prevail over the national labor legislation, which esta- blishes the minimum standards that labor contracts must comply with (minimum salaries and benefits) and gives freedom to the parties to negotiate terms above the minimum legal requirements. Once formalized, the collective labor contracts can be amended only by agreement between the parties and, as last resort, by the ruling of a tripartite arbitration tribunal in which the parties and the Government are represented. - 10 - 33. The four major public ports in Colombia are Buenaventura on the Pacific and Cartagena, Barranquilla and Santa Marta on the Caribbean coast. All four ports are fundamentally general cargo terminals, even though Buenaventura and Santa Marta have specialized facilities for bulk cargo hand- ling and storage. The ports terminals provide services cf pilotage, towage, bunkering, stevedoring, on shore cargo handling, lighterage and storage. 34. Buenaventura is the main port on the Pacific and also Colombia's largest public deepwater and container port. It lies in a tropical zone with a heavy rainfall, which interferes with port operations. Its terminal facilities cover an area of 1,175,000 m2. Its 13 berths, totaling 2,150 meters are naturally protected and offer draft up to 32 feet. In addition to 10 warehouses, the terminal has specialized facilities for grain (32,000 ton capacity silos), sugar and bulk liquids. The port traffic does not interfere with the city, and the access to the port area is adequate, even though possibilities for further physical expansion are limited. The terminal is connected with the hinterland by rail and road and, together with coastal shipping, serves all the western part of the country. Buenaventura competes with the terminals on the Caribbean coast for the seaborne freight originating in, or destined for, the Bogota metropolitan area. All sugar, molasses, an important share of coffee exports, and most imports from the Far East move through Buenaventura. In 1984, this port handled nearly 2.1 million tons of freight, equivalent to 55% of the total moved through public ports. 35. Cartagena, situated in the best natural port location on the Caribbean coast, is Colombia's second container port and premier cruise ship port-of-call. Its hinterland includes the important agricultural and industrial region of Medellin, in the Department of Antioquia. The port links with its hinterland by road, air and inland waterways through the Canal del Dique to the Magdalena River. Port facilities cover an area of 289,000m2 with five deepwater berths and two berthing areas for smaller roll-on/roll-off ships totaling 1,218 meters; the port offers draft up to 35 feet alongside its berths. There is some room for physical expansion at the port site, although access to the port is through the city streets. Addi- tional port areas can also be developed elsewhere in the bay. Cartagena moved 0.8 million tons in 1984, equivalent to 21% of the total freight through public ports. 36. Barranquilla is located at the estuary of the Magdalena River and is essentially a regional deepwater and river port. It serves primarily the city of Barranquilla and its area of influence, with some transshipment of cargo for up-river transport. The port is connected with the interior by road, river and air transport. The public port facilities cover an area of 1,030,000 m2. Barranquilla has six berths with 1,058 meters and one berth for river vessels. Although its berths offer d:aft up to 34 feet, Barranquilla has the most serious sedimentation and dredging problems of all public ports. Physical expansion of port facilities is possible, although not envisaged. Access roads to the terminal area are adequate. Barranquilla moved 0.48 million tons in 1984, equivalent to 12% of total freight through public ports. 37. Santa Marta is situated in a natural deepwater bay on the Caribbean coast. The port occupies an area of 133,000 m2. It has five berths with - 11 - 1,300 meters offering draft up to 50 feet. Even though the terminal has four warehouses and mechanized grain handling facilities (32,000 ton capacity silos), they have limited use for unloading vessels because of the low unloading capacity of the conveyor. Potential for further physical expansion is limited. Road access to the port area is through the main city streets, which at times causes congestion. This port links with the interior by road, air and rail connections. The rail access to the terminal is adequate, but the lack of a marshaling yard disturbs the traffic in the port area. Santa Marta moved 0.49 million tons in 1984, equivalent to 12% of the total for public ports. 38. Seaborne traffic through Colombia's major public ports grew fast in the late 1970s, peaking at 4.9 million tons in 1980. Declining exports- caused mainly by reduced world demand for some Colombian agricultural exports, the diversion of coal exports to a private port and decreasing imports as a result of balance of payments restrictions-brought the public ports traffic down to 3.9 million tons in 1984. Because of improved pros- pects for economic growth, this trend is expected to be reversed, and traffic at these ports is forecast to increase at an average rate of 1.8% p.a. over the 1985-1990 period. The highest traffic growth is expected at Santa Marta (7.6% p.a.) while at Buenaventura it is expected to remain at current levels with declines in bulk traffic offset by increases in general cargo. 39. COLPUERTOS is a financially independent enterprise and receives no budgetary support from the Government. Most of its revenues come from tariffs for services provided by the public port terminals and a small portion from charges (ad valorem charge on traded goods) from the private wharves. The Central Office is financed by the charges on the private wharves plus 20% of the revenues generated by the public terminals to finance its administrative expenses, capital investments at headquarters and the ports and debt service. Each terminal retains 80% of its revenues to cover the cost of its own operations. 40. Over the years, until 1983, COLPUERTOS' institutional and financial situation deteriorated sharply as the result of a combination of several factors. First, COLPUERTOS' management had been generally weakened by exces- sive political interference, which resulted in high turn-over in upper management positions, which in turn contributed to lack of continuity and absence of clear institutional objectives. Second, influential port labor unions (one in each port and three in Barranquilla) took increasing control of labor and equipment assignment functions at the port terminals over the years and generated significant overstaffing and unrealistic compensation terms (para. 52). Third, COLPUERTOS' pension obligation to retirees, entirely paid by the enterprise out of its own operational resources with no funding provision, has become an unbearable financial burden upon the enterprise (para. 52). Finally, the short-term focused management concerns, coupled with continuous financial deterioration and recurrent labor problems, resulted in poor long-term planning, which weakened COLPUERTOS' operational capabilities (para. 59). 41. By end-1982, however, in an effort to reverse these trends, a strong management took over and initiated, backed by the Government, a series of corrective measures to recover control of operations at the terminals and to bring down excessive costs. Substantive progress was made in the negotiation of new and more sustainable labor agreements, and important - 12 - concessions with regard to linking payment to manpower productivity were obtained from the labor unions. Staff was reduced by 23% to 9,411 employees (through induced attrition coupled with a freeze in hiring). The cost reduction measures so far undertaken by COLPUERTOS' management have had an important impact upon the financial position of the enterprise, changing the nearly endemic operating losses of 1979-1982 into an operational surplus for the first time in 1983 (para. 69). Bank Involvement in the Sector and Lending Strategy 42. The Bank has played an important role in the development of Colombia's transport sector. Its involvement dates back to 1949, when a transport sector mission reported the transport system to be in an exceptionally bad condition. Since 1950, the Bank has lent about US$551 million in 23 loans to the sector. These investments supported the construction of an integrated highway network and, more recently, have contributed to the rehabilitation and maintenance of the national network and to the development of an improved highway organization. They have also contributed to the construction of over 670 km of the main railroad line, as well as to the rehabilitation of other lines. A domestic aviation project helped to improve basic aviation infrastructure and subsector efficiency and planning. The proposed project would be the first Bank operation in the ports subsector. 43. The Bank's lending strategy for the transport sector emphasizes the timely provision of development finance in support of policy reform and institution-building objectives, including: (a) policies targeted at achieving a more balanced use of existing transport alternatives, through adequate price signals to consumers and improvements in marketing and distribution arrangements for key commodities; (b) equitable treatment for the distinct modes of transport, and for each user of public infrastructure, by pursuing the development and adoption of cost-based pricing policies for eacn mode, to cover marginal costs of use; (c) reduction of total transport costs, by improving modal interfaces and the efficiency of operations within each mode; (d) public sector funding and expenditure mechanisms to reflect the costs of use of existing infrastructure and facilities; (e) investment planning to give adequate priority to export development, agriculture diversification, and energy conservation and substitution, with emphasis on maintenance and rehabilitation programs; (f) further integration of the public planning, budgeting and programing processes and strengthening of the financial and personal management practices of sector agencies; and (g) institutional and human resources development, through comprehensive training programs at the upper and middle management, and operating levels. 44. At the project level, this lending strategy is presently supported by: (a) the Rural Roads Project (Loan 1966-CO, 1981, US$33.0 million) for construction, rehabilitation and maintenance of rural roads; institutional objectives sought with the project include the strengthening of FNCV's technical and economic capability for identifying, programing and implementing rural roads subprojects; - 13 - (b) the Seventh Railway Project (Loan 2090-C0, 1982, US$77.0 million) for rehabilitation and modernization of the railways; the project supports the implementation of Colombian National Railways' (CNR) 1983-1987 investment program and the improvement of financial and operational management; and (c) the Highway Sector Project (Loan 2121-CO, 1982, US$152.3 million) for rehabilitation, paving and maintenance of the primary road network; the project pursues the improvement of transport sector management and other subsector objectives, including the development of a balanced pluriannual highway expenditure program, more systematic use of economic appraisal methodologies, the implementation of a pavement management system and training actions at the managerial and operating levels. Experience with past lending 45. The performance of these projects so far has been mixed. While the results with the Rural Roads and Highways Projects have been positive and the respective loans have contributed significantly to sector management improvements, building up of investment appraisal capabilities and institutional strengthening, as well as physical improvements, the activities involving the Railways subsector have fallen short of expectation. The capacity of the Railways Authority (CNR) to overcome operational deficiencies and thus, to recuperate credibility with users of cargo services has not yet materialized, partly because of internal management and operational problems, such as slow procurement and poor operational planning, as well as insufficient Government counterpart funding for needed capital investments. The fiscal constraints have prevented the Government from making a significant financial contribution to project's investments and has limited its financial support to covering CNR's mounting pension payments, which are not backed by any funding provision. A re tructuring or deferral of the Railways project is presently being discussed with the Government. CNR's pension problems have served as a basis for the approach followed in the consideration of the proposed Port Rehabilitation Project. 46. The proposed Port Rehabilitation Project described in the following section would strengthen COLPUERTOS' management and operational capabilities while achieving reductions in port operating costs and ship waiting times through better utilization of existing quay structures and equipment. It would also introduce the mechanisms for establishing a cost-based tariff structure and improved planning of port activities to accommodate future traffic increases. PART IV - THE PROJECT Background and Long Term Goals 47. Bank's first involvement with the Colombian Port Authority dates back to 1980. At that time a Bank-UNDP sponsored port modernization study performed a thorough evaluation of the Colombian ports and concluded that a - 14 - large scale program to modernize and equip the ports terminals with major container facilities would be necessary to enable the port system to fulfill properly its long-term role. This study, completed in January 1982, also concluded that the management, labor, planning and financial problems that have developed in COLPUERTOS over the years would probably hamper any attempt to modernize the entity, if not resolved first. Subsequent to this study, in December 1982, a UNDP-sponsored, Bank-executed technical assistance mission developed for COLPUERTOS a program of immediate measures to resolve the critical operational bottlenecks at the terminals and recommended a plan of action to deal with the institutional and labor constraints facing the Colombian ports, which COLPUERTOS set in motion in early 1983. Since then the Bank has been assisting the Government in its effort to upgrade the organization of its ports, and monitoring the developments at COLPUERTOS. 48. The fundamental institutional changes that in early 1983 started to address COLPUERTOS' chronic management and labor problems presented an almost immediate impact in its financial performance and laid down the basis for the recuperation and longer-term consolidation of the enterprise. 49. To keep up with the policy changes taking place in the ports subsector, and to permit a self sustained transformation process of the port authority, an initial institutional rehabilitation project was designed to assist COLPUERTOS in implementing solutions to its basic management, operational, labor and financial problems as well as prepare the ground for future expansion of its physical and technological capabilities towards the end of the decade. The project was appraised in November 1984. Loan negotiations were held in Washington in late September 1985, with a Colombian delegation led by Capitan Jaime Sanchez, General Manager, COLPUERTOS. Project Objectives 50. The proposed project encompasses the core of COLPUERTOS 1985-1988 investment program, prepared with Bank assistance. The project represents an integrated effort to (i) strengthen COLPUERTOS' managerial, financial, administrative and operational capabilities to improve port services and reduce operational costs, and (ii) upgrade port capacity by restoring port installations and increasing port productivity to enable the public port system to cope with future traffic demand and ensure adequate support to Colombia's foreign trade. 51. This rehabilitation project is based upon a comprehensive analysis of COLPUERTOS' organizational set-up, administrative and operational proce- dures, technical capabilities, labor practices and financial situation, together with a detailed examination of the existing port installations and equipment. Three of the four main commercial ports administered and operated by COLPUERTOS-namely Buenaventura, Cartagena and Santa Marta-have reached a degree of deterioration due to poor maintenance, aging and poor construction, to an extent that a major rehabilitation effort is necessary in order to ensure their continuous operation. Equipment maintenance has also been neglected over the years in all ports: inadequate service facilities, absence of consistent maintenance policies and shortage of spare parts combined with inappropriate operational planning have seriously harmed productivity and efficiency of port services. - 15 - 52. Concurrent with project execution, COLPUERTOS and the Government are addressing three areas that have generated growing financial obligations to the entity over the years. The first, and by far the most important, are COLPUERTOS pension obligations to its personnel. COLPUERTOS highly generous pension system, whose terms have been established in collective labor agreements, has no funding nor cost-sharing provisions, and the company has to pay the full benefits out of its own operational resources. The legal status of the labor agreements and the existing legislation on acquired rights of labor have constituted an important obstacle to change the existing pension system. Consequently, the establishment of a new, properly funded and financially independent pension system for COLPUERTOS employees has had necessarily to involve negotiations with the labor unions and complex legislative action on the part of the Government. Accordingly, this aspect is being dealt with at Government level as described in para 69. The second refers to COLPUERTOS statutory responsibility for dredging in all Colombian ports and inland waterways, including those outside its operational jurisdiction. The funds oriented to this activity became a substantial burden on COLPUERTOS finances until 1980, when it discontinued the dredging services for lack of resources. As an emergency measure MOPT has been funding the most urgent maintenance dredging works, but a permanent arrangement to permit a financially self-sufficient dredging operation in port areas under COLPUERTOS' jurisdiction is yet to be definrid. Studies for such a permanent arrangement are provided for in the proposed project (para. 57). The third area refers to COLPUERTOS' labor relations and terms of employment. Significant improvements have been obtained through the negotiations with the port labor unions in the course of the last two years, and COLPUERTOS is committed to maintain its current personnel policy of further reducing staffing to actual operational needs and adjusting labor costs to levels compatible with an efficient port operation. Accordingly, a staff rationalization plan will be developed and implemented during the first two years of the project. Project Description 53. The project involves the rehabilitation of existing infrastructure, partial replacement of obsolete equipment, acquisition of selected container-handling equipment and preparation of studies for long term expansion and modernization of the public port facilities; it also includes major technical assistance and training components to strengthen COLPUERTOS (i) managerial, administrative and operational capabilities to enable the enterprise to improve efficiency and reduce costs; (ii) financial capabilities through the establishment of modern financial management techniques and a cost-related tariff structure; (iii) human resources through training programs with appropriate technical assistance and equipment; and (iv) planning capabilities through training of mediumr-and high-level managers as well as fellowships for professionals on port planning and administration. 54. The project consists of: (a) civil works for: repairing or rebuild- ing foundations and structure of existing quays at Buenaventura, Cartagena and Santa Marta, construction of roofing for storage areas at Buenaventura, replacement of sheds at Cartagena, repairing storage areas at Buenaventura and Cartagena, and acquisition and installation of emergency power plants at the four ports; (b) provision of: fork-lift trucks and mobile cranes to cover COLPUERTOS' shortage of equipment to handle heavy loads, trailers for general cargo, selected container yard handling equipment, workshop machinery and - 16 - tools, four second-hand tugboats to partially replace the existing fleet, computer equipment for the management information systems, and equipment for the training program; and (c) technical assistance and training. 55. The technical assistance services provided for in the project contemplate: (a) supervision of construction; (b) preparation of a training program for management, operations and administrative personnel at the ports and COLPUERTOS' central office; (c) management advisory services on financial, administrative, operational and maintenance functions; and (d) preparation of technical studies. 56. The training component would include: (a) advisory services to assist preparation of an overall four-year training program for COLPUERTOS' staff and all levels of management; (b) instructors to conduct courses and seminars for medium and top level managers; (c) visit of top-managers ane selected labor union personnel to selected ports within and outside the region to familiarize themselves with modern port operation and administration; (d) fellowships in port planning and administration practices; and (e) training material. The training program will be managed by a Training Steering Committee and operated by a Training Supervision Unit recently established and staffed for this specific purpose. COLPUERTOS has entered in an agreement with the National Service of Traineeship (SENA) to deliver training programs at the working level on administrative services and ports maintenance, and introduce formal training programs on industrial security. The preparation of the four-year training program would be a condition of loan effectiveness. 57. The technical studies would encompass: (a) engineering studies for, and design of, a future project to equip selected ports with full container and bulk-handling capabilities; (b) a study to reorganize the dredging services required for the operations of COLPUERTOS, and to identify arrangements to enable dredging in the Colombian coasts to become a self-financed activity; and (c) feasibility studies for the expansion of Colombia's port capacity on the Pacific coast. Use of Private Equipment 58. COLPUERTOS' limited availability of light cargo-handling equipment in working conditions has been efficiently covered by those from private comr panies, which until recently had been renting them directly to users. However, this arrangement had generated double costs because port users paid COLPUERTOS full tariffs in addition to the rent of private equipment an.s operators. Moreover, the cost of operntion and maintenance of COLPUERTOS' light cargo handling equipment has been higher than the prices charged by the private rental companies, and COLPUERTOS' operators were paid even when they did not participate in the operation. In an initial effort to correct these disturtions and reduce costs, COLPUERTOS has recently changed its policies in respect of cargo handling by Ci) entering, on its own account, into fixed-price contracts with equipment rental companies for the light cargo services; and (ii) renegotiating labor contracts to discontinue compensation to workers for services not rendered. Notwithstanding, until COLPUERTOS is able to reduce the costs of operating and maintaining its light equipment to competitive levels, it is committed not to replace light cargo equipment and to provide the services through the equipment rental companies. - 17 - Port Productivity Targets 59. Productivity of the four ports involved in the project was compared with that of other ports of similar size and volume of traffic, and with the average performance indicators of a sample of 220 ports around the world. This analysis showed that while gang productivity is generally in line with that of other ports, the idle time of ships alongside berths is considerably longer. This is attributed primarily to poor operational planning, working time control, equipment availability, internal traffic organization and pre- paration of cargo/storage areas. On that basis, a comprehensive strategy for improving port efficiency and a realistic set of productivity targets were prepared for each of the four ports. These productivity targets reflect an average increase in port service efficiency of 21% in general cargo handling and 38% in container handling (measured by tons of cargo/gang/hourB) between 1987 and 1991; the corresponding increases in port throughout capacity (measured by tons of cargo/ship/day) average 41Z for general cargo, 40% for containers and 33% for dry bulk cargo, during the same period. Project Costs and Financing 60. Total project costs are estimated at US$60.0 million, of which US$42.8 million corresponds to the foreign exchange component. Consultant services required are estimated at 190 man-months and 270 man-months for foreign and local consultants, respectively. Cost estimates are based upon September 1985 prices, exclusive of taxes and duties, of which COLPUERTOS is exempt. They include allowances of 10% for physical contingencies for civil works, 6% for equipment and 10% for all other items. Price contingencies were based on projected changes in domestic and international prices and expected exchange rate adjustments during the project period. Domestic inflation was assumed 22% in 1985, 20% in 1986, and 18% thereafter. Price escalation on foreign costs was assumed 5% in 1985, 7.5% in 1986 and 8% in 1987 through 1990. 61. The proposed loan of US$42.8 million corresponds to 71% of total project costs and would finance the foreign exchange component. COLPUERTOS would finance the local costs from its own cash generation. COLPUERTOS already initiated the procurement of initial civil works and heavy cargo handling equipment following Bank procurement procedures. Procurement and Disbursements 62. Except as noted below, civil works and equipment to be financed with the proceeds of the proposed loan would be subject to international competitive bidding (ICB) in accordance with Bank guidelines; civil work items estimated to cost US$0.6 million equivalent or less and equipment items estimated to cost US$0.1 million equivalent or less, may be procured through local competitive bidding (LCB) procedures open to foreign bidders. Workshop machinery and tools, the second-hand tugboats, training-related equipment and computer hardware may be procured through international comparative shopping procedures satisfactory to the Bank. Consultant services would be retained in accordance with Bank guidelines on the use of consultants. Local bidders for equipment would be granted a margin of preference equivalent to 15% of the CIF price of foreign competitors, or the relevant prevailing customs duty, whichever is lower. - 18 - Procurement procedures per item, excluding contingencies, are summarized as follows: PROCUREMENT TABLE US$ Million 1/ Procurement Procedures Project Element ICB LCB Other Total Cost Civil Works 27.3 2.2 - 29.5 (13.1) (1.0) _ (14.1) Equipment 14.1 0.8 5.6 20.5 (14.1) (0.8) (5.6) (20.5) Technical Assistance and Studies - - 9.1 9.1 - - (7.-) (7.2) TOTAL 41.4 3.0 14.7 59.1 (27.2) (1.8) (12.8) (41.8) 1/ Excluding fellowships and work visits abroad. Figures in () correspond to foreign exchange costs. 63. Disbursements would be made on the basis of: (a) 48Z of total expenditures for civil works; (b) 100% of foreign expenditures for directly imported equipment, 100% of ex-factory costs of domestically manufactured equipment, and 80% of local expenditures of imported equipment procured locally; (c) 79% of costs of consultants services; and (d) 100% of foreign costs of fellowships and work visits abroad. In order to permit an early project start-up, retroactive financing up to US$4 million would be allowed for expenditures incurred between January 1, 1985 and loan signature, on account of the advanced procurement of initial civil works and heavy cargo handling equipment. In order to expedite reimbursement of all eligible project expenditures a Special Account maintained in US dollars would be established in Banco de la Republica (Central Bank). This account would receive an initial deposit of US$4 million (authorized allocation) and would be replenished, as required, with disbursements from the loan account. Disbursements from the loan would be made on the basis of certified statement of expenditures for local expenditures where the contractual values are less than the equivalent of US$200,000, and for foreign expenditures where the contractual values are less than the equivalent of US$20,000. The corresponding supporting documentation would be verified on a routine basis during the supervision process. 64. Loan proceeds are expected to be disbursed over a six year period, slightly less than the 6 1/2 years standard profile for port projects in the region. This schedule takes into account the time savings expected from the advanced procurement already in progress, and that the civil wcrks requiring relatively small mobilization of equipment would be started simultaneously in all four ports. - 19 - Project Execution 65. COLPUERTOS would be the borrower and responsible for the execution of the project. COLPUERTOS has established a Project Implementation Unit (PIU), separated from COLPUERTOS normal operations, to coordinate and supervise the execution of the project with assistance from external consultants. The studies on dredging and expansion of port capacity in the Pacific coast would be coordinated and supervised by a Government-level technical committee formed by representatives of the Ministry of Public Works and Transport, the National Planning Department and COLPUERTOS. The recommendations of these studies would be subsequently implemented under Government responsibility. The measures recommended by the study on dredging shall be implemented by mid-1987. Financial Aspects 66. COLPUERTOS' financial planning requires a major overhaul to become an efficient management tool. Financial forecasts are limited to annual cash budgets used in monitoring day-to-day operations. Consequently, capital investments and other business decisions have been often made without adequate economic and financial scrutiny of their long term impact on COLPUERTOS' finances. Despite important improvements made during the last two years toward computerization of financial infermation and cost control, COLPUERTOS' accounting system is still complex and inadequate for measuring financial efficiency of individual ports, and fixed assets are substantially undervalued. COLPUERTOS has no cost-accounting to identify costs by function and, therefore, the present port tariffs--which are applied uniformly to alI ports-have no direct relationship to actual costs. While port tariffs for imports are set in US$ equivalent and, thus, are automatically adjusted for local inflation and devaluation, tariffs for exports are maintained in pesos and have not been adjusted since 1981. COLPUERTOS' internal audit system is reasonable but the auditing process is often hampered by the complexity of the existing systems and procedures. 67. From 1978 until 1982, COLPUERTOS made losses consistently. Over- staffing, disproportionate salaries and benefits, the expensive pension system and the inadequate dredging arrangement, compounded by a decrease in traffic during 1980-1982, brought accumulated losses to US$99 million (equi¶-alent) and networth reached a negative US$90 million (equivalent) in 1982. 68. Despite the rigidities imposed by the labor agreements on COLPUERTOS personnel management, the strict cost control measures introduced in late 1982 improved substantially its financial position. COLPUERTOS generated a net operating income of US$25.2 million (equivalent) in 1983, and US$23.2 million (equivaient) in 1984. The surpluses of the last two years, together with a projected US$58 million net operating income in 1985, have significantly improved COLPUERTOS' networth, which is expected to recuperate to a negative US$22 million (equivalent) by the end of this year and to turn positive in 1986. Moreover, further cost reductions are expected when COLPUERTOS starts implementing the staff rationalization plan referred to in paragraph 52. Accordingly, the financial forecast (para. 70) indicate sufficient cash generation to enable COLPUERTOS to meet the counterpart funding requirements through the project period. - 20 - 69. In order to resolve permanently the problems of COLPUERTOS' pension system by way of establishing an autonomous pension fund to administer retirement benefits to port workers independently from COLPUERTOS' operation, the Government initiated early this year negotiations with the ports labor unions to bring the retirement rights and obligations of COLPUERTOS workers in line with the normal pension terms in the country. Subsequently, in late July, a bill providing for the creation and regulation of such a pension fund was submitted to Congress. This bill sets the legal framework for a pension system to be funded with contributions from COLPUERTOS, payroll contributions from its employees and retirees, and supplementary contributions from the Government during the fund's consolidation period. Once approved, this pension fund would take over COLPUERTOS' accrued obligations on account of pensions and take responsibility for the benefit thereon. The Bank has reviewed the terms of the bill as proposed to the legislature and found them adequate. The Congress is expected to vote on it before the end of the year. In the event the pension law is not enacted in this legislative period, the Government has made a commitment to put in place by June 1986 an alternative mechanism to ensure that COLPUERTOS' financial contributions toward pensions will not exceed the amounts that would have been required from it had the proposed law been enacted. Financial Forecast 70. COLPUERTOS' financial projections for 1985-1990 reflect the expected decrease in port operating costs derived from the planned staff reduction by attrition, although further staff reduction is expected from the implementation of the staff rationalization plan in 1988. The projections assume that starting in 1985, COLPUERTOS will pay for dredging costs only in port basins and alongside quays under its jurisdiction and, starting in 1986, COLPUERTOS' pension nayments would be limited to the employer's regular contributions to the funding of a pension fund under normal terms in Colombia.. They assume, however, that COLPUERTOS would start in 1986 special contributions to the fund of about US$35 million equivalent per year (in mid-year exchange rates) corresponding to COLPUERTOS' share of the accrued pension liabilities until they are covered. Since cost-based tariffs would be instituted only by mid-1988 when COLPUERTOS' cost-accounting system is put in place, port tariffs are assumed to maintain the average revenue per ton constant, in real terms, at 1984 level. The combined effect of the expected reductions in labor costs and the operational improvements implicit in the productivity targets would reduce the average port cost per ton of cargo by 24%, in real terms, between 1984 and 1990. Economic Benefits and Risks 71. The project is designed to increase reliability and reduce the costs of port services through the rehabilitation of existing physical facilities and the institutionur. capabilities of COLPUERTOS. The economic analysis assessed each major project component by port. The technical assistance and training components were not analyzed separately but their costs were included in the overall project economic analysis. The economic benefits of repair of quays and infrastructure improvements include: reductions in ship waiting time, and avoidance of lighterage-related costs, such as double-handling of cargo and cargo losses that would be expected without the project; quantified benefits from the expenditures in equipments - 21 - are: reductions in ship service time and improved cargo handling efficiency consistent with the productivity targets established under the project. Economic ratas of return of individual components range from 16X to 86%. To avoid double counting of time savings from upgraded equipment efficiency and quay improvements, only ship service time savings were attributed to the equipment procurement program, and only ship waiting time savings were attributed to the civil works for quay improvements in the overall economic analysis. It has been assfimed that all efficiency gains accruing to Colombian vessels and half of those accruing to foreign vessels will be captured by the Colombian economy. The overall economic rate of return is estimated at 38%. 72. The quantified economic benefits will accrue directly to port users through lower turn around times and ship service time, which in turn would be reflected in lower shipping costs (or avoidance of demurrage charges) than would be expected without the project. In addition, upon the establishment of a cost-based port tariff structure, COLPUERTOS' lower operating costs will be translated into lower and less cross subsidized port tariffs. 73. Sensitivity analysis indicates that the civii works components are not sensitive to failure of forecast traffic to materialize. Although the equipment component is sensitive to this risk, it has been minimized by concentrating the equipment procurement program on replacing equipment items of well established need at the present level of traffic. 74. The project presents a somewhat higher risk than the usual for port projects. The additional risks are those associated with the pension and labor problems at the Colombian ports, the permanent solution of which, because of the sensitivity and legal complexity of the issue, lays beyond COLPUERTOS sole capacity and demands firm commitment at, and support from, the highest Government levels. These, nonetheless, have been demonstrated by the concrete actions taken by the Government and the results achieved so far, which suggest that the degree of risk is acceptable and more than offset by the project's potential benefits to the Colombian economy. PART V - RECO0MENDATION 75. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank and recommend that the Executive Directors approve the proposed loan. A. W. Clausen President Attachments October 24, 1985 Washington, D.C. - 22 - ANNEX I T A * L 3A PaRe 1 of 6 C OOWaIk - SOCIAL INDICATOU MDTA SIE COLOMBIA BnUh CROUPS (HGIIIED AMEBHSE NOST (HOST hhOhJIT nTDXATE) /b sCst" MIDDLE 11036C NICmLE lml 19OL I@J0.11- iI2nmTLb LAI. SEttCA A CARBU e~~~~~~~~~~~~~~~~~~tT 41670 & amu (auso sq.. no TOTAL 1135.9 1133.9 1135.9 AGRICULTURAL 350.3 330.3 353.6 GM PM C&pT& CS) .. .. 1430.0 L873.9 2144.3 fmmC cosooram PM CAPRn CKILOCBAIU Or OIL EQUIVALEln 333.0 495.0 690.0 993.6 litSJ IOPILATION.110D-TAR (TNbASDUS) 13754.0 21266.0 27315.0 urv PoPLATiO cE or TOuL) U8.2 37.2 61.1 67.7 47.5 POIULATIOI PEOJECIONS POPULATON in EA 2000 (HILL) 37.0 STATONr POPULATION (HL 60.0 P0PULATZOU 3010113 1.5 POPUTION 0111 PER SQ. IQ 13.8 15.7 24.2 48.0 54.7 PE SQ. KI. SAt. LA 43.0 60.7 75.6 91.1 166.9 0-14 US 46.7 46.1 37.7 35.5 31.2 5 TSit 30.2 51.0 58.6 57.1 61.3 65 3AND ABOV 2.9 2.7 3.6 4.2 7.2 POULTrIOE CROWS LuZ (2) 70TAL 3.1 3.0 2.0 2.4 1.6 Ull 5.7 5.2 2.7 3.6 3.7 BI- a RATE (M TN0U5 47.2 33.8 26.0 30.9 23.4 -NICO UATH RATE (PM T105) 17.1 9.7 7.3 5.0 5.9 GROS EROOUCT RATE 3.3 2.6 1.8 2.0 1.5 FAIIMLT PLANIIIIC ACC311, ANUS.AL (T1V105) .. 115.4 192.5 lC USERS CZ OP HARRIED V IE) 34.0 55.0 45.3 1M1 OF PMO POD. PEA CAPTA (1969-71-100) 100.0 99.0 117.0 109.6 109.1 2R CAPITA SUPL! OF CALORIS (I or _UQUIREEI5) 102.0 89.0 110.0 113.2 131.5 PROTINS (CRAMS PZR DAT) 54.0 48.0 57.0 69.4 92.4 OF WuCH AlMDIAL AlID PULSC 28.0 24.0 23.0 Id 34.2 34.5 aCii (ACES 1-4) DEATH RATE 9_4 6.6 3.0 4.5 4.7 LIrE ElxCT. AT BIxRT (YEARS) 53.1 56.9 64.1 6U4. 67.2 INFA37 MrT. ATZ (FPER TSDUS) 93.5 70.5 53.0 59.7 53.3 ACCESS TO SAFE 5A WA (MPP) TOTAL 30.0 63.0 92.0 Ic 65.3 70.2 URBAN 54.9 58.0 100.0 7ie 76.5 89.4 uMLAL 6J 28.0 79.0 7i 44.2 57.0 ACCESS TO rCETA DISPOSAL (I OF POPULATION) TOTAL .. 47.0 65.0 Ic 56.3 59.6 U0* 75.0 100.0 7-7 73.4 65.9 LUA l 8.0 &.o 7;- 25.5 47.6 POPULAInO PU PITSICIXAI 2640.0 2330.0 1710.0 /a 1909.7 1070.6 POP. PrE NURSING PERSON 4220.0 If 730.0 100.0 7; 805.2 769.5 POP. PU HOSPITAL BED TOTAL 360.0 450.0 530.0 /. 362.0 32U.3 UBAII .. 380.0 490.0 77 *22.0 201.9 RURAL .. .. . 2716.7 4519.7 ADMISIONS PER ESPITAL BCD .. 22.9 29.8 /d 27.5 20.0 mIlC AVERAGE SZE OF NDUSE3ILO TOTAL . . . . .. UEIJ4 5v57 RILAL *- 5.9 AVERAGE NO. OP PERSONS/E0O TOTAL I I .8ft URiAN 1.s64 RURAL .. 2.&. PERCEN-ACE OF DWELLIOS WITN eLECt. A.Z.b 47.0 /h 58.1 I allAN 53.O7ir 57.3 j0 Rl!RAL s.o7Wii 13.21B 1 ": - 23 - ANNEX I T A I L A 3A Page 2 of 6 MOST (MOST RECar TzlTAn) lb z~~wLk znotk - ~~ NUN"L iNCOW NIDOIZ in-cmI 1@ Lb- waLb 0 sumAnLk LA?T. AMICA A CAR EUROPE ADJUSTD RROIJUIIT RATMIO PRIKRAT SOTA 77.0 10.0 130.0 106.7 101.9 NALE 77.0 107.0 129.0 106.5 106.2 FSNALE 77.0 110.0 132.0 104.6 97.5 - SECUDL:z STOTAL 12.0 25.0 4U.0 4.2 57.5 KALB 13.0 25.0 45.0 42.7 b4. FCENALE 11.0 24.0 51.0 ".9 50.0 VOCATCOAL (C O SaMomAR) 30.6 it 20.2 21.61± 13.3 21.0 P8I1A*1 38.0 38.0 31.0 29.9 25.1 °OORHAS? 11.0 17.0 20.0 16.7 19.1 a_fl *ASS60 CARS/SOU D POP 5.7 11.2 16.6 ld 46.0 54.2 RADIO UCRR=S/SOOMLID POP 125.1 104.3 131.7 328.3 170.7 Tv _- B POP 9.5 38.1 86.9 /c 112.4 149.3 nRMPI ("AILY cu3aL. INTEEIr) CTOIIAUO PER OUSSDPGPUILATO 50.0 108.7 41.0 81.1 97.0 cminA AmuaL AE Uicz/cAfM .. .. 2.6 2.4 2.7 TOTAL LAS FORCE (THOSW) 4727.0 6353.0 9064.0 PUwLE C(PUe!) 19.2 24.8 24.6 23.6 36.3 SICAUGlT (PUCK) 51.4 37.9 25.8 /c 31.4 40.8 13DU:152 (P3ICMS) 19.2 21.0 21.2 7;r 24.3 23.3 PARTICIPATION RATE (PURCKI?) TOTAL 30.0 29.9 33.0 33.5 43.1 MALE 48.I 45.1 49.4 51.3 55.1 P3Wll! I 1.5 14.8 16.1 15.9 31.4 ECoOUaC DU lrOCTr RAM 1.7 1.6 1.3 1.3 J.9 PISRW Or PUAIT INCM REEIE I HIHEST 5S OF IOUSUI.ZDS 41.2 lb 31.9 .. IMISS 202 0F UWSUZOSDS 67. 71R1 60.1 l1 LOWEST 2.0 Hor 2.1 3.. j 3.. LOST 402 0F IIOSRUOS 6.8 10.112. mi - -C, LTU A9MC POvZn nK LEVR (cm PER CaP) 038*1 .. .. 214.0 /d 288.3 RAL .. .. 197.0 7i 185.3 UZDS rmAV nu trn LUV. (US$1FM CAPITA) Ul .. .. 167.0 /d 519.8 RtAL .. .. 122.0 7r 359.7 ufS D POP. BELOW ABSOIUM P* M INCOM LEM (2) R .. .. 34.0 /d ..AL NOT *A~ NON AP I1 O T 9 S /a The group rg for each indicator - popullatam-weited aritbetic seans. Coverage of tr meog the indicator, dopes. on avaolability of data ad is not untfon. /b Miami otbwriae noted. "Data for 1960" refer to any year between 1959 nd 1961; "Datt for 1970" betwee 1969 and 1971; and data for "tht Recet mtetate" between 1981 and 1983. /c 1980; /d 1977; fr 1976; /f 1962; fg 1973; b 1964; /i Incldin teacber training at the tertiary level; I Ecnoo ucy actrive popuatio. JUNaZ. 19815 - 24 - ANNEX I Page 3 of 6 DEFINmONS OF SOCIAL INDICATORS No: Although the data are drawn from sources generally judgcd the most authoriauive and reliable, it should also be noted that they may not be intenstionally comparable because or the lack of standardized definitions and concepts used by different countres in collecting the data. The data are. nonetheless useful to describe orders of magitude. indicate trends, and characitnze cerain major differences between countries. The reference groups are ( I the same country group of the subject country and 12) a country group with wmewhat higher avenge inCOMe than the country group of the subjectcountry (ept for -High Income Oil Exporters group where Middle Income North Africa and Middle East- is chosen becuse of stronger soco-cultural affinities). In the refierence group data the averages are population weighted anthmetic means for each indicator and shown only when majority of the countries in a group has data for that indicator. Since the coverage ofcountries among the indicators depends on the availability ofdaa and is not uniform cautwn must be exercised in relating averages of one indicator to another. These averages are only useful in comparing the value of one indicator at a time among the country and reference groups AREA (thousand sq.km.) Crude Birth Rate (per rkousand)-Numberof live births in thb: year Total-Total surface area comprising land area and inland walers: per thousand of mid-year papulation: 1960. 1970. and 1983 data. 1960 1970 and 1983 daEa. Crude Death Rate (per tousaud)-Number of deaths in the year Agricultural-Estimate of agricultural area used temporarilv or per thousand of mid-year population: 1960. 1970, and 1983 data. permanently for crops. pastures. market and kitchen gardens or to Gross Reproduction Rate-Average numbcr ofdaughters a woman lie fallow. 1960. 1970 and 1982 data. will bear in her normal reproductive period if she experiences present age-specific fertility rates; usually five-year averages ending GN' PER CAPITA (USS)-GNP per capita estimates at current in 1960. 1970. and 1983. market prices. calculated bv same conversion method as U4srPA Bank Atlas {19X1483 basisi: ;983 data. amy Facdee-ccprors. An1n thoms) -Annual numn- berof acceptors ofbirth-control devices underauspices of national ENERGY CONSUMPTION PER CAPITA-Annual apparent family planning program. consumption of commercial primary energy (coal and lignite. Famiy Psrining-Users (per at ofemarriled wenra)-T'e percen- petroleum. natural gas and hydro-. nuclear and geothermal elec- tage of married women of child-bearing age who are practicing or tricity) in kilograms of oil equtivalent per capita: 1960. 1970. and whose husbands are practicing any form of contaception. Women 1982 data. of child-bearing age are generally women aged 15-49. although for some countries contraceptive usage is measured for other age POPULATION AND VITAL STATlSTICS groups. Total Populaio. Mid-Year (thousandsi-As ofluly 1: 1960. 1970. FOOD AND NUTRMON and 1983 data. Index of Food Production Per Caa (1969-71 = 10)-Index ofper population:puiofent dperenitiofntoasati of urban acto totpal capita annual production of all food commodities. Production population:.different definitions of urban areas may affect compar- excludes animal feed and seed for agriclture. Food commodities ability of data among countries: 1960. 1970. and 1983 data. include primary commodities (e.g. sugarcane instead of sugar) Popuation Projections which are edible and contain nutrients (e.& coffee and tea are Populaion in rear 2000-Thc projection of population for 2000 excluded): they comprise cereals, root crops. pulses oil se. made for cach cconomy scparately. Starting with information on vegetablcs, fruits. nuts, sugarcane and sugar beets, livestock, and total population by age and sex. fertility rates. mortality rates, and livcstock products. Aggregate production of each country is based international migration in the base year 1980. these parameters on national average producer price weights 1961-65, 1970. and were projected at five-year intervals on the basis of generalized 1982 data. assumptions until the population became stationary. Per Capta Spply vfCaorie (percent efrequxeans)-Comput- Srarionary population-Is one in which age- and sex-specific mor- ed from calorie equivalent of net food supplies availablein country tality rates have not changed ever a long period. while age-specific per capita per day. Available supplies comprise domestic produc- fertility rates have simultaneously remained at replacement level tion. imports less exports. and changes in stock. Net supplies (net reproduction rate = I ) In such a population. the birth rate is exclude animal feed. seeds for use in agriculture. quantities used in constant and equal to the death rate. the age stnaicture is also food processing, and losses in distribution. Requirements were constant. and the growth rate is zero. The stationary population estimated by FAO based or. phtysiological needs for normal activity size was cstimated on the basis of the projected characteristics of and health considering environmental temperature, body weights. the population in the year 2000. and the rate of decline of fertility age and sex distribution of population. and allowing 10 percent for rate to replacement level. waste at household level: 1961. 1970 and 1982 data. Population Momentum-is the tendency for population growth to Per Capita Supply of Protein (gru per dayf-Protdin content of conrinue beyond the time that replacement-level fertility has been per capita net supply of food per day. Net supply of food is defined achieved. that is. even after the net reproduction rate has reached as above. Requirements for all countries establshed by USDA unity. The momentuir. of a population in the year t is measured as provide for minimum allowances of 60 grams of total protein per a ratio of the ultimate stationary population to the population in dav and 20 grams of animal and pulse protein. of which 10 grams the year z. given the assumption that fertility remains at replace- should be animal protein. Thcse standardsare lower than those of ment level from year t onward. I985 data. 75 grams of total protein and 23 grams of animal protein as an Popdarion Deity average for the world, proposed bv FAO in the Third World Food Per sqkrn.-Mid-year population per square kilometer (100 hec- Supply: 1961. 1970 and 1982 data. tares) of total area: 1960. 1970. and 1983 data. Per Capita Protein Supply am Anima and Pkalse-Protein supply Per sq.km. agricultural fznd-Computed as above for agricultural of food derived from animals and pulss in grams per day: 1961-65. land only. 1960. 1970. and 1982 data. 1970 and 1977 data. Populatn Age Strcture (percent)-Children (0-14 vears). work- Child (aes 1-4) Death Rate (per tusandu-Number of dcaths of ing age ( 15-64 years). and retired (65 years and over) as percentage children aged 1-4 years per thousand children in the same age of mid-year population: 1960. 1970. and 1983 data. group in a given year. For most developing countries data derived Popltio Growth Rate rpercentJ-troal-Annual growth rates of from life tables: 1960. 1970 and 1983 data. total mid-year population for 1950-6. 1960-70. and 1970-143. HEALTH Populato Growth Rare (percentj-arbaa--Annual growth rates Life Expectancy at Birth (yers-Number of years a newborn of urban population for 1950-60. 1960-70. ard 1970-83 data. infant would live if prevailing patterns of mortality for anl people ANNEX I - 25 - Page 4 of 6 at the time of of iu birth were to stay the same throughout its life; Pupl-teawher Ratio - primary. and secondary-Total students en- 1960. 1970 and 1913 data. rolled in primary and secondary levels divided by numbers of lRfe Manoby Roe (,ar th.emdj-Numblr of infants who die teacher in the corresponding levels. before reaching one year of ap per thousand live births in a given year, 1960. 1970 and 1933 data. CONSUMPTION Amuc t SoS Whew (re e ofae-rr he, ad fasewr Cars (per theand pepaineaJ-Passenger cars com- rwaL-Number of people (totaL urban, and rurl) with rsnable prise motor cars seating less than eight persons: excludes ambul- access to safe water supply (includes treated surface waters or ances. hearses and military vehicles. untreated but uncontaminated water such as that from protected Ra Recelers (per sheus.dpopulanionj-AlI types of receivers borehols, sprinp and anitury wells) as percentages of thimr respec- for radio broadcasts to general public per thousand of population: tive populatn. In an urban area a public fountain or standpost exdudes un-licensed receivers in countries and in years when located not more than 200 meters rrom a house may be cnidaed registration of radio sets was in effect data for recnt years may as being within reasonable access of that howe. In rural ar-a not be comparable since most countries abolished licensing. rmaoasble ass ould inply that th houwwife or mmbers ofthe houselbold do not have to spend a disproportionate part of the day TYR s {per rkep9 i-TV receivers for broadcast in fetching the family's water needs to general public per thousand population: excludes unlicsed TV receivers in countries and in yeas when registration of TV sets was Awnes te Exreme Diupea (prew of powdxJ-oa arb in edrect. ad rura-Number of people (total, urban, and rural) served by excreta disposal as percentages of their respective populations. News C'rcAmo (pgr aoJedpap.ai-Shows the aver- Excreta disposal may include the collection and disposaL with or age rciulation of -daily generAl interest newspaper.' defined as a without treatment, of human excreta and waste-water by water- periodical publication devoted primariy to recording gerl news. borne systms or the uwe of pit privies and similar installations. It is considered to be -daily" if it appears at least four times a week. fbp.dadon per PhjPsicio-Ppulation divided by number of prac- Cinm Anmal Auedmnc per Cata per YVa-Based on the tising physicians qualified from a medical school at university level. number of tickets sold during the year, including admissions to Pepalmnos per Nunu fPasn-fPpulauon divided by number of drive-in cinemas and mobile units. practicing male and female graduate nurses, assistant nurses. practical nurses and nursing auxiliaries. LABOR FORCE .opulation Hotal Bed-totaL drban, and rl-ohpulation Totra Labor Farce rt m'adui-Economicalbl active persons. in- (totaL urban. and rural) divided by their respective number of cludin armed forces and unemployed but excluding housewives. hospital beds available in public and private. and specalized students etc.. covering population of all age Definitions in hospitak and rehabilitation centers. Hospitals are esm slunents various countries are not comparable; 1960. 1970 and 1983 data. permanenly staffed by at last one physician. EsLablshmeats pray- lik & prmrP-Female labor force as pecentage or total labor iding principally custodial care are not included. Rural hospia. force. howver. include health and media ceners not permanendy staffed Agriutue fpernt)-Labor force in farming. forestrv. hunting by a physician (but by a medical assistant. nurse, midwife. etc.) and fishing as percentage of total labor force 1960. 1970 and 1980 which offer in-patient acconunodadon and provide a linited range data. of medical facilities. Inury (ecent-Labor force in mining. construction. manu- Admssions per Hospital Red-Total number of admissions to or factuting and electricity. water and gas as percentage of total labor discharges from hospitals divided by the number of beds. force: 1960. 1970 and 1980 data. Parrian Rate (percentj-eraL. ak. andfemale-Participation HOUSING or activity rates are computed as totaL male, and female labor force Averae SIe of Hous (peeonas per hoseholdj-rotal she, as percentages of totaL male and female population of all ages andrwral-A housebold consists of a group of individuals who share respectively: 1960. 1970. and 1983 data. These are based on ILO's living quarters and their main meals A boarder or lodger may or participation rates reflecting age-sex structure of the population. and may not be included in the household for statistical purposes. long time trend. A few estimates are from national sources. Average Number of Persons per Reom-,erei. urban, and rura- Econemic Depedw Ratio-Ratio of population under 15. and Average number of persons per room in all urban, and rural 65 and over. to the working age population (those aged 15-641. occupied conventional dwdlings. respectively. Dwellings exclude non-permanent structures and unoccupied parts. INCOME DISTRIBLTION Prcetage of DleWags wirt Eeciricire-toral. aa. and rual- Percentage of Total Dispsabk la e (botkhi cash and kind)- Conventional dwellings with electricity in living quarters as percen- Accruing to percentile groups of households ranked by total house- rage of total urban. and rural dwellings respectively, hold income. EDUCATION POVERTY TARGET GROUPS AJured Enofimt Ratios The follow.ng estimates are very approximate measures of poverty Prliwn school - total. ma and femak-Gross total. male and levels. and should be interpreted with considerable caution. female enrollment of all ages at the primary level as percentages of Estsnmed Absolute Poverty Iwcoa Level e(US per cairai-u _r respective primary school-age populations. While many countries and rura-Absolute poverty income level is that income level consider primary school age to be 6-11 years. others do not. The below which a minimal nutritionally adequate diet plus essential differeces in country pracices in the ages and duration of school non-food requirements is not affordable. are reflected in the ratios given. For some countries with universal Emaed Reie Poverty Icome Lel f SS per pia h education, gross enrollment may exceed 100 percent since some ad rel-Rural relative poverty income level is one-third of pupils are below or above the country's standard primar.y-school average per capita personal income of the country. Urban level is age. derived from the rural level with adjustment for higher cost of &cond&ry schol - total. male and femde-Computed as above: living in urban areas. secondary education requires at least four years of approved pn- Estmated Population Below Absolute Poverty Income Level (pr- mary instruction: provides general. vocationaL or teacher training centJ-awhan and rutral- Pfcent of population (urban and rural instructions for pupils usually of 12 to 17 years of age. correspond- who are -absolute poor." ence courses are generally excluded. Vocational Enrollment (percent of secrndmrzv i-Vocational institu- Comparati'c Analysis and Data Division tions include technical. industrial. or other progrAms which operate Eonomic Analysis and Projections Department independently or as departments of secondary institutions. June 1985 god aulbi ) - 26 - Am ) zemd sis C0pt) i t--( ! w . .) 3-2-~~-Pdg xe d, 53 Ssw 4 MD sM MD MD ]M MeD ENd rd~~~~~~A 9J -73 S9 Ms Z; ifM III3D Imo- mo9 -U mo0 mo kdmcw ~ ,3 SMZ 9%3 %M 7 62 u1 2B6 2S . ma 2;6% 20 M 2L,2Si 4m a,z D,32A S-9 SL4 4J 42 DL6S Si wIL 5%6 5 SS anrd AMl 3Mf 3M M6M l SSb 5B MA aL8 MOD 1M2 M14 az Rh am ~~7,13 7,S 7Y 60 J S 36 7.2 15 M62 DD. D6 A5 DA 89 E ,cfwbdm W 4iE 4;1t 4.% 4P 1 5A4 7 5A L9 5A as =3 KU 9 im_fibhdff 6,11 6n %fl %M 4]3 Q6 9i as IS M w7 D.3 W tlnl*. S,SI 4,M1 &A1 w 52 IL2 -M MA4 M5 wi Lt VA IL6 n3 QWL-nf fthrA a: C : 1 4 3;S~~~ 3jlS 3W MMB 13 1 ld O MOD MO MO XllO ]MO mLo F