FILE COP DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Not For Public Use Report No. P-1498a-YU REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO PORT OF BAR ENTERPRISE WITH THE GUARANTEE OF THE SOCIALIST FEDERAL REPUBLIC OF YUGOSLAVIA FOR A PORT PROJECT November 11, 19,74 Europe, Middle East and N. Africa Region This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report. rJT,j M!Y EQUIVALEMTS * Currency Unit Yugoslav Dinar (Din.) US$1 = Din. 15.15 Din. 1 = us$o.o66o Din. 1,000 = us$66.00 a n. 1,000,000 ITs$66,006 Fiscal Year January 1 tc December 31 * Th,e Yugoslav ninar has been floating since July 13, 1973. The currency equivalents given above are as of August 1, 19714. The Yugoslair Central Bank established on October 29, 1°7L a new intermention rate of US$1.00 enuCnl to Dinars 27.23, an effective devaluation or 7 percent. INTERNATIONAL BANK FOR RECONSTRUJCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO PORT OF BAR ENTERPRISE WITIi THIE GUARANTEE OF THE SOCIALIST FEDERAL REPUBLIC OF YUGOSLAVIA 1. I submit the following report and recommendation on a proposed loan to Port of Bar Enterprise, with the guarantee of the Socialist Federal Republic of Yugoslavia, for the equivalent of US$44 million to help finance a port proj- e:t. The loan would have a term of 25 years, including four years of grace, withl interest at 8 percent per annumi. US$5.7 million of the proceeds of the loan would be relent to the Railway Transport Enterprise, Belgrade (RTE Belgrade) for the railway part of the project, on similar terms and conditions to the Bank loan. PART I - TtiE ECONOMY 2. A basic economic mission visited Yugoslavia in November 1972; its report entitled "Tie Economic Development of Yugoslavia" (R74-1) was distri- buted to the Executive Directors on January 2, 1974. An economic updating mission visited the country in October 1973 and its findings are reflected in this report. Basic data on the economy are given in Annex I. Economic Trends and Development Issues 3. The Yugoslav economy has experience(d rapid growth and significant structural change during the past two decades. GDP at constant prices in- creased by about 5.5 percent per year and per capita GDP by over 4.5 percent per year. Average per capita GNP is estimated at around US$900 (1973). The nurmber of people engaged in agriculture has decreased both absolutely and as a percentage of the labor force, while the number engaged in industry and serv- ices has correspondingly increased. However nearly half of the labor force is still engaged in agriculture, most of it on small private farms. Industry ac- counts for 23 percent and services for 22 percent of the labor force. 4. Two imLportant features of the economy have been strengthened by the recent constitutional changes. Self-management, whereby the means of produc- tion used by different workers' collectives are given to them to manage, has emerged as the fundamental right and obligation of every basic unit of orga- nizedI labor in whatever sector. Second, the responsibility for most important economic and social policy decisions has been delegated to the Republics and Provinces. Against this background, Yugoslavia has placed increasing re- liance on the market mechanism and the opening-up of the economy to inter- national trade. 5. The leading role in economic and social development has been played by the social sector, which includes government, most enterprises and institu- tions such as libraries, hospitals, theatres and schools, and which accounts for 85 percent of GDP and employs over half of the total labor force. All the enterprises and institutions are under workers' self-management and re- sources are under social ownership. There is a private sector predominantly comprised of peasant farms (withi a 10 hectare limit on land holdings) and small enterprises (with a 5 person limit on the number of non-family workers), mainly in handicrafts, construction, trade, transport and tourism. In the past the private sector has been relatively neglected by government policy. However, the government has lately been devoting more attention to private farmers with a view to accelerating the growth of agricultural production. 6. Despite a policy of fostering accelerated growth in the less- developed regions, major differences persist in the levels of development among Republics. The more-developed regions are located in the north and include 65 percent of the population, But even this area includes sizeable pockets of poverty, particularly in private agriculture. The less-developed regions are in the south and are generally more mourntainous and less densely populated. This makes agriculture and transportation more difficult. The southern regions are rich in minerals, coal and hydro-power generating poten- tial. The development of these resources has provided the major stimulus for growth. 7. Although the economy of the less-developed regions has been growing at almost the same rate as the more advanced areas, per capita income has lagged behind because of faster population growth (1,6 percent per year as compared with 0.7 percent in the more-developed regions). Consequently, regional inequalities have widened. Average per capita GDP in the less- developed regions now amounts to abouL J0 percent of that of the rest of the country. Yugoslavia's development policy aims at reducing regional inequal- ities by transferring investDment funds from Lihe more advanced to the less- developed regions. In 1972 these transfers amounted to almost US$300 million, about one-third of the less-developed regions' total investment expenditure. 8. In addition to significanit regional income differences there are substantial sectoral income differences. For example, per capita GDP in pri- vate agriculture in Kosovo (by far the poorest region), is just over US$100 or about one-ninth of the national average. Many private farmers there sup- plement their incomes by working in the social sector but are, nevertheless, unable to maintain an adequate standard of living. Although incomes in private agriculture are somewhat higher in other parts of the country, they remain far below those obtaining in non-agricultural activities. 9. Thus far the unemployment situation in Yugoslavia has remained manageable not least because some 800,000 Yugoslav workers have found work abroad. But the number of registered first-time job seekers has risen from 146,000 in 1971 to 230,000 early in 1974 (5.4 and 13.7 percent of the labor force respectively). The Government is concerned about having a large number of workers abroad and favors a policy of encouraging their return. Moreover job opportunities abroad may diminish as economic growth in Europe slows down. - 3 - Although this trend has not yet taken on serious proportions there is a grow- ing tendency for workers to return home and a slow down in the number leaving. This could aggravate the country's unemployment and housing problems. Recent Developments 10. Rapid economic growth since 1968 was accompanied by inflation and balance of payments problems. tMany enterprises experienced financial diffi- culties primarily as a result of over-zealous investment programs and a lack of financial discipline. To counter inflation and improve the external pay- ments position the Government, in 1972 and 1973, adopted measures aimed at restricting monetary expansion, limiting public expenditure, temporarily strengthening price controls, reducing the growth of personal income, improv- ing the financial structure of enterprises and imposing limitations on ex- ternal borrowing. In addition, to neutralize the inflationary pressure on the balance of payments, the dinar was devalued by 16.6 percent in January 1971, and again by 18.8 percent in December 1971. Since July 1973 the dinar has been floating. 1/ 11. As a result of these measures exports increased rapidly in 1972 and 1973 and imports stagnated. Aided by a sharp rise in workers' remittances, up 36 percent in 1972, the current account showed a surplus of US$415 million in 1972, the first surplus since 1965. A current account surplus was again achiieved in 1973 ($210 million). Foreign exchange reserves have risen from tihe equivalent of about one month's merclhandise imports in 1971, to nearly 5 montlhs at present. There has been no slowdown in the rate of inflation, however, and most prices continue to rise at the rate of 15-20 percent per year. 12. While the restrictive measures have been successful in improving the external pavments position and the financial situation of enterprises, thley lhave reduced economic growth. Real GDP increased by only 4.4 percent in 1972 as against 8.8 percent in 1971; for 1973 real economic growth is esti- mated at about 5 percent. 13. The Social Development Plan for 1971-75 proJected an average GDP growth of 7.5 percent per year in real terms but it is clear that this will not be realized. Even if economic growth in 1974 and 1975 reached that level, average growth during the five years would amount to around 6.8 percent, due to the slowdown associated with the 1972/73 stabilization measures. Given thie slow population increase this would still be rather high, and would com- pare well with growth during the preceding five-year period (6.3 percent per year). The Energy Sector 14. On a calorific basis 67 percent of Yugoslavia's energy needs in 1973 were met from domestic sources. Domestically-mined coal remains an im- portant source of fuel. Practically all thermal power plants are coal fired. About 39 percent of the oil consumed is of domestic origin. Yugoslavia gen- erates more than half of its electricity from hydro plants despite the fact 1/ l; new intervention rate was fixed by the Yugoslav Central Bank on October 29, 1974 of US$1.00 equal to Dinars 17.23, an effective devaluation of 7 percent. - 4 - that liydro capacity has been developed only to about one-third of its poten- tial. The shortages of electricity that are emerging are not due to the lack of lhydro generation potential, coal or oil, but rather to insufficient plant capacity, delayed construction and a country-wide drought which has reduced hydropower output. Yugoslavia maintains friendly relations with nearby oil producers, so that its oil imports are assured. 15. In spite of Yugoslavia's relatively low dependence on imported oil, increases in the price of oil are bound to affect the government's efforts to improve the external payments position. In 1973 oil imports amounted to an estimated USS259 million, or 5.4 percent of goods and services imports. For 1974 oil import payments will be of the order of US$900 million, at an average c.i.f. price of US$100 per m.t. (US$13 per barrel), equivalent to about 15 percent of imports of goods and services. The impact on the balance of payments will be to contribute to a substantial current account deficit in 1974 (estimated at about US*6OV miilion) and later years, instead of the supluses Yugoslavia has enjoyed recently. 16. The indirect consequences of the world energy crisis are unclear. On the positive side Yugoslavia's heavy use of coal and hydropower should improve the country's international competitive position. On the other hand jot) opportunities for Yugoslavs working abroad will diminish as economic growth in Western Europe slows down. Returning migrant workers would exacer- bate unemployment and housing problems and workers' remittances, which have played a dynamic role in the economy, may suffer. Moreover, stagnation in economic activity abroad could affect Yugoslavia's exports. The rise in the cost of automobile and air transportation may influence tourism unfavorably, although it is also conceivable that the country would attract tourists who would otherwise have gone furLher afield. Therefore, the tourist sector may gain on balance. These conflicting trends are being watched carefully by the Yugoslav authorities and the Bank. Capital Requirements 17. Yugoslavia is dependent to a large degree on imported equipment for its economic development and the country has borrowed substantial amounts abroad. Gross capital inflows have more than tripled during the last five years, reaching US$1,250 million in 1973, mostly in medium-term commercial credit. However, due to rapidly rising amortization payments, an increase of US$746 million in gross inflows between 1967 and 1972 resulted in an in- crease in the net inflow of only US$224 million. The growing discrepancy between gross and net inflows reflects a shlift, following the 1965 Economic Reforms, from long-term official loans to medium-term commercial credits as a result of the limited availability of official capital and the liberaliza- tion of foreign trade and borrowing. The United States, the Federal Republic of Germany, Switzerland, Italy and the United Kingdom have provided most of the commercial credits. IBRD, the Federal Republic of Germany, and the USSR have been the principal sources of long-term official capital. - 5 - 18. Until recently it was thought that much of the foreign exchange needed to finance imports would come from the growth of workers' remittances. However, the energy crisis and other factors make it doubtful whether this source will continue to expand at its previous high rate and the country will, therefore, need to maintain a high level of foreign borrowing. Its gross long-term capital requirements are tentatively estimated at between US$2.0 and 2.5 billion per year during 1974-79. Around US$500-600 million of this may be provided in the form of official development assistance from bilateral and multilateral sources. The remainder will come mainly from foreign banks and suppliers. Raising such large sums will be a formidable challenge, but Yugoslavia's success in the past in obtaining the funds it requires from the capital markets, and its continued good credit standing, give grounds for confidence that it will be able to obtain the capital inflow required to fi- nance its development efforts. Creditworthiness 19. In spite of the present unsettled international conditions, the prospects for Yugoslavia's continued economic growth during the next decade are good. The country's endowment of natural and human resources, its rela- tively low dependence on imported energy sources, its pragmatic approach to economic problems and its readiness to undertake institutional changes, com- bine to give grounds for a favorable assessment of future prospects. 20. External public and publicly-guaranteed debt outstanding as of December 31, 1972 was US$1,730 million. In addition there was US$1,820 mil- lion non-public external debt outstanding. Total (public and non-public) debt service payments in 1973 were equivalent to 20 percent of foreign ex- change earnings. With external borrowing projected at around US$2.5 billion per year during 1974-79, the debt service ratio (public and non-public) is ex- pected to remain at the same level or to decline slightly to about 19 percent in 1979. Taking into account Yugoslavia's debt service record and the measures taken in the past to control balance of payments problems, as well as the pro- spective growth of production and foreign exchange earnings, Yugoslavia remains creditworthy for a substantial amount of Bank lending. 21. MIany of the high priority projects in Yugoslavia have a low foreign exchange component due to the relatively advanced state of Yugoslav industry and the competitiveness of Yugoslav contractors. Were the Bank to confine its lending to the foreign exchange costs of projects, an adequate contribu- tion to Yugoslavia's external capital needs could be made only by spreading the lending over a large number of projects, including some of lesser prior- ity. Therefore it seems reasonable to provide for some measure of local ex- penditure financing in the Bank's lending program. - 6 - PAKR II - BANK GROUP OPERATIONS IN YUGOSLAVIA 22. The Bank has made 30 loans totalling about US$972 million to Yugoslavia. Of this amount approximately 50 percent (US$487.4 million) has been for 11 loans for the transportation sector - six for highways totalling US$180 million, four for railways totalling US$248 million, and US$59.4 mil- lion for the Naftagas pipeline loan approved in 1973. Bank lending has gen- erally concentrated on infrastructure including, in addition to the transport- ation loans, power (three loans totalling US$135 million), telecommunications (one loan for US$40 million), and three multipurpose projects totalling US$103 million. Nine loans have also been made for industry, two for tourism and one for agricultural industries. This would be the first loan for a port project. IFC has made eight investments in Yugoslavia totalling about US$80 million. 23. In the last few years delays in loan effectiveness have hampered project implementation. To some extent delays are inevitable since the clear- ance of loan documents involves all the Republics and Provinces in every case. Conditions of effectiveness can rarely be met speedily, regardless of how well tihe ground is prepared. Yugoslavia has been continually evolving its consti- tutional process and the approval of a new constitution earlier this year should facilitate a better understanding of what is required to get project implementation off the ground quickly. There are encouraging signs of this. Three of the six loans approved in FY74 have already been declared effective and disbursements have started under all three of them. But this problem will continue to be closely monitored by the Federal authorities and the Bank. Thiere have been delays in the execution of several projects including the Belgrade-Bar Railway Project and two tourism projects. The Bank has increas- ed its efforts to deal with these problems through extra supervision and other missions. Annex II contains a summary statement of Bank loans and IFC invest- ments as of September 30, 1974 and notes on the execution of on-going projects. 24. The major objectives of Bank lending to Yugoslavia are to accelerate development in the less-developed regions of the country; to promote agricul- tural development, particularly in the peasant sector, by providing basic infra- structure and credit for the financing of farm development, equipment and processing facilities; to promote structural reforms in major sectors of the economy tlhrough improved coordination and the strengthening of institu- tions; and to provide Yugoslavia with long-term external capital and thus help reduce the country's dependence on short-term external borrowings. These objectives are basically the same as those which have guided Bank lending in previous years, but efforts to give special support to the less-developed regions and the private sector have been strengthened. 25. Over the next two years loans are envisaged for tourism infrastruc- ture in Dubrovnik, power generation, agricultural credit, an oil pipeline, urban pollution control in Sarajevo, highways, two multipurpose (water supply/ sewerage, and power/irrigation) projects and one for railways. IFC is cur- rently investigating several new investment opportunities to encourage joint ventures which would provide technical, management and marketing expertise as well as long-term capital. - 7 - 26. Apart from substantial assistance given in identifying and preparing projects for Bank financing, the Bank is providing technical assistance in sev- eral areas. A series of regional studies of the four less-developed regions of Yugoslavia was initiated two years ago and two studies, covering Kosovo and Bosnia-herzegovina, have been completed. These studies will contribute to better assessment of development problems and will assist in formulating de- velopment strategies for these regions. Other current activities include as- sistance with a study on the Yugoslav capital market designed to help improve resource mobilization and allocation, and assistance for a training program for auditors of the Social Accounting Service, which audits all enterprises and Government activities, including Bank financed projects. 27. Bank commitments to Yugoslavia have averaged about US$100 million annually in the last three years. Although this has represented only a small proportion of the country's need for external finance, it has been equivalent to almost one-third of the annual long-term official capital inflow in conver- tible currencies. Assuming that the level of Bank lending continues to rise substantially during the next five years, the outstanding debt to the Bank could rise from about 9 percent of Yugoslavia's total external debt in 1973, to about 11 percent by 1979. Service on Bank loans as a proportion of total debt service wotuld increase from about 3 percent to about 7 percent during the same period. PART III - THE TRANSPORT SECTOR IN YUGOSLAVIA 28. Topography has influenced the development of Yugoslavia's transport sector. The main routes have tended, in the past, to avoid the mountains along the Adriatic coast and to the south. Instead they have flowed north-west to south-east along the Sava-Danube valley, linking Western Europe to the Balkans. By the early twentieth century a sound transport system was developing in the northern part of the country. The sector as a whole suffered considerably during the second World IJar. Today Yugoslavia has an extensive transport system including 96,000 km of roads, 10,400 km of railways, 15 airports, 5 major ports and a sizeable network of coastal and inland waterways. 'The roads and railwavs are the backbone of the transport system, together carrying some 90 percent of the total freight and 95 percent of passenger traffic in 1971. The maritime transport carried about 10 percent of the total freight. While there have been many physical improvements in the sector over the last decade, ,tuch remains to be done. The railways offer slow service; many of the roads are still below standard; and port capacity needs to be increased. In general the development of transport infrastructure over the last decade has been in- adequate to meet the rapidly. growing demand for its services. 29. The economic reforms of the sixties facilitated the decentralization of policy-making in the sector and the liberalization of the transport industry. From 1960 to 1970 passenger and freight traffic grew at annual rates of 10 and 7 percent, respectively. While the reforms encouraged growth they brought about structural changes. Passenger and freight traffic on the roads, bene- fitting greatly from the liberalization policies, grew at 21 and 20 percent respectively, while the comparable figures for railways were zero and 2.5 - 8 - percent. By 1970 the railways' share of the passenger market had dropped from 67 to 25 percent and of the freight market from 74 to 47 percent. The decentralization wekened transport administration, coordination and planning. It also aggravated the difficulties faced by many enterprises in the sector, especially the railways, in mobilizing funds for investment. 30. Decentralized management made it difficult in recent years to for- niulate coherent policies for the sector as a whole. The policies that are pursued, such as the freedom of choice by users to select their transport mode and competition in the market economy among autonomous transport enterprises, reflect thie prevailing economic climate. More emphasis is currently being placed on a coordinated approach to the transport sector. In 1971 a Federal Secretariat for Transport and Comnmunications was established and most of the Socialist Republics (SRs) and Socialist Autonomous Provinces (SAPs) have since established similar secretariats, although all these authorities suffer from a lack of qualified staff. Under the Ilighways VI loan (Ln. 990-YU), approved by the lxecutive Directors in May 1974, agreement was reached that the Federal Goverment would take appropriate steps to coordinate planning and investments among transport modes. 31. Bank lending has been concentrated upon priority infrastructure projects for which funds were scarce. lncreasirig emphasis is being given to hlelping those institutions, like the Community of Yugoslav Railways, re- sponsible for coordination and planning in the sector. The Ports Subsector 32. The Yugoslav Adriatic coast, which stretches for about 600 km., in- cludes some ninety harbors, some of whlich have been active for centuries. There are presently ten main porLs of which the most active are Koper, Rijeka, Split, Ploce and Bar. The system is designed, so far as possible, to diversify access to the sea in more than one Republic. As the coast line is separated from the industrial and commercial centers to the east by mountain ranges, the major ports are located near mountain passes which provide access to the hinterland. The ten principal ports together handle niore than 80 percent of tihe seaport traffic. Rijeka, by far the largest port, accounts for 50 percent of the Yugoslav seaport traffic. Because of their proximity to Italy, Koper, and to a lesser degrea Rijeka, compete withi Trieste and Venice for transit traffic from Austria, Czechoslovakia and Ilungary. 33. During the last decade cargo handled by the ports has doubled, reaching the present level of 24 million tons per year. Oil imports have grown considerably faster than non-oil trade. The decline in the relative importance of the non-oil seaborne trade is partly due to the increasing share of trade with Western Europe in the total Yugoslav foreign trade pic- ture, ,ost of which is transported overland. Although port infrastructure has expanded substantially in the decade, general cargo congestion still exists, particularly in Rijeka and Koper, due to inadequate handling equip- ment, insufficient storage capacity and poor coordination with the railways. One crucial issue in estimating future seaport traffic and port requirements is the effect of containerization. Overland container rates are competitive - 9 - with sea rates and container cargo can be handled with greater time savings and flexibility by efficient railways and roads. Thus the development of containerization may encourage more overland transport. 34. Ports are generally constructed, operated and maintained by inde- pendent port enterprises in accordance with the principle of workers' self- management (see para. 38 below). They are free to set their tariffs in prin- cLple but they do so in practice in consultation witlh other ports. They form- ulate and implement their own development plans. Partly due to competition with other ports, including Italian ports, the principal Yugoslav ports have tended to be pre-occupied with their own expansion, resulting in a lack of nationwide coordination of port investments. The principal Yugoslav ports ihave formed an association which represents the ports in the Council for Transportation in the Chamber of Economy of Yugoslavia. The association is a consultative body with no executive functions, and its coordinating role has thus far been limited to tariff questions. Competition has forced the Yugoslav ports to keep their tariffs low and they have been unable to generate sufficient funds to meet their investment needs. Some ports have borrowed increasingly on short-term and are now facing liquidity problems. 35. The current five-year development plan for ports (1971-75), pre- pared by the association in 1971, represents an aggregation of individual port development plans. The plan calls for an investment of US$116 million, primarily for a 30 percent extension of general cargo berthage in the ten principal ports, the construction of a bulk handling installation at Bar and two minor container terminals at Rijeka and Koper. The plan does not attempt to provide for the optimization of port development on a national basis (by estimating the future traffic and defining the facilities required to meet the traffic). In connection with preparation of the next five-year plan, the ports are currently considering joint measures to improve coordination in the sub- sector, including carrying out a ports sub-sector study. The details of the studv are under discussion among the ports. The study should offer a good opportunity to conduct a comprehensive review of the development of the ports sub-sector, which the Bank has urged the Yugoslav authorities to carry out. However, as the port enterprises themselves have not yet taken a decision, it w'ould be premature to link the study either directly or indirectly with this project. 36. The proposed project would be the Bank's first lending operation in the ports sub-sector. Two more port projects are planned for later years; Rijeka and Belgrade. The primary objective of Bank lending for the subsector is to encourage institution-building and to help finance high priority invest- ment. An important consideration in the case of the proposed project is its link with the Belgrade-Bar railway line (Ln. 531-YU), currently under construc- tion and due for completion in 1976. The expansion of Bar harbor is linked to the completion of the rail link to Serbia and the central Yugoslav hinterland. - 10 - The Borrower 37. The proposed loan would be made to Port of Bar Enterprise (PBE). The Enterprise was established as a state agency in 1954, initially to un- dertake construction of the port facilities at Bar and, upon the comple- tion of the construction in 1966, to operate the port. Today it has evolved into an autonomous, self-managing port enterprise, operating one of Yugoslavia's principal ports on the Adriatic coast, hitherto serving the area within and around Montenegro. Following the completion of the Belgrade-Bar railway, its service area will dramatically expand, encompassing industrial centers in eastern and southern Yugoslavia, and by 1980 the traffic through the port is expected to have increased fourfold. 38. PBE is characterized by the normal Yugoslav concept of workers' self-management. The policy making body is a Workers' Council elected by all personnel, which appoints the general manager as chief executive. The enterprise comprises five units dealing with operations, maintenance, con- struction, administration-finance-marketing and general services. Each unit has a large degree of autonomy in regulating its own affairs which are co- ordinated by the Workers' Council. Senior management personnel are qualified and experienced, but staff at the middle management levels are less experienced. 39. In view of the proposed expansion of PBE's operations after the completion of the project, its management has decided to bring its structure and operating procedures more in line with those of a larger scale operation. The measures being implemented toward this end will increase the delegation of authority and more clearly identify operational responsibilities. One of the immediate requirements is to improve the management information system. PBE has employed a Yugoslav consulting firm to help improve its accounting system and is in the process of implementing the consultants' interim recom- mendations to improve its costing procedures and budgetary control. PBE has agreed to continue to employ accounting consultants, acceptable to the Bank, to help complete the implementation of satisfactory cost accounting and management information systems, including procedures for setting tariffs (Loan Agreement, Section 4.05 (a)). PBE has also agreed to employ consultants to help to improve cargo handling procedures and, in view of the planned increase of labor force from the present 560 to some 1,500 in 1980, consultants to help devise an appropriate training program in operational procedures (Loan Agree- ment, Section 4.05 (b)). PART IV -. THE PROJECT 40. When the Bank agreed in 1968 to assist in construction of the Belgrade-Bar railway line (Loan 531-YU), the Federal Government undertook to begin an expansion program for the port of Bar to cater for expansion of the traffic consequent upon the completion of the railway line, now expected in 1976. The proposed project, which would provide for the necessary expan- sion, was prepared by PBE with assistance from consultants. Following several Bank missions to help in project preparation, a mission visited - 11 - Yugoslavia in January 1973 to review the feasibility study and the project was appraised in December 1973. Due to delays in finalizing the financing plan, two follow-up missions were undertaken earlier this year. Negotiations were held during September 1974 in Washington, D.C. The Yugoslav delegation was led by Mr. Gavra Popovic, Assistant Federal Secretary for Finance, and included representatives of the Federal Government, Republican Government of Montenegro, Investment Bank of Titograd, the Borrower and the Railway Transport Enterprise (RTE) - Belgrade (the Sub-Borrower). Project Description 41. The proposed project represents a four-year slice (1974-1977) of PBF.'s investment program for 1974-1980 aimed at building the necessary port capacity to handle the traffic demand after the opening of the Belgrade-Bar railway. The program envisages an investment in port facilities of US$76.5 million, providing for the expansion of port capacity fourfold by 1980, i.e. from the present 1.2 million tons to about 5.0 million tons, made up of 3.0 million for dry bulk cargo, 1.5 million for general cargo and 0.5 million for liquid cargo. 42. The loan and project are summarized in Annex III and the project is described in detail in the Appraisal Report entitled "Appraisal of the Port of Bar, Yugoslavia" dated November 8, 1974, which is being distributed separately to the Executive Directors. The project consists of: (a) Port Facilities (i) expropriation of and compensation for about 250 houses on the land to be developed (ii) construction of a hostel for about 500 single workers and apartments for about 250 workers with families (iii) completion of the dry bulk cargo wharf under construction, construction of two general cargo berths, extension of the passenger ferry facilities, dredging, and provision of rail- way facilities, water supply and other services in the port area (iv) construction of transit and storage sheds, grain silos and edible oil tanks (v) procurement and installation of portal and mobile cranes, transporter bridges, fork-lift trucks, tractors, trailers and tug boats (vi) a program to improve PBE's management, financial control, and accounting system witth the assistance of consultants (b) Railway Facilities: construction of reception and dispatch yards outside the port area, and of sidings for the distribution and marshalling of wagons outside the customs area. - 12 - Detailed design is expected to start shortly before the end of 1974 and the project construction would begin in the first quarter of 1975. The project would be completed by December 31, 1977. The dry bulk cargo handling facil- ities are scheduled to be available in the first quarter of 1976 in time for operation of the Belgrade-Bar railway. The remaining works would be completed by the end of 1977, in step with the expected build-up of general cargo traffic. Project Execution 43. PBE would be responsible for the execution of the port component of the project. The overall responsibility for planning, coordination, and su- pervision of project implementation lies with PBE's Project Management Group (PMIG) which was recently established to assist the general manager. In order to strengthen this group, PBE has recruited additional qualified staff and has also agreed to employ design consultants to assist in detailed engineering and in preparation of bid documents (Loan Agreement, Section 3.03). In view of the urgent need for the services of design consultants and management - accounting consultants (para 39), it is recommended that the Bank finance retroactively expenditures incurred from January 1, 1974 for these consultants, services, up to US$100,000. 44. RUE Belgrade, which is constructing the Belgrade-B3ar railway under the Bank assisted project (Loan 531-YU), will construct, manage and operate the proposed railway investments under the project. PBE would enter into a Sub- sidiary Loan Agreement with RTE Belgrade for relending a portion of the loan to the latter for the construction of the railway facilities. The ratifica- tion of this agreement would be a condition of effectiveness (Loan Agreement, Recital N, and Section 7.01). Since most of the traffic through the port is expected to travel along the Belgrade-Bar railway, it is essential that the port and railway operations are closely coordinated. Therefore, PBE and RTE- Belgrade have agreed to ensure continuous coordinat-on between the port and railway operations, including joint review of projected traffic (Loan Agree- inent, Section 3.02 (b) andl Subsidiary Loan Agreement, Section 3.04). Exrpropriat ion 43. The proposecd expansioni of the port facilities would involve expro- priation of land and resettlemient of some 250 families, Although tihe city of Bar would provide the necessary land for resettlement, PBE is responsible for ne_otiating the acquisition of land and for the provision of appropriate com- pensation. PBE has made satisfactory plans for expropriation and adequate provision for compensation: all the landl is schieduled to be acquired by the end of 1974. Project Cost and Financing 46. The total cost, includling interest during construction (US$6.0 mil- lion), is estimated at US$78.0 million with a foreign exchange component of US$36.9 million (about 47 percent of the total). Port facilities account for - 13 - US$67.8 million of the total cost and the railway facilities US$10.2 million. Price contingencies assume annual price increases of 12, 10 and 8 percent for the foreign exchange cost and 20, 16 and 10 percent for the local cost in 1975, 1976 and 1977, respectively. 47. The proposed Bank loan of US$44.0 million would finance 55 percent of the investment cost, including about US$7.1 million of local costs, and US$4.6 million for interest on the Bank loan during construction. The proposed investment is more than thirty times the size of PBE's current operating revenues and PBE is not expected to generate sufficient funds to pay interest during the construction period. The balance of the local costs for the port would be financed as follows: grants from the Governments of Serbia and Montenegro US$10.5 million, loans from the Investment Bank of Titograd (IBT) and the Federal Directorate for Reserves of Food Stuffs (the Directorate) US$17.0 mil- lion and PBE's internally generated funds US$2.0 million. For the railways, RTE Belgrade would finance the balance of US$4.5 million and has agreed to guarantee cost overruns (Loan Agreement, Recital (M) and Subsidiary Loan Agreement, Section 3.03 (b)). IBT would guarantee cost overruns for the port facilities. The Serbian and Montenegrin Governments have agreed to make their respective grants and local loan agreements between PBE, IBT and Directorate, all in form and substance satisfactory to the Bank, are about to be executed. Authorization or ratification of all of these agreements would be conditions of loan effectiveness (Loan Agreement, Section 7.01). Procuirement 48. Procurement would be on the basis of international competitive bid- ding in accordance with Bank Group's "Guidelines for Procurement". The major infrastructure, service and storage items would be procured through civil works contracts and wharf cranes, bulk handling equipment, mobile mechanical handling equipment and tug boats, each with an initial stock of spare parts, through supply contracts. Most equipment financed under the Bank loan would be pro- cured from abroad. For the purpose of bid comparison, a preference of 15 percent of the CIF landed price of imported goods or the actual custom duty, whichever is lower, would be given to local manufacturers who qualify as preferred bidders. There are competent contractors for civil and marine works in Yugoslavia. It is therefore doubtful wlhether overseas contractors would be interested, even in the larger contracts , except possibly in joint ventures with Yugoslav contractors. Prequalification of bidders would be desirable to confine bidding to reliable and experienced contractors. PBE has agreed that prequalification would be applied for all civil works contracts estimated to cost more than US$3.0 million. Experienced foreign suppliers and contractors are well represented in Yugoslavia and local competitive bidding would apply for works contracts under US$1.0 million and supply contracts under US$200,000. Disbursement 49. Disbursement is expected to start early in 1975, except for technical assistance. For port facilities, disbursement would be made on the basis of: (i) 100 percent of the CIF landed cost of imported goods or of the ex-factory prices for goods procured locally; (ii) 100 percent of the foreign exchange cost of consulting services; (iii) 100 percent of interest during construction - 14 - on the Bank loan; and (iv) 57 percent of applicable civil works contracts. The Bank would not disburse for land acquisition, accommodation (hostel and apartments), or dredging, which are governed by local regulations or are the continuation of existing contracts. For railway facilities the Bank would disburse 55 percent of all expenditures and 100 percent of interest during construction on the Bank loan. The disbursement schedule on the Bank loan is given in Annex III. Any surplus funds in the loan account after the project has been completed would be cancelled. As recommended in para 43, disbursement would be made for up to US$100,000 against expenditures incurred after January 1, 1974 for consultants' services. Environment 50. The proposed expansion of the port is in accordance with the general zoning plan of the Commune of Bar. PBE had an environmental study carried out in connection with the project and is taking measures to prevent possible coastal and marine pollution through bilge water discharge and oil spill. The project is not expected to have any adverse effects on the existing environment. Financial Position 51. PBF's financial results for 1971 and 1972 showed small operating losses due to the low level of traffic relative to tthe capacity and also to poor operating procedures. During the construction period and in the subse- quent years when traffic will rise dramatically, earnings are expected to in- crease significantly; first until 1976 due to initial traffic increase and improvement of operating procedures, and after 1978 when the assets under the project would be used to capacity. The operating ratio will improve from 85 percent in 1973 to 64 percent in 1976 and 57 percent in 1980. In- terest and debt service ratios would be satisfactory reaching 2.8:1 times and 2:1 times, respectively, in 1976 and 1980 and the rate of return on aver- age net fixed assets will rise from 2.3 percent in 1973 to 8.7 percent in 1976 and 9.8 percent in 1980. Ilowever, these projections assume, and PBE has agreed to ensure, that depreciation would be charged on breakwaters and wharves starting January 1, 1976 (Loan Agreement, Section 5.04). Expected debt/equity ratios would be acceptable, reaching 53:47 in 1978 and declining to 48:52 in 1980. 52. PBE plans to invest an additional US$14.5 million between 1978 and 1980 to meet the projected traffic demand after 1980. On the basis of the financial projections, it will be able to finance, out of its revenues, all but US$3.3 million of the planned investment. PBE has agreed that it would achieve an operating ratio of not more than 70 percent by 1976 (Loan Agree- ment, Section 5.06), and that tariffs would be set at a level which would enable PBE to earn a minimum rate of return on its average fixed assets of 4 percent between the year following the opening of the Belgrade-Bar line and 1980, and a minimum rate of 8 percent thereafter (Loan Agreement, Section 5.07). It was also agreed that PBE would not incur any additional long-term debt unless its net income for the fiscal year is at least 1.5 times the maxi- mum debt service requirements of any succeeding year on all its long-term debt, including the debt to be incurred (Loan Agreement, Section 5.05), and that - 15 - during the period through 1980 it would not undertake any investments other than those envisaged in the 1974-80 program, except for small items not ex- ceeding US$400,000 annually (Loan Agreement, Section 4.07). Tariffs 53. PBE's tariffs have generally been lower than those of Rijeka and Koper by 10-15 percent, reflecting the weaker competitive position of the former. However, after 1976 when opening of the Belgrade-Bar railway will substantially increase traffic at Bar, PBE's improved competitive position would enable it to charge the level of tariffs comparable to those of Rijeka and Koper. On this assumption the requirements in the rate covenant (para. 52) are realistic. The present tariff structure of PBE does not fully reflect costs, partly because of the lack of adequate cost information. This is being studied (see para 39) and PBE has agreed that a cost based tariff structure would be prepared before January 1, 1976, for review with the Bank prior to its implementation (Loan Agreement, Section 5.08). Justification 54. Linking the port of Bar and the Belgrade-Bar railway line would achieve an important objective of transport policy to connect the mountainous and relatively isolated regions of the south western Yugoslavia with more industrialized areas to the north and east. It would also provide the indus- trial centers in Serbia and Vojvodina with closer access to a major sea port in Yugoslavia. The opening of the Belgrade-Bar railway is expected to facil- itate economic and social development of the traffic zone along the line. The proposed expansion of port of Bar under the project, represents the least cost solution to meet the projected traffic demand consequent upon the opening of the Belgrade-Bar railway. 55. The quantifiable benefits of the project would consist primarily of savings in overland transport cost for goods imported to and exported from eastern Yugoslavia, savings in port operating costs, and net revenues from transit traffic. It is estimated that by 1980 users' financial savings would amount to about US$6.6 million per year, equivalent to one-third of the aver- age cost of inland transport to the northern Adriatic ports. The project would have an economic rate of return of 13 percent. The project would create employment for about 800 for port workers in Montenegro, one of the less- developed regions in Yugoslavia. Improvements in PBE's financial position through the project would also raise the wage levels of the port workers. PART V - LEGAL INSTRUMENTS AND AUTHORITY 56. The draft Loan Agreement between the Bank and the Port of Bar Enter- prise, draft Subsidiary Loan Agreement between the Port of Bar Enterprise and the Railway Transport Enterprise, Belgrade, the draft Guarantee Agree- ment between the Socialist Federal Republic of Yugoslavia and the Bank, the - 16 - Report of the Committee provided for in Article III, Section 4 (iii) of the Articles of Agreement and the text of a draft resolution approving the pro- posed loan are being distributed to the Executive Directors separately. 57. Features of the Loan and Guarantee Agreements of special interest are referred to in paragraphs 44, 47, and 52 of this Report. 58. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOM1ENDATIONS 59. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President by I.P.M. Cargill Attachments ANNEX I Page 1 of 3 Pages CoUNTRY DATA - YUGCELAVlA A CtA POPPULATION DENSITY AN -290.580 dllion (mid-1970) 2 00PO - ?02 perscoos Per ikrgot arabic lead SOCIAL INDICATORS Reference Countries Yugoslavia Poetur-- P: - . 9.; -crriiie * 1960 __ 197 0 1570 °170 cGNP PER CAPITA USS (ATLAS RASIS) a75 0 7i0 L 3,210 I,. Crude birth rate (per thousand) ?8 IB IP 21 13.3 Crude death rate (par Thousand) 10 '3 10 1,6 Infant ertality rats (per thousand li-e births) 3 Sc P, O 23 C. Life nopeotancy at birth (yeare) t7 62 67 tK,c 6'J b .L 0oen reproduotIon rate 12 1.3 1.3 1. S c 0.? d i.2 Poplation growth rate f 1.2 1.0 9.9 I.0 3.0 Populatiun growth rate - urban ./ 3 / . 3 Ago etruot,rn (percent) 15-68 $53 63 69 no onr o 8 d 2 11 ilenenderoy ratio f8 0 9 /, O 1 ) 7 d o.a Urban population as per.net of total 28 f 35 L . . 3i 3.- 1 Foxily pl-nning, N, of ..neptore onmulatin- (thou.) No. of a..re (S of married an) Eli?LOYMENT Totallbor forc. (thousands) 8,300 9,600 Ifa 3,030 q 9,900 26,6 00 /L Peroentage employed in agrioultore 57 C2 36.6 L 690 82 2 J Pnroettage unemployed 7 8 8 0 0.8 IN ON DIST7RIbUTICN P.r.nt of .ational moosM raomived by highest 5% 17 L .. 28, Percent of netioal Income Ireocind by highest 20% 3.1 hk 1 L2 /i7. Peroent of national inoe reJeived by loJeet 20% 7 '7l 7 7 6 C Percent of nationaI income rec-ived by loJeat t4O 19 kT 19 .. MSTRIBITION OF LAND OWERRSNIP S oned by top 10% of `n-ere S own-d by aseemliet 10% of -enere hEALTH AND NUTRITION Population perr phydsiotn 14,3g / 1n ,010 1,100 8310 Li Population per oursing person 3700 200 370 9 Population per hoopital bed 190 5 180 160 120 10 Par oepbta oelori eropply ee S of req3uiremote /5 119 /s 125 /y 111 110 120 / Pee capita protein nupply, total (gmne per day) L 91 73 92 Z¶ 82 82 33 It Of hich, animal ed pulse 27 29 O 29 56 euath rein 1-t years /71.7 2.6 3 d IDUCATION AdJoeted /8 pr,i-ry *QhOOl enrollment ratio 91 9t 95 107 /d 13? Adjuatsd s socordary school enrollmnt ratio 3a 65 65 62 Td f1 lore of soboollog provided, lrt mod second leel 12 12 13 12-1t 12-1' Y.oationrl s-vol.o-nt me S of sec enhool enrollment 72 72 32 58 L 49 Adult literacy rats S 77 35 99 Average No. of peerse per soo. (urban) 63 S L.' 1.3 L . /c Percent of oN.opied unite witho,t piped eater 56 / 3 1,8 A-oenv to elvctricity (as S of total population) 98 70ac 7. ) 3,9 7l. 99 /ao Parc.nt of Coral ppulatiron con-eoted to electricity 277 CrONSUMTION Radli receivers per 1000 pup.iltino 88 168 182 152 318 Pasesoger cars per 1000 population 35 60 2?0 Elnotic powr -oossoeption (kbh p.c.) 52 1,288 768 1,615 ,c067 Neasloriot conoPsPtion p. c.(kg per yer,e 2. 1.3 4.6 2.8 17.5 Note,, Figure refer either to the latest periods or to -:ount of enTironmental tewparature, body .eighta, and the latest yearn. Latest periods refer in principle to dietribhtio. by age aMA ae of Atioal popolatios. the Yeere 1956-60 or 1966-70; the latest years in prin- 6 Prtein atandards (requir-eents) f-o 11 enontrie ae -etab- ciple to 1960 mod 1970. liohed by USDA R.oono -o Necamnoh Slevine provide for a inu Li The Per Capitm GNP e.timeis is at ikeAct priorm for allowanna of 60 greU- of total protein per day, end 20 Fre-e of y-arm othcer than 1960,.csl.,amtsd by the eamie nonverion animl and pulsa protein, of hieh 10 grsme ahould be ervl tehbique on the 1972 World Bank Atla.s protein. Thme *ta da "r amo:ehat lorer than thoes 01 75 12 A_erog number of daughtern per nman of reproductive grar-r of total protein nd 23 gram of animl protein am an age. average fro the world, proposed by FAO in the Third World Food F hopalotioc growth raten are for the denades ending in MYrve. 1960 mod 1970. a 7 o,se atadihe hae- suggested that oride death rates of children A- Ratio of under 15 mod 65 mod over age br ckete to ages 1 through 4 nay be used as a first approximation index of those in lobor foroc bracket of ego- 15 through 64. salnatrition. PR O referene otmndards repremeot physiologiol re- /8 Peroentage enrolled of norreepuoding population of school age qoireaentt for norstu motivity -md health, taking ae defined for aah nountry7 /A in 1971 15i coneerted at tho c oi of 20 lei per USJ; / 1965-70; /c Ull intimate; /d 1969; /- For the defi- rition of urban see IN Demographic -earhook 1972, page 137; If Citien, toWno and 183 oth-r loc1litino hboing urban roolo-eoononlc nchmrmteristlci; /p 1971; /h Ratio of population under 19 and 65 mod ov-r to total labor for-on; /t F:tIate; -t stoiate hosed on the resultr of a labor force aseple nurvey; k 1963; /1 Ibuseholds; /n 1968; n 192; L Percent of salaried workere e-rning lse. than 1,100 lsi; /p Peroent of sslaried our-krn eerniog nore than 2,500 idA La Include idwi-e, assistant acidwie- and assintant n_rer; /r In-ludd vidviven; /s 1960-02; it 1969-70; /A Fil-time education; gy 19 years and over; / Definition not available; /0 DPt. refer to doellings; _/ Urban mod rural; /I 1966; /a Urban units only; lab Percentage of delliogo uithcut piped .oter in-ide; eac Percentage of dwellings with electrical lighting; ad Percentage of rural dvellings uith electrloal lighting; /as 1961; /af including sorkers abmtod * Solection of the F.derul Republic of 0-rr uny ax an obective c.otry Is bhoed or- the clone ect-io ties the two ccr.trnen Looctole, an wnell an on tc loft ti- tIm rrocar pert of Yugo: ' 'a -CO,CC wcr,erv, ate oore abracd, hona iounu -tpluy-nnt it Oemasy. A.M. hS Oetober 16, 1971 ANNTS I Page 2 of 3 p.,Ses FOOItLIO0 ~~~~~ ~~~1940 1 965- 19~70 - 15.74- 1965 1970) 1977 1 9 73 17. 9996 170 1975 1979 1960 1970 1979 ot - Fi -ot 9 5'.i 120391 13770 144.55 19939 22300 6.2 4.7 6I. 8 1.5 100.6 550.1 99.7 CuSS of [tado I - 7 - 11 - IS -~~~~~~~~~~~28 - 19 69 -'2)9 0 025 . . -.6 - .1 -93 sects ~~~~ t U 1st ,sm ~~~~~9531 1720720 13553 14426 15520 2 2376 6.3 4. 7 6.8 7 .6 100.0 100.0 100.0 l.it ..,51 I 5"I 102 705O 3154 57sf 6 3571 6175 8.7 11.5 7.4 11.6 15.3 73.3 277.9f 77P- LL_CatJ- L577- -22709 -793 -'696 -80 -476 1 3.~1 7.7 7.7 11.7 -11.7 -18.4 -71.8 04 5~~~~~l ~ 677 571 709 1307 -16.1 41.4 6.3 le. Int 4.9 9. >',Iip o -srdi--t 6539 884i 9680 10001 10863 15712, . 6.2 5.7 7.1 73.3 7 ~.76 70.21 "It,sIs.s wea sI ks) 3101 37681 7495 491o 5366 7964 9.8 7~0 9. 1 6. 30.7 31.3 35.6 Iei, It -a. os 99 7 31 74 3 87 3 4345 4.690 6664 9.8 1.2 9, ~6 74 76.7 56.4 79.9~ icte.I 3, 3w043 353e 5543 5767 5 3 71 7173 9.7 10 III. 2 4.3 727.u 7) 9 5 37.1 Cap iiI goods 296 615 685 891 1032 1774 1.6 19.2 14.0 10.8 28.5 21.3 16.9 lnos -dat ods eol.fuel1) 728 7678 1867 2422 2522 5324 11.6 18.2 13.0 16.1I 51.3 58.4 57.2 Fools aod ro]latsd mater,ale 77 l38 176 314 1010 1572 9.9 13.9 49.0 -9.2 5.4 4.8 15.4 ci hLL,h Ftcirn (321 (1991 (561) (259) (927) (1020) (2.7) (25.3) (57.0) (8.3) 13.3) 13.41 (73.9) l.ur.sis.pttos goods ~~~~ ~~~2372 443 907 655 760 1568 13.9 13.8 14.4 17.6 14.0 15.4 15.5 Total Mertb. lisporto )o.i.F.) 1288 2074 3235 0~~~~~2~82 5324 1018 9. 74 16.7 -17.76 100O. I c,0 100.010. PI'-.,a, pr-d-tt.f. ol fools) 322 610 752 821 949 1701 089 13.6 11.1 17.7 37.1 36.4 31.5, Ea-ls aed relt-ed mtras 11 20 18 20 20 20 8.6 12,7 - - 1.4 1.2 5~4 of chick: Petroleom ~~~~~~(10) (12) 19) (13) (13) (33) (27.1) (3.8) (-1 I-) (0.59 (0.71 10.23 ll1-ofsrtced g-cds 758 1045 1467 1576 1719 3668 16.8 6.6 15.0 15.0 61.5 62.4 60.1 Toa Et1 . Epoots (fo.b.) 1091 1675 2237 2470 2791 53692 14.0 9.0 13.6 14.0 100.0 100.0 100.8 TLaos, Wrie Tt-ea 51 775 463 521 670 1338 42.0 78.5 73.7, 17.7 VALLUO 3A9DED 115 5013 R A-oc DiSto at 1967-69 Sti- r - cd Fr, -- K.Nte- sor,roIr.srs 7~~~~~~~~~ ~~~000 2721 2737 2'425372570 ( 3343) 4.3 2.o, 3 .9' 5.7, 20.4 16.9 15.8 Ir-oste- 3648 4777 5477 5930 6522 935 76 10.7 5.5 7 .7 0 .4 32.6 410. 0 43.3 s.ˇrcieo ~~~~~ ~~~~~ ~~~3 7 71 4945 5634 6046 6499 9_3513 7.5 5.6 7.1 8.0 39.0 4 1 .4 4 2 .0 Ttsl 547~~~~~~~~~~~~~~~J'7 17t947 135773 14479 75511 3222-7 7.0 5.8 .0 7.n 100.0 10.3.7 130.0C PUB1l1il).AhiiIA0 - 9, As Frtoo O2F G O1P c-rret lf-eipts 2 77 4573 4671 5737 7513 5.7 7.5 .. 35.5 33.7 tCtto eoedroo374 4117 4380 4190 6759 . . 5.9 7.5 . . il1 30.5 Bhoigo .c.. Ssns530 491 491 579 755 J . 1.4 7.5 .. 4 .4 3.4 Othor Fbl- ors-t-i - - - - Pfoblic S-carI. etr 533) 461 591 59 7e0 I. . 1.4 7.5 .. 4.2 3.4 DETAL ON5 At 196~7-69 5115 As FPr-o Tet.1 IURRENi XEDtR .ii D31f FTllAL _____ Actuacl Lot. PUBLI.C SECTOR L-ot Ploe Not-Fo I st ice. Nir f'ci- A., 7 oc C-rr-t ]:o1,-d_ 1965 1973 1971 1973 1973 IN1VESTMlENT FPRIGKA}1 31 1968- lie) 11977-753 1968- 701) 13071-751 OiEd,e i,o . 1. 07.1 15.1 [9.0 OLhor lOiaL 1 S-1ow I I I. 8~8 0.1 941 fecic1 Sectors.. . Ag,i-olta- . 6. 0.2 9. ..1 AXgrteo - r I. - Other Froormie for,[eOo . . ~~~~~8.5 5.0 6.7 2.5 Tod-tlry -nd Powr..,. SoFOO¸t S . . ~~~~ ~ ~~~~64.72 59.4 67.4 91.0 Treep-t 6 Co--sˇoti -. letcl arr-t Erpeociterro I 16. 0 100o. 0 109.7 I300.s uoa lpiiot 1960- 1965 - 0770- 1914- F I ANCC1NG 40400707 170143AI084 [965 1970 1975 19781 ,-l-ml trd Item 3--ec ,i--iged data) F51tS-rter snrtgo . Ar--c- 1... 08 5.4' t 6. 4.3 4.7 D-e,stl,t lrao (net) ... I0p001L .Ilastioty 1.3 2.2 1.6 1.6 F-riso~ Borrowing (oat) . 1logol .o-to- Rclos cso .46 .04 . 27 .791 litr Is crra-t U0. . 3argil,el NcLi-o.i a-iegs Rato .45 .14 .32 .30 Totl lnon 01 T i ,r 1 Farre 5/ VoIce Added Per Worker (1967-69 Frirco 4 feo. Rates) £ LABOR FORCE AND OrU, 'lr 1960-1970 c07Selr I of A-orag 1960-1970 OUTFOJT FIR WiORlKER 1960 4/ 1970 41 1960 1870 G-wath lRe,t 1114) 1979 1960 1970 irotht Rate Agri-oltore1 4.69 3.93 56 47 -1.7 470 565 50 .5 39.2 7.8 led-trry 1.46 1.89 18 73 71.6 1579 2577 186.4 175.5 4.8 S-rvi-e 1.36 1.80 16 23 2.6 1 1759 7001 149.6 139.7 4.7 Oehrr jol1. oeomplved5 .63 .67 10 8 -2.0 Total 8-.5_4 8.79 1T 70 100 - .1 4-7 17440 17)00. 1o00.0 5.5 aLt epplioable -It .,-ivaii1ble 1/ DfP at market rries 2/ Federal -rgicl do loca gev-r-tmo, pltis sporiallond f-id- 31 Doe to ooereis o the. poblir -r.rt. cc ly plays a r-ideal role lit e-rreg eat ieeot-et. Srrialist solf managing -orerpris-s cr rIoe 8090 g-ors for t-plo--ti g leer-tm.on.t plans. 4/ Based os data for 1960 and 1978. 5/ lIsldtg -arker cbrr-d bes,t c hom ram ftro the agEcloo-p-ri)1ror Middle Ecst and Sooth Afri-e Ogtir artoner lb, 1034 ANNEXI Page 3 of 3 pages YUGOSLAVIA - BALICGE OF PAYMENTS, E7T22MAL AND DEBT PROJECTIONS (amounts in millions of U .L. doll&rs at current prices) Avg. Annual Actual 12 L t 90td Projected Grovth Rate 1979- 1969. 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 i1979 SUW'ARY BALANCE, OF PAThMENTS Exports (ind. NFS) 2139 29,89 2722 3315 3963 93951 5029 5791 6633 7581 8660 15.0 Imprts Inclj. )299 320 370 371 6033 6800 761 8747 9982 11360 13.5 R'~sourceBalance (-x) -271l -731 -108 7 - ..'3 -1682 -1770 -l1' -231 -201 - 2700 Interest (net) - 90 -109 -128 *-198 - 1F2 - 2394 - 240 - 299 - 256 - 279 - 3 14 6.0 D4rect Investment Income- - 1 - 2 - 3 -3 - . - L - 23 - 34 - 96 - 59 99.0 W(rkers' Remittancea 206 92x 652 889 1170 121.0 1315 1393 1977 1566 1660 6.0 Current Trensferls{net)i6 9 9 3 8 98 110 123 138 159 12.0 kBalpncea onCurrent Aount -1.10 -390 73 915 2 - 996 - 612 - 628 - 809 -1022 -1268 Private Direcet Investment 9 10 20 30 s0 79 100 130 190 190 150 14.9 Official Capital Orants - - - - - - - - - -- Publlc FEtLT Loans Disbnursements 206 210 275 340 529 711 959 981 527 940 938 -9.5 -Re coca ~~~~ ~~~~~~199 -135 -131 -200 -?9l -31.1 -992 -972 -995. -3P!, -.½ i3 0.0 Net Diebur3ements 71 =0~ ~ I7 T 37 _0 1397 -72 T-15 -13 - - Other, MtTT Loa.ns Disbursements 313 969 723 732 665 807 975 2193 1489 1829 2200 30.0 Z- LeDn '-PemS -109 -205 -391 -h99 -C &8 -698 -71 -877 -20~98 -1253 19.1 Net Uitsoursumants 209 269 2 T9 -1 327 2 , 3 Capital Transaction n.e.i. - 72 - 99 -206 - 20 70 - 38 - 82 - 36 26 - 14 - 24 6.8 Change in Not le.myea - 78 90 66 -809 -790 0 0 0 0 0 0 Official Grants anid Grant-like - - - - - Public X< Loans 1/ Est.91 92 2 YMED ~~~ ~~~ ~~~~ ~~30 99 1.10 83 100 DstOt Dsw" 1196 1216 1399 1729 2023 IDA- - - - - Other - - - - - Interest on Public Debt 53 72 52 63 92 Olther Multilateral - - - - - Payments on PLblic Debt 160 169 131 199 291 Oovermments 77 30 130 875 ills Total Public Debt Service 213 292 183 218 383 Suppliers a 31 13 - - Other lebt Service (net) 196 293 468 990 682 Financial In3stitut:nnc 11 12 - - - Total Debt Service (net) 359 989 692 78 16 Bonds -52-768 126 PutblicP Lon ne¾- - 1 - - Bur'den on Fxport Far:cngs() Total Public 3411 Lc.ns 126 1T2 2>U ~ * Public Debt Service 8.9 8.1 9.2 5.0 7.8 Total Dle3t Service 19.0 16.2 18.9 17.6 19.1. Actu. Deb Duttand= on1972 TDS+Direct Invest.iont Inc. 19.0 16.2 18.9 17.7 19,5 ACTUAL ANDAtu Det utPaninJonDecT3. 172 C ,#1 I PASS ENGER/ PA55ENGER BeRTHS BLACK Existing / I S/ I VEHICLE FCRRY RED ProjeCt and Future Extension / !711 1 --- Iterenationol Boundaries i t f1 u-- Depth in Meters below LWO. S.T I t SW1 | /KJ ENTRANCE 10 PORT AREA C, | M|1 1 1 ; I ~__ l^A§N FOA,0 100 200 300 40D 500 osi. : LL ~~~~~~~~~~~~~~~~~~ROAO,VEH CLE_ M ETER OIANKER I D |POR PARKING TANKER ) A TWINISTRAT. 'I AREA I i 3k BE~~~~RTHS ; XOFFI ; KA l / XXPIER T C019 I~ /' / 1 / /~~~~~~~~~~~~~~~~~~~~~~~~/ ~~ETOFROM AND' Ii ~~~~~~~~~~~~~~~~~~~GIOMRINAT PIER I 77" -P d"~~~~~~~~~~~1 IULMIT5 OF u/ oAr:ur rdCiOSby e _____ / ) 000001DREDGIN TO \> 01,Ni. ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~~~~~~~~cI~RO'A AN IA _A5 ~~~~~~~~45- G'UOSL AVI4 05~ ~ ~ ~~ ~ ~~~~~~~~~~~~~~~~~~~ A/ J~~~~~~~~~~~~~~~~~~~~~~3 15- 20.- I BRD 10917 15 ~~~~~~2'0' AUSTRIA/ YUGOSLAVIA bRMNI PORT OF BAR PROJECT Igoe UBAN DEVELOPMENT PLAN 2 YUGOSLAVIA S> B~ o, Th, b-ed-~O AbC. oC -pb 00 0 oo,iy eoe0 oop.o,oo by he 1bHdAek od jh-yfili.n0 TO DUBROVNIK~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~0~N