Bank activity: Bank and IDA loans for urban impact projects in Indonesia, Greece, Ivory Coast, and India; education loans for Zambia, Afghanistan, and Paraguay; recent loans; global indicators and price forecasts of selected commodities

This paper highlights that 1976 was an important year for the IMF. With the end of 1976, the IMF closed its books on a year of virtually unprecedented activity. It launched the New Year with a US$3.9 billion stand-by arrangement for the United Kingdom, the largest ever made for a member country. The outlook at the beginning of 1977 suggests another busy year ahead for the IMF. The proposed second amendment to the IMF’s Articles of Agreement and the increase in members’ quotas are expected to go into effect before the end of the year.

Abstract

This paper highlights that 1976 was an important year for the IMF. With the end of 1976, the IMF closed its books on a year of virtually unprecedented activity. It launched the New Year with a US$3.9 billion stand-by arrangement for the United Kingdom, the largest ever made for a member country. The outlook at the beginning of 1977 suggests another busy year ahead for the IMF. The proposed second amendment to the IMF’s Articles of Agreement and the increase in members’ quotas are expected to go into effect before the end of the year.

World Bank and IDA lend for urban impact projects

Kampung upgrading set in Indonesia

Almost 1½ million poor urban residents of Indonesia’s two largest cities—Jakarta and Surabaya—will benefit from a $52.5 million loan agreed by the World Bank.

The loan will finance about 50 per cent of the total cost of the project undertaken by the Indonesian Government to provide basic urban infrastructure—including water supply, human waste disposal, drainage, footpaths and roads to densely populated neighborhoods of Jakarta, the Indonesian capital and Surabaya, the second largest city in the country. The project also includes the construction and equipment of primary schools and health clinics in the low-income neighborhoods, as well as the training of community health workers, engineers, accountants, and other qualified personnel needed in the execution of the project.

The project is officially called the Kampung Improvement Program, in Jakarta and Surabaya. Kampungs are neighborhoods of bamboo and wooden houses which spring up around the periphery of Indonesian cities to house the landless farmers and unskilled laborers who flock into the urban centers in search of means of livelihood.

The new World Bank loan will give a significant boost to these two Kampung Improvement Programs. In Jakarta, with a present population of 6 million, some 3,000 hectares of densely populated neighborhoods will be covered, providing direct benefit to about 1.2 million low-income urban residents. The smaller program in Surabaya will be expanded to cover at least 374 hectares and benefit about 200,000 people.

The total cost of the project is estimated at $104.8 million, of which about $28 million is in foreign exchange. The World Bank loan will finance the total foreign exchange component and part of the local costs. The remainder of the project cost will come from the administrations of both cities and from the Central Government.

The $52.5 million loan will be for 20 years, including 4½ years of grace, at an annual interest rate of 8.7 per cent.

$36 million for sewerage project in Greece

The World Bank has approved a loan of $36 million to Greece for a $113.5 million sewerage project. The project’s main purpose is to provide assistance in the reorganization and upgrading of the country’s sewerage sector through priority investments in Salonica and Volos, the country’s second and fourth largest cities. The project will directly benefit over 800,000 people in these cities.

The project will eliminate the discharges of raw sewage and industrial wastes that have caused severe pollution of the inner Salonica Bay and have led to increases of waterborne diseases, closing of bathing beaches and prohibition of fishing. Salonica has a population of over 700,000. Volos, with a population of about 100,000, will also benefit from the elimination of pollution arising from untreated wastewater discharges into the Volos Bay.

The project will also provide expertise in industrial wastewater management, accounting and financial control and protection of coastal waters. The rehabilitation of the existing sewer networks and their extension to low-cost residential areas under the project will help improve public health conditions in both cities.

The loan is for a term of 15 years including 3 years of grace with interest at 8.7 per cent per annum.

$44 million for urban development in Ivory Coast

The World Bank has approved two loans totaling $44 million for urban development in Ivory Coast. About 200,000 people will directly benefit from the shelter component of the project.

The Bank will provide a loan of $30 million and a Third Window loan of $14 million. USAID will co-finance the shelter component of the project under a $21 million housing guarantee operation. The Government of Ivory Coast will put $57.3 million toward the project.

The $123 million project will provide transport and housing in Abidjan, the capital, and San Pedro. An important main urban road in Abidjan will be constructed and traffic improvements in the business district of the city will be made. Housing, trunk sewers and other urban services in the poor neighborhoods of Abidjan and San Pedro will be upgraded through site and services programs designed to improve the living conditions of the urban poor. There is also a significant technical assistance component to the project.

The $30 million loan will be for a term of 20 years, including 4 years of grace. It will bear an interest rate of 8.7 per cent per annum. The $14 million Third Window loan will be for a term of 25 years including 7 years of grace with interest at 4.7 per cent per annum (an additional 4 per cent will be paid to the Bank by the Interest Subsidy Fund, representing the difference between the Bank’s standard interest rate of 8.7 per cent and the charge to Ivory Coast).

Assistance for transport development in Bombay

A World Bank loan of $25 million will help finance the development of transport in the Metropolitan Region of Bombay, one of India’s leading industrial, financial, and commercial centers.

The Bombay Metropolitan Region covers a land area of more than 4,000 square kilometers, and includes Greater Bombay—the island city of Bombay and its immediate and extended suburbs.

About 300,000 of the 1,400,000 jobs in the island city are held by persons residing in the suburbs and areas outside Greater Bombay. In recent years, mass transport capacity has lagged behind demand, and the system’s performance has deteriorated. Further deterioration could restrict access to the labor market for many of the work force, and constrain economic growth in the region.

The Bank loan will assist in improving the bus service in Greater Bombay and in supporting development planning and traffic management in the Bombay Metropolitan Region. The project is scheduled to be completed in 1980 at a total estimated cost of $50.5 million.

The Bank loan to the Bombay Metropolitan Region Development Authority is for 20 years, including 4½ years of grace. It will carry interest at 8.7 per cent per annum.

Zambia borrows $13.3 million for education

Zambia will be implementing an education project with the assistance of a World Bank loan of $13.3 million.

The project will bring major benefits to Zambia. It will help to increase the supply of extremely scarce middle and upper level manpower (accountants in particular) for business and commerce from 40 per annum to 300 per annum. It will create the opportunity for training an additional 13,400 farmers per annum in the farmer training centers and improve the in-service training capacity of the farm institutes for agricultural and extension staff. The project will also permit the full coordination of educational services.

The project is scheduled to be completed in 1983 at a total estimated cost of $23.2 million. The Bank loan to Zambia is for 17 years, including 3 ½ years of grace. It will carry interest at 8.7 per cent per annum.

The loan is the fourth from the Bank for the development of education in Zambia. Three previous loans are helping to finance projects designed to provide improved facilities for some 70,000 students, including the creation of 40,000 new places, mostly in secondary schools and at the University of Zambia.

IDA credits during second quarter of fiscal 1977

(Ended December 31, 1976)

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Figures in parentheses are number of loans approved for respective country.

With an $8 million World Bank loan.

IDA credit for agricultural education in Afghanistan

IDA has approved a $6 million credit for an education project in Afghanistan.

The project will help meet Afghanistan’s need for more practical education in agriculture and will increase the number of extension workers significantly.

Agriculture occupies two thirds of Afghanistan’s 16.7 million people and accounts for one half of the nation’s gross domestic product. The Afghan Government has placed high priority on a program of rural development, especially to assist small farm families.

Under the project, four new agricultural secondary schools will be opened and three existing ones expanded. These schools, all in rural areas, will add over 5,000 places to some 1,000 places now available. A more practical and relevant curriculum for agricultural education will be introduced and practical field training will be provided. Plans will also be drawn for a national educational materials and services center, a national teacher training complex and five regional teacher training institutes.

The project is expected to be completed by 1980 at a cost of $11.48 million. The IDA credit to Afghanistan will be for a 50-year term including 10 years of grace. It will be interest free but will carry a service charge of 3/4 of 1 per cent per annum to cover IDA’s administrative costs.

Paraguay project will improve rural education

The World Bank and IDA are lending $12 million to Paraguay for a project that will extend and improve educational opportunities in rural areas of the country.

The project, which will have a total cost of $17.38 million, will assist the Government in the implementation of its education programs and policies through the establishment of community learning centers and primary schools.

The Bank will give a $8 million loan for a term of 17 years, including 3½ years of grace at 8.7 per cent interest per annum. IDA will finance a $4 million credit on its standard terms of 50 years, with a 10-year initial grace period and no interest charge.

The project includes the establishment of 83 rural community learning centers; completion of construction of 77 primary schools; buildings and equipment for workshops and laboratories for five lower secondary schools; in-service training for about 2,700 teachers, directors, and supervisors; printing of about 300,000 textbooks; and technical assistance.

It is expected that about 46,000 children, or 20 per cent of the 7-12 age group in the rural areas, will benefit from the provision of rural community learning centers and associated rural primary schools. About 2,000 rural teachers, equivalent to 90 per cent of the total of unqualified teachers, will receive upgrading courses.

In addition, about 8,000 secondary school students (10 per cent of national enrollment) and 250 directors, teachers and supervisors will also benefit from this project.

World Bank loans approved during second quarter of fiscal 1977

(Ended December 31, 1976)

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Figures in parentheses are number of loans approved for respective country.

With a $0.5 million supplementary IDA credit.

Including a $7 million Third Window loan.

Including a $14 million Third Window loan.

Third Window loan.

With a $4 million IDA credit.

Global indicators

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Source: World Bank. United Nations publications are an important source of data for this table. For this reason, the standard U.N. classification of countries into developed and developing market economies (here shortened to simply developed and developing countries) and centrally planned economies is used. Use of this classification system, which follows, implies no judgment on the part of the World Bank as to the relative level of development of individual countries in these broad groupings, or on their economic structure and policies.Developed countries: coverage includes the OECD countries (excluding Spain, Greece, and Turkey) plus Australia, New Zealand, and South Africa. Developing countries: coverage includes market economies except the developed economies above mentioned plus Yugoslavia and Cuba. The countries included in the oil-producing group are Algeria, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libyan Arab Republic, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela. AH others are grouped according to per capita income of 1972. Centrally planned countries: coverage includes all countries with centrally planned economies, excluding Cuba and Yugoslavia.

Per capita, per annum.

Prices and price forecasts for selected commodities

(Price indices, 1967-69 = 100)

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Source: World Bank. Forecast prices represent likely trends in prices for the commodities concerned, essentially ignoring probable short-term fluctuations. The principal assumptions underlying the forecasts include: projected rates of growth for the developed countries at 5.2 per cent per annum in 1976-80; a projected rate of international inflation (taking 1974=100. projected price levels in 1977 and 1980 are respectively, 132.2 and 164.2); that there will be no change in exchange rates except insofar as they compensate for differential rates of inflation; and an expectation that the existing marketing arrangement will not be radically altered.
Finance & Development, March 1977
Author: International Monetary Fund. External Relations Dept.