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The World BankLFILE CopyFOR OFFICIAL USE ONLY
F?1 RNTo
WITHIN Report No. P-210
ONE- W
REPORT AND RECOMMENDATION
OF THE
PRESIDENT
OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION
TO THE
EXECUTIVE DIRECTORS
ON A
PROPOSED CREDIT
TO THE
PEOPLE'S REPUBLIC OF BANGLADESH
FOR A
SHALLOW TUBEWELLS PROJECT
June 3, 1977
This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.
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CURRENCY EQUIVALENTS
The value of the Bangladesh Taka (Tk.) is officially set
relative to the Pound Sterling. From May 17, 1975 through April 25,
1976, the official value was 30.0 to the Pound Sterling. Since
the latter date the value has been changed on three occasions, themost recent being on November 3, 1976, when it was set at 25.45 tothe Pound Sterling. The Pound is floating relative to the U.S.
dollar and consequently the Taka-U.S. dollar rate is subject to
change. The exchange rate used in preparing the data for this
report is Tk. 15 - U.S.$1 (except where stated to the contrary).
US$1 - Tk 15.0Tk 1 US$0.067Tk 1 million D US$67,000
WEIGHTS AND MEASURES
1 acre (ac) - 0.405 hectares (ha)1 mile (mi) - 1.609 kilometers (km)1 square mile - 640 ac (259 ha)
(sq mi)1 foot (ft) - 30.5 centimeters (cm)1 maund (md) - 82.3 lbs (37.3 kg)
1 metric ton (ton) 2 26.8 md1 cubic foot per - 0.0283 cu meters per
second (cusec) secondM - million
FOR OFFICIAL USE ONLY
PRINCIPAL ABBREVIATIONS AND ACRONYMS USED
ADB = Asian Development BankBADC = Bangladesh Agricultural Development CorporationBJSB = Bangladesh Cooperative Bank (Bangladesh Jatiya
Samabaya Bank)BKB = Bangladesh Agricultural Development Bank
(Bangladesh Krishi Bank)CB = Commercial BankDCA = Development Credit AgreementDTW = Deep TubewellGDP = Gross Domestic ProductGOB = Government of BangladeshEARP = Extension and Research ProjectHYV = High Yielding VarietiesIRDP = Integrated Rural Development ProgramILO = International Labor OrganizationKSS = Village Cooperative Society (Krishi Samabaya Samity)LLP = Low-Lift PumpNW = North-West (region)TCCA = Thana Central Cooperative AssociationUNDP = United Nations Development ProgramWDB = Water Development Board
GLOSSARY
Aman = Rice planted before or during the monsoonAus = Rice planted during March and April and
harvested during July and AugustBoro = Rice planted in winter and harvested during
April to JuneThana = Administrative Unit below District (average
180,000 population)Union = Administrative Unit below the Thana (average
18,000 - 20,000 population)
I Thb document ha a rsricted dbtribution and may be used by recipients only in the performanceof their odblal dutie. Its aontents may not otherwise be disclosd without World Bank aut_eilm.
BANGLADESH
Shallow Tubewells Prolect
Development Credit and Project Summary
Borrower: People's Republic of Bangladesh.
Amount: US$16 million equivalent.
Terms: Standard.
Purpose: To help the Government (primarily through theBangladesh Agricultural Development Corporation- BADC) provide irrigation to about 150,000 ac in
the northwest region of Bangladesh through theinstallation of 10,000 small capacity shallowtubewells (STWs). The project includes a programof credit for the sale of STWs to individual far-mers and farmers' groups, under the Integrated RuralDevelopment Program (IRDP) and through two commercialbanks (Janata and Sonali Banks). The project would
also improve BADC workshop facilities for maintenanceof all irrigation equipment (some 5,000 low-lift pumps,20,000 STWs and 4,000 deep tubewells) in the north-west region. Private workshops for irrigation equip-ment are assisted under the project, with spare parts,
machinery and equipment. Vehicles and office equipmentwould be provided to the various implementing agenciesto help them execute the project. The project alsoincludes consultants' services to help the Government(i) prepare irrigation maps and carry out hydrologicalinvestigations, (ii) evaluate the results of the various
project components and (iii) manage the operations ofthe workshops.
Estimated Costsx ofTotal
Item Local Foreign Total /a Cost-----------(US$ million)--------
Materials, equipment andincidentals for STWs 5.00 7.33 12.33 49
Standby pump sets and spareparts for STWs 0.84 1.21 2.05 8
Vehicles and office equipmentfor IRDP and CBs 0.14 0.22 0.36 1
Civil works for workshopfacilities 0.89 0.30 1.19 5
Machinery and hand toolsfor workshops 0.64 1.83 2.47 10
Vehicles for BADC 0.85 0.82 1.67 6
Technical assistance /b 0.47 0.26 0.73 3
Base Cost 8.83 11.97 20.80 82
Physical contingencies 0.40 0.45 0.85 3
Price contingencies 1.57 2.18 3.75 15
Total Project Cost 10.80 14.60 25.40 100
/a Figures in US dollars are derived from the corresponding figures in
takas. Small discrepancies are due to rounding.
/b Includes Tk 3 M for preparation of Irrigation Maps and for additionalgroundwater surveys; Tk 2 M for preparation of land registers and debt
inventories; Tk 3 M for two man-years of expatriate technicalassistance for workshop improvement; and Tk 2 M for monitoring andevaluation of the project.
Financing:
The proposed IDA credit of US$16.0 M would finance the full foreignexchange costs and US$1.4 M local costs or about 77% of the total project costnet of taxes and duties. Financing for the remaining US$9.4 M would comefrom the following:
Contributor Amount(US$ M)
(a) Buyers of STWs
Payments for cash purchase of 1.31,000 STWs
Down payments for purchase oncredit of 9,000 STWs 1.6
Installment payments on creditpurchase of 9,000 STWs /a 1.9
Payments for purchase of STWspare parts and rental ofstandby pump sets /a 0.5
Sub-total 5.3
(b) Janata & Sonali Banks
Loans from own resources for creditsales of 9,000 STWs 3.1
Payments for purchase of vehicles& office equipment 0.1
Recoveries from borrowers /a (0.6)Sub-total 2.6
(c) IRDP-TCCAs
Payments for purchase of vehicles 0.1& office equipment
(d) Private Sector Workshops
Payments for purchase of machinery 0.4and equipment /a
(e) GOB /b 1.0
Total 9.4
/a During project implementation. Further installment payments of US$8.3 M(of which about US$2.6 to CBs) would be received after project implementa-tion in June 1981. Similarly US$1.9 M from sale of spare parts and rentalof standby pump sets and US$0.4 M from sale of machinery and equipment toprivate workshops would be received after project implementation.
/b GOB would also be responsible for making up slhortfalls, if any.
- iv -
Procurement: Equipment, vehicles and materials would be procuredafter international competitive bidding in accordancewith IDA Guidelines, with the exception of constructionmaterials for workshops which would be procured throughlocal competitive bidding. Off the shelf items costing
less than US$10,000 each, would be purchased throughnormal Government procurement procedures, which aresatisfactory to IDA. Such purchases would, however,be limited to US$200,000 in total.
Because installation of the STWs (US$1.3 million netof contingencies) and civil works for construction of
workshops (US$1.2 million net of contingencies) wouldbe simple, individually very small, labor-intensive,scattered over a wide area and restricted to seasonalconstruction, they would be unsuitable for internationalcompetitive bidding and hence would be carried out onthe basis of local competitive bidding under Governmentprocedures satisfactory to IDA.
Consultants for the project would have qualificationsand experience, as well as terms and conditions ofemployment, satisfactory of IDA.
TechnicalAssistance: A. A consulting firm or a research institution would
be retained for conducting:
(i) appropriate field surveys to evaluate theproduction and distributive impact of theproject STWs; and
(ii) detailed studies to evaluate the effective-ness of the improved repair and maintenancefacilities.
B. Engineering consultants would be hired tocompile and analyze existing hydrologicaldata and prepare irrigation maps. If needed,hydrological consultants would conduct addi-tional tests where existing hydrological datais inadequate to determine the suitability ofthe areas under analysis for STW development.
C. Two-man years of workshop management serviceswould also be included in the project.
- v -
Rate of Return: About 50%
Estimated ------------ US$ Million -----------Disbursements: FY78 FY79 FY80 FY81 FY82
1.5 3.5 5.0 5.0 1.0
Staff ProjectReport: Report No. 1373-BD
Appraisal of the Shallow Tubewells Project- Bangladesh.
INTERNATIONAL DEVELOPMENT ASSOCIATION
REPORT AND RECOMMENDATION OF THE PRESIDENTTO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT
TO THE PEOPLE'S REPUBLIC OF BANGLADESH FOR ASHALLOW TUBEWELLS PROJECT
1. I submit the following report and recommendation on a proposedcredit to the People's Republic of Bangladesh for the equivalent of US$16million, on standard IDA terms, to help finance a shallow tubewells project.
PART I - THE ECONOMY
2. A Basic Economic Report on Bangladesh, entitled "Bangladesh: De-velopment in a Rural Economy" (Report No. 455-BD dated September 15, 1974)was distributed to the Executive Directors on October 1, 1974. An EconomicMission was in the field in November 1976 and its report entitled "Bangladesh:Current Economic Performance and Medium-Term Issues" (Report No. 1469-BD,dated May 19, 1977) was distributed on May 23, 1977.
Introduction
3. The Basic Economic Report described the obstacles to developmentin Bangladesh and outlined a course of action to maximize the developmentof the country's resources. The high. ratio of population to natural re-sources, the slow development of the productive and infrastructural baseand the weaknesses of the administrative and institutional framework led theReport to project a growth rate of GDP of between 2% and 3.5% per year inreal terms over the five years 1973-78, the variations within that rangedepending on the appropriateness of the policy framework and on levels ofaid.
4. Encouraging progress was made in the period immediately followingBangladesh's independence as an enthusiastic Government, supported by mas-sive external assistance, strove to overcome the devastation of the cycloneof 1970 and the struggle for independence in 1971. Large amounts of foodaid were distributed, refugees were resettled, and vital port, road and railfacilities were brought back into operation. A new constitution was adopted,and the first national elections, held in March 1973, brought Sheik MujiburRahman's Awami League party into power with an overwhelming parliamentarymajority.
5. Overall economic progress since independence, however, has beeninadequate. Agricultural output remains insufficient for a populationgrowing at close to 3% a year. Industrial output, heavily dependent onimports, has been affected badly by scarcity of foreign exchange. Stateenterprises have been hampered by management deficiencies, excessive govern-ment controls, shortages and price regulation. Exports have been stagnantand finance less than half of import needs. Bangladesh also has been severely
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affected by an adverse shift in its terms of trade since 1973. Trade pro-
blems are compounded by dependence on annual food imports of 1-2 million
tons, even in years of favorable weather, and by heavy reliance on imported
industrial raw materials. Government revenue has been insufficient to meet
current and development expenditure needs. Bangladesh has had to depend
on large flows of external assistance to support its development effort.
6. The present Government, in power since November, 1975, rules by
martial law. General Zia Rahman, the Army Chief of Staff, serves both as
President and Chief Martial Law Administrator. The two chiefs of the other
defense services serve as Deputy Chief Martial Law Administrators. The three
service heads and eleven civilians form a President's Advisory Council. Each
of the members has responsibility for one or more ministries. General Zia
Rahman's political program was endorsed by an overwhelming majority in a
referendum held in May 1977. This program includes national elections in
December 1978 and local elections, at municipal and district level, later
this year. The current Government has introduced economic reforms such as
a reduction of producer and consumer subsidies, agricultural taxation and
import liberalization and has indicated that it intends further reforms in
these areas. It has also pursued prudent monetary and fiscal policies. How-
ever, the fundamental problems of the country, namely overpopulation, weak
administration, inadequate infrastructure, insufficient foodgrain output and
inadequate resources for development continue to confront Bangladesh.
The Current Economic Situation
7. On July 1, 1975, Bangladesh initiated a stabilization program in
conjunction with a standby arrangement with the IMF. Its principal elements
consisted of a credit restraint program and elimination of deficit financing,
combined with some import liberalization. This was preceded by a devaluation
of 58% in May 1975, which subsequently, as a result of a link with the Pound
Sterling, has led to a cumulative de facto depreciation of 90%. The record
so far is that the credit restraint program has been a success: after an
estimated rate of inflation of about 80% in 1974, prices declined by 10% in
1975, and price stability continued throughout 1976. The Government not only
avoided deficit financing; it retired some of its debts to the banking system
in 1975. The import licensing program was relaxed during 1975/76; besides
increasing allocations to an average of 95% of entitlements, licenses were
renewed on expiry and there is greater fungibility in the use of exchange
allocations for selected categories of imports. Improvements in this area
continued in 1976/77: import requirements of all public corporations and high
priority private sector industries were fully met, the role of the Trading
Corporation of Bangladesh was further reduced, and the list of items permitted
under the Wage Earner's Scheme for imports by the private sector was enlarged.
8. At the beginning of 1975/76 the credit restrictions may have been
too pervasive and insufficiently selective; jute purchases by trading cor-
porations were hampered, production credit was scarce, and import allocations
could not be utilized. Measures were taken to rectify this situation. Over-
all, however, the credit restraint program has been salutary because of its
favorable impact on the rate of inflation. It has been reinforced by other
factors:
-3-
(a) The output of rice in 1975/76 is estimated to have been
about 12.8 million tons, representing an increase of about
14% over 1974/75. This record harvest is not expected to be
equalled in 1976/77; output may decline (3%) to 12.4
million tons, as a result of less favorable weather.
Rice prices which remained stable for most of 1976/77
have begun to rise in the last quarter.
(b) The private sector has a greater role in the retail and
distributive trades, but stringent measures have been
implemented to curtail hoarding and smuggling. The
distribution controls over some consumer goods have
also been liberalized.
(c) The supply position for raw materials has improved.
Moreover, consumers have benefitted in real terms by
substantial declines in the prices of key imports.
9. The devaluation in May 1975 made possible a reduction in the
price of raw jute exports from the unrealistic level of b 200 per ton
(late 1974 and early 1975) to i 150 per ton (from July 15, 1975), f.o.b.
Chittagong. The reduction in price led to a significant increase in
sales of raw jute but export volume in 1976/77 has been constrained by an
inadequate crop. The volume of exports of jute manufactures also improved
as a result of improved price competitiveness as well as a recovery in world
markets. However their value showed no commensurate improvement because of
a large fall in average price. Bangladesh's non-traditional exports have
derived benefits from the devaluation and a wide array of export incentives;
as a result, their value is projected to increase by 36% in 1976/77.
10. The agricultural sector did quite well in 1975/76 with overall pro-
duction increasing more than 10%. Favorable weather was essentially responsi-
ble for the good harvests, since the basic problems affecting the sector remain
unresolved. The small-scale irrigation program (comprising low-lift pumps,
and shallow and deep tubewells) has again fallen short of its target. Pro-
cedures for the allocation of fertilizer, though much improved, continue to
be in need of improvement. Credit is insufficient and inadequately distri-
buted, though the Government in recognition of this need mounted a large
credit program in 1976/77. Because of the steep fall in the free market
price, government procurement of rice increased dramatically in 1975/76 and
rose to an estimated 415 thousand tons. Nonetheless, the support price was
not maintained throughout the country because of limited purchasing facilities,
stringent moisture content requirements, and unfamiliar payment procedures.
This led farmers to sell their paddy at prices below the procurement price.
In 1976/77 the Government is likely to procure about 100,000 tons less than
in the previous year, but is relying more heavily on the private trade as an
instrument for supporting farmgate prices. To achieve this it has relaxed its
regulations governing stock accumulation and has expanded credit facilities.
Efforts are under way to rehabilitate approximately 200,000 tons of derelict
storage capacity and a study of further storage requirements is is progress.
-4-
11. In the industrial sector capacity utilization has improved in a
number of industries, and the supply of raw materials and spares has improved.Measures have recently been taken to reorganize those public enterprises,
which account for a major share of industrial output in order to improve
management and labor productivity through, among other measures, providingthem with operational autoniomy in matters such as staffing.
Balance of Payments
12. The impact of the extremely good foodgrain harvests and the policies
and measures instituted in 1975/76, were reflected in Bangladesh's 1976/77
balance of payments. The restrictive monetary and fiscal policies of 1975/76
were continued in 1976/77 and they continued to restrain demand. This, plus
reduced requirements for food imports and lower import prices reduced the
value of total imports by 27%. Export earnings showed an increase of 5%.
Exports benefited from a favorable climate for non-traditional exports, which,
in addition, were stimulated by a package of incentives. New items were added
to the list of export products eligible for export performance licenses, the
income tax rebate on earnings derived from non-traditional exports was doubled,
exporters were qualified for preferential credit and interest rates, andpriority was accorded them in the issuance of import licenses for the purchase
of raw material and machinery. These incentives are expected to contributesubstantially to a projected large expansion (36%) in the value of non-jute
exports. Consequently the trade deficit is expected to decline from $909
million in 1975/76 to US$537 million. The current account deficit in thebalance of payments is, therefore, expected to total US$512 million. However,
since external aid disbursements in 1976/77 are expected to total US$572 mil-
lion, inclusive of a cash grant of US$50 million, Bangladesh's internationalreserves are expected to rise by US$72 million to $285 million at the end of
June 1977. This would be equivalent in value to about three months antici-pated imports in 1977/78.
-5-
BALANCE OF PAYMENTS ESTIMATES(million US$)
1974/75 1975/76 1976/77(Actual) (Actual) Estimate
Merchandise Imports (c.i.f.) -1,402 -1,290 /b -937Merchandise Exports (f.o.b.) 358 381 400
Trade Balance -1,044 -909 -537
Other Current Account 7 1 25
Current Account Balance -1,037 -908 -512Other Receipts and Payments (net) 272 /a 122 46
Amortization: Long-term debt -25 -78 -21 /c
Short term capital movements(net) (including IMF) 62 -13 /d
Changes in Reserves (-=increase) -196 50 -72
External Capital Disbursements 924 814 572
of which:Food 379 307 128Commodity 386 378 220
Project 145 129 174Cash 4 - 50
/a Includes US$260 million of outstanding letters of credit./b Includes an estimated settlement of US$24 million of outstanding
letters of credit carried over from 1974/55./c Including repayment of US$6 million on USSR Wheat Account./d Including refund of a deposit of US$21 million made by the Kuwait
Central Bank.Source: Bangladesh Planning Commission and Bank estimates.
The Medium Term Development Focus
13. In its memorandum for the May 1976 Bangladesh Aid Group Meeting the
Government spelled out the focus of its development strategy for the medium-
term. Agriculture continues to be the cornerstone of its program. Withinagriculture the emphasis will be on an intensified Rural Development Strategy
which seeks "growth with equity" in the distribution of benefits. Strong efforts
are to be made to expand the acreage of high yielding varieties of seed (HYV),
to intensify "Food for Work" programs, to step up agricultural input programs
and to improve the efficiency and capability of agricultural support institu-tions. It is too early to say to what extent the Government's intentions will
be translated into realistic programs of action, but they represent an essen-tial first step.
14. A determined effort is to be made to improve the efficiency of the
industrial sector and its contribution to economic growth. One element of
the new industrial strategy consists of measures to improve the climate forprivate investment, such as raising the ceilings for such investment, the
-6-
payment of compensation for nationalized property, the encouragement of
foreign private investment collaboration in selected fields, the provision
of increased opportunities for private participation in domestic and foreign
trade, and steps to activate the capital market. The second element, in
the strategy, consists of a drive to improve the performance of public enter-
prises, through such measures as the grant of autonomy in matters of staff
management, pricing policies and inventory control, and creation of dis-
tribution networks. Programs for improvement in the performance and effici-
ency of the critical jute and cotton textiles industries, deriving from IDA's
Fourth and Fifth Imports Program Credit, have commenced. The focus in in-
dustry is on improvements in the quality of management, capacity utilization,
marketing, and profitability.
15. The weak administrative framework, the frequent overlapping of
functions, and insufficient decentralization of authority have been impor-
tant reasons for delays in the execution of projects. The Government has
indicated its intention to remedy these defects and has taken positive steps
to reduce administrative bottlenecks impeding project execution. Discussions
are underway with the Government concerning provision of technical assistance
(with IDA funding) to the Planning Commission in the fields of overall plan-
ning and project preparation. Project preparation and implementation cells
are being set up in Ministries and Public Sector organizations, to identify,
develop, and monitor projects. A study to determine what needs to be done to
strengthen the capabilities of the Ministry of Agriculture and the Agricul-
tural Development Corporation is underway, with assistance from IDA.
16. Despite a substantial revenue effort in recent years, Bangladesh
depends on foreign assistance, which finances about 80% of its development
expenditures. The Government has indicated its intention to reduce this
dependence and to improve its efforts to mobilize domestic resources. In
1976/77 total revenue is expected to increase by 11%, about twice the pro-
jected rate of growth of GDP. Some new taxes and reductions in subsidies
have been introduced: (a) a tax on urban non-agricultural land has been in-
troduced and a tax on agricultural land holdings in excess of 8.4 acres im-
posed; (b) a water charge levied at 3% of the gross increased benefit accru-
ing to beneficiaries of the Ganges-Kobadak, North Bengal Deep Tubewell, and
Dacca-Narayanganj-Demra Projects, and (c) the price of fertilizer has been
increased by 20%.
17. Population planning is being given high priority and is an integral
part of the Government's economic growth strategy. The Government, with the
assistance of IDA and bilateral donors, has developed a program which em-
phasizes a multi-sectoral approach including motivation, communication,
and education. This involves a major effort in training medical and para-
medical personnel, in co-ordinating several agencies and in devising pro-
grams for research and evaluation.
18. The policies and measures initiated by the Government represent a
good start. Yet they are no more than a beginning in tackling the major
problems of expanding the output of foodgrains, increasing domestic resource
mobilization, promoting exports and improving administration. Successful
implementation of the measures already initiated and formulation of additional
measures are necessary in 1977/78.
-7-
PART II - BANK GROUP OPERATIONS IN BANGLADESH
19. Bangladesh became a member of the Bank and IDA in August 1972.Initially, Bank Group operations in Bangladesh concentrated on reactivationof IDA credits for uncompleted projects financed under credits to Pakistanbefore the independence of Bangladesh. Eleven such credits in an aggregateamount of US$148.55 million (including US$44.1 million for the repayment ofamounts that had been disbursed under the corresponding previous credits toPakistan, and net of cancellations) were made to Bangladesh. In addition, 17new credits, excluding the consolidation credit of US$31 million referred toin paragraph 23, have been made totalling US$522.7 million. Of these US$325.0million have been for five program credits. The project credits have empha-sized agricultural development, but also included amounts for population,telecommunications, transport and industry. On June 18, 1976 Bangladeshbecame the 105th member of the IFC.
20. The debt service ratio in 1974/75 was 9.8%. For 1975/76, the ratiowas estimated at 22.8%; it is expected to decline to about 11.8% in 1976/77.The large increase in debt service was due to the repayment of about US$50million of short-term loans for foodgrain purchases made in the wake of thefloods of 1974. Agreement has been reached between the Government of Bang-ladesh and most of the bilateral and multilateral donors concerning theassumption by Bangladesh of portions of the debt contracted by Pakistan be-fore Bangladesh become independent. This will lead to some increase in debtservice from the levels prevailing through 1974/75. While the debt serviceratio is not expected to exceed 20% over the next several years, it may do soby the mid 1980's unless careful debt management policies are pursued and aidprovided on appropriately concessional terms. With respect to the Bank Group,Bangladesh has agreed to accept liability for certain debt for projects vis-ibly located in Bangladesh and completed before independence. A consolidationloan of about US$54.9 million and a consolidation credit of about US$31.0million were signed on February 14, 1975. The Bank Group's share of Bangla-desh's outstanding external debt is not expected to rise significantly overthe next few years from the present level of about 22%.
21. Annex II contains a summary statement of IDA credits and the Bankloan made to Bangladesh as of April 30, 1977 and notes on the execution ofongoing projects. Present disbursement performance under the program creditsis good, slightly ahead of estimates made during appraisal. In contrast, dis-bursements under project credits have lagged far behind expectations. Reasonsfor this include problems associated with release of local funds, clearance ofcontracts, employment of consultants and appointment of needed staff. TheGovernment of Bangladesh has taken steps aimed at eliminating the most press-ing of the present bottlenecks, and it is hoped that this lead to acceleratedproject implementation. The release of local funds for projects to semi-
autonomous government agencies now requires one application per year instead
of the previous requirement for quarterly applications. The approval of the
President is no longer required for contracts; the ceiling for contracts
which can be approved directly by the project implementing agencies has been
raised from Taka 700,000 to Taka 10 million. Similarly the requirement that
-8-
the President approve all consultants' contracts has been waived. The respon-
sibility now devolves upon the ministries responsible for the project agencies
to approve the appointment of consulting firms for projects with National
Economic Council approval, or for project preparation activities. Finally,
the authorization of the appointment of staff is being made automatic in the
case of approved projects.
22. The IDA project lending program increasingly has concentrated on
the rural sector, and specifically on food production. The Ashuganj Fertilizer,
Barisal Irrigation, Karnafuli Irrigation, Rural Development and Agricultural
and Rural Training Projects, as well as the proposed project, all fit into
this strategy. Other priority projects are at an advanced stage of prepara-
tion - many of them in the rural sector. These include a jute development
project. While development of the rural sector must have top priority, the
growth of other sectors cannot be neglected. Particular emphasis should be
placed upon projects which provide infrastructure for the rural sector, or
which process or provide outlets for its products, or which reduce the strain
on Bangladesh's foreign exchange resources. Finally emphasis must be placed
upon improving Bangladesh's project preparation and implementation capability.
Given its low per capita income, Bangladesh is heavily dependent on foreign
assistance to help finance its investment requirements. In view of Bangladesh's
difficult foreign exchange position, IDA credits should cover all foreign
exchange costs. Taking into account the level of financing expected to be
available from other external lenders, and in order to direct IDA lending to
those sectors (such as agricultural and rural development) where the percentage
of foreign exchange costs is relatively low, the financing of local currency
expenditures is also justified.
PART III - THE AGRICULTURAL SECTOR
23. Bangladesh is predominantly agricultural. The agriculture sector
accounts for as much as 60% of GDP, 75% of all employment and over 90% of
all exports. It has, however, been unable either to feed adequately the
country's rapidly increasing population or to provide gainful employment
for its largely unskilled and illiterate labor force. The major objectives
of Bangladesh's agricultural development efforts are to achieve food self-
sufficiency, create employment for the rural poor, and to increase export
earnings. The Government's strategy for development of the sector emphasizes
strengthening of rural institutions, improvement of farm input supplies, better
utilization of existing irrigation facilities and further expansion of irriga-
tion facilities through low cost, short gestation, minor irrigation schemes.
Land Use and Production
24. Bangladesh has a gross area of 35 million ac of which about 22.5
million ac are under cultivation. According to official statistics, for the
five year period, 1970/71 - 1974/75, the annual cropped area averaged 30.3
million ac giving a cropping intensity of about 135%. Rice -- by far the most
important crop -- accounted for 80% of the cropped area; jute for 6% and a
variety of other crops such as pulses, oilseeds, wheat, sugarcane and vegeta-bles for the remaining 14%. During the 1960s, agricultural production grew atan annual rate of about 2.5% and foodgrain production at a rate of 2.4%. How-ever, both lagged behind the population growth rate of 2.8% and as a resultfoodgrain imports increased from less than 0.6 million tons in 1960/61 to over1.5 million tons in 1969/70. A severe drought combined with the disruptionscaused by the 1971 civil strife resulted in a sharply reduced production in1972/73 -- some 15% below the 1969/70 level -- necessitating food imports of
2.8 million tons. Despite a substantial recovery, production in 1973/74 and1974/75 remained below the 1969/70 level. In 1975/76 due to favorable weatherconditions, improved availability of fertilizers and unusually high foodgrainprices in 1974/75, there was, however, a record foodgrain production of 13million tons, which exceeded the 1969/70 level by some 10%. Nonetheless,Bangladesh still had to import about 1.5 million tons of foodgrains in 1975/76.Despite major emphasis by the Government on achieving food self-sufficiency,substantial food imports are likely to continue for the foreseeable future.
Constraints and Potential
25. Agricultural development in Bangladesh is constrained by scarcityof cultivable land, limited potential oni part of the cultivated land, climatichazards, lack of irrigation facilities, and deficient transportation for movingfarm inputs and produce. However, the above constraints can be overemphasized.On the positive side, Bangladesh has large areas of highly fertile deltaicsoils, a climate suitable for year-round cropping, and abundant groundwaterresources for dry season irrigation. Also, in recent years, the developmentof high yielding varieties (HYVs) of rice and wheat, suitable for cultivationin large areas of Bangladesh even under rainfed conditions, has opened upthe prospects of substantial increases in production that can be brought aboutquickly and inexpensively. Much of the potential, however, has remained un-developed so far.
26. The reasons for underdevelopment are primarily sociological andinstitutional. There are some seven million farm households in Bangladesh,90% of which cultivate 5 ac or less. Even "large" farmers in Bangladesh aresmall by international standards. Hence to have any significant impact on
production, developmental programs must necessarily involve the participationof millions of small farmers. Generally, farmers in Bangladesh are hard work-ing and receptive to proven innovations. However, their efforts have not beencomplemented by adequate and timely supplies of farm inputs, relevant technicaladvice, and suitable marketing, processing and storage facilities. The failureof the various existing agencies and departments to fulfill these key functions
is due to weaknesses in planning as well as in implementation. Agriculturalplanning has generally been based on an extremely poor data base, inadequateanalysis, and very little feed-back from operating departments, resulting inunrealistic targets, inflexible and uncoordinated programs, and unexpectedbottlenecks during implementation. On the implementation side, the weaknessesinclude excessive centralization of decision-making, overly cumbersome admin-istrative procedures, inadequately trained field staff, unattractive staffsalaries and benefits, and poorly defined work responsibilities.
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27. The inadequacy of agricultural credit compounds the problem of in-
creasing agricultural productivity. About 85% of agricultural credit is from
non-institutional sources. The principal institutional sources of credit (the
Bangladesh Krishi Bank - BKB - and the Bangladesh Jatiya Samabaya Bank-BJSB)
have weak financial structures, little capital, few deposits, and are heavily
dependent on advances at concessional rates from Government and the Bangladesh
Bank. Their equity has been greatly impared by borrowers' defaults. Signi-
ficant improvement in agricultural credit is, however, a long-term task. The
Government is following an interim strategy of getting greater commercial bank
involvement in agricultural credit.
28. Lately, the Government has shown increasing awareness of the problems
facing the agricultural sector and has taken a number of steps to overcome them.
These steps include efforts to improve project preparation and implementation
through increased decentralization in project approval and in procurement and
contracting, and simplification of procedures for release of budgetary funds.
To overcome the lack of trained field staff, Bangladesh is implementing several
training projects -- the important ones being the IDA-supported Agricultural
and Rural Training Project (Credit 621-BD, 1976), and the UNDP/FAO-assisted
training programs for extension staff and for workshop maintenance personnel.
As a follow-up to a comprehensive crop sector review by the Bank Group, the
Government has initiated a program for improving the effectiveness of the
agricultural extension services. The Government has also decided to improve
the distribution of agricultural inputs through placing greater reliance on the
private sector. Also underway, with Bank Group assistance, is a study to
identify particular areas where technical assistance to improve the perform-
ance of the Ministry of Agriculture and the Bangladesh Agriculture Development
Corporation (BADC), the two agencies most deeply involved in the agricultural
sector, might be appropriate. A review of the agricultural credit system is
about to get underway with assistance from IDA and ADB.
29. To promote rural development, the Government is trying to expand the
Integrated Rural Development Program (IRDP). The objective of the program is
to use local cooperatives (KSSs), in turn grouped at the Thana level (TCCAs),
as a mechanism for coordinating and integrating services to farmers, including
farmer training, credit, input marketing, and rural works activities. The
Government is preparing a comprehensive plan for its rural development activi-
ties and has requested IDA to help organize a group of donors interested in
supporting rural development in Bangladesh so as to achieve a better coordi-
nated program of investment in this field.
Irrigation
30. For centuries, Bangladesh farmers have used bucket-lift methods
for irrigating a dry-season rice crop (boro) on lands near low-lying water
bodies and perennial rivers and streams. Until the late 1950s however, almost
no effort was made for further development of the water resources and the
irrigated area remained stagnant at around 1 million ac. The establishment
of the Water Development Board (WDB) in 1959 and BADC in 1961 gave a major
impetus to the development of water resources in Bangladesh. Currently,
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irrigation is available for about 2.7 million ac -- 0.2 million ac by gravitysupply; 0.2 million ac by groundwater from tubewells; 1.3 million ac by low-lift pumps, and about 1.0 million ac by traditional methods.
31. The development of water resources in Bangladesh presents manydifficulties. The need to maintain minimum flows in the rivers during thedry season (in order to prevent saline intrusion from the Bay of Bengal andadverse effects on navigation and fisheries) limits the potential for surfacewater irrigation. The flat terrain precludes the development of large re-servoirs for either flood control or water storage for irrigation in the dryseason. Poor transportation facilities cause problems in moving equipmentand materials to construction sites. Finally, the small size of holdings andhigh degree of fragmentation -- the typical holding is about two acres frag-mernted into five plots -- necessitates the organization of, and cooperationamong, a large number of farmers for full utilization of even minor irriga-tion facilities.
Strategy, Programs and Performance
32. In the early 1960s, much of the development effort was focused onlarge scale gravity irrigation and flood control projects such as the Ganges-Kobadak, Chandpur and Coastal Embankment Projects. Although these projectsnow provide irrigation to about 0.2 million ac and flood protection to about1.5 million ac, their overall impact has been disappointing. Most of theseprojects have suffered from large cost overruns and long implementation delaysand benefits to-date have generally been much smaller than projected. Part ofthe reason for the disappointing results has been the all-pervasive weaknessin implementation capacity. However, in retrospect, it would appear thatinadequate technical and economic evaluation was also partly responsible forthe poor quality of some of these projects.
33. Considerably more successful have been the relatively low-cost andquick-yielding minor irrigation schemes such as low-lift pumps and tubewells.These pumps and tubewells have been deployed and maintained by BADC. Low-lift pumps (LLP) are small capacity (1-2 cusecs), diesel-powered centrifugalpumps used to raise irrigation water from perennial streams and ponds. Start-ing from scratch in the late 1950s, the program has now expanded to some40,000 pumps, irrigating an estimated 1.3 million ac. Despite problems ofunder-utilization and inadequate maintenance, the LLP program is highly attrac-tive economically. The major constraint to further expansion of the program isthe availability of surface water during the dry season. It is estimated thatinstallation of some 10,000 additional pumps would exhaust the current poten-tial. Further expansion of the program would have to be in conjunction withimprovement of natural channels, building of control structures and regulatorsand, in some cases, double pumping (e.g. IDA-supported Barisal and KarnafuliProjects). This would be more expensive but still quite attractive in manycases.
34. Tubewells to exploit groundwater offer the best prospects for fur-ther expansion of the irrigated area. Conservative estimates based on preli-minary investigations indicate that some 4 million ac could be irrigated by
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tubewells. Tubewell irrigation, although somewhat costlier than that by LLPs,
has the advantage that it allows extension of irrigation to many areas where
surface water resources have already been exhausted (e.g., Northwest region).
Two kinds of tubewells are used in Bangladesh -- deep tubewells (DTWs --
typically 8 inch diameter wells equipped with 20 hp diesel engines coupled
to submersible pumps and yielding about two to three cusecs) and shallow
tubewells (STWs - 4 inch diameter wells equipped with 5 to 6 hp diesel engines
and a surface-mounted centrifugal pump, typically yielding less than one cusec).
Until recently, much of the emphasis in groundwater development was placed on
DTWs. Some 4,000 DTWs, irrigating an estimated 150,000 ac, are currently in
use. Programs for installation of an additional 5,000 DTWs (including about
3,000 under the IDA-financed NW Tubewells Project - Credit 341-BD) are also
underway. It is expected that by 1978/79, all 9,000 DTWs would be in operation
and the irrigated area should total at least 0.3 million ac. Problems have
occurred in organizing farmers' groups large enough to use the DTWs to full
capacity.
35. Compared to DTWs, STWs are simpler to install and maintain, require
much smaller groups of farmers for optimal utilization and are considerably
less expensive. Accordingly, the Government has rightly shifted its priority
to STWs. Although so far only about 7,000 STWs have been installed, proposals
have been approved or are under consideration for installing an additional
35,000 STWs over the next 4-5 years -- 2,500 under the IDA-financed Rural
Development Project (Credit 631-BD, 1976), 5,500 under an ADB-financed Agri-
cultural Credit Project, 17,000 under bilateral assistance from Japan, Germany
and India, and 10,000 under this proposed project. By the early 1980s, these
35,000 STWs are expected to irrigate about 0.4 million ac. Ultimately, Bang-
ladesh should be able to absorb about 100,000 STWs irrigating over one million
acres.
36. While the economic return on investments in minor irrigation has
been quite satisfactory, serious problems in utilization and maintenance of
irrigation facilities reduce the benefits from levels that could be obtained.
Heavy subsidies on irrigation also reduce the incentives to optimal utiliza-
tion by users and contribute to poor maintenance. Pump/well utilization is
only 15 to 20 ac per cusec compared to the potential of 25 to 30 ac per cusec.
The underutilization is partly due to the poor siting of pumps and tubewells
and partly a reflection of difficulties in organizing and managing groups with
a large number of farmers. The maintenance problems are due to inadequate
workshop facilities, poorly trained field staff, and lack of incentives for
farmers and BADC mechanics to keep the equipment in good working condition.
37. Under the Rural Development Project, a major effort is being made
to improve the pump/well allocation mechanisms and to facilitate the organi-
zation and management of pump groups. If successful, the Rural Development
Project procedures would be implemented on a nationwide basis. For improving
the maintenance of irrigation facilities, the UNDP/ILO has recently approved
a project for training field staff at various levels. Support for improvement
of repair and maintenance facilities is included in the proposed project.
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IDA Support to Irrigation
38. Prior to the independence of Bangladesh, two IDA financed water con-trol projects were completed, and some pumps and engines were financed underIDA agricultural credit projects. Currently, IDA is financing the Chandpur IIIrrigation Project (Credit 340-BD, 1972), the Northwest Tubewells Project(Credit 341-BD, 1972), the Barisal Irrigation Project (Credit 542-BD, 1975),and the Karnafuli Irrigation Project (Credit 605-BD, 1976). An additionalirrigation and flood protection project (Muhuri Project) is being presented tothe Board concurrently with this proposed project. The implementation of allfour irrigation projects currently in execution is behind schedule by one totwo years. Reasons for the slippage of the implementation schedules areprimarily administrative and include difficulties in: hiring of consultants;appointment of project staff; release of budgetary allocations; approval ofcontracts, and coordination among the various implementing agencies. TheAssociation and the Government have been discussing specific measures toimprove project execution over a long period. The Government has alreadytaken a number of steps to relax the most serious bottlenecks. IDA and theGovernment have also given increased emphasis to regular monitoring andsupervision of the various projects in order to identify and resolvepotential problems at an early stage.
PART IV - THE PROJECT
39. The feasibility study for the project was prepared by BADC andfurther preparation was done by IDA missions. The project was appraisedin February/ March 1976; a follow up mission visited Bangladesh in August/September 1976. Negotiations for the proposed Credit took place in Washingtonin May 1977. The Government of Bangladesh was represented by a team ledby Mr. A. Samad, Chairman, BADC. Attached as Annex III is a SupplementaryProject Data Sheet. Two project maps are also attached.
Project Concept
40. The proposed project would provide irrigation to about 150,000 acin the Northwest (NW) region through the installation of 10,000 small capacitySTWs. The project would also improve the workshop facilities for maintenanceof all irrigation equipment (some 5,000 LLPs, 20,000 STWs and 4,000 DTWs) inthe NW region. The NW region, covering five of the country's 19 Districts,has a gross area of about 13,350 sq mi and an estimated population of about18 million. There are some 2 million farm families in the region each culti-vating an average of 3.5 ac. The major objectives of the project are to: (a)
increase foodgrain production; (b) improve farm income levels; (c) rationalizeand strengthen the rural institutions; and (d) improve utilization of existinginvestments in irrigation facilities. The project is in line with the stra-tegy set forth in the Land and Water Resources Sector Study by the Bank Group(Report No. PS-13, dated December 1972).
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41. Project formulation and appraisal involved the resolution of the
following major issues: (a) the areas to be covered under the project; (b)
the institutional set-up for sale of STWs and provision of credit facilities
to farmers; (c) the feasibility and consistency of the Government's overall
program for shallow tubewell development; and (d) the scope of the project.
The following decisions were made during the appraisal:
(a) Prolect Areas. To benefit the relatively poorer areas and
to increase food production in food-deficit areas in the NW
region, it was decided that the project should cover all
areas with technically acceptable groundwater potential rather
than be limited only to areas with optimal potential.
(b) Institutional Set-up. To strike a balance between the
objectives of 'growth', 'equity' and 'institution building,'
it was decided that distribution of the project-financed
tubewells would be through the following three channels:
(i) outright cash sales to individual buyers;
(ii) sales to IRDP cooperative groups with credit from
commercial banks; and
(iii) sales to individuals or groups of individuals in non-
IRDP thanas on direct credit from commercial banks,
with larger down payments and stricter security
requirements than for IRDP groups.
All three channels would operate in parallel. It is esti-
mated that about 10% of sales would be on a cash basis, 60%
to IRDP groups and 30% to individuals on credit. To ensure
participation by the small farmers, 5,000 STWs would be re-
served for IRDP groups. It has been agreed that the insti-
tutional set-up and the terms and conditions for the sale of
the project STWs would be satisfactory to IDA and that by
December 31, 1977, BADC would phase out its hire-purchase
system for sale of STWs on a country-wide basis (Section
3.07(d) of the Development Credit Agreement - DCA).
(c) Program Feasibility and Consistency. In addition to the
10,000 STWs under the proposed project, the Government has
arranged external financing for about 25,000 STWs for in-
stallation during the next few years. In view of this, the
feasibility and consistency of its overall program for STWs
was thoroughly reviewed. The review indicated that although
there was some need for further preparatory work, the program
was feasible and would be consistent with the approach adopted
in the proposed project. It was agreed that uniform pricing
principles and credit terms would be employed during the project
implementation period for all STWs installed in the project area
- 15 -
irrespective of source of financing and method of procurement(Section 4.02 of DCA). Specific measures were also agreed tostrengthen the program in other parts of the country. In par-ticular, the Government agreed to establish an expert committeeto review the issue of groundwater development in Bangladeshand submit to IDA for review, not later than December 31, 1979,its proposals for the regulation of groundwater development(Section 3.09 of DCA).
(d) Scope of the Project. In view of problems of inter-agencycoordination in Bangladesh, the high priority nature of in-vestment in STWs, and the proposed Extension and ResearchProject for the NW region, it was decided to include in theproject only those services which are essential to thesuccessful operation of the project STWs, i.e strengtheningof repair and maintenance facilities for the irrigationequipment in the NW region.
Project Components
42. The project would include the provision of:
(a) Equipment, materials and incidentals for the installationof 10,000 power-pumped STWs. To demarcate areas suitablefor STW development, BADC would hire engineering consultantsto compile and analyze existing hydrological data and toprepare Thana Irrigation Maps. The availability of these maps,to be prepared in accordance with standards satisfactory toIDA, would be a precondition for installing STWs in a particularthana (Section 3.06 of DCA). Assurances have been obtainedthat in project thanas where the existing hydrologicaldata is found to be inadequate, BADC would commission thedrilling of test holes and carry out other appropriate tests,under arrangements satisfactory to IDA, to determine beforeJune 30, 1978, the suitability of such thanas for thedevelopment of STWs (Section 3.08 of DCA).
(b) Credit facilities through two commercial banks (CBs), theSonali and Janata Banks, to eligible IRDP groups and indivi-duals for financing the purchase of about 9,000 tubewells --an estimated 6,000 by IRDP groups and the rest by individualbuyers. Vehicles and office equipment would be providedto the staff of IRDP, the Sonali Bank and the Janata Bankto help them in administering and supervising the creditprogram. To improve operations of IRDP's village levelsocieties (KSSs), IRDP would prepare debt inventories andland registers for IRDP-KSSs in the NW region. ProjectAgreements with Sonali Bank and Janata Bank, respectively,have been agreed upon concerning their involvement in theexecution of the project and the details of the implementa-tion of the credit program. The Government has agreed to
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ensure that IRDP, BKB, BJSB, the Central Cooperative Banks
and the four other commercial banks provide all necessary
information to the Sonali and Janata Banks, with respect to
all outstanding loans due to them by prospective borrowers,
not later than two months after Sonali or Janata shall have
requested such information. The Government has also agreed
to complete, by March 31, 1978, an inventory of outstanding
or overdue institutional debt owed by KSS members in the
project area (Section 3.07(b) of DCA). Farmers would have to
settle their debts according to guidelines agreed upon with
IDA in order to qualify for loans under the project (Schedule
1 of Project Agreements).
(c) Strengthening of repair and maintenance facilities for the
existing and proposed irrigation equipment in the NW region
(a total of about 5,000 LLPs, 4,000 DTWs and 20,000 STWs).
The project would include: (i) civil works for completion/
construction of one regional workshop, five zonal workshops
and about 100 thana workshops; (ii) incremental requirements
of machinery and equipment for the regional, zonal and thana
workshops as well as machinery and equipment for sale to
private sector workshops; (iii) transport and vehicles for
BADC field staff in the NW region; and (iv) two man-years
of technical assistance for helping BADC in the implementa-
tion of the proposed program for strengthening the repair and
maintenance facilities (Section 3.10 (b) of DCA). The
Government agreed that BADC would, by June 30, 1978, consolidate
the field organization of its Irrigation Directorate in the NW
region and assign to its regional, zonal and thana workshops in
the NW region functions and responsibilities satisfactory to
IDA (Section 3.10 (a) of DCA). In order to promote private
sector involvement in the provision of repair and maintenance
services, the Government has provided assurances that it would
cause BADC to sell to qualified mechanics in the NW region spare
parts for irrigation equipment, and the workshop equipment and
machinery referred to in (c)(ii), under arrangements satisfac-
tory to IDA (Section 3.11 of DCA). The Government has also
agreed that BADC would charge the users of its repair and main-
tenance services full cost of the spare parts and at least 50% of
the cost of services (Section 4.05 of DCA). Since the BADC thana
workshops are the property of the Ministry of Land Administration,
Local Government, Rural Development and Cooperatives, the Govern-
ment has undertaken to ensure that the workshops are made avail-
able to BADC under arrangements satisfactory to IDA (Section
4.03 of DCA).
(d) Services of qualified consultants for conducting (i) appro-
priate field surveys to evalute the production and distribu-
tive impact of the project-financed STWs; and (ii) detailed
studies to evaluate the effectiveness of the improved repair
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and maintenance facilities. It has been agreed that theseconsultants would be hired not laLer than March 31, 1978
(Section 3.02 of DCA).
Cost Estimates
43. Total project costs are estimated at US$25.4 million equivalent and
include about US$4.6 million in import duties and taxes. The foreign exchange
component is estimated at US$14.6 million or about 57% of the total projectcost. Cost estimates are based on unit prices at March 1977 levels. The major
elements in the cost estimates are equipment, materials and incidentals for
STWs (US$12.33 million), standby pump sets and spare parts for STWs (US$2.05million), vehicles and office equipment for IRDP and CBs (US$0.36 million),
civil works for completion/construction of workshop facilities (US$1.19 million),machinery and hand tools for workshops (US$2.47 million), vehicles for BADC
(US$1.67 million), and technical assistance (US$0.73 million), totalling to a
base project cost of US$20.80 million. Physical contingencies of about US$0.85
million and price contingencies of US$3.75 million bring the total project
cost to US$25.4 million.
Financing
44. The proposed IDA credit of US$16.0 million would finance the full
foreign exchange costs and US$1.4 million local costs or about 77% of the total
project cost net of taxes and duties. Financing for the remaining US$9.4million would come from the following: Farmers buying the STWs would put up,
either as installment payments on credit sales or as full payment on cashsales, about US$4.8 million. Participating commercial banks would put up
from their own resources US$2.5 million as credit to individuals and groupbuyers (net of repayments during implementation period). The IRDP-TCCAs and
the CBs would pay US$0.2 million for purchase of office equipment and vehiclesfor their staff. Farmers and private sector mechanics would pay a total of
US$0.9 million for the purchase of spare parts, machinery and equipment and
for rental of replacement pumps during the project period (and an estimatedUS$2.6 million following project completion during the life of the projecttubewells). GOB would contribute US$1 million and would also be responsible
for making up any shortfalls. As there would be some time lag between projectexpenditures and realization of the sales proceeds of the tubewells, the Gov-errunent would establish a revolving fund for the project and keep a balance
adequate to cover expected expenditures for the following three months. Acondition of effectiveness of the proposed credit would be that the Government
has established the revolving fund and made an initial contribution of Tk 4.5million (Sections 3.13 (a)-(d) of DCA).
Implementation Schedule
45. Project implementation would take four years. Preparatory activi-
ties such as preparation of Thana Irrigation Maps, KSS land registers anddebt inventories for KSS members would be completed by March 31, 1978.Procurement of vehicles and office equipment for IRDP and CBs would be com-pleted during the first year of the project. Detailed designs and layouts for
- 18 -
the various workshops have already been completed and construction would be
phased over three years: 1977/78 - 1979/80. Procurement of tools and machinery
for the workshops and vehicles for BADC would be phased with the workshop
construction program.
46. Tubewell installation would be spread over four seasons: 1977/78 -
1980/81. Tender documents for procurement of materials and equipment for
shallow tubewells are under preparation and tenders would be issued for deliv-
eries in four batches - the first batch of 1,000 STWs by December 1977, and
subsequent batches of 3,000 each by September of the following three years
(1978-80). The procurement schedule is tentative and would be revised, if
necessary, following periodic reviews of the demand for STWs in the project
areas.
Procurement and Disbursements
47. Equipment, vehicles and materials (with the exception of construc-
tion materials for workshops which would be procured on the basis of local
competitive bidding) with an estimated cif cost of about US$11.3 M (net of
contingencies) would be procured after international competitive bidding in
accordance with IDA Procurement Guidelines. Off the-shelf items costing less
than US$10,000 each would be purchased through normal Government procurement
procedures, which are satisfactory to IDA. Such purchases would, however, be
limited to US$200,000 in total. Because installation of the tubewells (US$1.3
million net of contingencies) and the civil works for completion/construction
of workshops (US$1.2 million net of contingencies) would be simple, individ-
ually very small, labor-intensive, scattered over a wide area and restricted to
seasonal construction, they would be unsuitable for international competitive
bidding and hence would be carried out on the basis of contracts awarded after
local competitive bidding under Government procedures satisfactory to IDA. The
locations, site plans and designs of the regional and zonal workshops would
be acceptable to IDA (Section 3.03 of DCA). The Government's current proposals
for locations, site plans and designs were reviewed during the appraisal and
would be acceptable.
48. The consultants to carry out the evaluation studies (Section 3.02
and Part D of Schedule 2 of DCA), the Thana Irrigation Maps (Section 3.06 of
DCA) and the workshop improvement program (Section 3.10 (b) and Part D of
Schedule 2 of DCA), would have qualifications and experience, as well as
terms and conditions of employment, satisfactory to IDA.
49. Disbursements from the credit acccount would be made for: (a)
equipment, machinery, spare parts, vehicles and materials (other than mate-
rials for construction of workshops): 100% of foreign expenditures if directly
imported, or 100% of local expenditures (ex-factory) if manufactured locally,
or 60% of local expenditures in other cases; (b) materials and civil works for
construction workshops: 70% of total costs; and (c) consultants services and
technical assistance: 100% of foreign expenditures and 70% of local expendi-
tures. Applications for withdrawals from the credit would be fully documented
except that disbursements for individual local expenditures costing less than
US$1,000 under category (c) would be made against certificates of expenditure.
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It is expected that the disbursements would be completed by December 31, 1981,
approximately six months after the completion of the project. The Governmenthas agreed that all participating agencies would maintain seperate project
accounts at thana, District and overall Project levels, to be audited by
auditors acceptable to IDA each fiscal year. Auditing of credit accounts
for STWs would continue until all loans provided to farmers during projectimplementation are repaid (Section 4.01 (b) of DCA).
Project Implementation and Operation
50. Project implementation would principally involve three agencies:
- BADC for procurement, installation and after sales serviceof the project-financed STWs. It would also be responsiblefor strengthening the repair and maintenance services for allirrigation equipment in the NW region;
- IRDP for organizing farmers' cooperatives for credit salesof STWs to groups, and administering and supervising thecredit facilities to the TCCA-KSSs; and
-- CBs (the Sonali and Janata Banks) for providing creditfacilities to individual as well as group buyers. Theywould have the sole responsibility for administering andsupervising the lending to individuals and would helpIRDP in this regard for the groups.
In addition, the Ministry of Land Administration, Local Government, RuralDevelopment and Cooperatives would participate in project implementation for
supervising construction/completion of thana workshops, helping in verifica-
tion of credit records for the borrowers under the project and providingproject coordination through the local government administration in the field.Assurances have been obtained from the Government that it would assign an
adequate number of additional staff to the various implementing agencies(Section 3.12 of DCA).
51. BADC, a semi-autonomous organization under the Ministry of Agri-culture, is the single most important organization in Bangladesh for supply-ing inputs and services to the agricultural sector. It is responsible for
procurement of virtually all agricultural inputs, machinery and equipmentand for distribution of seeds (except for jute), fertilizers, diesel and some
pesticides. It also manages seed multiplication farms, deploys and maintainslow-lift pumps, tractors and power tillers, and sinks and maintains STWs andDTWs. The corporation, with some 16,000 employees and a total annual budget
in excess of US$100 million, is one of the largest organizations in Bangladesh.Owing to this rapid growth and the disruptions caused by the civil dis-turbances during the early 1970s and their aftermath, there has been some
deterioration in the management of the various BADC programs. The deterio-
ration has, in turn, affected implementation of two IDA financed projects--the NW Tubewells Project (Credit 341-BD) and the Cereal Seeds Project (Credit410-BD)--for which BADC is the main implementing agency. Both projects have
- 20 -
experienced substantial implementation delays as well as cost overruns. Fol-
lowing intensive supervision and monitoring by IDA and the Government during
the past year, both projects are proceeding satisfactorily now. To prevent
similar problems, during appraisal of the project, BADC's existing STWs pro-
gram was thoroughly reviewed and institutional changes incorporated, as
necessary. IDA is currently financing consultants under a technical assist-
ance credit (Credit 409-BD) to assist BADC in preparing terms of reference
for further studies necessary for improving BADC's management and operations
(paragraph 28).
52. IRDP is an agency under the direct administrative control and super-
vision of the Ministry of Land Administration, Local Government, Rural Devel-
opment and Cooperatives, for developing stable, self-reliant and disciplined
cooperatives in rural areas. The IRDP approach is fashioned after the two-
tiered cooperative system developed at the Comilla Academy during the 1960s.
At the village level, farmers (typically 30 to 100) are encouraged to join
together to form Village Agricultural Cooperative Societies (KSS). In turn,
the KSSs within a thana (100 to 150) are federated into a Thana Central Coop-
erative Association (TCCA). The TCCAs organize supply of technical services
(land use planning, training and extension), farm inputs and machinery, and
production-linked supervised credit for the member KSSs. The two-tiered
approach enables retaining the village as the natural unit of development while
still exploiting economies of scale inherent in organizing and supervising the
supply of inputs and services at the thana level. The IRDP, started in 1970,
presently covers about 160 thanas and plans are to extend its operations to
another 50 thanas during 1977. Compared to most other agencies and departments
involved in rural development in Bangladesh, IRDP is a relatively strong
organization with better than average field staff, a well conceived work
program, and good leadership. IRDP is the main implementing agency for the
IDA-financed Rural Development Project. A substantial amount of technical
assistance for improving IRDP's field operations is being provided under that
project.
53. CBs. The Sonali and Janata banks are the two largest commercial
banks in Bangladesh having, respectively, 435 and 348 branches, well dis-
persed over the whole country. Both banks are financially sound and ade-
quately staffed with personnel trained and experienced in the commercial
banking business. The Sonali Bank has been a pioneer in providing produc-
tion credit to the agricultural sector through the IRDP cooperatives. It
has achieved an excellent record in loan recovery with less than 2% of amounts
advanced in default for more than one year. Involvement of the Janata Bank
in agricultural credit has been more modest. It has lent directly to farmers
for production of cash crops such as potatoes, tobacco and sunflower seeds.
On an experimental basis, it has also lent for installation of a few shallow
tubewells in Noakhali and Comilla Districts. The Janata Bank's recovery
performance also has been very good.
Project Coordination
54. Successful project implementation would require close cooperation
and coordination between the staffs of BADC, IRDP and the commercial banks,
- 21 -
at all levels. The organizational structure to achieve this has been modeledafter that of the IDA-supported Rural Development Project which, according toexperience so far, has been successful. The Government has provided assurancesthat the composition and functions of the committees described below would besatisfactory to IDA (Section 3.01 (b) of DCA).
55. Project Executive Committees, Three levels of project ExecutiveCommittees have been established -- at thana, District and the project levelsrespectively. These committees would be in charge of day-to-day projectfollow-up and execution. The Thana Circle Officers (Development)would serve asthe Thana committee chairmen, and the District Deputy Commissioners as chair-men of the District committees. The (Member) Director Irrigation (BADC) wouldbe the chairman of the Project Executive Committee. The BADC officers wouldserve as executive secretaries of the committees at all three levels. Allparticipating agencies would be represented on the three levels of committees,thus maintaining their respective chains of command. In particular, theProject Executive Committee would be responsible for overall project execution,and for reporting progress to IDA. The Committee would review the annual workprograms of the various participating agencies. It would also manage therevolving fund to be established for the project.
56. Project Coordination Committee. A more senior committee, theProject Coordination Committee, has been established under the chairmanship ofthe Secretary of Agriculture. Its members are: Chief of Rural Institu-tions Division, Planning Commission; Chairman, BADC; Director, AgricultureCredit Department of the Bangladesh Bank, Director-General, IRDP, and ManagingDirectors of the Janata and Sonali Banks. The Committee will settle policyissues and will correspond with IDA on policy matters related to the project.The committee will also see to it that Government project funds are allocatedto the implementing agencies according to the project budget and that majorcoordination problems are resolved.
Operation and Maintenance
57. Responsibility for operation and routine maintenance of the tube-wells would lie with the buyers who would be instructed in these matters bythe BADC staff at the time of tubewell installation. Other maintenance andmajor repairs would be the responsibility of BADC which would operate a networkof regional, zonal and thana workshops for this purpose. Bicycles and motor-cycles supplied under the project for the field staff of BADC and IRDP-TCCAswould be sold to the staff on a 'hire-purchase' basis. Responsibility forthe operation and maintenance (O&M) of these vehicles would lie with therespective staff who would be given a monthly allowance for this purpose.Responsibility for O&M of other vehicles and equipment would lie with therespective agencies; Assurances have been obtained that the Government wouldmake adequate budgetary allocations to (i) BADC and IRDP for proper operationand maintenance of buildings, vehicles and equipment to be used in implemen-tation and operation of the project, and (ii) BADC for the import of spareparts required to carry out the repair and maintenance improvement programincluded in the proposed project (Section 4.04 of DCA).
- 22 -
Financial Analysis
58. The impact of the project on its beneficiaries under the three
proposed sales arrangements has been analyzed for three representative crop-ping patterns found in the project areas. It is estimated that, typically,
the per ac gross value of production would increase by 100 to 200%, farm labor
requirements by 50% to 100% and the net value of production by 100-200%. As
most of the human and animal labor used for cultivation is provided in kind,the net value of production is a relatively poor indicator of the incentive
to the cultivators. A more meaningful measure is the total "farm income" from
land and the farmer's own and his animal's labor. Assuming that 80% of thehuman labor requirements and 50% of the animal labor requirements are supplied
by the farmer himself, the estimated increase in per acre "farm incomes" wouldrange from 50% to 150%. The larger increases would take place in areas where,without irrigation, only single cropping is possible at present. As an alter-
native measure of the financial viability of the project, financial rates of
return have been calculated for various kinds of buyers. For group buyers,
the estimated annual rates of return vary between 65-115%, for individualsbuying on credit between 40-70%, and for those buying on cash between 25-40%.The most serious risk to financial viability would arise from: lower than
projected command areas for the tubewells and lower foodgrain prices. In theunlikely event that both were to happen simultaneously, the rates of returnwould be still in the range of 15 to 50%. Thus, the investments in project
tubewells would be financially viable under most circumstances.
59. Except for a part of the indirect O&M costs, all capital and O&M
costs for the tubewells would be borne by the users. In financial terms, the
cost recovery on the project would range from 80-90%. The high cost recoveryon the project is particularly striking since most other irrigation facilities
in Bangladesh are heavily subsidized. While it is clear from the financialanalysis that the high recovery rates under the project are fully compatible
with leaving enough incentive to the farmers, it is imperative for reasons of
equity and better resource allocation, that the Government should rationalizeits policies on "pricing" of irrigation water from different modes of irriga-
tion. An IDA Mission visited Bangladesh in August 1976 to discuss the issuewith the Government, which indicated its intention to reduce subsidies on otherirrigation facilities and study the implications of various alternative poli-
cies. Assurances have been obtained that before December 31, 1978, BADC would
furnish to IDA for comments a plan to recover from beneficiaries the O&M cost
and as much as possible of the capital costs of all irrigation facilitiesprovided through BADC; and that the Government would consult with IDA on the
timetable and measures to be implemented (Section 4.06 of DCA).
Benefits and Economic Justification
60. Bangladesh presently meets about 15% of its foodgrain demand through
imports and achieving self-sufficiency in foodgrains is one of the country'smost important priorities. The proposed project would assist in reducingBangladesh's foodgrain shortages, which have been averaging about 1.5 million
tons per year. At full implementation, in four years, the project tubewells
would provide irrigation to about 150,000 ac of cultivated land which presently
- 23 -
is mostly single cropped under rainfed conditions, with total rice productionin the command areas increasing by about 40,000 tons and wheat production byabout 51,000 tons. The more intensive land use under the project would createadditional annual farm labor requirements of about 7.5 million man-days, anincrease of about 60% over the present level and including secondary employ-ment, total employment would increase by about 10 to 11 million man-days.While much of this increase would come from the farmers themselves (who aregenerally underemployed at present), the landless laborer would also benefitsignificantly. Two important aspects of the project are that about one-thirdof the total initial investment would come from private savings (as downpay-ment by users or from commercial banks) and that project tubewells would in-volve practically no subsidies. These features are particularly desirable,in view of the Government's difficult budgetary situation and the need formobilization of private savings for productive investment.
61. In a project such as this where the major result is to increasethe productivity of land, to a large extent the distribution of directbenefits must reflect the existing land ownership pattern. In setting-upthe institutional arrangements for the project, however, particular attentionwas paid to ensuring that small farmers get at least a fair chance to benefitfrom the project. It is estimated that, of the roughly 50,000 farm familiesexpected to benefit directly from the project, two-thirds presently haveincomes below subsistence levels; they own about 40% of the lands likely tobenefit from the project.
62. The estimated economic rate of return for the project is about 50%.Separate analyses of the tubewells with different cropping patterns and own-ership arrangements indicate that all cases are economically viable; thelowest return being about 35%. Sensitivity tests taken under a variety ofless favorable assumptions resulted in rates of return over 30%. In the un-likely event that projected crop prices are 25% lower and command areas 25%smaller, the rate of return would be about 25%. Thus, the project would beeconomically viable under practically all circumstances. The high economicreturns, which are essentially a result of two factors -- the low unit invest-ment and the short gestation period - coupled with the large unexploitedgroundwater resource of Bangladesh, place shallow tubewells among the priorityinvestments for development of its agriculture.
PART V - LEGAL INSTRUMENTS AND AUTHORITY
63. The draft Development Credit Agreement between the People's Republicof Bangladesh and the Association, the draft Project Agreements between theAssociation and the Sonali and Janata Banks, the Recommendation of the Com-mittee provided for in Article V, Section 1 (d) of the Articles of Agreement,and the text of a draft resolution approving the proposed Credit are beingdistributed to the Executive Directors separately.
- 24 -
64. Special conditions of the project are listed in Section III of Annex
III. Special conditions of effectiveness are: (i) the ratification of the
execution of the Project Agreements on behalf of the Sonali Bank and Janata
Bank, respectively; (ii) the approval of the project's Project Proforma; and
(iii) establishment of the project Revolving Fund with an an initial deposit of
Tk 4,500,000. A condition of disbursement concerning categories (3) and (4) of
paragraph 1 of Schedule 1 of DCA (construction of workshops and supply of
machinery, equipment and vehicles for these workshops) would be the hiring by
BADC of a workshop management expert (Schedule 1, paragraph 4 of DCA).
65. I am satisfied that the proposed Credit would comply with the
Articles of Agreement of the Association.
PART VI - RECOMMENDATION
66. I recommend that the Executive Directors approve the proposed
Credit.
Robert S. McNamaraPresident
By J. Burke Knapp
June 3, 1977
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ANNE Ipage 2 of 4 page.
NOTES
Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961, for 1970 between 1968 and 1970, and for Meet Recent gatimate
betwe 1973 and 1975.
CThe 1970-75 population groth rate is abeornally low due to the effecta of the war of independence end-ate population -ovomnt. emroac
the hordera daring that period. Pre..e.tly, the avrage population growth in estimnated at 77. per ana.
meSelection of Maleysia as en ohjective country is based on Malsyaa'e aeuccesa in maintaining a high rate of economic growth and adequate
level of welfare cocurrently with di-arifying its ecaosic stmuctur.
EAS(LADESIH 1960 /a Ratio of population under 15 and 60 and over to total labor force; lb 1963-64; /c Registered, not allPracticing in the country; Id Govert hospital astablishesents only3; Ia Appro-imate anrolliue.t aspercentage of population in 6-10 and 11-15 age groups reapectively4 If Age group f5-59 and 60 and over respectively.
1970 4 1966-h7; /b 1967-68; /c Registered, not all practicing in the coutry; /d Goreroment hospitalastablihioen-ts only; fe Average f or 1969-71; If Appramiate enrolloent en percentage of population in 6-10
and 11-tS age groupa respectively.
MOST RECENT ESTIM4ATi: la Ratio of population under 15 end hi and over to total labor force; /b Mainly -mu1plyad workersseeking their first job; /c Including nidwivee Id 1972;' Ie Age group 15-39 end 60 and overrespectively.
goR24A 1970 /a Ratio of population under 15 and 65 and over to total labor force; /b personnel in govesonet services only;
I7 1964-66.
TRAfLAND 1970 I 1964-66; lb Public schools which include technical educa.tion at the poat-necondary level.
MALAYSIA 1970 Ia Weat Malasyia; /b Registered applican.ts for work; /. 1964-66; _/d Piped water innide.
R1O, may 24, 1977
PEPFINITIONS O? SOCIAL =DIICATORS
Land Ares (thou lea2) paoularmon oar sureiss os~~~~preac - Population divided by saber of practicing
Total- Total surface area comeprising land eras end inland waters, maesdfnle grduate sua "trained' or 'certified' nurses,. an d
Asri. - Most recen.t estimate of agricultural area used tosporarity or patn- amilisry personnel with training or emperienca.neatly for crops, psocura, market h, kitches gardons or to lie fallow. Poolstion ear hospital bed - Population divided by masher of hospital beds
avilable in public and private gser. I1 and apecialiced hospital ted
GNP ear c.Pit. (t515) - IMP per capita estimates at current market prices, rehabilitation centers; secldes nursing hones and eetsblihainato forcalculated by sane convrsion- mahod as World sank Atlas (1973-75 basis); custodial sod preventive care.19h0; 1970 sod 1975 data. Par capita supply of ca1oriee fI of tenuirenete) - Computed fran energy
squiva1at of mat food supplies availble in country per capita par day;
Poenletion sad vital sttsiiaelble supplies coprise dsmestic production, imParts las sePorts, endFpoocltima (id-year nillion) As of July first: if nor avilable, oversee changes is stob; net sapplias enclode nia feed, seeds, quascicti.. usad
of tw end-year as theatre; 1(460, 1970 and 1975 dots. in food processing sod 1.sees in distribution; requir-eta were eatbuatedby F40 hosed on Physiological needs for usnal activity and health consid-
Ppultiston density -per sucere be - Mid-year population per squore kilom,eter sting eniromomictal tnpercure, body weights, age and sex distributions of(100 heotaes f total area, population, and allowing 107. for wate at household level.
Ponulatioo denity -pear ousre be of saric. iaod - Computed as shov for Per .. pit. scpan, of erotain saeas eat day) - Prtelin contest of par capitaagricultural laud only. net supply of fond per day; net suPpply of food is defined as shov; require-
neots for all coteatries established by tUSDA Economic Research Servic..
Vital statistics provide for a ini_e allowance of 60 gras of total protein per day, andCrude birth rate pet thou.end. -verse - Annual lio birth. per thousand of 20 gras of animal sod Pulse protein, of which li grac,shobuld be snioasl
mid-year populatio; cetn-yer arithastic average ending in 1960 snd 1970, protein; chas standards are lar than these of 75 gras of total proteinand five-year-aergeeding in 1975 for -a tracent estimate and 23 eras of sni-1s protein asasavrage far the world, proposed by FAO
Crude death rate per thou ..nd. everage - Annual deaths per thousand of mid-yea r in th. Third World Food S-rvy.population; ceo-year arithesetic averages ending in 196 0 end 1970 and fiv- Per capita protein sanely from an-Ima and puise - protein supply of food
year average enin in 1975 for moot recent estimate, derived from animals and pulses in gras per day.Infant artojity race f/thou) - Annual deaths of infants nder one year of age leach rate f/thou) aces 1-4 - AnnualI deaths per thaceand in age group 1-4
per thousand liv births. years, to children in this age group; suggested as an indicator ofLife penneta...y at birth (yrs) - Averago mushr of years of life rasining at mal-atrition.
birth; usually fiv-yea averges ending in 1960, 1970 and 1975 for davlop-Log countries. Eduastion
iross reoroduction rote - Average somber of live daughters awsnwill bear Adluoted enrollmet ratio - primar, school - Enro1lawt of all gee as Per-inho nrmaul reproductiv period if eke enperisense present age-specific cantaga of Peimary achol-age populatimi; isciuden children aged 6-11 yesre
fertiliyrates; usully five-y -ravrgne ending is 1960, 1970 and 1973 bet adjusted for differset lengihe of primary educatimi; for coutries withfor davelapig coutries. aniver1sad eduction, -nro1-t may sensed 100% since sas pupils are below
Ppuolation erowth rate f7.) - total - Composed annua growth rates of mid-year at shov the official echool age.population for 1950-60 16-70' aod 1970- 71. Adlasntd enrolmet ratio-aecondsev achaal - computed as shav; secondary
population arowth rate (7.)1-6urban - Ccomputed like gr-nth race of total eduction requires at leas.t four years of approved primary instruction;population; different definitions of urban area may affect coparability of provides geneal., v-nticnl or teac.her training ine trotiona far pupils
daa mngcoories. of 12 to 17 years of age; carrepondeec courses ar generaly maclded.
Urban pouato ft of total) - Ratio of urban to total population; different Tneo colm rvdd(ie n eodlvl)-Ttlyasodefinitions of urban area may affect comparbility of dat.a ess contis,shooling; st secondary level, vstias instrution may be partially or
completely maclded.Aee etructure (peroet) - Children (0-14 years), curing-age (15-6.4 yas,Voctional enrollmet (7. of eecondary) - Vocationa institutions include
adrecited (65 yours and aver) as pertentages of mid-year population. technical, indus trial or other progras which operate independently or aAge denpnd.acy ra tia - itic of population ucdnr 1) sod 65 and avr to those deparmente of secondary institutions .
of ages 15 through 64dult lteracy reto (7.) - Literate adults (able to read and rice) as per-tcanoic dseende.ccv ratio - latic of papulatban ader 15 and 65 and aver to etg of total adult .poplation aged 15 years and over.the labor force to age group of 15-64 years.
tastiy olnsiecscce tor (cumlative, thou) - Can1ltive saber of acce ptors !Lousing rof birth-control device usdraupiceu of national fail 7
planning progromProantro ubn vre sme fprosprro nocpe
since inception. ~~~~~~~~~coovotion1 dwellings in urban areas; dwellings e-rlde non-pe-emaetIamily planning users (7. of married wmn P-Pecetages of married w-s of srcue n scuidpra
chil1d-bearing age (15-44 years) who.s birth-control devises to all maried Occuped awic cichoct pined eater (7.) - Occupied con-etionI dwellings
cmsisn a age group. inubanad ral areas ithout inside or outside piped cater facilitiesPas .pretage of all aupied dwelings
Eponpicmet Access to electricity 7X of all dweles - Cooventioc..l dwellings with
Total labor force (thousand) - iconomisally soti-e pereous, including armd electricity in living quarters as percent of total dwellings in urban andfarces end tomployd hut maclading h-oueive, students, etc. ; definitions rural ars..in various coatries are not comparble. Rural dwellings connected to electricity (7.) - Computed as above far rural
Labor farce in acricul1ure (7.) - Agricu1tural labor farce (in farming, foreecry, dwellings only.hunting end fishing) as Percentage of total labor force
Un_moloyed (7. of labor force) U- uoplyed ar usually defined as pereas h. Conaumotion
are able and willing to take job, out of a job on a give day, romied out Radio rece.ivers (net thou eon) - All types of receivere for radio broadcas ts
of a job, sod aseking wock for a specified minima Period not seceeding one to general public per thousand of population; secludes onlicensed ceci-ers
week; maysac be comparable between coun tries doe to different definitions in countriee and is years when registration of radio sets wa in effect;of unplayed nd source of dais, e.g., eaploymat office statistics, sample data far r.eet years may sat be comparable ino mos...t countries abolished
suvys opulsory ucoploy-nt inurnc, icning.
Pasene cr (e thou eon) - Passenger care comprise -t- car seatingIncs. distribution - Percntage of private incas (both in cash and bind) l:ess tha eigt eras macludee ombu1ances, hearses and military
recived by richnet 57., richest 507., poarasi 207., and po--a 45. of hos- veices
holds. Electricity (kwh/yt net can) - Annual consumption of induscrial, -mmrcia1,public and private electricity in kilowatt hour per capita, generally
Distribution of land owerhip -Percen.tages of land mind by wealthiest 107. base.d on production data, without alscefor looses in grids hut allo-end poorsat 107. of land onr.ing for imparts and exports of electricity.
Newprint (kg/nr ner can) - Per capita anna c.oIsaption is kilogras
Health and Nutrition estimated from, dometic production plus net imports of newprint.
PPeolation net physici.n - Population divided by me.ter of praticingphysicians qualified from a medisl school at aiversity leve.
ANNEX I
Page 3of 4Pages
(cmts in muiions of U.S. GSZ*reL-
Actual ~ ~ ~ ~ ~ ~ ~~ ±960 1965- l~~~~~~~~~~~97~- IZ967-69 1974/75 19 76/77Av.1967-69 1972/73 17/5 1975/ 1976/77 1965 190 19 77
NATIONAL ACCOUN!M__In Constantt 1972- 1973 Prices & change Rath. Average Annual Growth Rates As Percent of GDYt
Gross Domestic Product 6,012 5,833 6,514 7,295 7.361 4.7 3.3 6.7 9. 0. 0.Gains from Terms of Trade(+ 89 - -117 4145 -148 1.5 -1.8 -2.0Gross Domestic Income t7Th1 31f 57W -7.150 7,413 5.6 2.5 6.2 TWFZ =1 0 100.0
Import (inn].. NFS) 879 747 703 646 500 20.6 6.8 -7.4 14.4 11.0 6.7Exports " (import capacity) 598 369 197 200 210 12.3 -14.6 -12.6 9.8 3.1 2.8Resource Gap 281_174T_II 2904. 79
Consumption Expenditures 5,668 5,817 6,403 7,062 7,230 5.7 3.6 5.6 92.9 100.1 97.6Investment "1 (incl. stocks) 714 394 499 534 473 13.3 8.8 6.7 12.9 7.8 7.4
DDmestic Savings 433 16 -6 88 183 4.3 10.0 81.0 6.8 -0.1 2.4National Savings 416 32 10 110 200 8.7 20.5 57.0 7. 1 0.2 2.6
MERCHANDISE TRADE Annual Data at Current Prices As Percent of Total
ImportsCapital goods . 100 135 213 268.. . 25.7 . 16.8 28.6Intermediate goods (s.fusle) . 176 386 386 250... 12.8 . 30.4 26.7Fluels and related materialsof which: Petroleum . 23 155 126 144.. . 49.8 10.0 15.4
Co ton goods. ..hi l 541 275 ... -6.6 ....z A8 .-ZL. 1 -orstnt) 57o2 140 ,26 93 .6 100.0 100.0
ExportsPrimary products (xcl. fuole) 145 119 156 1d8.. . 2.9 40.9 42.0F-uels and related materials
of which: PetroleumManufactured goods - 195 239 225 242... 5.4 59.1 58.0Total Merch., Exports (fob) 481 340 358 400 ~ hi38 - 10. 0.Tourism end Border- Traae
Merchandise Trade Indices Average 1972- 73 -100Export Price Index 61 100 133' 109 11ll . 2.4Import Price Index 52 100 215 ~ 195 189... 16.3Terms of Trade Index 118 100 62: 56 59 .. -11.7Exports Volume Index 148 100 80: 106 123... 3.9
VALUE ADDED BY SECTOR Annual Data at 1972- 73Prmces and Exchange Rates Average AnLnual Growth Rates As Percent of Total
Agriculture 3,542 3,403 3,712 4,078 4,140 .. 4.8 59 59 5Industry and Mining 420 412 466 527 567 . 7.8 7 7 8Service 2.050 1.848 2.146 2.333 2,504 . 8.2 34 34 3Total 6,012 5,663 6,324 6,938 7,211 6. 100 100 Y$5
As Percent of GDPPUBLIC FINANCE __________(Central Government)
Current Receipts 317 280 469 775 877 .. 34.2 5.3 7.2 11.2Current Expenditures 365 364 419 600 686 16.8 6.1 6.4 8.7Busdgetary Savings -48 -84 50 175 191 -0.8 0.8 2.5Other Public SectorPublic Sector investment 421 239 248 295; 350 .. 10.3 7.0 3.8 4.9
0$ million-±CURRENT EXPENDITURE DETIAILS Actual Estimated DETAIL ON At Av. 1972/73 P and ERAs % Total Current Expend.) 1969/70 1972/73 1974/75 1975/76 1976/77 PUBLIC SECTOR First Plan % of T0,tslEducation . 14.8 15.5 13.6 13.3 INVESTMENT PROGRAM (1973/74 - 1977/78)Other Social Services . 4.0 4.2 4.4 4.2 Social Sectors 758 15.3Agriculture and Agriculture 1,302 26.4
Other Econmic Services . 11.2 7.2 6.8 6.7 Industry and Mininig 1,024 Z0.7Administration and Defense . 67.4 68.1 68.8 68.9 Power 529 10.7Other 2.7 5.0 6.4 6.9 Transport and communications 802 16.3Total Current Expenditures 100.0 1006.0 100.0 tooo Other 524 10.6
__________________________________________________________________________________ TTotalEExpenditures44,940 1100.
SELECTED INDICATORS 19~60- . 1965- 1973- FINANCING(Calculated from 3-year averaged data) 1965, 197-0 1976 - Domestic 8borrowing 784 15.9Average ICONR. 3.74 0.89 Public Sector Savings 2,022 40.9Import Elasticity . 1.29 1.11 Program aid counterpart 1,009 20.4Marginal Domestic Savings Nate . 0.22 0.05 Foreign Project Aid 1.125 22.8Marginal National Savings Rate - 7 T.15 0.05 Total Financing 4,940 100.0
LABDN FORCE AND Total Labor Force Value Added Per eWorke(1 7e2r- 73 Prices & Exc. Rates)OUTPUT PER WORKEN In Millions % of Total 1_961 _-73 In U.S.Doflars Pecnto Averge 19 70 - 73
1960/61 19 72/ 73 1960/61 1972/73 Growth Rate 1969/70 19 72/ 73 1969/70 19 72/73 Growth Rate
Agriculture 16.1 20.5 85 78 2.0 .. 166 .. 76Industry 1.0 1.8 5 7 5.0 .. 29 .. 105Service 1.8 3.9 10 15 6.7 -4.A222Total 18. 26. 10 100 2.8 248 217 100 100 -4.9
* not applicable- nil or negligiblenot available - less than half the smalest Unit shown
Note: Figures are on fiscal year basis (July I-June 30). Data prior to, 1972/73 pertain to erstwhile East Pakistanfl These are original plan targets.
ANNEX IPage 4 of 4 page.
BALANCE OP PAYMDT8. IIfBE;AL ASSIRTSW ASI DMT
(ost.e in ailli,oc of U.S. dollar. at ctrrnt price.)
Actual Sa~~~~Eti,sted Projetted A-Erage Annul Grouh Sgate
1969/70 1972/73 1973174 1974'75- 1975/16 1976/77 1977/78 1974- 1978
StIATY _ALANCE OF PAYMENTS
Exports (loo. NFl) 515 369 339 358 381 400 425 5.8
Deports (too. Nfl -639 -747 -958 -1.402 -1.290 -937 -1.274 7.4
R .... t. S7C (X)-M) -1Z4 ~ -PI378 -619 -1.044 -909 -537 -849 8.2
I.toroet (oet)Direct Iovrstoent oncesn 1I0 71 51
Workers Motta 45 10 7 1 25 15 -(cr0500 Tr-onu-r foot) IScience on Cnroont Accuoute -33 -60Q 93 -908 -512 834 6.2
fti- t:D=r -tI-.---Private Dtroct lovestoonDt-O ficiul Cepital tranct 482 204 397 236 258 340 13.6
Public M6LT L.o-nDiobnt-uonts 76 297 527 578 314 476 16.0
-Ropaynente -_10 -25 -78 -21 -31
Net Diebursoseot. 76 287 502 500 293 445 13.3
Other MhLT Lo-as
-Riobvreenros.. . .. .
Not DiSbur-seets
Copitcl Tr-ecctinne n-.i. - -205 78 334 122 33 81
Ch-_go in Not Eeerveo ( - - i-c...) -20 40 -196 50 -72 -32 Actual Etit.d
Gross . ese.r. e (end perid)- ; 107 67 263 213 285 317 1971/72 1972/73 1974/75 1975/76 1976/7;
GRANT AND LOAN COMITMENTSOffictml Cratni & Grunt-Like 514 150 368 380 DOT AND DENS DEVICE
Public Debt Out. 6 Disbursed 36 187 998 1.809 2,245
Poblic M6LT Loots Intorost on Public Debt - - 10 20 26
IbcD - - - - Rtpayuyote o= Public Debt - - 25 67 21
IDA 68 74 150 187 Tota. Public Debt Service - - 35 87 47
Gther MoltilatrolI 11 17 87 22 Othbs Debt Deroice (net)
G _OVroosote 204 329 678 332 Tot.l Debt Senics (net)
Suppliers 55 47 17 -
Fi--nia1 Institutions .. - - - 9 Bt. .fp~ .ig ZFtnanctal 1natituttons _ _ _ g ~~~~~~~~~Burden on Eaport Earnings (%)
BondsPublic L.n n... i. t -_ _ Public Debt Sorvico 9.8 22.8 11.8
Tntul Public MtLT LcO.. 338 467 932 550 Total Dobo Soslce.TDSSDtroct Invest. Inc. . .
Aotual Dbt OuatLodi a. Jane 30 1976EXTEtNAL DEBT Piebureed Only Percent Average .eoT e of Pnblin Debt
World Dusk - -. 3.9
IDA 38O 21 0 lot. an Prinr Teat WY 6 2.3 2.0 1.4
Other M-ltilat.u.1 25 1 4 A-Orr na X Prior Tos 000 5 .7 6.2 1.2
G_ver_ents 1,250 69.1
Suppliers 90 5 0 IBD Debt Out. 6 DSsborod
Fin..citl Iostitti.ons 9 0.5 an X Public Debt 06D - - 5.5 3.0 2.4
Bonds - as 2 Public Debt Servtce - - 1.8 720
Public Dobts s.o.i
Intul Public MOLT Debt 1,809 100.0 IDA Debt Ot. 6 Disbursed
tso n %o Public Debt 060 - 8.6 25.5 21.0 27.7Otbor MOLT Debts "-as % Public Debt Service - - 3.1 2.5 6.4
Short-Tornl Debt (diob. only)
not upplio-blo e staff netinctecot _vail ble - oIl or cogliglblenot -vullble aepurut-ly but -- oo. thus hb1f the oe1llest
i-cloded in total unto ahown
May 1977
ANNEX IIPage 1 of 10
BANGLADESH
STATUS OF BANK GROUP OPERATIONS
As of April 30. '1977
A. IDA Credits to Bangladesh
US$ Million net ofCredit Exchange AdjustmentNumber Year Purpose Amount Undisbursed
(net ofcancellations)
Five Credits Fully Disbursed 206.4 -
339 1972 Cyclone Area Reconstruction(replaces Credit No. 228-PAK of 1971) 25.0 9.4
340 1972 Chandpur Irrigation II (replacesCredit No. 184 of 1970) 13.0 5.8
341 1972 Tubewells (replaces Credit No. 208-PAKof 1970) 14.0 3.0
343 1972 Telecommunications (replaces partof Credit No. 145-PAK of 1969) 7.3 1.8
353 1973 Small-Scale Industry (replacesCredit No. 192-PAK of 1970) 3.0 0.3
367 1973 Chittagong Water Supply (replacesCredit No. 42-PAK of 1963) 7.0 1.1
368 1973 Dacca Water Supply and Sewage (replacesCredit No. 41-PAK of 1963) 13.2 1.2
381 1973 Foodgrain Storage (replaces CreditNo. 83-PAK of 1966) 19.7 0.3
407 1973 Education (replaces Credit Nos. 49-PAKand 87-PAK of 1964 and 1966) 21.0 8.2
408 1973 Highways (replaces Credit No. 53-PAKof 1964) 25.0 14.2
409 1973 Technical Assistance 4.0 2.2410 1973 Cereal Seeds 7.5 6.5424 1973 Inland Water Transport Rehabilitation 8.7 2.8487 1974 Second Telecommunications 20.0 19.2527 1975 Ashuganj Fertilizer 33.0 26.9533 1975 Population 15.0 13.8542 1975 Barisal Irrigation 27.0 26.3591 1975 Imports Program IV 100.0 6.4605 1976 Karnafuli Irrigation 22.0 19.0
ANNEX IIPage 2 of 10
BANGLADESH
STATUS OF BANK GROUP OPERATIONS
As of April 30, 1977
A.. IDA Credits to Bangladesh (CONT'D)US$ Million Net of
Credit Exchange AdiustmentNumber Year Purpose Amount Undisbursed
621 1976 Agricultural and Rural Training 12.0 11.9622 1976 Technical Assistance II 7.5 7.4631 1976 Rural Development 16.0 16.0632 1976 Bangladesh Shilpa Bank 25.0 25.0676 1977 Imports Program V 50.0 49.5
SUBTOTAL 702.3 278.2Principal Repayment 0.4Effective Credits held by Association 701.9
B. IBRD Loans to Bangladesh
1087 1975 Consolidation Loan 54.9 0
TOTAL 756.8 278.7
ANNEX IIPage 3 of 10
C. PROJECTS IN EXECUTION-
Cr. No. 339 Cyclone Area Reconstruction Project: US$25.0 Million Credit
of October 18, 1972; Effective Date: January 17, 1973;Closing Date: June 30, 1978
Project performance has improved and although the project is still
2-1/2 years behind schedule, it is no longer falling further behind. After
a pause while the shelter design was reevaluated, construction of cyclone
shelters is moving ahead. Arrangements for supervision of shelter construc-
tion still need to be strengthened. Four of the five primary roads are now
finished with the fifth road, scheduled for completion in 1978. The IDA fi-
nanced portion of the feeder road program is nearing completion. Construc-
tion of towers for the telecommunications subproject is behind schedule but
this subproject should be completed by December 1977. The fisheries sub-
project, including distribution of boats to groups of local fishermen has
been completed. All work on the repair or new construction of inland water
transport terminals is expected to be completed by within a few months.
Cr. No. 340 Chandpur Irrigation II Project: US$13.0 Million Credit ofOctober 18, 1972; Effective Date: January 17, 1973;Closing Date: December 31. 1977
The Project is about 30 months behind schedule due to major flooding,
work stoppages caused by 100% increase in construction labor costs, shortages
of cement, fuel, and inoperable construction equipment, ineffective management,
delays in provision of local funds and general inflation. While problems re-
main, substantial progress has been made recently both in physical construction
and agricultural extension. One regulator is now operational with the second
scheduled to be operating by the end of June. Utilization of the irrigation
works will be delayed due to land acquisition problems (now resolved) which
interferred with work on irrigation channels. Preparation of proposals from
the Government for recovery of irrigation water charges is seriously behind
schedule.
1/ These notes are designed to inform the Executive Directors regardingthe progress of projects in execution, and in particular to report any
problems which are being encountered, and the action being taken to
remedy them. They should be read in this sense, and with the under-
standing that they not purport to present a balanced evaluation of
strengths and weaknesses in project execution.
ANNEX IIPage 4 of 10
Cr. No. 341 Tubewells Project; US$14.0 Million Credit of November 6, 1972;
Effective Date: January 13, 1973; Closing Date: June 30,
1977
Because of a slow start, project implementation is about 18 months
behind schedule. Completion of the Project is expected within a year. Ninety
percent of the wells under contract have now been drilled, but it was found
that at least a sixth did not meet standards of verticality. Contractors have
accepted liability and are rectifying the situation. Meanwhile, BADC has
decided to recontract for the 285 wells not yet drilled. Pumphouse construc-
tion and engine/pump installation is now proceeding satisfactorily. The
agricultural development component of the project, also behind schedule, is
expected to be incorporated into a proposed Extension and Research Project
under consideration for financing this calendar year, in order to avoid dup-
lication or conflict between the two projects.
Cr. No. 343 Telecommunications Project; US$7.3 Million Credit of November
15. 1972; Effective Date: January 17, 1973; Closing Date:
June 30, 1978
The Project was originally financed as part of Credit No. 145-PAK
of 1970, and goods valued at US$2.2 million had been received prior to sus-
pension of disbursements. Three of the four microwave systems are expected
to be commissioned by June 1977, two years behind schedule. The contract for
the fourth microwave system (which substitutes the coaxial cable system in the
original project) has been awarded together with contract for similar systems
under Credit 487-BD. This system is expected to be commissioned by June
1978. The Closing Date has been extended from December 31, 1975 to June 30,
1978.
Cr. No. 353 Small-Scale Industry Project; US$3.0 Million Credit of
January 19, 1973: Effective Date: May 14, 1973;
Closing Date: December 31, 1977
The Project is administered by the Bangladesh Small and Cottage
Industries Corporation (BSCIC) and a consortium of commercial banks. Dis-
bursements up to April 25, 1977 amount to approximately US$2.7 million.
While the credit was fully committed by the end of 1974, agreements by
suppliers to provide equipment were cancelled in a few cases and new sup-
pliers had to be found. In early 1976, IDA therefore agreed to extend the
closing date by nine months to allow for disbursements under outstanding
letters of credit. To permit all credit funds to be disbursed, a further
extension of the closing date, from March 31, 1977 to December 31, 1977 has
just been made. An IDA mission visited Bangladesh in March 1977 to explore
with Government ways and means for improving BSCIC activities, and to form
a basis for a further operation involving BSCIC and commercial banks.
ANNEX IIPage 5 of 10
Cr. No. 367 Chittagong Water Supply Project; US$7.0 Million Credit ofApril 9, 1973; Effective Date: June 7, 1973
Closing Date: June 30, 1977
The Project was originally financed under IDA Credit No. 42-PAK of
1963. By December 1971, when disbursements were suspended, US$3.3 million
had been disbursed. After two years of organizational and procurement dif-
ficulties, progress in 1976 and 1977 to date has been satisfactory. The
project is now expected to reach completion by September 1977, over 2 yearsbehind the schedule established in 1973. Inspite of substantial rate increases
and improvements in billings and collections, WASA's financial problems are
still acute because of high operating costs and the large quantity of non-revenue water. Satisfactory progress has been made in most areas of an
agreed action program to improve the financial situation, but no decision has
yet been taken on how to deal with the Government agencies and municipali-ties arrears to Chittagong WASA or for payment for water supplied through
public hydrants. Revenue requirements are expected to increase in FY78,
because the project will be completed and the Authority must begin repaying the
Government loans for the project. Therefore, a further increase in tariffs is
expected to be required. IDA agreed in June 1976 to a second extension of the
Closing Date to June 30, 1977 but informed the Government that consideration of
a further extension beyond June 30, 1977 would be dependent upon further
actions taken to make the Authority financially viable.
Cr. No. 368 Dacca Water and Sewerage Project; US$13.2 Million Credit ofApril 9, 1973; Effective Date: June 7, 1973, Closing Date:June 30, 1977
The Project was originally financed by IDA Credit No. 41-PAK of1963. By December 1971, when disbursements were suspended, US$6.0 million
had been disbursed. The work progressed slowly for two years due to orga-
nizational and procurement difficulties but has been satisfactory in 1976and 1977. The project is expected to be completed by December 1977, about2-1/2 years behind the schedule established in 1973. However, the financial
condition of the WASA remains very weak despite substantial rate increases and
improvements in billings and collection. The situation is similar to thatdescribed for Chittagong under Credit 367-BD and IDA has informed the Govern-
ment that consideration of a further extension of the Closing Date beyond June
30, 1977 would be dependent upon further actions taken to make the Authority
financially viable.
Cr. No. 381 Foodgrain Storage Project; US$19.7 Million Credit of May 18,1973; Effective Date: July 17, 1973; Closing Date:September 30, 1977
The Project is also financed by credits from the Kingdom of Sweden
totalling 30.0 million Kroner. The project was originally financed by US$19.2
million IDA Credit No. 83 of 1966 and a 25 million Kroner credit from the King-
dom of Sweden. The project was almost completed at the time of Bangladesh's
ANNEX IIPage 6 of 10
independence, and 95% of the reactivated IDA and Swedish credits was to be
used for repaying the previous credits. Substantial delays occurred in hiring
consultants and in design and construction of ancilliary civil works. In
addition there was serious deterioration in the silos mechanical equipment due
to inadequate maintenance and management, under staffing in the Directorate
of the Silos and delays in ordering spare parts. Since January 1976 however
significant progress has been made in accordance with an action program agreed
with IDA/SIDA, particularly in constructing ancillary civil works and staffing
the project agency; one silo has been put back into operation, consulting serv-
ices for a silo maintenance improvement program have been obtained and jetty
rehabilitation started in February 1977. Therefore, the Association agreed
to a third extension of the Closing Date to September 30, 1977, by which time
the project is expected to be completed.
Cr. No. 407 Education Project; US$21.0 Million Credit of June 29, 1973;
Effective Date: September 27, 1973; Closing Date: June 30,
1978
This project was originally financed by Credits 49-PAK and 98-PAK
and by December 1971, when disbursements were suspended, US$7.7 million had
been disbursed. Progress on the Agricultural University portion of the proj-
ect is about 2 years behind schedule due to initial difficulties in reaching
agreement with the consultant architects on a revised contract and shortages
of building materials, and delays in the preparation of equipment lists and
furniture designs. However, significant progress has been made beginning in
late 1976. The academic buildings now under construction are expected to
be completed by August 1977 and the remaining works by July 1979. The Uni-
versity has taken steps to improve the relevance of its agricultural training
and research programs to Bangladesh's practical problems in agricultural and
rural development, but, further progress in this direction is needed. The
technical education portion of the project is about 18 months behind schedule
due to past delays, but is expected to be completed by December 1977. The
graduates are facing severe problems of unemployment and a committee has been
established to revise the curriculum needs revision to make it more relevant
to job requirements.
Cr. No. 408 Highways Project; US$25.0 Million of June 29, 1973;
Effective Date: September 27, 1973; Closing Date:
December 31, 1977
The project was originally financed by IDA Credit No. 53-PAK. By
December 1971, when disbursements were suspended, US$3.62 million had been
disbursed. Shortage of spare parts, administrative delays and deficiencies
in some contractors performance have delayed certain elements of the project.
Progress on construction of the Sitalakhya Bridge is improving and it is ex-
pected to be completed in early 1978. The paving of the Feni bypass road is
not likely to start before January 1978 due to delays on the part of the two
out of three contractors in completing the earth works. Disbursements, which
in the past have been slow, show signs of improvements.
ANNEX IIPage 7 of 10
Cr. No. 409 Technical Assistance Project: US$4.0 Million Credit ofJune 29, 1973; Effective Date: August 20, 1973; ClosingDate: December 31, 1977
Contracts have been signed with consultants for thirteen sub-
projects with an allocation from this Credit of about $3.6 million. Approval
is expected shortly for a contract negotiated with consultants for one addi-tional subproject of about $0.3 million. Completed studies have played a key
role in the preparation of projects for IDA financing including the AshuganjFertilizer Project, the Rural Development Project, and two other projects
which are under consideration for FY77. Due to delays in initial commitmentof credit funds, disbursements are 2 to 3 years behind initial estimates.The Closing Date for this Credit was extended by two years to December 31,1977.
Cr. No. 410 Cereal Seeds Project: US$7.5 Million Credit of June 29, 1973;Effective Date: January 30, 1974; Closing Date: December 31,1977
Although the project is about 20 months behind schedule,implemen-tation has improved considerably in recent months. Because of severe priceescalation the percentage of IDA financing of local construction costs hasbeen reduced. Orders for farm machinery and laboratory equipment have recently
been placed, but contract negotiations with the lowest bidder for the seedprocessing plants have broken down and a proposal for simplification of plantdesign is currently under consideration. After substantial initial delays
work is now proceeding well on improvements at the seed multiplication farms,and production of seed, especially wheat, is increasing as a result.
Cr. No. 424 Inland Water Transport Rehabilitation Project; US$8.7 MillionCredit of August 10, 1973, as amended by Amending Agreementof October 17, 1975: Original Credit Effective Date:September 27. 1973; Supplementary Credit Effective Date:March 19, 1976; Closing Date: June 30, 1978
The Amending Agreement of October 17, 1975 increased the amountof the credit from US$4.1 million to US$8.7 million to finance the new oil
transfer system at Chittagong. Procurement of spare parts and equipment was
slow initially but almost all funds for these purposes have now been committed.Regarding the repair of the Chittagong off-shore oil terminal, detailed inves-
tigations indicated that the damage was more severe than previously believed.
Consultants were appointed late in 1973 to study alternative technical solu-tions. An Amending Agreement modifying the project description in line with
the consultants' recommendations, and providing a supplementary credit of
US$4.6 million, was approved by the Executive Directors on September 16, 1975
and signed on October 17, 1975. Two used tankers have been procured and re-
paired, and are being equipped for lighterage service at Chittagong. They are
expected to be put into operation during July 1977.
ANNEX IIPage 8 of 10
Cr. No. 487 Second Telecommunications Project; US$20.0 Million Credit of
June 26, 1974; Effective Date: July 23, 1974; Closing Date:
June 30, 1979
The project is 18 months behind schedule due to delays in procurement
and civil works. Thirty percent of the original target for the first two years
has been achieved on the local telephone network. Work on the long-distance
telephone network has yet to commence. A Telegraph and Telephone Board has
been established, a year behind schedule. Consultants financed under the
Credit are assisting the T&T Board in establishing a commercial accounting
system and valuation of assets.
Cr. No. 527 Ashugani Fertilizer Project; US$33 Million Credit of
February 11, 1975; Effective Date: December 19, 1975;
Closing Date: December 31, 1982
The project is being cofinanced by Asian Development Bank, KfW, and
the Governments of Iran, Switzerland, UK and US, providing a total of US$109
million equivalent in addition to the IDA credit. Site preparation work in-
cluding the necessary dredging and filling was completed on schedule. How-
ever, based on the soils analyses undertaken by two specialist consulting
firms, further preparation of the site will be carried out to protect the
plant against earthquake risks. Currently the project is about eighteen
months behind schedule due primarily to the additional site preparation and
initial slow progress in (a) placing orders for time-critical items and (b)
planning for construction. Revised cost estimates are being finalized allow-
ing for the additional site work and the delays.
Cr. No. 533 Population Project: US$15 Million Credit of February 11,
1975; Effective Date: September 25, 1975; Closing Date:
December 31, 1982
The project is being cofinanced by six co-lenders providing a total
of about US$25 million equivalent in addition to the IDA credit. Notwithstand-
ing the delay in declaring the Credit effective, the Government has made sub-
stantial progress in project implementation. The organizational structure of
the Population Control and Family Planning Division (body responsible for the
population program) has been defined and its headquarters staff has been placed
in position; field staff is being recruited with special incentive payments
offered for some crucial personnel. The Population Program Officers, who are
responsible for the population programs of five non-health ministries, have
been trained abroad and have initiated schemes of their respective ministries.
The Building, Planning and Design Unit of the Ministry of Health, with the
assistance of consultants, has completed a master plan for the project's con-
struction program. The Government is proceeding with the selection of required
consultants and advisors for other parts of the project. However, because of
institutional and coordination problems, the implementation of a few proj-
ect components is some months behind schedule.
ANNEX IIPage 7 of 10
Cr. No. 409 Technical Assistance Project; US$4.0 Million Credit ofJune 29. 1973; Effective Date: August 20, 1973; ClosingDate: December 31, 1977
Contracts have been signed with consultants for thirteen sub-projects with an allocation from this Credit of about $3.6 million. Approvalis expected shortly for a contract negotiated with consultants for one addi-
tional subproject of about $0.3 million. Completed studies have played a key
role in the preparation of projects for IDA financing including the AshuganjFertilizer Project, the Rural Development Project, and two other projects
which are under consideration for FY77. Due to delays in initial commitmentof credit funds, disbursements are 2 to 3 years behind initial estimates.The Closing Date for this Credit was extended by two years to December 31,
1977.
Cr. No. 410 Cereal Seeds Project; US$7.5 Million Credit of June 29, 1973;Effective Date: January 30, 1974; Closing Date: December 31,1977
Although the project is about 20 months behind schedule,implemen-tation has improved considerably in recent months. Because of severe priceescalation the percentage of IDA financing of local construction costs hasbeen reduced. Orders for farm machinery and laboratory equipment have recently
been placed, but contract negotiations with the lowest bidder for the seedprocessing plants have broken down and a proposal for simplification of plantdesign is currently under consideration. After substantial initial delays
work is now proceeding well on improvements at the seed multiplication farms,and production of seed, especially wheat, is increasing as a result.
Cr. No. 424 Inland Water Transport Rehabilitation Project; US$8.7 MillionCredit of August 10, 1973, as amended by Amending Agreementof October 17, 1975; Original Credit Effective Date:September 27, 1973; Supplementary Credit Effective Date:March 19, 1976; Closing Date: June 30, 1978
The Amending Agreement of October 17, 1975 increased the amountof the credit from US$4.1 million to US$8.7 million to finance the new oil
transfer system at Chittagong. Procurement of spare parts and equipment was
slow initially but almost all funds for these purposes have now been committed.Regarding the repair of the Chittagong off-shore oil terminal, detailed inves-tigations indicated that the damage was more severe than previously believed.
Consultants were appointed late in 1973 to study alternative technical solu-
tions. An Amending Agreement modifying the project description in line withthe consultants' recommendations, and providing a supplementary credit of
US$4.6 million, was approved by the Executive Directors on September 16, 1975and signed on October 17, 1975. Two used tankers have been procured and re-paired, and are being equipped for lighterage service at Chittagong. They are
expected to be put into operation during July 1977.
ANNEX IIPage 8 of 10
Cr. No. 487 Second Telecommunications Project; US$20.0 Million Credit of
June 26, 1974; Effective Date: July 23, 1974; Closing Date:
June 30, 1979
The project is 18 months behind schedule due to delays in procurement
and civil works. Thirty percent of the original target for the first two years
has been achieved on the local telephone network. Work on the long-distance
telephone network has yet to commence. A Telegraph and Telephone Board has
been established, a year behind schedule. Consultants financed under the
Credit are assisting the T&T Board in establishing a commercial accounting
system and valuation of assets.
Cr. No. 527 Ashugani Fertilizer Project; US$33 Million Credit of
February 11, 1975; Effective Date: December 19, 1975;
Closing Date: December 31, 1982
The project is being cofinanced by Asian Development Bank, KfW, and
the Governments of Iran, Switzerland, UK and US, providing a total of US$109
million equivalent in addition to the IDA credit. Site preparation work in-
cluding the necessary dredging and filling was completed on schedule. How-
ever, based on the soils analyses undertaken by two specialist consulting
firms, further preparation of the site will be carried out to protect the
plant against earthquake risks. Currently the project is about eighteen
months behind schedule due primarily to the additional site preparation and
initial slow progress in (a) placing orders for time-critical items and (b)
planning for construction. Revised cost estimates are being finalized allow-
ing for the additional site work and the delays.
Cr. No. 533 Population Project: US$15 Million Credit of February 11,
1975; Effective Date: September 25, 1975; Closing Date:
December 31, 1982
The project is being cofinanced by six co-lenders providing a total
of about US$25 million equivalent in addition to the IDA credit. Notwithstand-
ing the delay in declaring the Credit effective, the Government has made sub-
stantial progress in project implementation. The organizational structure of
the Population Control and Family Planning Division (body responsible for the
population program) has been defined and its headquarters staff has been placed
in position; field staff is being recruited with special incentive payments
offered for some crucial personnel. The Population Program Officers, who are
responsible for the population programs of five non-health ministries, have
been trained abroad and have initiated schemes of their respective ministries.
The Building, Planning and Design Unit of the Ministry of Health, with the
assistance of consultants, has completed a master plan for the project's con-
struction program. The Government is proceeding with the selection of required
consultants and advisors for other parts of the project. However, because of
institutional and coordination problems, the implementation of a few proj-
ect components is some months behind schedule.
ANNEX IIPage 9 of 10
Cr. No. 542 Barisal Irrigation Project; US$27 Million of April 29, 1975;Effective Date: February 24, 1976; Closing Date: Decem-
ber 31, 1980
The project is behind schedule due to delays in hiring project
consultants and in assignment of Water Development staff members to the
project and delays in land acquisition. The staffing position improved in
March 1976 and field survey and design activities are now progressing. Prin-
cipal field activities have been survey work, procurement of materials and
housing and office construction. Two pilot areas have been developed which
have been useful in testing the project concept and in identifying potential
problems. Construction of irrigation channels has been delayed by problems
of land acquisition.
Cr. No. 591 Fourth Imports Program; US$100 Million of November 25, 1975;
Effective Date: December 29, 1975; Closing Date:September 30, 1977
Disbursements amounted to US$93.6 million as of April 30, 1977,
and in addition letters of credit guaranteed by IDA amount to US$4.0 million.
The remaining US$2.5 million represents letters of credit below $20,000 for
which IDA guarantee have not been requested. All orders are expected to be
received by the Closing Date. The requirements under the action programs for
the jute and textiles industries have been met.
Cr. No. 605 Karnafuli Irrigation Project; US$22 Million of January 28, 1976;
Effective Date: February 24, 1976; Closing Date: December 31,
1980
The project is behind schedule due to initial delays in hiring proj-
ect consultants. The consultants for the irrigation portion of the project
began work in September 1976, but their effectiveness is limited by delays in
procurement of vehicles and equipment. Work is now underway to prepare con-
struction contract documents and to facilitate equipment procurement. The
fisheries component of the project made virtually no progress until recently.
Key staff have now been appointed and a contract with a fisheries consulting
firm has been negotiated, and is awaiting Government approval.
Cr. No. 621 Agricultural and Rural Training Project; US$12.0 Millionof March 25, 1976; Effective Date: June 30, 1976; Closing
Date: June 30, 1981
Progress on preparation for construction is about five months ahead
of schedule. Most sites, with the exception of only three thana substations,
have been selected and acquired. Progress has also been achieved in the pre-
paration of sketch plans for project buildings and the Government has been
working on revised, more economical plans for the Bogra Rural Development
Academy. The inservice training program supported under project has been
delayed due to delays in allocation of local funds. Delaysare being expe-
rienced in hiring consultants for the project.
ANNEX IIPage 10 of 10
Cr. No. 622 Second Technical Assistance Project; US$1.5 Million ofApril 8. 1976; Effective Date: April 14, 1976; ClosingDate: June 30, 1980
Consultants are working on the first subproject authorized under
this credit, a water development study of the Southwest region. TheBangladesh Bank has invited consultant proposals for a second subproject,an agricultural credit study. Initial work is underway on a third project
involving feasibility of using jute fiber as a cotton substitute.
Cr. No. 631 Rural Development Project; US$16.0 million of May 20, 1976;Effective Date: August 3, 1976; Closing Date: December 31,1981
The reorganization of pump groups into cooperatives under the
Integrated Rural Development Program is being completed, and adequate progress
has been achieved in rescheduling loans. As part of a nationwide effort torevitalize the extension system, modifications are being introduced to theproject's agricultural extension system. Procurement under various project
components, benchmark and fish pond surveys, land and draft animal registrationare in progress. After some initial delays, the construction of feeder roadsand thana buildings is proceeding on schedule.
Cr. No. 632 Bangladesh Shilpa Bank Project; US$25.0 million of May 20,1976; Effective Date: November 8, 1976; Closing Date:June 30, 1981
As of April 30, 1977, IDA had authorized withdrawals from theCredit totalling $0.8 million. It is anticipated that the Credit will befully committed by December 1978, the final authorization date, and that
disbursements will be completed by the Closing Date.
Cr. No. 676 Fifth Imports Program; US$50 million of January 25, 1977Effective Date: February 24, 1977; Closing Date:December 31, 1978
As of April 30, 1977, disbursements were US$0.5 million. In addi-
tion about US$33 million of letters of credit have been issued.
ANNEX IIIPage 1
SUPPLEMENTARY PROJECT DATA SHEET
Section I: Time table of Key Events
(a) Time taken to prepare project:
9 months (October 1974/June 1975)
(b) Agency which prepared project:
Bangladesh Agricultural Development Corporation(BADC) and IDA
(c) Project first presented to IDA:
During visit of Karnafuli Irrigation Projectappraisal mission in October 1974
(d) First IDA mission to review project:
IDA preparation mission of May 1975
(e) Departure of appraisal mission:
February 1976. A follow-up appraisal mission visitedBangladesh in September 1976
(f) Completion of negotiations:
May 1977.
(g) Planned date of effectiveness:
September 1977.
Section II: Special IDA Implementation Actions
The tender documents for procurement of the materials and equipmentfor Shallow Tubewells have been finalized during negotiations. IDA isassisting the Government in preparing the Project Proforma for the
project.
Section III: Special Conditions
A. Assurances have been obtained from the Government that:
(a) irrigation maps prepared in accordance with standards satis-factory to IDA, would be prepared before installing project-financed shallow tubewells in each thana (paras. 42 and 48);
ANNEX IIIPage 2
(b) the institutional set-up and the terms and conditions for
the sale of project-financed tubewells would be satisfactory
to IDA (specified in Project Agreements between IDA and
Janata and Sonali Banks respectively) (para. 41);
(c) the project STWs would be sold at prices sufficient to cover
at least the equivalent of 100% of the capital costs (net of
taxes and duties). Also, after December 31, 1977, any non-
project STWs in the project area would be sold at prices and
on terms and conditions comparable to those for project-
financed STWs (para. 41);
(d) by December 31, 1977, BADC would phase out its "hire-purchase"
system for sale of shallow tubewells on a country-wide basis
(para. 41);
(e) in project thanas where the existing hydrological data is
found to be inadequate, BADC would commission the drilling
of test hole and other appropriate tests to determine, before
June 30, 1978, the suitability of those thanas for STWdevelopment (para. 42);
(f) the Government would appoint an expert committee to review
the issue of groundwater development in Bangladesh and thecommittee would submit to IDA, by December 31, 1979 draft
proposals for regulation of groundwater development (para. 41);
(g) BADC would: (i) consolidate the field organization of its
Irrigation Directorate in the NW region by June 30, 1978;
(ii) assign a work program to regional, zonal and thanaworkshops in the NW region which is satisfactory to IDA; and
(iv) employ a workshop management expert, with qualifications,
terms and conditions of employment acceptable to IDA, for at
least two years to help in initial implementation of the
repair and maintenance improvement program in the NW region(para. 42);
(h) BADC would (i) sell to qualified private sector mechanics
in the NW region spare parts for irrigation equipment on
a "cost plus handling" basis; and (ii) charge the users of
its repair and maintenance services full cost of the spare
parts as well as at least 50% of the cost of services (para. 42);
(i) BADC would, by March 31, 1978, hire a consulting firm or research
institution, with qualifications and terms and conditions of
employment satisfactory to IDA, for undertaking the evaluation
work for the project (para. 42 );
ANNEX IIIPage 3
(j) a project revolving fund would be established with an initialcontribution of Tk. 4.5 M and provide temporary advances, asnecessary, to the fund to maintain balances adequate to coverexpected expenditures for the following three months (para. 445;
B. Conditions of Credit Effectiveness (para. 64) would be:
(a) the Government has approved the Project Proforma forthe project;
(b) the Government has established a revolving fund for theproject and made an initial contribution of Tk 4.5 millionto the fund; and
(c) the ratification of the execution of the Project Agreementson behalf of Janata and Sonali Banks respectively.
C. A condition of disbursement (para. 64j for the workshops and supplyof equipment and vehicles for these workshops would be the hiring by
BADC of a workshop management expert.
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