Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. P-2539-BD

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

VOCATIONAL TRAINING PROJECT

May 10, 1979

This document has a restricted distibution and my 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 Bangladesh Taka is pegged to the Pound Sterlingand the rate has been refixed on occasion, most recentlyat 32.00 on April 16, 1979. Since, in addition thePound is floating relative to the US Dollar, the Taka/USDollar rate is subject to change. The rate below has beenused throughout this report except where otherwise stated.

US$1 = Tk 15.1215Tk 1 = US$0.0661Tk 1,000,000 = US$66,131

FISCAL YEAR

July 1 through June 30

ABBREVIATIONS

MOM - Ministry of Manpower Development and Social WelfareMOE - Ministry of EducationMOI - Ministry of IndustriesBMET - Bureau of Manpower Employment and TrainingTTC - Technical Training CenterVTI - Vocational Training InstituteNCSDT - National Council for Skill Development and TrainingILO - International Labor Organization

FOR OFFICIAL USE ONLY

BANGLADESH

VOCATIONAL TRAINING PROJECT

Development Credit and Project Summary

Borrower: People's Republic of Bangladesh

Amount: US$25 Million equivalent

Terms: Standard

Purpose: To assist in increasing the efficiency, quality andoutput of vocational training institutions, improvingemployee productivity and strengthening the Government'scapability to plan, manage and evaluate vocational skilltraining. The proposed credit would finance: construction,furniture and equipment for the Secretariat of the NationalCouncil for Skill Development and Training (NCSDT) and forfive Technical Training Centers (TTCs) at Barisal, Bogra,Comilla, Khulna and Mymensingh; equipment for two existingTTCs at Mirpur and Rajshahi; expenditures on additionalstaff salaries and training materials for NCSDT, the fivenew TTCs and for the introduction of short courses at fourexisting TTC's (Mirpur, Rajshahi, Chittagong and Bangla-German) on a declining basis;staff training for about 415instructors for the TTCs and about 1,500 training personnelfor in-plant training; and technical assistance and fellow-ships. The project would increase the output of skilled andsemi-skilled workers from about 600 per annum at present toover 10,000 by 1983. The project faces no special riskexcept that of delay because the project implementing agencyhas not previously executed an IDA-financed project. Thetechnical assistance to be provided is intended to minimizethis risk.

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

Estimated Costs: Local Foreign Total------US$ million----

Items

Construction 5.72 2.16 7.88Site development 1.17 0.29 1.46Building 4.09 1.75 5.84Professional services 0.46 0.12 0.58

Furniture & Equipment 0.53 2.48 3.01Furniture 0.36 0.19 0.55Equipment 0.17 2.29 2.46

Technical assistance 0.65 2.59 3.24Fellowships 0.01 0.58 0.59Experts 0.49 1.96 2.45Staff training 0.15 0.05 0.20

Operating Costs 3.80 5.51 9.31Salaries 3.33 0.00 3.33Consumable trainingmaterials 0.47 5.51 5.98

Total base cost 10.70 12.73 23.44

Contingencies 4.52 4.43 8.95

Total project cost 15.22 17.16 32.39

Financing Plan: Government IDA Total…-----…US$ million------

7.39 25.0 32.39

Rate of Return: Not applicable

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EstimatedDisbursements: FY80 FY81 FY82 FY83 FY84 FY85

----------------US$ million------------

Annual .4 3.6 6.2 7.8 3.9 3.1Cumulative .4 4.0 10.2 18.0 21.9 25.0

AppraisalReport: Bangladesh - Staff Appraisal of a Vocational Training

Project May 10, 1979, Report No. 2316-BD

INTERNATIONAL DEVELOPMENT ASSOCIATION

REPORT AND RECOMMENDATION OF THE PRESIDENT

TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT

TO THE PEOPLE'S REPUBLIC OF BANGLADESH FOR A

VOCATIONAL TRAINING PROJECT

1. I submit the following report and recommendation on a proposed

credit to the People's Republic of Bangladesh for the equivalent of US$25

million, on standard IDA terms, to help finance a vocational training project.

PART I - THE ECONOMY 1/

2. A Basic Economic Report on Bangladesh, entitled "Bangladesh:

Development in a Rural Economy" (Report No. 455-BD, of September 15, 1974)

was distributed to the Executive Directors on October 1, 1974. The most

recent economic mission visited the country in June 1978 and its report

entitled "Bangladesh: Current Trends and Development Issues" (Report No.

2245-BD of December 15, 1978) was circulated on December 20, 1978.

Background

3. When Bangladesh became independent seven years ago, the newly formed

Government inherited a shattered economy: the country had lost a large number

of its academic and business elite, while much of the physical infrastructure

had been demolished. Agricultural and industrial production and trade had

come to a standstill. Attempts to revive the economy were complicated by the

necessities to fashion a national government out of a provincial administra-

tion, to establish development institutions serving agriculture, industry,

trade and banking, and to reorient agriculture and industry after the loss

of the West Pakistan market.

4. The first years of independence were difficult. Bad harvests in

1972-73 were followed by damaging floods in 1974. International terms of

trade worsened considerably as prices of foodgrains, petroleum, fertilizer

and cement rose sharply while jute, the predominant export, stagnated. In-

flation, falling real wages, labor unrest and political instability added

to the troubles.

5. Economic improvements in recent years, together with conditions of

greater political stability, have removed the crisis atmosphere affecting

economic policy making in the early years of independence when relief and

1/ Parts I and II of this report are substantially the same as Parts I

and II of the President's Report for the Oxbow Lakes Fishery Project

(Report No. P-2490-BD), dated March 15, 1979.

- 2 -

rehabilitation and then the achievement of economic stabilization were un-avoidably the paramount concern of Bangladesh's policy makers. The presenttime may therefore be characterized as a period of consolidation of thecountry's economic recovery from the shocks of the early 1970s. It is alsoa period which offers the policy makers an opportunity to focus anew on thelonger-term needs of development. In recognition of its need for a fund-amental reorientation of policies, the Government wisely chose to put off anew Five Year Plan by two years. The current Two-Year Plan (FY79 and 80)calls for Bangladesh to clear the decks for future action (partly through ascreening of the 1400 projects on the present project list to weed out un-economic projects) and to study and consider the development strategy andpolicies to be incorporated in the next Five Year Plan beginning in July 1980.

Recent Developments and Near-Term Prospects

6. On the political front, the most notable recent development hasbeen the parliamentary election held in February 1979. For the past severalyears Bangladesh has been governed under martial law and without a parliament.In the recent election, some 29 political parties and groups contested for300 seats in the newly reconstituted national asembly. Roughly two-thirds ofthe seats were won by the Nationalist Party headed by President Ziaur Rahman,who was previously confirmed as President in elections held in June 1978.The new assembly will have substantial powers, including control over thecountry's finances. Martial law was lifted following the convening of thenew Parliament on April 2, 1979. It remains to be seen what specific impactthese political developments will have upon Bangladesh's economic policiesand prospects. One area, for example, in which the present government isanticipating a salutary effect is in the investment climate; it is hoped thatboth domestic and foreign investors will now be more inclined to assume a moreactive role than in the past. It is also anticipated that the Government willsoon be able both to take major decisions on important policy issues and toimplement programs that have been pending the outcome of the recent election.

7. FY78 was a relatively good one for the economy. Mostly as theresult of a large grain crop, which recovered from the substantial declinein the previous year, and a 10% increase in industrial output, GDP grew by7.8% in real terms after only a 1.7% rise in FY77. For the third year in arow, Bangladesh was spared major droughts, floods or cyclones. Foodgrainoutput reached a record level of 13.3 million tons. The favorable resultsin agriculture are explained not only by good weather but also by construc-tive Government actions resulting in sharply increased supplies of fertilizer,other agricultural inputs and credit, and a larger and more efficient procure-ment effort, at prices attractive to farmers. Results for wheat have beenparticularly encouraging. Jute output also increased substantially in FY78,partly due to the Intensive Jute Cultivation Scheme (IJCS) which, in only afew years' time, has risen to cover 500,000 acres and is expected to cover onemillion acres in the current year. However, raw jute prices remained high dueto increased demand and the depletion of inventories in prior years. Thesehigh raw jute prices and an increase in jute workers' salaries resulted in thejute mills once more suffering large financial losses.

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8. A strong upturn in industrial output occurred because of a revivalin consumer demand, an improvement in investment, and more liberal avail-ability of imported raw materials. Capacity utilization in industry wasstimulated by increased demand for jute goods and cotton textiles, and byan intensification of construction activity.

9. It is too early for an accurate assessment of the growth prospectsfor FY79. Present indicationsare that foodgrain output has been below lastyear's levels mainly due to adverse weather. A low level of government food-grain procurement combined with food import arrivals below projected amountsand high offtake rates have led to a currently worrisome food stock situation.Remedial actions are underway. Investments in the public and private sector--particularly in manufacturing--have shown some growth momentum and the con-struction sector appears to be booming. Whether the overall GDP growth ratefor the year will still be ahead of population growth is uncertain.

10. Recent fiscal and monetary developments present a mixed picture.Last year's acceleration in economic growth and imports engendered rapidgrowth in government revenues, which rose by about 25% in FY78. Currentexpenditure meanwhile rose at about the same rate, reflecting partly a sub-stantial upward adjustment in the very low salaries of government personnel.The net result was only a small increase in the current surplus. At the sametime, development expenditures also rose rapidly. In spite of increased aiddisbursements, deficit financing amounted to Tk 1.1 billion, about 9% of cur-rent revenue. Inflation again became a problem, and this is a worrisomeaspect of current developments in Bangladesh. Overall liquidity continuedto rise during FY78 and began to have its effect on the price level. Thecost of living increased by some 15% in FY78 as compared to 1% in FY77.Seeking to keep inflation under control, the Government drew up a balancedbudget for FY79. But in spite of continued growth in current revenue andlarge aid disbursements, there will still be substantial deficit. Reasons forthis include an apparent underestimation of the cost of the fertilizer sub-sidy, the still heavy weight of the food subsidy, and the dampening effect ofwage increases on the revenue transfers by the public corporations. Expan-sionary factors include the stepped-up grain procurement program, expandingagricultural credit, and increasing financial needs of the private industrialsector. It will be hard to contain the combined effect of these potentiallyinflationary factors during the current year. Monetary and credit restraint,and most importantly, increased efforts in domestic resource mobilizationwill be required in order to create the conditions for balanced future growth.

11. The most significant development in the FY78 balance of paymentswas a 56% increase in import payments after a low import level in FY77.Almost one fifth of this increase consisted of an increase in grain importsneeded to bring food stocks to a safe level; the remainder provided much ofthe wherewithal for accelerated GDP growth: fertilizer, cement, spare parts,industrial raw materials and capital goods. There was also a sizeableincrease in consumer goods imports.

12. Although export earnings rose in FY78 by 8%, the surge in importsresulted in a more-than-doubling of the trade deficit--from $405 million inFY77 to $852 million in 'y7g8(It should be noted, however, that this was less

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than FY75 and FY76 deficits which averaged $950 million.) The increasedexport earnings in FY78 represented a continuation of a trend that began withthe 1975 devaluation. The main determinant of last year's improvement was a16% increase in export prices, especially of traditional exports such asjute and tea. Although raw jute exports declined due to supply shortages,jute goods exports were buoyant, mainly due to fiber shortages in inter-national markets, some substitution of jute for synthetics, and governmentincentive policies, including special export bonus subsidies. Jute and juteproduct exports still account for about 70% of total Bangladeshi exports.The growth of minor and non-traditional exports in FY78 was modest as com-pared with the previous year.

13. An increasingly significant development in recent years has beenthe upward trend in workers' remittances, mostly from migrants to the MiddleEast. These remittances amounted to an estimated $83 million in FY78 andare projected to reach $100 million this year. An offsetting effect, however,has been the loss of trained Bangladeshis. This had led both to higher costsfor skills in short supply and to delays in implementing certain projects.(An analysis of this labor migration and its costs and benefits is currentlyunderway; this study is being financed under the Bank's external researchprogram.)

14. The balance of payments for the current year, FY79, is likely tobe marked by a slower growth in imports. The trade deficit is neverthelesslikely to be larger than last year's, partly because of an expected 5%deterioration in the terms of trade after an improvement of 22% in FY78.With development expenditures projected to continue to rise, both the Bankand Government anticipate an FY79 current account deficit slightly over $1billion. In view of the settlement of certain short-term liabilities andamortization payments on medium- and long-term debt, the total gap to becovered by foreign aid disbursements is estimated at almost $1,100 million.

Structural Conditions and Development Issues

15. Notwithstanding recent gains, especially in foodgrain output andper capita GDP growth, the salient conditions of Bangladesh are still masspoverty, a unique environment prone to natural disasters, and dependence onaid not only for investment financing but also for food and other recurrentinputs. Life expectancy is short, child mortality is high, and human fertil-ity remains largely unchecked. A large part of the adult population isilliterate, ill-fed, ill-housed and underemployed. Although the economy haslargely recovered from the shocks suffered in the early 1970s, in a numberof areas it has yet to reach the FY70 levels. In FY78 per capita income($91), domestic savings (3% of GDP), per capita rice production (notwith-standing last year's record crop) and average nutrition levels remaineddepressed below their pre-independence levels. The investment ratio (13%of GDP in FY78) was restored to about the FY69 rate after some years ofdepression to considerably lower levels. The country remains criticallydependent upon foreign aid, which covers some 75-80% of public investment.

16. Bangladesh has not been self-sufficient in food for over two decades.In spite of foodgrain imports averaging 1.8 million tons annually in recentyears (1.6 million tons in FY78), nutritional levels are believed to be

- 5 -

inadequate for half the population. Farm holdings are small and fragmented.The density of population on the land is already extremely high, and land-lessness is on the increase; almost half the rural population (comprisingnearly 90% of Bangladesh's 85 million people) is landless or virtually land-less. Population growth is continuing at a rapid pace--about 2.7% annually.The country's resources are essentially its land, water, and people. Othernatural resoures, excepting some natural gas deposits, are meager. Theinfrastructure remains inadequate, and the lack of managerial and adminis-trative skills has hindered the country's ability both to plan and to imple-ment its policies and projects effectively.

17. Another constraint on development is the segmented social ordercharacterizing rural Bangladesh. Agricultural change, which is critical tooverall development, is impeded by a rural power structure and social systemthat often works to obstruct collective agricultural interests at the villagelevel. This system tends to allow development initiatives to be capturedby the better-off, as the national government has only limited control overlocal behavior. Consequently, government and donor attempts to impose out-side organization and direction in the interest of the poorest rural classeshave often been frustrated.

18. Confronted by these formidable structural conditions and constraints,the Government is currently using the period of its Two Year Plan (TYP), asnoted above, to rationalize certain policies and to clarify its medium- andlonger-term development strategies. The TYP itself recognizes populationcontrol and rural development as top priorities. A nationwide framework forfamily planning services has been established, and experiments have been madewith various types of rural development models. Steps have been taken toprovide incentive prices for foodgrains through appropriate procurementpolicies, to reduce the levels of producer and consumer subsidies and toimprove the working of public sector corporations, most notably in the jutemanufacturing sector. Greater scope is being given to the private industrialsector. And the Government has established a Project Implementation Bureauas a means to help speed up the slow pace of project implementation. Thebeneficial results of these reforms are not always readily apparent, and ina number of cases will take considerable time to show. The TYP itself is,of course, unlikely to change the course of development, since its periodis too short and most of the development budget during these two years (83%)is preempted by ongoing projects. Moreover, the TYP's targets in the funda-mental areas of employment creation and population control are unrealistic.A further weakness is that the TYP does not clearly indicate which economicprojects are to be weeded out, nor what criteria are to be used to makedecisions about abandoning such projects during the remainder of the TYPperiod.

19. The TYP document lists five important areas where the policy makersmust make critical choices: (i) the respective roles of the public andprivate sectors; (ii) the organization of agricultural producers; (iii) thegoals of the national education policy; (iv) the role of subsidies in agri-cultural prices; and (v) the respective roles of foreign aid and domesticsavings in development financing. While outlining alternative solutions for

- 6 -

these major problem areas, the document does not present a full analysisof the options. Moreover, it only raises the question of the creation ofnon-farm employment for those who can no longer be absorbed by agriculture.This problem is assuming increasing importance and requires concentratedGovernment attention. Other key issues requiring urgent and detailed atten-tion include pricing policy, improvement in levels of domestic savings,expansion of export earnings, greater efficiency in project preparation andimplementation, and means to improve public sector management.

20. Work on both a Perspective Plan (1980-2000) and the Second FiveYear Plan is still in a preliminary stage. Present indications are that theGovernment will give emphasis to the following: (i) legal and institutionalchanges to bring about a rural orientation and decentralization of planning;(ii) achievement of food self-sufficiency by 1985; (iii) employment creationand population control; (iv) drastic reductions in subsidies, and othermeans to mobilize domestic resources; and (iv) a major new effort to reduceilliteracy. It remains to be seen, of course, what specific new modalitieswill be devised for achieving these broad objectives. But these are allcentral objectives, and much of IDA's own economic and sectoral work programis currently addressed to the analysis of rural development (including thedynamics of demographic growth), food production, trade policy and industrialdevelopment prospects, and domestic resource mobilization. Considerableattention is also being given, particularly by IDA's resident mission, tofinding ways and means to improve aid coordination and project implementation.

21. It appears to be generally appreciated, therefore, that in thepreparation of a development strategy and plan with realistic short andmedium-term targets, a clear set of priorities and a consistent resourceallocation pattern will need to focus on the following key areas: First,and central to any program to raise living standards, is the need to checkthe rapid growth of population. The main specific task is to increase effec-tive delivery of family planning services, while continuing to motivatefamilies to practice birth control. The second key area, because of itslarge potential for supplying food requirements and providing a broad dis-tribution of benefits, is the need to increase agricultural productivity.IDA is currently collaborating with the Government in the formulation of amedium-term crop production plan. Farm yields are far below what is environ-mentally and technologically feasible. The main constraints -- inadequateincentives, inefficient delivery of inputs, and the slow progress of ruraldevelopment programs -- are essentially administrative in nature. The ruralpower and social structure compound the inherent difficulties in mountingand administering large programs that will reach effectively the many mil-lions of people that live in Bangladeshi villages. These difficulties mustbe tackled with great resolve and singleness of purpose if they are to beovercome. Third, exports and supporting agricultural and industrial devel-opment are essential to the country's future economic viability. In thisconnection, improved efficiency of the jute industry, expansion of labor-intensive industries based on local raw materials (e.g. tea, fish, leather,paper, spices, fruits, vegetables and handicrafts), and the promotion of new

- 7 -

industrial export products are essential elements of a successful export

strategy. The fourth key area is to increase domestic resource mobilization.While the potential for increased public and private saving beyond the rate

of growth of the economy may be limited, some margin should be possiblethrough measures to increase taxation, improve tax administration and reducethe very large subsidies to public corporations. While these elements of adevelopment strategy are not the only requirements to improve the economy,they are among the most important and will themselves place heavy demands onan understaffed and overburdened development administration. The fifth area,therefore, is to strengthen the administration and to economize on the demandsplaced upon it. Where administrative capacity is limited, administrative

controls in such matters as industrial policy, pricing, food policy and trade

should be minimized to the extent feasible and consistent with social objec-tives. There remains considerable scope also for administrative economy in

these and other areas and through greater decentralization of authority andresponsibility.

22. External Capital Requirements. Even with significant improvementin its domestic resource mobilization, Bangladesh will continue to needsubstantial external assistance to support its development efforts. In theshort run, such support is becoming even more important in view of the factthat the pace of development expenditures has begun to accelerate. It isroughly estimated that aid disbursements, which amounted to $797 million inFY78, should rise to $1,095 million in FY79. These would comprise $250 mil-lion of food, $520 million of commodities and $325 million of project aid.

Since Bangladesh began the year with an aid pipeline amounting to $1,912million, it should be possible to disburse about $625 million from that pipe-line. Hence, about $470 million of disbursements from new aid would benecessary. To yield disbursements at this level in FY79 and to build upthe pipeline for FY80, required FY79 commitments are estimated at approxi-mately $1,600 million. On the basis of donor pledges and indications givenat the January 1979 Aid Group meetings, and taking into account actual andprospective commitments by other donors, this target could be realized. Itis important to stress that Bangladesh's capital requirements must be met

to a large extent by external assistance, at least for the time being, ifeconomic growth and execution of current development plans are not to be

slowed for lack of financial resources. At the same time, the Governmentmust strive to increase exports, to be prudent in the use of foreign exchange,and to make increased efforts to increase domestic resource mobilization.Finally, in the context of the above-noted limitations of Bangladesh's devel-opment administration, it should be recognized that substantial improvementsin administration are likely to take many years. Hence, the Government, IDAand other external assistance agencies will have to tailor their requirementsin terms of project design, preparation and implementation to these admini-strative realities. And in all cases, particular priority should be givento those sectors and those types of financial and technical assistance whereinstitutional improvements are most needed.

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PART II - BANK GROUP OPERATIONS IN BANGLADESH

23. Bangladesh became a member of the Bank and IDA in August 1972. Ini-tially, Bank Group operations in Bangladesh concentrated on the reactivationof uncompleted projects, financed under credits made originally to Pakistan,before 1971. Eleven such credits, amounting to US$148.6 million (includingUS$44.1 million for the repayment of amounts that had been disbursed underthe corresponding previous credits to Pakistan and net of cancellations) weremade to Bangladesh. In addition, as of March 31, 1979, 30 new credits, ex-cluding the consolidation credit of US$31 million referred to in paragraph24 below, have been made totalling US$843.7 million. Of these, US$500 millionhave been for seven program credits. The project credits have emphasizedagricultural development, but also included amounts for population, telecom-munications, transport and industry. On June 18, 1976 Bangladesh became the105th member of the IFC, but no IFC investments have been approved as yet.

24. Agreement has been reached between Bangladesh and most of the bi-lateral and multilateral donors concerning the assumption by Bangladesh ofportions of the debt contracted by Pakistan, before Bangladesh became inde-pendent. This will lead to some increase in debt service and, while the debtservice ratio is not expected to exceed 20% over the next ten years, it maydo so by the mid-1980s, unless careful debt management policies are pursuedand aid is provided on appropriately concessional terms. With respect tothe Bank Group, Bangladesh agreed to accept liability for portions of IDAcredits extended for projects visibly located in Bangladesh and completedbefore independence. Based on this agreement, a consolidation loan of aboutUS$54.9 million, and a consolidation credit of about US$31.0 million weresigned on February 14, 1975. The Bank Group's share of Bangladesh's outstand-ing external debt is not expected to rise significantly above the presentlevel of about 24% over the next few years.

25. Annex II contains a summary statement of IDA credits and the Bankloan made to Bangladesh as of March 31, 1979, and notes on the execution ofongoing projects. While disbursement of the program credits has proceededsatisfactorily, project credit disbursements have lagged far behind expecta-tions, owing inter alia to delays in the release of local funds, approvalof contracts, employment of consultants, and appointment of staff. The Gov-ernment has taken some steps to eliminate bottlenecks and the results arebeginning to be reflected in improvements in project implementation and dis-bursement performance. However, serious implementation constraints remainbecause of shortage of qualified staff, over-centralized bureaucratic proce-dures and organizational deficiencies. Progress is being made on these issues.For example, at the Government's request, IDA is providing assistance to im-prove organization and procedures, especially in the ministries and agenciesdealing with agriculture and water resources. Further, the Government hastaken actions including improved procedures for recruitment of civil servantsand increased emphasis on training - which are important not only as stepstowards gradually improving the quality of public administration, but alsoas evidence of its awareness of the problem and concern to do something about

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it. On the organizational side, the Government is in the process of estab-lishing planning cells in the main ministries and agencies and in strengthen-ing the Planning Ministry. In this connection, IDA is providing assistanceboth under specific projects and under the Technical Assistance Credits(409-BD, 622-BD and 827-BD).

26. Of the 23 new project credits totalling US$343.7 million, 14 creditstotalling US$241.5 million have been directed towards agriculture and ruraldevelopment (excluding subprojects of the Technical Assistance credits allo-cated to this sector). Their basic objective is to support the delivery ofinputs, including assured water, through quick yielding projects with lowcapital intensity. While the pace of implementation has been disappointingso far, the fundamental need to improve agricultural productivity means thatprojects geared to the rural sector should remain the cornerstone of futureIDA lending. However, in the shorter term, the rate of planned lending foragriculture will be a function of progress in improving the currently limitedabsorptive capacity of the project executing agencies. At the same time,greater efforts in institution building are being made through closer super-vision and technical assistance where necessary. Some progress has alreadybeen made in correcting problems in ongoing projects. During the next fewmonths, proposed credits for rural works, low-lift pumps and a second ruraldevelopment project are expected to be ready for consideration.

27. Industry has been the main beneficiary of the seven program creditsapproved to date. For the reasons given in paragraphs 34-39 of my Reportand Recommendation on the Seventh Imports Program Credit (P-2373-BD, datedNovember 29, 1978), program lending to Bangladesh will continue to be requiredwhile efforts are made to correct basic structural weaknesses in the economy.Nevertheless, the share of program lending in total lending on a year-to-yearbasis is planned to decline gradually during the next few years. The indus-trial sector has also benefitted from DFC and small industry projects. IFCis currently in the process of identifying suitable investment opportunities.

28. The enormity of Bangladesh's population problem makes this an ex-tremely high priority sector, limited only by its absorptive capacity. Thefirst population project (Credit 533-BD) is now making encouraging progressand a second population and family health project is expected to be ready forconsideration shortly. Improved education and availability of trained man-power is also crucial. Past lending in this field has emphasized agriculturaland technical training and future operations, while maintaining a similarbasic emphasis, are expected to include assistance for primary and managementeducation as well.

29. Given Bangladesh's immense needs, specific efforts to identify andprepare projects in transport, industry, energy and power, telecommunicationsand water supply and sewerage are now under way. In this connection, particu-lar emphasis is being placed upon projects which provide infrastructure forthe rural sector, which process or provide outlets for its products, or whichreduce the strain on Bangladesh's foreign exchange resources. Such projectscould make a significant contribution towards supporting Bangladesh's

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development efforts. In view of Bangladesh's difficult foreign exchangeposition, IDA credits should cover all foreign exchange costs. However, allexternal lenders are inhibited from achieving the levels of resource transfersappropriate to Bangladesh's economic circumstances by difficulties in thepreparation and implementation of development projects. In addition, theGovernment's capacity to carry out projects is constrained, inter-alia, by alow domestic savings rate. In these circumstances, and in order to directIDA lending to those sectors - such as agricultural and rural development -where the percentage of foreign exchange costs is relatively low, the financ-ing of local currency expenditures also is justified.

30. In addition to lending, economic and sector work provides the basisfor continuing dialogue between the Bank Group and the Government on develop-ment strategy, and for the coordination of external assistance within theframework of the Bangladesh Aid Group. Recent activities in this area haveconcentrated on food policy, industrial investment strategy, and increaseddomestic resource mobilization.

31. The scope and complexity of Bangladesh's development problems willcontinue to strain the physical, human, and financial resources of an alreadyoverburdened development administration. Since substantial improvements willtake many years, external assistance agencies, including the Bank Group, willhave to tailor their requirements in terms of project design, preparationand implementation to the administrative realities. They will also have tocontemplate higher amounts of technical assistance and supervision than isthe case in many other countries. Nevertheless, there are opportunities formaking significant progress in improving economic conditions for the peopleof Bangladesh. Although progress is bound to be slow and will require pain-staking efforts, these efforts are nonetheless worth making.

PART III - MANPOWER DEVELOPMENT AND VOCATIONAL TRAINING

32. Although Bangladesh is a labor surplus country, it suffers from ashortage of managerial and skilled manpower. This shortage, which seriouslyimpedes project implementation, industrial development and labor productivity,can be attributed to three main factors: the small output of skilled per-sonnel from existing training institutions; the almost complete lack of in-plant training and retraining programs for industrial workers; and, morerecently, the depletion of the existing skilled manpower stock owing to emi-gration, mainly to the Middle East. The latter has become a significant factor:for example, during 1977, the Bangladesh Textile Mills Corporation lost 300skilled workers to Iran; and the Bangladesh Steel and Engineering Corporationand the Bangladesh Chemical Industries Corporation each lost about 300-400skilled/semiskilled workers to other countries in the Middle East. AlthoughBangladesh is a relative newcomer among labor-exporting countries, thedeparture of manpower has accelerated during the last three years. In 1977alone, about 15,800 Bengalis secured employment abroad, more than twice thenumber in 1976. According to Bureau of Manpower, Employment and Training(BMET) estimates, about 31,000 workers left Bangladesh between January 1976

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and June 1978 for employment abroad, of which six Middle Eastern countries(UAE, Iraq, Kuwait, Oman, Qatar and Saudi Arabia) accounted for over 80%of the total.

33. Apart from the existing shortage, the demand for skilled manpoweris likely to increase in the near future to meet the requirements of theGovernment's development plans. However, its size is difficult to estimatebecause no comprehensive assessment of Bangladesh's manpower needs has yetbeen undertaken. The following estimates of annual skilled and semiskilledmanpower requirements are therefore no more than orders of magnitude. By1983/84, Bangladesh's annual domestic requirement for additional skilledworkers is estimated at about 30,400, about one-half in the non-agriculturalsectors, and for additional semi-skilled workers at about 164,000, includingabout 135,000 for the agricultural sector. For the manufacturing, construc-tion, utilities and transport sectors alone, about 40,000 additional skilledand semiskilled workers per year are expected to be required. External demandfor skilled and semiskilled Bangladeshi labor, mainly in the petroleum export-ing countries of the Middle East, is conservatively estimated at about 10,200per year, entirely in the non-agricultural sectors.

34. Compared with the annual domestic demand for additional skilled andsemi-skilled workers in the non-agricultural sectors alone (40,000), the esti-mated annual supply from existing formal and non-formal training programs isabout 2,000. Despite this enormous gap between existing supply and estimateddemand, the Government has not so far attempted to limit emigration partlybecause of the practical difficulty of keeping people in the country againsttheir will and partly because of the financial benefits to the Bangladesheconomy. For example, remittances from Bangladeshi workers in the Middle Eastand Western Europe amounted to $83.4 million in 1977 and the value of goodsshipped under the Government's Wage Earners' Scheme was estimated at about$60 million. In 1978, remittances amounted to $107 million. At these levels,remittances already constitute Bangladesh's second largest source of foreignexchange earnings. While these short-term benefits are obvious and relativelyeasy to quantify in financial terms, the short- and longer-term costs to theeconomy of reducing the country's already limited stock of experienced skilledand semiskilled manpower are more difficult to estimate. The Government andIDA are currently undertaking a regional study of labor migration with a viewto quantifying its costs and benefits and providing a basis for specificmanpower export and development policies.

35. To summarize, the existing and potentially increasing shortage ofskilled labor is a significant impediment to Bangladesh's development. Itmakes the impleidentation of development projects and the achievement ofproduction targets difficult; and it limits productivity gains achieved byincreasing other inputs to the production process. While the current rate ofemigration of skilled and semiskilled workers may not be sustained owing tochanges in development priorities and in employment opportunities in someMiddle Eastern countries, Bangladesh's own needs, and its industrial devel-opment in particular, will require a much greater supply of skilled manpower

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than the present output capacity of its training institutions. Bangladeshmust therefore strengthen its infrastructure of institutions and programs tomeet these short- and medium-term requirements.

Vocational Training

36. Vocational training in Bangladesh is undertaken by three Ministries:Manpower Development and Social Welfare; Education; and Industries. TheMinistry of Manpower conducts two-year training courses in fourteen tradesat five Technical Training Centers (TTCs) for secondary school dropouts andother unemployed and/or underemployed workers normally with not less thaneight years' schooling. It is also responsible for an Apprenticeship TrainingScheme. Within the Ministry, the Directorate of Training is charged withimplementing and supervising both programs. The Ministry of Education offers

two-year certificate courses in ten trades at twenty-three Vocational TrainingInstitutes (VTIs) and at thirteen Polytechnics (only in the afternoon shift).However, each VTI provides only two trade courses.The entrance requirement forthe Ministry of Education's VTIs and Polytechnics is grade VIII graduation.The Ministry of Industries operates training programs at the BangladeshIndustrial Technical Assistance Center, and the Textile Institute, and shortcourses within state corporations. In 1976, the total output from all thesecourses was just over 2,000, of which 600 were trained in the TTCs, 800 inthe VTIs and Polytechnics and 700 in the Ministry of Industries' schemes.

Financing

37. By international standards, Bangladesh spends only a small shareof its resources on education and training. In 1978/79, for example, recur-rent expenditure on education and training totalled about Tk 1,390 million,13.2% of central government current expenditure and 1.1% of estimated GDP;development expenditure, expected to total Tk 720 million in 1978/79, accountsfor about 5.2% of the Annual Development Program (ADP). Vocational trainingaccounts for about 2% of recurrent educational expenditures but has increasedat an average rate of about 88% p.a. over the 3-year period 1976/77-1978/79,an indication that the Government now recognizes its importance. However,the 1978/79 budget for vocational training (Tk 29.4 million) remains inade-quate for the task of producing the requisite numbers of skilled/semi-skilledworkers to meet both domestic and foreign manpower demands.

Issues

38. The main issues in vocational training concern its relevance tothe needs of the economy, the quality of output from vocational trainingprograms, the utilization of vocational training institutions and the lackof coordination among the ministries involved in skill training. First,regarding its relevance, too much emphasis has been given to pre-employmenttraining at the established training centers, at the expense of in-planttraining and retraining as a means of increasing workers' skills, productivityand earnings potential. Training plans have been made without prior assess-ment of the labor market, the manpower needs of state enterprises or theactivities of other ministries which require skilled manpower. This hasresulted in an imbalance between the supply of and demand for the numbers

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and types of workers trained. Admission to courses is limited to candidates

with formal educational qualifications, although occupations such as masonry

and plumbing require only basic literacy and numeracy skills. Second, regard-

ing the quality of output, the skill level of students graduating from existing

training programs is low owing, inter alia, to inadequate testing standards,

insufficient training materials, inexperienced and, until recently, poorly

motivated instructors and the virtual absence of training supervision. Third,

regarding its efficiency, there is considerable underutilization of existing

facilities, the existing two year courses are too long for basic skill train-

ing and there is little or no coordination or common purpose between the three

main Ministries responsible for vocational training.

Strategy for Expansion and Improvement

39. Recognizing the need to develop a coordinated vocational training

system, the Ministry of Manpower has been working on proposals to establish

closer relationships with industry and other ministries. The first of these,

a National Advisory Committee proposed in 1976, was never implemented because

it was felt that an advisory body would be ineffective. The second, an inter-

ministerial council, was convened in 1977 to decide on the programming and

budgeting of training for various ministries. A program was approved but

could not be implemented because of the lack of resources. The Government

has now upgraded and expanded this body to form the nucleus of the National

Council for Skill Development and Training with a Secretariat located in the

Bureau of Manpower Employment and Training, responsible for planning voca-

tional training and the development of national skill standards. The Ministry

of Manpower's plans for the development of vocational training during the next

seven years (1978-85) originally included the following: three existing TTCs

at Mirpur, Chittagong and Rajshahi would be improved and expanded; three other

TTCs under construction, at Khulna, Rangamati and Bogra, would be completed;

and four new TTCs would be built at Comilla, Mymensingh, Faridpur and Barisal.

This program would have increased the annual output capacity of TTCs from

about 1,400 to about 3,400 under the regular two-year program. The Ministry

of Manpower also planned to introduce an accelerated (one-year) modular train-

ing program as a second shift at all TTCs so that by 1983 the TTCs would have

produced a further 6,600 trained workers, giving a total output capacity of

10,000 trained workers per year. The Ministry of Manpower also planned to

establish a National Skills Development Institute and an Islamic Center for

Technical and Vocational Training and Research. While the overall objectives

of these plans and the Government's request for assistance were desirable,

implementation appeared unrealistic in light of their total capital cost,

their implications for recurrent expenditures and management capacity. As

a result of discussions between the Government and IDA, the proposals were

modified and the project described in paragraphs 43-49 of this report was

prepared.

External Financing in Vocational Training

40. Since 1972, the Government has received extensive technical assist-

tance from multilateral and bilateral sources: the Swedish International

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Development Agency (SIDA) is assisting the Ministry of Education to developVTIs and the Vocational Teacher Training Institute at Bogra; the FederalRepublic of Germany is providing financial and technical assistance for theexpansion and improvement of the Bangla-German TTC; ILO/NORAD have assistedin the extension and improvement of the Marine Diesel Center at Narayanganj.A recently approved UNDP project (July 1978) aims at (a) upgrading the skilllevels of selected managerial and supervisory staff at the Bangladesh TextileMills Corporation (BTMC) and skilled workers in selected mills, (b) establish-ing central training and advisory services for BTMC mills, and (c) improvingmachine productivity by establishing suitable preventive maintenance systemsand repair services.

41. UNDP/ILO assistance has also been extensive (US$8.0 million between1973-78). It has organized training programs for deck personnel, low-liftpump operators and mechanics, the improvement and development of employmentservices, a manpower survey, and management development and training assist-ance to the Bangladesh Road Transport Corporation (Truck and Bus Division).In addition, since 1973, UNDP/ILO has been financing the services (US$2.2million) of international experts, spares and equipment to:

(a) assist in the organization and training of staff of the Bureauof Manpower, Employment and Training (BMET); and to supportactivities for all existing and future training centers as wellas broad, industry-based training schemes;

(b) upgrade two training centers (Mirpur, Rajshahi);

(c) assist in the initial planning for design, construction,operation and routine inspection of new TTCs (Bogra, Comilla,Faridpur, Mymensingh, Khulna, Barisal and Rangamati); and

(d) assist in making three of the new TTCs (Rangamati, Khulnaand Bogra) operational.

This project has fallen short of its objectives, mainly because the inade-quate operational budget allocated by the Government did not permit sufficientcounterpart staff to be appointed to the various sections of the BMET. Aproject revision to adjust project objectives to the revised Governmenttraining strategy is now underway.

Bank Group's Role in Education and Training

42. Previous Bank Group lending in the education sector includes:Credit 407-BD (1973) which aimed to improve and expand institutions providingeducation and training in technical and agricultural subjects; and Credit621-BD (1976) which aimed to expand and improve agricultural and rural train-ing. IDA assistance for education to date has been concentrated on agricultureand the major share has gone to the Bangladesh Agricultural University (BAU).Although BAU has become the main source of trained agricultural manpower inthe country, in the past its teaching and research programs tended to be over-specialized, whereas Bangladesh's present state of agricultural developmentrequires technicians with more generalized training. Significant progress

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has been made over the past few years in improving the practical relevance ofBAU's teaching and research efforts. In addition, Credit 621-BD is expandingthe training capacity for middle-level agricultural manpower through assistanceto seven Agricultural Training Institutes and the Bogra Academy, but trainingshortages are projected even with this higher capacity. In technical education,new facilities have been constructed for five polytechnics that will providetechnician training (under Cr. 407-BD) and equipment has been provided toeight others. All five polytechnics have started in new facilities whichbecame operational on a limited basis in December 1978. Efforts are underway to revise curricula to give a practical orientation to technical educationand to improve the quality of teaching staff. The eight IDA-assisted poly-technics are also being used on a second shift basis for vocational training.

PART IV - THE PROJECT

43. The project was identified initially by an education and trainingsector mission that visited Bangladesh in October/November 1977. It wasprepared by a Government working committee, chaired by the Secretary,Ministry of Manpower Development, Labor and Social Welfare and assisted bya UNESCO project preparation team, which completed its work in May 1978.Following project appraisal in August/September 1978 and a post-appraisalmission in January 1979, credit negotiations took place in Washington,April 5-12, 1979, at which the Government was represented by a delegationled by Mr. A.B.S. Safdar, Secretary, Ministry of Manpower Development andSocial Welfare. Attached as Annex III is a Supplementary Project Data Sheetand, following Annex III, a project map. The Staff Appraisal Report entitled

"Bangladesh - Vocational Training Project" (Report No. 2316-BD dated May 10,1979) is being circulated separately to the Executive Directors.

Project Concept

44. Against the background of Bangladesh's manpower development andvocational training needs outlined in Part III of this report, the project'sprincipal objectives are threefold: (a) to increase the efficiency, qualityand output of technical training centers; (b) to raise the skill level andproductivity of existing workers employed in Bangladesh's public sector cor-porations; and (c) to strengthen the Government's capability to plan, manageand evaluate the further development of vocational and skill training. Theproject therefore seeks to achieve both quantitative and qualitative goals andis designed to address the country's shorter-term incremental and replacementneeds for skilled manpower as well as the longer-term institutional develop-ment of the vocational training system.

Project Components and Description

45. The project includes:

(a) construction of, and furniture and equipment for:

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(i) five Technical Training Centers (TTCs) at Barisal, Bogra,Comilla, Khulna and Mymensingh; and

(ii) the Secretariat of the National Council for SkillDevelopment and Training (NCSDT) in Dacca;

(b) additional equipment for two existing TTCs at Mirpur andRajshahi;

(c) provision of and/or support for:

(i) salaries of additional staff required for theSecretariat of the NCSDT;

(ii) training materials and salaries of instructors requiredfor the five new TTCs to be constructed under (a)(i) above;

(iii) training materials and salaries of additional instructorsrequired for the phased introduction of six month trainingcourses at four existing TTCs (Bangla-German, Chittagong,Mirpur and Rajshahi); and

(iv) training materials and stipends for the introduction ofin-plant training at six public sector corporations;

(d) initial and refresher training for about 415 additionalinstructors for the five new and four existing TTCs and forabout 1,500 training officers/supervisors for the in-planttraining schemes; and

(e) technical assistance, including about 41 man-years of consultant/specialist services and about 49 man-years of fellowships.

46. Technical Training Centers (TTCs). The five new (Barisal, Bogra,Comilla, Khulna and Mymensingh) and four existing (Bangla-German, Chittagong,Mirpur and Rajshahi) TTCs included in the project were selected followinga detailed training needs assessment conducted by the Government, with ILOassistance, during the second half of 1978. Their courses would include,inter alia, drafting, general mechanics, welding, auto and diesel mechanics,wiring, armature winding, plumbing, masonry and pump maintenance. CommencingJanuary 1, 1980 with the second (afternoon) shift, the present two yearcourse would be replaced by a six month course at the existing Bangla-German,Chittagong, Mirpur and Rajshahi TTCs and training at the five new TTCs, con-struction of which is expected to be completed by December 31, 1982, wouldbe carried out on the basis of six month courses from the outset. In thisconnection, the Government has agreed to replace the existing two year train-ing courses with training modules of employable skills of not more than sixmonths duration by January 1, 1982 (Section 3.09 of DCA). To accommodate thisexpanded program, the TTCs would require about 415 new instructors who wouldbe recruited from public sector corporations (experienced skilled workers andforemen). Subject to minimum qualifications of six years! primary educationand five years'industrial experience in their trade and following appropriate

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literacy, numeracy and skill tests, these instructor-trainees would undergosix months or 720 hours of instructor training at the Bangla-German, Chittagongor Mirpur TTCs where technical assistance for this purpose is already beingprovided, mainly by ILO. The project includes technical and financial assist-ance to continue and strengthen instructor training at these three institutionsand also to provide short refresher training for 170 existing TTC instructors.To ensure the availability and quality of instructors for TTCs, the Governmenthas agreed to appoint them on the basis of the results of skill and tradetests and to give preference to persons with relevant industrial experience(Section 3.12 of DCA).

47. The project includes residential accommodation for instructors atall TTCs in accordance with the Government's policy and the need to provideincentives for the recruitment and retention of teaching staff. All projectTTCs, excepting Bangla-German, Chittagong, Mirpur and Rajshahi where facil-ities are already available, also include boarding accommodation for students/trainees. In addition, to expedite the start-up of the new TTCs and tofacilitate the introduction of the six month training course at the fourexisting TTCs, the project includes provision for salaries and consumabletraining materials for the five new TTCs commencing January 1, 1983 for twoyears and for the four existing TTCs from January 1, 1980 for five years, thelatter in respect of the additional staff and incremental training materialsrequired.

48. In-Plant Training. The project includes provision for the introduc-tion of in-plant training to improve the skill level and quality of the laborforce in six public sector corporations. In-plant training schemes would bedeveloped by technical assistance experts who would assist in: the diagnosisof training needs, the preparation and organization of training programs andmaterials, and the implementation and evaluation of training within thecorporations. They would also help develop a cadre of personnel in thecorporations which, over time, could create effective training programs topromote productivity as well as meeting the internal training needs of thecorporations. Under this component of the project, the apprentice trainingscheme for recognized skilled occupations would be revised and closely coor-dinated with TTC courses to ensure continued personal and skill development oftrainees. An ILO-sponsored National Management Development Program is nowtraining about 150 supervisors and training officers to establish a traininginfrastructure within the corporations; course topics range from determinationof training needs and the preparation of training plans to the evaluationof training programs. This program would be coordinated with the IDA-financedcomponent under which about 1,500 first line supervisors would receive shortcourses in instructional techniques, industrial relations, safety and produc-tion methods, as well as the technical subjects necessary to prepare them forroutine, on-the-job upgrading of production workers. A technical assistanceexpert financed by the project would organize the courses. In addition, 28man years of fellowships would allow selected training managers and trainingofficers to gain experience abroad on the organization and management oftraining within enterprises in the same sectors as their own.

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49. A National Council for Skills Development and Training (NCSDT) hasrecently been established comprising inter alia Ministers or Secretaries ofthe Ministries of Manpower, Education, Industries, Finance and Planning andrepresentatives of the Employers' Association and the Trades Unions. TheCouncil's mandate includes preparing draft legislation or administrativeregulations/resolutions pertaining to training, formulating national trainingpolicies, approving training plans and recommending allocation of financialresources. It will also be responsible for evaluating existing and approvingnew curricula and national skill standards and tests. The NCSDT will beassisted by a Secretariat within the Ministry of Manpower Development andSocial Welfare, headed by the Director General, Bureau of Manpower Employmentand Training (BMET) and the Secretariat's functions will be divided betweenthree divisions: a Directorate of Training Operations, responsible for tech-nical training centers, in-plant and apprentice training and staff development;a Directorate of Planning, responsible for labor market analyses, trainingneeds assessments, the planning and evaluation of training and the collectionof statistics; and a Directorate of Standards, responsible for curriculumdevelopment, setting skill standards, trade testing and the production ofteaching materials. About one hundred professional level staff are requiredfor the Secretariat and they are expected to be recruited from among existingchief instructors and engineering technicians from industrial enterprises.All staff would receive training through: (a) a fellowship program financedby the project, (b) participation in courses organized by technical assistanceexperts financed under the project, and (c) working as counterparts to theexperts. To facilitate the establishment of the Secretariat, which is funda-mental to the future organization of vocational training in Bangladesh, theproject also includes provision for the construction of a headquarters build-ing and for the salaries of the additional staff required for a period of fiveyears commencing January 1, 1980.

Cost Estimates

50. Total project costs are estimated at $32.4 million, including about$1.7 million in import duties and taxes. The foreign exchange component isestimated at $17.2 million or about 56% of total project cost. Cost esti-mates are based on unit prices at September 1978 levels. The major elementsin the cost estimates are: civil works, including site development and pro-fessional fees, for five Technical Training Centers and the Secretariat ofthe NCSDT ($7.9 million); furniture and equipment for these facilities andequipment only for two existing Technical Training Centers ($3.0 million);incremental operating costs (salaries and consumable materials) for five years($9.3 million); and technical assistance -- fellowships, experts and stafftraining -- ($3.2 million), making a total base project cost of $23.4 million.Physical contingencies ($2.3 million) and price contingencies ($6.7 million)total about $9 million.

Financing

51. The proposed $25 million credit would finance the full foreign ex-change costs and $7.8 million local costs or about 79% of total project cost,net of taxes and duties. Financing for the remaining $7.4 million, including

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$1.7 million for taxes and duties, would be provided by the Government. Inorder to facilitate payment of local currency expenditures by the implementingagency, the Government would establish a revolving fund of Tk 750,000 in acommercial bank and replenish it at least monthly to this level (Section3.10 (b) of draft DCA). A condition of effectiveness of the proposed creditwould be that the Government had established this revolving fund and made theinitial deposit of Tk 750,000 (Section 5.01 (c) of draft DCA).

Implementation

52. Project implementation would take five years. The project wouldbe implemented by a Project Implementation Unit in the Secretariat of NCSDT,staffed on a full-time basis by a project manager, a coordinator/vocationaltraining officer, a project architect, a procurement officer, a projectaccountant and additional supporting staff (Section 3.07 (a) and Schedule 5 ofdraft DCA). The Director General of the Secretariat would serve as projectdirector. Directors of the TTCs would be responsible to the project directorfor the educational development aspects of the project and would assist inthe supervision of civil works. Assistance in project implementation wouldalso be provided by technical assistance experts financed under the project(Section 3.02(a) of draft DCA). Agreements, on terms and conditions satis-factory to the Association, for the provision of technical assistance expertsand fellowships would be a condition of effectiveness of the proposed credit(Section 5.01 (a) of draft DCA).

53. Construction of the civil works components would be undertaken bypre-qualified contractors in three phases: Advance Procurement of BuildingMaterials; Building; and Site Development and External Works. Althoughdetailed designs and layouts for the Technical Training Centers were preparedseveral years ago, they are no longer appropriate and a private architecturalfirm would be hired to redesign the Technical Training Centers, design theheadquarters building for the Secretariat of the NCSDT and supervise theconstruction of all facilities included in the project. The appointment ofthis firm, on terms and conditions satisfactory to IDA, would be a conditionof effectiveness of the proposed credit (Section 5.01(b) of draft DCA). Thefive sites needed for the TTC facilities included in the project have alreadybeen acquired and surveyed; the site for the Secretariat of NCSDT will beacquired by December 31, 1979 (Section 3.05(b) of draft DCA).

54. Administrative supervision of the above architectural services,including the preparation of equipment and furniture lists, tenders for thecivil works, equipment and furniture and their execution, delivery andinstallation respectively would be carried out by the project implementationunit. The services of equipment, curriculum, training and other specialiststo be employed for the establishment of the Secretariat of the NCSDT wouldalso be available to assist in project implementation.

Procurement and Disbursement

55. Because the value of contracts for civil works, bricks and aggre-gates, and furniture would be relatively small (less than $0.5 million), theywould be awarded after local competitive bidding under Government procedures

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satisfactory to IDA. However, foreign contractors would be free to partici-pate. Equipment, building materials (excluding bricks and aggregates) andtraining materials exceeding $50,000 equivalent in value would be procuredon the basis of international competitive bidding in accordance with IDAProcurement Guidelines and local manufacturers/suppliers would be accorded amargin of preference of up to 15% of the c.i.f. cost of competing imports orthe actual customs duty, whichever is lower. Contracts that cannot be groupedinto packages of $50,000 equivalent or more would be awarded on the basisof local competitive bidding procedures satisfactory to IDA, provided thatsuch contracts do not exceed $1.5 million equivalent in total (equivalentto about 15% of the estimated total cost of equipment, building and trainingmaterials). Off-the-shelf items costing less than $15,000 equivalent foreach contract would be awarded on the basis of prudent shopping after obtain-ing not less than three price quotations, provided such contracts do notexceed $0.5 million in total (equivalent to about 5% of the estimated totalcost of equipment, building and training materials). Prior IDA approvalwould be required for all civil works contracts exceeding $0.2 millionequivalent and all other contracts exceeding $50,000 equivalent.

56. Disbursements from the credit account would be made for (a) 100%of the c.i.f. cost of directly imported building materials, equipment andfurniture; (b) 100% of the ex-factory price of locally manufactured buildingmaterials, equipment and furniture; (c) 100% of expenditures on expert ser-vices, staff training, and overseas fellowships; (d) 60% of the cost ofbuilding materials, equipment and furniture procured locally (e) 60% of localexpenditures on civil works including building materials procured locally;and (f) an average of about 80% of expenditures on incremental consumabletraining materials and staff salaries (100% in calendar years 1980, 1981 and1982, 80% in 1983, and 48% in 1984). Applications for withdrawals from thecredit would be fully documented except that reimbursement of expenditureson salaries under category (f) above would be made against certified state-ments of expenditure. It is expected that the credit would be fully disbursedby March 31, 1985. The implementing agency would maintain separate projectaccounts and have its accounts audited annually by independent auditorsacceptable to IDA (Section 4.01 (c) of draft DCA).

Operation and Maintenance

57. Responsibility for the operation and routine maintenance of thephysical facilities and equipment would lie with the Chief Instructor of theTechnical Training Centers. Adequate budgetary allocations would be made toensure assignment of trained personnel and maintenance staff at each institu-tion and provision of maintenance materials, utilities, spare parts for in-structional equipment and training materials (Sections 3.07 and 4.02 of draftDCA). Approval by the National Economic Council of Project Proformas, includ-ing adequate provision for staff, materials and maintenance of project insti-tutions, would be a condition of effectiveness (Section 5.01 (d) of draft DCA).

Monitoring and Evaluation

58. A system would be developed with the assistance of a consultant forevaluating the external and internal effectiveness of the training activities

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financed under the proposed project. External evaluation would focus on the

effect of training both on the enterprise, and the trainee. Statistics wouldbe gathered annually from representative enterprises in each industrial sectorcovering: (i) expenditure on training; (ii) workers' wages without trainingand with training; (iii) annual output per worker; and (iv) capital invest-ment. For the individual trainee a career follow-up scheme would be devisedto record his progress. Internal evaluation would be concerned with thetraining costs of different training modes and delivery systems. It wouldaim at identifying the lowest cost system. Implementation of the evalutionsystem would commence not later than June 1, 1982 and the Government wouldmake available for IDA review annual evaluation reports during the life of

the project (Section 3.11 of draft DCA).

Benefits and Risks

59. The project is consistent with the Government's plan to expandvocational training and increase the skilled manpower needed for industrialdevelopment and for the replacement of skilled workers emigrating to theMiddle East. It would help accelerate the output of skilled and semiskilledworkers, and thus increase the productivity of the industrial and manufac-turing sectors by achieving a higher ratio of skilled workers to unskilledworkers, thereby reducing the need for extensive on-the-job training.Industry would also benefit from the program for in-plant training andupgrading of unskilled workers. In addition, an increase in skilled workerswould enable the country to capitalize (through foreign exchange remittances)on overseas employment opportunities without disrupting domestic production,project implementation and productivity. By 1980, with the introduction ofshorter courses, double shifts and upgrading programs, the output of existingTTCs would increase from about 600 to over 2,500 workers and by 1983, whenproject-financed facilities would be fully operational, the total annualoutput from the Ministry of Manpower's technical training centers would beabout 10,350 skilled and semiskilled workers in 18 different occupations. Theindirect output from in-plant training would be about 8,500, comprising some1,500 apprentices and 7,000 production workers. By 1983, project trainingwould account for 85% of total output from the national vocational trainingsystem and would meet about 40% of the total estimated skilled and semi-skilledmanpower requirements of the non-agricultural sectors.

60. A major benefit would be the better quality of training given grad-uates entering the job market through establishing training standards devel-oped with the participation of industrial enterprises hence making trainingmore practical. The quality of training would be further enhanced by fundsprovided under the project for consumable training materials to foster prac-tical rather than theoretical instruction; project financing of incrementalstaff salaries would also assist in ensuring that sufficient instructors ofrequisite quality are trained and employed. The project would institute ashorter, six-month modular-type course, a system which is both cost effectiveand practical in Bangladesh. The proposed coordination of institutional train-ing (TTC) with in-plant schemes would reinforce this practical orientation.

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61. The project would also have significant institutional benefits.The creation of the National Council for Skill Development and Training withits Secretariat would help ensure national coordination and avoid duplicationof programs, thereby enabling a more efficient use of resources. It isexpected also to assist Bangladesh's planning capability, foster standard-ization of qualifications throughout the system, and promote the evaluationof vocational training. The project would benefit vocational education ingeneral by strengthening training institutions, mainly by assisting theDirectorate of Training Operations to strengthen its headquarters and regionalstaffs in the supervision and administration of TTCs.

62. Although an implementation schedule has been discussed and acceptedby the Government, experience has shown that implementation usually takeslonger than planned when ministries and agencies are involved in their firstBank project. Therefore, intensive supervision and training of project staffwill be needed to assist the Bureau of Manpower, Employment and Training inimplementing the project. Problems have also been anticipated in the recruit-ment and retention of qualified instructors, and staff of the Secretariat ofthe NCSDT. For instructors, recent salary increases over 30% plus the provi-sion of housing for instructors at all TTCs should attract suitably qualifiedpersonnel from industry, but alternative employment opportunities still existin the Middle East. The appointment of suitably qualified staff would there-fore be closely supervised and remedial action (e.g., increasing the outputfrom instructor training programs) recommended should shortages develop.A further risk is that the Government might not provide sufficient funds fortraining materials after the project is completed, particularly if the short-age of resources remains critical. However, it is believed that the benefitsrealized through increased domestic industrial production and workers' remit-tances from abroad would be sufficient to motivate the Government to continueto allocate adequate funds to the project facilities to enable them to operateeffectively.

PART V - LEGAL INSTRUMENTS AND AUTHORITY

63. The draft Development Credit Agreement between the People'sRepublic of Bangladesh and the Association and the Recommendation of theCommittee provided for in Article V, Section 1 (d) of the Articles ofAgreement are being distributed to the Executive Directors separately.

64. Special conditions of the project are listed in Section III ofAnnex III. Additional conditions of effectiveness include (a) the conclu-sion of agreements, on terms and conditions mutually agreed between theGovernment and IDA, for the provision of experts and fellowships under theproject (para 52); (b) the appointment of architectural consultants to providedesign and supervision services (para 53), (c) the establishment and initialfunding of the revolving fund (para. 51), and (d) approval of the ProjectProforma (para. 57).

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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

May 10, 1979 by I.P.M. Cargill

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TABLE 3ABANGLADESR - SOCIAL INDICATORS DATA SHEET

REFERENCE GROUPS (ADJUSTED AVERAGESBARGLADES /Ia

LAND AREA (THOUSAND SQ. IN.) - MOST RECENT ESTIMATE)

TOTAL 144.0 SAME SAME NEXT HIGHER

AGRICULTURAL 101.1 MOST RECENT GEOGRAPHIC INCOME INCOME

1960 Lb 1970 Lb ESTIMATE lb REGION /c GROUP /d GROUP /e

GNP PER CAPITA (US$) 40.0 60.0 90.0 167.4 182.9 432.3

ENERGY CONSUMPTION PER CAPITA(KILOGRAMS OF COAL EQUIVALENT) .. .. 28.0 65.7 88.9 251.7

POPULATION AND VITAL STATISTICSTOTAL POPULATION, KID-YEAR

(MILLIONS) 53.9 70.8 82.7URBAN POPULATION (PERCENT OF TOTAL) 4.8 6.4 9.2 12.8 15.0 24.2

POPULATION DENSITYPER SQ. EM. 374.0 492.0 574.0 85.2 46.8 42.7

PER SQ. KM. AGRICULTURAL LAND 566.0 730.0 818.0 322.6 254.1 95.0

POPULATION AGE STRUCTURE (PERCENT)0-14 YRS. 44.3 46.4 46.2 44.0 43.6 44.9

15-64 YRS. 52.5 51.0 51.1 52.9 53.3 52.8

65 YRS. AND ABOVE 3.2 2.6 2.6 2.9 2.9 3.0

POPULATION GROWTH RATE (PERCENT)TOTAL 2.7 2.8 2.1 /f 2.2 2.4 2.7

URBAN 6.2 7.4 4.2 4.0 8.8

CRUDE BIRTH RATE (PER THOUSAND) 49.8 50.3 49.5 45.1 44.3 42.2

CRUDE DEATH RATE (PER TBOUSAND) 27.2 22.9 28.1 17.3 19.7 12.4

GROSS REPRODUCTION RATE 3.5 3.1 .. 3.2 2.9 3.2

F.AMILY PLANNINGACCEPTORS, ANNUAL (THOUSANDS) .. 345.6 655.1USERS (PERCENT OF MARRIED WOMEN) .. .. 4.7 13.7 14.6 14.2

FOOD AND NUTRITIONINDEX OF FOOD PRODUCTION

PER CAPITA (1970-100) 106.2 100.0 93.7 95.6 96.4 104.3

PER CAPITA SUPPLY OFCALORIES (PERCENT OF

REQUIREMENTS) 89.0 LI 89.0 93.0 91.1 92.3 99.5

PROTEINS (GRAMS PER DAY) 42.6 I *- 58.5 49.6 50.0 56.8

OF WHICH ANIMAL AND PULSE 9.2 a .. 8.0 12.6 13.9 17.5

CHILD (AGES 1-4) MORTALITY RATE .. .. .. .. .. 7.5

HEALTHLIFE EXPECTANCY AT BIRTH (YEARS) 38.7 43.3 45.0 43.1 45.8 53.3

INFANT MORTALITY RATE (PERTHOUSAND) .. .. 140.0 99.5 102.7 82.5

ACCESS TO SAFE WATER (PERCENT OFPOPULATION)

TOTAL '- 45.0 56.0 30.0 26.4 31.1

URBAN '- 13.0 22.0 66.3 63.5 68.5

RURAL *' 47.0 61.0 17.2 14.1 18.2

ACCESS T0 EXCRETA DISPOSAL (PERCENTOF POPULATION)

TOTAL *' 6.0 5.0 15.7 16.1 37.5

URBAN .. .. 40.0 66.9 65.9 69.5

RURAL .. .. .. 2.5 3.4 25.4

POPULATION PER PHYSICIAN 10000.0 /h 7600.0/h 11000.0 8830.8 13432.7 9359.2

POPULATION PER NURSINC PERSON 110000.0 /h 72030.0/h 56070.0 8479.3 6983.3 2762.5

POPULATION PER HOSPITAL BEDTOTAL 11000.0 /1 8120.0 /i 5200.0 1624.5 1157.6 786.5

URBAN .. .. .. .. 183.3 278.4

RURAL .. .. .. .. 1348.8 1358.4

ADMISSIONS PER HOSPITAL BED .. .. .. .. 19.S 19.2

HOUSINGAVERAGE SIZE OF HOUSEHOLD

TOTAL .. .. .. .. 5.2

URBAN .. .. .. .. 4.8

RURAL .. .. .. .. 5.3

AVERAGE NUMBER OF PERSONS PER ROOMTOTAL .. .. ..

URBAN .. .. .. .. 1.8 2.3

RURAL .. .. ..

ACCESS TO ELECTRICITY (PERCENTOF DWELLINGS)

TOTAL .. .. .. .. 25.9 28.3

URBAN 3.0 .. .

RURAL .. .. .. .. 8.7 10.3

- 25 - ANNEX I

TABLE 3ABANGLADESH - SOCIAL INDICATORS DATA SHEET

REFERENCE GROUPS (ADJISTED AVERAGESBANGLADESH /a

- MOST RECENT ESTIMATE)SAME SAME NEXT HIGHER

MOST RECENT GEOGRAPHIC INCOME INCOME1960 Lb 1970 Lb ESTIMATE /b REGION /c GROUP /d GROUP /e

EDUCATIONADJUSTED ENROLLMENT RATIOS

PRIMARY: TOTAL 47.0 61.0 73.0 59.1 62.9 75.8FFHALE 26.0 42.0 51.0 38.4 45.9 67.9

SECONDARY: TOTAL 8.0 19.0 25.0 19.9 14.4 17.7FEMALE 1.0 8.0 11.0 9.9 8.8 12.9

VOCATIONAL (PERCENT OP SEGONDAN Y) 1.0 1.0 .. 1.5 6.6 7.4

PUPIL-TEACHER RATIOPRIMARY .. 49.0 50.0 38.2 38.5 34.3SECONDARY ,. 26.0 24.0 23.5 19.8 23.5

ADULT LITERACY RATE (PERCENT) 21.6 .. 23.0 35.6 36.7 63.7

CONSUMPTIONPASSENGER CARS PER THOUSAND

POPULATION .. 0.4 0.4 fL 2.2 3.1 7.2RADIO RECEIVERS PER THOUSAND

POPULATION .. 6.0 .. 14.9 31.1 71.1TV RECEIVERS PER THOUSAND

POPULATION .. .. .. .. 2.8 14.1NEWSPAPER ("DAILY GENERALINTEREST") CIRCULATION PERTHOUSAND POPULATION .. .. 5.0 6.4 6.0 16.3CINEMA ANNUAL ATTENDANCE PER CAPITA .. .. .. .. 1.4 1.6

EMPLOYMENTTOTAL LABOR FORCE (THOUSANDS) 19400.0 24500.0 26200.0

FEMALE (PERCENT) 15.2 16.5 17.0 21.3 24.2 28.0AGRICULTURE (PERCENT) 87.0 86.0 78.0 62.8 60.7 54.1INDUSTRY (PERCENT) 3.3 3.5

PARTICIPATION RATE (PERCENT)TOTAL 36.0 34.6 34.4 35.8 39.8 37.8MALE 58.7 55.8 55.3 52.4 53.3 50.3FEHALE 11.4 11.8 12.1 15.6 19.6 20.9

ECONOMIC DEPENDENCY RATIO 1.3 1.4 1.4 1.3 1.3 1.3

INCOME DISTRIBUTIONPERCENT OF PRIVATE INCOMERECEIVED BY

HIGHEST 5 PERCENT OF NOUSEHOLDS 18.3 /k 16.7 11 . 18.6 20.3 19.5HIGHEST 20 PERCENT OF HOUSEHOLDS 44.5 /k 42.3 L .. 42.8 45.1 48.9LOWEST 20 PERCENT OF HOUSEHOLDS 6.9 1k 7.9 L . 7.3 5.7 5.9LOWEST 40 PERCENT OF HOUSEHOLDS 17.9 A 19.6 L .. 19.3 16.8 15.7

POVERTY TARGET GROUPSESTIMATED ABSOLUTE 'POVERTY INCOMELEVEL (USS PER CAPITA)

URBAN .. .. 110.0 80.2 88.5 155.9RURAL .. .. 90.0 67.2 71.9 97.9

ESTIMATED RELATIVE POVERTY INCOMELEVEL (US$ PER CAPITA)

URBAN .. .. .. .. 100.8 143.7RURAL .. .. 29.0 39.8 42.0 87.3

ESTIMATED POPULATION BELOW POVERTYINCOME LEVEL (PERCENT)

URBAN .. .. 61.0 50.3 46.0 22.9RURAL .. .. 70.0 44.6 48.0 36.7

Not availableNot applicable.

NOTES

/a The adjusted group averages for each indicator are population-weighted geometric means, excluding the extremevalues of the indicator and the most populated country in each group. Coverage of countries among theindicators depends on availability of data and is not uniform.

/b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969and 1971; and for Most Recent Estimate, between 1973 and 1977.

/c South Asia; /d Low Income ($280 or less per capita 1976); /e Lower Middle Incocme ($281-550 per capita,1976); /f The 1970-75 growth rate is abnormally low due to the effects of the war of independence andthe mass population movement across the borders during that period. Presently, the average populationgrowth rate is estimsted at 2.82 per annum; /i Av. 1961-65; /h Registered, not all practicing in thecountry; /i Govt. establishments only; /i 1972; /k 1963-64; /1 1966-67.

September, 1978

- 26 -

DEFINITIO6S OF SOCIAL INDICATORS Page 3

N2ta The adjusted group averages for each indicator are population-weighted geometric means, excluding the extreme values of the indicator and the meotpopulated country in each group. Coverage of countries among the indicators depends on availability of date and is not uniform. Due to lack of date,group averages for Capital Surplus Oil Exportere sod indicators of access to water and axerete disposal, housing, income distribution and poverty aresimple population-weighted geometric means without the exclusion of extreme valus,

LASD AREA (thousand sq. kb) Population per hospital bed - total, urban. and rural - Population (total,Total - Total surface area comprising land area and inland waters, urban, and rural) divided by their respective number of hospital bedsAgricuitura) - Most recent estimate of agricultural area used temporarLly available in public and private general end specialized hospital and re-

or permanently for crops, pastures, market and kitchen gardens or to habilitation centers. Hospitals are establishments permanently staffed bylie follow. at least one physician. Establishments providing principally custodial

care are not included. Rural hospitals, however, include health and aedi-ANP PeR CAPITA (US$) - GNP per capita estimtes at current market prices, cal centers not permanently staffed by a physician (but by a medical Cr

calculated by sane conversion method as World Bank Atlas (1975-77 basis); sistant, nurse, midwife, etc.) which offer in-patient accomodation and1960, 1970, and 1977 data, provide a limited range of medical facilities.

Admissions Per hospital bed - Total number of admissions to or dischargesetERGY CONSUMPTION PER CAPITA - Annual consumption of commercial energy from hospitals divided by the number of beds.

(oual and lignite, petroleum, natural gas and hydro-, nuclear and geo-thermal electricity) in kilograms of coal equivalent per capita. HOUSING

Average eie of household (persons oer household) - total, urban, and rural-POPULATICN AND VITAL STATISTICS A household consists of a group of individuals who share living quartersTotal pc 8ulation. mid-year (millions) - As of July 1; if not available, end their -in meals. A boarder or lodger may or my not be included in

overage of two end-year estirates; 1960, 1970, and 1977 data, the household for statistical purpoes. Statistical definitions of house-Urbao population (Parcent of total) - Ratio of urban to total popula- hold vary.

tion; different definitions of urban areas my affect comparability Average number of persons Per room - total, urban, and rural - Average num-of data among countries, ber of persons per room in all, urban, and rural occupied convenrional

Populatoc- density dwellings, respectively. Dwellings exclude non-permanent structures andPer sq. km. - Mid-year population per square kilometer (100 hectarsa unoccupied parts.uf total are. Access to electricity (percent of dwellings) - total, urban, and rural -

Per up in agricolturo land - Computed ma above for agricultural land Conventional dwellings with electricity in living quarters as percentageonly of total, urban, and rural dwellings respectively.

Population age structure (Percent) - Children (0-14 years), working-age(15-64 ynars), and retired (65 years and over) as percentages of mid- EDUCATIONyour population. Adlusted enrollment ratios

Population growth rate (percent) - total, and urban - Compound annual Primary school - total, and female - Total and female enrollment of all agesgrowth rates of total and urban mid-year populations for 1950-60, at the primary lewel as percentages of respectively primary school-age1960-70, and 1970-75. populations; normally includes children aged 6-11 years but adjusted for

Crude birth rate (per thousand) - Annual live births per thousand of different lengths of primary education; for countries with universal edu-old-your population; ten-year arithmetic averages ending in 1960 and cation enrollment may exceed 100 percant since some pupils are below or1970 and five-year average ending in 1975 for most recent estimate, above the official school age.

Crude death rcte (per thousand) - Annual deaths per thousand of mid- Secondary school - total, nd female - Computed as above; secondary educe-Year population; ton-year arithmetic averages ending in 1960 and 1970 tion requires at least four years of approved primary instruction; pro-and five-year average ending in 1975 for mast receot estimate. vides general vocatioml, or teacher training instructions for pupils

Grons reproduction rate - Average number of daughters a woman will bear usually of 12 to 17 years of age; correspondence courses are generallyin her nornal ouproductive period if she experiences present age- excluded.specific fertility rates; usually five-year averages ending in 1960, Vocatiomal enrollment (percent of secondary) - Vocational institutions in-1970, snd 1975. elude technical, industrial, or other programs which operate independently

Pancly planning - acceptors, annual (thousands) - Annual number of or as departments of secondary institutions.acceptors of birth-control devices under auspices of national family Pupil-teacher ratio - primary, and secondary - Total students enrolled inplannng program. primary and secondary levels divided by numbers of teachers in the corre-

unily planning - users (parcent of married woaen) - Peroentage of spending levels.narriod woman of child-bearing age (15-44 years) who use birth-control Adult literacy rate (percent) - Literate adults (able to read and write) asdevices to all married women in same age group. a percentage of total adult population aged 15 years and over.

FOOD AND NUTRITION CONSVMPTIONIndes of food production per capita (1970-100) - Index number of per Passenger cars (per thousend population) - Passenger care comprise motor cars

capita annual production of all food commdities, seating less than eight persons; excludes ambulances, hearses and militaryPer capita supply of calories (percent of requiremants) - Computed from vehicles.

energy equivalent of net food supplies available in country per capita Radio receivers (aer thousand population) - All types of receivers for radioper day. Available supplies comprise domestic production, imports less broadcasts to general public per thousand of population; excludes unlicensedsporce, and changes in stook. Net supplies asolude animal feed, seeds, receivers in countries and in years when registration of radio sets wao is

quantities used in food processing, and losses in distribution. Re- effect; data for recent years may not be comparable since most countriesquirenents were estimated by PAO based on physiological needs for nor- abolished licensing.vol activity and health considering envirormartal temperature, body TV receivers (per thousand population) - TV receivers for broadcast to generalweights, age and sex distributions of population, and allowing 10 per- public per thousand population; excludes unlicensed TV receivers in coun-uent for waste at housebold leveol cries and in years when registration of TV sets was in effect.

Per capita supply of protedin (ara per day) - Protein content of per Newspaper circulation (per thousand population) - Shows the average circlo-capita net supply of food per day. Net supply of food is defined as ion of "daily general interest newspaper", defined as a periodical publi-above. Requiremeneo for all countries established by USDA provide for cation devoted primarily to recording general news. It is considered too mn.unr allowance of 60 grams of total protein per day and 20 grams be "daily" if it appears at least four times a eeh.of animal and pulse protein, of which 10 grams should be animal protein. Cinema annual attendance per capita per year - Based on the number of ticketsThese standards are lower than those of 75 grams of total protein ani sold during the year, including admissions to drive-in cinemas and mobile23 grams of animal protein as an average for the world, proposed by units.FAP is the Third World Pood Survey.

Per capita protein supply from animal and pulse - Protein supply of food EMPLOYMENTderived iron animals and pulses in gr-as per day. Total labor force (thousands) - Economically active persons, including armed

Child (ages 1-4) .ortality rate (per thousand) - Annual deaths per thous- forces and unemployed but excluding housewives, students, etc. Defini-and in age group 1-4 years, to children in this age group. tions in various countries are not comparable.

Female (percent) - Female labor force se percentage of total labor force.HEALTH Agriculture (percent) - Labor force in farming, forestry, hunting and fishingLife enpectancv at birth (years) - Average number of years of life as percentage of total labor force.

ronuin-g at birth; usually fie-year averages ending in 1960, 1970, Industry (percent) - Labor force in mining, construction, manufacturing andand 1975. electricity, water and gas as percentage of total labor force.

Infant mortality rate (per thousand) - Annual deaths of infants under Participation rate (percent) - total, male, and feamle - Total, male, andone year of age per thousand live birhts. 'emale labor force as percentages of their respective populations.

Access to s-fe water (percent of poPulation) - total, urban and rural - These are mLO's adjusted participation rates reflecting pge-oemNumber of people (total, urb-n, and rural) with reasonable access to structure of the pepulatino. and long time trend.safe .ater supply (includes treated surface waters or matreated but fromomic dependency ratio - Ratio of population nder I) and 65 and opec touncontaoinated water such as that from protected boreholes, springs, the labor force in age group of l5-64 years.and sanitary wells) as percentages of their respective populations.In an urban area a public fountain or standpost located not more INCOME DISTRIBUTIONthen 200 matoso fto. a house may be considered as being within rea- Percentage of private income (both in cash and kind) received by richest 5sonable access of that house. In rural areas reasonable access would percent richest 20 percent, poorest 20 percent, and poorest 40 percentimply that the housewife or members of the household do net have to of households.spend a disproportionate part of the day in fetching the family'swater needs. POVERTY TARGET GROUPS

Access to excreta disposal (percent of population) - total, urban, and Estimated absolute poverty income level (US$ per capita) - urban and rural -rural - Nuaber of paupla (total urban, and rural) served by mac.ats Absolute poverty income level is that income level below which a minimal

disposal as percentages of their respective populations. Excrete nutritionally adequate diet plus essential non-food requirements is notdisposal may include the collection and disposal, with or without affordable.treatment, of huban surreta and waste-water by water-borne systems Eftimated relative poverty Income level (US$ per capita) - urban and rural -r the use of pit privies and similar installations. Relative poverty ineoe level is that income level less than one-third

-opultion per physician - Population divided by number of practicing per capita personal income of the country.physicians qualified from a medical school at university level. Etimated paputan below poverty Incom level (oecent) - urban end rural

Population per nursing person - Population divided by number of Percent of population (urban and rural) who are either "absolute poor" orpracticing male and female graduate nurses, practical nurses, and "relative poor" whichever is greater.

vssistant nurses.Efocomic and Social Date Division

Economic Analysis and Projections Department

- 27 - ANNEX I.

ECONOMICO MEED9ET DATA

(Amaounts in milliPonTs oyf U.S. dollars)

Actual Estimated 1960- 1965- 1973- 1976917v. S~77Av. 19)67-69 i972/73 1775 1976/77 1977/78 1965 1970 1978 196-6 197/5 07

'.'133AL ACCOU1NTS __

In Constant 1972-1973 Prices & Exchange Rates n;aoAnnual Growth Rates As Percent ofGUrot,S LkosiseLic Prodact 6UlC2- -3-DTT-6,514 Y ,55 7,833- 47 J . 98.5 101.8 101.1

IP from. 'terms of Trsde () 89 - -117 -149 -88 1.5 -1.8 -1.1e,tuic Insane 6,101 583-3 6,-397 7,107 j7745 5.6 2.5 5.8 100.0 100.0 100.0

sps'rn (inot. NFrS) 879 747 703 506 791 20.6 6.8 0.7 14.4 11.0 10.2esposts (imprt capacity) 598 369 197 24~3 315 12.3 -14.6 -3.2 9.8 3.1 4.1

I-'so,rce Gap 281 378 506 263 TW6 -4.6 7. 6.1

J'nsumcption Expenditures 5,668 5,817 6,404 6,764 7,521 5.7 3.6 5.2 92.9 100.1 97.1-.nvstment 1 (ic]l. stocks) 714 394 499 660 700 13.3 8.8 12.2 12.9 7.8 9.0

k, ceztic Savings 433 16 -6 343 M2 4.3 10.0 72.0 6.8 -0.1 2.9.Nati-sis Savings 416 32 10 378 279 8.7 20.5 56.3 7.1 0.2 3.6

eIERCIJANDISE TRADE Annual Data at Current Prices As Percent of Total

UsrortsCapital goods . 100 135 227 3168. 22.9 . 16.8 23.5Tintermediate goods (acLfuels) . 176 386 270 459 . 21.9 . 30.4 34. 1is~els and related materials

of which; Petroleum .. 23 155 141 166 . .. 48.5 .. 10.0 12.5Consumption goods .. 428 726 227 406~ . . rZA 4 42.8 3o. 1total Merch. TTmports Ceif) 547 -7 27 1 ,40 2 865 1,349 12.2 100.0 100.0

Elcoorts"srimary products (mmcl. fuels) . 145 119 220 203 . 7.0 . 40.9 40.8Thjel s and related materials

of which: Petroleum,Yanufactured goods . 195 239 240 294.. . 8.5 . 59.1 59.2Total Merch, Exports (fob) 48I -3TO 358 7609 7.9 100.0 100.0Touarism wsid Border TrauLe

rschacndise Trade Indices Average 1972-73 130Paport Price~ Index -- 61 100 133 - 118 137.. . 6.5imoprt Price Index 52 100 215 189 180.. . 12.5

onsof Trade Index 118 100 62 62 76.. . -5.6Exports Volume Index 148 100 80 115 107.. . 1.5

%ALUS; ADDED BY SECTOR As coal rata so 1972-73 :Prise; and Exchange Pates - Žirage Annual arowth Rates A,, Percent of Total

Agriculture 3,542 3,403 3,712 4,020 4,318.. . 4.8 59 59 57industry and Mininig 420 412 466 582 642 . .. 9.2 7 7 8

Service ~~~~~2,050 1,848 2.146 2,442 2.645 7.4 34 34 35Total 6,012 5,663 6,324 7,044 7,605 6.1 100 100 100

PURlItC FINAN4CE As Percent of ,r-(cen,tr ~Government)

Current Receipts 317 280 469 563 665 . .. 34.2 5.3 7.2 8.5Current Expenditures 365 364 419 464 553 . .. 16.8 6.1 6.4 -7.1Busdgetary Savings -48 -84 50 9912-0.8 0.8 1.4Othoer Public Sector . . . .. . .PubIlic Sector Investment 421 239 248 516 514 . .. 10.3 7.0 3.8 8.

us $ million LjiCURRENT EXPENDITIURE DETAILS Actual Estimated DETAIL 0ON At Av. 1977/78 P and ER

As % Total Current Expend.) 1969/70 1972/73 1974/75 1976/77 1977/78 PUBLIC SF1115 Nwo-Year Plan 7, of TotalEducation . -15.5 'I9T5 12-.4 13.0 IlR'VESTMENT PROGRAM (1978/79 - 1979/80)Otier Social Services . 4.5 3.6 4.2 4.9 iScial Sectors 287 13.2Agsiculture and Agriculture 600 27.6Other Economic Services . 5.0 12.5 6.6 7.0 industry and MI,ning 380 17.5

Admi,nistration and Defense .. 70.4 57.1 61.5 61.2 Power 314 14.4Other . 4.6 12.3 15.3 13.9 Iranspart and commeunicatiors, 387 17.8Total Current Expendituires 100.0 10 0. 0 -100.0 100.0 Other 206 9.5

______________________________________________________________________ Total Expenditures 2,174 100.0

SELECTED INDICATORS 1960- 1965- 1973- FINANCING(Calculated from 3-year- averaged data) 1965 1970 1976Average ICOR . TS-7fl 0.89 Putic 7.-star Savings 557 25.6Import Elasticity .. 1.29 1.11 Pragram aid counoterpart 838 38.6Marginal Domestic Savings Rate .. 0.22 0.05 Foreign Project Aid 605 27.8Marginal National Savinigs Rate . 0.35 0.05 Oflsher (incl. dom. borrowing) 174 8.0

Total Fintancing 2,174 100.0

LABOR PORCE AND Total Labor Farce Value Added Per Worker (1972- 73 Prices & Exc. Rates)OUTPUT PER WORKER In Millions % of Total 19 61 -73 In US.Dollars Percent of Aven ge 19 70 -73

19 60/61 19 7 ZL319 60/61 1972/73 Growth Rate 19 69/70 19 72/73 19 69/70 19 72/73 Growth Rate

Agriculture 16.1 20.5 85 78 2.0 .. 166 .. 76Ind:ustry 1.0 1.8 5 7 5.0 .. 229 . 105Der-vice 18 3.9 10 15 6.7 .. 484 . 2

Total 18.9 2~~~~~~~~~6.2 100 T00 2.8 248 217 100 10-0 -4.9

not applicable - nil or negligiblenot available - less than half the smallest unit shown

Rote: Figures are on fiscal year basis (JulY I-Juae aOb Oats prior to 1972/73 pertain to erstwhile East Pakistan./I Plan targets.

ANNEX I

-28 -

86162103 OF P1000870

BMNAL ASSIdSiNE AND8 DEBT

lensonte irs ml'ir s of 13.S. do7.1ars at correct petees)

Aetal. Esimoated Prljjctog Averass annua Grvl,O7S69/7.9 7S7Z173 bORn1/t ZS1!37' Reti. ted 773d1977/7 1974 - 1978

S9(2 BALANCE OF F-hYINSS

EVort. (ioel. NPS) 515 369 358 329 588 648 13.780port4.(incl. NFS) -639 -747 -1,402 -957 -1,427 -1,779 9.8

ReAS486e uSsnce (I-N) -124 -378 -1,044 -428 -1 7.4

Intcre-t (net) IDirect 7neet-ent Thele, t8Wdreers' Raeittaoee I .. 45 7 66 83 92 -

Bari-te cnDCur rTen t t -

Private Strcet Devestprlot 482 397 229 396 400 13.6Of ricial Capital doonto .

Bobbie M&iT L..nPubli -nroans 76 527 273 411 695 5.2

-rlv,wntn ,, -25 -16 -51 -54 --RCtp3S7nte. 79 3 57 73t7 6 4 4.8l

other 1861T LeansDiboeeot. ..

-R6D=89t._

Net Disboeseaeots .

C pital Tea ti2 33los net 44 1 -33 Actual Ltnd Period EstbeutelChsog In L. tIoSes - aec) . -20 -196 -60 24 23 ________________Cr000 Reserves (end peried) . 107 263 293 269 EB i 19/2/13 1914/-5 1975/76 b/19777 1977/76_47ANt DiRT 344VIC01

Ptblie Debt Out. & lleb-red 228 1,366 1,812 2,065 2,556GRANf A9D 10AN C080IIT87l5TS

Officis Scenic & Grant-like 514 368 338 452 lotoreet no Bublie Debt - 10 21 25 27topayre<nte on. P,blie Debt - 25 78 17 51

Ocblbe 0,LT Lcons Total Public Debt Seric 3 99 42 78irB5 .. - - - - Ieth- Debt Senic

0(net)

rDA 68 150 50 211 rntal Debt Service (net)t-ier oIreilotrei 11 87 84 74

t -vref,ents .. 204 628 200 376 Burden on. Eort S_rinej , )soppliers .. 55 17 2Fi_Co' i__ltotoine ....- 5 13 Poblic Debt Sernice a.0 22.4 7.9 13.7Bends ..- Total Debt Servicepbl LoTsD, t.e.-. ._t .t L

Total Public M9LT Loans .. 338 932 341 684 Ternc ot lice.Ave-ge Te,e of Pbotl Debt

Actual Debt ttitttediog en rone 30, t978 I:t. no r Prior Year DO4D 2.0 1.5 1.4 1.3SITERBTAL D343 Di

0b-eed.d t Percent bmoot. uo 0 Price Yver D1&D 5.0 5.7 0.9 2.5

.3ecrl 3ank,

7DA 554 21.7 TBRI Debt Put. & DibersedOther !Mltilbtercl 64 2.5 an r Public Dlbt O&D - 4.0 3.0 2.7 2.2Gonoeroneeno 1,746 68.4 uc 0 Public Dsbt service - - 1.6 7.5 4.4Tnnnlieno 111 4.3itbenoiol rn1titntione 26 1.0 'DA Debt Cat.& Disboreed

3onds - as Public Debt O&D 7.1 18.7 21.0 22.7 21,7Publo ebts tbn.e ^ i an 'Public Debt Seee-oe - 2.3 2.0 7.5 4.9Tota7 Publib M&LT Debt 2155 DO0.O

Other MhL,T DebtoSh-rt-ten Debt (dieb. only)

. net applicable e ist.f vetimato

net uvti bl.e - .il yr negligible.. net -vilable eparatly -- less thon half the

btt ircluded ib tetal smallest u-it shebnNvenb-e 1979

- 29 -ANNEX II

THE STATUS OF BANK GROUP OPERATIONS IN BANGLADESH

A. STATEMENT OF BANK LOANS AND IDA CREDITS (as of March 31, 1979)

US$ MillionAnount

(net of cancellationsLoan or and exchange adjustments)Credit Un-Number Year Borrower Purpose Bank IDA disbursed

One loan and eight credits fully disbursed 54.9 329.1 -

339 1972 Bangladesh Cyclone Area Reconstruc-tion (replaces CreditNo. 228-PAK of 1971) 25.0 2.7

340 1972 Bangladesh Chandpur Irrigation II(replaces Credit No.184-PAK of 1970) 13.0 1.1

341 1972 Bangladesh Tubewells (replacesCredit No. 208-PAKof 1970) 14.0 2.0

343 1972 Bangladesh Telecommunications (re-places part of CreditNo. 145-PAK of 1969) 7.3 .3

367 1973 Bangladesh Chittagong Water Supply(replaces Credit No.42-PAK of 1963) 7.0 .1

368 1973 Bangladesh Dacca Water Supply andSewerage (replacesCredit No. 41-PAK of1963) 13.2 /b

407 1973 Bangladesh Education (replacesCredit Nos. 49-PAKand 87-PAK of 1964 and1966) 21.0 4.8

408 1973 Bangladesh Highways (replaces CreditNo. 53-PAK of 1964) 25.0 5.7

409 1973 Bangladesh Technical Assistance 4.0 .3410 1973 Bangladesh Cereal Seeds 7.5 5.2424 1973 Bangladesh Inland Water Transport

Rehabilitation 8.7 1.1487 1974 Bangladesh Second Telecommunications 20.0 13.1527 1975 Bangladesh Ashuganj Fertilizer 33.0 8.3533 1975 Bangladesh Population 15.0 11.7542 1975 Bangladesh Barisal Irrigation 27.0 23.7

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ANNEX II

A. Bank Loans and IDA Credits to Bangladesh (Cont'd)

US$ MillionAmount

(net of cancellationsLoan or and exchange adjustments)Credit Un-Number Year Borrower Purpose Bank IDA disbursed

605 1976 Bangladesh Karnafuli Irrigation 22.0 14.9621 1976 Bangladesh Agricultural and Rural Training 12.0 10.5622 1976 Bangladesh Technical Assistance II 7.5 6.2631 1976 Bangladesh Rural Development 16.0 14.6632 1976 Bangladesh Bangladesh Shilpa Bank 25.0 19.0676 1977 Bangladesh Imports Program V 75.0 2.8724 1977 Bangladesh Shallow Tubewells 16.0 16.0725 1977 Bangladesh Muhuri Irrigation 21.0 20.1729 1977 Bangladesh Extension and Research 10.0 9.9735 1977 Bangladesh Inland Water Transport II 5.0 4.4752 1977 Bangladesh Imports Program VI 75.0 21.7765 1978 Bangladesh Jute 21.0 19.6787 1978 Bangladesh Foodgrain Storage II 25.0 25.0825 1978 Bangladesh Small Scale Industry II 7.0 7.0828 1978 Bangladesh Agricultural Research 6.0 6.0864 1978 Bangladesh Drainage and Flood Control 19.0 19.0 /a866 1978 Bangladesh Imports Program VII 75.0 68.2872 1978 Bangladesh Technical Assistance III 10.0 10.0890 1979 Bangladesh Oxbow Lakes Fisheries 6.0 6.0 /a

Total, 54.9 1,023.3 390.7of which has been repaid 0 0.4 -

Total now held by Bank and IDA 54.9 1,022.9

Total undisbursed 0 390.7 390.7

/a Not effective.

/b Balance of $9,224.

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ANNEX II

C. PROJECTS IN EXECUTION 1/

Multi-Sector ProjectCr. No. 339 Cyclone Area Reconstruction Project: US$25.0 Million Credit

of October 18, 1972; Effective Date: January 17, 1973;Closing Date: June 30, 1979

After a very difficult start, the project is expected to be com-pleted by about 1979, about three and a half years behind schedule. Parts A,F, and G (Inland Water Transport, Coastal Fisheries, and Cyclone WarningSystem) have been completed for some time. Parts D and E (Primary and FeederRoads) have been substantially completed except before the remainder of theroad can be constructed. Work on the completion of Part B and C (Telecommuni-cations and Cyclone Shelters) appears to be proceeding satisfactorily althoughwe have had reports that the Project Director did not get as much allocatedin the budget for the cyclone shelters as he requested.

Agricultural Projects

Cr. No. 340 Chandpur Irrigation II Project: US$13.0 Million Credit ofOctober 18, 1972; Effective Date: January 17, 1973;Closing Date: December 31, 1979

The project is expected to be completed by late 1979, three yearsbehind schedule. Delays have been due to major flooding, labor problems,shortages of materials, equipment breakdowns and rebuilding the embankmentas a result of rapid river erosion during the construction phase. Whileproblems remain, substantial progress has been made both in physical construc-tion and agricultural development. The main regulator is operational and majoragricultural development is about to commence.

Cr. No. 341 Tubewells Project; US$14.0 Million Credit ofNovember 6, 1972; Effective Date: January 13, 1973;Closing Date: September 28, 1979

Because of a slow start, project implementation is about 18 monthsbehind schedule. Nearly 3000 wells have now been drilled, and verticalityproblems have already been corrected by the contractors. Pumphouse construc-tion and engine/pump installation is proceeding satisfactorily. Agriculturaldevelopment is about to commence on 2400 wells in the winter 1978/1979.Project audit for 1975/1976 has been received while audit for 1976/1977 is

1/ These notes are designed to inform the Executive Directors regardingthe progress of projects in execution, and in particular to report anyproblems which are being encountered, and the action being taken toremedy them. They should be read in this sense, and with the under-standing that they do not purport to present a balanced evaluation ofstrengths and weaknesses in project execution.

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ANNEX II

being awaited. Arrangements for extending consultant's services have beenagreed. A request is currently under consideration for an extension o. the

closing date to permit the financing of, inter alia, distribution channelsin order to increase the effectiveness of the project. Pending the outcome

of this review, the Closing Date has been initially extended to 9/28/79.

Cr. No. 410 Cereal Seeds Project; US$7.5 Million Credit of June 29, 1973;Effective Date: January 30, 1974; Closing Date: December 31,1979

There has been an improving trend in project implementation duringthe past two years. Seed sales and quality are good. Contract growers'interest is high. Staff morale has also improved considerably. Civil works

are underway but are being delayed by shortages of local funds. Machineryfor seed processing has been ordered. Tender documents for the final list

of machinery and equipment are undergoing final revision after IDA comments.Staff housing is about 80% complete. On the other hand, vacancies still existin the staff to supervise contract growers. With fifteen trainees presentlybeing trained, most of the planned overseas staff training programs are well

underway.

Cr. No. 542 Barisal Irrigation Project; US$27 Million of April 29, 1975;Effective Date: February 24, 1976; Closing Date: Decem-ber 31, 1980

Project civil works continue to make good progress and is expectedto be completed on schedule. The problems delaying procurement of 60 primaryand 2,500 secondary pumps have been resolved and it is expected that some 25primary pumps will be installed during the current boro season. A target

area of 24,000 acres of irrigation for the present dry season using some608 secondary pumps is to be attempted.

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 had been behind schedule due to initial delays inhiring project consultants. The consultants for the irrigation portion of theproject began work in September 1976, but their effectiveness was limited bydelays in procurement of vehicles and equipment and in the assignment of localconsultants to assist in the design work. After a period of good progress,project civil works have again slowed down due to shortages of local Taka.

If adequate additional funds are alloted, the project could still be completedon schedule.

Cr. No. 631 Rural Development Project; US$16.0 million of June 3, 1976;Effective Date: August 3, 1976; Closing Date: December 31,1981

The project was designed as a pilot application of the rural devel-

opment approach pioneered at the Comilla Academy in the mid-sixties. It

- 33 -

ANNEX II

aims at introducing accelerated agriculture and rural development in seven

thanas in Bogra and Mymensingh Districts. It provides financing inter alia

for rural roads, minor irrigation, buildings, storage, rural credit and

strengthening of rural cooperatives. The project became effective on

August 3, 1976. Initially, despite some teething problems, the project was

progressing satisfactorily. But by June 1977, the following weaknesses

became apparent: (i) lack of cooperation the various ministries and agencies

involved; (ii) lack of effective organization ineffective supervision of

the project by the implementing agency, the Integrated Rural Development

Program (IRDP); (iii) basic deficiencies in the cooperative system (complex

regulations and procedures); (iv) inadequate training of project personnel;and (v) conflicting government policies in the field of rural credit. InNovember/December 1977, IDA, in association with IRDP, undertook a compre-

hensive review of the project, and an Aide Memoire, setting out an actionprogram to overcome these problems, was presented to the Government in

December 1977.

The Government has made a concerted effort to implement the recom-

mendations of the Aide Memoire prepared in December 1977. A full-time Project

Manager has been appointed who is assisted by three assistants responsible forcredit, cooperatives and training, respectively. International recruitmentis being used to obtain for IRDP technical assistance in project management,

supervision, and monitoring. At the field, two district managers, for Bogra

and Mymensingh, have been appointed to work full time on project activities.Budgetary and procedural changes have been introduced to enable participatinggovernment agencies to be fully responsible for the implementation of the

projects subcomponents. This, together with a revitalized coordinating com-

mittee of Secretaries of the Ministries concerned has greatly improve coopera-

tion. Implementation of the physical aspects of the project such as rural

works is proceeding satisfactorily but project beneficiaries have, so far,

yet to receive tangible benefits in the form of farm inputs farm equipment.

A proposal has recently been approved to amend the Credit Agreement to finance

incremental fertilizer needs for the project instead of incremental credit for

fertilizer.

Cr. No. 724 Shallow Tubewells; US$16 Million of July 1, 1977; Effective

Date: December 9, 1977; Closing Date: December 31, 1981

Bids for engines and pump sets for all 10,000 wells have been re-

ceived and are being reviewed by the Bangladesh Agricultural Development

Corporation's Tender Committee. A consultant for workshop management has

been hired and the preparation of tender documents for workshop tools and

machinery is at an advanced stage. Construction of 3 out of the 5 project

zonal workshops has been completed. Thana irrigation maps are yet to bereviewed by consultants.

- 34 -

ANNEX II

Cr. No. 725 Muhuri Irrigation; US$21.0 Million of July 1, 1977; EffectiveDate: January 6, 1978; Closing Date: June 30, 1983

Delays occurred initially in obtaining Government approval of theproject budget, establishing the project fund, completing arrangements forhiring the engineering consultants, and signing a contract with the Contractorwho will construct the Feni Regulator. The contractor, with the BangladeshWater Development Board (BWDB) approval, has signed in August 1978, a contractwith the Implementation Assistance Team to participate and assist in construc-tion work. A BWDB engineer has been appointed as Project Manager and has setup office in Feni township. The Contractor has started construction sitedevelopment and assembly of staff.

Cr. No. 729 Extension and Research Project; US$10 Million of July 1, 1977;Effective Date: January 6, 1978; Closing Date: April 30, 1981

The project is making good progress since it became effectiveJanuary 6, 1978. Pre-qualification of contractors for the construction oftraining unit at Bogra and Santahar has been advertised while detailed draw-ings and cost estimates have been submitted and forwarded to IDA for review.Procurement of essential project vehicles and equipment is progressingsatisfactorily. Suitable salary scales are now approved and DEM has beenrequested to proceed immediately with filling of posts for crop productionspecialists and district training officers. In the case of Project Imple-mentation Unit/Sub-Unit (PIU/PISI), gazetted officers have been appointedin late September 1978; selection of senior staff (Class III and IV) hasbeen completed but appointment awaits Government's clearance. On agricul-tural extension, a consultant has been appointed to review unification ofextension services. Village Extension Assistants (VEAs) have already beenrelieved of extension duties. The Ministry of Agricultural has also re-quested the Planning Commission to increase the taka allocation of theproject to Taka 65 million.

Cr. No. 765 Jute Project; US$21 Million of February 8, 1978; EffectiveDate: April 14, 1978; Closing Date: June 30, 1983

Project progress is generally satisfactory. The project organiza-tion appears to be succeeding in generating enthusiasm among farmers and JuteFarmers Associations are becoming effective. The value of credit in cash andkind has increased substantially, and repayments are progressing satisfactorily.The project technological package is reported to be signficantly increasing peracre yields.

Cr. No. 787 Foodgrain Storage II Project; US$25 Million of April 12,1978; Effective Date: September 29, 1978; Closing Date:December 31, 1982

Effectiveness was delayed by almost three months due to delays inGovernment approval of the project budget. However, work on site selection,

- 35 -

ANNEX II

land acquisition, and preparation of tender documents has been proceeding

satisfactorily and physical progress of the project is not expected to be

effected by this delay.

Cr. No. 828 Agricultural Research Project; US$6 million of June 16, 1978;

Effective Date: November 15, 1978;

Closing Date: December 31, 1974

Effectiveness was delayed by two months, due to delays in approval

of the project budget. Meanwhile contracts with architects for design of

facilities have been signed, and technical working groups established respon-

sible for drawing up research programs in specific fields.

Cr. No. 864 Drainage and Flood Control Project: US$19.0 million Credit

of December 22, 1978; Closing Date: June 30, 1984

This credit is not yet effective.

Cr. No. 890 Oxbow Lakes Fishery Project; US$6 million of April 3, 1979;

Closing Date: June 30, 1984

This credit is not yet effective.

Industry and Imports Program Credits

Cr. No. 527 Ashuganj Fertilizer Project; US$33 Million Credit of

February 11, 1975; Effective Date: December 19, 1975;

Closing Date: December 31, 1980

The project is being cofinanced by the 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 including the necessary dredging and filling was completed on schedule.

However, based on the soil analyses undertaken by two specialist consulting

firms, further preparation of the site was undertaken to protect the plant

against earthquake risks. Currently the project is about 32 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. Process engineering and procurement have progressed substan-

tially and the groject is now in the construction phase. The soil compaction

work has been completed and work is progressing on the critical compensatory

foundation works of the Project. Revised estimates indicate that due to the

need for additional site work, the delays and the currency fluctuations, costs

will be substantially higher than lender funds currently available. Arrange-

ments are being discussed among the Government and the various cofinanciers

to raise the additional funds required to complete the Project. The fertilizer

company has terminated the contract of the consultants who had been providing

management assistance, and has hired a new firm to provide assistance during

the construction phase. The company is currently negotiating arrangements for

provision of assistance during the operations phase.

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ANNEX II

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 February 28, 1979, Bangladesh Shilpa Bank (BSB) has sub-mitted 96 subprojects for IDA approval. Of these, 93 have been approved andthree have been held pending clarification by BSB of queries raised duringIDA reviews. As of February 28, 1979 disbursements (including QAR's) wereUS$5.2 million.

Cr. No. 676 Fifth Imports Program; US$75 Million of January 25, 1977Effective Date: February 24, 1977; Closing Date:March 31, 1979

As of February 28, 1979, disbursements were US$70.0 million. Thecredits Closing Date has been extended by three months to enable GOB processreimbursement from IDA under Procedure Case I.

Cr. No. 752 Sixth Imports Program; US$75 Million of November 30, 1977;Effective Date: January 13, 1978; Closing Date:December 31, 1979

As of February 28, 1979 disbursements (including QAR's) wereUS$38.5 million.

Cr. No. 825 Small Scale Industry II Project; US$7 million of June 16, 1978;Effective Date: September 15, 1978; Closing Date: March 31,1983

Progress has started in training commercial bank staff, distributingcirculars to commercial bank branches describing project procedures, and adver-tising the availability of funds for small industry loans. Staff of the Smalland Cottage Industries Corporation have been assigned to begin preparation ofsubsector and area studies for small industry promotion.

Cr. No. 866 Seventh Imports Program: US$75.0 million Credit ofDecember 22,; 1978; Effective Date: January 8, 1979;Closing Date: December 31, 1980

Education Projects

Cr. No. 407 Education Project; US$21.0 Million Credit of June 29, 1973;Effective Date: September 27, 1973; Closing Date:December 31, 1980

Progress on the Agricultural University component of the projectis about 75% complete but 30 months behind schedule. The academic complexfacilities and staff housing are now virtually completed. About half ofthe hostels will be completed in December 1979 and the remainder by June1980. The auditorium, gympnasium and stadium are scheduled to be completed

- 37 -

ANNEX II

by October 1979, two months before the Closing Date. A number of new pro-grams intended to improve the practical skills of students and increasetheir involvement in research and extension have been introduced. Civil Worksfor The Technical Education component, although 30 months behind schedule ispractically complete. Procurement of equipment is only 60% complete becauseof the time-consuming procedures of the Supplies Directorate. Efforts torevise curricula and improve quality of teaching staff are being made.However, action has yet to be taken to complete the facilities at Joydeppurintended to be used for the training of technical teachers. (Constructionof this facility is not part of the project).

Cr. No. 621 Agricultural and Rural Training Project; US$12.0 Million

of March 25, 1976; Effective Date: June 30, 1976; ClosingDate: June 30, 1981

Implementation of civil works is about three months ahead of sched-ule but has slowed recently due to shortage of local funds. Completion isabout 60% on weighted average. Tenders for instructional equipment wereinvited in mid-December. Training of teachers for the Agricultural Train-ing Institutes (ATI's) has been set back by a recent transfer of instructorsto the extension staff to benefit from a recent upgrading of positions, whichwas not extended to the ATI staff. Little progress has been made on therecruitment of technical assistance experts, the development of revisedcurriculum, or the in-service training of extension staff.

Population

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 totalof US$25 million equivalent in addition to IDA credit. Some progress hasbeen made in project implementation. Tenders have been received for allconstruction packages except the Family Welfare Visitors' Training Schoolin Khulna and Faridpur. Scrutiny of bids received for four tenders areunderway. Recruitment of staff training teams is under progress while localconsultants have started working with Project Finance Cell to strengthencentral accounting system. Government is considering implementing manage-ment study recommendation for strengthening district level organization. Over60 out of 90 medical doctors deputed from the Health Division of the Ministryof Health and Family Planning to Population Division and Family PlanningDivision (PCFD) have joined. Deputation of another 100 doctors is expectedshortly. On the other hand, proposals to strengthen the Building, Planningand Design Unit (BPDU) are still pending with the Health Division while pro-gress on service statistic system has been discouraging.

- 38 -

ANNEX II

Transport Projects

Cr. No. 408 Highways Project; US$25.0 Million of June 29, 1973;Effective Date: September 27, 1973; Closing Date:December 31, 1979

There are two major elements of the project which are not yet com-pleted, these being construction of the new Roads and Highways Directorate(RHD) headquarters building and paving of the Feni bypass. Progress on theRHD building is satisfactory, and appropriate steps are being taken toremedy constructional deficiencies previously noted. Progress on the Fenibypass paving has improved, and the contractor should complete before theclosing date of the Credit on December 31, 1979.

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: December 31, 1979

Procurement of spare parts and equipment under the Original Credithas been substantially completed. The two lighterage tankers provided underthe Supplementary Credit have been operating since January 1978, transferingcrude oil from the mother tanker, "Banglar Noor", to the ERL refinery atChittagong. However, Bangladesh Shipping Corporation (BSC) has experiencedsome problems in maintaining the tankers' cargo pumps and manufacturers'service engineers are now in Chittagong. IDA has agreed to finance underthe credit additional Technical Assistance to improve tanker operation andmaintenance. There appears to have been a significant improvement in theoil transfer operating over the past few months.

Cr. No 735 Inland Water Transport II Project; US$5.0 Million Credit ofSeptember 30, 1977; Effective Date: March 13, 1978;Closing Date June 30, 1980

The Credit became effective on March 13, 1978 three and a halfmonths behind the original schedule. Lists of spare parts for BIWTA vessels,navigation aids and for hydrographic equipment, and for BIWTC cargo vesselshave already been prepared and most items agreed. The selection of con-sultants required for the execution of the project has proceeded very slowly.However, contracts with two consulting firms have now been signed, and work onselection of additional required consultants is underway.

Telecommunications Projects

Cr. No. 343 Telecommunications Project; US$7.3 Million Credit ofNovember 15, 1972; Effective Date: January 17, 1973; ClosingDate: June 30, 1979

The Project was originally financed as part of Credit No. 145-PAKof 1970, and goods valued at US$2.2 million had been received prior to sus-pension of disbursements. Three of the four microwave systems have been

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