Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. P - 3 4 9 3

REPORT AND RECOMMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED CREDIT

IN AN AMOUNT OF SDR 11.1 MILLION (EQUIVALENT TO US$ 12.0 MILLION)

TO THE PEOPLE'S REPUBLIC OF BANGLADESH

FOR A

PUBLIC ADMINISTRATION (TRAINING, PERSONNEL AND MANAGEMENT) PROJECT

March 24, 1983

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

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

CURRENCY EQUIVALENTS

The Bangladesh Taka is fixed in relation to a basket of referencecurrencies, with the US Dollar serving as intervention currency. On January11, 1983, the official exchange rate was set at Tk 24.48 buying and Tk 24.52selling per US Dollar. Throughout this report the rates shown below havebeen used.

US$ Tk 24.5Tk 1 = US$ 0.04

PRINCIPAL ABBREVIATIONS AND ACRONYMS USED

ADP - Annual Development ProgramBCS - Bangladesh Civil ServiceCSP - Civil Service of PakistanEPCS - East Pakistan Civil ServiceMSW - Management Services Wing (Establishment Division)NIPA - National Institute of Public AdministrationNTC - National Training CouncilPEU - Project Evaluation UnitPIU - Project Implementation UnitPATC - Public Administration Training CenterPMIS - Personnel Management Information SystemSFYP - Second Five Year Plan (1980-1985)TCPC - Training and Career Planning Cell (Establishment Division)UNDP - United Nations Development Programme

FISCAL YEAR

July 1 to June 30

FOR OFFICIAL USE ONLY

BANGLADESH

PUBLIC ADMINISTRATION (TRAINING, PERSONNEL AND MANAGEMENT) P->OJECT

* Credit and Project Summary

Borrower: People's Republic of Bangladesh

Amount: SDR 11.1 million (US$ 12.0 million equivalent)

Terms: Standard

Project The project would assist the Government in increasingDescription: efficiency in the country-s public administration by

developing a cadre of professionally trained andqualified public servants through: (a) improvements tothe existing public administration training facilitiesand programs at the Public Administration TrainingCenter (PATC) and its regional centers; (b) theinstallation of a modern Personnel ManagementInformation System (PMIS); and (c) improvements inadministrative systems and procedures, andorganizational development through a new ManagementServices Wing (MSW) in the Establishment Division.Part (a) above would include an expansion of PATC'scapacity through the construction, furnishing andequipping of additional buildings and upgrading thequality of PATC training through (i) overseasfellowships, internships and seminars, (ii) technicalassistance to improve curriculum, course content andteaching methods, (iii) a faculty research and casedevelopment program, and (iv) supply of equipment andinstructional materials. Parts (b) and (c) would beaccomplished through technical assistance for(i) establishing PMIS and MSW and (ii) projectimplementation and evaluation. The project would alsoinclude financing of incremental staff salaries, student

* stipends and training allowances.

Risks: The major risks to the proposed project concern thepossible lack of qualified instructors for the PATCprogram and the development of a performance appraisalsystem that may not fit existing social and governmentalcircumstances. The risk to the training component is

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

-ii-

reduced because qualified instructors would be attractedby the development of an incentive package which includesthe opening up of possibilities for pronotion intraining where none existed before. The use of localconsultants to work in tandem with expatriates will helpto ensure that the performance appraisal system takesproper account of local circumstances and is a practicalmanagement tool. Finally, the project will provide thebasis for Government to undertake future fundamentalreforms which, however, would require changes in attitude.The risk is that attitudes may be difficult to change inthe short run. This risk should be reduced through theexposure of civil servants to modern systems.

Estimated Cost /a: Items Local Foreign Total…ITUS$ Millions-

PATC Facilities and Programs 4.91 3.84 8.75Establishment Division 0.47 0.67 1.14(PMIS/MSW)

Establishment Division, 0.14 0.31 0.45

Project Management

Total Base Costs 5.52 4.82 10.34

Physical Contingency 0.55 0.48 1.03Price Contingency 2.22 1.12 3.34

Total Project Cost 8.29 6.42 1A.71

/a Includes duties and taxes US$0.68 million equivalent.

FinancingPlan: Local Foreign Total

---------US$ Millions---------

IDA 5.58 6.42 12.00Government 2.71 - 2.71

Total 8.29 6.42 14.71

-iii-

EstimatedDisbursements:

FY84 FY85 FY86 FY87 FY88 FYP9

Annual 0.40 2.65 3.70 2.70 1.79 0.76Cumulative 0.40 3.05 6.75 9.45 11.24 12.00

Rate of Return: Not Applicable

Appraisal Report: BANGLADESH: Public Administration (Training, Personnel

and Management) Project,Report No. 4181-BD, dated Mlarch 23, 19R3.

INTERNATIONAL DEVELOPIENT ASSOCIATION

REPORT AND RECOMMENDATION OF THE PRESIDENT

TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT

TO THE PEOPLE'S REPUBLIC OF BANGLADESH FOR APUBLIC ADMINISTRATION (TRAINING, PERSONNEL AND MANAGEMENT) PROJECT

1. I submit the following report and recommendation for a proposeddevelopment credit to the People's Republic of Bangladesh for SDR 11.1 mil-lion (the equivalent of US$12.0 million), on standard IDA terms to helpfinance a Public Administration (Training, Personnel and Management) Project.

PART I - THE ECONOMY 1/

Introduction

2. An economic report entitled "Bangladesh: Recent Economic Develop-ments and Selected Development Issues," (Report No. 4277-BD, dated March 4,1983) has been distributed to the Executive Directors.

3. The first years of independence were difficult for Bangladesh. Itseconomy was disrupted and its infrastructure severely damaged by the strugglefor independence. The country was afflicted by poor harvests and devastatingfloods in the early 1970s. Agriculture and manufacturing production felldrastically and only recovered to pre-independence levels in the mid 1970s.Inflation, declining real wages, rapid population growth, labor unrest andpolitical instability added to the difficulties. In these early years,Bangladesh's policy makers were by necessity largely preoccupied with mattersof relief and rehabilitation and the need to shape a national government outof a provincial administration. The First Five-Year Plan (FY74-78) had tobe scrapped and replaced by a scaled-down and refocussed three-year "HardcoreProgram" (FY76-78) in response to the enormity of the country's difficulties.

4. Economic progress and increased political stability in the secondhalf of the past decade provided planners the opportunity to turn theirattention from crisis management to the longer-range objectives of develop-ment. Between FY75 and FY80, GDP increased by about 5.8% p.a. despiteseveral setbacks in agricultural production. Output in manufacturing rose byabout 6.3% annually between FY75 and FY80, most of this growth taking placeoutside the jute industry. Although shortfalls in domestic foodgrain sup-plies and increases in international petroleum prices led to a deterioration

1/ Parts I and II of this report are substantially the same as Parts I andII of the President's Report for the Third Telecommunications Project(Report No. P-3441-BD), dated December 29, 1982.

-2-

in the balance of payments in FY80, the concluding years of the decade wit-nessed a number of encouraging developments and positive policy measures toattain longer-term development goals. These included a strengthening ofbudgetary policies, improvements in agricultural and food distributionpolicies and steps to promote a more active role by the private sector indeveloping the economy.

Recent Economic Developments

5. The economic consolidation in the second half of the past decade hasbeen followed by a period of economic difficulties. Bangladesh experiencedserious budgetary and balance of payments problems in FY81 which continuedinto FY82. The external and domestic resource constraints led to somedecline in investment, in real terms, and some loss of momentum in thedevelopment effort. The management of domestic food situation, due to poorcrops, has also posed considerable problems. Although GDP at market pricesincreased by 6% in FY81 (as favorable weather and stepped-up provision ofagricultural inputs helped to increase foodgrain production to a record 14.8million tons), growth of the economy became negligible in FY82 due topoor crops, lagging rural incomes and consumer demand and the decline ininvestment. A recovery in winter crops (wheat and boro rice) due to improvedweather and the Government's efforts to expand minor irrigation facilities,however, is expected to increase value-added in agriculture by 3.4% andoverall growth of the economy by 2.5% in FY83.

6. The economic difficulties experienced in the last few years isindicative of major constraints to sustained economic development inBangladesh in the near term. These are (a) a severe balance of paymentsproblem; (b) an extremely tight public finance situation; and (c) a foodproduction and management problem.

7. Bangladesh's balance of payments is characterized by a massive struc-tural trade deficit and heavy dependence on foreign aid. Export earningsare currently less than 30% of the import bill and over 50% of these limitedexport earnings is derived from raw jute and jute goods. Although exportearnings doubled over the second half of the past decade due to a significantstrengthening of export prices, and remittances from abroad increasedrapidly, the current account deficit over the past decade averaged over 10%of GNP annually, financed by external aid inflows, provided mainly on conces-sional terms by external donors. In FY82 and FY83, however, Bangladesh wasadversely affected by (a) a severe deterioration in its terms of trade and(b) a simultaneous stagnation in external aid inflows. A sharp decline inexport prices of raw jute and jute goods and of major non-traditional exports(notably leather and fish products), combined with a 14% increase in averageimport prices (partly reflecting significantly higher petroleum prices), ledto a 16% deterioration in Bangladesh's terms of trade in FY81. While importprices remained relatively stable in FY82, export prices declined by a fur-ther 16% due to continued stagnation of demand for raw jute and jute goods,and the terms of trade deteriorated further by 17% in FY82. At the same time

-3-

external aid inflows, which rose steadily until FY80, stagnated or declined;aid disbursements in FY82 were only 4% higher than in FY79 in real terms, andin FY81 were 7% lower than FY79 levels. During FY81 the Government attemptedto cope with this reduction in the availability of external resources byresorting to short-term commercial borrowing, short-term deposits from andcurrency swaps with friendly countries, some run-down of reserves and assis-tance from the IMF under an Extended Financing Facility (EFF) arrangementconcluded in December 1980. However, the EFF arrangement was suspended inJuly 1981, as the Government's budgetary problems led to a largebank-financed budget deficit and to the violation of credit ceilings agreedwith the IMF. In FY82 the Government attempted to slow down the growth ofimports through a variety of measures. Nevertheless further short-termborrowing of $226 million and a run-down of Bangladesh's meager foreignexchange reserves to about US$100 million (equivalent to about two weeks'imports) were necessary to finance the reduced level of imports.

8. The balance of payments situation in FY83 will benefit from a sig-nificant improvement in the terms of trade, a substantial increase inworkers' remittances to about US$600 million and a 9% increase in total aiddisbursements due to an improved response from donors to Bangladesh's recentrequests for more food and commodity aid. The Government has also recentlyreached agreement with the IMF on a Standby Arrangement in an amount of SDRs68.4 million covering the second half of FY83. Rising medium and long-termdebt service payments (from US$98 million in FY82 to US$155 million in FY83)will, however, claim part of this increase in external reserves; Bangladeshwill be also making net payments of about $100 million on outstandingshort-term debts.

9. The deterioration in the trade and aid climate had a major adverseimpact on public finances during FY81 and FY82. Government's receipts oflocal counterpart funds--a principal source of taka resources--were reduced,as were its receipts from import duties and sales taxes, which account fornearly 60% of total tax revenues. These budgetary problems were exacerbatedby weak financial planning and inadequate domestic adjustments in the face ofgenerally reduced availability of resources. The Government's developmentprograms were predicated on the basis of overly optimistic assumptionsregarding resource availabilities; and the poor financial performance ofpublic enterprises, due to low levels of efficiency and delays in increasingtheir sales prices added a further drain on the budget. A budget deficit ofTk 5 billion or about 2.5% of GNP emerged in FY81 even though the AnnualDevelopment Program (ADP) was cutback by 12% in the second half of the fiscalyear. In FY82, the cutbacks in imports noted earlier sharply reduced govern-ment revenues; and this caused serious difficulties in implementing the ADPwhich was again initially set at ambitiously high levels. Although the Takacomponent of the ADP was cutback by 15% in the third quarter of FY82, it waspossible to avoid a deficit in the overall government budget only because asharp run-down in government's food stocks as a result of poor domestic cropshelped to produce a substantial cash surplus on the food account.

-4-

10. Although considerable progress has been made in the past ten yearsin increasing the availability of irrigation and other inputs and improvingagricultural policies, foodgrain production and supply in Bangladesh remainsheavily dependent on the vagaries of the weather. Prolonged drought since thesummer of 1981 adversely affected the FY82 and FY83 rice crops. The short-fall in foodgrain production in FY82 (0.7 million tons or 5% below FY81levels) led to high food prices in FY82, low government procurements,increased demand for foodgrain distributed through the ration system and asubstantial run-down of public sector foodgrain stocks to about 600,000 tonsby end-June 1982, far below the levels considered to be sufficient for foodsecurity purposes. In order to replenish stocks the Government made substan-tial commercial imports, thereby imposing further strain on the balance ofpayments.

11. The Government endeavored to cope with the intensifying problemsfacing the economy by placing restrictions on imports, public sector expendi-tures and bank credit, reducing various subsidies, and allowing the Taka todepreciate. In FY82 the Taka was depreciated by about 10% in relation to abasket of currencies to which it is pegged and by about 22% in relation tothe US dollar.l/ However, the rate of domestic inflation, spurred on bysharp increases in foodgrain prices in mid FY82, the adjustments in theexchange rate and rapid expansion of domestic liquidity in late FY81accelerated and the consumer price index increased by 15% over the 12 monthperiod ending June 1982.

12. Faced with continuing prospects of unfavorable terms of trade andstagnating resource availabilities, the Government, in the FY83 budget (inJuly 1982), introduced a wide range of policy measures designed to adjust theeconomy to the country's serious resource constraints. Projected developmentexpenditures for FY83 were reduced by nearly 20% in line with resourceavailabilities, while the increase in recurrent expenditures was limited to14%, only slightly above the forecast inflation level. The Government alsointroduced new tax measures expected to yield Tk 1.17 billion (about 0.5% ofGDP) in FY83. In addition, a number of substantial subsidy and pricingadjustments aimed at reducing consumption and protecting investments weremade. Ration prices of wheat and rice were increased by 11% and 8%, respec-tively and fertilizer prices were increased by 14% on average. The Govern-ment also recognized the need to improve the financial performance of publicsector enterprises and utilities; and product prices and rates were raisedsubstantially in the case of petroleum products (41%), electricity tariffs(40%) and natural gas (13%). These measures are expected to channel resour-ces from private consumption to public investment and, together with a cashsurplus on the food account noted earlier, will help improve the overallbudgetary position, and restore a greater measure of financial stability.

11 Change from end-June 1981 to early June 1982.

-5-

External Debt

13. Debt service payments on medium and long term debt totalled US$94million in FY80 and US$92 million in FY81. Bangladesh's debt service ratio,about 12.9% in FY80 following some debt relief measures undertaken by variousdonors, remained at this level in FY81. The debt service ratio might exceed20% by the mid-1980s, unless careful debt management policies are pursued andaid is provided on concessional terms. Bangladesh's total outstanding anddisbursed external public debt amounted to just under US$3.6 billion as ofJune 30, 1981 with IDA credits and the single IBRD loan accounting for 30% ofthe total. In FY81, the Bank Group accounted for 3% of Bangladesh's totaldebt service payments: because assistance is now entirely in the form of IDAcredits, debt service to the Bank Group will rise slowly.

Development Planning and Policy Issues

14. The Second Five-Year Plan (SFYP), issued in draft form in May 1980,accords high priority to four major goals: (i) achievement ofself-sufficiency in foodgrains by FY85, with domestic foodgrain productiontargeted to increase to 20 million tons by FY85; (ii) reduction of thepopulation growth rate with a view to bringing down the net reproduction rateto unity by 1990; (iii) progress towards mass literacy through free universalprimary education; and (iv) emphasis on energy development, particularlythrough accelerated exploitation of known reserves of natural gas.

15. The potential for increasing foodgrain output in Bangladesh is con-siderable. Surface and groundwater resources permit a substantial expansionof irrigation, which in turn would permit increased fertilizer use and shiftsto high yielding varieties of rice. The Government has formulated, withassistance from IDA, a Medium-Term Foodgrain Production Plan (MTFPP) whichprovides an investment portfolio geared towards the attainment of the SFYPtarget of 20 million tons of foodgrains. This target is now being scaleddown in view of the country's resource constraints. The achievement of eventhis revised target will depend considerably on the allocation of sufficientresources to provide needed inputs to farmers and to permit the privatesector to play an expanded role in the provision and servicing of modernagricultural implements and inputs. Other necessary requirements are ade-quate levels of foreign aid to finance imported inputs, improved extensionservices and training, and appropriate producer incentives.

16. Achievement of the second objective, reduction of the populationgrowth rate, will require more determined efforts than have been made thusfar, especially with regard to birth control efforts which have generallysuffered from poor implementation and have had only limited success.Recently, however, birth control activities within the Government have beencoordinated, while training programs for field staff have been revised andare now, for the first time, considered adequate. GOB is now preparing, withbank assistance, a medium-term implementation plan for the population sector.

-6-

17. The third major objective of the SFYP is the attainment of generalliteracy. The Government recognizes that achievement of the goal will takelonger than five years, but it has set itself the ambitious target of intro-ducing universal primary education and enrolling 90% of all children ofprimary-school age by 1985. IDA has assisted GOB in preparing a medium- termplan for the education sector.

18. A Plan aimed at effecting significant departures from past trendswill place severe strains on financial resources and managerial skills. Amajor challenge which the Government is now facing is to translate the objec-tives of the SFYP into an operational implementation program on an annualbasis. The Government is now revising the draft SFYP, but more work andconsiderable discipline are needed to identify core programs and projects andprotect them to the extent possible in a situation of resource scarcity. Acritical factor will also be the extent to which project implementationcapabilities are improved. Although immediate improvements can be made, itis unlikely that the efforts of public agencies alone would be adequate toachieve the targeted breakthrough. The Government recognizes that in certainkey areas greater reliance will have to be placed on the private sector. Italso believes that, to a certain extent, activities such as education andrural development should be carried out in a decentralized fashion, withgreater emphasis on local initiative and grass-roots participation.

19. Over the past few years, a series of studies undertaken by IDA, GOBand other organizations has concluded that existing trade and industrialpolicies have distortionary effects on resource allocations within theindustrial sector. The Government is now preparing a program for trade andindustrial policy reform which is expected to lead to a medium-term programof actions to be pursued across a broad front, including modifications in thetariff structure, the pattern of domestic indirect taxation, investmentincentives, export policies and the mechanism for industrial promotion andplanning.

PART II - BANK GROUP OPERATIONS IN BANGLADESH

20. Bangladesh became a member of the Bank and IDA in 1972. Initially,Bank Group operations in Bangladesh concentrated on the reactivation ofeleven credits, amounting to US$147.11 million, made originally to Pakistanbefore 1971; in addition, a consolidation loan of US$54.9 million and creditof US$31.04 million to cover liabilities arising from projects located inBangladesh and completed prior to independence was approved in 1974. As ofSeptember 30, 1982, 62 new credits have been approved, totaling US$2,064.67million; of these, US$765 million have been for import credits (ten importsprogram credits and two fertilizer imports credits). Annex II contains asummary statement of IDA credits and disbursements as of September 30, 1982,and notes on the execution of ongoing projects. On June 18, 1976, Bangladesh

-7-

became a member of the IFC, and three investments (for a shipbuilding com-pany, an investment promotion company and a leather factory) have beenapproved.

21. The focus of IDA assistance in recent years has been on agriculture(20 of the projects approved as of September 30, 1982, and two fertilizerimports credits). This is consistent with the country's needs and theGovernment's priorities. Particular emphasis continues to be placed onprojects that provide agricultural inputs, including fertilizer, fertilizertransport, irrigation, improved seeds, extension, and credit and storagefacilities. In addition to agricultural projects, emphasis is also beingplaced upon complementary infrastructural projects in sectors whichfacilitate agricultural development or which reduce bottlenecks constrainingthe economy's overall performance. In the power sector, for example, IDA isassisting in rural electrification and elimination of shortages of generationcapacity and distribution facilities which have been a major impediment toutilization of existing industrial capacity. Assistance for developingtelecommunications is designed to improve the efficiency of a wide-range ofeconomic and social activities.

22. Industry has been the main beneficiary of the ten imports programcredits approved to date. Given the need for substantial net transfers ofresources and the persistent structural imbalance and weakness of theeconomy, program lending will continue to be an important component of IDAoperations in Bangladesh. The industrial sector has also benefited from twofertilizer production projects, a jute industry rehabilitation project,several DFC and small-scale industry projects and three IFC loans.

23. The enormity of Bangladesh's population problem makes this anextremely high priority sector as well, limited only by its absorptivecapacity. IDA has made two credits available in support of GOB's populationprogram, which is now making some progress. Improved education andavailability of trained manpower are also crucial, and lending in this fieldhas emphasized agricultural, technical and vocational training, and primaryeducation.

24. Disbursement of the imports program credits has proceeded satisfac-torily. Project disbursements have lagged behind expectations, owing largelyto delays in the release of local funds, approval of contracts, employment ofconsultants, and appointment of staff. Underlying these delays were seriousconstraints that included a shortage of qualified staff, overcentralizedbureaucratic procedures and organizational deficiencies. IDA and GOB havegiven increased attention to regular monitoring and supervision in order toidentify and resolve potential problems. IDA is providing assistance bothunder specific projects and under technical assistance credits to improveplanning, project preparation and implementation capabilities.

-8-

25. In view of Bangladesh's difficult foreign exchange position andsavings/investment gap, IDA credits should continue to cover all foreignexchange costs and a portion of local currency expenditures.

PART III - PUBLIC ADMINISTRATION IN BANGLADESH

Problems of Public Administration

26. During the past decade, Bangladesh has suffered from a combination ofwar, natural catastrophies, political turmoil and external economic shocks.The building of fully competent national institutions in the relatively shortperiod since independence has therefore been difficult and has not satisfac-torily been achieved in any of the principal sectors. The task has been mademore difficult by the loss of many experienced officers of the Civil Serviceof Pakistan (CSP) following the war of independence and the lack of a unifiedcivil service structure. At various times the Government has initiatedreforms in the organizational and administrative systems, but the civilservice remains poorly motivated, not only because of low salaries and poorconditions of service but also because decision making is centered in a veryfew top officials who are spread too thinly to be able to cope expeditiouslywith the many decisions that need to be taken. The concentration ofauthority at the upper levels of government is in part the result of theshortage of well trained officers at the management and supervisory levels.At the same time the proliferation of procedures, rules and regulationsserves to further inhibit the initiative, discretion and judgement ofindividual officers.

27. Personnel Management. The Establishment Division 1/ is the centralpersonnel management agency of the Government. It is responsible forrecruitment, posting, and promotions for all grades of public servants; itdevelops rules, regulations, and administrative procedures which govern theministries (secretariat), and the district (local) administration; finally,it is supposed to provide management service by assisting government agencieson all matters relating to organization, staffing and procedures. The Divi-sion works well as a control agency, but its personnel and management func-tions remain weak. It has, however, been the lead agency for implementingseveral reforms which affect the civil service including the establishment ofa unified Bangladesh Civil Service and the creation of a Senior Service Pool(see paragraph 30). While the basis for an adequate personnel managementsystem exists in the Establishment Division, it is hampered by four majorproblems: (a) absence of a strong data base needed to recruit, train, placeand promote public servants on the basis of established requirements and

1/ A Division in Bangladesh is equivalent to a Ministry and is headed by aMinister responsible to the head of government.

-9-

merit, and the inability to analyze the data and present them in a formuseful for decision making; (b) lack of adequate training in the basic func-tions of personnel administration; (c) highly prescriptive and outdatedpersonnel rules; and (d) low levels of pay and poor conditions of service.

28. Training. The higher education system has only recently begun toproduce a number of graduates trained in public administration. Recentchanges in admissions examinations for the public service reflect this cur-riculum shift, so that admission tests are no longer biased toward those withliberal arts degrees. The Government has established a network of traininginstitutions which provide both general administration/management and sec-tor-specific technical training to public servants. Administrative andmanagement training is organized under the Establishment Division, whilesectoral training is undertaken by the respective line ministries. Therewere until recently four major civil service training institutes whichoffered general administrative and management training; in November 1982, theGovernment merged all four institutions into the Public Administration Train-ing Center (PATC) located at Savar with four regional centers located atDhaka, Chittagong, Khulna, and Rajshahi. However, the training institutionsfor civil servants remain poorly housed, understaffed, their curricula needto be oriented to the actual job requirements of their students, and traininginstructors lack adequate training themselves and have no career path.

Government Policies and Programs

29. As set out in the SFYP, the Government's main priority in the publicadministration sector is to improve efficiency through: (a) universal andcompulsory training in administration and management; (b) career planning andpersonnel policy; (c) research activities in administration and managementdevelopment; (d) organization and methods systems in order to rationalizeprocedures and structures; (e) rationalizing and simplifying accounting,budgeting and financial control procedures; and (f) training support to localadministrative units.

30. The Government has already taken several steps to address theproblems which affect public administration. The Senior Policy Pool, whichcomprises the top levels of the administrative hierarchy, was created in1979. One of its main purposes was to equalize the status of officers fromthe CSP and the East Pakistan Civil Service (EPCS). All senior officers ofthe rank of Deputy Secretary and above are now eligible for the Pool and forsenior positions in the Secretariat.l/ The Pool should provide for free andopen representation for all the services in key positions in the Secretariat.The Bangladesh Civil Service (BCS), which was created in September 1980, isessentially an amalgamation of CSP and EPCS. All new recruits to the BCS are

1/ The Secretariat comprises all Ministries/Divisions in the Government.

-10-

selected through competitive examinations and are eligible for appointment tosenior posts after established periods of service.

31. In the latter part of 19829 the Government made significant changesin the organization of government and the deployment of its staff. It com-pleted the reorganization of the Secretariat by reducing the number of Minis-tries from 44 to 19 and cutting staff from about 9,400 to 6,100. The Govern-ment is also proceeding with the reorganization of the 179 Attached Depart-ments and Autonomous Bodies. Surplus staff are now being retrained andposted to positions in local administration. In addition to the obviouseconomies generated by these changes, the Government is hopeful that thisstreamlining will increase the efficiency of its operations.

32. The Government has also developed a plan for improving publicadministration and management training at all levels. It has developed aunified management structure for the previously separate civil service train-ing institutions and has relocated them from their scattered facilitiesaround Dhaka to PATC at Savar and its four regional centers (paragraph 28).Construction of the required physical facilities at the centers is welladvanced. Government has also made training for all civil servants compul-sory and has issued orders that promotion of officers will be linked to thesuccessful completion of specified training programs. A National TrainingCouncil (NTC) has been formally established to formulate the National Train-ing Policy, issue training guidelines, and keep under review training perfor-mance. The Training and Career Planning Cell (TCPC) has been created in theEstablishment Division to serve as the Secretariat to the NTC.

IDA Role in Support of Public Administration

33. Against this background of problems and policy responses, there isa clear case for providing support to Government in its efforts to strengthenpublic administration. The issues which affect the efficiency and quality ofpublic administration are complex, constraints are deeprooted, and theirlonger term resolution calls for a number of actions which have far reachingimplications. First, there is structural reform which would require fun-damental organizational, administrative and functional changes in the civilservice system -- such reforms are politically difficult but, as alreadydescribed, progress has been made in this area. Second, there is the needfor an affordable pay structure and pay review system which will help Govern-ment attract and retain a greater number of highly qualified publicadministrators. Third, a program of management training more directlyrelated to public sector corporations, autonomous agencies and the privatesector is warranted. Fourth, programs of training which are more practicaland tied to job-related competencies must be implemented at the publicadministration training institutions. Fifth, there is need to strengthen thecivil service through the recruitment, placement and promotion of suitablyqualified and trained personnel; this means that a personnel managementsystem capable of such tasks must be developed. Finally, a program to refinethe organization, procedures, and methods of administration is essential.

-11-

The prnprsed project, which is the first IDA operation directly in supportof public administration in Bangladesh, would have limited objectives; itwould help in addressing the last three issues through upgrading the puh'74cadministration training centers, improving the personnel management system,and providing the means to improve administrative efficiency through astreamlining of the operating procedures. These improvements would provide afoundation for addressing some of the wider and more complex issues discussedabove which will be the subject of further dialogue between Government andIDA.

34. Previous IDA Assistance to Management Training in Bangladesh. PastIDA assistance to management development in Bangladesh has been ratherlimited. IDA has financed various studies by consultants to assist managersin improving organizational arrangements and procedures for their agencies.Some middle level managers have also received training under variousIDA-assisted projects. Most of these project components provided limitedassistance to industrial sector corporations and were designed to overcomeimmediate management constraints, particularly as they related to theimplementation of IDA projects. This assistance, however, did not addressthe larger institutional and organizational problems of public administrationand the management of the development process. More recently, IDA hasfinanced the services of a consultant to carry out a training needs survey,as part of the government's preparation of a training plan and policy. TheEconomic Development Institute has also been involved in a joint annualprogram with the Bangladesh Administrative Staff College (now merged intoPATC) to develop skills in the project development process. The recentlyapproved business management training project represents a major effort byIDA to assist in expanding and improving the quality of business managementtraining in Bangladesh. It will focus mainly on the needs of the publicsector corporations and its objectives are complementary to those of theproposed project.

PART IV - THE PROJECT

35. The proposed project, which was requested by GOB and prepared by theInstitute of Public Administration (Consultants), was appraised by a missionthat visited Bangladesh in February/March 1982. A Staff Appraisal Report(Report No. 4181-BD dated March 23, 1983) is being distributed separately.Supplementary project data are summarized in Annex III. Negotiations for theproposed credit were held in Washington in March 1983. The Bangladesh teamwas led by Mr. D.S. Yusuf Hyder, Additional Secretary, Establishment Divi-sion.

Project Objectives and Scope

36. The proposed project aims to increase efficiency in publicadministration by (a) upgrading the facilities and programs of the public

-12-

administration centers; (b) improving existing methods of personneladministration; and (c) strengthening administrative systems and procedures.The result would be better trained and more competent public servants workingin a more efficient administrative environment, thereby increasing the effec-tiveness of public administration. To upgrade public administration train-ing, the proposed project would (a) expand the physical capacity of the PATCthrough the construction and equipping of teaching facilities, library,administrative buildings and a dormitory; (b) improve the quality of trainingat PATC through fellowships and special training courses to upgrade theteaching staff, increasing the relevance of curricula to training needs withthe assistance of experts, developing a program of research and case studiesand upgrading equipment and training materials. To improve the presentsystem of personnel administration, the project would introduce a modernPersonnel Management Information System with the assistance of experts andreinforced by staff training and additional equipment and salary support forincremental staff. To strengthen administrative systems and procedures theproject would finance experts, staff training, equipment and incrementalsalaries to enhance the scope of the 0 & M Wing; and finance staff training,equipment and incremental staff salaries to upgrade project managementcapability in the Establishment Division.

Detailed Features

A. Improving Managerial and General Administrative Training

37. Public Administration Training Center (PATC). With the developmentof a comprehensive national administration and management training policywhich calls for the introduction of compulsory professional training for allpublic servants, the PATC was established to undertake an integrated trainingprogram within the framework of this policy. The PATC, as an autonomousorganization, is headed by a board of governors, with a rector as the chiefoperating officer. The institution is organized around five major depart-ments: Public Administration and Management, Economics, Program and Studies,Research and Consultancy, and General Administration. Each department isheaded by a Member, Directing Staff with the rank of joint secretary orabove. The PATC undertakes: (a) induction training for all BCS cadres;(b) administration and management courses for officers at all levels;(c) refresher courses on administrative and management principles and techni-ques for top executives; (d) courses to augment the proficiency and skills ofthe supervisory and clerical staff; (e) research in all related aspects ofpublic administration; (f) consultancy and reference services to the Govern-ment on different aspects of administration and management as and whenrequired; and (g) specialized courses, seminars, syndicates, and conferenceson all areas of public administration and management.

38. The new PATC facilities would increase training capacity from thepresent level of 2,750 to around 5,000 per year; even with this nearly doub-ling of capacity, PATC would be training less than one-half of the officersin the public service and administrative staff. The proposed project would

-13-

assist in the capacity expansion of PATC by financing the construction of andthe furniture and equipment for a library and training materials productioncenter, a multi-purpose hall, with two lecture rooms, a third wing ofadministrative offices for the central administrative block, a dormitory forsenior staff and additional classrooms, library and multipurpose ball room at:the regional PATCs in Rajshahi, Khulna and Chittagong. It would providefurniture and equipment for the classrooms/syndicate rooms and the centraladministration block at PATC Savar and at the regional center in Phaka. Theproject would also finance a self-contained teaching computer to assist inthe analysis of data which will be generated by the PMIS and vehicles for theregional PATC. The Government is financing the remaining administrative,teaching, residential and common facilities which are already under construc-tion.

39. Quality improvements by PATC would be facilitated through improvedlibrary facilities and training materials, curriculum upgrading, the researchprogram to be undertaken by the PATC, but mainly by the staff developmentprogram designed to produce more capable trainers. Staff development wouldbe the result of two programs. The first is a locally-oriented Training ofTrainers program which would be organized at PATC. It would be designed totrain 120 trainers per year for a total of 700 trainers over the projectperiod. This would cover all of the trainers in PATC (about 200 trainers)and about 60% of the trainers in the rest of the training units within thecivil service. The project would finance technical assistance (local andexpatriate), honoraria, stipends, and the cost of training materials tosupport this program. The second program involves overseas training. Theproject would provide about 339 man-months of fellowships for 26 Master'sDegrees in order to upgrade the permanent teaching staff of the PATC byallowing them to pursue advanced training in specialized areas of publicadministration, development economics and planning, rural development, per-sonnel management and financial administration and business education.Another 27 man-months of fellowships would be financed for short-term struc-tured courses in a number of administration, management, and training areassuch as the training of senior executives, training techniques, organiza-tional development, psychological testing, consulting techniques and learningmeasurement. Because of the problems of attracting suitable staff to thetraining area, the Government was asked to develop ways and means of upgrad-ing the quality and type of instructor staff going to the PATC. The Govern-ment has now completed a plan which details the recruitment rules forinstructors, qualifications, experience, monetary and non-monetary incen-tives, and links to career progression in the BCS. Because the investment inoverseas fellowships is relatively expensive ($1,500 per man-month), and thereturn of trainees to the PATC is important to the success of the project,IDA reviewed the Government's bonding program and found that it was effectivein having the trainees return to service in the training institutions.

40. Both the Training of Trainers and overseas fellowship programs wouldbe supported by technical assistance for curriculum and program development(48 man-months). Expatriate experts would serve as visiting professors and,

-14-

at the same time, undertake curriculum and program development activities.Because the curriculum for supervisory training is outdated, it is envisagedthat on-the-job training techniques for use within the individual agencieswould be a central feature of the new curriculum and training program forsupervisory officers. The staff of PATC's Training of Trainers Program andPATC's Staff Training Department and MSW will work with the training officersin Government ministries/departments to organize in-house training programs.Expert assistance would be required to develop this program. The projectwould finance 24 man-months of technical assistance in the area of officemanagement, supervisory skills, report writing and administrative communica-tions. A studies program (250 man-months) would he coordinated by theResearch and Consultancy Department of the PATC. As a priority, studieswould include topics of relevance to the Establishment Division in its roleas the central personnel agency of the Government, and in particular, thedevelopment of the PMIS. The Government would prepare and furnish to theAssociation not later than September 30, 1983 a comprehensive program forresearch and case development to be undertaken during the Project period(Section 3.07(a)(i) of the draft Development Credit-Agreement).

B. Strengthening the Establishment Division

41. Personnel Management Information System (PMIS). The new PMIS wouldconsist of job descriptions, job analysis, performance appraisals, upgradedindividual officer files, a personnel manual of rules and regulations, andcomputer facilities to speed the analysis and recovery of the data generatedby the other elements of the system. Job descriptions would be prepared forstaff positions and would describe in detail the functions to be performed ineach position. At the same time, job analysis would provide an understandingof the experience, skills and knowledge needed to perform each job. Perfor-mance appraisal would be developed to assess performance against agreed workprograms and job descriptions. Personnel files. would be upgraded to includeinformation on performance, training, education, as well as wage and benefitdata. The Personnel Marlual would rationalize and codify the scattered ele-ments of personnel rules and regulations. The PMIS would be managed by theAppointments, Promotion and Deputation Wing in the Establishment Division.Once developed, the PMIS will be introduced throughout the Government. Theproposed project would support the establishment of the PMIS, by financing 12man-months of expatriate and 48 man-months of local technical assistance,staff training in the form of 21 man-months of regional and internationalfellowships for. short-term training and in-country seminars/workshops, salarysupport for incremental staff required for system development, and a smallself-contained computer. The project would strengthen these managementfunctions by financing the training of staff (24 man-months) in careerdevelopment, including salary administration, and the management and evalua-tion of training. The job analysis and job descriptions developed as part ofthe PIIIS would be utilized by training institutions in curriculum developmentand the preparation of annual training plans by, selected Ministries in thepreparation of their staffing plans (Section 3.09 (a) of the draft Develop-ment Credit Agreement). The performance appraisal system would he utilized

-15-

by the Establishment Division in mLaking promotions and placements within theEstablishment Division, Superior Selection Board and the Council Committee onProiAotions (Section 3.09 (b) of draft Development Credit Agreement), whichare responsible for making senior promotions in the civil service.

42. The Management Services Wing (MSW). The MSW would be established byenlarging the scope of work of the O&M Wing of the Establishment Division.The new MISW would focus on both improving office systems and procedures andorganizational development. These would be the on-going central functions ofthe Wing, and during the project period, selected Ministries would be thesubject of these analyses.l/ Initial emphasis would be on work simplifica-tion, office systems such as records management, filing, copying, commonservices, and the procedural rules which govern these matters. This wouldresult in a complete review and simplification of the Secretariat Instruc-tions which contains the rules governing office procedures. In addition tothis methods' work, the Wing would also perform a more sophisticated serviceof organization development aimed at those procedures, rules and regulationswhich govern inter and intra agency information flow and decision making andwould be reflected in appropriate sections of the Rules of Business. In thiscase, MSW staff, working with data generated by the PMIS, would assist Minis-tries in the development of more appropriate organizational patterns andsimpler coordination procedures. It would also provide the means for reduc-ing the denmand for decision making at the higher levels by institutingraanagement control mechanisms such as management by objectives and managementby exception. This would allow certain classes of decisions to be made atpoints closer to actual project implementation and would allow the governmentto reformulate its rules governing the devolution of authority. It is fur-ther expected that with the information of the PMIS, the MSW in cooperationwith PATC consultants, would be able to advise Ministries on their staffingpatterns, particularly at the lower levels where overstaffing is prevalent.

43. The proposed project would support the establishment of this Wing, byfinancing 60 man-months (30 expatriate, 30 local) of technical assistance, 48man-months of fellowships for short-term training, staff training (in-countryseminars/workshops), equipment and incremental staff salaries. The technicalassistance would comprise expatriate and local experts in organizationaldevelopment for three years who would work together to provide:(a) on-the-job training of MSW staff to supplement their experience andeducation; (b) assistance in the analyses of selected Ministries; and(c) assistance in defining the type of new system that would make officesfunction more efficiently and effectively. Local consultants would be of

1/ Because of the size of this undertaking, it will be started initiallyon a pilot basis in Ministries selected from the following five minis-tries: Agriculture, Finance and Planning, Commerce and Industries, Educa-tion and Religious Affairs, and Health and Population Control.

-16-

particular importance to the success of this component, as they would providean understanding of the local cultural and political environment which maynot be fully apparent to expatriates.

Project lManagement/Administration

44. Project Management. The proposed project would be managed by aProject Implementation Unit (PIU) in the Establishment Division. The PIUhas been already substantially established by expanding the existing projectoffice which was set up originally to implement the PATC building program.The Government would establish and maintain the PIU with staff, powers andresponsibilities satisfactory, to IDA (Section 3.08(a) and Schedule 4 of thedraft Development Credit Agreement). The office is headed by an AdditionalSecretary who reports directly to the Secretary, Establishment Division. TTewould be assisted by two Deputy Directors. One Deputy Director would beresponsible for the management and supervision of the inputs to the PMIS andMSW' components, and the other for the management and supervision of theinputs to the training institutions including the coordination of the fellow-ship and in-country training programs. The PIIJ would be further staffed withone evaluation officer in the Project Evaluation Unit (PEU), a procurementofficer to manage the equipment procurement process, and a project account-ant. Implementation of PATC civil works would be managed by an ExecutiveEngineer of the Public Works Department (PWD) which would be responsible forthe administration of all aspects of civil works including the awarding ofcontracts and on-site supervision. The project would assist project manage-ment by financing equipment (vehicles), salaries of incremental staff, con-sumable materials, fellowship training (6 man-months) and local seminars.

45. Because the project includes a number of institutions and organiza-tions and is centered on the complex issue of institutional development, theGovernment will prepare a Project Administrative Plan. This specialized formof project administration would allow the rapid achievement of project goalsby coordinating the activities of the various agencies and contractors. Theplan would be developed by instituting the following elements: (a) attachingthe PIU to the Office of Secretary, Establishment Division to ensuresufficient prestige and authority, which lhas already been implemented;(b) carefully outlining the terms of reference and decision-making authorityof the managers of the various administrative units of PATC, and the lineDepartments (Wings) in the Establishment Division which has also been par-tially implemented with the reorganization of the Establishment Division andthe full integration of training institutions into the PATC; and (c) listingin detail, the contributions and time table expected of each of the manyorganizational units of the Establishment Division, the PATC, and the minis-tries/agencies selected on a pilot basis. The Plan would be developed by thePIU staff, line administrators and the leader of the consulting team provid-ing technical assistance (see paragraphs 47 and 48). The Government wouldprepare this Plan and submit it to IDA for review by December 31, 1983 (Sec-tion 3.08(b) of draft Development Credit Agreement).

-17-

46. Evaluation. The PEU (see paragraph 44) would be staffed with one

full-time officer who would be specially trained and assisted by local (30man-months) and expatriate (27 man-months) consultants, financed under theproject. The Government would prepare a draft evaluation plan and submit itto IDA for review and comment by September 30, 1983 (Section 3.07(a)(ii) ofdraft Development Credit Agreement). The Government would also (a) establishand have operative by December 31, 1983, a monitoring and evaluation systemsatisfactory to the Association which would evaluate annually the impact ofthe programs carried out under the project (Section 3.08(c) of draft Develop-ment Credit Agreement). The Government would make available to the Associa-tion, for review and conment by December 31 of each year of the project,commencing in 1984, annual evaluation reports of the programs carried outduring the prior academic year utilizing the monitoring and evaluation systemreferred to above (Section 3.07(b) of draft Development Credit Agreement).

Technical Assistance

47. The technical assistance to be provided under the proposed projectwould comprise 29.80 man-years of local expert assistance, 11.75 man-years ofexpatriate specialist services and 38.75 man-years of fellowships. The totalcost of technical assistance would be US$3.15 million, including contingen-cies. The cost of foreign consultants would be US$10,000 per man-month,including international and local travel, housing, insurance and medicalallowances: the cost of local consultants would be about US$610 perman-month. The assistance would be allocated as follows:

(a) 20.80 man-years of local experts to carry out the PATC studyprogram, (see paragraph 40), 6 man-years of expatriateassistance and 30.50 man-years of fellowships for the capacityexpansion and quality improvement program at the PATC;

(b) 6.50 man-years of local experts, 3.50 man-years of expatriatespecialist services and 7.75 man-years of fellowships for theestablishment of the PMIS and NISW in the Establishment Division;and

(c) 2.50 man-years of local experts, 2.25 man-years of expatriateassistance, and 0.50 man-years of fellowships for project

t evaluation, management and civil-works implementation.

48. Because of the linkages among the types of technical assistance toPATC and the Establishment Division, the Government would enter into anagreement(s), satisfactory to the Association, with one or more academicinstitutions, agencies or firms, for the purpose of assisting the Governmentin providing visiting professors, experts in curriculum, training, manage-ment, personnel, program and staff development, and organizing in-country andoverseas fellowship training (Section 3.10 of the draft Development CreditAgreeaent). Entering into an agreement with the technical assistanceinstitution would be a condition of credit effectiveness (Section 5.01(b) of

-18-

draft Development Credit Agreement). The Government would carry out thefellowship program in accordance with a training program acceptable to IDA(Section 3.11 of the draft Development Credit Agreement). To assist incarrying out the Project, the Government would employ consultants and expertswhose qualifications, experience, and terms and conditions of employment aresatisfactory to the Association and assign for the duration of the Project,such couniterpart staff as may be required to work in conjunction with theconsultants; the assignment of each of the counterpart staff would he effec-tive prior to the relevant consultant taking up his employment (Section3.02(a) and (b) of the draft Development Credit Agreement).

Project Costs

49. Total project costs are estimated at about US$14.7 million equiv-alent, including US$0.68 million in taxes and duties. The foreign exchangecomponent is estimated at US$6.4 million or about 44% of total project costs.Estiwated costs to be financed by IDA and COB are based on price levelsprevailing in March 1982 adjusted for expected domestic and internationalinflation to December 1982 levels. Physical contingencies amount to 10% ofbase costs. Price contingencies for foreign exchange costs have beenestimated at 8% per annum for FY83, 7.5% for FY84, 7.0% for FY85 and 6.0% forFY86-88; local costs have been estimated on the basis of the following annualdomestic inflation rates: 15% in FY83, 13% in FY84, 12% in FY85, and 11% inFY86.

Financing

50. The proposed IDA credit of SDR 11.1 million (US$12.0 million equiv-alent) would finance about 85% of project cost net of taxes and duties or100% of foreign exchange costs and 67% of local costs. IDA financing wouldcontribute to all project components. The Government would finance therenmaining project costs amounting to US$2.7 million equivalent includingduties and taxes. A condition of effectiveness would be that ProjectProforraa 1/ satisfactory to IDA had been approved by the Government (Section5.01(a) of the draft Development Credit Agreement).

51. The architectural designs and cost estimates for the library and ahostel for senior staff at PATC Savar, which are to be financed under theproposed project, were sufficiently prepared at the time of appraisal thatconstruction could begin prior to credit signing. The estimated expenditurefor the civil works to be incurred after January 1, 1983 but before creditsigning is US$100,000 for which retroactive financing is proposed.

1/ An internal government document, approval of which is necessary for theappointment of staff and the release of funds.

-19-

Procurement

52. Past experience in Bangladesh has shown that contracts for civilworks and furniture do not attract foreign bidders unless they are con-solidated into large packages. Therefore, contracts for civil works, con-struction materials and furniture (US$2.80 million) would be awarded on thebasis of local competitive bidding procedures satisfactory to IDA. Equipment(including specialized furniture) (US$1.23 million) which can be packaged in

contracts exceeding US$100,000 would be awarded on the basis of internationalcompetitive bidding. Contracts for equipment and vehicles (US$0.17 million)which cannot be grouped into bid packages of US$100,000 or more suitable forinternational competitive bidding would be procured through local competitivebidding procedures satisfactory to IDA, as would most consumable trainingmaterials (US$0.64 million). Off-the-shelf shopping, (US$0.35 million) bysoliciting at least three price quotations, would be used for contracts notexceeding US$50,000 equivalent. Library books and instructional printedmatter (US$1.91 million) would be procured directly from publishers orauthorized distributors on the basis of at least three price quotations.Recipients of fellowships (US80.72 million) would be selected in accordancewith criteria and procedures agreed with IDA. Technical Assistance services,including local and foreign consultants (US$1.71 million) would be obtainedin accordance with IDA guidelines. Selection and appointment of additionalstaff would be in accordance with locally established procedures.

Disbursements

53. The proceeds of the proposed IDA credit would finance the variouscategories in the following manner:

(a) Civil works

80% of local expenditures (US$2.4 million);

(b) Equipment, materials (including building materials and instructionalmaterials) furniture, vehicles, books.

100% of foreign expenditures,100% of local expenditures (ex-factory),80% of other local expenditures (off-the-shelf purchases)(US$3.0 million);

(c) Expert services for technical assistance; fellowships, professionalservices for architectural design and supervision

100% (US$3.1 million);

(d) Training allowances, honoraria, student stipends and incrementalstaff salaries;

55% of local expenditures (US$2.0 million);

-20-

(e) Consumable training materials and operating costs;

80% of local expenditures (US$0.6 million);

(f) Unallocated

(US$0.9 million)

54. With the exception of staff salaries, consumable materials and otheroperating costs, all withdrawal applications will be supported by fulldocumentation. Withdrawals against staff salaries, consumable materials andother operating costs would be made against statements of expenditure cer-tified by the Project Director. Documentation in support of statements ofexpenditure would not be submitted to the Association but would be retainedby the PIU for review by IDA's supervision missions. In addition, thisdocumentation would be subject to an independent auditor-s report which wouldbe submitted no more than nine months after the end of the Government sfiscal year in which the expenditures covered by the statement of expendi-tures were paid (Section 4.01(c) of the draft Development Credit Agreement).To the extent practical, withdrawal applications would be aggregated inamounts equivalent to US$50,000 or more prior to submission to IDA for reim-busement.

Accounts and Audit

55. The PATC and the Establishment Division would have their accountsand financial statements for each fiscal year audited by independent auditorsacceptable to the Association, and furnish them to the Association not laterthan nine months after the end of each year (Section 4.01(c) of the draftDevelopment Credit Agreement).

Project Benefits

56. The benefits of the three major components of the project (stafftraining, personnel management and management services) are substantial.In the area of training, the major benefit would be that 38% of themanagement level officers and 17% of the supervisory and clerical staffwould have received institutional training in different aspects ofadministrative/management training by project completion. Further, theinstitutional network for training civil servants in administration andmanagement would have been well established, and equipped with better trainedstaff, improved curricula and relevant training materials. Most important,the linkage between training and career development would be institutional-ized, and become a key element of the personnel system of the government.

57. The long term benefit of the PMIS would be the improved morale andproductivity of civil servants, as the current hit or miss placement, andseniority promotion systems are gradually replaced. The development of theMSW is expected to lead to an increased efficiency in decision making through

-21-

the better flow and content of information which would result from thestreamlining of administrative rules and procedures. Although the project isfocussed initially on a few ministries which will be selected on a pilotbasis, the benefits are expected to be government wide. As these techniquesand procedures are implemented in other Ministries, they are likely to leadto the use of more effective management methods and a less fragmentedorganizational structure of Government. The major benefit of the project,however, is that trained staff, PMIS and a management services capability in

* Government, are all essential building blocks which must be in place, ifthere is to be continued and substantive reform of the system particularly inthe most difficult areas of organizational restructuring, pay system reform,and program and policy formulation and evaluation.

Project Risks

58. The main risk to the training program is the possible unavailabilityof suitably qualified and motivated instructor staff. The development ofan incentive package, clearer definition of the autonomy to be exercised bythe training institutions in hiring staff, and the strict procedures for theselection of trainers for fellowships, are likely to overcome this risk.

59. The Performance Appraisal element of the PMIS constitutes the mainrisk to this component of the project. The performance appraisal system mustbe carefully constructed to fit the social and governmental realities ofBangladesh. In Bangladesh, because of the traditions of close kinship ties,and personal networks of influence, it may he difficult to design a perfor-mance evaluation systew which could prevent non-merit promotions. Unless thedevelopment of the system is properly managed, and its implementation under-taken after support is garnered from key groups, the performance appraisalsystem runs the risk of being simply an irritant and obstacle to the alreadyapparent, but gradual, movement to a 'merit-cum-seniority promotion system.The risk that overeager consultants and government officers would develop animpractical system would be substantially decreased by the careful selectionof local consultants to work with the expatriate specialists.

60. The management services component of the project is expected toproduce some of the largest benefits, but at the same time, has some of thehighest risks associated with it. In the initial period of the project, theMSW would concentrate on methods, which is relatively simple, and the resultsvisible and non-threatening. However, the entry of the MSW into the complexand sensitive area of organization development has several risks. First,organization development is an inexact science, western in approach, and moreoften than not, produces mixed results. More significant, the MSW whenundertaking this type of activity, would be dealing with the sensitive issuesof staffing, organization design, and the locus of decision-making authority.Several factors offset these risks. A major effort in training staff both inthe MSW and in selected Ministries through workshops and seminars will domuch to reduce suspicion. Above all, the strong backing of the Governmentfor progress in the area of organizational development will do much to offset

-22-

possible initial resistance. MIuch of the success of this part of the projectwill depend upon the ability of MSW staff to resist the temptation of tack-ling more than their capacity would allow, and their ability to translateand/or modify western organization development techniques to suit the manage-ment culture of the sub-continent.

61. Finally, the project will provide a basis for Covernment in thefuture to undertake more fundamental reform. Success in bringing about thiskind of reform requires a change in attitude as well. The attitudes mayprove difficult to change in the short run. This risk should, however, hereduced by Government's strong support for the project and the exposure civilservants would receive through the project to modern administrative systemsand procedures.

PART V - LEGAL INSTRUMENTS AND AUTHORITY

62. The draft Development Credit Agreement between the People's Republicof Bangladesh and the Association, and the Recommendation of the Committeeprovided for in Article V, Section 1 (d) of the Articles of Agreement arebeing distributed to the Executive Directors separately. Special conditionsof the project are listed in Section III of Annex III. The following areadditional conditions of effectiveness: (a) that Government has approved theproject proforma (Section 5.01(a) of the draft Development Credit Agreement)and (b) that Government has entered into an agreement or agreements with oneor more academic institutions, agencies or firms for the purpose of providingexperts and professors and organizing fellowship training (Section 5.01(b) ofthe draft Development Credit Agreement).

63. I aLi satisfied that the proposed credit would comply with theArticles of Agreement of the Association.

PART VI - RECOMMENDATION

64. I recommend that the Executive Directors approve the proposed credit.

A. W. ClausenPresident

Washington, D.C.

March 24, 1983

-23-Annex I

Page 2TABLE 3A

BANGLT!R- SCCIAL INDICATORS DATA SEET!

BANGLADESH REFERZNCE GROUPS (WEIGHTED AV EAGs- MOST RECENT ESTIMATE)-

MOST RECENT LO INCO&E MULE 7CCIgE1960 /b 1970 /b ESTIMATE /b ASIA & PACIFIC ASIA & PACIFIC

EDUCATIONADJUSTED ENROLLMENT RATIOS

PR1MARY: TOTAL 47.0 52.0 65.0 97.4 96.2MALE 66.0 68.0 79.0 101.0 99.8PFMALE 26.0 34.0 49.0 87.8 92.1

SECONDARY: TOTAL 8.0 19.0 25.0 53.0 37.6MALE 14.0 29.0 38.0 63.8 41.1FEMALE 1.0 8.0 11.0 41.3 34.1

'IOCATIONAL ENROL. (X OF SECONDARY) 1.0 0.8 0.7 1.7 20.8

PUPIL-TEACHER RATIOPRIMARY '' 45.1 43.8 37.7 35.5SECONDARY .. 26.4 24.9 20.2 25.0

ADi1LT LITERACY RATE (PERCENT) 21.6 23.0/h 26.0/c 52.1 73.1

CONSUPWTIONPASSENGER CARS PER THOUSAND

POPULATION , 0.4 0.4 1.5 9.8RADIO RECEIVERS PER THOUSAND

POPULATION .. 6.0 8.2 35.4 116.5TV RECEIVERS PER THOUSAND

POPULATION .. .. 0.5 3.2 37.6NEWSPAPER ('DAILY GENERALINTEREST") CIRCULATION PERTHOUSAND POPULATION .. .. 4.7 16.4 53.7CINEMA ANNUAL ATTENDANCE PER CAPITA .. .. .. 3.6 2.8

LABOR FORCETOTAL LABOR FORCE (THOUSANDS) 19251.6 23611.0 31477.4

.EMALE (PERCENT) 15.2 16.6 17.5 29.5 33.6AGRICULTURE (PERCENT) 87.0 86.0 74.0 70.0 52.2INDUSTRY (PERCENT) 3.0 3.0 11.0 15.0 17.9

PARTICIPATION RATE (PERCENT)TOTAL 36.0 34.7 35.6 40.0 38.5MALE 58.7 55.9 56.9 51.8 50.5FEMALE 11.4 11.9 12.9 23.8 26.6

ECONOMIC DEPENDENCY RATIO 1.3 1.4 1.3 1.0 1.1

INCOME DISTRIBUTIONPERCENT OF PRIVATE INCOMERECEIVED BY

HIGHEST 5 PERCENT OF HOUSEHOLDS 18.3/i .. 14.6/kHIGHEST 20 PERCENT OF HOUSEHOLDS 44.57i 44.1/j 42.2/.LOWEST 20 PERCENT OF HOUSEHOLDS 6.97! 8.7/1 6.97*LOWEST 40 PERCENT OF HOUSEHOLDS 17.97! 19.6Z 18.27.

POVERTY TARGET GROUPSESTIMATED ABSOLUTE POVERTY LNCOMELEVEL (USS PER CAPITA)

URBAN .. .. 139.0/c 133.8 194.7RURAL .. .. 111.0/cE 111.1 155.1

ESTIMATED RELATIVE POVERTY INCOMELEVEL (US$ PER CAPITA)

URBAN .. .. .. .. 178.2RURAL .. .. .. .. 164.9

ESTIMATED POPULATION BELOW ABSOLLTEPOVERTY INCOME LEVEL (PERCENT)

URBAN .. .. 86.0/c 43.8 24.4RURAL .. .. 86.0/i 51.7 41.1

Not availableNot applicable.

NOTES

/a The group averages for each indicator are population-weighted arithmetic means. Coverage of countriesamong the indicators depends on availability of data and is not uniform.

/b Unless otherwise noted, data for 1960 refer to any year betwe'en 1959 and 1961; for 1970, between 1969and 1971; and for Most Recent Estimate, between 1978 and 1980.

/c 1977; /d 1976; /e 1975; /f Registered, not all practicing in the country; /. 1972; /h 1973; /i 1964;/I 1967, /k 1974.

May 1982

-24- ~~~~~~Annex I-24--tLMNITtdNS IF SOCIAL ltfftCAtOt

Aote; o tnoh cnae. orel Itatr- from --uce generally luagad the aeaunrtoo ho elaf, it anode a.eo be toted that they a rot t.t totr-net looc Ic aeparria ne oute I I oh Look o todard Lead doE.Llatons. MIdcomteaeepifrntoweOe Ic c ibc tgtedate. The "C. ir.oecteao..acultodecetaCrdnted -agnltuda.idct trn -.ad cha-oocrde cetain mJor differa..cear betce..t.. oea

line raicrete ntroops itt iS te tome country roop of the dot(ccc c oucrey ad Of. tcuctep goup o..h aclynht niahar aortah, ttccgh-th-a h.he co.ntry grou

tctic<ulc,.t&i tfititits), In tA to Letcta grou Iota the urg aepplc -atgnt ... httcnt Anoefor eah Ledi-Coo or thorn only chartao ortY oft. oc.... na. ru octaIrta nictr n atecvrg of tcunrntae anan the itdtoarora dapeodo on the o bilatly of data

frooaporrE..n.tro n Ratche batte ord cc h ful 1979 date ftiLltceyontrrr -hoprfae taloMotel~1 permaentl trdfa

cy -t.it ate Phyruoba..tcalihent ycidiag prtcoopaIl p Ca-ro-

C..t.d by oe _neriot oatho oob d Lock utL.e I197fbl0 baait); ~960, .....it tnnc no eenntcee.eIb. tecio htb

o1d-oono,anoct,ltpI O uh ai.ncio adgotra -c and ..utal optLo, ba rrt oprl c nadna odntnnr- ntctc. mob .-crto 0)<cc ocivlontPa, co 9t: n, i 970, cod l19ot79 cnto othopci Ottt ade d _ol tr cne.I

from hoaPinoim ubAidod by tie code o cede.

xclyyltio ib-Acrroao)- Ar a loIn L; l96hd, 1370, -cO .1St A.OUtLNG

boo, po_ o tc -jf0 mc. A) catul - Ratio ad arton to coral popLaecian; A cool otoeo ru f lrdtidu.l Rb bn cn itat) nnondadthtbao a artAottc to f fot a~roLL ihLf dcoc _od theci at cl . ta nra ode a at ann nor ha Iiaedt_tngnoh c ;196). 0970, ann 1960 tae h ....tidefol to -otetIc y.tn.

oao;nP-nn-cI-t cAtlg"", ee of yI......rvOtthon - oa. -tta, ard tr oeeetyopuloniot LAoem 1000 - Carrant popultion p tobtiot art, bea.d on 1980 hen of _tron .yt .oo In l ro, Fo Ioa ott.. ted anAteLehood populbCtc aH aeotoco thf oraty n lnil icy etton d ta.nePooCe-Ly. Onlooo1 n udhn-emaotarttaaat

Lea-- . -dc-alo Life orp..Ctny entliltica. oc 17.5 ytars. 'to poet- CocoenLion.al4 oilno. cithdairtrlioiny to, ljning A--tto-e 05oetnr :Ao ~-rcl ity rate tIt hnethrr en l .eo edtIerI in ofL cra l,nrben. _-aodeu Ie ee i _tmapeoninle.lerr t"lLt, __opohi to on et ond! pa..fmu pattn petor-o-toot n--cy to that a..eLdd 000 oftheta ti. Cosinotie of -otality LDOCATIaNtdI_inetlint cna.do for projootton poycakdoered tnrli11aoc tatto

htanuonarnnon Lonctn - c tocianory pcolat inn thee ta no 0 roeh atots ytieay rotnol -. tno, - mete ca femand -fem oe totat. , ete anddfo-ol"Ie 0 iPti I'll ceoo note Ceh rare.o. .m .........tur .o- cncieco lla ntepimory Lana I l o I cncen.g. ofC'.oP.otctAr rep- Locce -r :e la nlt -nt -nptcd.tcioe creC. - hn th1aeato 0chtodt d ft dif f-net lenths of pti-aotr .o cttta;in.r_Ae Ic-nteif onn n h tthtr nuoitteo torc 0h 0 oto dcoo otlon a c oLt pe0tterccor'nnotaa oe_r fnc nharacr C1.trt, tioo ofthe. pccaua tnea ..ylaat dobe I-too th ffito Ib 0gPm.

'onotn ro0. -nl nbI rat of delie tfetiry ar totetno etnce of -ntoi nt ant fctoto Cornntdaaahno-afaeccAdorclott io roqieoorbot fot caref "pP"on"d primary maill coueo ttnboom AAolocOt t -a-hed - Ate -- ynrh..actuoiooy ypuP-loto rcomgnrl.oacnl.o ata t nr nnutit foe poptt;

FAt on. -antort_lLoob-.d .-Conotdoouccna fee areota lngenfo atOpurr_era of toondoy cnaioottte..ache t19O. .c ond 191 dana. Fciji-..ei-be -aot - ener.ad .... orden - rtota eCoen- enroled LotSA cinh t-Ancout-IconI - Chinldt.. (0-L4 yeeta.. earftto-oga (iS- pointCy ard eoeyLe.aIe dintded by hter of ot..nhers cc the

no o-re) and trrirrd (99 yeeen tod oreo oerrrnee of ed-peep papo- ac..emrondi Leai..Lota aOh ,1970, an 90 ae dci literoty trt- ertt Li f....ttnadoi- (one. 0 teed and ontte-ortat- Gtratnhon - nenoc total - outtat gre-h Locee of tota md- om.PeeCeetoga or Cton1 adILtoolrc aged 15 ya Ieedoetfoo (<iacon.lap1950-hO. 315-70, and 1970-d SO

- RctttOoooMc F-Ct I _ aro -AdeCof gro-h race. of -rtet popt- C0SUI(T10OAtbootoo In :50fl bNf-0 -oo L970-O.Patroet oroma otco-d oocotnef- cmonge crn osriarmoo

--0000 A Into taco (non bhauocnt( - cotocall LIo tirtha pen tho...-d of eid-y... coaaatgIe htegtrtca;eoue toacs ere nynno.lntno; YnO, SlO, o) :ntb-data otlitt netnR

lod, 1970. cod c90it,bodneohogtttpbi e thousad of PtpoL.loto;eoLoo.Onnee tononIctino fan A-cotgooo atoLogtroo L be o1ieednctaeIn Cnotrtee, and to Yetthe rttacn fom_e1. nodnnn eioo If ate noparianoae PCren.. ge... t ...- ic o-tr a oi fo dt o nt eaeLy o e onrbietton

"to rotor; -- aul ycrra aLccc cdigt L9tD. 19700 and 19M0. ca uoteafibeo1 iceh trgnny lta-Ac-ynto - ooooI (neade) - -.. c.t coaefac.Ceore T ane leer thtedpeLtnf- TVP ranatnere far hr...dtoor,

,ootla ylatccg-Iaet (netteer ad rrtied wrooto -Pcernentge of metingt oeeiad i er L be,y rer. sh.. tleeo TV oe ee. oretLoc f-.a htild-beettnga

0 a C150--uer) oh. tae hinthoCtor donne no .oaete C rnto a (a hoen erLrto theta the -otag i-tr

cur Lottion dented prtieriy heroodt eerbot.It be-coottd-ndFOOD 00D NUTRITION to he diLy 'if it appeatm at I...t f.c.tsaotk.lnd-e on Food yro-nb- ne Copino clSbg-7i-lOOI - Indet of par coIno, onecl linen aanncluceden co oet neYha- Coan the- noor o-d-tlnofatro nott. Ptoto .Cnlode .. r..d and fard oed cikc- .. da dunte the neo, tnotna rmcat drone- o cunem-to on naLendar year oat na- ObodttneaooI- primaty god.eg ograad mobile oote..inon-d -o uttbhhni one rdtbhe ee lutoo opra as.cffe _d

-econ no tde) AOo-te9ne rednoot f attnotr .. oedC on 300 FOR9CEnotinnol onera go roducer petna otidee; iSbI-AS,1ib0, and 1990 der.tTtoLbo Force fr-o.edaf - tCendebc-Lly tiePetoe oli

enr_ ntnin tntfo op e ntalo in-corypantrtonoe go reoarc of Alt gem. Dar.teti..m to~ oett.o. o-Co te areynr cay. oAti.l..Plohe opi-ecopt- dm rIn tdctr p r I baaP not `noParobim;ti9O, 1970 and 1990 dero-

irpcts an-hogrhoeok. get mophpr tLdsat- ed.ari aot peerf-Fml abrfrae pa ltotga cI na-ai lborf-rce~toottte aae to d pcn ie 5 n le...e.i diettcio- tob ra aitCoe epeei-t.hnforte te friog. femr,hoto 0me he ate esimatedby FAO he...d no pttyttologhno1 neede. Cot -cere limt- fiehiet am "ntreta tf nnL1 labor force; .19 .. 1970 rd 1990 data.

and cot o iorethuni of popoLattero .dc o11iitag Idpnee0 o P nate otf andeicrny.atredoerpretgeftoelabrotenoonehid lanai 1961-95. 1970 od 1977 dto. iSbo, 1970 and 1990 dete.

..r acply offo e a.hr plf f.Lfotd ta defin~d a.aho.b t-aciiynea r no Ctd a oa,ml.adfm ao fatneoquineeeta or oI no ft..o ra liahibd by USDOA peo-ida o tiayretee fttl aead famlepoLoltoen f o1 I oeer-yTntoecrellocetme of h goon f total prorat per dec end 20 grema fC teiml oal9t.ibd n 191 dt. Tem ore haeb r .P`art ptotar

Po.ee Crmi.L of thih 10 gram .. Icd he teohi ptnmo Aba.e eteod- reflect tg aen atrootunef the potplaio. ad ice gtlm neond. uA-td are Lowe than hboe. o 75 gesm of cral Prerela atd 13 greet of fan tnsoetet c Ilttcnletreotorat pocceo am atacemoa fer too otid, precosedby ?AO on t]he Chord otonmi Eoedortra - ae o noa ieoo cede 15 ard 65 and antbonId Iedfrvy 1961-b5. i970 tea i9Pdaa.n Cthe _ taltber forte.

fr c -ua ooai ontoi Oteceel n coe-roeotpply of food do-ntaed Itom acomaio aod calmr t gaaeraoy; 19- 90od177 Ceee. !NtOOft DITRtIBTICONChild Jaet 1-of henb oe ernuo d)-gooi drone. Par Choo....d lo Prcraefrct one ht tca o Ld) - n-cetne y9,,,tPFt- yeara. no ch,IldrenL toobo ego prooF, for mee aealoiog cot ICyren rcet20 percer .pCer 10 prtn..to poereat t4o0 ontIrL dt drnd r.life nablam; 1960. 190odiS oe f h.t..hnold..

ILI oce t -ca Birth ctta - arae "cbor of yeere of life -omeinto T1he.alee otita r taryaFctantaa- fnaroo yat-A eo iatlunto; .90 97 n960 60 oo, ndoho b h tocarpretad lith osidrto-ecatte

of oto en ohoacod bc htetn-96SbO 1970 and 1990 data thooaptryinmlnL h thtLb_ enLnt0 ttfm eAcet -oSaetea (Petcact of eoiton Ihtnl,l u-h-o and naroI - Ite- noIrronIomely deqoate dItt PIo .. m.... ill nn-f-cd nncrmea o

eenanatoo to. cttend horoociea,.... tpnitga ...adortc celo . e cono necoernotd00mlma sc- hn fnbs e atnenonototee ofchenrnaocentin p.....tboo. t... orhellorrOt-dpoitn Ieemitonooeooc.- - Ir'olnoit P eoefoteuhnooat..nncnpee loae u tena 0 aeafoabotcyb ro liojon too hg_Ce L ar of _Ltaoabnaea -haoal aora anlth l ostehnenleo thneo h oshl n ot ect of yoolat 00 Iohailad totl) . g chooa 'todta

<thee of cfothe fr.t.L..urban, at aLrural0

a..nad byLeot-eref- Ch ltC a

the colentlotend dlaneal..00th h. ettotot...aumIn.ofrOs onefnan at-mte cc. estr-ored mttmeor heum of pot prine ted hi..ntel-b. .dI-I .

nplatic pe y- na p nplato,diooe be ctaher of, pranfhIn.g phyot tonet ndSnalfroD7mictr oLlir frmaedtLmhola tnrty e-l c,etnaayt r nfenatDprmecanla -onne DioRete ato -ooiie dtne h tehno cat "etaSe 16otl ad fnl grdotLcoree ool uaa ...... .rati.. norersontraocguuotii. trtrt. - .r-~.. 1 .. 1;

-25 - Annex IPage 4

BANGLADESH

ECONOMIC INDICATORS

Population: 91.5 million (January 1982)GNP Per Capita: US$120 (FY81)

Amount Average Annual Increase (X) Share of GDP at Market Prices (X)

(million US$ (in constant FY75 prices) (in current prices)in current prices)

* Indicator FY81 FY60-70 FY70-75 FY75-81 FY60 FY70 FY75 FY81

NATIONAL ACCOUNTS

Gross domestic product /a 11,989 4.0 -0.6 6.0 100.0 100.0 100.0 100.0Agriculture /a 6,423 3.1 -1.3 4.3 59.9 56.9 62.5 53.6Industry /a 1,680 7.9 -3.2 6.0 7.7 9.6 11.3 14.0Services /a 3,887 4.9 3.3 8.8 30.1 30.0 26.2 32.4

Consumption 11,701 4.4 -0.7 5.7 92.4 92.8 99.1 97.6

Gross domestic investment 2,064 10.9 -10.9 20.2 6.9 11.3 8.1 17.2Exports of goods & nfs 859 0.8 -11.7 5.7 10.0 8.3 3.2 7.2Imports of goods & nfs 2,635 8.8 -12.0 3.6 9.3 12.5 10.4 22.0

Gross national savings 639 26.5 -17.7 -8.4 0.9 6.1 1.0 5.3

Amount Composition of Merchandise Trade (%)(million US$ (in current prices)

in current prices)FY81 FY73 FY75 FY80 FY81

MERCHANDISE TRADEMerchandise exports 710.8 100.0 100.0 100.0 100.0

Primary /b 165.2 40.4 29.6 24.3 23.2Manufactures 545.6 59.6 70.4 75.7 76.8

Merchandise imports 2,524.0 100.0 100.0 100.0 100.0Food 342.4 44.1 41.5 29.1 13.6Petroleum 490.1 3.2 11.1 15.7 19.4Machinery & equipment 580.0 13.8 9.6 20.0 23.0

Other 1,111.5 38.9 37.8 35.1 44.0

FY74 FY75 FY76 FY77 FY78 FY79 FY80 FY81

PRICE AND TERMS OF TRADE INDICES (1972/73=100)GDP Deflator 140.6 240.5 183.1 177.2 203.6 216.8 249.2 264.0

Exchange rate (Tk/US$) 7.9661 8.8759 14.8521 15.4667 15.1215 15.2228 15.4777 16.3447

Export price index 103.7 123.5 107.1 111.8 127.7 167.5 200.9 178.6

Import price index 152.8 194.8 186.2 183.1 179.4 218.0 250.3 283.9Terms of trade index 67.9 63.4 57.5 61.1 71.2 76.8 80.3 62.9

As % of GDP

(at current prices)FY73 FY75 FY77 FY80 FY81

PUBLIC FINANCECurrent revenue 5.0 5.4 9.5 10.6 12.0

Current expenditure - 6.5 4.5 7.8 7.8 7.6Current surplus (+) or deficit (-) -1.5 +0.9 +1.7 + 2.8 + 4.4"apital expenditure 8.8 3.1 9.5 13.5 12.1Foreign financing 7.1 2.4 6.0 8.3 7.7

FY60-70 FY70-75 FY75-80 FY80-81OTHER INDICATORS

GNP growth rate (%) 4.2 -0.7 5.8 7.9GNP per capita growth rate (%) 1.5 -3.3 3.0 5.2Energy consumption growth rate (%)

= not available= not applicable

/a At market prices.7W Raw jute, tea and (in FY81 only) rice.

ASADDApril 15, 1982

-26-Annex IPage 5

BANGLADESH

BALANCE OF PAYMENTS, EXTERNAL CAPITAL AND DEBT

(million US$, in current prices)

BALANCE OF PAYMENTSActual Projected

FY74 FY75 FY76 FY77 FY78 FY79 FY80 FY81 FY82 7Y63

Net exports of goods -551 -1,050 -885 -454 -859 -946 -1,645 -1,813 -1,780 -1,938Exports of goods 374 352 381 411 490 610 727 711 640 732Imports of goods -925 1,402 -1,266 -865 -1,349 -1,556 -2,372 -2,524 -2,420 -2,67C

Net exports of services -21 12 -24 -29 -32 -27 3 11 -70 -12CWorkers' remittances 19 34 62 81 113 143 210 377 400 450

Current account balance -553 -1,004 -847 -402 -778 -830 -1,432 -1,425 -1,450 -1,608

Direct private investment 76 .. .. .. .. .. 5..MLT loans (net) 276 498 498 238 398 420 581 481 501Grants & grant-like flows 174 382 245 265 393 553 591 616 650 -1,608Other capital flows (net) 45 275 52 -20 -38 -19 141 304 199

Change in reserves (- = increase) 58 -151 53 -81 25 -124 119 24 100 -

International reserves (end of period) 115 266 213 294 269 393 274 250 150 150Reserves as months of imports of next year 0.98 2.52 2.95 2.62 2.07 1.99 1.30 1.24 0.67 0.63

Actual

FY74 FY75 FY76 FY77 FY78 FY79 FY80 FY81

GROSS DISBURSEMENTSOfficial grants 173.8 382.3 244.7 264.8 392.6 553.2 590.8 616.4Gross disbursements of MLT loans 287.4 518.9 563.5 268.3 435.3 476.8 631.4 531.0

Concessional 201.4 458.4 533.0 244.1 400.8 456.4 601.6 509.6Bilateral 150.4 342.8 389.9 144.0 261.9 212.6 272.7 255.2IDA 51.0 112.5 127.8 86.1 88.2 152.5 152.1 170.9Other multilateral - 3.1 15.3 14.1 50.7 91.3 176.9 83.4

Non-concessional 86.0 60.4 30.4 24.1 34.5 20.4 29.8 21.4Official export credits 40.6 45.2 16.5 5.6 1.7 3.3 16.8 2.0IBRDOther multilateral 5.4 0.3 1.1 0.5 0.5 0.1 0.3 0.8Private 40.0 14.9 12.8 18.0 32.3 17.0 12.7 18.6

EXTERNAL DEBTDebt outstanding and disbursed (end of period) 492.8 1,352.6 1,795.9 2,051.5 2,569.2 2,949.2 3,215.6 3,584.8

Official 383.3 1,232.8 1,689.0 1,939.8 2,435.6 2,808.3 3,068.8 3,462.1IBRD - 54.9 54.9 54.9 54.9 54.9 54.9 54.9IDA 105.6 255.3 379.8 465.9 554.2 706.7 858.8 1,028.5Other 222.8 922.6 1,254.3 1,419.0 1,826.5 2,046.7 2,155.1 2,378.7

Private 109.5 119.8 106.9 111.6 133.6 140.9 146.8 122.7Undisbursed Debt 580.8 1,019.4 947.5 1,015.8 1,335.4 1,659.1 1,716.7 2,068.4

DEBT SERVICETotal debt service payments 18.0 31.3 87.4 58.5 69.2 95.1 93.7 92.0

Interest 7.3 10.1 21.9 28.4 32.1 38.1 43.3 42.0Payments as Z of export earnings 4.8 8.9 22.9 14.2 14.1 15.6 12.9 12.9Payments as % of GNP 0.2 0.2 1.2 0.9 0.8 1.0 0.8 0.7

Average interest rate on new loans (%) 3.2 2.0 1.7 1.6 1.5 1.4 1.4 1.6Official 2.9 2.0 1.6 1.5 1.3 1.4 1.2 1.5Private 5.1 2.3 7.8 6.4 6.2 6.1 6.9 7.2

Average maturity of new loans (years) 26.1 35.5 41.6 40.1 37.7 35.9 33.6 35.9Official 28.3 35.8 42.2 40.8 38.6 36.3 34.2 36.2Private 13.3 15.3 11.3 11.0 9.5 14.8 19.3 18.5

BANK GROUP EXPOSURE (%)IBRD DOD/total DOD - 4.0 3.0 2.6 2.1 1.8 1.7 1.5IBRD disbursements/total gross disbursements - - - - - - - -

IBRD debt service/total debt service - - 1.8 5.6 4.8 4.1 3.7 4.0IDA DOD/total DOD 21.4 18.8 21.1 22.7 21.6 24.0 26.7 28.6IDA disbursements/total gross disbursements 17.7 21.7 22.7 32.1 20.3 32.0 24.0 32.1IDA debt service/total debt service 1.3 3.1 2.5 5.3 5.4 4.6 6.0 7.3

As % of Debt Outstandingat End of FY81

TERM STRUCTURE

Maturity structure of debt outstanding (%)Maturities due within 5 years 13.5Maturities due within 10 years 36.8

Interest structure of debt outstanding (%)Interest due within first year 1.6

= not available.

ASADDApril 15. 1982

-27- ANNEX IIPage 1

THE STATUS OF BANK GROUP OPERATIONS - BANGLADESH

A. STATEMENT OF BANK LOANS AND IDA CREDITS (as at September 30, 1982)

Amount(less cancellations)

Loan or US$ Million /aCreditNumber Year Borrower Purpose Bank IDA Undisbursed

One loan and 21 credits fully disbursed 54.90 684.32

341 1972 Bangladesh Tubewells (replacesCredit No. 208-PAKof 1970) - 14.00 0.65

408 1973 Bangladesh Highways (replaces CreditNo. 53-PAK of 1964) - 25.00 2.77

410 1973 Bangladesh Cereal Seeds - 7.50 0.10487 1974 Bangladesh Telecommunications II - 20.00 5.29527 1975 Bangladesh Ashuganj Fertilizer - 62.00 1.88533 1975 Bangladesh Population - 15.00 3.43542 1975 Bangladesh Barisal Irrigation - 27.00 12.31605 1976 Bangladesh Karnafuli Irrigation - 22.00 7.64621 1976 Bangladesh Agricultural and Rural Training - 12.00 3.48631 1976 Bangladesh Rural Development - 16.00 5.97632 1976 Bangladesh Bangladesh Shilpa Bank - 25.00 3.55724 1977 Bangladesh Shallow Tubewells - 16.00 2.55725 1977 Bangladesh Muhuri Irrigation - 21.00 11.84729 1977 Bangladesh Extension and Research - 10.00 2.62735 1977 Bangladesh Inland Water Transport II - 5.00 2.12765 1978 Bangladesh Jute - 21.00 13.40787 1978 Bangladesh Foodgrain Storage II - 25.00 16.68825 1978 Bangladesh Small-Scale Industry II - 7.00 3.15828 1978 Bangladesh Agricultural Research - 6.00 1.58864 1978 Bangladesh Drainage and Flood Control - 19.00 13.57872 1978 Bangladesh Technical Assistance III - 10.00 4.87890 1979 Bangladesh Oxbow Lakes Fisheries - 6.00 5.06912 1979 Bangladesh Vocational Training - 25.00 20.79921 1979 Bangladesh Population & Family Health II - 32.00 28.93934 1979 Bangladesh Greater Khulna Power

Distribution - 28.00 27.41941 1979 Bangladesh Dacca Water Supply &

Sewerage II - 22.00 10.48

/a Prior to exchange rate adjustments.

-28- ANNEX II

Page 2

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

Amount(less cancellations)

Loan or US$ million /aCreditNumber Year Borrower Purpose Bank IDA Undisbursed

955 1979 Bangladesh Small-Scale Drainage andFlood Control - 25.00 22.34

964 1979 Bangladesh Highways II - 10.00 8.83980 1980 Bangladesh Imports Program VIII - 50.00 0.05990 1980 Bangladesh Low-Lift Pumps - 37.00 21.551001 1980 Bangladesh Chittagong Water Supply II - 20.00 19.201023 1980 Bangladesh Fertilizer Industry

Rehabilitation - 29.00 26.791032 1980 Bangladesh Jute Industry

Rehabilitation - 20.00 15.601042 1980 Bangladesh Mangrove Afforestation - 11.00 9.491044 1980 Bangladesh Fertilizer Imports II - 25.00 0.201054 1980 Bangladesh Education IV (Primary

Education) - 40.00 36.051065/c 1980 Bangladesh Small Scale Industry III - 35.00 34.421071/c 1980 Bangladesh Imports Program IX - 65.00 12.801091/c 1981 Bangladesh Bakhrabad Gas Development - 85.00 50.711096/c 1981 Bangladesh Fertilizer Transport

Project - 25.00 18.981117,c 1981 Bangladesh Bangladesh Shilpa Bank II - 50.00 44.221124L/c 1981 Bangladesh Technical Assistance IV - 16.00 15.981140 /S 1981 Bangladesh Hand Tubewells - 18.00 16.301147/C 1981 Bangladesh Agricultural Credit - 40.00 40.00118 4/c 1982 Bangladesh Drainage and Flood

Control II - 27.00 26.001194/c 1982 Bangladesh Imports Program X - 100.00 66.55

/c 1204/b 1982 Bangladesh Chittagong Urea Fertilizer - 15.00 15.00/c 1205/b 1982 Bangladesh Textile Industry Rehabili-

tation - 30.00 30.00/c 1215/b 1982 Bangladesh Extension and Research II - 27.00 27.00/c 1247/b 1982 Bangladesh Chittagong Port - 60.00 60.00/c 1254/b 1982 Bangladesh Ashuganj Thermal Power - 92.00 92.00/c 1262/b 1982 Bangladesh Rural Electrification - 40.00 40.00/c 1287/b 1982 Bangladesh Second Deep Tubewells - 68.00 68.00

Total 54.90 2,242.82 1,03'0.16of which has been repaid - 0.40 -

Total now outstanding 54.90 2,242.42 1,030.16

Amount sold 0.00

Total now held by Bank and IDA 54.90 2,242.42

Total undisbursed - .1,030.16 1,030.16

/a Prior to exchange adjustments./b Not yet effective./c IDA 6th Replenishment Credits denominated in SDRs. Amounts of principal

shown in US$ equivalent at time of negotiation and undisbursed amountscomputed at the September, 1982 rate.

-29- ANNEX II

Page 3

laB. STATEMENT OF IFC INVESTMENTS (as of September 30, 1982)

Fiscal Amount in US$ MillionYear Obligor Type of Business Loan Equity Total

1979 Highspeed Shipbuilding Ship-and Heavy Engineering buildingCo. Ltd. 1.20 0.36 1. 56

1980 IPDC DFC - 1.05 1.05

Total gross commitments 1.20 1.41 2.61less cancellations, terminations, repayments and sales - - -

Total commitments now held by IFC 1.20 1.41 2.61

Total undisbursed 0.65 - 0.65

/a The following IFC investment has been approved but not yet signed:

1981 Asia Leather IndustrialCompany Ltd. Tannery 2.1 .2 2.3

C. STATUS OF PROJECTS IN EXECUTION AS OF SEPTEMBER 30, 1982 1/

Agricultural Projects

Cr. No. 341 Tubewells Project; US$14.0 Million Credit ofNovember 6, 1972; Effective Date: January 17, 1973;Closing Date: December 31, 1982

Implementation of the tubewell component is complete and a PCRhas been issued. However, the credit remains open to permit completion of adelayed pilot command area development component which is also being financedunder the Extension and Research Project (Credit 729-BD).

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.

-30- ANNEX IIPage 4

Cr. No. 410 Cereal Seeds Project: US$7.5 Million Credit of June 29, 1973;Effective Date: January 30, 1974; Closing Date: December 31,1981

The project closed on December 31, 1981. The Government have beenrequested to confirm that no further applications for expenditure are pendingand that the undisbursed balance amount can be cancelled.

Cr. No. 542 Barisal Irrigation Project: US$27 Million Credit of April 29,1975; Effective Date: September 30, 1975; Closing Date:June 30, 1984

Barisal Irrigation Project I was completed on June 30, 1981 andtaken over on maintenance. Barisal extension was taken up with the savings ofBIP 1. Farmers response for the dry season (Boro) cultivation has been muchbelow expectation mainly due to the land tenure system and credit facilities.However, there has been an increase of one third over the previous yearscultivation. Good progress is maintained on civil works construction in theextension area. Procurement preliminaries for the primary pumps, gates andlow lift pumps have been completed and deliveries should have started.Agricultural demonstration farms are in operation in the extension area.Generally progress is satisfactory. The project could be completed beforethe Closing Date.

Cr. No. 605 Karnafuli Irrigation Project: US$22 Million Credit ofJanuary 28, 1976; Effective Date: February 24, 1976;Closing Date: December 31, 1983

Project implementation which was about 2.5 years behind schedule hasshown remarkable progress in 1981/82 and if adequate funds are released in1982/83 completion except for flood embankments will be by June 1983. GOBexpects to provide shortly technical justifications and social reasons for thedeletion of embankments. The trend on agricultural development is encouragingand expected benefits would be attained. The current project estimates withembankments and including additional intricate works show a cost overrun of37 .5%.

The fisheries component is essentially completed. The Raipurhatchery is in full production and final disbursements are expected to bemade up to the end of 1982.

Cr. No. 631 Rural Development Project: US$16.0 Million Credit of June 3,1976; Effective Date: August 3, 1976; Closing Date:June 30, 1983

Following a request from GOB that the credit closing date beextended to allow completion of components initially delayed, the closingdate has been extended to June 30, 1983. Project implementation is now

-31- ANNEX IIPage 5

proceeding satisfactorily and the project should be completed according tothe new schedule. Sale of Deep Tubewells is almost complete but sale ofLow Lift Pumps is slow. The Rural Industries component has been intensified.Project management is much improved.

Cr. No. 724 shallow Tubewells Project: US$16 Million Credit of July 1,1977; Effective Date: December 9, 1977; Closing Date:December 31, 1982.

Progress in procurement has been satisfactory. All 10,500 pumpsetshave been procured. About 55% of the pumpsets have already been sold. Theconstruction of workshops is proceeding with a modified program and workshopequipment has been ordered.

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

Project implementation which was about two years behind schedulewill suffer a further setback for delays in finalizing the design and tenderdocuments for the closure dam work. The Feni Regulator is expected to beoperational in February 1983. Agricultural and IRDP activities will commencein early 1982/83. Farmers' response for adoption of improved agriculturalpractice and group formation appears good. A cost overrun is expected dueto a likely increase in the cost of the closure works.

Cr. No. 729 Extension and Research Project: US$10 Million Credit ofJuly 1, 1977; Effective Date: January 6, 1978; ClosingDate: June 30, 1982.

As of September 30, 1982 US$7.38 million had been disbursed. Thecredit was closed on June 30, 1982 and payment for commitments in the pipe-line will continue.

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

Farmers have been encouraged to use higher quantities of fertilizer,resulting in higher yields. As expected, higher jute production forced marginaljute farmers to switch to rice production in the aus season. Consequently riceproduction has increased. IDA credit on lending problem has also been solved.Staff travel allowance is inadequate and that is hampering production creditrecovery effort. Staff housing component has been scaled down.

-32- ANNEX IIPage 6

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

The project had a slow start due to administrative difficulties,problems in land acquisition and material shortages. Implementation of the165,000 MT storage construction program has gained additional momentum andis now satisfactory. The storage rehabilitation component has been reducedfrom 25,000 MT to 10,000 MT, and the number of paddy drying from 15 MT to 5 MTas a result of implementation delay. Contracts for rehabilitation have beenawarded for 7 ,750 MT, and tenders are being issued for civil works construc-tion of paddy dryers and evaluated for drying equipment. Quality controlequipment has been procured, but considerable additional efforts are requiredin the area of grain quality control and inspection. The project is nowanticipated to be completed by June 30, 1983.

Cr. No. 828 Agricultural Research Project: US$6 Million Credit of June 16,1978; Effective Date: November 15, 1978; Closing Date:December 31, 1984

Implementation of the project is progressing satisfactorily.Almost all research station buildings are now complete and farm developmentonly remains to be finished at the Jessore and Hathazari stations. Researchprograms on research stations and those supported by the research grantscheme are being vigorously pursued. The technical monitoring scheme is nowoperating well and a monitoring and evaluation cell, established at BARCheadquarters, will now apply techniques pioneered under the project to allgrant-supported research.

Cr. No. 864 Drainage and Flood Control Project: US$19.0 Million Creditof December 22, 1978; Effective Date: October 19, 1979;Closing Date: June 30, 1984

Of the three sub-projects financed under the project, Chenchuri Beel(CCB) and Kolabashakhali (KBK) are expected to be completed on schedule inmid-1983. Delays have been experienced, however, in the implementation of theBrahmaputra Right Embankment (BRE). Agreement has recently been reached onretirement of the embankment and disbursement for this part of the project isexpected to accelerate.

Cr. No. 890 Oxbow Lakes Fishery Project: US$6 Million Credit of April 3,1979; Effective Date: February 13, 1980; Closing Date:June 30, 1984

The project is designed to assist in the development of a group ofsix oxbow lakes through the introduction of composite techniques for fishculture and improved lake management technologies. Hatchery and rearingfacilities will be established for the production of carp fingerlings forstocking of project lakes where little stocking took place in the past. Asa result, annual carp production from project lakes is estimated to increase

-33- ANNEX IIPage 7

from 138 MT to 1,100 MT, representing an eight fold increase. Hatchlingsand fry will also be sold to pond owners. This will have a country-wideimpact introducing for the first time fish farming technology based oncomposite fish culture for small water bodies in private ownership. Aproject implementation unit, supported by an international consultancy firmhas been set up within the Directorate of Fisheries. Construction of thecentral hatchery at Lake Baluhar started in January 1982, some 12 monthsbehind schedule. The delay was caused by managerial and administrativeweaknesses and shortage of counterpart funds. It is now expected that thecentral hatchery will start operations in March/April 1983 and the satellitehatcheries one year thereafter. Full project benefits are expected for 1986.

Cr. No. 955 Small Scale Drainage & Flood Control Project: US$25.0 MillionCredit of October 30, 1979; Effective Date: May 21, 1980;Closing Date: December 31, 1984

A total of 19 subprojects were approved in FY81 and FY82 respectively.Construction has been completed on eleven subprojects. Progress is satisfac-tory. However, there is a need to increase substantially the allocations tothe revolving fund to avoid delays in project implementation due to shortagesof funds. This issue is currently being discussed with GOB.

Cr. No. 990 Low Lift Pump Project: US$37.0 Million Credit of April 4,1980; Effective Date: September 8, 1980; Closing Date:December 31, 1984

Three thousand two-cusec LLPs and 1,500 one-cusec LLPs under thePhase I sales program, were delivered in October 1980. Orders have also beenplaced for the remaining 4,000 LLPs. About 40% of the LLPs under Phase I ofthe sales program has been sold. A detailed project Action Plan has beenprepared. About 95% of the projected disbursements (as percentage of appraisalestimate) has been made.

Cr. No. 1042 Mangrove Afforestation Project: US$11.0 Million Creditof June 27, 1980; Effective Date: September 26, 1980;Closing Date: December 31, 1985

Overall Project performance is good. The establishment of planta-tions was carried out according to SAR targets in 1981 and current progressindicates that this year's target will also be achieved. The procurement ofessential equipment and materials has been completed. The civil works programhas now started and physical progress on the first phase is estimated atabout 15%. However, staffing remains behind the SAR target. The implementa-tion of the Plantation Trial Unit Program has been delayed. No activityon the Public Relations Component has been started. As a response to theApril/May Supervision, FD has agreed to give high priority to intensifyoverall activity on the lagging operations.

-34- ANNEX IIPage 8

Cr. No. 1140 Hand Tubewells Project: US$18.0 Million Credit of July 8, 1981;Effective Date: February 11, 1982; Closing Date: March 31, 1985

The project is proceeding satisfactorily. Civil works are completeand plans are well in hand for local foundries to fabricate pumpheads. However,shipment of raw materials has been delayed by preshipment inspection problems.BUET and BARC/BARI are being contracted to carry out laboratory and fieldtesting of alternative handpump models.

Cr. No. 1147 Agricultural Credit Project: US$40.0 Million Credit ofJune 9, 1981; Effective Date: October 6, 1981; Closing Date:December 31, 1985

This project is designed to provide long-term credit to farmersfor investments in minor irrigation and other agricultural development, andto private borrowers for grain storage facilities. Progress in privatizationof shallow tubewells is proceeding very slowly. Although import licenses havebeen issued to authorized private dealers, opening of the letters of creditis delayed by a new directive not to import certain makes previously author-ized. STW prices set by GOB are still below those of private dealers.Appointment of consultants to assist Bangladesh Bank, the implementationagency, is yet to be made.

Cr. No. 1184 Second Drainage and Flood Control Project: US$27.0 MillionCredit of January 8, 1982; Effective Date: July 14, 1982;Closing Date: June 30, 1987

This Credit became effective on July 14, 1982.

Cr. No. 1215 Second Extension and Research Project: US$27 Million Creditof March 16, 1982; Closing Date: June 30, 1988

This Credit is not yet effective.

Cr. No. 1287 Second Deep Tubewells Project: US$68.0 Million Credit ofAugust 10, 1982; Closing Date: December 31, 1986

This Credit is not yet effective.

Industry and Imports Program Credits

Cr. No. 527 Ashuganj Fertilizer Project: US$62.0 Million Credit ofFebruary 11, 1975, as amended by Amending Agreement of June 18,1979; Original Credit Effective Date: December 19, 1975;Supplementary Credit Effective Date: August 1, 1979;Closing Date: June 30, 1985

The project was cofinanced by the Asian Development Bank, KfW,EEC, IFAD, the OPEC Special Fund, and the Governments of Iran, Switzerland,UK and US, for a total of about US$190 million equivalent, in addition to theIDA credit. Because of the additional site works, the delays and currency

-35- ANNEX IIPage 9

fluctuations, supplemental financing was necessary and has been obtained.The Project has now been mechanically completed. Despite continuing minorcommissioning problems, production of urea was started in December 1981, aboutsix months later than anticipated at the time of supplementary financing, andtotal project costs are likely to be about US$15 million higher than thatapproved at the time of IDA supplementary financing.

Cr. No. 632 Bangladesh Shilpa Bank Project: US$25.0 Million Credit ofMay 20, 1976; Effective Date: November 8, 1976; Closing Date:June 30, 1983

Institutional upgrading program instituted under the credit arestill under implementation, continuing the improvement on BSB-s loan account-ing and staff training. However, because of declining collection BSB-sfinancial position has weakened significantly. This area of operationalweakness is receiving close GOB/IDA attention, and IDA is coordinatingclosely with ADB and KfW to implement an action program to restore BSB'sfinancial viability.

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

The Project appraisal and processing capabilities of the implement-ing Banks have developed rapidly, and the Project is expected to be completedahead of schedule. There has been significant improvement in institutionalcapabilities of the commercial banks; and staff of the Small and CottageIndustries Corporation have begun preparation of subsector and area studiesfor small industry promotion. The project was fully committed by the commer-cial banks in July 1980.

Cr. No. 980 Eighth Imports Program: US$50 Million Credit of April 4, 1980;Effective Date: April 21, 1980; Closing Date: February 28, 1982

As of September 30, 1982 US$49.9 million has been disbursed. Thecredit was closed on February 28, 1982 and payment for commitments in the pipe-line will continue.

Cr. No. 1023 Fertilizer Industry Rehabilitation Project: US$29 Million Creditof June 4, 1980; Effective Date: September 8, 1980; Closing Date:December 31, 1983.

The reorganization of the project entities into three separatefertilizer manufacturing companies has been accomplished, and project financingagreements have been executed. Consultants for providing engineering serviceshave been selected and their contracts approved.

Cr. No. 1032 Jute Industry Rehabilitation Project: US$20 Million Creditof June 4, 1980; Effective Date: July 22, 1980; Closing Date:June 30, 1984

Project implementation has been fairly satisfactory though somedelay has been experienced in the recruitment of consultants. Tender Notices

-36- ANNEX IIPage 10

for procurement of spares have been issued and those for the construction oftwo new training centers are in preparation.

Cr. No. 1044 Second Fertilizer Imports Project: US$25 Million Credit ofJune 27, 1980; Effective Date: November 11, 1980; ClosingDate: March 31, 1982

As of September 30, 1982 US$24.8 million had been disbursed.The credit was closed on March 31, 1982 and payment for commitments in thepipeline will continue.

Cr. No. 1065 Small-Scale Industry III Project: US$35 Million of October 17,1980; Effective Date: January 15, 1981; Closing Date:June 30, 1984

The credit became effective on January 15, 1982. The credit com-ponents of the project are moving well, particularly in the area of small-medium sized projects. Progress is also satisfactory on the technical andmarketing service components of the technical assistance elements of theproject.

Cr. No. 1071 Ninth Imports Program: US$65 Million Credit of October 17, 1980;Effective Date: November 11, 1980; Closing Date: December 31,1982

Progress on implementing ongoing action program requirementscontinue satisfactorily albeit somewhat behind schedule. During FY81,GOB has initiated a number of the policy changes required under the credit,particularly in the areas of agriculture/irrigation policy.

Cr. No. 1117 Bangladesh Shilpa Bank II Project: US$50.0 Million Credit ofMarch 31, 1981; Effective Date: August 12, 1981; Closing Date:April 30, 1986

This project continues IDA's involvement with BSB initiated underCr. 632-BD. Institutional upgrading programs initiated under that creditare being continued and GOB/IDA are monitoring carefully BSBs operationin the areas of loan recoveries and project appraisals. IDA is also coor-dinating closely with ADB and KfW to implement an action program aimed atimproving BSB's collection performance and financial viability. As ofSeptember 30, 1982 US$31.7 million of the credit has been committed andUS$5.0 million disbursed.

Cr. No. 1194 Tenth Imports Program US$100.0 Million Credit of January 26,1982; Effective Date: February 22, 1982; Closing Date: June 30,1984.

This Credit became effective on February 22, 1982. As of September30, 1982 US$33.4 million had been disbursed.

-37- ANNEX IIPage 11

Cr. No. 1204 Chittagong Urea Fertilizer Project; US$15.0 Million Credit ofFebruary 10, 1982; Closing Date: December 31, 1986

This Credit is not yet effective.

Cr. No. 1205 Textile Industry Rehabilitation Project: US$30.0 Million Creditof February 10, 1982; Closing Date: December 31, 1985

This Credit is not yet effective.

* Education Projects

Cr. No. 621 Agricultural and Rural Training Project: US$12.0 MillionCredit of March 25, 1976; Effective Date: June 30, 1976;Closing Date: June 30, 1983

All civil works have virtually been completed except for construc-tion of two new Thana Training Units (50% complete) and for renovation of twoexisting Agricultural Training Institutes (ATI), both of which have been slowto complete due to lack of Taka funds. GOB has now released the needed fundsand work has resumed. The latest estimate (June 1982) for completion of allworks is December 1982. As a result of student strikes in 1981, no firstyear students were enrolled and all ATIs are currently operating at onlyabout 50% capacity. The Directorate of Agriculture (Extension and Management)intends to utilize the excess space this year for in-service training of VEAs.Staffing is adequate and all ATI instructors have received in-service trainingunder the project. The course to train project managers and those civilservants directly concerned with implementation of IDA financed agriculturalprojects has been successful and an extension of the course to December 1982has been recently approved by IDA. A further extension to June 1983 is nowunder consideration. At the request of GOB, extension of the closing datefrom June 30, 1982 to June 30, 1983 has been granted by IDA to allow enoughtime to complete all remaining civil works and project activities and toclose all project accounts.

Cr. No. 912 Vocational Training Project: US$25.0 Million Credit of May 31,1979; Effective Date: November 2, 1979; Closing Date:June 30, 1985

Progress is evident in several areas of project activity. Bidshave been invited, and the layout plans completed, for the 5 New TTCs.Equipment being procured by the ILO has started arriving in Bangladesh, andarrangements for storage, checking, and installation (where possible) are welladvanced. Instructor and In-Plant Training programs are underway. The majorityof Technical Assistance experts are deployed, and a fellowship trainingprogram (suspended for 1 year) prepared. Curriculum Development, tradestandards and tests, and a national vocational training policy are underpreparation. Increased cooperation between the Ministry of Labor (TTCs) andMinistry of Education (VTI) in Vocational Training is also evident. Projectmanagement, however, continues to be weak and the failure to replenish theRevolving Fund has hampered instructor and In-Plant training programs.

-38- ANNEX IIPage 12

Cr. No. 1054 Fourth Education (Primary) Project: US$40.0 Million Creditof June 27, 1980; Effective Date: December 1, 1980; ClosingDate: December 31, 1986

The construction program is now underway, but it emphasizes schoolrepairs and other minor works at some 300 schools. However, designs, plansand estimates for a further 611 schools (including 289 new schools) and otherproject buildings are being prepared. Schedules for school furniture havebeen prepared and tenders invited. Textbooks for Class I & II studentsprocured and tenders invited for the manufacture of girls uniforms. Moststaff are now in position but effectiveness of project management is beinghampered by internal conflicts at the project Director level. A plan forthe recurrent training of teachers has been prepared and the training of PTIinstructors, Thana Education Officers and Asst. Thana Education Officers,is underway. During the past year 370 officers and teachers were trained.Four experts under the technical assistance component of the project are nowin post and an agreement signed with the British Council to undertake fourstudies required under the project.

Population Project

Cr. No. 533 Population Project: US$15 Million Credit of March 10, 1975;Effective Date: September 25, 1975; Closing Date: September 30,1982

As of September 30, 1982 US$11.57 million had been disbursed. Thecredit was closed on September 30, 1982 and payment for commitments in thepipeline will continue.

Cr. No. 921 Second Population and Family Health Project: US$32.0 MillionCredit of May 31, 1979; Effective Date: April 1, 1980;Closing Date: December 31, 1983

Project execution, except for the first tranche of the Family WelfareCenter's component, effectively commenced only in July 1980, about one yearbehind schedule. While the Information, Education and Motivation (IEM) andResearch and Evaluation parts of the project are proceeding satisfactorily,the civil works and Family Welfare Centers components of the servicedelivery and training parts of the project are significantly delayed andtheir completion within the original four year implementation period (July1979-June 1983) is no longer feasible, owing not only to the initial oneyear delay in implementation but also to weak implementation capacity ofresponsible agencies, and the impact of budget cuts following the Government'sde facto devaluation of the Taka since appraisal, will result in significantsavings. A two year extension of the project implementation period or areduction in the projects infrastructure components to match implementationcapacity with subsequent reallocation of the IDA credit are currently beingdiscussed with the Government.

-39- ANNEX IIPage 13

Transport Projects

Cr. No. 408 Highways Project: US$25.0 Million Credit of June 29, 1973;Effective Date: August 7, 1973; Closing Date: December 31,1982

All works under the project are now complete. Arbitration on theSitalakhya Bridge contractor's claims has been completed, and the Governmenthas announced that it intends to contest the award, although an out of courtsettlement remains a possibility. The Closing Date of the credit extended toMarch 31, 1981 has been extended to December 31, 1982 to enable the use ofuncommitted credit balance to meet the cost of eligible components of thearbitration. Significant failures have appeared on Feni Bypass.

Cr. No. 735 Inland Water Transport II Project: US$5.0 Million Creditof September 30, 1977; Effective Date: March 13, 1978;Closing Date: December 31, 1982

Spare parts for BIWTA vessels, navigation aids, hydrographic andcargo handling have been ordered. Most spare parts for BIWTC cargo vesselsand BIWTA service vessels have been delivered and are on order. Consultantsappointed to carry out studies on IWT sector, fleet scheduling of BIWTC andaccounting systems for BIWTA and BIWTC have submitted their reports. Imple-mentation of the recommendations of the accounting studies is in progress.At the request of the Borrower the closing date has been extended toDecember 31, 1982.

Cr. No. 964 Second Highway Project: US$10.0 Million Credit of December 21,1979; Effective Date: August 29, 1980; Closing Date: June 30,1984.

Project implementation has been seriously delayed by the Borrower'sfailure to award construction contracts in reasonable time. This failure hasresulted in increased project cost due to inflation. The problem appears toresult from factors outside the control of RHD, e.g., the inability of the"Procurement Committee" to take timely decisions and standard Governmentprocedures which are in conflict with IDA procurement principles.

Cr. No. 1096 Fertilizer Transport Project: US$25.0 Million Creditof February 13, 1981; Effective Date: July 24, 1981;Closing Date: December 31, 1984

Trial dredging at Chittagong Port has been completed and resultsof the survey are expected by end-1982. Also dredging work at the inlandriver port of Baghabari has been completed and pontoons are to be in placeshortly. Tenders for procurement of railway material have been issued.Progress on other project components has been slow, but regular supervisionmissions are providing assistance to speed up implementation. Disbursementof funds, on the other hand, has been satisfactory.

-40- ANNEX II

Page 14

Cr. No. 1247 Chittagong Port Project: US$60.0 Million Credit of May 21,1982; Closing Date: December 31, 1987

This Credit is not yet effective.

Telecommunications Projects

Cr. No. 487 Second Telecommunications Project: US$20.0 Million Creditof June 26, 1974; Effective Date: July 23, 1974; ClosingDate: June 30, 1983

The project execution is largely behind schedule due to previousdelays in procurement, civil works and reduced output of the domestic telephonecables and switching equipment factories. Difficulties were also experiencedin completing the local construction and installation of the systems. TTB, aGovernment board since April 1979, is making significant progress in organiz-ing its finances and accounts, and in managing its operations and development.TTB funds had until recently all been deposited in an overall Governmentaccount. Since July 1981, TTB has a designated bank account to which allfunds are deposited and withdrawn and the accounting functions have beentransferred from Controller's Auditor General to TTB. The overhaul of account-ing functions, staff and methodology is proceeding very well. Recruitment ofstaff has been completed and TTB now has an established and trained cadreof financial staff. Commercial accounts will be preapred from FY82/83 onward.In general, financial performance of TTB is reasonably good. Thus, TTB isgradually achieving a level of financial autonomy that will permit it toadjust its development program within the overall framework of the agreedbudget. Covenants under the project are now being complied with. SinceMay 1981, TTB has taken final procurement action to commit the funds remainingunder the project. Works related to last procurement, including nationaltrunk and international electronic telephone exchanges, will be completed byJune 1983. Adequate actions as would be required to further improve TTB'smanagement, operations and development capability, will be considered underthe proposed third telecommunications project.

Technical Assistance Credits

Cr. No. 872 Third Technical Assistance Project: US$10.0 Million Creditof December 22, 1978; Effective Date: January 19, 1979;Closing Date: June 30, 1983

37 subprojects, totalling about $10.7 million have been approved.The credit is about half disbursed and has been over allocated to increasedisbursements. Sixteen subprojects have been completed. The remainingsubprojects are proceeding smoothly except in several instances, consultantcontracts have not been finalized.

+~- 34 {7!J 32

Annex ITABLE 3A Page 1

BNGCLADESH - SOCIAL INDICATORS DATA SHEET

BNCLADESH REFERENCE CROUPS (WEIGHTED AVYRAGESASEA (SHOUSAND SQ. MO.) - OST RECENT ESTIMATE)-

TWA-144 . MOST RECENT LOW INCOME MI0LE lNCOMEAGRICULTURAL 97.3 1960 lb 1970 /b ESTLMATE /b ASIA & PACIFIC ASIA & PACIFIC

CUP PER CAPITA (US$) 40.0 70.0 130.0 261.4 890.1

ENERGY CONSUMPTION PER CAPITA(KILOGRAIS OF COAL EQUIVALENT) .. 24.9 39.7 448.7 701.7

POPULATION AND VITAL STATISTICSPOPULATION, MID-YEAR (THoUSANDS) 53491.0 68117.0 88513.0URBAN POPULATION (PERCENT OF TOTAL) 5.1 7.6 11.0 17.3 32.4

POPULATION PROJECTIONSPOPUlATION IN YEAR 2000 (MILLIONS) 141.0STATIONARY POPULATION (MILLIONS) 321.3YEAR STATIONARY POPULATION IS REACHED 2125

POPULATION DENSITYPER SQ. KM. 371.5 473.0 600.7 158.1 255.9PER SQ. K4. AGRICULTURAL LAND 561.9 703.0 889.0 355.9 1748.0

POPULATION AGE STRUCTURE (PERCENT)0-14 YRS. 44.3 46.3 42.8 36.8 39.9

15-64 YRS. 52.5 51.0 54.6 59.7 56.865 YES. AND ABOVE 3.2 2.7 2.6 3.5 3.3

POPULATION GROWTH RATE (PERCENT)TOTAL 1.9 2.4 2.6 2.0 2.3URBAN 3.6 6.3 6.5 3.3 3.9

CRUDE BlRTH RATE (PER THOUSAND) 53.5 49.2 45.3 29.3 31.8CRtUDE DEATH RATE (PER THOUSAND) 28.1 22.7 18.2 11.0 9.8GROSS REPRODUCTION RATE 3.6 3.4 2.9 2.0 2.0FAMILY PLANNING

ACCEPTORS, ANNUAL (THOUSANDS) .. 373.0 1607.0USERS (PERCENT OF MARRIED WOMEN) .. .. 8.9/c 19.3 36.3

FOOD AND NUTRITIONINDEX OF FOOD PRODUCTION

PER CAPITA (1969-71-100) 106.0 101.0 97.0 108.1 115.6

PER CAPITA SUPPLY OFCALORIES (PERCENT OF

REQUIREMENTS) 87.3 84.7 .. 97.3 106.4PROTEINS (GRAMS PER DAY) 43.9 42.7 .. 56.9 54.4

OF WHICH ANIMAL AND PDUSE 9.1 8.7 .. 20.0 13.9

CHILD (AGES 1-4) MORTALITY RATE 24.S 23.0 20.0 10.9 6.7

HEALTHLIFE EXPECTANCY AT BIRTH (YEARS) 37.3 41.6 46.3 57.8 59.8INPANT MORTALITY RATE (PERTHOUSAND) 159.0 150.3 136.1 89.1 63.7

ACCESS TO SWFE WATER (PERCET OFPOPULATION)

TOTAL .. 45.0 53.0/d 32.9 32.0URBAN .. 13.0 15.0/; 70.7 51.9RURAL .. 47.0 55.0/f 22.2 20.5

ACCESS TO EXCRETA DISPOSAL (PERCENTOF POPULATION)

TOAL .. 6.0 5.01e 18.1 37.7RBAN .. n .. 40.0/; 7.7 65.7UIRAL .. *. .. 4.7 24.0

POPULATION PER PHYSICIAN .. 8427.2/f 12691.9/c 3297.8 8540.4POPULATION PER NURSING PERSON .. 7680.3 40489.7/; 4929.3 429.4POPULATION PER HOSPITAL RED

TOTAL .. 7m21.5Jl 4499.3/c 1100.4 1047.5VW" .. $I8.5I 627.4r; 301.3 651.6RURAL .. .. 23362.4rc 5815.7 2597.6

ADMISSIONS PER HOSPITAL BED .. .. .. ... 27.0

HOUS INCAVERAGE SIZE OF BOUSEHOLD

TOTAL *- 5.9/b 5.8URUAN .. 6.17; 6.1IWKAL .. 5.97ir 5.8 .. ..

AVERAGE NIMBER OF PERSONS PER ROOMTOTAL .. ..

URBAN .. ..RURAL .. .. ..

ACCESS TO ELECTRICITY (PERcENTOF DWELLINGS)

TOTAL .. .. 3.5URUN .. ..RURAL .. ..

-41- ANNEX IIPage 15

Cr. No. 1124 Fourth Technical Assistance Project: US$16.0 Million Credit ofMarch 31, 1981; Effective Date: June 10, 1981; Closing Date:April 30, 1985

This Credit became effective on June 10, 1981. Thre. subprojectsfor about $0.2 million have been committed. A number of proposed subprojectstotalling about $7.0 million have been agreed in principle and steps are being

t taken to secure consultant services. In addition, a pipeline of subprojectstotalling about $15.0 million is under consideration.

r Power Projects

Cr. No. 934 Greater Khulna Power Distribution Project: US$28.0 MillionCredit of June 18, 1979; Effective Date: November 20, 1979;Closing Date: June 30, 1984

Foreign consultants (Motor Columbus - Switzerland) have been ap-pointed as scheduled and have begun design work. Project execution is aboutone year behind schedule due to administrative difficulties in preparing mapsfor the project areas and to the inability of the beneficiary (Power Develop-ment Board) to provide adequate local staff for project implementation. Toimprove the situation, local consultants have been appointed in September1981 and conditions have been created to recuperate part of the delay.

Cr. No. 1091 Bakhrabad Gas Development Project: US$85.0 Million Creditof February 13, 1981; Effective Date: June 16, 1981;Closing Date: December 31, 1984

Major procurement activities have been completed. Construction ofthe Bakhrabad-Chittagong pipeline has been suspended because of the currentmonsoon. The construction contract requires completion of the pipeline byend-March 1983 in line with the original schedule. The last gas well (BK-5)has been completed. Test results from the drilling program so far confirmgas reserves and well productivity forecasts by reservoir consultants.

Cr. No. 1254 Ashuganj Thermal Power Project: US$92.0 Million Credit ofJune 30, 1982; Closing Date: June 30, 1987

This Credit is not yet effective.

Cr. No. 1262 Rural Electrification Project: US$40.0 Million Credit ofJune 30, 1982; Closing Date: June 30, 1989

This Credit is not yet effective.

-42- ANNEX IIPage 16

Water Supply and Sewerage Projects

Cr. No. 941 Second Dacca Water Supply and Sewerage Project: USS22.0 MillionCredit of June 29, 1979; Effective Date: November 30, 1979;Closing Date: June 30, 1983

DACCA WASA's consulting engineers have completed design and it isexpected that procurement will be completed by early 1983. Physical progressis one year behind schedule. Early delays resulted from slow startup andsluggish procurement but are currently due to land acquisition problems, which

have recently been mostly overcome, and shortage of local currency with whichto pay civil works contractors. Also, recently, DACCA WASA raised its tariffby 30% and GOB paid off all arrears.

Cr. No. 1001 Second Chittagong Water Supply Project: US$20.0 Million Creditof April 4, 1980; Effective Date: April 9, 1981; ClosingDate: December 31, 1985

After early delays in selecting consultants for the project a firmis in place and design is now well advanced. Selection of a second consultantfor a sewerage/sanitation study has been made. An expatriate financialadviser has proved effective. Procurement has started but implementationwill be about 1-1/2 years behind schedule. Recent tariff increase is notsufficient and another increase by July 1, 1983 is expected. While there hasbeen improvement in the collection of arrears from Government departments,further improvement is still necessary.

- 43 -

ANNEX IIIPage 1

BANGLADESH

PUBLIC ADMINISTRATION PROJECT

Supplementary Project Data Sheet

Section I: Timetable of Key Events

(a) Tiiae taken to prepare project:

4 years

(b) Agencies preparing the project:

UNDP/IDA with the assistance of the Institute ofPublic Administration (Consultants)

(c) Date of first preparation mission by IDA and dateof first mission to consider the project:

September 1981

(d) Date of departure of appraisal mission:

February 3, 1982

(e) Date of completion of negotiations:

21arch 11, 1983

(f) Planned date of effectiveness:

90 days after signature

Section II: Special IDA Implementation Action:

None

Section III: Special Conditions of Effectiveness would be:

(a) that Government enter into an agreement or agreementswith an academic institution(s), agency(s) or firm(s)(paragraph 48);

- 44 -

ANINEX IIIPage 2

(b) Government's approval of the project proforma

(paragraph 50).

Other (a) The Government would prepare and submit for IDA

Conditions: Review by December 31, 1983, a Project AdministrativePlan (paragraph 45);

(b) The Government would carry out the fellowship programin accordance wth a training program acceptable to

IDA (paragraph 48).