Do=ume of

The World Bank

FOR OMCIAL USE ONLY

(CA?2 /5-426- 5

Rpuwt No. P-3874---AG

REPORT AdhD RECOMIENDATION

OF THE PRESIDENT

OF THE

INTERNATIONAL DEVELOPME NT ASSOCIATION

TO THE

EXECLGTIVE DIRECtORS

FOR A

PROPOSED CREDIT OF SDR 14.8 MILLION (CSS15.0 MILLION EQUIVALEN-T)

TO THE

DEMOCRATIC REPUBLIC OF XADAGASCAR

FOR A

CYCLONE REHABILITATION PROJECT

October 11, 1984

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CURRENCY EQUIVALENTS

Currency U-it M !alagasy Francs (FXG)US 1.00 F'AG 560FflG 100 US$ 0.1785FXG 1,000,000 USS 1,785

WEIGHTS AND MEASURES (Metric System)

1 meter (a) = 3.28 feet1 kilometer (km) - 0.62 miles1 square meter (m2 ) = 10.76 square feet

1 square kilometer (ku 2 ) - 0.386 square milesI bectare (ha) * 2.47 acres1 liter (1) 0.26 US gallonsI cubic meter (m3 ) 264 US gallons

GLOSSARY OF ABBREVIATIONS AND ACR0N'Z4S

ASECK& Age=ce pour la Securite de la Navigation AMrie=ne enAfrique et a Madagascar (Agency for Security ofAeronautic Navigation in Afr.ca and Madagascar)

BFV BankY Fampandrosoa=a Ny Varotra (National Bank for

Commerce)B^D Ba=ky Ny Tantsaha Mpamokatra (National Bank for Rural

Development)CFC Centre de Formation de la Comptabilitg (Accou=tancy

Training Center)CNC Natiocal Coordination CoumitteeDGP Direction G&Erale du Pla: (Directorate General

of Planing, Office of the Presidency)Farita-y Local government unit: ( province7)Firaisa=a Local goverzme=t unit: grnup of foko=tany (-districtc)Fivondrona-a Local government u-it: gro.iz nf firaisana (mu-icipalityf)

FIFABE Socigtg pour le Dgveloppement de i2 Plai-e de la Betsiboka

(Betsiboka Development Corporacion.)JIRAMA Jiro sy Rano Malagasy (Water and E'ectricity Authority)SEI[AD Societe d'Equipement Immobilier de Madagascar

(Madagascar Housing CorporatUon)SEPT Sociftg d'Exploitation du Porr de Toamasina (Operating

Company of Toamasina Port)

UNDP Uzited Nations Developuent ProgrammeUNESCO U:ited Nations Education and Scientific Organization

USAID United States Age=cy for Imter=ational Development

FISCAL YEAR

January 1 - December 31

FOR OMCIAL USE ONLY

MAAGASCAR

Cyclone Rehabilitation Project

Credit and Project Summary

Borrower: Democratic Republic of Madagascar

Beneficiaries: Ministry of Public Works, Ministry of Transport, Supplyand Tourism, Agency for Security of Aeronautic Navigationin Africa and Madagascar (ASECNA), Operating Company ofToamasina Port (SEPT), Betsiboka Development Corporation(FIFABE), and Madagascar Rousimg Corporation (SEIMAD).

Amount: SDR 14.8 million (USS15.0 million).

Terms: Standard IDA terms.

RelendiM terms: The Government would releand USS1.0 million of theproceeds of the credit to ASECNA for part of therehabilitatioc of Mahajanga airport, at 10 percentinterest per annum for 20 years including 5 years ofgrace. US$2.0 million would be used to make housingcredits to cyclone victims who would pay 12 percentinterest per annum for 10 years including 2 years ofgrace.

Project Description:

Objectives: The proposed project is designed to (i) contribute to thephysical and economic rehabilitation of the areas dnagedby cyclone Kamisy (of April 9, 1984), particularly byrestoring essential facilities before the next cycloneseason; (ii) support institutional arrangementsappropriate for efficient coordination of reconstructionefforts; and (iii) help develop measures to minimize thepotential damage from natural disasters that could occurto these and other vulnerable areas of the country.

Comonents: (a) Rehabilitation of Mahajanga and Antsiranana ports;

(b) Rehabilitation of Mahajanga and Antsiranana airports;

(c) Rehabilitation of major roads affected by the cyclone(RN4, RN6, and RN8);

Thb docuent hu a resrited distibutbn and my be used by recipients only in the perfonnrmc ofthei Offcial dutis Its contents may not otherwise be dsclosed without World Bank authoration

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(d) Repairs to schools and other public buildings,administrative offices and state owned housing;

(e) Rehabilitation of FIFABE installations and equipmentdAmAged by the cyclone 1: Marovoay;

(f) Rehabilitation of JIRAMA's damaged power facilitiesin Mahajanga, Antairanana, Toamasina, Nossi-B,Ambatoboeni, and Marovoay;

(g) 'Rousing credit to private owners for thereconstruction of their houses damaged by thecyclone; and

(h) Consultant services, technical assistance, and urbanplanning, drainage study.

Benefits: The project would assist in restoring economic activityin the regions of Mahajanga and Antsiranana. Inparticular, reconstruction to operational standards ofthe ports of Mahajanga and Antsiranana, andreconstruction of the Amboromalandy Dike which isnecessary to restoring traffic flow on the RN4 route(Antananarivo-Mahajanga) and irrigation of 2,500 ha ofrice fields. The repair and restoration of about30 schools would provide accommodation for an estimated15,000 pupils who are either currently deprived ofadequate educational opportunities or accoimodated inover-crowded classrooms. The replacement of airportequipment will improve security, not only for localtraffic, but also for international traffic, sinceMahajanga Airport is an international traffic regulator.Finally, a general benefit for the rest of the countrywould be to equip Kadagascar with a framework forhandling future emergencies of this kind.

Risks: The jroject's major risks are those which relate to theneed for timely execution and the timely availability offunds, local and foreign. To minimize these risks majoremphasis has been placed on centralized coordination bythe National Coordination Committee (CNC), reliance onexecution by experienced agencies and closer monitoringmainly during the start-up period. Tn additioncommitments have been obtained from the Governmentregarding the provision of counterpart funds. On thewhole, the project presents an acceptable level of risk,considerimg the benefits which would be realized from it.

Estimated Project costs:

-(USS uilion)-CkcE2>nent Local Foreign Total

Ports 0.88 1.85 2.73Airports 0.60 1.42 2.02Roads 2.98 4.37 7.35Public Buildings 2.96 2.19 5.15Agriculture 0.17 0.43 0.60JIRANA 0.78 1.38 2.16Housing credit 0.80 1.20 2.00Consultant services 0.68 1.06 1.74

Total Base Cost 9.85 13.90 23.75

Physical contirgencles 1.18 1.75 2.93Price contingencies 0.44 0.63 1.07

Total Contingencies 1.62 2.38 4.00

TOTAL PROJECI COST (incl. Taxes) 11.47 16.28 27.75

Fiancing Plan:

--- USS million)-Local Foreign Total

IDA Credit 0.7 14.3 15.0

Credit 663-MAG 0.3 0.4 0.7Credit 1002-MAG& 0.7 1.3 2.0Credit 1391 and SF46fAG* 0.2 0.3 0.5Government or Cofintnciag: Investsets 5.0 5.0Taxes and Duties 4.5 4.5

Total 11.4 16.3 27.7

Estimated Disbursements: (USS silion)

IDA Fiscal Year 1985 1986 1987

Annual 8.0 4.0 3.0Cumulative 8.0 12.0 15.0

Staff Appraisal Report: None

!LaE: IBRD No. 1849l

* Savi:igs from these credits are being utilized to start urgent roadworks, repairs to school buildings, and to finance equipment and suppliesutllized by JIRAMA in the rehabilitation of electricity in the affectedareas.

INTERNATIONAL DEVELOPMENT ASSOCIATION

REPORT AND RECGIMENDATION OF THE PRESIDENT TO THEEXECUTIVE DIRECTORS ON A PROPOSED CREDITTO THE DEMOCRATIC REPUBLIC OF MADAGASCAR

FOR A CYCLONE REHABILITATION PROJECT

1. *I submit the folloving report and recommendation on a proposedDevelopment Credit to the Democratic Republic of Madagascar for SDR 14.8million (US$15.0 million equivale-t) on standard IDA terms to help financea Cyclone Rehabilitation Project. The Borrower would relend US$1.0 millionof the proceeds of the credit to ASECNA for part of the rehabilitation ofMahajanga airport at 10 percent interest per annum for 20 years including5 years of grace. The Borrower would utilize US$2.0 million for housingcredits to cyclone victims at 12 percent interest per annum with arepayment period of 10 years including 2 years of grace. In additionUS$3.2 million from other credits would be utilized in the respectivesectors for which those credits were granted and on the same terms andconditions as agreed in those credits.

PART I - THE ECONOMY

2. A report entitled -Current Economic Situation and Prospects-dated March 20, 1983, was distributed to participants of the MadagascarConsultative Group Meeting of April 27-29, 1983 and is available asdocument MAG (83-4). An economic mission visited Madagascar in March 1984and an updating economic report is under preparation. Country data sheetsare provided in Annex I to this report.

Background

3. Madagascar, with a population of 9.4 million and a GNP percapita of about US$300 in 1983, is among the poorest countries in theworld. It is a sparsely settled country, with a population density ofabout 15 persons per square kilometer. Although generally well endowedwith natural resources and a variety of soils, there are considerableregional variations in ecology and climate. The central plateau, the mosteconomically advanced region, has a subtroFical to temperate climate. TheSouth is the poorest region with an arid climate and infertile soils. Theeastern region has a tropical climate and, although rich agriculturally,crops are frequently devastated by cyclones. Agriculture accounts forabout 35 percent of GDP; about 85 percent of the population lives in ruralareas, and agricultural products account for about 80 percent of thecountry's export earnings.

Economic Developments in the 1970s

4. During the past twenty five years, Madagascar's development hasbeen sluggish and erratic. For about a decade following independence in1960, the economy grew at an average annual rate of 3 percent. Agriculture

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was responsible for much of this GDP growth while manufacturing, underincreased protection, gained in relative importance. For the period1970-1983, however, there was, on average, virtually no growth i- realGDP. With an average population growth of about 2.8 percent per annum, percapita real income in 1983 was about 28 percent below its 1973 level.

5. This slow development was true for all sectors of the economy.Agricultural output lagged conspicuously, and yields tended to stagnate ordecline; the country became i-creasingly dependent on imports, especiallyof rice, rt5 meet food requirements; and the volume of agricultural exportsvirtually stagnated. Manufacturing output showed a mDdest expansion. Thesector remained heavily dependent on imported inputs, however, and operatedat low levels of capacity utilization. There was little expansion in thecountry's transport network and indeed the existing transport facilities(road and rail) were subject to increasingly serious deterioration.

6, The poor economic performance stemmed in large measure frominappropriate economic policies. These policies can be summArized alongtwo mait themes. First, in the beginnlg of 1972, the Government greatlyextended its control over economic activity by taking over nearly all thelarger entreprises, excluding the private sector from all commerce with theagricultural sector, and imposing numerous controls, especially on pricesand movements of goods. Under these political and economic conditions,prlvate sector Initiative was discouraged. Second, the Government embarkedon a strategy which accorded high priority to the development of industrywith protective policies that neglected agriculture and, in effect,fostered the growth of an inward-looking and sometimes uneconomicmanufacturing sector. The adverse effects of these policies werecompounded by the deterioration in the terms of trade follovimg the worldoil price increases.

7. Through 1977, the poor growth and development performance and theextensive institutional cha3ges which were being effected were neverthelessaccompanied by continued caiutious policies regarding the balance ofpayments, public finances and external debt. The external resource gap waskept at low levels (about 3 percent of GDP from 1970 to 1978), the overallGovernment budget deficit fluctuated around 2.5 percent of GDP and recourseto external borrowing was strictly limited. Total external public debt(outstanding and disbursed) at end 1977 was equivalent to about 13 percentof GDP, compared to an average of about 22 percent for low incomedeveloping countries, and the ratio of debt service payments to exportearnings, including non-factor services, at end 1977 was only about3 percent.

The Public Investment Boom of 1978-81 and its Impact

8. In 1978 the Government adopted a significantly different economicpolicy orientation, undertaking a large expansion in public sectorinvestment with greatly increased reliance on external sources for itsfinancing. Investment outlays increased by about 13 percent per annumbetween 1978-80 and the share of investment in GDP, which had been about14 percent since the early 1970s, rose to around 21 percent in 1979 and1980. The increased investment resulted in increased imports and coincided

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with virtually stagnant export earnings and a further deterioration in termdebt obligations in 1980. Foreign exchange shortages also grewincreasingly severe through 1981 and 1982, largely as a result of therapidly growing burden of external debt service.

9. With the rapid expansion in external borrowing and a hardening ofaverage terms, Madagascar's public external debt service obligationsIncreased dramatically from about US$19 million in 1977 (equivalent toabout 3 percent of exports of goods and non-factor services in that year)to about US$265 million in 1982 (equivalent to about 72 percent of exportsof goods and NFS). In 1981 and again in 1982 Madagascar sought andobtained a rescheduling of a part of debt service obligations due. Theserescheduli-gs reduced payments due in 1981 and 1982 by over 50 percent sothat actual service payments on- external public debt made in 1982 wereequivalent to about 35 percent of export receipts.

10. The Central Government's finances in 1978-82 clearly reflect theinvestment boom and the subsequent efforts to restore equilibrium. Totalexpenditures more than doubled between 1978 and 1980 and declined slightlyin 1981 and 1982, when the inflation rate was much higher. The overallCentral Government deficit swung from 4 percent of GDP in 1978 to a peak of17 percent in 1980 and then down to 6 percent in 1982. Recurrentexpenditures contributed little to the swings since expenditures andrevenues moved roughly in line. The main cause of the changes in thedeficits was the capital budget, which more than quadrupled between 1978and 1980 and then declined by 57 percent from 1980 to 1982. However, otherGovernment expenditures, mostly deferred payments and, up to 1982,subsidies on rice, accounted for 10-12 percent of total expenditures.Despite considerable growth in nominal terms, both revenues and recurrentexpenditures generally declined in real terms after 1980. The growth ofrevenues has been greatly slowed by the deterioration of the economicsituation, although a number of measures were taken to increase taxation in1982.

11. The investment boom and the ensuing stabilization policies arealso reflected in the money and credit figures as well as in the rate ofinflation for the years 1978-83. Net domestic credit tripled in nominalterms from 1978 to 1982, most of the increase being due to net governmentborrowings from the Central Bank. The Government's share of domesticcredit rose from 31 percent at end 1978 to 58 percent at end 1982. Theofficial cost of living index for Antananarivo, Madagascar's capital andlargest city, which is likely to understate the actual price rises, showedan 18 percent increase in 1980, about 31 percent in 1981 and 1982, and anestimated 18 percent increase in 1983. The implicit GDP deflator shows aparallel development: a 15 percent increase in 1980, a 25 percent increasein 1981, a 34 percent increase in 1982, and a 22 percent increase in 1983.

12. The balance of payments has also been affected by the investmentspending of 1978-80, but the sluggishness of exports and the problems inreducing imports have made restoration of external equilibrium especiallydifficult. The current account deficit began to rise rapidly from lessthan 2 percent of GDP in 1978 to over 18 percent in 1980. Transactionswith the rest of the world were financed by a total exhaustion of reserves,an unprecedented degree of foreign borrowing, and by incurring substantial

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arrears on external payments obligations. The Government began to takesome measures to restore equilibrium in 1981 and took stronger actions in1982, notably by tightly restricting imports and by negotiatingarrangements with the IMF and the Paris Club. It succeeded in reducing theoverall deficit to FMG 31.4 billion (US$90 million) in 1982, thanks to theagreements reached with the IMP and the Paris Club as well as someexceptional balance of payments financing, but it failed to restoreequilibrium in the current account, whose deficit in 1982 was stillUS$350 million (9.5 percent of GDP).

13. The main reason for the failure to improve the current accountwas that capital goods imports, which were tied to the existing financingarrangements and on-going projects, continued at very high levels through1981 and 1982. The total volume of imports grew by 33 percent in thisperiod, and import price increases were also substantial, increasing atroughly the same rate. The foreign exchange shortages that began in 1980and grew much worse in 1981-82 obliged the Government to restrict importswhere it could. The categories of raw materials and spare parts and ofnon-food consumer goods suffered most, though the Government ensured thatenergy imports covered essential needs. Food imports increased because ofbad weather, including serious floods, that reduced the rice harvests. Thesluggish export performance aggravated difficulties. During 1978-1982 thevolume of exports stagnated. Coffee, the main export, was seriouslyaffected by the international market situation, first by a drop in pricesin 1981 and then by the 100 quota restrictions.

Recent Developments

14. Since 1979 the drop in industrial production, including mining,has been especially sharp. Production at end 1982 had dropped to70 percent of the level in 1979, lower than in any year of the 1970s.Output in every branch of production was lower in 1982 than in 1979. Aparticularly serious aspect was that the output of some basic consumptionitems (soap, shoes, matches, batteries) had dropped by well over one halfsince 1979. Although final data for 1983 are not yet available, it appearsthat there has been a modest pick-up in manufacturing activity.

15. The performance of the agricultural sector since 1979 was lessdisappointing than in the immediately preceding years, but was neverthelessunsatisfactory. Output grew by 7 percent in 1979, fell by 1.5 percent in1981 and continued to grow by 2.5 percent per year in 1982 and 1983. Inaddition to poor weather, there have been shortages of inputs such asfertilizers, pesticides and improved varieties of seeds. Rice productiondid not increase between 1979 and 1982 but most export crops had somewhathigher outputs in 1982 than in 1979. In the case of coffee the increasewas only about 2.5 percent, but output reached the highest level so farobtained. Clove production almost tripled between 1979 and 1980 anddeclined slightly thereafter. Vanilla also picked up from a low level in1979 and almost doubled by 1982. These three crops accounted for over70 percent of merchandise exports.

16. The Malagasy Franc was pegged to the French Franc until April1982 when it became pegged to a basket of ten currencies weighted on thebasis of Madagascar's external trade during 1973-1980. Following movements

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in the -weighted basket- the Central Bank of Madagascar adjusts theMalagasy franc exchange rate on a daily basis. Furthermore since theadoption of the ten currency basket pegging there have been a number ofdiscrete devaluations of the Malagasy franc. As a result the nominal tradeweighted exchange rate for the Malagasy franc has depreciated by about40 percent between the 1st quarter of 1982 and June 1984 (using 1978 as thebase). In real terms (i.e. after adjusting for differing relative pricemovements between Madagascar and its main trading partners) the effectiveexchange rate has depreciated by about 23 percent between the 1st quarter1982 and June 1984. In June 1984 the real effective exchange rate of theMalagasy Franc was therefore, estimated to be about 5 percent below itslevel in 1978, i.e. before the upsurge in external borrowing and thedeterioration on external account.

17. Over the last couple of years, the Government has shown itswillingness to take a number of significant stabilization and recoverypolicy measures. The measures represent a major reversal in the thrust ofpolicies and, therefore, were politically very difficult. The fact thatthe Government has been willing to undertake them shows that a significantreassessment has taken place. The Malagasy Government's stabilization andrecovery efforts have been supported by successive IMF stand-byarrangements. The latest arrangement, in addition to establishingperformance targets for external borrowing, domestic credit, reduction inexternal arrears and maintenance of exchange rate adjustment, requiresincreases in the prices of major agricultural products, further measures toliberalize the marketing of these products and progress towards amarket-determined system of interest rates. Madagascar has met the June1984 IMF stand-by target.

PART 11 - BANK GROUP OPERATIONS IN MADAGASCAR

18. IDA credits to Madagascar amount to US$428.05 million(including US$29.9 million from the Special Fund) and Bank loans totalUS$32.57 million. Since 1975, about 40 percent of Bank Group lending hasbeen for transport, 28 percent for agriculture, 15 percent for electricpower and petroleum, 6 percent for industry and water, 4 percent fortechnical assistance, 4 percent for education and 3 percent for urbandevelopment. IFC has three investments in Madagascar in textiles, footwearand fisheries. The first investment was made in 1977 when IFC participatedin financing the SOTERA textile mill. Recently SOTEMA encountered problemsof cotton allocation, and transferring payments on its loan to IFC. Butthese problems appear to have been satisfactorily resolved. Last year IFCmade its third investment in the Nossi-Be fisheries project. Annex IIcontains a summary statement of Bank loans, IDA credits and IFC investmentsas of March 31, 1984.

19. Bank Group assistance to Madagascar has been concentrated in thekey areas of infrastructure (including urban and social infrastructure),agriculture and energy. In infrastructure, six Credits have provided forthe construction of all-weather highway links between the island'sdifferent regions and for road maintenance and road rehabilitation. There

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have been projects to improve Madagascar's main port of Toamasina, and tosupport the railway's modernization efforts. Urban infrastructuredevelopment has benefited from a water supply and sanitation project(US$20.5 million) for the capital city of Antananarivo which was signed inMay 1980. In the social sectors, education has been the major recipient ofBank assistance with two credits totaling US$18.8 million. In addition,studies for urban development financed by the UNDP with the Bank asExecuting Agency have led to preparation of an urban development project(US$12.8 million) approved in FY 1984. A first US$5 million DFC credit wasmade to the Industrial Development Bank of Madagascar (BNI) in 1980. Inaddition, a credit of SDR 9.4 million for an accounting and audit projectwas made in June 1981.

20. Bank Group lending for agriculture has included three livestockdevelopment projects, four irrigation projects, two forestry projects, anagricultural credit project and a cotton project. Technical assistancesupport is also being provided under two free-standing projects, one tostudy investment alternatives in the Plain of Antananarivo area, and theother designed to strengthen institutional development of key sectorinstitutions and to support agricultural policy reform. In addition, theBank appraised and is supervising a rice intensification project for IFAD.

21. Energy projects have received growing Bank Group attention. IDAparticipated with several co-lenders in the financing of the largeAndekaleka hydroelectric project, which was successfully completed in June1982. A US$12.5 million project for petroleum exploration promotion issupporting the Government's efforts to develop a domestic supply ofhydrocarbons and to improve planning in the energy sector. A heavy oilexploration project (Tsimiroro), in the amount of SDR 10.7 million wasapproved by the Executive Directors on November 16, 1982. Both projectsare proceeding well.

22. The program for Madagascar is being broadened to includesectorial lending in support of current imports of a priority nature. Afirst project for industrial imports is well advanced and a second project,similar in design but for agriculture, is under preparation. Both projectsare geared to relatively extensive commitments by the Government to policyreform - both at sectoral and at the macro-economic levels. In additionprojects for a broad program of irrigation and ports/railwaysrehabilitation are at advanced stages of preparation. Both projects wouldinvolve substantial cofinancing. Further lending in the next two or threeyears is also foreseen for technical assistance, vocational education andenergy development (petroleum and fuelwood).

23. In the past, problems have arisen in the execution of severalCredits. The main problems encountered included delays, cost overruns,deficiencies in management and inadequate financial performance ofbeneficiary agencies. Recent problems have centered on difficulties linkedto the country's economic crisis, notably the acute shortage of foreignexchange and budget funds and institutional problems related above all tothe parastatal system. Nevertheless, the Fourth Highway Credit iscompleted and construction under the Fifth Highway Credit is well advancedDisbursement of the Second railway credit was suspended on June 25, 1982pending Government action to correct major deficiencies affecting the

railway's finances. They were resumed in December 1982 after theGovernment had implemented a satisfactory financial recovery program andhave been virtually completed. More recently, difficulties with covenantedfinancial rates of return in the Water/Sanitation Credit have resulted inan action program to improve the financial management of the state waterand power company, JIRAMA. Due to difficulties occasioned by a poor choiceof consultants and disorganized municipal finances, the sanitationcomponent of the Credit has been very slow in starting.

24. Experience with project implementation in agriculture has beenmixed, reflecting difficulties in the agriculture sector in general overthe last few years. Performance under irrigation projects (for cotton andrice) has been particularly disappointing, due to the following majorfactors: (i) the weakness of the parastatal managing institutions; (ii)the poor incentive structure, both at scheme level and in the officialpricing systems; and (iii) inadequate arrangements for maintenance and costrecovery on the schemes. Performance in the livestock and forestry sectorshas generally been satisfactory with both implementing agencies (FAFIFAMAand FANALAMANGA, respectively) developing into effective institutions withtechnically competent and dedicated management. Experience with theagriculture technical assistance project has been positive, althoughserious delays in approving contracts have been encountered. In general,most projects have been adversely affected by the worsening economicsituation and particularly by shortages of foreign exchange.

25. Since the start of our program in Madagascar, four Credits havebeen completed and audited by the Operations Evaluation Department. TheAudit Report No. 1622 of December 1976 on the first Lac Alaotra Projectconcluded that the project was generally successful. However, the ImpactEvaluation Report No. 3600 of August 1981 concluded that earlierassessments of project performance had been over-optimistic, and that theactual economic rate of return was probably negative. The Audit ReportNo. 1559 of April 1977 on the Beef Cattle Development Project concludedthat the project had contributed little to Madagascar. The Audit ReportNo. 2143 of July 1978 concluded that the Third Highway Project was welljustified and had a good rate of return despite substantial cost overruns.Report No. 2299 of December 1978 concluded that the physical objectives ofthe Tamatave Port Project were satisfactorily achieved but pointed out thatthe institutional objective was not accomplished during projectimplementation because of inadequacies in the staffing of the portauthority.

PART III - CYCLONE KAMISY AND THE REHABILITATION PROGRAM

Cyclone Damage and the Main Affected Zones

26. Madagascar has been hit during the past cyclone season, December1983 to April 1984, by some ten cyclones of which the last, cyclone Kamisy,which hit the Island on April 9-13 was particularly destructive. Kamisyfirst hit the City of Antsiranana on April 9, then Mahajanga on April 11before crossing the Island from West to East to Toamasina. Due to theextreme violence of the winds (more than 250Km/h) and very heavy rainfalls,

severe damage was caused I= the provi=ces of Antsira=ana and Mahajanga toports, airports, roads, buildings, irrigation schemes and the power=etwork.

27. The province (Faritany) of Anmtsiranana (Diego Suarez) is locatedat the extreme -orth of Kadagascar. Its capital city, Antsiranana, with apopulation of 70,000, Is one of the four maim ports of the country. It isalso Madagascar's main naval facility.

28. The province (Faritany) of Mahajanga ls located on the northwestcoast of the island. Mahajanga City lies on the Mozambique Channel. at theestuary of the Betsiboka River. The port of Mahajanga is the second mainport of Madgascar, carryitg 11 percent of the country's total traffic,both international and coastal. Its capacity, however, is limited as theport's use is restricted by the condition of the road to Antananarivo CRN4)and because of draft restrictions. 1* Mahajanga province there Is majoragricultural infrastructure such as the irrigatioc zone around Marovoay(100km south of Mahajanga), which is the country's second most importantrice surplus area after Lac Alaotra and the main cotton producing zones ofMadagas3car which support an important textile isdustry.

Rehabilitation Costs

29. Damage to infrastructure, crops and economic activity caused bycyclone KmiLsy was estimated at up to USS250 million (para. 37). The mosturgent rehabilitation needs are In the two hardest hit areas, lahajanga andAntsira3asa. Only the cost of these urgent rehabilitation works, includedin this project, have bee- estimated. Estimates of damage to buildings,housing and agricultural installations is only partially available.

30. Damage to the transportation network includes the ports andairports of Antsiranana and Mahajanga, and the road netwrrk of Mahajangaand Antsiranana Provinces, with the most urgent rehabilitation and repaircosts estimated at about US$10.0 million. Damage by sector and tI'a relatedrehabilitation and repair costs are as follows: Ci) Ports - Botl the portsof Antsiranama and Mahajanga sustained beavy damage to harves, sheds andother buildimgs; vital equipment such as tugboats, beacons, navigationalaids, were sunk or badly damaged. Rehabilitation and repair costs wereestimated to be about US$2.5 million; (il) Airports - Traffic has beenrestored in precarious conditioa and substantial repair works are requiredto both Antsiranana and Mahajanga freight terminals, sheds, technical,meteorological and staff housimg buildings which lost part or all of theirroofs. The navigational aids and meteorological equipment were destroyedand msat be replaced. Correspondimg costs are estimated to be aboutUS$1.5 million; and (iii) Roads - The Cyclone ve:,* heavily affected theroad network of Mahajanga and Antstranana Provinces, causing considerabledamage on RN4, 1N6 and RN8 and interrupting traffic for about two weeks.Major repair works are needed urgently, mainly on the RN4 stretch alongLake Amboromalandy where a flood-gate bridge has been washed away and adike damaged along its entire length. Repair works are estimated to costaround US$6.0 million;

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31. In both towns of Antananarivo and Mahajanga. urban Infrastructurews badly hit. Nmerous public boLldings lost part or all of their roofs.The cost of damage to schools, hospitals, administrative offices and Stateownd housine is estimated for those two towns at around USS5 million. Thedamage to electric power systems was mai:ly to the medium voltage and lovoltage networks of seven towns. In addition, numerous buildi3gs weredamaged: thermal power plants at Mahajanga, offices at Marovoay andAntananarivo. and various buildings at Antsiranana. The cost of repairworks are estimated to be about USS2 minlion.

32. Tn agriculture, the damage Involved primarily resulted from therupturing of dikes leadig to floodlng of villages and the deposit of sandon fields and Iu irrlgation canals , washouts in bank of Canals,deterioration of bighways and access roads, and damage to various feederroads and access roads In additiLon to damage to buildigs. Most of thisdamage occured In the Marovoay region, a major rice producing area nearMahajanga, whose production and trade is largely handled by theagricultural parastatal FIFABE. The cost of infrastructure damage causedto FIFABE In the Marovoay region is estimated at over USS3 million. t:addition followizg the torrential rains and the breaches in the banks ofthe Betsiboka and the other rivers about 70 percent (7.000 hectares) of thearea devoted to cotton cultivation in the Mahajanga region was flooded.The loss of cotton under cultivation and future effects on production havenot been estimated.

MaWKLM and Funding Relief and Rehabilitation

33. The Immediate Relief Effort. The emergency relief effortimediately after the cyclone was eificiently handled by the ConseilNational de Secours (CNS), chairea by the Minister of Tnterior, and otherGovernment agencies. Removal of debris started immedlately and most of theessential water supply and power networks were restored to operatingcondition within days. The response of the Government (through the CNS),and of the affected communitles, professional associations andinternational relief organiszations was immediate and efficient, providingmedicine, food and tents. The financial resources of the CNS were,however, extremely limited (about FMG 140 million in May 1984) and totallyinadequate to cope with the disaster.

34. International Support. In the weeks after the cyclone, stepswere taken to prepare for the rehabilitation program. All Governmentagencies were asked to prepare documents establishing the extent of damageand an approximate cost of rehabilitation; an appeal for assistance warlaunched to f-reign governments and aid agencies. At the time ofappraisal, their responses were as follows:

(a) A U.N. mission visited Madagascar for the purpose ofassessing the damage and making recommendations for therehabilitation program. UNDP made available US$60,000 whilchhave been used for import of construction materials;

(b) KFW is financing major rehabililtation projects for theFIFABE irrigation system, already started;

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(c) The African Development Bank (AfDB) has expressed interestin financing the complete rehabilitation of the FIFABEirrigation system and of the RN6 between RN4 junction andA_tsohihy;

(d) The European Development Fund (FED) provided tents(USS280.000), 1,750 tons of rice and construction materials(USS280,000). They are ready to finance the completerehabilitation of the Vohemar-Ambilobe road and to envisagea contribution to the Namakhia Bridge reconstruction (on theHahavavy River to the West of Mahajanga);

(e) The CaIsse Centrale de Cooperation Economique (CCCE)(France) was prepared to finance rehabilitatios of damageddikes of HASYMA (cotton fields) with available counterpartfunds;

(f) The Fonds d'Aide et de Cooperation (FAC) (France) intend tofinance detailed engineering and supervision forrehabilitation of the Ports of Mahajanga asd Antsiranana andto contributs building materials for certain educationalbuildings;

(g) USAID has agreed to finance the importation of constructionmaterials for rehabilitation of housing; and

(h) UNESCD has selected 5 subprojects totalling US$2.7 million:gi) construction materials for 220 school buildings in theFaritany of Mahajanga, Antsiranana and Toamasina; (ii)5,000 school desks and other furniture; (iii) equipment fora technical high school in Mahajanga; (iv) 100 tool kitsfor villages to rebuild schools; and (v) assistance of anarchitect to design cyclone resistant prototype educationalbuildings.

Bank Experience in Reconstruction Projects

35. In recent years, the Bank has participated in a limited numberof rehabilitation projects following earthquakes, cyclones and civilwars. The proposed project takes into consideration the lessons learnedfrom these previous operations by: (a) limiting project scope andrehabilitation targets; (b) shorte-ing the implementation period; (c)streamlining project design and administrative procedures; and (d)requesting from the Government the establishment of a National CoordinationCommittee.

PART IV. THE REHABILITATION PROJECT

Background

36. On April 16, 1984 President Ratsiraka telexed the Bank tLatcyclone Kamisy had killed some 50 persons in the north of Madagascar, left70,000 persons homeless and caused damage to infrastructure, crops and

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economic activlty estimated at up to USS250 million. In reply to thePresident's appeal for Bank assistance an appraisal mission visitedMadagascar from May 25 to June 5, 1984, to assess the damage toinfrastructure and assist the Government in preparing an outline for thereconstruction program and a framework for the proposed project, includinginastitutioal arrangements. Negotiations vere beld in Washington fromSeptember 21 to 24, 1984. The Malagasy delegation was led by Mr. Rem&Rasata Rainiketamanga, President of CNC. No Staff Appraisal Report hasbeen prepared.

Approach, Objectives a-d Rationale

37. The proposed credit would finance urgent works in prioritysectors, thus providing al initial impetus to the reconstruction effort.This approach would support a coherent rehabilitation process and provide afoundation for the restoration of economic activities. The project wouldalso assist the Government in handling the rehabilitation management,planning and financing issues steiming from the destruction caused by thecyclone. The project wa defined by selecting critical items wbichencompass the most e .atial and urgent investments necessary for thereconstruction of shelter and key facilities. Other contributions to therehabilitation program, such as mentioned in para. 34 above, willcomplement and will not overlap with the proposed project. The proposedproject is expected to be completed in two years.

38. The IDA contribution to the overall rehabilitation program wouldalm at: (a) contributig to the physical and economic rehabilitation ofthe areas damaed by the cyclone and particularly by restoring essentialfacilities before the next cyclone season (January-April 1985); (b)supporting a streamlined institutional arrangemet appropriate forefficient coordination; and (c) helping de7elop measures that could beapplied to minimize potential damnage from natural disasters in these andother vulnerable areas of the country. The project components wereselected on the basis of: (a) their priority as assessed by the Governmentand the Bank; (b) the necessity of immediate restoration of someactivities; (c) their location in areas which would permit appropriateexecution and supervision; and (d) the absence of other finacing.

39. Specifically, the objectives of the project are: (a) to restorethe ports of Mahajanga and Antsiranana, to a minimum operational level; (b)to restore the airports of Mahajanga and Antsirarzna in order to maintainair traffic safety; (c) to rehabilitate sections of the roads RN4, RN6, andRN8; (d) to repair the public buildings of Mabajanga and Antairanana and toprepare a program based on an urban and drainage study for improvement ofcertain wards of Mahajanga in which there are unsanitary conditions; (e) tohelp FIFABE (the Island's second largest rice producer) maintain itsproduction by reconstruction of the Amboromalandy Dike which protects therice fields and by replacing lost transport equipment; complementaryinvestments would be undertaken by AfDB and KFW to rehabilitate the FIFABEIrrigation system; (f) to repair the power plants and networks; and (g) tomake housing credits available to home owners to assist them in repairingtheir houses. All these components are located in the provinces ofHahajanga and Antsiranana.

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Institutional Framework

40. For the rehabilitation effort, the ministries concerned aremainly Public Works, Agriculture and Transport. At the request of theBank, the Minister of Finance has established, in the ministry of PublicWorks, a National Coordination Committee (CNC) composed of full timerepresentatives of all ministries concerned. This Committee is headed byan advisor to the Minister of Finance. He is assisted by two experts to befinanced under the project. The principal role of the CoordinationCommittee in the proposed project is to plan and coordinate with theexecuti=g agencies the preparation and implementation of sub-projects andto monitor their execution. The CNC would be responsible for verifyingthat sub-projects are prepared and implemented in accordance with therequirements of the Bank, including preparation of bid documents aadcontract award. The CNC would approve reimbursement of projectexpenditures by reviewing the works performed and authorizing payments fromthe Special Project Account. The CNC would also represent the Borrower for_he purpose of loan disbursements.

41. Under the coordination of the CNC, the implementing agencieswould be the existing institutions responsible for each sector: (a) theMinistry of Public Works for the ports (through SEPT), civil works for theairports, the roads and public buildings, and the urban drainage study forMahajanga (through SEIMAD); (b) ASECNA for airport equipment (this agencyis operating the Mahajanga airport); (c) the Hinistry of Education for theeducational buildings financed by Credit 663-MAG; (d) FIFABE for theagriculture component; (e) JIRAMA for the power networks, to be financed byCredit 1002-MAG; and (f) BTI and BFV for the housing credit (administrationof housing loans , recovery of loan charges) and SEIMAD for reconstructionsupervision.

42. The Government would enter with ASECNA into a subsidiary loanagreement for the Mahajanga airport equipment which would be operated byASECNA and into a -contrat particulier (special implementation agreement)for the rest of the airport component. The Government would also enterinto implementation agreements (-conve-tions de travail-) with SEPT, SEIMADand FIFABE. For the housing credit, the Goverment would use the servicesof two banks, BIM and BFV, as intermediaries. It would enter intosubsidiary agreements with them.

Project Description

43. The proposed rehabilitation project would consist of componentsin the following areas:

(a) Ports

(i) Mahajanga: rehabilitation of Vuilleman and BarriquandWharves, repair of offices, housing and warehouses, repairor replacement of port equipment (navigational aids,launches, tugs and spare parts); and (ii) Antsiranana:rehabilitation of the old and new wharves, restoration ofbuildings and housing, and replacement or repair of portequipment (launches, tugs, navigational aids, and spareparts);

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(b) Airports

(i) Mahajanga: Repair of air terminal, technicalfacilities, control tower, staff residences and hangcr;replacement of equipment (radio beacons, pylons, antennas,1 GIF receiver, IVOR/DKE station and 2 power units); (ii)Antsiranana: Repair of air terminal, technical facilitiesunder construction, hangar and quarters; replacement orrepair of equipment (1 VOR radio transmitter, pylons andantennae, landing aids, generating set and fire engine); and(iii) restoration of Mahajanga and Antsirananameteorological stations including repair of technicalbuildings and quarters, replacement or repair of variousmeasuring instruments and repair of communication, telex andtelepho=e equipment.

(c) Roads

(i) Rehabilitation of Amboromalandy Dike, bridge andspillway on RN4; (ii) reconstruction of the 12 km roadlinking Marovoay to the RN4 (RN8); and (iii) repair work onLN6 between Ambondromany, Port Bergg and Ambanja.

Cd) Public Buildings

C) Repair of educational buildings (about 15 schools inMahajanga and 15 in Antsiranana); and (ii) repair of otherpublic buildings, administrative offices and public housing(about 20 buildings in Mahajanga and 16 buildings inAntsiranana).

Ce) Agriculture

(i) Restoration of the FIFABE fleet by purchasing one tugand two barges; (ii) re-establishment of FIFABE spare partsstock (spare parts for diggers, pumps and power units); and(iii) repair of 15 FIFABE buildings at Marovoay andMahajanga.

(f) JIRAMA

(i) Rehabilitation of power networks and plants inMahajanga, Antsiranana, Toamasina, Nossi-Bg, Ambato-Boeniand Marovoay; (ii) repairs to various buildi-gs inMahajanga, Antsiranana, Antananarivo, and other sectors; and(iii) re-establishment of JIRAMA vehicle spare parts stock.(To be financed under Credit 1002-MAG).

(g) Housing Credit. Credit to be made available through Bf1and BFV to private owners for the reconstruction of theirhouses, provided the damage was caused by the cyclone; therepayment period would be 10 years with two years of graceand an interest rate of 12 percent per annum, with maximumamount of FMG 1.5 million. The interest rate of 12 percent

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per annzm is belov the prevailing bank lending rates InMadagascar which vary between 15 and 20 percent (the rate ofgeneral price Increase in the economy for 1984 is estimatedat 16 percent). A monthly income below !MG 70,000 would berequired for eligibility.

(h) Consultant Services

(i) Urban planning, housing and drainage study for thelow-income neighborhoods of Mahajanga: Amboboka, Tsararano,Tsaramandroso and Abattoirs; (ii) two experts assisting theNational Coordination Committee; and (iii) assistance insupervising program execution.

The project provides the Government with the opportuaity to reinforce itsprocedures for coping with natural disasters. For this reason the NationalCoordination Committee has been established and is being provided withtechnical assistance. Throughout project execution we will assist theGovernment in adapting the functioning of this committee so that it can bea model for coping with future emergencies. The Government programincludes studies to provide techbical solutions for low cost cycloneresistant construction and the preparation of sub-projects to protectlow-lying urban areas that are subject to flooding.

Project Costs

44* The total cost of the project, including taxes, is estimated atUS$27.7 million. Of the total cost of the project, 59 percent orUS$16.3 million is estimated to be foreign exchange, as shown in thefollowing table, and isn Annex 4:

USS Million KLocal Foreign Total Total Cost.

Ports 0.88 1.85 2.73 9.8Airports 0.60 1.42 2.02 7.3Roads 2.98 4.37 7.35 26.5Public Buildings 2.96 2.19 5.15 18.6Agriculture 0.17 0.43 0.60 2.2JIRAMA 0.78 1.38 2.16 7.8Housing Credit 0.80 1.20 2.00 7.2Consultant Services 0.68 1.06 1.74 6.3Total Base Costs 9.85 13.90 23.75 85.6Physical Contingencies 1.18 1.75 2.93 10.6Price Contingencies 0.44 0.63 1.07 3.8

TOTAL1/ 11.47 16.28 27.75 100.0

1/ Goods, works and services procured under the project will be subject totaxation, the total cost includes custom duties and internal taxesamounting to US$4.5 million (16 percent). Baseline costs are expressedin June 1984 prices.

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45. The cost breakdow- by major categories is as follows:

USS million

(a) civil works 15.2(b) equipment 4.8(c) housing credit 2.0(d) consultants services 1.7(e) contingencies 4.0

Total 27.7

This cost includes refinancing of the disbursed amount of a= IDA ProjectPreparation Facility (PPF) of US$1.0 million which was approved in July1984 for project preparation, for recruitment of consultants for theNational Coordination Committee (CNC) and for starting some repairs whichshould be done before the next rainy season.

46. Physical contingencies have bee= estimated at 15 percent forcivil works and equipment. No physical contingencies were allowed fortech_ical assistance, studies or housing credit. Price contingencies onthe local and foreign components were based on anticipated internationalinflation of 3.5 percent for 1984, 8 percent for 1985 and 9 percentthereafter. The resulting price escalation factor represents 3.8 percentof total costs. A more detailed breakdown is provided in Annex 4.

Project Financing

47. In addition to the proposed IDA credit of US$15.0 million, threeon-going projects would contribute funds towards certain urgentrehabilitation needs i- their respective sectors: (a) the Second EducationProject (Credit 663-MAG) has a remaining balance of US$700,000 aftercompletion of the project; these funds would be used for emergency schoolrepairs; (b) US$2.0 million from the Water and Sanitation project (Credit1002-XAG) would be used for rehabilitation of JIRAlA's facilities, and forthe urban and drainage study of Mahajanga which Is necessary for properrehabilitation; and (c) the Sixth Highway Project (credits 1391-AG andSF4-MAG) are being used to start urgent works which are expected to resultin payments estimated at US$0.5 million before approval of this credit.

48. This drawing of funds from other projects will not affect therespective projects because (a) credit 663-NAG would otherwise have beenclosed at the end of 1984 with an undisbursed balance of US$700,000; (b)credit 1002-HAG has a remaining balance of about US$16.0 million whichcould not be fully utilized due to delays in project execution and tosavings resulting from dollar appreciation; and (c) only small amountswould be utilized from credits 1391 and SF4 - MAG to start the road worksas the new credit is expected to take over the disbursements for road worksafter January 1, 1985. Appropriate amendments have already been made tothe Second Education credit and minor amendments are being made to theother two credits to permit disbursement from them.

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49. Total IDA assistance would amou=t to US$18.2 million. The tablebelow summarizes the f inancing plan:

USS millionLocal Foreign Total

Proposed IDA Credit 0.7 14.3 15.0Credit 663-KAG (2nd Education Pr.) 0.3 0.4 0.7Credit 1002-MAG (Water & Sanitation Pr.) 0.7 1.3 2.0Credits 1391 and SF4-HAG (Sixth Highways Pr.) 0.2 0.3 0.5Government or Cofinancing: Investments 5.0 5.0Duties and Taxes 4.5 4.5

Total Financing Required 11.4 16.3 27.7

Project Implementation and Monitoring

50. Those parts of the reconstruction program included in the projectare expected to be completed within two and a half years. This period issufficient to execute the most urge=t investments necessary for the fullrestoration of economic activity i- the affected areas. In fact, most ofthis project would be completed within one year. A project implementationschedule is given in Annex 5. The implementing agencies (para. 41) havethe capacity to execute the project quickly. They have experience withBank projects and would be helped by consultants in the field and by theNational Coordination Committee (CNC). As part of its coordinating roleCNC would be responsible for review and approval of all documents beforesubmission to the Association. Local coordination and supervision of theproject would be performed by CNC with the help of consultants retained bythe Ministry of Public Works and financed by the proposed credit.Implementation agreements, subsidiary agreements, subsidiary loanagreement and Contrat Particulier- between CNC and the executing agencieswould define responsabilities for project execution (para. 42). Theirsignatures would be conditions of credit effectiveness (Draft DevelopmentCredit Agreement, Section 6.01 (a)).

Procurement

51. Due to the availability of funds under existing credits and thePPF, the CaC has been able to carry out project design work and preparationof bid documents. One expert has been recruited for CNC and another onefor the Ministry of Public Works. The consultants of the Fifth and SixthHighway Projects are in the field and have completed design studies. Theworks for the roads and the public buildings have been started in August1984.

52. The table on the following page indicates the planned procurementprocedures and respective amounts. This distribution may be subject tosome revision as the sub-projects and respective implementationarrangements are developed in detail.

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Procurement Arrangements

Not TotalProject Element LCBaI Otherbi Applicable Cost

Civil Works 11.00 4.70 - 15.70(7.70) (3.30) - (11.00)

Equipment 2.00 1.90 - 3.90(2.00) (1.90) (3.90)

Housing Credit - - (2.00) (2.00)Consulting Services - 1.60 - 1.60

TOTAL 13.00 8.20 2.00 23.20(9.70) (6.50) (2.00) (18.20)

Notes - Cost figures shown in this table include contingencies and arerounded.

- Figures in parentheses are the respective amounts that would befinanced by IDA.

a/ Local unrestricted bidding (Appel d'Offres ouvert local).b/ Force account, direct negotiatio=, amendments to contracts already

signed, direct purchase and hiring of consultants.

53. Taking into account the necessity to expedite procurement, localuarestricted bidding procedures acceptable to IDA in which foreign firmsare eligible to participate would be used for civil works. Road workswould be carried out on the basis of amendments acceptable to IDA made tocontracts for works being executed under the Fifth and Sixth HighwayProjects (credits 938-MAG, 1391-MAG and SF4-MAG) awarded on ICB basis. Allequipment would be purchased on the basis of LCB acceptable to IDA or bylocal shopping with at least three price quotations (if the expected priceis below US$100,000), except technical equipment for airports which,because of standardization, would be purchased by direct contracting.

54. The following measures would be applied to streamline theprocurement process as it relates to this project: (a) submissions frombidders would be reviewed by the National Coordination Committee whichshould issue a bid evaluation report within ten days; (b) the executingagencies would react to a bid evaluation report by issuing a decisionwithin ten days of its receipt; (c) the Central Tender Comission wouldrender its opinion on this decision within five days of its receipt; (d)all works contracts over US$1,000,000 each and equipment contracts overUS$500,000 each would be subject to prior IDA review. Other contractswould be subject to selective post-award review; and (e) other proceduresnot routine in Madagascar but which have been used in Bank-supportedprojects, such as public bid openings and requirement of a performance bondor Bank guarantee, would also be applied.

Disbursements

55. Retroactive financing of up to US$2.25 million (15 percent of thecredit amount) would cover expenditures made after July 1, 1984, for itemsurgently needed to start the reconstruction effort. The Bank would

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disburse 100 percent of foreign expenditures and 65 percent of localexpenditures for equipment, 65 percent of civil works net of taxes and100 percent of foreign expenditures and 50 percent of local expendituresfor consultant services. The schedule of estimated disbursements given inthe Credit and Project Summary is based on a two and a half yearimplementation period (see Annex 5).

56. All disbursements would be fully documented and prepared by CNC.Because of its growing familiarity with the Bank portfolio in Madagascar,the Treasury should be able to transmit requests to IDA without unduedelay. The resident mission is alsc. expected to help in this regard.

57. To ensure prompt availability of funds for the project, aseparate Special Account (revolving fund) would be established in theCentral Bank, with an initial deposit by IDA of USS3.0 million. TheSpecial Account opening balance was calculated as the equivalent of threemonths of IDA disbursements from the proceeds of the proposed credit plus20 percent. The Borrower would also open in its Central Bank a ProjectAdvance Account with an initial deposit of FMG 1 billion. At the beginningof each quarter, the account would be replenished up to this amount.Establishment of these Accounts would be a condition of crediteffectiveness (Draft Development Credit Agreetment, Section 6.01 (b)).

Accounting, Auditing and Reporting

58. CNC would maintain individual accounts which would record eachsub-project of the rehabilitation program. Annually, the CNC would providethe Bank with accounts and financial statements including the opinion of anindependent auditor acceptable to IDA. Also, on an annual basis, the CNCwould supply the Bank with a copy of the audit of the Special Accountincluding the opinion of the auditor.

59. CNC would also be responsible for preparation of quarterlyprogress reports to be addressed to the Association. The regular reportingof project progress to be provided by CNC on a quarterly basis wouldconsist of the following: (a) implementation schedules by component; (b)disbursements during the preceding quarter and cumulative, with a breakdownfor each sub-project; (c) documentation attested by the executing agency;and (d) a qualitative description of progress in the overall rehabilitationprogram and in the IDA supported project. In addition to this quarterlyprogress report CNC would monthly send to the Association, by telex, a veryshort report giving the status of each component, the contracts signed withtheir amounts, the problems to be resolved and the solution recommended. AProject Completion Report would be prepared by CNC and sent to IDA withinsix months of the close of disbursements.

Benefits and Risks

60. The benefits of this project are related to the reconstruction ofinfrastructure which has been destroyed or damaged by the cyclone. Thisreconstruction is needed as quickly as possible to restore economicactivity in the regions of Mahajanga and Antsiranana. In particular, thereconstruction of the Amboromalandy Dike is required to restore the traffic

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on the RN4 (Antananarivo-Mahajanga) and irrigation of 2,500 ha of ricefields. The repair and restoration of about 30 schools would provideaccommodation for an estimated 15,000 pupils who are either currentlydeprived of adequate educational opportunity or accommodated inover-crowded classrooms. The replacement of airport equipment will improvethe security, not only for local traffic, but also for internationaltraffic, since Mahajanga Airport handles international traffic in theregion. Finally, a general benefit for the rest of the country would be toequip Madagascar with a framework for handling future emergencies of thiskind. This would be achieved through the institutionalframework established for the project (paras. 40 and 41); the NationalCoordination Committee would be maintained with experienced staff. In thepreparation of the PCR the effectiveness of this approach in responding tosimilar emergencies in the future would be assessed. Moreover,rehabilitation works financed under this project would be designed on thebasis of methods for reducing vulnerability of buildings.

61. The foreseeable risks in this project are principally those whichrelate to the need for timely execution and the timely availability offunds, local and foreign. CMC will have to prove its ability to prepare,coordinate and execute sub-projects in a timely manner, but this risk willbe reduced by the recruitment of two experts financed by the proposedcredit. There is also a risk of delays in the procurement process. Thisrisk has been taken into consideration in the scaling and phasing of theproject, its reliance on components to be executed by experienced agencies(Ministry of Public Works, ASECNA, etc.) and closer monitoring andsupervision. The last risk concerns the timely availability of funds andthe start up support necessary for the rehabilitation. Bank experienem inother reconstruction projects strongly suggests the need for streamlineddisbursement procedures and close monitoring in the start-up period. Thecommitments which would be obtained from the Government regarding theprovision of counterpart funds (Draft Development Credit Agreement, Section3.01 (a)), special procedures put into place to speed up the procurementprocess (para. 53), the retroactive financing proposed for the IDA creditand frequent supervision missions are seen as a means of supporting thestart-up process.

PART V - LEGAL INSTRUMENTS AND AUTHORITY

62. The draft Development Credit Agreement between the DemocraticRepublic of Madagascar and the Association, and the Recommendation of theCommittee provided for in Article V, Section 1 (d) of the Articles ofAgreement of the Association, are being distributed separately to theExecutive Directors.

63. Special conditions to the Credit are listed in Section III ofAnnex 3 to this report. Additional conditions of effectiveness of theproposed Credit are: (a) the establishment at the Central Bank of theSpecial Account and of the Project Advance Account; and (b) signing ofimplementation agreements, subsidiary agreements, subsidiary loan agreementand Contrat Particuliere as indicated in para. 50.

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64. 1 am satisfied that the proposed Credit would comply with theArticles of Agreement of the Association.

PART VI - RECoMUENDATION

65. 1 recommend that the Executive Directors approve the proposedcredit.

A.W. ClausenPresident

AttachmentsWashinRton D.C.October 11, 1984

- 21 - Annex 1TABLE C rscE I of 5

HADAGASCAR - SOCIAL INDICATORS DATA SHEETHADACASC REFERENCE GROUPS (tEIGHTED AVERAGES) j.

MUST (HOST RECNT ESITEATE) lbRECENT LOW INCOHE AFRICA mIDDLE IN-COM

196q0b 1970m k zst riTb soUTN OF SAHARA AFRICA S. OF SAMARA

ARE (TUO SAND Sq. U)TOTAL 587.0 187.0 537.0ACRICJLTURAL 361.2 363.7 370.5

CGN Fm CAPITA (VS$) 130.0 190.0 320.0 249.1 1112.9

KNOtt CONSIWTIUM PER CAPITA(KILOCRANS OF OIL EQUIVALENT) 27-0 60.0 41.0 62.6 529.0

PoPuLATION AD VITAL SUTlSTICSPOPULATION,HID-YEAR (THOWSANDS) 3474.0 6785.0 9199.0URBAN POPULATION (2 oF TOTAL) 10. 14.1 19.5 19.2 29.7

POPULATIUII PROJECTIONSPOPULATION IN TEAR 2000 (HILL) 16.1STATIONARY POPULATION (KILL) 34.1POPULATION HONETM 1.9

POPULATION DENSISYPER SQ. EN. 9.3 11.6 15.3 32.5 55.8PER SQ. N. AGRI. LAND 15.2 18.7 24.2 119.2 111.5

POPULATION AGE STRUCTURE (2)0-14 US 41.6 42.6 43.9 45.6 45.4

15-64 YRS 55.Z 53.9 52.9 51.5 51.765 AND ABOVE 3.2 3.3 3.3 2.9 2.9

POPULATION GROUTH RATE (C)TOTAL 1.6 2.1 2.5 2.8 2.8URBAN 4.9 5.0 5.2 6.2 5.2

CRUDE BIRTH RATE (PER THOUS) 46.7 45.2 46.7 48.6 47.0CRUDE IDEATH RATE (PER THOUS) 26.6 21.9 17.8 17.7 15.2GROSS REPRODUCTION RATE 3.0 3.0 3.2 3.2 3.2

FAMILY PLANNINGACCEPTORS. ANNUAL (TNOUS) .USERS IS OF HARRIED VOEE) .. .. .

YODM AND UnRItIONINDEX OF FOOD PROD. PER CAPITA(1969-71-100) 89.0 102.0 94.0 65.8 31.6

PER CAPITA SUMY OFCALORIES (2 OF REQUIREMENTS) 100.0 107.0 109.0 86.4 98.2PROT£ENS (GRANMS PER DAY) 57.0 59.0 56.0 49.9 56.7

OF WICH ANDAL AND PULSE 17.0 17.0 15.0 Ic 18.3 17.0

CHILD (AGES 1-4) DEATH RATE 45.0 32.0 23.0 23.8 18.7

IsLAILIFE EXPECT. AT BIRTH (YEARS) 37.2 42.2 47.9 48.4 51.7INFANT NUT. RATE (PER THOUS) 177.0 149.0 116.0 117.5 102.7

ACCESS TO SAFE WATER (%POP)TOTAL *- 11.0 25.0 Id 21.8 35.6URBAN .. 67.0 76.0 7d 61.5 54.1RURAL .. 1.0 t4.07d 14.2 27.3

ACCESS TO ElCRETA DISPOSAL(2 oF PoPuLATIoN)

TOTAL .. .. .. 32.0URIUN .. 68.0 .. 69.2RURAL .. .. 9.0 Id 24.8

POPULATION PER PHYSICIAN 6900.0 10170.0 10170.0 le 27477.8 11946.3POP. PER NURSING PERSON 3110.0 tf 3350.0 3660.0 77 3396.2 2248.9POP. PER HOSPITAL 3ED

TOTAL 420.0 350.0 500.0 Ie 1069.0 986.9URBAN 150.0 /f 210.0 240.0 7W 395.2 368.7RURAL 610.0o 7 460.0 520.0 7W 3094.0 4012.1

ADIUSSIONS PER HOSPITAL RED ..

AVERAGE SIZE OF HOUSEHOLDTOTAL .. 5.8 4.7 /dURBAN .. 5.3 5.0 IdRURAL 5.9 4.7Td

AVEMRE NO. OF PERSONS/bROOTOTAL .. ..URBAN .. ..RURAL .. ..

ACCESS TO ELECT. (2 Or DWELLINGS)TOTALURBAN .. ..RURAL .. ..

22 Annex 1

IZ A 1h mc 12 or 5___CASCAk - SOCeL =?CK`;S UAA S5

CMSCZ CUNT Uaznm X,s uz A aIE~~~~cW 3S: B52XAS;4 l'b

*96UM LOW lXC=ff AS&= !13r L MM:9l-b ' 97V! Et StlC-s OF SAza A L3cL S. or ScAA&

P32a*Y: --. A 52.0 Ul.C 0 100.0 l 69.2 91.058.0 95.C .. 78.8 90.5

Fs-L 45-0 s;-0 .- 57.6 73.6

cE~&ZT: ~U:A.'"a0 1'.0 -4.0 /c L3.1 17.4-M,:- 5.0 '3.0 __ 17.6 23.7

!aX 3.0 9.0 __ 8.3 14.8

ocOSa. Cm OF SECmSIt) 9.L 8.7 _ 7.2 5.3

P3~AiY 70.0 65.0 55.G /a 4&1 38.6SECOlrAM Z -O0 20.0 23.0 7F 25.9 24.3

AZ= =I3ACr RA-Z () .. 39.0 50.0 /c 44.3 35.6

PASSESGR C&35TIUSSC POP 4.0 6_8 7.1 3.8 20.7=:aX ;ERZS/31T:5= POP 15.0 79.7 195.1 41.9 100.8, RECE3S/0I& £0? .. 0_5 52 2.0 8L.5

1!RESr) CE..L'A-Z0PM S i -PCkPm"J_OS 7.7 7.8 17.2

= ALAL A0 !/CP OS 0.7 __ '.- 0.3

-AL LA3a FW3CE C(5) 3046.0 3620.0 4634.0 .7 5PE F) 46.9 46.1 44.5 36.5 33.8AMIC:;= (PECENZD) 93.0 90.0 87.0 77.4 57.1

:SiCs (P 'IE7) :.0 3.0 4.0 9.8 17.4

?A4lC1PA105 3A= CPERCS-)TOTW- LL5_6 53.4 50-4 41.0 36.3MAL2 60.7 58.8 56_0 52.1 *7.6

_iEnALE 50.9 48.2 44.7 30.2 25M1

ECSIIC DPENOCE RA 0.8 0.9 0.9 1.2 1.4

-ECN OF PRW tOmq m 1

:[ EMS52 OF 07ISEO 5_0_HIGES. 23: OF BlDCSt --L0Es: 2OZ oF _DSNO _ : ..7 .. ..

LT 40Z OF SE 13.0 .LL

!STnATED ABSoLC= P0Wo?Y I¢ELamL (055 PER CAPXM&)

BAS .. .. 150.0 /c 168.3 525.3WAAL .. .. 86.0 Ic 90.8 249.0

ESTIATED RfLArV POwER2T DlELEVEL. (5s PEM CAPITA)

ORSAS .. .. 135.0 lc 107.7 477.4R=A;. .. .. 86.0 7r 65.0 186.0

ESrTMAD PoP. ar-M ABSOLCZEroy LCME LEVEL (:)

C3BAS .. .. 50.0 Ic 34.7AL .. .. 50.0 7T 65.4.

307- AVALLkZL-0 APPLICABLE

5 O T x S

Ia Mm group averages for each Ind-cator are popuiat_lo-wIgh±ad arItbtfc _ems. Cow.rae of catries mgg theIndicators depends an availabllity of data -d Iaut no niforu.

fb UnLa.. otbrulee noted, -Dota for 19o0 refer to any yer betwen 1959 end 1961; -za for 1970J betwea 1969 ad1971; and data for Most Recent !Estiate between 1980 and 1982.

Ic 1977; Id 1975; 1. 1978: /f 1962; LL POpu1at1on.

Mm. i1si

-23- Annex 1

.9 �'� Page 3 of 5- t0.t0 009 -. - *90= 9.99

9 99.a9 3. �99 t9990 0= .00.9J9. 3. .0-OS *0.9 - � #0= 999. �09999000009

0.. - 99 9. - .9.0=900= 001 99010= 0= 99 .5.4 - 99.ofl .090.9 09 0910990.99 9� 0=99 19. - o. 1009.9. 90 -

e.� ., - .u.. **�� os. 0= .� .. n.0. -� 49Mb fire .090.9..

- 6.4o9- - - 'E9 .90 �0.09 - 099�� -- 0=0?) .0.. - t99 - 000=. .- 90 09.*0 =0= 0- 90047 - £99

0-9 . :.n 99. .99r :a 39: 999*999 * e 90490. 0990= 0=09 91009. - 0=9 - 9.0 - ' 0*9-9.0009990

99919903990. 9-.- 99999- 90�.9 - 0= 999909 a .0J.9139 9

9.0.o. .90.909. 9c lor - fhto, - 909 .0nf...

9 - 0=9 999 10= 9090949.. 90999 199 0090 - 9009*99 999 0=0=999 0=0-0 - 0= 000=.....t 009 09 *999. 9090 09 09

9�00= 0 999099 99900 -. - 099. - 99900=. - �9 - .9 9 to �990fl9 =

.9.� - 00=99199�. * -

-. 19� 99-= . 0909. -. 909.09199 - 90099099 419100 9-9 9999009t99

- %..0 ... 9...-.o '�t9� 0 .-... C .9. 00. 00! cOO .. 091.9 90=. t�C 01c .90.990t. sO..

- .. 0.991... � � 9..0.9 9099.99 - 3*OZ.5 099 009900 9. 9 - 999399

- 9919099 .9 90.. 99999.. - 9,9.0 �e9999009 - 990 9 9 90.9. 59 9.10 0=0.00 0.990. 990.30-- - 91�9*999 £990� 0' 009 94.99. -. 0=9099 0=9009999..

9. �09: � o. 0=9.9.1 - - *...; . - 9.990 - .0099.09 **990.

-. �1000 419,904w -. 0�90�.0 . 999 -Cr. �0 -…- - - -0�. ... s..0.o. oeoo. - ro.... �.? - .ws.oo99 oo.0 -

- 9.9099 9999.'4 - 9.9t* 90 - .0-.: 0=0.. - '0=99109.5090 999999. 994**: 09900.0. 0.009 4..9

009 399*0* - .0- 4999. - - 109 001-099.. 99900. 9.09*9099 999993.9009 o....90.90. - - 0.9000. 9.9.1 ino.az.. 10. 0990.s 999039

9999.9 0=0009.3 99 C'o - 9900.90 .0993 ��-t.- - 99909* tt990 999 - 99�09 9999 * .Ott- 9*99 - .9.90.90

909990-0 . - 0009. 0990-0=. 9.9.9.1 - 0.49-. - 1..9 �Io. � 9699 0.. .9.. 1 999.90 .999 09-09900 � 0=

0= 9999* 9990*t 09*991 199.0 - .10 09910= 0 .9900.. .*. 999.0 - - 0099909 - * 9990991:993. Ofl. 499.. �f22±*=.rz**�=*::=.-� .990 a .5 .900.9.00= - - *00599

0-0090.. .- �09��92999. 90.-.- 90�0 '9�0 - - - 3999 00=. 090. �50- 0=009.

00., � . 3399 99 1009 *099..e -* 05099.t .50 0= 9.990

00�o� 99fl09 .1 rn.fl - -- a -. 000 .. o0�* - �1084m.9e .5 . o.a *0000. * 0o90o q.0=99

99. 000.0910= - .9n ��999o - on. a .. 09909 0-. &.. a - 9.0-9 - 0= 0= - 0990000.

-9 9009909. 0909. 9009* 0= 0992�.. 999 1009 9.9 .9009.0 .

*.9090 0=000= a a n. - 9.9.0 . .... ..... � a

900.9099 1. - 2 99199 .99099900 �999.9� IS 999 0 09 901 .099* - '919.0 901990900 0100999.0. .00.9 Ia 01 S - 10=9 t0009 - 9.99t lot. 0-200W. 3990309909. 00t..9. 00.0 .990.9.0

3'9999. 9.S9.90.9 009999 999 9.9090099 99990 9093.9 - 390 9990 099.000. .. 00.9 009. .0=99,09.9 9teot 00090199 9099 9099.*9 999 - 99 939999091*9 'ooe.. a 3, *.9�0 - *.9*: - - 9.9.1 -

-t 0.0101.. - 90.39 00* 99�9r9 990=0093.99 .9 ?�.23 909990 00.00 9090 9099090001. 19 009099 99 S 0095

� 109 0 9.9 9.9?. rot. os .bo 00 o.9.1.. a ,...0. .. *0=0 40o Ott.9S9.

99 Zte 00 99900099 0990=099 9. 0990= 099.0 - - 90=09

f0

099999�� 9.9 .- 0. - ��oc - a - ... � a,oe.s a .. 00�. 9.900 00.9 9 9.9 00999 0.9 -- 99.99.4 009.9309 999099

9039. .00.99... - 39 09 03901 .0199 fl9.fl 0=. 9909 9001 - 0090. 9.09 9 9519

- . 10= .. 9t.9. 0=1. e....9000 99993.0909 ..... 000* 90 -- .n 0.009 - 09.9009 .1 ... t..

-- 00 909.19�0.9 9-0= 9. 9.900 000 '0 9919.99 000-999 .00.9.. - 0=9.009 1� o..999 9901*9.9 09 9.31

900099999999900. 99- 9 000.9 009. 099 99990 9909 09 9090= *�99 �94099999�.9 9099.90 -39999.5 9939.99 00.9099. 999

99990 99 099 - 9999 0= * 9999909 39 90- 90. - 99. 00*9099 9099 9.09999.0 00.9090 0.0009 - - 1.9. 999

9999 39�t. 09000. 090009 9099 - 0=3.0 - 9 .00 309999 990.999 999 099091.1 0 S

o� a 9 r.�. 90=99*993-ta - 0= 4.90199 go 999 ......... 90=1 . *.9. 909 *99919 - 290999 - .0..2.w0. � .. - .. � a

9.- no... ..- o. ... 009.09 0�990 - .9 990= - 9.9 �9 - 49 9909. 10=999.90.9.

999.099,99 .0999 - 9999 29.09 0.9 999.0.9090 990=9'9 9 99.991999 .099* 9. -- 00=1. - 999.999 *99099.9 30=0=900 999

9910= '09.90= 999099.n-0.0 9.9.. 999.09.99* 9 00=40* .. �9 0. 9.0= ' 0=

09. - a... o - 999�3 .909 - 999.0= 99009. - 99999.109 99.051.a .000909. 39 199 0 09 9.9999 - 9 99939 a 999 9999900=1 999.9009.99 *9999999 9 99999�9�* - 0.90 9390 09.9t9..90

0

.39t99999...999.9.:099-9999..1.9399999999.40 .,904-.09993990...990.0 -

099 9009 0= 9999 0'9''99.3 * - 9.90.9.0999 0. 9999999. *.9..9.4o.90. 99 - 099909099 9 .9 �9199� 99,9-90--

99999.. 999. .�r-. 0-999 �

.99..99-99,9.-090.90...99- -. 99. 9..'..-. - 9-9999199.9 99- �.9 909309.9.99 999 9 99-.0e .9 99.9 *0.0 999919909. 04 -s 999 9999.

*300099t99 999 - .99.999 .999990 - COO 390= 9*0-. 99.991. 0000 -,

- .03. 0= 9990399 01 9999*05 0=90 - 990 .99.4.0=9 99009.999 999999.9 '10 9.9.:.9 ... - oo- .�. 9.o.. 0-

09909.. 3900. fl'0� 0 0094 9019. 9909 09009 :999 99.9 90999 9.909. 99.100 CLO9.. -. -

99190099 �90* 3.99 .999999) - -. 94: - .090 499.9* 9.99. *9 9�9. .990 .900.0= 391990.

1990.9990. .09097.. 0= .r9..:. 99 0939999 '999 9 999*0990990 - 000 99$9991 999.09990 99999499

9.000.90.9 C909 999. '09,91990' - . 9-4. 490590 19999*9 990= 9999 99 .090. 990009 9 9 9 .009909.. 0a

.00-10 999 :0.0.99. .. M. 0990.92. .90199- �99 . .o - 9

- 99909 0=9 10 0109 - - 00.9 991009 9.9 99099.0 99 9 30919999 9969 99. 9090= 9.999 0 0 99.9.9993. 900=00

9991 990009910 .0-. .990. .9.2 9999. 99.99 919. *09.0 009f0�9.

939.4. 0=9,9 999. '0 1900=0 - 9-0 910 a 9949 - 9999? .999 9999 0 9999199'993 - �?* 99909999 99. .. 99999.

0909999.. o90

9� o*�. 99 0992 00990. 9.00990909009 0 310 090919.9. 0151 90009909 99 9999009CS... 900995909. toO. - 9e 9-9.9 499099999. 9900909909 10 .099099.409 990 9.90.999039. 91990=9009 999.99.

O 09.1 9090 9099 090 .bt 93.0 993 909 99 09990.939. '909 �10 90.990990 - 0=

90=0000999999. .0000 099.9999 9.9909 l9 909, I*,'0. 09990099099 - '4990. .0090 39990999 99.09. 0*90= �9 9.90090.90

0992. 909000399 4999999 *�99.9t09 9. 9999999 999.0090 09. 993. 909.9

59903. 0309.9 - .9�-rn9 9.0=5 't99...9 - 99,9391 at 91 99.9.9999 t. - 4.o09 0 39 09 - � .00 909.

09 999t9�990 09996 00 31 0=3.00 '0-37 01999999 23.99900909999999999 909 249099 0 9999 - 9000 99099 a 91

93099. 099999 9909 9..10 099 9999. 199060.99 0990.900 9 099.09 90990 99

900* 909900.9 - 90999 '999-9.9 e.0o.. ' - 999999 - 0=00.9 9.3019 99

0 9090=99t99 0�� 599993 9109 99 0=0=000�9999909099 a 999990 990t399999099 99900 #9099 -. 9499909.090.9 a 9909 - - 39.909, 9039090 9.9 099. .9999 99999 9099.0=91 - 019-9.10. 9.93.. 99 09.191099 -

0090090 .0=999.90099 990 09 99. .90= 00109. 909999 994-90999.9 .09 0.d9.� 90099. 99949.99* .99, 909999

09099099 99 9* 5 999990900 09 0.910 .99.99199 999 -

90= - *'93*'*?w '.909. 9999 ,t'3 .. 4 0991 4.9*.999 9990-9 09.91901 - 000 99 9.9 909093 � - 0539 009 99109 99 999�9.90 99 99993 09009 99919,

9-0 990090.99 0' 33. 09-09099. 99000090 99909999 r�i±2=.:=�' ¶9991 0.999 39 *.90999* 99999099. 9000900

00.9.4 - - c999 0=9 0=00. 900900099 9999 993.999 99999 9990. 9099.099 90 93.919900 999999:09990 9999, 3909. 0r0� '90099.

.000 00999 a 0991 90049 999 99090. 0= 990909 9t9999 19.9. :9999 �99999991 - t 99999 09 999009, -09909199.. 0919909.9199 0

*fle 0=099999 99000-40. 09909 900-91099 .9 009. 90*99 09 900909099. �.9 99049909 99990=0 99 99990 09099 99199. 0900. 19'9990=00=0 90990 990099 999999909099. 0900099. 0.9.0. - 1992 99909.. 4999.

9999. 90990.00390 9999 �o9.9.0' 9990 9.09 0 9in09 - 3990tO390 09

9019990999999099W t99 .

9099 999.909 .5 Ot.3.0 9 590999 999. 9.00999.99.9. 99* .0999* 99 99090. 0.9. 0= 9o..a. 1.9 9.99.99

90999 95 #0- 90039.99901.9909 09 900910 9909009w 9.990=09 90 990. 9.09 0=10.0999990.900.9 05900 o9990o909.

. 9.0.9900. 00 909099 9-39 9-90.9. 0t* On. In. 090'* 0= 0990 059. a 9- 99 9091'9 9.9939000.999999

95999. 9.9 09- 399.0=. - 90=0099.9900- 993900 9994* 99999, 9900999090 0.0 9939990.9 999.0:99099. 099 9099 090=, 99-3.9'.. .009 90=99099099. 0=1.00. 4199900=099. 999.999 999 .99099999 399 9999 0=000 0999.,

90=999094 - 99999994 99 9999093.999990 991 0=000 '99.0=9 0990-099 99909 - 99.0. a 9999099099 .fo II 09 9.9 .. t.

99909099 0=0=0090 90=0499099 0=099-90 .909900=. 9.09099, 099 9099 0.0099099 109999 0 019000.

O - - 40.99.0=099 a 990990909 0- 9000=99 19..... 10*

.. o 0999:: 3900-el, 0 999 0= 20= �990. *tW 0999999911999 .009 9.990. .5 .901.09 9990=0=00990 - 93909 9000 a 0 999309 19- 999* 99 0 94 93900 - 099910=99 90-9

- .OpE *090 - 499. 00009491.. 91 90=3. 90000= 0= 90910=. 9.93909 39399.00. 9999.9 991.0, 0= 99.0990 09 90900= .1

0000.09 999.03.099099960=19099 S 9999*49 999 .99- 000499090.9 9059090 999919999909 9994990= 90510 99 0 0=

99099 90909. .90-9901099-999.0499 .909905999909. 90 09919�1 "0=99. 99.10 - 0.9�� 91 90� 05 .90.0 99909 0=21 sIn. 309 99.1009. 99910=99.999999 .9.99900-. a 09909 099.09.

a 0=9.0. 9.009999. 99990 001 009 .99t. 9.9-69 999 39 999 90-09 99 0999909000 9090 9.99904999009 905009.

10099 9.904 901... 0903-09. 09?'! 999000 999� 9903.9999 99990919 9091. 2990=099.0 919999 9990099 9 09999 0= 999.0 -

0 59.099 9999009 9.9.09 99.9 .999.3 0= 0.100 - 9999909 0=909 10= *000999 9.99999 09- 1900990= ±9- 0.990 99109 .90099 9900.90

90900= 00=9.09 0= 990009 49099999 0099, 0900999. 1999 0= 95. 9t03001 99-99 9990 90.9 .039: 99990= 999609.09 090

5909. 0500149619.99* 00 '00909 0.90 900 99900901 9900-0 9 .091.90990 9900=19 99909.999990.909. 9999900 999990 199993 '2990 '900390 9 090=0= 9.990

0 099 99999. 9939900909 0909 0 090=, 09. 09.099 90991.9.1.9000 90=999 0090 .9900 09 0=9990.9 .5 0=90 99.099

99099 009 49900= 999. 0099 90399, 0909. 099*0= 0990 4919. 9.9.99.0 3.069 � 905990. 0.0 :0990 0. 4999994 9090. .9590

0.9.0. 9000 902000 0.9 03.o. . .0 10.0t -

9 91 *9 009.1090.99 99qt9.�. 909909909. 9909. 999.0999 9.99990. 9.0 09-991 .999900 9 .90=

1.9.99 9993 339 9999 9� 900=0 900090. 99.59. .0 0900=9 001 -�91 0 0 010 00.9 9099990 0993. .'� 0= 09.3 ..

90900991 99.99991 099.9999 - 099909909.0 . 09990 990= 9.9.0 -

91 9019 099990. 9,0=. - 99 9.0 9090 90990009 99.0 99. 9999 9�9999 0.9 90919939 009.9. 10.99399

0=99 09:. (09009499099.9.9 04.990*09 9 90990=94 994 .9900. 0=09900 0= 99290 90999909

99I90 0=99 9090=9999 .999.90.09-90.95. 95100. 909 -3999

90919 9.20.5 99 .990909 90 39909 3

.9tt 9.0-993-. 09.9900.9999 0=401 909*3.91900=9094 0.0-990= a 99.9 ?09 00099

90=9 9909 9999 99 9.090900909 0000190009 91 0=900. 99 .9990.09.99999939990939 14 9.9909 9 9= 100�..9

. a - 0029490=3-9. 559.9. 4o..9....ooa.. .. st .900949909 999.903909.09 *:r. a .0,

6999 9099949 9900009.93 �909900 000999.90 9 09900 940= 0= 9999099 a 39o90 . o.991. -. 0= .00o9910909 90 93.0949090099 999039930. 09999990009090 0 00000-00999000009 0=469.00. 9090.9900909909990. 9.99-00909- bOW 099�99. 10990990910099690990=.090391 090092.0-0.99.

- 24 -

4ne 1

Page 4 of 5MADAGASCAR - ECONQIIC DDICATOS

GROSS NATiONAL PRODUCr IN 1983 ANUAL RT OF GROVrr1 I

uSS Kim. Z 1975-79 1979-82

GOP at market Prices 2,837.7 100.0 0.1 0.0Consuption 2,646.3 93.3 -0.6 0.8Gross Domestic Investen 373.8 13.7 4.1 4.2Current Account Balace -324.3 -11.4 - -EiWor-z of Goods, NES 324.5 11.4 -2.8 9.5Imports of Goods, NrS 506.9 17.9 2.3 -7.0

OUP. LABOUR FORCE. AND PRODUCnVT IN 1983

Value added 2 / Labour Force 3 / VA Per WorkerISS Kin. 1 '000 z -s- mK _

Ariculture 1155.1 40.7 4095 88.4 282.1 46.0Industry 418.6 14.8 127 2.7 3,296.1 537.8Services 1,156.2 4L.8 357 7.7 3,238.7 528.4unJaliocated41 107.8 3.5 51 1.2 2.113.7 34.9Total 28Tj 100.0 4630 62. 9 -100.0

GOVERIUT FINANCE

Ceztral Governent=HG B31 Z of GDP

1983 1975 1980 1983

Curre=t Receipts 141.0 13.6 14.6 11.4Current Expenditures 143.0 13.0 16.4 11.7Current Deficit -2.0 +0.6 -1.8 -0.2Capital Expenditures 49.9 3.3 13.4 4.1Foreign fEinancl (net) 17.1 1.4 5.2 1.4

MONEY, CREDT and PRICES1978 1979 1980 1981 1982 1983

(Millioni MRG Outstandig at End of Period)

Money and Quasi Money 141.0 173.0 206.0 242.0 276.0 271.5Bank Credit to public sector 49.0 99.0 176.0 234.0 266.0 304.0Bank Credit to state enterprises

and private sector 101.0 121.0 150.0 164.0 197.0 229.6

Money and Quasi Money as # of GDP 29.0 29.1 29.9 30.7 27.7 22.2GDP Price Deflator (1978 - 100) 195.7 217.9 250.6 313.7 403.9 488.9Annual percentage chages In

GDP PrSce Deflator 6.8 11.4 15.0 25.2 28.8 21.0Bank Credit to public sector 75.0 102.0 77.8 33.0 13.7 14.3Bank Credit to State enterprises

and private sector 5.2 19.8 24.0 9.3 20.1 16.5Note: All conversions. to dollars in this table are at the average exchange

rate prevaili=g durig the period covered.1/ 1 1970 prices for 1970-81 arnd 1982 prices for 1982-1983./ At market prices.31 Tozal labour force in 1980.' Import duties. July 1984

- 25 -

A 1Pge 5 of 5

,-DAGMCM - TRADE PAV2r AND CGPTL HC

}gNC CF PAILS r-DIE iR (AVM 1977-M)

1981 1982 19831/ USS MX. 2;TTS M-11IIMT

Coffee 132.8 41.3Va=illa 40.7 12.7Cloves 47.8 14.9M-e an 'mul producs 18.7 5.8

EiqpoTts of G L& NF.S. 391.6 378.6 363.5 Fish ansdd fish 7.1 2.2Iroos of GoDas & S.F.S. 735.6 651.7 510.3 Stgar 9.9 3.1

Pecrlen pr&rs 11.4 3.5Resource Blme -343.0 -273.1 -216.8 Chrcmite 13.7 4.2

Other *cIIeHsad 39.5 12.3Toal 31.6 100.0

hL--eStEME e 88.3 -%.6 -106.3_Private Trafers, Net 4.0 -1.4 -1.2 E Al ET, I4RI 31, 198i5/

WS M1-.Garren Bal1 -427.3 -369.1 -324.3

Phblic Debt, i1. guaraee 1,564.8Official *, eqested n-(immateed Pri-a"e Debt -

Trafers 62.6 72.3 63.8 Total Oumtandi:g & Disb 1564.8

Net M; Borowing: 323.9 189.0 51.5 DEBT SIC RATO FCR 19823/

D I sbursIers 326.8 309.9 200.6 2nrziern -78.8 -110.4 -183.9

Debe Relief 75.9 89.5 34.8 Public Debt, frncl. ga±ted 33D.d-5/

Other .4tal (me)2/ 50.7 116.4) IMZ/I IDIA LW G gSeptw 3DZ 1984) 2D9.0 USS mi111=

qt~E - Reere 9.9 -8.6 IMR IDA

autstadg &DIisbisid 28.96 254.26

PATE (F EA0KE 1981 1982 1983 bdisbrsel 164.8tsanm Icl.

USS1.00 - D 21.7D O.3 3 430.45 34hzD45 28.96 419.101 I USS 0- o.2 Q0023

ProvIs1awl estIninterI Thiu ne NF cret, state a private 3/ Debt service payi3 s as 2 of eqports of goocs

sbart-tezm captal, arre zd coUdated 4 services.arrs, and errors and aissioc. 4 / After effects of debt resdm*hdlg armg ts

rParPis 0iub.Provisic l data dill be revisel wt= updated

de- data are available.July 1984

- 26 -

Annex 2Page 1 of 2

STATUS OF BANK GROUP OPERATIONSIN THE DEXOCRATIC REPUBLIC OF MADAGASCAR

A. Statement of Ba-k Loans and IDA Credits (as of September 30, 1984)1/

Loan orCreditNumber Year Borrower Purpose Bank IDA Undisbursed

-(US$ Million)

Ten Credits and Five Loanshave bee= fully disbursed 32.57 112.95 -

CR 663-MAG 1976 Madagascar Education II 14.002/ 1.14CR 817/1-4AG 1978 Madagascar Andekaleka Hydroelectric 43.00(PI 5.82CR 881-HAG 1979 Madagascar Mangoky - Agriculture 12.00 2.85CR 903-HAG 1979 Madagascar Railways II 13.00 0.23CR 938-MAG 1979 Madagascar Highways V 24.00 5.05CR 977-HAG 1980 Madagascar Industrial Bank - BNI 5.00 1.81CR 1002-XAG 1980 Madagascar Water/Sanitation 20.50 15.87CR 1016-MAG 1980 Madagascar Petroleum Exploration 12.50 2.92CR 1064-HAG 1981 Madagascar Agriculture Bank - BTK 11.50 7.58CR 1086-MAG 1981 Madagascar Plain of Antananarivo T.A. 2.30 1.20CR 1155-HAG 1981 Madagascar Accounting and Audit 11.50 5.91CR 1161-HAG 1981 Madagascar Forestry II 20.00 10.70CR 1211-HAG 1982 Madagascar Village Livestock II4/ 15.00 11.27CR 1249-HAG 1982 Madagascar Agriculture Institutions 5.70 2.69CR 1298-HAG 1982 Madagascar Tsimiroro Heavy Oil

Exploration 11.50 5.00CR 1337-MAG 1983 Madagascar Lac Alaotra 18.00 15.69CR 1391-MAG 1983 Madagascar Highways VI 25.00 22.38CR P004-MAG 1983 20.00 18.21CR 1433-HAG 1983 Madagascar Cotton 7.90 7.43CR P008-HAG 1983 - 9.90 8.29CR 1497-MAG4/ 1983 Madagascar Urban Development 12.80 12.80

TOTAL 32.57 428.05 164.84of which has been repaid 3.61 2.55

TOTAL now outstanding 28.96 425.50

Amount sold of which has been repaid 0.00 6.40TOTAL now held by Bank and IDA 28.96 419.10TOTAL undisbursed 164.84

1/ The status of projects listed in Part 'A' is described in a separate reporton all Bank/IDA-financed projects in execution, which is updated twiceyearly and circulated to the Executive Directors on April 30 and October 31.

2/ Including a Norwegian grant participation of US$7.0 million.3| Including a supplemental credit of US$10.0 million of 1980.4/ Not yet effective.

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Ak 2Page 2 of 2

B. Stateme=c of IFC 1kvestmeats (as of September 30, 1984)

Loan Equity Total-(US$ Million)-

1977 Sotema - Textile Mill at Miajuga 11.00 0.29 11.291980 Bata - Shoe Manufacturi=g in

AitaLanariLvo 1.25 - 1.251983 EPecheries de Nossi-Bg 2.57 0.13 2.70

15.24

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Annex 3

MADAGASCAR

CYCLONE REHABILITATION PROJECT

SUPPLEMENTARY PROJECT DATA SHEET

Section I - Timetable of Key Events

(a) Identification: April 1984(b) Project preparation: May 1984(c) Appraisal mission: May-June 1984(d) Negotiations: September 1984(e) Board Presentation: October 1984(f) Planned date of effectiveness: December 1984

Sectio- II - Special IDA Implementation Actions

None

Section III - Conditions of Effectiveness

(i) Establishment at the Central Bank of a Special Account toreceive an IDA deposit of US$3.0 million (para. 57).

vii) Establishment of a Project Advance Account to receive aG-overnment deposit of FMG 1 billion (para. 57).

Ciii) Signature of a subsidiary loan agreement and of a -ContratParticulier' with ASECNA (para. 50).

(iv) Signature of implementation agreements (conventions detravail) with SEPT, SEIMAD and FIFABE (para. 50).

(v) Signature of subsidiary agreements with BM and BFV(para. 50).

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Annez 4Page 1 of 2

CYCLONE EIL PROJECr

Cost Estimates(USS = 560 F(g)

FMg Million US0 million zForeign

Local Foreign Total Local Foreign Total Exchange

A. PORTS

KgLmjaDsgaCivil Works 127 186 313 0.227 0.332 0.559 60Equipment 73 244 317 0.131 0.436 0.567 77

Antsirananacivil Works 200 294 494 0.357 0.525 0.882 60Equipment 93 309 402 0.166 0.552 0.718 77

Sub-Total A 493 1,033 1,526 0.881 1.845 2.726 68

S. AIRPORTS

Mahaj argaCivil Works 33 24 57 0.060 0.043 0.103 42Equipment 144 480 624 0.257 0.857 1.114 77

AntsirananaCivil Works 95 70 165 0.169 0.125 0.294 43Equipment 42 140 182 0.075 0.250 0.325 77

MeteorologicalEquipment 23 78 101 0.042 0.139 0.181 77

Sub-Total B 337 792 1,129 0.603 1.414 2.017 -,s

C. ROADS

Amboromalandy Dike 810 1,190 2,000 1.447 2.125 3.572 60RN8 Works 238 350 588 0.426 0.625 1.051 60RN6 Works 619 910 1,529 1.106 1.625 2.731 60

Sub-Total C 1,667 2,450 4,117 2.979 4.375 7.354 60

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Amn 4Page 2 of 2

FMg Million USS Million S

Foreign ForeignLocal Foreign Total Local Foreign Total Excharge

D. PUBLIC BUILDINGS

EducationMahajarga 315 234 549 0.564 0.417 0.981 42Antsiranana 537 397 934 0.960 0.709 1.669 42

OthersMahajanga 441 326 767 0.787 0.582 1.369 42Antsiranama 365 270 635 0.651 0.482 1.133 42

Sub-Total D 1,658 1,227 2,885 2.962 2.190 5.152 42

S. AGRICULTURE

FIFABEEquipment 35 115 150 0.061 0.205 0.266 77Spare Parts 32 108 140 0.058 0.193 0.251 77Buildings 27 20 47 0.048 0.035 0.083 42

Sub-Total E 94 243 337 0.167 0.433 0.600 72

P. JIRAMA

Civil Works 260 191 451 0.463 0.341 0.804 42Equipment 175 583 758 0.312 1.041 1.353 77

Sub-Total F 435 774 1,209 0.775 1.382 2.157 64

G. BOUSING CREDIT 448 672 1,120 0.800 1.200 2.000 60

R. OCXSULTANT SERVLCES

MahajangaUrban Study 98 224 322 0.175 0.400 0.575 70Supervision 153 200 353 0.274 0.357 0.631 57Experts 129 168 297 0.230 0.300 0.530 57

Sub-Total R 380 592 972 0.679 1.057 1.736 61

Total Base Cost 5,512 7,783 13.295 9.846 13.896 23.742 59Physical Conti:gencies 664 978 1,642 1.186 1.747 2.9 33 60Price Contingencies 247 353 600 0.441 0.630 1.071 59

TOTAL COSTS 6,423 9,114 15,537 11.473 16.273 27.746 59

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Aznez 5

MADkGASCAR

CYCLONE REBAIILIflTIOK PROJECT

Project Implementation Schedule

Building Period

1984 1985 1986

I I I 1 I I | I -JA PORTS

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jEALEORTSI I*I I I I I I I I I 1 iIB AIRPORTS . 5

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