Doument of

The World Bank

FOR OFICLAL USE ONLY

L MV- 32 SE/- Pa^Report No. P-6330-PA

MEMORANDUM AND RECOMMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED LOAN

IN THE AMOUNT EQUIVALENT TO US$25.0 MILLIO'N

TO

THE REPUBLIC OF PANAMA

F-OR A

RURAL HEALTH PROJECT

DECEMBER 21, 1994

MICROGRAPHICS

Report No: P- 6330 PANType: MOP

This document has a restricted distribution and may be used by recipients only in the performance oftheir ofricial duties. Its contents may not otherwise be disclosed witbout World Bank authorization.

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CURRENCY t ND EQUIVALENT UNITS

US$1.00 - 1.00 Balboa (B)

WEIGHTS AND MEASURERS

I Kilometer (kkm) =1 ,000m1 Cubic Meter (rn3 ) = 1,000 liters I)

1 Liter (1) = 1,000 milliliters (ml)

FISCAL YEAR

January 1 - December 31

GLOCSARY OF ACRONYMS

CHW Community Health WorkerFES Panamanian Social Emergency Fund (Fondo Emergencia Social)GDP Gross Domestic Pr-1uctGOP Government of PanamaHA Health Assistant (Asistente de Salud)ICB International Competitive BiddingIDB Inter-American Development BankLCB Local Competitive BiddingMIPPE Ministry of Planning and Economic Policy (Ministerio de Planificaci6n y

Poiftica Econ6mica)MOH Ministry of HealthNGO Nongovernmental OrganizationPAU Project Administration UnitPNP-C Pilot Nutrition Program - Chiriqui.PRODESHU Human Resources Development Program (Programa de Desarollo

Humano)PRONAN National Food and Nutrition Program (Programa Nacional de

Alimentaci6n y de Nutrici6n)SDGSA Subdirectorate General of Environmental Health of the Ministry of Health

(Subdirecci6n General de Salud Ambiental)SDGSP Subdirectorate General of Health Services of the Ministry of Health

(Subdirecci6n General de Salud de la Poblacion)

FOR OFFICIAL USE ONLY

PANAMA

RURAL HEALTH PROJECT

LOAN AND PROJECT SUMMARY

Borrower: The Republic of Panama.

Implementing Agency: Ministry of Health (MOH).

Beneficiary: Not Applicable.

Poverty: Program of Targeted Intervention.

Amount: US$25.0 million equivalent.

Terms: Repayment in 17 years including, five years of grace with interestat the Bank's standard variable rate.

Comunitment Fee: 0.75% on undisbursed loan balances, beginning 60 days aftersigning, less any waiver.

Financing Plan: See Schedule A.

Net Present Value: Not Applicable

Staff Appraisal Report Report No. 12944-PA; dated December 16, 1994

Map IBRD No. 25709

Ws documet has a restuicted distnuito ad my be used by reipien ol in the pefomr m ti&rlofficial duftes is contn riot oftem be discloed wiht Wol Bak authorizato

MEMORANDUM AND RECOMMIENDATION OF THE PRESIDENT OF THE IBRIDTO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN

TO THE REPUBLIC OF PANAMAFOR A RURAL HEALTH PROJECT

1. I submit for your approval the following memorandum and recommendation on aproposed loan to the Republic of Panama for US$25.0 million equivalent to help finance a RuralHealth Project. The loan would be at the Bank's standard variable interest rate, with a maturityof 17 years, including five years of grace. The total project cost is estimated at US$41.7million.

2. Background. Panama's GDP per capita was estimated at US$2,570 in 1993. Socialindicators for the country as a whole are comparable to other middle-income countries, withwide regional variations that reflect a skewed distribution of income, past public investments andsocial expenditures. In 1988 half of the households in Panama were below the poverty level.Critical poverty affected about one third of households, concentrated in deep pockets of povertyin peri-urban and rural areas. The 28 poorest districts (out of a total 68 districts) where mostof the project beneficiaries live, are characterized as follows: (a) over 50 percent of householdshave monetary incomes insufficient to buy a minimum food basket; (b) 40 to 70 percent ofchildren are growth retarded by the time they enter school; (c) about 30 percent of householdsdo not have access to safe drinking water and basic sanitation; (d) 40 to 50 percent ofhouseholds do not have access to primary health care services; and (e) infant and child mortalityrates range between 40 and 75 per thousand live births, two to five times the national average,reaching levels found in low-income countries. The spread of cholera since 1990 has heightenedthe health risk posed by waterborne diseases, sihns, most of Panama's rural water supply systemsdo not provide for disinfection. Unless adequately addressed this trend threatens to underminethe effectiveness of Panama's considerable health expenditures, which reached 19.6 percent oftotal Government expenditures and 5.6 percent of GDP in 1992.

3. Past development policies to redress poverty issues have had shortcomings that include:(a) a bias in investment and social expenditures that has favored population groups living in themore affluent Panama City-Col6n metropolitan area; (b) overly sophisticated infrastructure andequipment that are costly to operate and maintain; (c) an excessive reliance on the State toprovide basic services, and a parallel failure to mobilize the capabilities of the private sector,nongovernmental organizations (NGO) and beneficiaries to contribute to the developmentprocess; (d) insufficient monitoring of environmental conditions; and (e) overly complex,centralized financial and administrative procedures. The proposed project has been designed toaddress these issues within the context of the Government of Panama's (GOP) poverty alleviationstrategy.

4. Government Strategy. GOP's development strategy is centered on an economic andsocial recovery program which is presented in the accompanying Country Assistance Strategystatement. To further the social objectives of its economic recovery program, GOP has preparedrehabilitation programs for the public health system administered by the Ministry of Health(MOH) and the Social Security Fund, and for the water and sewerage authority that serves theurban population. To develop its human resource base and alleviate poverty, GOP adopted a

2

National Food and Nutrition Prograin (PRONAN) in 1992, that defined new strategies andprograms for addressing priority issues in food production, distribution, and malnutrition. Italso adopted a Human Development Program (PRODESHU) that defned the parameters of amult.sectoral investment program to alleviate poverty, including agriculture, forestry,infrastructure, and social projects, estimated to cost US$200 milion over 1993-1997. Parts ofthese programs are already being implemented by: (a) the Social Emergency Fund (FES) fundedby USAID and the GOP; (b) a Pilot Nutrition Project under the Economic Recovery Loan (Ln.3438-PA, 1992); and (c) an Agro-foety project (International Fund for AgriculturalDevelopment).

5. To complement the above actions, GOP reque-sted Bank assistance to support the ongoingPRONAN and PRODESHU objectives. In particular, these include the reduction in the highrates of malnutrition, especially among young children, and the inadequate access to safe potablewater and basic sanitatior. in rural areas. GOP policies and strategies in the social sectors andfor poverty alleviation, with specific reference to its policies and strategies in the nutrition andthe water supply and sanitation subsectors, are presented in a Policy Letter submitted in supportof the proposed project. The letter demonstrates GOP's commitment to adopt a policy ofpoverty alleviation and improve access to and quality of public services for the poor. Evidenceof the govemment's commitment to social sector reform include an ongoing Health SectorRehabilitation Project (IDB) that complements the proposed project by focussing on urban healthcare and sector management capacity, as well as a recent request for Bank assistance in theeducation sector.

6. Rationale for Bank Involvement. The proposed project, the first Bank operation in thesocial sectors in Panama, will follow up on issues of health and nutrition and of the efficiencyof social sector expenditures that were identified in the Economic Recovery Loan. The projectis fully consistent with the country assistance strategy, which is being presented together withthe proposed project, as it supports the objectives of poverty alleviation. The project willimprove the access of rural populations to basic servizes and strengthen the country's socialsafety net. The Bank will assist GOP to apply efficient targeting criteria, raise the quality andcoverage of basic health services and improve institutional and administrative capacity in MOH.An analysis of the nutrition and environmental health subsectors was carried out in 1993 as partof the preparation assistance for the proposed project. This analysis has helped GOP developits policy framework for investments in nutrition, rural water and sanitation, and in communityorganization and participation. The results of lessons learned in the review of the sector havebeen incorporated into the project design.

7. Project Objectives. Project objectives are to: (a) reduce the incidence of malnutritionfrom an estimated 40 percent at present to about 30 percent among young children, and breast-feeding and pregnant women in the poorest 28 districts of Panama; (b) increase the covmrage ofwater supply and basic sanitation in all of Panama's rural areas, from about 62 to 80 percent andfrom about 72 to 88 percent, respectively; (c) train new and existing community water boardsto improve their capacity to operate and maintain systems under their responsibility; and (d)strengthen the institutional capacity of: (i) the Subdirectorate General of Health Services(SDGSP) of MOH to direct, monitor and evaluate the nutrition strategies and programs to beimplemented under the project; (ii) the Subdirectorate General of Environmental Health(SDGSA) of MOH to perform ils statutory obligations to provide households in small rural

3

communities with access to basic water supply and sanitation infrastructure, and to define andenforce environmental health regulations to protect the general public from waterbornecontamination and pollution; (iii) the Project Administration Unit (PAU) to coordinate andadminister the project; and (iv) the Ministry of Planning and Economic Policy (MIPPE) todesign and implement a national system for monitoring poverty alleviation efforts. The projectsupports GOP's poverty alleviation strategy as it: (a) targets nutrition interventions to the poorestdistricts; (b) contributes to human resource development by improving access to basic andpreventive health services; (c) involves the community in the project's design andimplementation; and (d) makes full use of NGO, private sector and community resources.

8. Project Description. The proposed project consists of three components. (1) TheNutrition Component (US$13.1 million, or 31 percent of total costs) is targeted to the 28poorest districts and will help MOH to: (a) select, train, equip and supervise about 1,500community health workers (CHW) and 120 health assistants (HA) to provide basic nutrition andhealth services to about 75,000 rural inhabitants who lack adequate access to the public healthsystem; (b) introduce a complementary feeding program in communities with a trained CHWand in about 250 MOH outpatient facilities, enrolling about 95,000 children under 5 years of ageand about 20,000 breast-feeding and pregnant women, who are either seriously malnourishedor at risk of serious, chronic malnutrition; and (c) provide refresher training to about 950 MOHstaff assigned to outpatient facilities. (2) Th Rural Water Supply and Sanitation Component(US$21.3 million, 51 percent) will help MOH to: (a) construct new water supply systems inabout 450 unserved communities and expand/rehabilitate existing systems in about 250communities, construct about 450 shallow wells equipped with handpumps, and provide latrinesand basic sanitation to about 30,000 households; (b) organize, train and supervise about 450 newand 1,150 existing community water boards; and (c) establish and support the operations of anational system of water quality control and a computerized information center on Panama'swater sources for rural areas and related water and sanitation activities. (3) Tne InstitutionalStrengthening Component (US$7.3 million, 18 percent) will strengthen the operations and thetraining programs for the staff of SDGSP, SDGSA, PAU and MIPPE by providing funding forstudies, participatory research, poverty monitoring, project reviews, staff training and projectadministration.

9. Project Costs and Financing. The total project cost, including physical and pricecontingencies, is estimated at US$41.7 million, net of taxes, of which an estimated US$22.1million (53 percent) is foreign exchange. Investment costs are 55 percent of total baseline costs,and incremental recurrent costs, including complementary food (US$10 million over the projectimplementation period), amount to 45 percent of the total baseline costs. The proposed Loanof US$25.0 million finances about 60 percent of total project cost, net of taxes and duties. Itfinances about 78 percent of foreign exchange expenditures and 39 percent of local expenditures.It finances the food used in the complementary feeding program on a declining basis (US$5.8million), which amounts to about 31 percent of the total incremental recurrent cost of theproject. The extent of local and incremental recunrent expenditures financing is justified topromote the adoption by MOH of an efficient way of procuring and providing food rations. Allother categories of incremental operating expenditures, including taxes and duties, are financedby GOP. The Government's contribution to the proposed project is US$15.4 million (37 percentof total costs) and project beneficianres will contribute labor valued at US$1.3 million (3 percentof total costs). Retroactive financing up to US$2.0 million, or 8 percent of the proposed loan

4

amount, is authorized for eligible expenditures (e.g., technical assistance, design andimplementation of a first batch of subprojects, and initial training of MOH staff, communitywater board members, and community health workers) incurred after December 15, 1993.Retroactive financing is justified to facilitate a timely implementation of start-up activities,including subploject design, staff training and community mobilization efforts. A breakdownof estimated costs and financing are shown in schedule A. Amounts and methods ofprocurement and disbursement and the disoursement schedule are shown in Schedule B. Atimetable of key project processing events and the status of Bank Group operations in Panamaare given in Schedules C and D, respectively. The Staff Appraisal Report No. 12944-PAN,dated December 16, 1994, is also attached.

10. Project Implementation. SDGSP and SGDSA of MOH will be responsible forimplementing the projwct, through the Central, Regional and local offices of MOH. They willbe supported by the services of other units of MOH, in accordance with their currentorganizational responsibilities: the Social Participation tIepartment for training and communityorganization activities; the Research Department for a baseline survey of health and nutritionconditions; the Planning Directorate for project evaluations and a Project Administration Unit.In addition, the services of the Social Planning Subdirectorate of MIPPE will be mobilized andsupported to develop a system to monitor living standards. To assist in the construction andrehabilitation of rural water supply and sanitation systems, MOH will enter into an agreementwith FES to delegate to FES the administration of up to US$3.5 million of civil works (about25 percent of total) in a manner that promotes maximum community participation. Annual workprograms for works to be administered by PES and built by private contractors or NGOs willbe agreed to between MOH and FES. The Nutrition Component will be implemented in ftfreephases. PAU has been established to provide administr'Pve support for project activities,including procurement and disbursement, according to streamlined procedures acceptable to theBank. Annual work program and budget reviews with Bank participation and a revolving fundfor GOP counterpart funds will be established to improve investment implamentationperformance. Contracting with private sector companies, individuals and NGOs will beencouraged for civil works and training activities. Where contractors are not available, welldrilling and other project works valued at US$1.2 million (2 percent of total project costs) willbe carried out by force account using MOH's staff and equipment in the regions. In these cases,the Bank will only finance the cost of the equipment and materials used.

11. Project Sustainability. Project design contributes to sustainability by: (a) requiring theregular GOP budget to finance aUl incremental operating expenditures, except food which wiUlbe financed by the proposed loan on a declining basis, (b) organizing communities to operateand maintain basic infrastructure, requiring them to contribute to the capital costs of rural watersupply and sanitation investments; and (c) setting water tariffs at levels that are affordable andthat at least cover operatirg and maintenance costs. The estimated net incremental opeatingcost necessary to sustain the project's benefits is about US$3.2 million annually, or less than 3percent of MOH's 1993 recurrent budget. It includes the full cost of the complementary feedingprogram and supervision and technical assistance by bcal MOR officials to the communities.

12. Lessons from Previous Bank Involvement. The key lessons learned from similarprojects and incorporated in the project design are the need for: (a) project preparationarrangements to create a high level of commitment to project objectives, and to design the

5

components taldng into account the institutional capacity of implementing agencies (b) clear,simple project design and implementation arrangements, with a built-in provision for review andadjustment; (c) careful attention to developing and defining implementation arrangements; (d)agreement on explicit, measurable progress, and monitoring and result-oriented indicators; (e)mobilizing the community's participation in all project phases, and especially for operations andmaintenance, to promote sustainability of project benefits; and (f) basing food supplementationprograms on efficient targeting criteria and accompanying them with growth monitoring andnutrition counseling. These lessons have been incorporated into the project design, including:(a) GOP commitment has been secured through extensive discussions, the Policy Letter andthrough a post-negotiations mission that reviewed the project and the legal documents with thePanamanian Administration that took office in September 1994; (b) annual and midterm reviewsof the implementation perfonnance of Annual Work Progams, with agreed quarterlyperformance targets by regional offices to provide opportunities to adjust project implementationas needed; (c) institutional strengthening is a major component of the project and focuses onMOH's capacity to implement the project; (d) a table of monitoring indicators and a performancereview process were agreed upon; (e) a participatory strategy was adopted to actively involvecommunity groups and ensure the sustainability of project impacts; and (f) explicit targeting ofPanama's poorest 28 districts (out of 68) was utilized, and within these districts onlymalnourished preschool children and pregnant and breast-feeding women will be eligible forcomplementary food rations.

13. Agreed Actions. During negotiations, agreement was reachtd on: (a) the final text ofthe Policy Letter submitted to the Bank; (b) terms of reference and follow-up procedures forconducting the annual and Midterm project Reviews; (c) the number, profiles and time ofappointment of additional permanent staff required to implement the nutrition and the rural watersupply and sanitation components; (d) the final versions of the project procurement proceduresand standard bidding documents; (e) project start-up expenditures eligible for retroactivefinancing; (f) procedures to open a revolving fund account for GOP's counterpart funding; and(g) a set of key monitoring indicators for project activities, financing, outcomes and impact. Asconditions of Loan effectiveness, GOP will have: (a) appointed suitably qualified andexperienced managers to head MOH's Potable Water, Basic Rural Sanitation and Quality ControlDepartments and the chief engineers of SDGSA's five regional offices; (b) adopted a satisfactorymanual of project rules and procedures; (c) opened a bank account for the revolving fund withan initial deposit of US$0.5 million; (d) appointed to the PAU a suitably qualified andexperienced procurement officer, accountant and financial officer; and (e) submitted asatisfactory Annual Work Program for 1995. As a condition of disbursement for the purchaseof food supplements and medical equipment, MOH will have adopted and started to implementa satisfactory action plan for the Pilot Nutrition Program - Chiriqui (PNP-C). The PNP-C aimsto: improve the nutritional status of vulnerable groups; increase attendance of health clinics andposts; provide better coverage of key preventive health programs and to train HAs and CHWs.Its implementation is being monitored to validate the acceptability and efficiency of mechanismsto target food rations and to promote community participation in the delivery of basic nutritionand health services.

14. Poverty Category. The proposed project is a Program of Targeted Interventions. Itdirectly seeks to reduce the two leading indicators of household poverty: child malnutrition andthe lack of access of the household to potable water and basic sanitation. The design of the

6

Nutrition Component incorporates both geographical and individual targeting mechanisms: itsintroduction is limited to the 28 poorest districts and only malnourished members of thevulnerable group consisting of children under 5 years of age and pregnant and breastfeedingwomen will be eligible. The design of the Rural Water Supply and Sanitation Componentsincorporates criteria that target the rural communities: those that have either not been served inthe past or in which over 30 percent of the population is not currently served. Overall, thepopulation of project beneficiaries has a significantlv larger proportion of poor people thanPanama's population as a whole,

15. Environmental Aspects. The proposed project will have no adverse environmentalimpact and will help to reduce soil and water body contamination by: (a) improving disposalof human excreta and waste water; (b) institutiag a system of regular controls of water quality;and (c) encouraging appropriate watershed management practices. It is classified Category C.

16. Project Benefits. The Nutrition Component will improve the nutrition and health statusof the population living in the 28 poorest districts of Panama, which account for about one thirdof the country's total population. In particular: (a) about 75,000 people living in remote,isolated rural communities will gain access to primary health care services, including nutrition,through the training, deployment and support of CHWs; and (b) about 20,000 pregnant andbreast-feeding women and 95,000 children under 5 will be enrolled in complementary feedingprograms over the life of the project. Taken together, these actions are expected to reduce theincidence of malnutrition among preschool children and pregnant mothers within the 28 districtscovered, from about 40 percent to about 30 percent. In addition, training programs for MOHstaff and imrproved technical supervision will improve the quality of nutrition services deliveredin these 28 districts. Improved nutrition and health status and better use of preventive healthcare services will reduce the need for hospital and outpatient health services and will increasethe efficiency of public expenditures for health. The Rural Water Supply and SanitationComponent will provide access to safe water and to basic sanitation for about 175,000 and150,000 unserved rural inhabitants, respectively.- Efforts to organize, train, provide technicalsupport and supervise community water boards will improve the quality of water delivered andthe sustainability of rural water sector investments and will help protect the environment.Benefits of safe drinking water and basic sanitation are well known and include: better healthof families, reduction of nfant and child mortality and morbidity, increased time for productivework and child care, and higher school attendance. The Institutional StrengtheningComponent will: (a) improve knowledge about health issues affecting the poor and theresponsiveness of national policies to these issues; and (b) strengthen the capacity of MOH toset policies and norms for nutrition, water supply and sanitation, and to design, implement andevaluate projects.

17. Program Objective Category. The project is a poverty reduction and human resourcedevelopment operation.

18. Participatory Approach. The project has been designed to promote communityparticipation in identifying and developing appropriate responses to the health, nutrition andsanitation needs of the intended beneficiaries, to contribute to project investments, and to assistin delivering basic services and in maintaining and operating project financed infrastructure.During the preparatory stage, MOH invited representatives of local communities, officials and

7

NGOs to workshops and informal meetings to develop proposals. During implementation,communities will play a major role in selecting and supporting the activities of CHWs, HAs andCommunity Water Boards which are essential to sustaining project benefits. Recourse to NOOsto carry out civil works and for training and supervision activities is envisaged. The projectsupports a program of participatory research on health and nutrition related household behaviors.The Mid-term and project evaluation studies will include assessments of beneficiary attitudes andsupport of project activities.

19. Risks. The proposed project faces three main risks. The first risk is the limitedmanagerial and administrative capacity of MOH to implenunt investment projects. This riskhas been attenuated by: (a) the appointment by the new Panamanian administration ofexperienced managers to head the key headquarters divisions and departments responsible forproject implementation; (b) improvements in the organizational structure of MOH impler-entedby the new administration; (c) the preparation of a detailed manual of project opeLatingprocedures setting out, inter alia, the mandate of SDGSP and SDGSA to direct projectimplementation, the project's internal planning, budgeting and monitoring procedures, the roleand support functions of PAU and the streamlined administrative procedures to be used; (d)arrangements for having FES administer part of the water supply and sanitation constructionprogram; and (e) annual and Mid-term project review mechanisms that provide flexibility toadjust planned project activities to demonstrated institutional capacity, while strengthening thatcapacity. The second risk is the Limited institutional capacity of MOH and NGOs inorganizing and supporting local communities and in delivering services and supervision inremote areas; and of the community water boards in operating and maintaining water systems.This risk has been attenuated by: (a) the inclusion of an institutional development component tostrengthen the management and technical capacity of the MOH at both the central anddecentralized levels; (b) training programs and seminars for the working level staff of MOH andcommunity workers and water board members; and (c) close involvement of the Bank in aproject launch seminar that will be held at the time of loan effectiveness. The third risk is thepossible delay in the provision of counterpart funding. This risk is a'tenuated by: (a)Government assurances that Annual Work Programs will be prepared and reviewed with theBank in a timely manner permitting agreements to be reached on the required level of budgetaryallocations and counterpart financing for the following year, before the limit date for submittingMOH's annual budget request to the National Assembly; and (b) the establishment of a revolvingfund to meet GOP's counterpart funding obligations.

20. Recommendation. I am satisfied that the proposed loan complies with the Articles ofAgreement of the Bank and recommend that the Fxecutive Directors approve it.

Lewis T. PrestonPresident

AttachmentsWashington, D.C.December 21, 1994

8 Schedulc A

PANAMARURAL HEALTH PROJECT

ESTIMATED COSTS AND FINANCINGProject Cost Summary

(US$lions)

-oa Forelgu- t Tfftal-

1. Nutrition Component

A. Community Health/Nutrition Workers 0.6 1.6 2.2

B. Complementary Food and Micronutrients 0.1 7.9 8.0

C. MOH Staff Training 0.1 0.3 0.4

Subtotal Nutrition Component 0.8 9.8 10.6

2. Rural Water Supply & Sanitation Component

A. Rural Water Supply and Sanitation Systems 9.9 5.9 15.8

B. Community Water Boards 0.7 0.4 1.1

C. Water Quality Control Program 0.4 0.3 0.7

-Suba R WatertaSurply S 17.6

3. Institutional Strengthening Component

A. Water and Sanitation Division 1.6 0.7 2.3

B. Nutrition Department 1.8 0.6 2.4

C. Project Administration Unit 1.2 0.4 1.6

Subtotal Institutional Strengthening Component 4.6 1.7 6.3

TOTAL Baseline Costs 1 . .4,5

Physical Contingencies 1.2 1.8 3.0

Price Contingencies 2.0 2.2 4.2

TOTAL PROJECT COS -19.6 22.1 41.7

9 Schedule A

PANAMARURAL HEALTH PROJECr

ESTIMATED COSTS AND FINANCING

Financing Plan: Local Foreign Total-US$ Millions--------- -------

Government of Panama 10.7 4.7 15.4IBRD 7.6 17.4 25.0Beneficiaries 1.3 0.0 1.3

TOTAL 19.6 22.1 41.7

10 Schedule B

PROCUREMENT METHODS BY CATEGORY(US$ million)

Procurement Arrangements(US$ million)

Category ICB LCB Other Non-Bank TOTALFinanced

Civil Works 5.7 3.tl' '-0 52 93(4.1) (2.2) (6.3)

Goods and Equipment (except for mat. 3.7 1.0 0.5 - 5.2and equip. for Subprojects executed by (3.7) (1.0) (0.5) (5.2)Force Account)Materials and Equipment for sub- --0.4 0.3 0.7projects executed by Force Account (0.4) (0.3) (0.7)FES Subprojects 2.2 1.3" 3.5

(1.6) (1.0) (2.6)Medical Equipment and Supplies - - 1.0' - 1.0

(1.0) (1.0)Training - - 0.2 0.9 1.1

(0.2) (0.9) (1.1)Consultants and Studies, incl. PAU - - 2.3 - 2.3

(2.3) (2.3)Complenentary Food 9.87' - 9.8

(5.8) (5.8)Incremental Salaries - - - 5.4 5.4Incremental Operating Costs - - - 3.4 3.4

TOTAL 3.7 9.3 18.5 10.2 41.7(3.7) (7.1) (13.3) (0-9) (25.0)

Figures in parentheses are the respective amouns finced by the Boak." Local shopping - US$3.1 million.i1 Value of labor for sub-projects construted uaing fone account mthods. Not filanced by the Bank.if Local shopping = US$0.8 and 4irect contraetig = US$0.5 million.4' Direct contracting with UNICEF = USS 1.0 million.5' Consltants = US$2.3 million.6 Includes consultants' contracts for the PAU."' Limited Iernational Bidding = US$ 8.9 milion, and

Local Shopping - US$0.9 nillion, of which US$0.4 mnilion fSnanced by th Bank.

11 Schedule B

PANAMARURAL HEALTH PROJECT

WITHDRAWALS OF THE PROCEEDS OF THE LOAN

Ca£tory Amount of the Lean % of Expenditures to be financedAllocated (expressed inUS$ mnimon equivalent) l

1. Civil works, other 5.7 70%than FES subprojects

2. Goods, other than for 4.7 100% of foreign expenditures, 100%FES subprojects or of local expenditures (ex-factory cost)medical equipment and 85% of local expenditures forand supplies, and other items procured locally.goods for civil workssto be carried out byforce account

3. Goods for civil works 0.6 100% of foreign expenditures, 100%to be carried out by of local expenditures (ex-factory cost)force account and 85% of local expenditures for

other items procured locally.4. FES subprojects

a. to be carried out by 0.3 70%direct contracting

b. to be carried out by 2.0 70%procurementprocedures other thandirect contracting

5. Medical equipment 1.0 100%and supplies

6. Consultants' services 2.0 100%

7. Training 1.0 100%

8. Food Supplement 5.0 100% until December 31, 1996; 60%until December 31, 1998; and 30%thereafter

9 Unallocated 2.7

Total 25.0

ESTIMATED DISBURSEMENTS TIMETABLE

IBRD) I1scal Year

1995 1996 1997 T 1998 1999

Annual 4.31 5.1 6.0 5.8 3.8

Cumulative 4.3 9.4 15.4 21.2 25.0Includes the initial deposit of US$S1.5 nllion into the Spedd Account. Reoacv fnAig of up to US$2.0 miion wwld

be permied for dligib expenditrles incumed snce December 15, 1993

12

Schedule C

PANAMARURAL HEALTH Pi;4OJECT

TIMETABLE OF KEY PROJECT PROCESSING EVENTS

(a) Time taken to prepare Twelve months

(b) Prepared by Ministry of Health

(c) First Bank Mission January 1993

(d) Appraisal mission departure December 1993

(e) Negotiations May 1994

(f) Planned date of effectiveness May 1995

(g) List of relevant PCRs and PPARs Not applicable

13

SCHEDULLE D

STATUS OF BANK GROUP OPERATIONS IN PANAM

STATEMENT OF BANK LOANS AND IDA, CREDITSAs of October31,1994)

Amount in US$ SilMoa(es canceUation)

Credit/ FiscalLoan No. Year Borrower Parpose Bank IDA Undisbursed

32 loans fully disbursed 505.63

Of which SECALA, SALs and Program Loans

La. 2357-PAN 1984 Panama Structural Adjustment 1 60.20LN. 2768 PAN 1987 Panama Stuctura Adjustment 11 49.83

110.03

Ln. 3438-PAN* 1992 Panama Economic Reovery 120.00 59.72Ln. 3686-PAN 1994 Panama Roads Rehabilitation 60.00 58.53

Total 683.63 118.25Of which has been repaid 401.58

Total held by Bank and IDA 284.05

Amount sold: 9.21Of which has been repaid: 9.21

Total Undisbursed 118.25 118.25

* SAL, SECAL, or Program Loan

14

SCHEDULEI DPANAM

SFATEMET OF IWC W4VUFSNTSAs of Octobr 31 1994(In Miebas US Dolars)

Orwd GM CommItnat- Me fie U*dLsb.Fisal Years IFC IFC by by lncLConuitted Obliw Type of 8zesS Loaw Equty Yartlk Totals IFC Partk. Paric.

1971 a/Corporaciond Deso rolio Toursm 1.21 .27 - 1.48197$ a/Vidrios Panamons, S.A. Gsa. Manuf. 2.40 1.40 - 3.80 . . _1979185186188 Banco Latinoamericano de Capital Mkts. 47.33 2.50 - 49.83 2.09 -

1993 Banco Continental de Capital Mkts. 5.00 - * 5.00 5.00 - 4.03

Toa lgross commitments b/ S5.94 4.17 - 60.11Lass cancellations, torminrtions.

repsyments and sales 50.94 2.0$ 53.02 -Total commitments now hold c/ S.00 2.09 - 7.09 7.09 4.03

Tota commitments held and pending commitmentsToal undisbursod commitments 4.03 * * 4.03

a/ Investments which have boum fully cancelled. terminated, writen-off, Sold, redeemod, or tepaid.br Gross commitments consst of approved and signed projects.ef Hold commitments consist of disbuned and undisbutsed investments.

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