Document of RETURN TO 1The W orld B1K REPORTS DIESK

FOR OFFICIAL USE ONLY W ITHiN

Report 17

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PROGRAM PERFORMANCE AUDIT REPORT

COLOMBIA: PROGRAM LOAN (LOAN 842-CO)

September 23, 1977

Operations Evaluation Department

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

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FOR OFFICIAL USE ONLY

PROGRAM PERFORMANCE AUDIT REPORT

COLOMBIA PROGRAM LOAN (LOAN 842-Go)

TABLE OF CONTENTS

Preface

Basic Data Sheet

Highlights

PROGRAM PERFORMANCE AUDIT MEMORANDUM 1

Design of the Loan 2

Export Projects Component 2- 3

Achievement of Objectives 3

Conijtinn fnr thp SarAnd Trnnrhp 4

Disbursement and Use of Counterpart Funds 5

Summary and Conclusions 5- 6

Attachment: PROGRAM COMPLETION REPORT

Summary A.1 - A.3

1. Introduction A.4

III. Loan Description and Objectives A.6 - A.7

IV. Import Component A.7 - A.8

V. Export Component A.9 - A.16

V I.. Z .Lc.LiUjLLLUIL I-L %1- '.ULLL £ L CU "LeL Cance ~llau L

of Second Tranche A.16 - A.17

VII. Conclusions A.17 - A.19

Annexes:

I. Balance of Payments Data (100-74) 4f. LU

2. Terms of Trade (1970-73) A.21

3. Import Component - Disbursement Schedule A.22

4. Import Component - Project Share of Total Imports A.23

5. Import Component - Allocation of Counterpart Funds A.Z4

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

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Page No.

Annexes:

0. Import Component - Allocation of Counterpart FundsCompared to Projections (Percentage Terms) A.25

7. Import Component - New York Spot Prices, ColombianMams A.26

8. Export Component - Project Data (as of March 31, 1976) A.27

9. Export Component - Summary of Operations,no of July 2. 1976 A_9R

10. Export Component - Description of SubprojectsApprovals of Foreign Exchange Subloans A.29

Approvals of Domestic Currency Subloans A.30

12. Export Component - Distribution of Approved Loansby Size (As of March 31, 1976) A.31

13. Export Component - Distribution of Approved SubloansUy AHLeCUL LCL d[U IeiS LAS 01 LarcH i1 1710) t.JL

14. Export Component - Sub-Loan Distribution by EconomicActivity and Location (As of-March 31, 1976) A.33

. VApoJ Sumpunent - GLyment eueration uy Economic

Activity (As of March 31, 1976) A.34

16. Export Component - Export Commitments and ActualExports A.35

17. Export Component - Approvals Schedule A.36

18. Export Component - Disbursement Schedule A.37

19. Export Component - Distribution of Committed Loansby Financial Intermediaries (As of March 31, 1976) A.38

20. Export Component - Characteristics of Subprojectsby IntPrmPdiaria% A 10

21. Export Component - Staff of Development CreditDepartment A.40

PROGRAM PERFORMANCE AUDIT REPORT

COLOMBIA PROGRAM LOAN (LOAN 842-CO)

*n T.i, A .1 1M

Loan 842-CO for US$60 million, to be disbursed in two equaltranches, was the forty-ninth loan, and the first program loan, to beapproved to Colombia. The loan was signed on June 28, 1972, and becameeffective on August 24, 1972. The second tranche was cancelled inFebruary 1973, and the first tranche was closed on September 30, 1976.

A Program Completion Report (PCR), prepared by the Latin Americaand the Caribbean Regional Office,is attached. It is comprehensive andcompetent. The audit report supplements the PCR by focusing mainly onthe design of the loan and dealing with performance under the loan inrelation to its objectives. Comments on the draft audit were receivedfrom the Latin America and the Caribbean Regional Office and Policy Plan-ning and Review Department of the Bank.

PROGRAM PERFORMANCE AUDIT REPORT

COLOMBIA PROGRAM LOAN (LOAN 842-CO)

BASIC DATA SHEET

Amounts (in US$ mln)

Aq nf R/11/77

Original Disbursed Cancelled Repaid Outstanding

Loan 842-CO 60.0 29.55 30.45 - 29.55

Project Data

Original Plan Actual or Est. Actual

Conception in Bank 9/16/71 9/16/71

Board Approval May 1972 6/22/72

Effectiveness 8/24/72

Loan Closing 12/31/74 9/30/76

Mission Data

Month, No.of No. ofYear Weeks Persons Manweeks Date of Report

identification--Preparation )-- 11/71 1 4 4 11/05/71Preappraisal )

Appraisal 1/72 2 2 4 3/30/72

Subtotal 3 8

Supervision I / 6/73 1 2 2 6/22/73

Supervision II/ 1/74 1 2 2 1/11/74

Runervi-inn TTT2/ 5/74 0- 1 0.5 r/17/74

Subtotal 2.5 4.5

1/ This mission was part of the Economic Mission visiting Colombia. Dateof Conception in Bank is date Bank first recorded project was beingconsidered for financing and began to follow up that decision in aserious continuous way (Project Negotiations or Country General Files).Actual Loan Cl6sing Date is date of last disbursement out of the Loan,as given by Controler's Department.

2/ Supervision Missions also reviewed DFC loans: 451-GO, 534-GO, 625-GO,742-CO and 903-CO.

PROGRAM PERFORMANCE AUDIT REPORT

COLOMBIA PROGRAM LOAN (LOAN 842-CO)

HIGHLIGHTS

This report deals with the program loan made to Colombia inJune 1972. Its principal objectives were to assist Colombia to resumea higher rate of economic growth and to reduce the dependence of theeconomy on coffee exports by encouraging the Government to undertakepolicy measures of a longer term impact.

The audit finds that the Program Loan achieved its mainobjectives. It helped Colombian industry to build up its exportcapability and to increase its non-traditional exports. The Govern-ment took measures to increase budgetary revenues. It is not, how-ever, possible to relate precisely the improvement in the performanceof the economy to measures taken in connection with the loan or todistinguish the impact of the loan from that of measures taken by theGovernment and aeneral economic develonments. The loan was made intwo tranches and, because of rising coffee prices, the second tranchewas~ cancnle 1d.-

Othe points o neetae

- De-i-n of the loan (pras i n7 nnri o if thep PrR andparas. 5-7 of the PPAM);

- Role of the export projects component (paras. 5.01-5.29of the PCR and paarraass 10 of the P-P.,, and

and paras. 18-19 of the PPAM).

PROGRAM PERFORMANCE AUDIT MEMORANDUM

COLOMBIA PROGRAM LOAN (LOAN 842-CO)

1. Coffee exports play a crucial role in Colombia's governmentrevenues and foreian exchange earnings. In 1971 it was estimated that

a one US cent per lb. change in the price of coffee made a US$1.5 milliondifference to annual Government revenue and a TMAR-4 millinn diffPrPnrPto its annual export earnings.

2. The price of coffee which was 56.4 US cents in 1970 began to

the Government's budgetary position worsened, and its balance of mer-andisuL LLU shUweu a defiCiL UL U9140 milliOn. 1h Government of

Colombia approached the Bank for a program loan and in June 1972 theDan approved a Program Loan of US$60 million, to be made available intwo tranches. The objectives of the loan were to help Colombia (a)resume a higher rate or economic growth- and kD) "achieve a rapidly

diminishing dependence on coffee export" (para. 24, President's ReportNo. P-1076).

3. The following Table gives the amounts of funds made available,and their proposed uses, under each US$30 million tranche of the ProgramLoan:

Program Loan Counterpart FundsAmount Amount

(US$ million) Purpose (US$ million) Purpose

20 Import of specific 15 Development expenditurecategories of goods under specified categories

5 On-lending for permanentworking capital needs ofexporting enterprises

10 On-lending for -exporting enterprises

30 20

Since the export component of US$10 million was intended to be used forfurther on-lending, no counterpart funds (except in the process of renav-ment by sub-borrowers) were to be generated and, therefore, provisionsrelating to counterpart funds did not apply to this segment of the ProgramLoan.

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4. The two tranches under the-loan had the same characteristics(use of funds, export component and other requirements). This reporthighlights some issues arising out of the objectives and design of theProgram Loan.

Design of the Loan

5. Two elements in its design distinguish Loan 842-CO from otherprogram loans: (a) Firstly, the loan had a component for export projectfinancing; (b) secondly, it included explicit conditions governing therelease of the second tranche of the loan.

6. There were two conditions for the release of the second tranche:(i) The first was a miximum price of 57 US cents per lb. of coffee, onthe ground that at a coffee price above that level Colombia would not needthe foreign exchange provided under the second tranche to support itsd-p1lonment nrogram. (ii) The loan also nrovided for a nerformance review

six months after itbecame effective. This review was intended to deter-mnine thep prnaogres mnAde inanrVipvinv acvppd fnrQpfQ in ePonrts, in addlition-

al revenues through tax measures and in current budgetary surplus. Each

tranche of the loan. The targets for export growth and fiscal performancerereete -he end reutoadaou onplcmesrsn these

fields intended to achieve these results (para. 7.03 of the PCR). Theirrelevance la n te fc l + 1 A,e t- -- ^-A-A +-I,- I- F^

further discussions on policy measures, had coffee prices remained below

%LULY _ -VC ,.CtL o 1L.. -.U CtLLLLU L_.

normal, quick-disbursing characteristics of program lending, the exportF-JJ k 'LLLLVIL UO9 . L- Lit -iJ &L .Lt S. ttV I JLaniJajOiiL ant. LLC LtJLULLCL PaL

funds equivalent to US$5 million for permanent working capital loans, hadLthe c11hLCLrisLc U a Ur LUaL. IL1e1D dLarLcLListic iUceU Ltepace of disbursement under the loan: The first part, US$20 million, wasdisbursed by January 12, 17/3, that is, within 5 months of the date ofeffectiveness; disbursement of the remaining funds under the first tranche,however, was completed only in the third quarter of 1976, the closing datefor the loan having been extended by 21 months (from December 31, 1974 toSeptember 30, 1976).

Exports Projects Component

8. The export projects component, whose main objective was toimprove the export capacity of industrial enterprises in Colombia, did nothave the normal DFC loan objectives such as institution-building or develop-ment of the capital market. It also differed from DFC lending in Colombiain its design in that (i) it used a different channel (the two funds -Fondo de Inversiones Privadas (FIP) and Fondo Financiero Industrial (FFI) -rather than be administered directly by the Department of DevelopmentCredit (DDC) of the Banco de la Republica - BR, (ii) in addition to theprivate financieras, commercial banks were eligible for on-lending, and(iii) instead of a free limit. it provided for a ceiling (set at US$1million) for sub-loans, with no provision for review of sub-projects bythe Bank.

9. Given the limited objectives of the export projects component,the deJ*6n.pOUd effiCient in. achi eving them. The choice o f 'VTP" and FFIenabled the Bank to operate through existing agencies, thereby reducingLhe Leau time neeueu LU UL Ltn :Uu Lo use. LuLe use u utuLLLeCL%LaJ. bansE

for on-lending helped to broaden the clientele and the geographical dis-tribution or the runOs.

10. It appears that, overall, the export condition - export earnings

over five years to exceed all direct foreign exchange costs of a sub-project - set for on-lending under the export component, will be met:against minimum export requirements of US$296 million, actual exports by

December 31, 1975 (about the third year of operation), amounted to US$240million, and likely exports over 5 years are estimated at US$400 million.

These figures, however, need to be interpreted with caution: (i) theexports related to the companies which obtained the sub-loans and not to

the sub-projects for which the sub-loans were made; and (ii) while the

over-all export target was likely to be reached, 15 of the 22 sub-borrowers

were lagging in meeting their individual export commitments, their exports

by December 31, 1975 being only about one-fifth of expectations. Sinceprices also rose substantially after 1973, the significance of the perfor-

mance lies more in increasing export consciousness in industry and in

building up export capability and export markets than in the actual amounts

of export achieved during the period under review.

Achievement of Objectives

11. Two main objectives of the Program Loan were to assist thecountry to resume a high rate of economic growth and to reduce its depen-

dence on coffee exports. Colombia's current account balance remained

adverse in 1972 and 1973, and the Program Loan was of substantial helpin filling the gap, as the increase in the inflow of public capital from

US$130 million in 1971 to US$255 million in 1972 and US$285 million in

1973 (Annex 1 of the PCR) shows. Thus small as it was in relation to

Colombia's needs, the loan helped the Colombian Government in its efforts

to bring in other resources to meet the country's external gap.

12~ -Grs domesti product which had grown at the rate of- .9during 1970-73, increased by only 5.9% in 1974. Gross fixed investment

more sharply in the subsequent two years; at constant 1970 prices, grossfixed iLVcotm1ent was av L n LLE .LsLtablL nLthMUU fiu rn pewru a uu-ain

rise in 1973 and 1974.

13. Minor exports (that is, exports other than coffee and petroleumand ue UE4.a LV / Licreased s'U,>Lt-LLIL-L"LLy fe dL L 7/ . I J"_UL;UIII_ALL for te

first time higher than the value of coffee exports in each of the years± /Z LU . uverall, the export projects component ana Le exput cUnCiou-

ness so promoted helped achieve one of the objectives of the Program Loan,namely, to increase non-traaional exports and, thereDy, to help reducedependence on coffee exports.

Conditions for the Second Tranche

14. The Program Loan had provided that the second tranche would notbe made effective if the coffee nrice exceeded 57 cents per lb. Thecoffee price was 53.65 cents per lb. in June 1972 when the loan wasanroved. and rpched 6375 cents ner lh- in Antivt 1972 when the loan

became effective. After a decline (but not to less than 57 cents per lb.)in thp Ri!hqPn1iPn mnnth of 1979 (Annrpz 7 of thp PCR- rhp nrine heganto rise again from January 1973, and the second tranche of the loan wascancelled in Febranrr 1971 as n-rmr4Arl iindamr tho T.rnn Agreement- The

cancellation was also justified in terms of immediate needs as Colombiaha a_ -avr~-able b-,. (TTZI'9A 1 -o4 1 1 4 -) 4,, 44-i, h ot -rn,Aa 4,n I171

and the deterioration in the balance to a US$16 million deficit in 1974was due mainly to arise In -mot -oe h peiu year'- 1--1

Beie IJ.4.the coffee..t. prc, thei !oan~., aloprvde o. ar-ve

of performance before the second tranche could be used. This review was4-o 1.- 4 - - - 4- 0-F +---1..a ~ 4 t..an.. - .. 1 V 01~ - 4-, the POR re-

lating to exports ("an increase in non-traditional exports of at leastrJco Aurilng calendaL yeaL 197L U veL i111\ , tax revenues wcuk ceu

I.) Io UU.IL ie U.L ) di L1 .UV L .L J L I- iD k~IU WLLJ-_LAL=L LCV LLt_

measures taken after 1971 would lead to a net increase in tax receipts.L aL L~ L . JL*9L U I.L.£L L-.iL LL

6 Li A I . J VLi.A Ui..L

6 )O "JL L .LL%U k MIi

increase in the current budgetary surplus of at least 19% as compared to1 (V A \

16. Because of the rise in coffee prices and consequent cancellationof the second tranche, there was no reason to hold such a review. Never-theless, it is interesting to measure the performance of One Colombianeconomy against the conditions which were the result of an understandingbetween the Government and the Bank on the measures needed to improve thecountry's economy. The export condition was easily fulfilled. As regardsthe other two conditions, the Government raised customs duties in 1972and introduced in 1974 a presumptive income tax (in place of a presumptiveagricultural tax in 1973, as discussed at the time of the loan), yieldingrevenues in excess of Col.$l billion as required under the covenant. Onthe other hand, the actual increase in budgetary surplus of 7.5% in 1972and 24.3% in 1973 (a 4.8% decline and 3.6% increase respectively, in realterms); and the decline in the ratio of current revenues to current expen-diture from 1.41:1 in 1971 to 1.39:1 in 1972 and 1973 indicate that thestipulated additional surplus of 19% in 1972 over the 1971 was not achieved.

17. It is difficult from the above to assess the improvement in theperformance of the economy or to relate it to the Program Loan. Perfor-mance under the two covenants relating to fiscal measures cannot be separatedfrom the impact of other developments on the budgetary position: itwas not capable of measurement nor amenable to monitoring, particularlyin an inflationary context. Given the relationship between the coffeeprices and government revenues, the improvement in the fiscal situationachieved in 1973 and 1974. can be attributed not only to the comnliancewith the loan covenants but also to the rising coffee price in 1973 andthe general inflationary situation in that year and subqniuenty1v Whiletherefore, the Government did take steps to raise revenues, as requiredunder the loan, their imnact in strengthening the budgetary nosition ofthe Government cannot be evaluated precisely.

Disbursement and Use of Counterpart Funds

18. Disbursement of the program component was rapid, and was facili-tated by a simplification of-A, -444. the prcdue .4tiA lA d- for- r--bursement against imports (para. 4.01 of the PCR). There was close moni-

toringL oL commitmentL andL disb-ULrs=eLCenL -ULnd=er th.=ejLI ~ UxprtrUJeCtSL -LpI.UIneLiI

extensions in closing dates under this component being used to revise

borrowers).

19. The release of counterpart funds was made conditional, amongother things, upon the Government meeting the local currency requirementsof public sector projects receiving Consultative Group assistance. Thiscondition was invoked in 1973, in respect of the release of the finalinstallment of counterpart funds, and the Bank delayed the release of thefunds owing to non-fulfillment of certain obligations of a financial naturerelating to Bank loans (Loans 536-CO, 634-CO, 682-CO, 738-CO, 741-CO and860-CO) as also late contributions by the Colombian Government to AID andIDB-financed projects. Release of counterpart funds was thus used, asprovided, to ensure adequate local financing of (non-Bank) ConsultativeGroup projects (para. 4.06 of the PCR).

Summary and Conclusions

20. As it was designed and implemented, the loan served a morespecific purpose than an IMF drawing or a straightforward program loan,in that the export projects component of the loan helped to build upa long-term export capability. In addition, by providing a valuableelement of budgetary support and by linking the formal withdrawal ofaccruals of counterpart funds to the financing of Consultative Groupprojects, the Bank assured that the slow-down in the local currencyfinancing of such projects, was overcome.

21. Compared to other program loans, the design of Loan 842-CO wassophisticated. incorporating both a auick-disbursing element normal toprogram loans and an export projects component (in both the loan and apart of the counterpart funds Renerated through the quick-disbursingelement) intended to improve directly the export capability of the country.There were two basic elements in the success of the export projects com-ponent: it was directed towards achieving a limited, clear-cut objective;and secondly, it was channelled throueh a broader eroun of financial inter-mediaries, particularly commercial banks, than the Bank's normal DFC loans.Rather than policy understandings. the loan laid down snecific targets to

be reached in the fiscal and foreign trade fields. Finally, a two-stagecommitment formula was established, which nrovided hoth for intPrmediat-monitoring of obligations and for relating the release of funds to the needfor thm While like the Proornm T.nAn to 7Amhin (Lnan Q11-7AN only hAlfthe amount approved under the loan was disbursed, the two-stage formulaiOt have.-4f4- nnnA4t4nne fnp- 4-O 7m"Ma 1^- AiA

not have.

22. The loan was used as a vehicle to encourage the introduction of

various measures in the management of the Colombian economy, particularlyin the field of exports and public savings. The effects of these measures,however, proved difficult to monitor in the context of an acceleratinginflation rate in the economy. The design of the loan was intended to reachspecific goals (reducing the balance of trade gap by increasing exports,fiscal reform). The extent to which these goals were reached varied. How-

ever, the extent of achievement cannot be precisely related to the policymeasures taken in connection with the loan.

23. Summing up, the loan did achieve the main objectives set underit. It helped Colombian industry not only build up its export capabilitybut bring about increases in non-traditional exports. The Colombian

Government did take measures intended to raise additional revenues. Finally,as coffee prices rose and the balance of merchandise trade improved,obviating the need for special external assistance, the second tranche ofthp lnnn wa. not uqPd. Tt is understandable that the improvements in the

fiscal situation and foreign trade cannot be attributed precisely to themmesres tken in rnnnpction with the Inan- Neither is it nossible to

distinguish the impact of the loan from that of other measures taken by theGovenmen and cr~ ti TInMn- in the~ Prnomy. _l__v tbp lnnn~ did

give rise to a set of measures to enhance Colombia's export capabilityTAiih i: nf ln-t-rm hPnPfit to thp rnlnmbian pnnnmv

Operations Evaluation Department

- A.1 -

PROGRAM COMPkETION REPORT

COLOMBIA PROGRAM LUAN tUmAN O42-o O

SUMMARY

i. After a period of strong economic growth in the late 1960s. Colombia

began to experience a downturn in 1971. A sharp drop in cottee prices resultea

in a major deterioration in the balance of payments and sharply reduced

public savings. During the same year, severe flooding in several parts of the

country and a decline in the rate of growth of non-coffee exports further

compounded the country's economic difficulties. To help ease this situation

Colombia applied to the Bank for a program loan.

ii. Program Loan 842-CO. for US$60 million (divided in two equal tranches)

was approved by the Bank in June 1972. The second tranche was eventuallycanclld beause roffee orices started rising again in the later half of 1972

and exceeded the cut-off point of US$0.57 per pound by the date the second

tranchen na duo to he released. Each tranche of the Loan consisted of two

components. The import component of US$20 million would provide foreignexchann to fininne imnrts of raw materials. intermediate goods and capitalequipment by industrial and agricultural enterprises. The export componentof usin m4i4n" wna a4moe at atrainthpning Colombian non-traditional exports

by helping to provide term financing for export oriented projects by privatesector firs.nf theUmnn ^intarpart canrated by the sale of the import

component proceeds to private firms, US$15 million equivalent was to be usedCo goven-entn pu.1ic inasnment and ITSSS million to supply the working

%_ 5 LUIAV V ___ _AUL_-- - -

capital needs of private exporting fitam.

iii. The primary objective of the loan was to assist Colombia in overcomingtS_ immadiate aconomic difEficulI tine and to rement and anvrin n high rate of

economic growth. During Loan negotiations.the Colombian authorities agreed totake a number of annnmt main, n an aim a. 4nnarine exornt narfnrmanreincreasing public sector revenues and maintaining public sector investment. Toeno.ure rapid actnion on. theseasnoures, a serie nof targetsa we.reagreed, tile

achievement of which were made conditions for the release of the second tranche.

L7 4V1CC target %nj.UU ICu ncreaseCS in nL n 64=~&UXL&L1O.L

exports by at least 15% in 1972 compared with 1971; (b) adopting fiscal measuresafter L-51J. kXnluiuig incusLeu Lax cu±AlectonU througuLl betLr u tax aumiisa ratrILN

that would lead to a net increase in tax revenues of at least Col$l billion in1973; (c) achieving an increase in current Government Oudgetary surplus of at

least 19% in 1972 as compared to 1971.

iv. After 1971 Colombia was successful in accelerating economic growth. GDPgrowth which averaged 6.6% per annum in the period x9o-±9i0, fell to 5.5% in1971 but increased to 7.0% in 1972 and 7.2% in 1973. It is difficult to assessto what degree this improved performance was attributable to the Loan itself,and to measures adopted by the Government in 1971 and 1972 in the context of the

Loan, since many other internal and external factors influenced the economy.Growth of non-traditional exports (64% in 1972 and 35% in 1973) far exceeded theLoan target of 15% and was one of the major factors contributing to improvedeconomic performance. However, the increases in coffee prices during the latterpart of 1972 and in 1973 were also important factors.

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v. The targets for increased government revenues and savings were not

LUl.Ly achieved, AlthUugh 1973tJ x eA eue L_LUCH UL=M5CU DY UV.LY,LOV U.L.L.L.UL XLL1973 compared to the target of Col$1,000 million, most of this increase canhe attributed to ini'latiun, nigher cofcse prcas ano higher economic growthrather than to new tax measures or better tax administration. The Government'scurrent budgetary surplus did not increase by the targetted 19% in 1972. Infact, the ratio of current receipts to revenues remained virtually unchangedat 1.42:1 throughout the 1972-1974 period. Failure to meet fully these targetsis attributed mainly to delays in introducing new fiscal measures partly becauseof reluctance to adopt piecemeal changes. In 1974, the Government announced animaginative and comprehensive fiscal reform which considerably exceeded theBank's initial expectations under the Loan and has contributed to substantiallyimproved fiscal performance.

vi. The export component of the Loan made a comparatively small but importantcontribution to the longer-term growth of non-traditional exports. The exportperformance of the 32 subprojects financed under the loan is exceeding initialexpectations by 35%. Although the second tranche of the export component wascancelled, together with the import component, when coffee prices rose, theColombian authorities subsequently made available a similar line of credit frominternal resources which enabled the special arrangements for financing exportprojects to continue.

vii. In contrast with previous Bank DFC loans to Colombia in which fiveprivate financieras participated, all commercial banks and financieras throughourColombia were eligible to act as intermediaries under the export component, whichwas administered by Banco de la Rep6blica (BR), Colombia's Central Bank. It isprobable that the participation of commercial banks, which utilized 57% of theloan proceeds, helped to speed up the initial commitment of the Loan and toachieve a wider distribution of lending through their extensive branch networks.However, their participation also resulted in somewhat lower appraisal and super-vision standards than in normal DFC loans. This potential problem was recognizedat the outset, and BR agreed to strenathen its engineering staff in order to carryout a more thorough review of the technical aspects of subproject appraisalssubmitted by intermediaries. This stren2thenine has hanefit6d subsequent DFCloans channeled through BR.

viii. Overall, it appears that the Bank's main objectives in making the loanwAre lareply mtn COnnmbin offirinlQ qppm tn fP1 hn th T.nan made a seaful

contribution to overcoming the economic difficulties being experienced in 1971/72.Furthermore, they consider thast the dialogue betrween the Goverm-ent and the Bantkthat took place in the context of the loan was a significant factor in encouraging

Loan proceeds were used for the intended purposes and generally the anticipated

Xx. LL aLter UL11UU.LL LU ULUW UUy IUeOUS IrUm Lis raner unusual loanthat would be generally applicable to normal Bank lending operations. However,the rollowing detailed points may De relevant to other program loans or exportoriented loans:

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(a) the Apavnhility nf dAvising aimnlifiad diaurscmentprocedures to avoid delays in what is meant to be afnat dihraina loan;

~&J L~~ fltSA t~ap~ C LI 0h V0U WL&JU WAA"I 6%.%,WU C9 f L XII UU

be kept if the Bank wishes to review in detail theuL.Aa.aL.La A .non-stanuaru mnLa e.g. cIont m t

financing;

(c) when considering the criteria to be used to definee^poL SbPuOLeCtS fUr the purpU St nan rinancing,it is important to recognize that the criteria willnave to depend primarily on an adequate ex-anteappraisal of the export prospects of the subproject.Once the SUbproject has been completed it is oftendifficult to distinguish exports attributable to thesubproject from exports attributable to the companyas a whole. In addition, it is difficult to determinewho was at fault, if export targets are not met, unlessthe export potential of the subproject was properlyexamined before the project was financed;

(d) the fact that is often the larger companies that arein the best position to export and thus it is difficultto include employment generation or regional developmentobjectives in a loan whose primary focus is on exportpromotion;

(e) the practical difficulties involved in trying to assess theimpact of specific economic measures that are taken bya borrower in the context of a program loan because ofthe multiplicity of other factors that influence thedevelopment of a national economy.

- A.4 -I. INTRODUCTION

1.01 The program lonn (Loat 842-CO; the "Loan") to the Governmeot ofColombia, for US$60 million (divided into two tranches of US$30 million)was approved on June 28, 1972. It became effective on August 24, 1972, wasfully committed on December 31, 1975, and closed on September 30, 1976.The Loan was made (i) to provide foreign exchange for imports of raw materials,intermediate products and capital equipment (import component); (ii) tofinance, out of the peso counterparts, government public investment andpermanent working canital needs of orivate industrial and agricultural exortenterprises, and (iii) to finance the foreign exchange component of projectsexnected to inrrPaP nnn-traditionnl ennrts (export comnonent). The second

tranche of the Loan was cancelled since coffee prices increased beyondT1An_S7 nPer nniintj i-p- t-ha r'ttnff nnin4,t fnr itaQ r1ppAqpe

IT. UArtri-ATTWIV IA TAM 1DVMAT7QT

2.01 In the late 1960s and early 1970s the Colombian economy experienceda rflS.6 X Ave. U L tcoun Lu .

6 u W.L#11 l &LVCl C LMC. %YJU bLVWL&I UL V.,)/. UUL.LLAU

1968-71. The 1970 development plan envisaged a continuation of these highanuual gruwth rates, wnich were expected to average i 0irougn 19i, whilegiving increased emphasis to the problems of rural poverty and urban unemployment.The prospects for achieving both objectives were considered good. Uolee priceswere high and it was anticipated that they would remain buoyant for several yearsto come. Non-traditional exports (i.e. exports other than coffee and petroleum)were expanding rapidly and there was a demonstrated increase in the capacity ofthe public sector to prepare and implement investment projects; the number orprojects submitted for external financing had risen sharply.

2.02 The Consultative Group, in its meetings of 1971 and 1972, endorsedthe Government's plan and offered its continued financial assistance to theGovernment in achieving its objectives. The Consultative Group stronglyemphasized the need for continued growth in non-traditional exports and forhigher public sector savings. Higher public sector savings necessary to maintainan adequate level of public investment could be generated by increased governmentrevenues through a reform of the fiscal system. With this in mind, during 1971the Government introduced a variety of measures aimed at increasing the rate ofgrowth of current revenues. Sales and stamptaxes were raised in April, and thepetroleum dollar exchange rate applicable to crude petroleum transactions wasraised by over 100% in June. Current expenditures, however, increased rapidlyas the actual level of inflation was higher than what had been expected and whatit had been historically and public savings declined in real terms. In addition,Bank officials indicated to the Government their concern that an unrealisticallyhigh exchange rate was being maintained and that a faster rate of currencydevaluation was desirable.

- A.5 -

2.03 During 1971 it became evident that the pace of economic growth wasslowing down. A sharp drop in coffee prices from previous and projected levels(from 59.43 cents per pound in January 1970 to 47.83 cents per pound in June1971) resulted in a sudden deterioration in the country's balance of paymenis

and lowered public HILvings by reducing the tax proceedi from the coffee Iniporttax. In 1971 coffee exports amounted to as much as 64% of total exports ofUS$750 million, and a one cent drop in the coffee price meant a reduction ofUS$8.4 million in foreign exchange receipts and about US$1.5 million incentral government revenues. The 1970 development plan had assumed an averagecoffee price of 56 cents per pound for 1971, against the actual average of49.27 cents per pound, causing a US$55 million reduction in anticipated coffeeexport proceeds, equivalent to 7.3% of total exports in 1971 and a reduction intax revenues of about US$9 million equivalent to 12% of total government revenues.

2.04 The rate of growth of non-traditional exports also fell during 1971.This was attributed, at the time. to three main factors. Firstly, a high levelof domestic demand, associated with the previous high rates of economic growth,diverted production from the export market to the domestic market. Seondlvafter three consecutive years of rapidly expanding exports, there remainedlittle excess canacitv in the induntripa anneArnead Thirdly- and pnrhanp mostimportantly, an overvalued exchange rate adversely affected the competitiveposition of these exrnn. This delino in thA rnt nf rnWth nf nntiraAitionalexports exacerbated the balance of payments problem and was a significant factorin forcina A rpdirtinn in the r%-rnmAn t

a 4 mn^vt hUsAfn Nevr heless thebalance of payments showed a substantial deficit for 1971 (Annex 1).

2.05 Severe flooding in major agricultural areas during the first half of~~~~~~ LLI %.%JLULL& 0 CuutiviltL. U.L .LLU.LL~~ C~ L~.LLL L..

in production meant that exports were reduced and that higher levels of foodimports were uncesary. Lt UUULL.LUlL Lilt kYUVWleL Was IUrCe( LU reOlfeCTfunds to emergency road and railway rehabilitation works in the affected areas,and t LL oncu t:APLg LULe ar.5ing trum thL reduced public sector savings.

2.06 This set of circumstances also had obvious implications for theGovernment's budgetary revenues and thus its investment program, affecting mostlythose sectors where external finance was not generally available. In particular,this was expected to have an adverse impact on government efforts to directlyCIODO LIM PuVkL begmenLs 01 tne community. The Bank estimated that in theabsence of extraordinary external assistance, 1972 investment would be below that0 1n-71

2.07 in August 1971, the Colombian Government indicated to the Bank aninterest in applying for a program loan, of approximately US$100 million, thatwould help ease the worsening economic situation. Subsequently, a Bank missionreviewed the country.s balance of payments and budgetary difficulties and foundthat Colombia met the Bank's criteria for program lending (see Annex 2 forcriteria). The IMF had indicated earlier that Colombia was ineligible forcompensatory financial assistance because export prices, despite the 1971 dropin coffee prices, were still higher than the five year average used to determineeligibility.

A If

Ill. LOAN DESCRIPTION AND OBJECTIVES

3.01 The stated major objectives of the Loan were to assist Colombia

in: (a) resuming a high rate of economic growth, and (D) Lessening its

dependence on coffee exports. To achieve both these major objectives, theLoan had two components. First, the import Component which (i) would allowthe rapid transfer of resources which was needed to maintain high growthrates in spite of low coffee prices; this goal could not have been achieved

effectively and expeditiously by Bank financing of specific projects; and(ii) would assist the Government in financing projects and programs aimedat meeting the country's social and employment creation goals, taking intoconsideration that the Loan should not induce growth of public sectorinvestment that could not be sustained after disbursements had been finalized.Second, the Export Component which would help to (i) achieve the target ofincreasing non-traditional exports by more than 15% p.a.; (ii) provide theexporting sector with financing for fixed assets and permanent working capital; and(iii) meet the country's social and employment creation goals by permitting awide distribution of bank funds to all sizes of exporting enterprises.

3.02 The Loan was divided into two equal tranches of US$30 million.However, the release of the second tranche, six months after the effectiveness

of the Loan, was made dependent upon: (a) an increase in non-traditional exportsof at least 15% during calendar year 1972 over 1971; (b) whether revenuemeasures taken after 1971 would lead to a net increase in tax receipts of atleast Col$1 billion beginning in 1973; (c) an increase in the 1972 currentGovernment budgetary surplus of at least 19% as compared to 1971; and (d) coffeeprices not in excess of US$0.57 per pound. The coffee price ceiling containedan allowance for increased import costs; any higher price level would raiseexport receipts and fiscal revenues to a point that would make further Loandisbursements unnecessary.

3.03 US$20 million of each tranche was to be sold to industrial firms forpesos to Day for imnorts of raw materials intermediate nrodnrts and canital

equipment. The remaining US$10 million were to be channeled to the exportsector for fixed investment. Of the nPan ointerpart PAnerated hv the imnort

program, US$15 million equivalent would be used to support Colombia's publicinvestment program. Thp rP1AAqA nf thon fwnAa frnimi o narin1 fwnA in AR wna

to be conditional upon Bank approval of the uses to which the funds were beingmit- nntud Qlan ilinrm W.hathor Ona~ Cnvair-Dnma&"*-Lwoo mnpf- ft -i+.c fa- a,* 4-i,n-4-i,

put the-G ver-e.-.--- mee in it _nar.-ingL

requirements for all projects receiving Consultative Group assistance. Thesecring ISburs m in walnt to to finance working capital for the exportsector; its disbursement was not to be subject to Bank approval. The allocation

LI 17(1. -- O a. u,aL- c LU £04J± L 1. UCP 1W:

- A.7 -

A ca il Tr

ALLOCLAUII UJ DUwil IEUCC~UG

(US$ Million)First Tranche Second Tranche Total

1. Import Component 20 20 40

2. Counterpart:

Public Investment 15 15 30Export Sector Working Capital 5 5 10

3. Export Component 10 10 20

TOTAL 30 30 30

IV. IMYUR CuUPUNE1

A. Disbursements

4.01 A documentation problem delayed the initial disbursement until December1972--four months after the date of loan effectiveness. At first, it had beenRnprifiPd rhat diahurAamants would he made only an a reimbursement basis and thatall reimbursement applications would be required to be supported by:

(i) an invoice from the supplier;

(ii) evidence of payment to the supplier; and

Howve, n epemer1972 the rninb i,n"a v-ramaf-aA *hmn procedres be cin 1;jn

to encourage rapid disbursement and in early December the Bank agreed to foregoits earlier d ocumentation reirements A make - -*reme.... on th basiso-

foreign exchange licenses issued by BR.

4.02 The first disbursement of US$5 million was made in mid-December 1972.------------------- -- . -A-1 1 Q'7' A-----4 -f-1,

W.LII LIIC LUULLI anu LAal ULUULOCUICHL UULULL.LL&r JAL UL-LU-tA-L Ljsj.35% of the US$20 million component was allocated to imports of mechanical equipment,about 'u20 each LU electrical equipment anu cLosuciUon makstralskL, oa LU-cultural machinery and the remainder to fertilizers, chemicals, textile machinery,

1% .-- L _ - -and automotive macuinery and equipmenE %annex ffj. inO precXUe eSL.maLed n1Mu uenmade at appraisal of the expected share of each category in the total.

B. Utilization of Loan Proceeds

4.03 The Loan, as was to be expected, accounted for only a small proportion--

4.6%-- of the total imports in categories financed by it, and 2.3% of all imports(Annex 5). However, most of the Loan proceeds were used to import construction

materials, agricultural machinery and mechanical and electrical equipment.Ius Lltey PLUVIUeU 4111UI L,- LU $Vt.LLUL" WIILil WtLC CApollUingI V%:Ly 1411 LUJY 111

the period 1971-1974.

.I04 Tt is difficult to assess what the level of these imports would 11.1vebeen in rhe absence of the Loan. Imports made possible by the Loan are boundto be relatively small compared to total imports so that in comparisonsagainst trend figures, the effect of the Loan is likely to be small comparedto variations due to other causes. This is particularly so in this case, asthe Government increased the import budget in December 1972 when coffee pricesstarted to increase again and generated expectations of a more favorable balanceof payments situation. Examination of the figures shows that the rate of growthin import registrations in the fourth quarter of 1972 and the first quarter of1973 was greater than in earlier quarters of 1972 and those of 1971.

C. Utilization of Counterpart Funds

4.05 As noted earlier, 75% of the counterpart pesos generated by the programcomponent of the Loan were to be utilized by the Government te support its publicinvestment program. Annex 5 shows that the major uses were school construction(20%), rural sanitation (18%), housing construction loans (15%) and railwayrehabilitation (15%). The President's Report (IBRD Report No. P-1076 datedMay 31, 1972) does not contain a specific list of investments to be financedwith these funds, although it does prohibit their use for certain purposes, suchas construction of military works. The report, however, provided an illustrativeallocation of the funds and this is compared in Annex 6, with actual allocations.The education sector received substantially more than foreseen in the Bank'stentative projections, and industry substantially less. Other allocations wereroughly as had been expected. Consequently. the funds were used for the intendedpurposes.

4.06 One condition for disbursement was that the Government had to bemeeting its local financinv cnmmitments in all nrniprrs utili7ing external fndsprovided by Consultative Group members. Because of problems with late contributionsto ATD and TnR nrnippfq in Marnh 197 the Hank Aeled the reinea nf the thiAand final disbursement to April 12. Local contributions to Bank-financed projectswere apnprAllv nnt a nrnhlpm

4. 07 TI-tin was poeted that- t-he Addiion of t.he cowntepr pesos -w-uuldenable National Government cash investment to increase, in 1970 constant terms,

- -e -u " W WI.ULLUL LUCULI CLUU AA-1/o I 11 71 J kUbLkMaLtU

8.3% without loan). Actual growth rates were a 24.9% increase in 1972 and 17.5%decrease in 1973, i.e. an average urowt te for the two years of i., compared

to a projected average of 10.5%. In the absence of the counterpart pesos, it iseotmatCU that government investment would have increased by approximately 20%Xin 1972, while the decline in 1973 would have been much the same, at approximatelyI.7.5%. But whie in real terms the actual government investments were lower thanthe projected amounts, in nominal terms the targets were achieved, but the rate ofinfation had unexpectedly accelerated. It would seem, theretore, that the impacton the level of government investment created by the availability of the additionalfunds generated by the Loan was somewhat less than had been expected.

- A.9 -

V. RAYUKT CUMUNENT

A. Execution

5.01 Subloans. Under the export component of the Loan, both the foreignexchange resources and counterpart funds were channeled by BR's Fondo deInversiones Privadas (Private Investment Fund , PIF) through financial inter-mediaries. A total of 44 subloans amounting to about US$15 million equivalentwere committed by PIF as follows:

(a) 18 subloans amounting to US$9.1 million (65% of thetotal) were committed to exporting enterprises forimporting fixed assets;

(b) 16 subloans totaling Col$114.2 million (US$5 million;i.e. 29% of the total) were committed out of counter-part funds generated by the Loan to exporting enter-prises for financing permanent working capital; and

(c) 30 subloans amounting to Col$21.9 million (US$0.8 mil-lion: i.e. 6% of the total) were lent to exportingenterprises for domestic purchases of fixed assets.

5.02 The 44 subloans were allocated to 32 subprojects. Six subprojectsreceived subloans both for fixed aRRPtR imnnrtq and nermanont wnrking rapitnlfinancing, 3 for purchasing both imported and domestic fixed assets, 9 forimportine fixed aARes only- 4 for nurchasing domestiralnv fi%ved nae nnIyand 10 for permanent working capital needs only.

5.03 Fourteen financial intermediaries participated in the project: 8cnmmercial hanka 5 fina- arao nn so- AS-lanm-N+ l .- A 1 .m..i ..... ,

bank. While the financieras and the agricultural bank provided subloans mostlyfor ;mnnrt4".n f4-.OA ... o4 f-l. f-u_ o.oo V-1,.. -.11 L... m msyL Luli- A- ,R- UXLL. DLA UL O LID UVELCU MLa LuLC

categories, i.e. financing of working capital, and imported and domestically-

*.04 Funds withdrawal. D.usbursements of the Loan suffered substantial delayscompared to appraisal estimates. While the Bank had estimated that disbursementswould be CompletedI in 15 mo nth,hs took* abou 48n h, manl du to deIIyswvu.u c LusyCoo usAJ sunll, LLJU LUU1' UDUUL 90 morthu, ma1nly aue Lo aetLaySin the appraisal and subsequent disbursements of one subproject I/ and tocancellations of two other large subprojects at a late stage. Both the terminaldate for subproject submission and the closing date for subloan disbursements wereextenueu tree times by the Bank (para. 5.07), to allow funds released by the twocancellations to be used to finance 3 other subprojects in 1975.

1/ The subproiect involvine the Rinaralda qiiear Cn. an enternrica with o,n,,om,-mont

and private participation, was submitted to BR at a very early stage ofimiulementation- AvAn bpfnrp thp fpsnihil4t-ty 2t_--- -- v--m rt o.A-

completed only 12 months after the Loan was made effective and it took thegovArnment nithoritioa and financial int_rmiA4arie 9 months anA DTV - L-11

4 months, to review the subproject's feasibility. Also, IFC was approached Lo. . .UaLL.y assU, C.LLIVU811 Lr%. L.LL&LL.y ULU IOL

participate in the subproject, this delayed the Bank's review and approval by 9months. In total. 34 months elanned hPtwPn the stihnrnioec's a.1mi-non andapproval..

- A.iu -

5.05 Project implementation moved rapidly in 1973, when approvals amountedto or, of t tlO Vodtlm u-Aftt LU tt.J 14tS -UL. -- AI a .- t tdf t..A- #LUk-

foreign exchange line, but it slowed down afterwards mainly due to delays in

5.06 Other de'ays, 'L about a year, were causeu by late cancellations

of two textile subprojects; neither the intermediaries nor BR urged subborrowersto move faster in project implementation or consider SUDOan cancellatIOU.Neither did they attempt to find out the causes for delays or to detect whethercancellations could have been made earlier. The partial cancellations of thetwo textile subloans amounted to US$925,000 (US$371,000 and US$554,000, respectively),i.e. almost 10% of total amounts approved under the foreign exchange line. Thecause for the cancellations was the contraction in external and domestic demandfor textiles in recent years, causing many of the textile enterprises toreconsider their expansion programs. If the intermediaries had followed up moreclosely on these cases, it is likely that the cancellations would have been madeearlier and disbursements of the Loan would have taken about one year less.

5.07 Extension of terminal and closing dates. In order to allow approvalsand disbursements through 1974-75, the terminal date for subprojects submissionand the closing date for disbursements had to be extended three times by the Bank:

(a) the original terminal date for subproject submission wasDecember 31, 1973. It was extended first to June 30,1974, then to September 30, 1974, and finally toDecember 31, 1975; i.e., for a total of 24 months;

(b) the original closing date for funds withdrawal wasDecember 31, 1974. It was extended first to December31, 1975, then to June 30, 1976, and finally toSeptember 30, 1976; i.e., for a total of 21 months.

All extensions were based on recommendations of Bank supervision missions whichreported that delays were due to specific subprojects and that prospects forcompleting approvals and disbursements under the Loan were good.

5.08 Interest rates. The interest rate of 19% to subborrowers. althonghabove the 18% rate charged under the fourth financiera project (Loan 742-CO), hasturnAd it t o hp lnw Pnmared to inflntin in tfhe 1979-76 nayinA_ Rnk funds

were lent to BR at 7-1/4%, which assumed the foreign exchange risk and relent thefuinds at 16% to f4,nnc4n intearmea4mries, tobe passed on tou oo^r at 19%.However, except for 1975, inflation rates have been higher, amounting to 22% in 1973,

5.l ~ I td.*t 1UtA SO- - _L -. I -J -LL JLULO W LICC LLL JJaiir. CAI ILC

the terminal date for subproject submission it also requested that interest ratesLtd~ CIJI OS.S.~JW S.~ IC ~~ U L.' LU L V . L L u LIu L Lii I. Li.Lt-LL ._LIiLL k A-

project (Loan 903-CO); consequently, subloans under the foreign exchange lineapptovu In 17It aU 1t t LULCLCUL Laken UK 7U/o anU LJA, LeA1*cLiVely*_

In the event that future inflation rates in Colombia develop as expected 3 /,realintLerst LLe LU sUUUULLUWeL Will UC pUsiVe faUUL /o p.a. aVerage U 811 suD-loans).

1/ During the first semester of 1976, the cost of living increased by 16%, accordingto DANE (the Government's Statistical Department). For the total year inflationis expected to reach at least 25%.

2/ One subloan in domestic currency approved in 1975 carried a 23.5% interest rate.

3/ LAC2 expects inflation rates of 18% in 1977, 15% in 1978, 12% in 1979 and 10%thereafter.

- A.11 -

5.09 After the cancellation of the second tranche of the Loan in 1973,the Government approved a similar credit line of Col$600 million (MonetaryBoard Resolution No. 9). This amount was slightly less than the second trancheof the Loan and was to be channeled through PIF with minimum requirements.The interest rate to subborrowers under Resolution No. 9 was only 14%, wellbelow the 19% charged under the Loan. In addition, in 1974 another line of

Col$30 million also at a 14% interest was channeled through PIF by the Government(Monetary Board Resolution No. 10). The low interest rates applying to these

credit lines was intended to stimulate investment, especially in export orientedindustries.

5.10 Foreign exchange risk. All subloans under the US$10 million exportcomponent were denominated in donmestic currency and AR has hAPn rovring thp

foreign exchange risk against an annual fee of 8.25% 1/on loans outstanding.Annual devaluation ratese however, have been higher thus fa (1.1 IPAeno i n

1973-76) and are projected to average 8.7% during 1976-84 2/, resulting in an

~ 1 0*Rejectio...n of.k subloa.n uet- by, PTF wrer frequent becaun.,Oe many sub-projects could not meet the established export criteria. 3/ Out of a total of

of total amounts requested, which is very high compared with the 16% average fora.L.L i LE VCLL.LLAUO UZLWCCLL ±7UJoI1. The UUmanu LoL sub."Loano was eVeu higher

under the domestic currency line, due to the attractive feature of permittingthe LinanCuLg U- pereUsneI wOrking cap. ,euJum andU ULg-teLm. rw -uU ----

requesting domestic currency subloans, however, could meet the export criteria;out of 49 requests 23 were rejecLea, as agaius I out of 3U requets under theforeign exchange line. Under both lines rejections amounted to 68% of totalamount requested.

B. Nature of Subprojects

5.12 Definition of export subprojects. As the basic objective of the export

component was to develop export activities in.the industrial and agriculturalsectors, under this component of the loan only export subprojects were eligible

for financing. Export subprojects were defined as those able to generate fromexport earnings a positive net foreign exchange impact within a period of five

years after implementation. For estimating the net impact, all direct foreignexchange costs of a subproject were to be deducted from export revenues. Whilethis criterion was found to be operationally adequate as a means of determining

the eligibility of subprojects, it was difficult to follow-up, because super-vision of subprojects is needed for at least 5 years. In addition, it has beenalmost impossible to differentiate exports accruing to subprojects from those

accruing to the enterprises. Consequently, the effectiveness of the criterion isvery dependent on the quality of the initial appraisal of the export prospect ofthe subproject.

I/ L11Lsb annulLee a~mounts to 97.25(/ ad 14.25 for sul.bUlan approved J_n .71 4 andI

1975, respectively.

2/ LAC2 expects annual devaluation of 10% in 1977, and 8% thereafter.

3/ Subprojects had to demonstrate that in the first 5 years of operation they wouldgenerate exports amounting to at least the investment and operating costs inforeign exchange (para. 5.12).

- A.12 -

5.13 Size of subloans. To ensure a reasonable spread of loan funds

was established. In practice, however, larger enterprises with larger sub-projLcL s U UhLL UbteoULLULC LIHnte tnsmaLleL Unes Lo iLLC=aD1 =A.VULLO.

About 73% of the foreign exchange funds were used by only 8 subloans (all aboveUgivuuVJ ana aDout 943/ or tne umestic currency fuuu were utilizeu uy only

3 subloans (also above US$500,000 each). Thus, the average subloan size underthe Loan was about double that of normal PIF subloans. Under the foreignexchange line the average subloan size was US$507,000, compared to PIF'saverage of only US$26l,uu; and for the domestic currency line the average suD-loan sizes were US$219,000 and US$130,000, respectively. The large average sub-loan size was due in part to the aggressive and active participation of commercialbanks, which had close relationships with large exporting companies. These bankssubmitted most subloans close to the US$1,000,000 limit.

5.14 Size of sponsoring enterprises. Large sponsoring enterprises obtainedmost of the funds under the Loan. Enterprises with total assets above US$4 mil-lion received one half of total subloan amounts, and enterprises with assetsabove US$25 million, about 17% (compared to only 7.5% under all PIF's operations).The participation of small enterprises with assets below US$0.5 million amountedto only 0.6% of total subloans, while they received 10% under all PIF subloans.The higher proportion of large enterprises is not surprising, however, sinceseveral of them had in effect been excluded from further access to Bank financieralending (having obtained a total of US$4 million) and because larger firms weregenerally in a better position to mount export projects.

5.15 Geographical distribution of subprojects. Industry in Colombia isconcentrated around 4 main cities: Bogota, Medellin, Cali and Barranquilla.The distribution of subloans under the project, both in the domestic currencyand foreign exchange lines, clearly followed that concentration; 85% of subloanswere granted to subproiects located in the four main cities. Mainly due to thelarger participation of commercial banks with their extensive branch system,however, subprojects in remote areas obtained a higher share than the average ofPIF's financing. The share of subprojects in "non-traditional" areas, likeBolivar. Risaralda. Meta and Nariho. reached double the PIF average.

5.16 Sectoral diRtrihition. Although aorirultiural exnort nrierts wPrPexpected to account for an important share, industrial subprojects utilized mostof the fun"aQ Tn tho anmpcrir PiurrencY lino fn-r eramnleP agcrritural sunrnijctsobtained only 2% of subloans under the project, compared to 14% average under

PTF~ opera~o No interational tourism projectso we,re fl-ncnd -- t-n 14&-l

because of the heavy demand to finance industrial subprojects, and the greaterA., tJV~ .UUZ J t.-J.LU L r WLL LILl.L tAJUL LUI c'. 1.0J %LULU U1= _C LLLU

eligibility criterion for export projects.

5.17 Five industrial subsectors--textiles, food products, shoes and garments,chemicals, and non-metallic minerals--obtained 80 of the domestic currency funds(compared to a 48% PIF average) and 79% (59% under the PIF) of the foreign exchangefunds. it seems that these subsectors had the best-opportunities to increaseexports. Relative to PIF's operations the large proportion of shoes and garmentssubloans is striking; this subsector received 10 times its average under normalPTF operations.

1/ There was no "free limit" for Bank approval of subloans; approval authority upto the US$1 million subloan maximum was exercised by BR.

- A.13 -

C. Impact of subprojects

5.18 Actual exports of subprojects financed under the Loan have exceeded-----------n --t~ --- r- -~mwte of -- b-orrowers smount-ed to U_$296 m.il~

lion for the first five years of operations. As of December 31, 1975, withmost subproj-- In +-S%-;-1,4A -F4 ~ .

amounted to US$240 million, and the latest forecast indicates that subborrowers'edmexpor twse would amunu Lov avorowV iAun LJ avuv ummi m.uto~~ ~ WJU.LU ou 1U L. L L VW~UL_ UOY- tVV~ UL.L.LLU, -l.J.J o v com-J -men*sI± LULLL

after five years of operations 1/. Most exports, however, accrue to the largersubrrowers which have gCLLna.Ly succeeUeU Li InureaSUg exports DeyUnU Uiginalexpectations, while many smaller subborrowers have been facing difficulties inaeyL.L LLg tneir export commitments. UUL or tne 3a suoDorrowers under one

project, 17 are accomplishing the export goals, with actual exports 54% aboveexpectatLuIS on average, whereas 15 are not, with actual exports amounting toonly 19% of expectations.

5.19 Employment. The direct employment impact of the subprojects financedunder the Loan has been comparatively modest. In total, 4,445 jobs weregenerated at an average cost of US$11,300 per job, which is about 60% higher thanthe US$,UUU average found by the 1974 Colombia Special Study of 29 financierafinanced subprojects 2/. The difference appears to be due mainly to the capitalintensity of textile and chemical projects, i.e. of two subsectors with a strongexport performance which accounted for about 40% of total subloans. On theother hand, it is important to note that the average investment cost per jobcreated in the case of all projects financed by PIF up until 1974 is estimatedto have been US$13,400. In this context projects financed under the Program Loanwould not be unduly capital intensive.

D. Institutional Aspects of the Projects Export Component

(a) Banco de la Repfiblica

5.20 Department of Development Credit. The Bank's DFC lending in Colombiahas been channeled through BR and administered (with increasing responsibilities)by DDC. For its DFC loans, the Bank has established specific lendina policiesregarding allocation of funds and institution building goals, separate from thoseapplicable to the other operations administered by DDC. In view of the nroaramloan characteristics of the Loan, however, the Bank considered that regulationsand procedures of two existing funds. the PIF and Fondo Financiero Industrial(Industrial Financing Fund, IFF) were satisfactory for encouraging developmentof the exporting sector and for channeline Bank funds. In addition, it was feltthat negotiations would be simpler and faster if PIF and IFF were used. Further-more. a wider range of intermediaries would he ali ia en participae in te Lanthereby speeding up utilization of the loan proceeds. The selection of the twofunds. however. did not result in any navantaeoa enmpared ton the ther Bnk ineI-----------------------Banadministered by DDC. Moreover, it caused delays in loan effectiveness, becausesome time-ronsuminc modifiratinnc tn PTV's reunations were nees. I', Thesemodifications, which included extending maximum subloan terms from 10 to 15 years,andI waivingy PTF'P- li4r nf qnT fnr __-;+_1 caia-iacn eaiet its

1/ Estimates are based on statistics of the Government's Export Agency PROEXPO(Annex 17) in the absence of actual figures based on the supervision of subproject(para. 7.29).

2/ IBRD Report No. 1037-CO, "Colombia Special Study: Economic Impact of DFC assistedprojects", January 23, 1976.

- A.14 -

total operations, were finally incorporated but only on an ad-hoc basis and

applicable only to subloans financed out of the proceeds of the Loan.

5.21 IFF Participation. To facilitate participation of small sub-projects and enterprises, the Loan Agreement foresaw the participation of

IFF in addition to PIF. However, no subprojects were channeled through IFF,

given its more restrictive requirements 1/and the fact that all subprojectseligible for support by IFF can also be financed by PIF. During negotiationsthe Minister of Finance proposed a 50/50 allocation of funds between PIF and

IFF, which might have facilitated access to the Loan by small scale enter-prises. 21 However, since the main objective of the export component was

to stimulate new exports and the larger enterprises were in a better position

to export, no minimum allocation was established. As a result, small enter-prises with assets below Col$20 million (eligible under IFF financing) obtained

subloans for only US$55,000 out of the total US$9.1 million of subloans in theforeign exchange line, or less than 1% of total.

5.22 DDC's management and staff. In general, DDC efficiently handled thesubloans channeled through PIF. DDC is well managed and has a staff of 55persons, 33 of whom are professionals. 3/ The review of subproiect appraisalsprepared by intermediaries has been satisfactory, on balance, in spite of arelatively high turnover of DDC's financial analysts. During 1972-75, whensubloans under the Loan were reviewed, 8 of the total 16 financial analysts hadto be replaced mainly due to DDC's relatively low salaries (particularlycompared to those of commercial banks). Steps were taken to improve DDCsalaries and training under the two most recent Bank financiera loans (942-COand 1223-CO).

5.23 Engineering and technical aspects review. DDC's review of engineeringand technical aspects of suboroiects hag heAn imnroving since 1972- due in partto Bank efforts connected with the Loan. At the Bank's suggestion, DDC'sPnpineering staff was increased from 2 tn & in 1977 and n manual wnq nrenared hV

a consultant to provide guidelines for technical reviews. Initially, however,exP~uPempasi wa m1a-p nn~r~i~o

4 ngaspctsand - Bank- supe-vsion. is. o

found that, instead of reviews, DDC was often undertaking reappraisals of projects,

the experience gained by DDC's engineers, the impact of the Loan on improvingquality" and copem of DDreviewso-f enieeigA technical aspects "ade-u-cyof localization, costs, procurement prices and environmental impact) has been

processes, technology and equipment selection is still needed, DDC--with BankUVLaL.ULu--cUnUnues LU arrange trainung programb Lur its engineers.

1/ To be eligible for IFF financing, subprojects with assets above Col$5 million(about US$180,000) had to pass the additional test of having no more thanCol$100,000 in assets per employee and three was an upper limit of Col$20 millionin total assets for eligible enterprises.

2/ Letter from the Minister of Finance to Mr. Alter, dated January 28, 1972.

3/ 1 Director, 2 Assistant Directors, 4 Division Chiefs, 16 Financial Analysts,4 Engineers. 3 Economists and 3 Accountants,

4/ On average, it took DDC 4.5 months (including engineering reviews) to review theappraisals prepared by intermediaries for financing under the Loan as against2 months under more recent DFC-type loans.

- A.15 -

kLJJ) riacl ±Ld1L~±jIntermedit~aries

/.L Participation or intermedlarles. In contrast to the DanK other

DFC lending in Colombia, commercial and agricultural banks were allowed toparticipate in the Loan, together with development banKS Ifinancieras). Eign

commercial banks, 5 financieras and 1 agricultural bank intermediated the 44subloans under the Loan. Commercial banks were by far the most activeparticipants; out of the 18 subloans in the foreign exchange line commercial

banks intermediate 10 subloans, equivalent to 57% of total volume, and out ofthe 26 subloans in the domestic currency line they intermediated 16, or 76% oftotal volume. The 5 financieras, which had access to other Bank funds at the

time, achieved a relatively modest participation under the Loan, committingonly 32% of the foreign exchange line and 24% of the domestic currency line.

Finally, the agricultural bank participated in the financing of one large sub-project, a sugar refinery.

5.25 Commercial banks were more aggressive and active than the financieras,due to the former's large size of operations and to their often closer relation-ship with larger enterprises and exporters. Under the domestic currency line,the average size of commercial bank subloans was twice the financeras', andsponsoring enterprises that received subloans from commercial banks were 4 timeslarger than those financed by the financieras under the foreign exchange line,

and 2 times larger under the domestic currency line.

5.26 The most active commercial bank under the Loan was Banco de Colombia,

Colombia's largest commercial bank. It participated with 5 subloans in thedomestic currency line and with 3 subloans in the foreign exchange line, andin total financed 25% of all subloans. The most active financiera was Cornoraci6n

Financiera del Valle. Its 19 subloans under the domestic currency line and 4subloans under the foreirn exchange line. accounted in volume for 15% of all

subloans.

5.27 Appraisal by intermediaries. The financial intermediaries generallynprpd qnHQfnrftnrv Annrnicnlc~ fnvr cziihinvn4ontic~ 4i-uliy 4 ney f4v'c.4 nen-T,, n

These subprojects have been operating in most cases with little difficulties.However, under the local currency line for permnent working cap-1 financingL (ofwhich 75% was channeled by the commercial banks), only brief superficial reviews

t r- pepar_pi -1.f 0- -nrne)n deisons base mainy on 0-~ __i_collateral. Seven of these subprojects have been facing serious marketing

-rbesta led eutdi.t.wo bankrupl.tcies..L. M__JL -- 4-SJ1LLaj-OJoaL

might have permitted the detection of project deficiencies in several cases.

5.28 In the foreign exchange line full subproject appraisals were prepared,In-- quaifty waO UOULif OL.1LatLULY W.LLH LCUPtwUiLU WL&CL.LLUu-

processes, financial and economic analysis. Engineering and procurement aspects,however, were sludm analyzeu auequaely uy Lue inLUrMeCrUIL.eb kp4LL.Lep cularlycommercial banks) and had to be reviewed extensively by BR.

5.29 Supervision of subprojects, either by the financial intermediaries orU.LrLLy Uy uJJU, nUb Deen raLner slack. Supervision reports nave mostly beensuperficial and even the standard supervision forms have often not been fullycompleted. nus, there is little factual information available from these reports

- A.16 -

on whether subprojects are accomplishing their export commitments. Also,thus far, insufficient information about actual production of subprojectshas been provided and no comparison between expected and actual costs has been

made. In order to prepare this completion report it was necessary to requestadditional information from the assisted companies and from PKUEXPU, theGovernment export agency.

VI. ACCOMPLISHMENT OF CONDITIONS AND THECANCELLATION OF SECOND TRANCHE

6.01 Loan conditions for the release of the second tranche have beensummarized in para. 3.02. The growth of non-traditional exports substantiallyexceeded the target growth rate of 15%. From 1971 to 1972, these exportsincreased by 64% in value, and in 1973 a growth rate of 36.5% was recorded.Some individual 1972 increases, along with the value of export registrationfor each product and its percentage share of total 1972 exports, are givenbelow:

Table III

Export Registrations in 1972 for Selected Products

Value of Export Shares of Total ExportIncrease in Registrations Registrations

1972 1972 (US$ m) 1972

Clothing and Textiles 74% 44.7 5.4%r.M-1on 527- q0-4 6.12

Sugar 62% 30.7 3.7%Cement 107% 5 9 077Leather and Hides 218% 23.4 2.8%

6.02 While a precise estimate is difficult as many things happened simul-

current revenues in 1973, as a result of new fiscal measures or improvements intax collection administratiOn iLrouced aIE 1711., Was not aLLined on sChedUle.In practice, since the target was expressed in nominal rather than real terms,it was difficult to determine ex post what proportion of increased revenueswere attributable to existing or new fiscal measures. Tax revenues in 1973increased by Col$4,280 million, but most of this growth can be attributed toinflation, higher coffee prices and a higher level of economic activity ingeneral. The new measures which were planned, comprising higher customs dutiestogether with a presumptive tax on agricultural income, scheduled to be introducedin 1973, would have enabled the Government to reach the target. However,introduction of the latter tax was postponed. It was replaced in 1974 by a generalfiscal reform including a presumptive income tax covering all sectors of theeconomy. This tax has provided approximately 45% of all incremental income taxrevenue since its introduction, generating (in constant 1973 pesos) Col$642 million

- A.17 -

in 1974 and Col$1,651 million in 1975. Overall, the 1974 fiscal reform hasexceeded the Bank's expectations at the time the Loan was made, both in terms

of fiscal revenues and improved administration of tax collections.

6.03 The target of increasing the Government's current budgetary surplushv 19% in 1972 wma nnt a14aelA Tn 1Q79 thp rnvernoe fnrfnr (ratin of rnrrPnt

receipt to expenditures) remained unchanged at the 1971 level of 1.41. In1071 4.- AelnAt .34 but recover A agai~4, -- 1 I.) ;_, 107. 'r'h40 -~.A

confirm that the target for new tax revenues was not achieved. Thus if thepri4ce of coffee had failed tA increas beon,S$.7 -- -- there wouldhave been another reason to cancel the second tranche of the Loan.

6.04 As coffee prices had risen above the specified maximum of 57 cents------------------ no. I- n -71 XT ---per puunu, te secou tnche was canceleu oi reLuuLy Lo, L1J. r1ULLLy LIrW

York spot prices for Colombian coffee for the years 1970 through 1973 are givenin Annex 7. By tne time tne Loan became ellective (August 4, 1y9, the price

of coffee had already risen to 63.75 cents per pound--6.75 cents per pound abovethe cut-off mark. Although the balance or payments constraint had already Deenlessened by the time disbursements commenced, the Loan almost certainly had someimpact prior to effectiveness. Thus, the Colombian authorities were in a positionto free imports as soon as they were reasonably sure about the size and timingof the Loan.

6.05 It has been suggested that the second tranche may not have been cancelledif a terms of trade criterion had been used, rather than the price of coffee.Although it may have been better to use that criterion, its use (as shown inAnnex 2) would also have resulted in the cancellation of the second tranche. If1970 is taken as the base year, Colombia's terms of trade worsened during 1971and the first half of 1972, but improved in the third quarter of 1972 to becomebetter than they were in the base year and remained so for all of 1973.

VII. CONCLUSIONS

7.01 The main objectives of the Loan were generally met quite successfully.The availability of the Loan enabled the country to maintain imports at a higherlevel than would otherwise have been possible during 1972 when Colombia had theheaviest foreign exchange constraint. Both Bank and Colombian officials agreethat the Bank's insistence on specific improvements in the public sector currentsurplus was a significant factor in encouraging the Government to introducedesirable fiscal and monetary reforms, even though established targets were notachieved on schedule. The longer term objective of increasing Colombian non-traditional exports was also achieved. Government policies and incentivesresulted in higher than expected export growth and the export component of theLoan helped to finance some sound and worthwhile export oriented proiects. Itis difficult, of course, to assess to what extent the improvements in the rateof economic growth and in the rate of erowth of exnorts after 1971 were attributableto the Loan. A variety of other internal and external factors influenced thesituation. including the recovery in noffee nrice. during the _ecannd half nf 1979.

7-02 On the whole- itseePmTsr thmt- t1 4. 4a 44 nn to nk t then relea o nf thesecond tranche of the Loan to the price of coffee was sensible, despite somefactorl thatiau Cof l in 1971 r T1, and prov the main-4

factor that caused Colombia's economic difficulties in 1971 and provided the mainthe ~ ~ --- "Ll L .&'...O r oe ag~ai LL I LIC~ secondLI hia.L.L .VL 2/

A10

Colombia's balance of payments and fiscal situation recovered rapidly. Analternative would have been to use a term of trade criterion for release ofthe second tranche, but this would have been much more difficult foroperational purposes because of the time required to collect all of therequired economic data. In practice, coffee prices were the maior determinantof Colombia's terms of trade during this period.

7.03 At first sight, it might appear somewhat inappropriate to haveattached some of the other conditions (such as the net increase of tax receintsby Col$1 billion in 1973 as a result of measures taken after 1971) to therelease of the second tranche. The decision on whether to release th Rennnd

tranche was to be taken six months after loan effectiveness, i.e. February 1973,and at that time it would have hen difficnlt to assess the imnaf-t of the finsrMa

measures that had been taken. However, these targets represented the resultsof !agreemennt.rPqr'hPd eiiirinvY T.ni nagntintinc nn -qanacre of aecnomic measuresto be undertaken by the Government. Their inclusion as conditions for releaseof tlla QapnnA t-rrnit-1o vffn i -M"AMA i^ -.p;d ac I byV the Coobinon introducing the agreed measures. Thus, despite the potential measurementdifficulties, they would av provideda a difloprC_ ul__alogue~ *a~~-kFWL LULL Uy LUL LL L -1 d algu

with the Government had coffee prices remained low.

7.04 The question of whether to link the cancellation of the second trancheo e lne. tr expo rt~LL componen L 11JIJ..L~I L IL Ce 1dOan LU LU L 4-t:J L UU WUb a U1.1J.lC ULL

one, to which considerable thought was given at the time of project preparationan.u implementatiun. 01HC6-LUCmUEL I H OUWT 1WGRand £ULUILLUL. ±C LW S.LnceCHL tUe tw c[onnt IC Loan were viewed ascomplementary, and the various agreements reached during Loan negotiations appliedto both components, it was eventually decided to link them together in the tranchingarrangements. Furthermore, if coffee prices were to rise again, Colombia wouldhave sufficient resources to continue financing priority export projects. Inpractice, this did occur. Following the cancellation of the second trancheColombia established a special line of credit, using internal resources, that wassimilar in size and purpose to the second tranche of the export component.

7.05 It is rather difficult to draw many lessons from this rather unusualloan that would be generally applicable to normal Bank lending operations.However, the following detailed points may be relevant to other program loansor export oriented loans:

(a) the desirability of devising simplified disbursementprocedures to avoid delays in what is meant to be afast disbursing loan;

(b) the need to agree in advance on what records should bekept if the Bank wishes to review in detail the utilizationof non-standard components e.g. import financing;

(c) when considering the criteria to be used to defineexport subproiects for the purpose of Bank financing,it is important to recognize that the criteria willhave to depend primarily on an adequate ex-ante appraisalof the export prospects of the subproject. Once thesubroiect has been comnleted it iR often difficult

to distinguish exports attributable to the subproject

- A.19 -

from exports attributable to the company as a whole.In addition, it is difficult to determine who was atfault, if export targets are not met, unless the exportpotential of the subproject was properly examined beforethe project was financed;

(d) the fact that it is often the larger companies that are inthe best position to export and thus it is difficult toinclude employment generation or regional developmentobjectives in a loan whose primary focus is on exportpromotion;

(e) the practical difficulties involved in trying to assessthe impact of specific economic measures that are takenby a borrower in the context of a program loan becauseof the multiplicity of other factors that influence thedevelopment of a national economy.

LCPDFNovember. 1976

COLOMBIA, Loan 842 Coin letion Report

Balance of Payments Data (1968-74)

(US$ Millions)

L968 1969 1970 1971 1972 1973 1974

FOB Merchandise Exports 605 672 788 752 979 1,26:3 1,494

FOB Merchandise Imports 615 648 802 900 848 982 1,510

Trade Balance - 10 24 - l -148 131 281 - 16

Service Receipts 179 198 212 222 228 285 364

Service Payments 251 291 347 385 388 442 533

Goods + Services Balance - 82 - 69 -149 -311 -- 29 124 - 185

Current Account Balance -164 -175 -302 -453 -.191 - 56 - 322o

Private Capital 18 109 100 106 72 25 28

Public Capital L46 133 161 130 255 285 158

SDR Allocation - 21 17 18 - -

Net Reserve Change 6 - 3 6 82 -.164 - 213 389( - = Increase)

Short Term Errors and Cmissions - 6 - 65 14 118 10 41 - 253

Source: IBRD, 1190-00, May 1976.

- A.21 -

ANNEX 2

COLnMRIA: T.nan R2-CO, Comnletion Report

Terms of Trade (1970-73)

Years and (1970 = 100)Quarters Imports Exports

1970 100 100 1.000

1971 110 103 0.936

1972

I 122 114 0.934

II 125 119 0.952

III 129 134 1.039

IV 138 137 0.993

1973

I 145 156 1.076

II 154 164 1.065

III 171 173 1.012

IV 186 194 1.043

Source: IMF, International Financial Statistics, July 1975.

COLOMBIA: Loan 842-CO, CompletionReport.

Impor t Componn t

Disbursement Schedule

(Us$)

% of TotalPurpose 12/4/72 12/13/72 1/8/73 1/12/73 Total Disbursements

Agricultural Machinery 292,588 311,137 - 1,076,877 1,680,612 8.4

Fertilizers 57,508 6,118 31,245 595,287 690,158 3.4

Chericals 314,683 - 160,325 475,008 2.4

Construction Materials 848,933 798,044 - 2,712,821 4,359,798 21.8

Electrical Equipment

General 987,260 945,839 1,580,556 240,897 3,754,552 18.8 >Communications - 14,312 299,250 - 313,562 1.6

Mechanical Equipment 1,935,100 2,586,779 2,207,95:3 194,530 6,924,362 34.6

Texitile Machinery 291,026 334,831 180,045 19,253 825,155 4.1

Automotive Machineryand Equipment 272,902 - 700,951 - 973,853 4.9

Miscellaneous - 2,940 - - 2,940 -

Total 5,000,000 5,000,000 5,000,000 5,000,000 20,000,000 100.0

Source: IBRD, Controller's Department

COLOMBIA: Loan 842-C, Copletioi_Report

Import Component

Project Share of Total_Imports /1

(US$ Million and Percentage)

1970 1971 1972 1973 1974

Construction Materials 13.9 13.7 5.3 4.- 27.2% Financed by Bank Loan 75.2%

Fertilizers 7.7 10.7 10.9 36.1 99.1% Financed by Bank Loan 6.3%

Chemicals 63.8 72.5 76.0 95.9 188.0% Financed by Bank Loan 0.6%

AgricJltural Equipment 15.3 B.6 9.8 13.7 52.5% Financ-d by Bank Loan 5.8%

Electrical Equii:3nt 65.4 7.6 69.6 73.0 109.1 '

% Financed by Bank Loan 5.8%

Textile Macfxiner7- 15.4 15.5 25.1 23.2 26.8% Financed by Bank Loan 3.3%

Mechanical Equipment 135.0 181.0 151.5 159.6 15.8% Fina:ced by Bank Loan L.6%

Automotive Equipment 91.2 83.7 89.7 98.9 1(0.3, Financed by Bank Loan 1.1%

Sub-Total h07.7 461.4 h38.h U0 .0 821.8% Financed by Bank Loan 4 . 5,

Total All Imports 8WL.0 929.6 858.9 1,061.5 1,336.6% Financed by Bank Loan 2.3%

/1 CIF Basis

Source: INCOMEX

COLOWMBIA Loan 842-CO. Completion Report

"L" WQMannaLt

Allocation of Counterpart Funds

A.0).

Percent12/13/72 2/7/73 4/12/73 Total Of Total

Ministry of Agriculture:Rehabilitation Banana Zone 266.785 - 266.785 1.78

Sub Total 266.785 - - T77

Ministry of National Education:School Construction 1,600.711 1,322.222 - 2.922.933 19.49Scientific Studies 177.857 - - 177.857 1 19Credito Educativo - Formacion de Profesores 120.053 - 120.053 0.80Allocation to Instituto Colombiano de Pedagogia 93.375 23.611 - 116.986 0.78

Universities: Equipment/Construction - _ I __LSub Total 1,991.996 1,762.500 437.637 4,192.133 27.95

Ministry of Public Works:National Road Plan 518.008 - - 518.008 3.45

Railways Rehabilitation 2.223210 -=z.naan _WU ggSub Total 2,741.218 - 2,741.218 113.27

Minisry o the CabinetCoMmunity Development Program - 119.167 121.663 240.830 1.61Promotion Native Business 2213.055 177,243 405.298 2.70

Sub Total - 347.222 298.906 646.128 4.31

Minastry oEPublic Health:Hospital Construction 305.555 87.527 393.082 2.62Construction Health Centers/Posts in Rural Areas 83.333 262.582 345.915 2.31Medical Investigation and Drug Analysis 159.722 503.282 663.004 4.42Basic Sanitation - Rural Areas j97a.222 ii&10J5 2.708.127 18.05

Sub Total - 1,520.832 2,589.496 4.110.327 27.40

Ministry oF Economic DevelopmentHousing Construction Loans - 1,127.778 1,196.936 2,324.714 15 50Industrial Development * 152.778 240.700 393.478 2.62Departmental and Hunicipal Planning ad

Development - 27.778 43.764 71.542 0.48Regional Develooment 61.111 192.560 253,671 1.69Sub Total .--7. .=f*M --'2| 6.

Total Total L. 5,000.000 5,000.000 5,000.000 5,000.000 100.00

/I Columns nay not sum to totals due to rousding.Source: Ministry of Finance

- A.25 -

ANNEX 6

COLOMBIA: Loan 842-CO, Completion Report

Impur Uumponun

Allocation of Counterpart Funds Compared to Projections

(Percentage Terms)

Tentative Projections Actual Allocation

Rural Development 33.3 21.4

Education 11.7 26.8

Public Health 6.7 9.4

Industry 20.0 5.4

Transportation 23.3 18.2

Mineral Resource Development 1.7 -

Economic and Social Studies 3.3 1.2

Housing - 15.5

Regional Development 2.1

Total 100.0 100.0

Source: Compiled from data given in President's Reportm. Aal" q suF 1e UyyJ.C .J ,n L ~.L C

COLOMBIA: Loan B4 2-CO,_Completion_ReLort

Import CompoLent

New York Spot :Prices. Colombian Mams

S Centsper Poundi

Month 1970 1971 1972 1973

January 59.43 52.10 51.78 69.10

7-ebruary 57.18 50.35 50.13 73.88

March 57.50 ;9.93 51.70 73.50

April 57.23 48.35 51.75 70.65

May 57.78 h8.58 53.03 73.35

June 56.80 [7.83 53.65 76.10

July 56.25 47.75 59.48 75.25

August 55.95 h8.20 63.75 73.27

September 55.65 47.93 59.73 72.60

October 56.05 47.90 60.90 71.78

November 5h.80 47.90 61.43 71.le

December 52.45 52.40 62.70 71.28

Average 56.42 49.27 56.67 72.66

High 60.00 52.63 65.63 77.00

Low 52.00 47.38 49.88 65.00

Source: IBRD, Economic Analysis and Projections Department.

COLOMBIA: Loan 842 - Ccpletion ReportEXIORT COMPONENT

Project Data(as of March 31, 1976)

Loan ProceedsForeign Exchange Line Counterpart Funds

Domestic Currency Line

Imported Permanent Domestic

FixedA!sets Workinj_Cpital Fixed Assets

(inU$illion) (in Col$ million)1. Amounts

A. Approvals 10.0 114.5 21.9B. Commitments 9.14- 114.3 21.9C. Disbursements 7.74-/ 114.3 19.0'

D. Free limits None, all subprojects were to No subprojects were to be No subprojects were tobe submitted to the Bank submitted to the Bank be submitted to the Bank

2. Disbursement Time

A. Appraisal's disbursement 15 months 15 months 15 months

time estimateB. Actual disbursement time 48 imonths 24 months 48 months

3. Dates

A. Loan Agreement June 28, 1972

B. Effectiveness - August 24, 1972

C. Terminal Date for SubprojectSubmission:- original December 31, 1973 -

- Ist Extension in 12/18/73 June 30, 1974 -- 2nd Extension in 7/74 September 30, 1974 - -- 3rd Extension in 7/75 December 31, 1975 -

D. Closing Date for Disbursement- original December 31, 1974 -- 1st Extension in 1/8/75 December 31, 1975 - -- 2nd Extension in 12/19/75 June 30, 1976 -- 3rd Extension in 2/4/76 September 30, 1976 - -

1/About US$400,000 will stilll be coemitted by the final closing date of September 30, 1976. Total comitments, therefore,

will total US$9.55 million in the foreign exchange line.

ý./About US$1.B million will still be disbursed until September 30, 1976. Total disbursements, therefore, will totalUS$9.55 million in the foreign exchange line.

COLOMBIA: Loan 842 - Completion Report

EXPORT COMPONENTSummary oVD2perations aIof Jukl2, 1976

Domestic CurrencyOperations Line Foreign Exchange Line

No ~~~iount No Amount

(in Col__'000) (in US$ '000)

Total applications 49 500,456 30 16,651

Applications retired or rejected 23 362,066 12 6,417

Total Approvals 26 138,390 18 10,234

Total cancellations 3 2,185 10 1,092

Net comnitments 23 136,205 18 9,142

Total Disbursements 22 133,334 17 7,746 c

Source: Banco de la Republic's Development Credit Department

LCPDF, September 1976

tz1

COLOMBIA: Loan 842 7 Completion ReportEXPORT COMPONENT

Description oifT buIbpcts

Approvals of ForegLxch&& Subl

Intermediaries and their EmploymentSubprojects Amount Total in Sub- Total Amets

(in $S'0O00) Enterprise Xgrojfl(o CoL illion Location eres Interest Date of Approval

A. Finance Comipanica

Corporacion Financiera de Valle.lMerosC 258.4 476 - 362.7 Mdellin 10 yra 19% 8 Feb 732.Ingenio Melendez 86.0 8¥ - 106.7 Cali 10 19 28 Jun 733.CurtieäEres Titan 232.0 - 42T 100 90,5 Yuibo 6 25 24 July 7:3

576.4 1 729 100 .9 8.4 21.4Corporacion F. Valle & Cf Nacional -

4.Cementos del Valle 1,000.0 628 - 288.2 Yumbo 10 19 30 Aug 73Cofiagro

5. Ingenio Risaralda _1_0o 1.0 Rarad7 R0 26 Sept 74

B. Commercial Bak

Banco de Colombia6.Fabricato 516.1 6,024 190 1,421.8 Bello 10 19 22 March 737.Thomas de la Rue 191.8 444 10 51.5 Bogota 10 19 17 May 738.Singer Sewing Machine 948.0 1,191 250 355.9 B/quilla 10 19 27 Sept. 73

1.65.9 7.659 450 652.8 10 19Banco de Caldas9.Distral S.A. 550.0 600 420 205.3 B/quilla 10 25 20 Nov. 75Banco Comercio "" =" 10 2

10.Coltejer 12000.0 20C 511 2 889.1 Medellin 10 19 22 March 75Banco Cafetero11.Sedeco 446.1 - 126 596.5 Itagui 10 19 22 March 73Batnco Construccion Desarrollo12.Matadero del Llano 55.0 - - 4.4 Villavicencio3 19 12 kpril 73Corporacion F. Nacional

-

13.Textiles Rio Negro 628.7 1 104 293 273.1 Rionegro 10 19 1 March 73Consorcio Bancos y Financieras ""14.Peldar 1000.0 L550 561.7 Zipaquira 10 19 26 April 73Bco. Comercial Antiogueno -215.Productos Grulla 124.3 1.236 - 122.3 Envigado 6 19 19 July 73FNCB & Corporacion Occidente16.Pepalfa 356.0 1 463 kl 149.9 Medellin 8 19 9 August 73Corporacion Norte17.Cemento Blanco 500.0 116 30 41.1 Medellin 6 19 4 October 73 0Corporacion Colo~éia18.Pavco 250.0 305 304.9 Bogota 7 25 27 Julio 75 -

9--------14 -4969.

Source: Banco de la Republica'n Development Credit Department

LCPDF, September 1976

ANNEX 11

- A.30 -

COLOMBIA: Loan 842 - Comoletion ReportEXPURT COMF,NENT

Description of Subprojects

Approvals of Domestic Currency Subloans

Employment Total AssetsAmount Sub of Inv. Enterp. Location of Terms Interest Date of

irmediaries ., (e.1 $ 4114nn1 Totl Prjaect (Col S million) Suborolects (vrs) (%) Approval

A. Financieras

Corp. F. Norte1. Slaconia 3.0 376 - 34.6 B/quilla 10 19 13 Sep '73

Corp. F. Valle2. Polimero ColombianOs 9.0 476 19 362.7 Medellin 3 19 8 Feb '73

3. Ingral SA 9.0 556 - 415.1 B/quilla 10 19 26 April '73

4. Angel H. Castro td.-' 0.6 48 20 14.1 Falmira 3 i9 24 May '73

5. Guadualito Lda.-1 0.7 50 14 12.1 Palmira 3 19 24 May '736. Ingenio Melendez- 4.7 826 100 106.7 Cali 10 19 28 June '73

7. Loutdo i.3 - 40 6.5 Cali 3 A 28 June '73

8. Eugenio Castro Ltd. 0.2 - 16 20.5 Cali 3 19 12 July '73

9. Maderas y Chapas 2.5 750 - 167.9 Tumaco 10 19.0 14 Feb '74

A0. ini r 4 1li 5 23.5 74 Jul '75

30.0 3131 309 271.0 6.9 19.3

Subtotal Financieras 33 3507 309 246.4 7.2 19.3

B. Commercial Banks

Banco de Colombia11. Fabricato 22.4 6024 190 1421.8 Medellin 5 19 23 March '7312. Petroquimica Colombians 20.0 192 - 236.8 Cartagena 5 19 9 August '7313. Thomas de Is Rue 3.5 444 10 51.5 Bogota 10 19 17 May '7314. Cia. Colombians Calzado 1.8 294 28 22.5 Medellin 8 19 30 August '7315. singer Sewing Machine 1.3 1191 250 355.9 Barranquilla t 19 27 Sep 73

49.0 8145 478 760.6 5.6 19

Banco del Comercio

16. Monark 9.8 185 100 54.4 Cali 10 19 7 June '73

Banco Construccion Desarrollo17. Matadero Llano 0.3 - 59 4.4 Villavicencio 3 19 12 April '7318. Confecciones Blason 5.6 220 300 47.4 Bogota 5 19 24 May '73

19. Vertex Ltda. 1.4 - 35 3.0 Bogota 3 19 9 August '73

7.3 220 394 37.1 4.5 19

First National City Bank20. Floramerica 2.0 830 - 39.1 Madrid 5.0 19 28 June '7321. A. Johnson de Colombia 2.6 178 75 59.0 Bogota 5.0 19 31 Jan '74

4.6 1008 75 50.3 5.0 19

Banco Comercial Antioquefio22. Products Grulla 3.6 1236 200 122.3 Medellin 4 19 19 July '7323. Manuf. Ceramics 3.8S 330 716 53.8 medellin 10 19 27 Sept. '73

7.4 1566 270 87.1 7.1 19

Consorcio de Bancos y Finanzas24. Peldar 16.0 1550 112 561.7 Zipaquirg 5 19 26 April '73

Banco de Bogota25. Confec. Sead 3.0 125 110 11.3 Pereira 5 19 16 August '73

Aco. Celsia y Frances Italiano26. Textfies Ego 8.2 610 85 80.4 Bogota 5 19 19 July '73

Subtotal Commercial Banks 105.3 13409 1630 461.8 5.86 19

Total 138.3 16916 1939 410.4 6.18 19.1

I/ This three subloans were fully cancelled.

Source: Banco de la Republica's Development Credit Department

LCPDF, September 1976

- A.31 -COLOMBIA: Loan 842 - Completion Report ANNEX 12

Distribution of Approved Loans by Size(As of March 31, 1976)

(A) Doestic Currency Line -Amounta _N % Total Amums %

(in $ Col million) (in $ Col '000)

Up LU 1,UVU 2 8.7 71 U./.From 1,001 to 2,000 5 21.8 8.481 6.2

2,001 to 3,000 2 8.7 5,100 3.73,001 to 4,000 5 21.8 16,926 12.44,001 to 5,000 1 4.3 4,700 3.55,001 to 6,000 1 4.3 5,600 4.06,001 to 7,000 - - -

7,001 to 8,000 - -8.001 to 9-00n 3 13.1 26.160 19.29,001 to 10,000 1 4.3 9.830 7.210,001 to 15,000 - -15,001 to 2 ,0- 2 R7 36;000 70AMore than 20,000 1 4.3 22,412 16.5

(5) Foregn Exchange Lineimounta No. % Total Amounts %

(in IIS$ '000) (in US$ '000)

Up to 100 2 11.1 141 1.5From 101 to 200 2 11.1 316 3.5

201 to 300 3 16.7 740 8.1301 to 400 1 %A 356 3a401 to 500 2 11.1 946 10.3501 to 600 2 11.1 1,066 11.7601 to 700 15.6 629 6.9701 to 800 - - - -801 to 900 - 27-8 --901 to 1,000 5 4,948 54.1

TOTAL 1B 100i AW142 100.0

COLOMBIA: Loan 842-CO

Distribution of Approved Subloans. by Size of Subborrovers Total Assets(As of March 31, 1976)

n-n.i Currancy Lin Pnrign Pr hangT in-TOTAL ASSETS Awons A...,

(in $ Col.) No. % $ Col(000) % No. I US $ (000)

Frmto I3UU,U I- I. I,,f, . - - -

3,000,001 " 7,000,000 1 4.3 292 0.2 17,000,001 " 11,000,000 - - - - - - - -

11,000,001 " 15,000,000 2 8.8 3,705 2.7 - - - -15,000,001 " 20,000,000 - - - - - - - -20,000,001 " 40,000,000 3 13.0 6,820 5.0 - - - -40,000,001 " 60,000,000 5 21.8 25,316 18.6 2 11.1 692 7.660,000,001 " 80,000,000 - - - - 1 5.6 1,000 11.080,000,001 " 100,000,000 2 8.8 10.160 7.5 1 5.6 232 2.5100,000,001 " 300,000,000 4 17.4 30,840 22.7 6 33.2 2,745 30.0300,000,001 " 500,000,000 3 13.0 19,261 14.1 3 16.7 11456 15.9500.000.001 " 700.000.000 1 4. 16.non 1107 2 11.1 1,446 i5.8700000,001 and more 1 4.3 22412 16.5 2 11.1 1,516 16.6

Source: Banco de la Republica's Development Credit Department

LCPDF, September 1976

- A.32 - ANNEX 13

COLOMBIA: Loan 842 - Completion ReportEXPORT COMPONENT

Disribucion of Approved Subloans by interest ana Grace reriode(As of March 31, 1976)

Interest Rates Domestic Currency Line oreicn Exchano LinpNo. % Amounts in % No. % Amounts in %

$ Col '000 US $ '000

Up to 19.0% 22 95.7 134.206 98.5 14 77.8 7.110 77.8From 19.1% to 20.0% - - - - 1 5.5 1.000 10.9From 20.1% to 23.5Z 1 4.3 2.000 1.5 - - - -From 23.5% to 25.0% - - - - 3 16.7 1.032 11.3

TOTAL 23 100.0 136.206 100.0 18 100.0 9.142 100.0

Amounts in Amounts inGrace Periods No. x $ Col '000 % No. % US $ '000 2

0 years 5 21.7 29.970 22.0 2 11.1 753 8.21 year 7 30.4 37.304 27.4 3 16.7 927 10.11.5 years 1 4.3 3.000 2.2 - - - -2 years 9 39.3 63.432 46.6 13 72.2 7.462 81.73 years 1 4.3 2.500 1.8 - - - -

TOrML 23 100.0 136.206 100.0 18 100.0 9.142 100,0

COLONBIA: Loan 842-CO

Distribution of Approved Subloans by Terms(As of March 31, 1976)

Domestic Currency Line Foreign Exchange LineNo. Amounts in % No. I Amunts in 2

Terms $ o1000 us $ '000

Up to 3 years 4 17.4 11.397 8.4 1 5.6 55 0.6

From 3.1 to 4 years 1 4.3 3.640 2.7 - - -

From 4.1 to 5 years 10 43.6 84.772 62.2 - - -

From 5.1 to 6 years - - - - 3 16.7 856 9.4

From 6.1 to 7 years - - - - 1 5.6 250 2.7

From 7.1 to 7 years 1 4.3 1.820 1.3 1 5.6 356 3.9

From 8.1 to 10 years 7 30.4 34.577 25.4 12 66.5 7.625 83.4

TOTAL 23 100.0 136.206 100.0 18 100.0 9.142 100.0

Source: Banco de la Republica's Development Credit Department

LCPDF, September 1976

ANNEX 14

COLOMBIA: Loan 842 - Completion ReportEAUR CUMUNENT

Sub-Loan Distribution by Economic Activit and Location(As of March 31, 1976)

Economic Activity Domestic Funds Line Frein Eange unds lineNo. % Amounts in % No. % Amounts in %

($ Cal 000) US$ (000)

Agriculture 2 8.8 2.705 2.0 - - - -Food 3 13.0 13.992 10.3 3 16.7 1.141 12.5Textiles 1 4.3 22.412 16.5 5 27.8 2.947 32.2Shoe and Garments 6 26.2 25.220 18.5 1 5.5 124 1.4Wnnd nrodiirra 1 4 2.500 1.8 - - - -

Printing Industries 1 4.3 3.481 2.6 1 5.6 192 2.1Leather 1 4.3 2.000 1.5 1 5.6 232 2.5

Ceias2 8.8 29.000 21.3 2 11.1 5085.Non-metallic Products 2 8.8 19.805 14.5 3 16.7 2.500 27.3Basic Metallic Products 1 4.3 1.400 1.0 - - - -Metallic Products - - - - 1 5.5 550 6.0Non-electric Machinery 1 4.3 2.600 1.9 - - - -F1ptric MAr,inpry 1 A 1.21 0.9 1 OQ in ATransport equipment 1 4.3 9.830 7.2 - - - -

TOTAL 23 100.0 136.206 100.0 18 100.0 9.142 100.0

Destiny of Products No. % $ (000) % No. % US$ (000) %

Exports 23 100.0 136.206 100.0 17 94.4 8.592 94.0Tmport auhtitution and rnorts - - - - 1 5. 550 An

TOTAL 23 100.0 136.206 100.0 18 100.0 9.142 100.0

COLOMBIA: Loan 842-CO

Sub-Loan Distribution by Geographical Zones(as of March 31, 1976)

Geographical Zone Domestic Funds Line Foreign Exchange Funds LineNo. % Amounts in No. Amountsin %

Le Col 000) (US$ 000)

Antioquia 5 21.8 40.677 29.9 8 44.4 3.829 41.9

Atantico 3 13.0 13.261 9.7 2 11.1 1.498 16.4

Bolivar 1 4.3 20.000 14.7 - - - -

Cuindin-mrca 7 30.5 301.24-1 . . 3, 167r.4

Meta 1 4.3 292 0.2 1 5.5 55 0.6Narifio 1 4.3 2.500 1.8 - - - -

Risaralda 1 4.3 3.000 2.2 1 5.6 1.000 10.9

Valle A 17 cZ 17 GIq 1IVL, 4-75 17251 3 16.7 1.318 14.4

TOTAL 23 100.0 136.206 100.0 18 100.0 9.142 100.0

Source: Banco de la Republica's Development Credit Department

LCPDF, September 1976

COLOMBIA: Loan 842 - Completion ReportEXO?ORT COMPONENT

E12.pyment Generation by Economic Activity

(As of March 31, 1976)

Economic, Activity Total Value ofSubprojects Total Employment Investment per Job

(in $ Col '000) Generation (in $ Col '000) (in US $)

Agriculture 8,500 14 607.1 22,487Food Products 404,906 1,206 335.7 12,435Textiles 506,618 1,200 422.2 15,636Shoes and Garments 74,068 723 102.4 3,794Wood Products 5,050 75 67.3 2,494Printing, industries 9,866 10 986.6 36,541Leather 20,000 100 200.0 7,407Chemicals 130,222 19 6,853.8 253,840 1Non-metallic Products 239,475 218 1,098.5 40,685 >Basic Metals 1,800 35 51.4 1,898Metallic Products 263,206 420 626.7 23,211Non-electric Machinery 11,100 75 148.0 5,481Electric Machinery 45,093 250 180.4 6,680Transport Equipment 000 100 240.0 88

TOTAL 1743,904 4 5 392.3 14,530

Source: Banco de la Republica's Development Credit Department

LCPDF, September 1976

X-

COLOMBIA:: Loan 842 - Corletion ReportEXPORT COMPONENT

Export Comuitments and Actual Exports(in US$'000)

A. Subprojects that are AcconplisIng_ the Export Goals B. Subpro)ect; that are not Accomplishng the Export Goals

Export ExportCommitment Actual Exports Latest Forecast Commitment Actual Exports Latest Forecastin 5 Years in (N) Years of Exports in 5 in 5 Years in (N) Years of Exports in 5

Enterprise ofOeratn f Years O -eration Enterp e of Operation of Operation Years Operation

1. Ingenio Melendez 4,080 4,897(3) 8, 1602. Ingral 62,560 47,952(3) 80,0003. Polimeros Colombianos 5,291 4,673(3) 7,800 1. Friollanos 2,490 -4. Fabricato 39,782 47,925(3) 79,875 2. Sedeco 3,000 -5. Textiles Pepalfa 1,165 2,178(3) 3,600 3. Textiles Ego 700 -6. Coltejer 92,452 84,579(3) 141,000 4. Textiles Rionegro 2,000 -7. Slaconia 1,000 924(3) 1,540 5. Confecciones Blason 2,500 972(2) 1,3008. Curtiembres Titan 5,300 3,102(3) 5,300 6. Confecciones Saad l,000 311(2) 7809. Productos Grul1a 750 760(3) 1,270 7. Compania Col. Calzado 985 18(2) 60

10. Petroquimica Colombians 7,735 6,304(3) 10,500 B. Maderas Narino 3,000 -11. Pavco 1,000 939(3) 1,565 9. Thomas de is Rue 2,595 1,129(3) 1,90012. Peldar 12,953 14,688(3) 24,480 10. Vertex 125 18(3) 3013. Manufacturas Ceramica 5,520 3,286(3) 5,520 11. Cemento Blanco 2,000 115(2) 36014. Cementos del Valle 2,500 3,943(3) 6,600 12. Bicicletas Monark 7,914 66(3) 10015. Floramerica 9,500 5,800(3) 9,800 13. Singer Sewing Machine 9,000 1,719(3) 3,00016. A. Johnson 2,052 1,566(3) 2,610 14. Guadualito l,435 162(2) 40017. Distral -1,000 1,313(2) 3300 15. Ingenio Risaralda 3,000 -

Subtotal 254, 392920 Subtotal 41 ,744 lL30

INDEX 100 154 INDEX 100 19

Latest Forecast ofSUMMARY: Exports in 5 Years of

Number of Sub rojecta Expor: Commitments operation

A. Subprojects accomplishing the Export Goals: 17 254,640 392,920B. Subprojects not accomplishing the Export Goals: 15 _1 _ 0

TOTAL 32 2968 0

INDEX 100 135

Source: Banco de Is Republica's Development Credit Department and statistics from Colombia's Export Agency PROEXPO.

LCPDF, September 1976

COLOMBIA: Loan 842 - Completion Report - A.36 ANNEX 17

EXPORT COMPONENTAPPROVALS SCUIEDLF,

I) IMPORTED FIXFD ASSETS (in US$)

Y E A R S,bclborrower 1973 1974 T o t a 1

Po i'meros Colombianos 258 ,402.04 - 258 ,402.04extiles Ri.oeg,ro 628722.63 -- 628 ,722.63

Coletejer S,A. 1,000,000.00 - 1 000 000.00Fabricato 5 A. 516,141.07 - 516 141.07Manufacturas Sedeco S, A. 446,080.50 446 080.50Motadero Frigorifico del Llano 55,000.00 -55 ,000.00

Cristaleria Peldar S.A 1,000,000 00 -1 000 000.00Thomas de la Rue 191 777 07 191 777 07Ingenio Melendez 86,018.42 - 86,018.42Productos de Caucho Grulla S.A. 124,304.18 - 124 304.18Textiles Pepalfa 356,047.18 - 356 ,047.18Cementos del Valle S.A. 1.000,000.00 - - 1 ,000,000.00Singer Sewing Machine 948,000.00 <-A9 000 00Cemento Blanco S.A 500,000.00 - 500 000 .00Ingenio Risaraldo SA. - 1 ,000,000.00 - 1 ,000,000.00PAVCO S,A. - 5 000.00 250 000.00Curtiembres Titán Ltda. - 232:000.00 232:000.00

Distral S.A. - - 550,000.00 550,000.00

T O T A L 7,110,493.09 1,000 ,000.00 1,032,000.00 9 142 493.09

I WORKINC CAPITAL (in S Co)

1973 1974 1975 TOTAL

PolUmeros Colombianos 9, 000, 000.00 - - 9 000 000.00Fabricato S.A. 20,700,000.00 - - 20:700:000.00Cristaleria Peldar S.A. 16, 000, 000.00 - - 16 000 000.00Thomas de la Rue 2, 946, 000.00 - - 2,946,000.00Esteban Valencia - Conf. Blasón 5, 600, 000.00 - - 5 600 000.00Fab. de Bicicletas Monark 9, 830, 000.00 - - 9.830.000.00Ingenio Meléndez 4 700, 000.00 - - 4,700,000.00Floramérica 2, 000,000.00 - - 2 000 000.00Textiles Ego S.A. 8,160,000.00 - - 8 ,160 000.00Productos de Caucho Grulla S.A. 3,520,000.00 - - 3 ,520 ,000.00Petroquímica Colombiana S.A, 20,000,000.00 - - 20,000,000.00Vertex Ltda. 1,400,000.00 - - 1 400 ,00000Confecciones Saad 3 000 000.00 - - 3 000 000.00Cia. Colombiana de Calzado 1,820,000.00 - - 1 '820 '000.00Fr_;bric Slacona Ltda. 3.,000000.00 - - 3'000 000.00A. Johnson de Colombia - 2,600,000.00 - 2,600,000.00

TOTAL 111,676,000.00 2, 600 000. 00 114, 276,000.00

IT)DOME=TICFIED ASSE-1S (inCo$

1973 1974 1975 T o t a 1

Fabricato S.A.1 711 ,777.06 - 1, 711, 777.06

Matadero Frigorifico dei Liano 292,000.oo 292 ,M00-0n

Ingral S.A. 9,000,000.oo - 94,00 ,000.oa

Thomas de la Rue 535,000.oo - 535 ,000.oo

Guadualito 705,271.89

Productos de Caucho Grulla S.A. 119,500.00 - 119 ,500.oo

Singer Sewing Machine 1,261,000.oo - l ,261 ,000.oo

Manufacturas de Cerámica S.A. 3,805,000.oo - 3 ,805 ,000.

Maderas y Chapas de Nariño 2 ß00,000.oo - 2.,500 ,000.oo

Curtiembres Titán Ltda. 2,000,000.oo 2 ,000,0

0 0 .oo

Total 17,429,548.95 2 ß00,000.oo 2, 000, 000.oo 21, 929, 548.95

Source: Banco de la Republica's Development Credit Department

LCPDF, Septeiber 1976

Afl17' 18

- A.37 -

ntvAT A:_ LoAn RM2_ - Cmnleti-on ReportEXPOR COMPONENT

Disbursement ScIWedule

1 ) IMPORTED FIXED ASSETS (n US $)

Subborrowers 197 z 1973 1974 1975

Cemento Blanco de Colombia '473,000.0 26 415.I

Cementos del Valle S.A. - 353,964.60 .

Cia. de Productos de Caucho Grulla - - - 124 304.18

Colteier S.4. - 370, 658.90 629,341.10 -

Cristaleria Peida, - 597, 523.79 395,557.70 6,918.5w

Curtiembres Titán Ltda.Distral S.

Fabricato S.A. - 214,683.94 301,457.13

Frigorifico del Llano - Frigollano - 55,000.oo

lngenio Mléndez S.A. - 86 018.42 - -

Ingenio Risoralda S.A. - 000 ,000.oo

Manufacturas Sedeco S.A. - - - 446,080.50

Pisos de A-falto y Vínilo de Colombia S.A. ---

Polimeros Colombianos S.A. - 117,940.76 140,461.28 -Singer Sewing Machine de Colombia - - 272,928.57 284,621.55

Textiles Pepolfu S.A. - 154,31148 195,047.50

Textiles Rionegro - 417, 422.37 211,300.26 -Thomas de la Rue de Colombia - 191 777 .07 -

- 1,996,025.25 2,987,3z.i2 593,110.85

II) WORKING CAPITAL LOANS (in $ Col.)

Subborrowers 1972 1973 1974 1975

A. Jhonson de Colombia S.A. - - 2 ,00,000.00 -Cia. de Producto- de Caucho Grulla - -- 3 ,20,000n.00 -

Confecciones Soad - 1 ,454 ,700.00 1,545,300.00 -Esteban Valencia - Blasón - 3,300,000.00 2,300,000.00Fruic, SaconIu Ltd. - 3J,000, 00.00 -Fabricato S.A. - 20 700 ,000.00 -Floramérica S.A. - - 2,000,000.00ingenio Meléndez S.A. - 2710 ,634. 0 1,89,365.40-Monark S.A. - 9 ,830,000.00 -Peldar S.A. - - 16,000,000.00 -

Petroquímica Colombiano S.A. - - 20, 000,000.00 -

Polimeros Colombianos S.A. - 7 ,900 ,000.00 1,100,000.00 -Textiles Ego S.A. - 8,160,000.00 -Thomas de la Rus de Colombia - 2 ,946 ,000.00 -Vertex Ltda. - 1 400 ,0.00 Yanovich Kertzman y Cía. - Cia. Col. de Calzado - 1,820,000.00

- 50,241 334.60 64,034,665.40

III) 0OMESTIC FIXED ASSETS (n US $)

Subborrowers 1973 1 974 1 975

Curtiembres Tit¿n Ltda. - - -Fabricato 45,516.80 19,957.18 3.469.29Frigorifico del Llano- Frigollano - - 10 ,956.85 -Guadualito 27 483.75 -Ingral S.A. - - 302,304.10Maderas y Chapas de Nariño S.A. - 47,149.72Manufacturas de Cer¿mica S.A. - 142,776.74 -Singer Sewing Machine de Colombia - -Thomas de la Rue de Colombia - 6, 047.20 -

45,516.80 207,251.72 352 ,923.11

Source. Banco de la Republica's Development Credit Department

LCPDF, September 1976

COLOMBIA: Loan 842 - Completion ReportEXPORT COMPONENT

Distribution of CommnIttEdLoans-n b nancial Intermediaries(As of March 31, 1976)

.Doestnic Currency Lne Foreign Exch.ang japinFinancial Intermediaries No. % Amounts in No. % Amounts %

$ Col '000 in US $ '000)

Domestic Private Banks 12 52.3 76,541 56.2 7 38.9 3,385 37.0

Public and Semi-Public Banks - - - - 1 5.6 446 4.9

Foreign Private Banks 2 8.7 4,600 3.4 - - -

Pool of Banks 1 4.3 8,160 6.0 - - - -

Financing Companies 7 '30.4 30,905 22.7 7 38.9 2,955 32.3

Pool of Finance Coinpanies - - - - i 5.5 2,--- 10.9

Pool of Banks and Finance Cos. 1 4.3 16 000 11.7 2 11.1 1,356 14.9

TOTAL 23 100.0 16 206 100.0 18 100.0 9 ,1 100.0

Source: Banco de la Republica's Development Credit Department

LCPDF, September 1976

COLOMB LA: Loan 842 - Completion ReportEXPORT COMPONENT

Characteristics of Subprojects by Intermediaries

Average Assets Average AverageSubloans Amount Employment & Enterprises Terms Interest

Financial Intermediaries (in_US $ '000) Number Enterprise Sub rojects (in Col $ million) jyr)

(A) Foreign Exchange Line

Finance Companies 2,955 7 3,882 423 230.6 8.75 20

Commercial Banks 5,187 10 24,508 2,184 959.9 9.74 19.6

Agricultural Bank 1 00 1 1,047 1,047 63.0 10.00 20.0

Sub-total 9 2Z18 289 3, 626.1 9.42 19.8

Average Assets of Average AvcrageSubloans Amount Emiloyment Enterprises Terms Interest

(B) Domestic Currency Line (in Col $ million) Number Enterprise Subprojects (in Col $ million) (Yrs) j

Finance Companies 32.3 10 3.507 309 246.4 7.20 19.3

Comnercial Banks 103.9 16 13,409 1,630 461.8 5.90 19.0

Sub-total 136.2 26 16,916 1 410.4 6.20 19.1

Source: Banco de la Republica's Development Credit Department

LCPDF, September 1976

- A.40 - ANNEX 21

COLOMBIA: Loan 842- Completion ReportEXPORT COMPONENT

Staff of Development Credit Department

1972 1973 1974 1975

Director 1 1 1 1

Assistant Directors 2 2 2 2DivisinChief 4 4 4Analysts 17 21 18 16

Economists 2 3 3 3

Acutns2 22Acc. Auxiliaries 4 8 5 7C 4-*4- 4- 4 ns 1

QMau 12 2Secretaries, Files, Others 15 15 19 15

Total 51 60 60 55