Doument of

The World BankFOR OFFICIAL USE ONLY

C A: -t"sA ('S,'

Report No. P-4430-CRG

REPORT AND RECOMKENDATION

OF THE

PRESIDENT OF THE

I NTEHNATIONAL DIEVELOPMENT ASSOCIATION

TO THE

EXECUTIVE DTRECTORS

ON A PROPOSED CREDIT

oF SDR 4.8 MILLION

To THE

EASTERN CARIBBEAN STATES

FOURTH CARIBBEAN DEVELOPMENT BANK

REGIONAL VOCATIONAL AND TECHNICAL EDUCATION PROJECT

April 2, 1987

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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Currency Equivalents

The currency unit is the East Caribbean Dollar.

EC$1.00 - US$0.37US$1.00 - EC$2.70

LIST OF ACRONYMS

AGFUND - Arab Gulf Fund

BDD - British Dsvelopmont Division

CARICOM - Caribbean Community

CGCED - Caribbean Group for Cooperation In Economic Development

CrDA - Canadian International Development Agency

CDB - Caribbean Development Bank

CXC - Caribbean Examination Council

ECCB - Eastern Caribbean Central Bank

EDF - European Development Fund

ILO - International Labor Organization

LMIS - Labor Market Information System

MOE - Ministry of Education

MOL - Ministry of Labor

NTB - National Training Board

OECS - Organization of Eastern Caribbean States

OPEC - Organization of Petroleum Exporting Countries

PIT - Project Implementation Team

RTB - Regional Training Board

UNESCO - United Nations Education, Scientific and CulturalOrganization

UNDP - United Nations Development Program

USAID - United States Agency for International Development

FISCAL YEAR

January 1 - December 31

FOR OMCIAL USE ONLYEASTERN CARIBBEAN STQ'ES

FOURTH CARIBBEAN DEVELOPKENT BANK

REGIONAL VOCATIONAL AND TECHNrCAL EDtJCATION PROJECT

I. IDA CREDIT AND PROJECT SUtMARY

Borrower/Intermediary: Caribboan Development Bank.

BeneficiaryStates: Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and

St. Vincent and the Grenadines.

Amount: SDR 4.8 million (US$6.0 million).

Terms: Standard IDA terms.

Onlending Terms: Each of the 5 beneficiai states would receive theamount of IDA funds for thich it is eligible on the samestandard IDA terms provided by IDA to CDB, except thatthe beneficiary states would pay CDS on a quarterlybasis; each beneficiary state would bear the credit andforeign exchange risks for its portion of the credit.The IDA commitment fee of 112% on the undisbursedbalance, which would begin to accrue on theeffectiveness date of the IDA credit or on a date 210days after board presentation date, whichever Isearlier, would be paid by the respective beneficiarystates. CDB's liabilities to IDA in respect of thecredit would be limited to amounts paid to CDB by sub-borrowers in respect of their individual subloans. CDBwould assign to IDA its rights to contracts for subloansmade with IDA resources.

Cofinanciers: Cofinancing for all equipment and furniture under theproposed project (US$2.8M) would be provided by CDBwhile 44% of the civil works (US$2.5 .) would becofinanced by the OPEC Fund.

ProjectDescription: The proposed project would improve the quality and

quantity of trained manpower in the beneficiary statesby: (a) improving the quality of facilities andinstruction, (b) expanding training capacity, and(c) enhancing sector management. It would includeconstruction, equipment and furniture for techniciantraining programs of 5 technical colleges; vocationaleducation programs of 7 senior secondary schools; andprevocational education programs of 10 junior secondaryschools serving 80 feeder schools; plus, for eachproject school, an initial stock of consumablesupplies/spare parts to be used in equipment maintenance

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

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and in repair service programs (with coat-recovery).The project would also include technical assistance insupport of training program development effort. (102staff months of consultant services and 632 staff monthsof fellowship training), establishing in each projectstate a labor market information system with inter-regional linkages (24 staff months), and conductingfeasibility studies on cost-saving/cost-recoverymacures in the education sector of all beneficiarystates (12 staff months).

Benefits and The project Is expected to generate signlficant benefitsRisks for the five participating countries by: (a) improving

national and subrogional planning procedures for humanreosources development; (b) developing trainingcapability and capacity, with the ultimate goal ofassuring adequately trained manpower for selectedsubsectors of industrial development; (c) enhancingsector management; and (d) incroasing workerproductivity. The risks are: (a) there is a possibilitythat only 3 or 4 of the 5 countries may ultimatelyparticipate In the project, in which case, the fullbenefits anticipated would not be realized sad (b) theremay be considerable variability in implementation ratesamong the countries, thereby causing delays inimplementation of project activities common to all ofthe beneficiary states, particularly, technicalassistance and procurement of goods. While delays dueto project implementation complexities cannot be ruledout, the probability of less than 5 countriesparticipating is low due to the strong commitmentexpressed by all countries to it. Also, the expectedstrong leadership from the Project Team in the CDB wouldhelp to minimize any implementation/management problems.

Estimated Project Costs by Countries: a/(including central project administration)

(US$ Million)Local Foreiz Total

Dominica 0.5 1.0 1.5Grenada 0.4 1.0 1.4St. Kitts and Nevis 0.6 1.3 1.9St. Lucia 1.0 2.6 3.6St. Vincent and the Grenadines 0.8 2.2 3.0

Total Base Line Costs (1986 Prices) 3.3 B.1 11.4

Physical Contingencies 0.3 0.8 1.1Price Contingencies 0.1 0.4 0.5

Total Project Cost: 3.7 9.3 13.0

aI Net of taxe3 and duties.

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Project Financing Plan

Local ForeiRn Total- ---- (US$ Million)--------

Governrmsnts 1.7 0.0 1.7IDA 0.9 5.1 6.0CDB 0.6 2.2 2.8OPEC Fund 0.-5 2.0 2 $

Total 3.7 9.3 13.0

Theme estimates exclude taxeS from which the project components are exempt.

Estimated IDA Credit Disbursements:

uS$ MillionIDA FY 1988 1989 1990 1991 1992 1993

Annual 0.6 1.0 1.5 1.5 1.0 0.4

Cumulative 0.6 1.6 3.1 4.6 5.6 6.0

' Of Total 10.0 27.0 52.0 77.0 93.0 100.0

Rate of Return: Not applicable.

ProlectCompletion Date: June 30, 1993

StaffAppraisal Report: Report No. 6490-CRG, dated April 2, 1987

Map: IBRD No. 10611R3

INTERNATIONAL DEVELOPMENT qSOCIATION

REPORT AND RECOMMENDATION OF THE PRESIDENTTO THE EXECUTIVE DIRECTORS ONPROPOSED DEVELOPMENT CREDIT IN

AN AMOUNT EQUIVALENT TO US$6.0 MILLIONTO THE CARIBBEAN DEVELOPMENT BANK

1. I submit the following report and recommendations on a proposed IDAcredit to the Caribbean Development Bank (CDB) to finance a multi-countryregional vocationalltechnical education project in five out of the sevenmembers of the Organization of the Eastern Caribbean States (OECS) for theequivalent of SDR 4.8 million. The CDB would relend the proceeds of theproposed IDA credit on the same terms except that the five beneficiarystates, namely Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St.Vincent and the Grenadines, would pay CDB on a quarterly basis and eachstate would bear the financial and foreign exchange risks of its portion ofthe credit. Standard IDA tern would apply, except that the IDA commitmentfee of 1/2% on the undisbursed balance would be paid by the beneficiaries toCDB for payment to IDA, which would commence at the effectiveness of the IDAcredit, or on a date 210 days after Board presentation date, whichever isearlier. CDB would assign to IDA its rights to contracts for subloans madewith IDA resources.

PART I - THE ECONOMIES

Introduction

2. Separate economic reports have been prepared and circulated to theExecutive Directors for five OECS countries: Dominica, Grenada, St. Kittsand Nevis, St. Lucia and St. Vincent and the Grenadines, based on Bankmissions during 1985 and 1986.2 A report entitled 'Caribbean Group: CurrentSituation, Issues and Prospects", which was prepared for the meeting of theCaribbean Group for Cooperation in Economic Development (CGCED) has alsobeen circulated to the Executive Directors (October 17, 1986).

Recent Economic Performance - A Reaional Perspective

3. The OECS is a common market formed in 1968 and belongs to thelarger 13-country regional integration organization -- Caribbean Community(CARICOM). The basic premise of CARICOM is the creation of a protectedregional market within which regionally produced goods move freely. TheOECS countries also share a common currency (the East Caribbean dollar) and

1/ "Dominics: Priorities and Prospects for Development" (No. 5421-DOM),April 15, 1985; "Economic Memorandum on Grenada" (No. 6292-GRD),September 5, 1986; "Economic Memorandum on St. Kitts and Nevis" (No.6500-CRG), December 24, 1986; "Economic Memorandum on St. Lucia' (No.6585-SLU), October 10, 1986; and "Economic Memorandum on St. Vincent andthe Grenadines" (No. 6449-STV), November 25, 1986.

a central bank. The East Caribbean dollar i. linked to the US dollar (atEC$2.7 - US$1.00 since July 1976) and, notwithstanding the recent declinq ofthe US dollar, has come to be overvalued in varying degree. in each of thesecountries, depending on their trading patterns. Any realignment of theexchange rate would be possible only by a unanimous decision of all memberstates. The benefits to the common market and currency arrangements areaccompanied by limits on the countries' freedom to act independently Intrade and nonetary policy. The brunt of economic management hasconsequently fallen on fiscal policy.

4. Growth performance in the 1980s for the five countries of the OECShas been mixed, both over time and among countries. While moat of thecountries attained average GDP growth of 31 to 5Z, much of that growth isattributable to the largely externally financed reconstruction andrehabilitation activities following natural disasters in 1979 and 1980. Theworld recession took its toll in 1983 and several islands registerednegative growth from which some bounced back strongly while others recoveredmore slowly. The rate of economic recovery depended on the main commodityexported by each country and the exchange rate behavior of the main exportmarkets. Banana exporting countries such as Dominica were negativelyaffected by the depreciation of the pound sterling until February 1985,while tourist centers such as Antigua and Barbuda benefitted from theappreciation of the U.S. dollar.

5. The economies exhibit common performance characteristics. Thebalance of payments current accounts show substantial deficits, though someimprovements have been recorded in recent years. External debt does notpose problems, and the ratio of interest and amortization payments toexports are below 15% in all countries. However, the ratio of debt servicepayments to Central Government current revenues is significantly higher,especially in Dominica and Grenada. Fiscal performance has shown animproving trend in recent years, in most cases the result of improved publicsector operations; nevertheless, budgetary deficits are still prevalent.Increases in the consumer price index have slowed considerably (to 21-3Z) inthe last two years, influenced by the decline in international inflation.Manufacturing is largely undeveloped, accounting for less than 10X of GDP.Unemployment is one of the moat serious social problems afflicting thesubregion. In some countries, the number of unemployed as a proportion ofthe labor force is estimated to be about 252 or more. Provided below arebrief country-by-country assessments and a review of the policy issues whichneed to be addressed. The Policy Dialogue Mission reports and the updatingeconomic memoranda prepared by the Bank for the OECS countries discuss thepolicy issues in detail.

Country Assessments

6. Dominica's economy was in a recovery phase during 1980-84 followingdevastating hurricanes in 1979 and 1980. In 1985, growth slowed to 1.0%with the completion of the roads project, but recovered to 4% in 1986 as aresult of a particularly strong performance in agriculture. Increases inthe consumer price indez have slowed considerably, averaging 2% in both 1984and 1985 and 3% in 1986. Public sector finances have strengthenedsignificantly since 1980, reflecting stabilization efforts supported by anIMF extended arrangement and continuing prudent public sector policies.

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Whereas in 1981182 the public sector showed a current account deficit of3.5% of GDP, in 1984185 it registered a surplus of 2% of GDP. Substantialpressures, however, still exist on the fiscal system &a a result of recentwage increases in the public sector. The main policy issues are thepromotion of public sector saving. and the need to develop a diversified andcompetitive economic structure. The balance of payments current accountdeficit, which was 35% of GDP In 1981, declined to 142 of GDP in 1983 androse to 21% In 1985. Dominica's development efforts in the last few yearsinvolved a rapid accumulation of external debt. The debt outstanding anddisbursed now stands at 512 of GDP. Given its relatively weak balance ofpayment. situation and its projected debt service obligations over themedium term (11% of exports and 15% of Government revenue), the countryremains dependent on highly concessionary capital flows for most of itsinvestment financing, and can only be considered marginally creditworthy forborrowing on non-concessionary terms. Dominica's medium-term prospects,given successful implementation of the structural adjustment program nowbeing undertaken, are modestly favorable and would be expected to result inannual GDP growth rate of 3.5% to 4.0% over the medium term.

7. After declining by nearly 3% in 1983, primarily because ofpolitical instability, GDP in Grenada rose by 2% in 1984 and by about 4% in1985 and 1986. Inflation was about 2% in each of the last two years. Themain policy Issue relates to improving the financial situation of the publicsector. Current expenditures and revenues of the Central Government havebeen roughly in balance over the last few years, but the fiscal situationdeteriorated sharply in 1986, with the current deficit reaching noarly 6Z ofGDP. In early 1986, the Government adopted a comprehensive tax reformprogram, replacing most taxes with a Value Added Tax. However, starting-upproblems in the administration of the new system as well as several taxexemptions and preferential rates resulted in lower than expected revenues.On the expenditure side, the Government did not implement in 1986 a plannedpualic sector retrenchment program that would have reduced CentralGovernment employment by nearly 20Z. In 1984-86, there was substantialbudgetary support by USAID, and capital expenditures have been financed,mostly by external grants. This assistance is expected to decline in thecoming years, implying a need to begin a process of adjustment in the fiscalsector. Further measures are also needed to improve the incentive systemand the allocation of resources by reducing quantitative restrictions onimports and limiting domestic price controls. The balance of paymentsexhibits a basic disequilibrium with a large resource gap (302 of GDP)covered largely by external grants. External debt stood at US$47.5 millionat the end of 1985. The debt service was 16% of exports or 22% ofGovernment revenue, and these ratios are projected to decline to 9% and 16%respectively in 1990. Grenada's credF;worthiness for nonconcessionallending is currently weak.

8. GDP growth in St. Kitts and Nevis has averaged 1% p.a. in 1983-85compared to over 5% in 1980-82 because of bad weather that affected bothsugar and non-sugar agriculture, and a slow-down in construction, in thetransport and telecommunication sectors and in government services.Inflation was about 2% p.a. in the last two years. The financial situationof the public sector deteriorated sharply in 1985, with the current deficitof the Federal Government doubling to nearly 71 of GDP; and the burdenincreased in 1986, when the domestic debt doubled to nearly EC$120 million.

Consequently, Interest payments on both domestic and foreign debt wouldabsorb about 252 of current revenues. Therefore, the most critical policyissue faclng the country is the urgent need to improve the finances of thepublic sector and halt the rime in the public debt. This will require theformulation and implementation of a public sector adjustment program,consistent with the recently completed five-year development plan. Anotherissue of critical Importance Is the improvement of efficiency in the sugarsector. External debt stood at about US$20 million at the end of 1985, anddebt service was 42 of exports and 9% of current revenues. However, giventhe poor fiscal situation and uncertainty regarding the future of the sugarindustry, St. Kitts and Nevis' creditworthiness is currently soverelylimited.

9. During 1982-84, real GDP in St. Lucia grew by an average of 42.The strong economic performance continued in 1985-86 when GDP grew by 6%.The economic perfonrance in 1985 and 1986 was led by ;rowth In agriculture,manufacturing and tourism. The rate of inflation as measur-ed by the CPIdeclined from more than 172 in 1980-81 to 22 in 1986. Unemployment remainshigh, although It appears to have declined somewhat with the recovery ineconomic activity; it is officially estimated at 18-202 of the labor force(from an estimated 222 three years ago). The public finances have improvednoticeably and public sector savings rose from virtually zero in 1982 tomore than 6% of GDP in 1986. Similarly, the deficit in the current accountof the balance of payments has narrowed from 122 of GDP during 1983-B5 to 6%in 1986. St. Lucia's debt service payments remain manageable (it stood at2.9Z of exports of goods and non-factor services and 5.02 of CentralGovernment revenue in 1986). The total outstanding and disbursed debt wasonly 17Z of GDP in 1986. The main policy issues facing the economy relateto the relatively weak public sector finances and the buoyancy of wageincreases in the public sector. A program is in place to reorganize thebudget division of the Ministry of Finance to improve monitoring ofexpenditures. With respect to wage policy, the Government has recentlyestablished a tripartite committee (public sector, private sector sad tradeunions) to develop guidelines for wage negotiations in the public sector.Assuming the successful redresn of the current fiscal situation,continuation of appropriate sector policies and no external shocks to theeconomy, GDP in St. Lucia could grow at 4-51 in the medium tern. The aboveconsiderations, however, imply that creditworthiness for non-concessionalborrowing is limited.

10. The economy of St. Vincent and the Grenadines has performedmoderately well since 1980, with GDP growth rate averaging 4.6% during 1980-1985. GDP growth was sluggish In 1986, estimated at 2.5%, as a slightsetback in agriculture and construction occurred following a rainstorm inthe latter half of the year. The rate of inflation declined from 82 in1981-83 to 21 in 1984-86. The public sector finances improved significantlyduring the past four years, with public sector savings increasing from about3% in 1985 to 72 in 1986. The Improvement resulted largely from the goodfinancial performance of the Central Government, which compensated for therelatively poor financial performance of the public enterprises.Substantial improvements in the balance of payments also occurred and theleficit on the current account narrowed from 232 of GDP in 1980 to under 10%in 1986 on account of strong improvements in exports. Because of the lowlevel of the total debt outstanding and disbursed (estimated at 282 of GDPin 1985) and its concessional terms, the debt service to exports of goods

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and non-factor services war only 42 in 1985 or 82 of Central Governmentrevenue. Despite the improved management of the economy, the supplyresponae has been weak and whae is needed is to improve productivity andoutput, and to boost exports. Other policy issues include the continuationof efforts to strengthen the finances of the public enterprises and theformulation of programs to r%duce the high level of unemployment in thecountry. The Government expects ita ongoing Investment program to generatejob opportunities in the short term, while It establishes a skills trainingprogram to equip labor for long term employment. On the baom of themoderate economic performance of the recent past and assumption relating toprudent management of the economy, improved performance of non-traditionalagricultura, manufacturing and tourism, and Inflow of project-relatedexternal capital on a timely basis, it is projected that the growth rate ofGDP over the medium term would average about 5Z. St. Vincent and theGronadines could be considered creditworthy for limited non-concossionalresources.

PART II - BANK GROUP OPERATIONS

11. The Bank Group lending strategy in the five OECS countries has beento finance infrastructure, agriculture and power projects. The Bank Grouphas channelled resources to the OECS countries through the CaribbeanDevelopment lank (CDB) and has assisted directly only in cases where theprojects proposed were beyond CDB's financial or technical capabilities.The Bank has provided under this approach two IDA credits totalling US$14million to CDB, and one US$3 million Third Window operation in 1976 which inaddition to financing specific projects have also helped to strengthen CDB'sinstitutional capacity to appraise and implement investment projects. TheBank expects to continue working closely with CDB in cofinancing developmentprograms in the OECS countries.

12. IDA has also made four direct credits totalling US$18 millionbetween FY82 and FY87. The four operations, amounting to a total of US$8.0million to Dominica for two projects US$5.0 million (Road Rehabilitation,FY82), and US$3.0 million (Power, FY87), US$5.0 million to St. Vincent andthe Grenadines (Hydropower, FY84) and US$5.0 million to Grenada(Agricultural Rehabilitation and Crop Diversification, FY85).

13. The OECS countries have also benefitted from participation in theCGCED; the Group has functioned under Bank leadership as an aid coordinationmechanism for the region. Through the work of the CGCED, the Bank hasconducted a dialogue with the Governments regarding their developmentpriorities and economic policies. Economic reports and project lists andprofiles have been prepared, submitted to donors, and discussed at countrysubgroup meetings which have generally been held at the time of theCaribbean Group meeting at 18-month intervals. In the context of thepreparation of these reports, Bank staff have maintained a dialogue with theGovernments on the formulation of the Public Investment Program. Thecountry subgroup meetings have focused attention on the central issues ofeconomic performance and priority financing requirements. The CGCED hasalso promoted regional activities which have benefitted all recipient membercountries; these activities have included technical assistance programs for

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energy, tourism, transportftion and securing of financing for private -sIctorinvestment projects througn the establishment and financing of the operationof the Caribbean Project Development Facility.

14. The broad principles of the Bank's lending strategy In the fiveOECS countries are spelled out in the Board document entitled 'Terms ofLending to Small Island Economlo Graduating from IDA" dated November 18,1985. The paper recognized that, while the OECS countries are above the IDAcutoff point, they are not yet creditworthy to borrow from the Bank. Thus,thoy face a transition prob?om moving from IDA to full Bank eligibility. Tofacilitate the transition, the Board agreed that the projects already in thepipeline for FY86-87 would be processed as IDA credits. For the IDA8 periodfY88-90, It is expected that some of the countrles would be conmideredcreditworthy for a limited amount of IBRD lending in which case they wouldbenefit from a blend of IBRDIIDA resources.

15. The proposed Regional Vocational and Technical EducatLon project,which aime at expanding the capacity and upgrading the quality of vocationaland technical education systems in the five OECS countries, fits within theBank'. overall strategy for accelerating economic growth and moving the OECScountrLes toward creditworthiness.

PART III - THE EDUCATION SECTOR

Overall Development Context

16. Unemployment, within the 18-20% range, is prevalent in most of theOECS countries, with unskilled workers --especially young people--suffering the brunt of the problem. At the same time, most OECS countriesreport severe shortages of trained manpower, along with low rates ofproductivity among existing workers. Despite relatively high quantitativeperformance of the OECS education systems at the primary and generalsecondary levels, most school leavers in these countries are not wellprepared for employment. The shortage of appropriate jolb skills amongexisting skilled workers and technicians in virtually all soectors ofeconomic activity, combined with the resulting low rates of workerproductivity, presents an increasingly serious constraint to economicdevelopment. In addition, private enterprises in the various economicsectors tend to be very small and types and levels of worker skills whichthey require fluctuate widely. This requires in the OECS countriesbroadly-oriented training programs to develop job skills with greaterranges of applicability and mechaniLms which determine, and periodicallyupdate, information concerning training needs within the countries and theregion.

Overview of Education in the Region

17. While the OECS countries do not have a unified and coordinatedregional education system, their education structures are virtuallyidentical, reflecting their common colonial past. Primary school consistsgenerally of seven years (grades 1-5, plus 2 years of preschool education)with enrollments, as a regional average, approaching 100% for the age group

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(ages 5-11). Secondary school enrolluenta (grades 6-12) range from 222 ofthe age group (ages 12-18) In St. Lucia to 542 In St. Kitts and Navin. Tholower enrollment at th. secondary level has been due partially to thelimited number of available speces and to the fact that, in most of theOECS countries, admilsion at this level is gained only by examination.Governments in these countries are making special efforts to increaseacoos to secondary education through program expansion and restructuring.While student participation in secondary education Is low, the gul3itv ofgnral oducatlon at both levels is relatively high. The OECS countriesare seeking to improve and expand education opportunity at the secondarylevel with assistance from bilateral sources and, particularly, theCaribboen Examination Council (CXC), an organization with representationfrom each country, which focuses on the common aspects of curriculumimprovement throughout the region. These efforts, in addition to impeiovingoverall quality of education in the region, will improve concurrently thequality of st.udents entering the vocational and technical educationprograms.

18. Students fe£ling to gain admission to secondary school. in thaOECS countries are allowed to remain In the "all-mt-_rimsary-ochools"through grade 9 or 10, although at present relatively few students choosethat option. As a basis for subsequent occupational study and job skilldovelopment, these schools Include limited offerings in prevocationaleducation, usually provided on a 3-hours per day, 2-day per week schedulein specialized training centers which serve a number of feeder schools.The prevocational education programs are designed to develop in the early'teen year." an awareness of occupations, Including use of tools andequipment and the development of basic work skills, habits, and attitudes.The OECS Governments propose to expand these prevocational programs toserve more of the youth who otherwise grow up not knowing about workpossibilities and without a foundation for job preparation. To improve thecurrent system/structure of education, all DECS countries have initiatedjunior secondary schools which accept a limited number of students from theupper levels of the all-age-primary schools and offer them basic, pre-vocational education along with the traditional general studies in acomprehensive type of curriculum. Some of the larger secondary schoolsoperate as comprehensive schools also, offering opportunity for vocationalskills training. In all of the project countries, efforts are under way toimplement structural reform within the educational system and to update andimprove school curricula and grade-level articulation.

19. The tertiary level of education includes programs for thepreparation of primary and general secondary school teachers, plus limitedofferings of first- and second-year university-level courses prodided bythe University of the West Indies Extra-Mural Studies Department. OnlySt. Lucia offers preservice preparation of teachers for vocational andprevocational subjects. Other OECS countries send their candiddtes abroad(mostly to Jamaica) for teacher preparation in this area. Most OECScountries have post-secondary technical colleges for the preparation oftechnicians. However, as a means of improving administrative andoperational efficiency and strengthening program quality, several of thesecolleges are now being brought under a community college structure with twodivisions: academic and technical.

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The Vocational and Technical Education Subsectors

20. Vocational education programs of the secondary schoolsJtrainingcenters concentrate primarily on the preservice preparation of in-schoolyouth for entry-level employment as semi-skilled and skilled workers.However, they also offer adult evening courses as in-service training Insuch specializations as demand warrants and this would increase under theproject. Training specializations at this level include building trades,metalwork, electricity (equipment repair), auto mechanics, home economics(tourism, hotels, garment making, etc.) agriculture, and clerical/stenography. The preservice day-school programs, generally 3 years induration (grades 9-11), accept students from both within, if comprehensivesecondary schools, and from surrounding "feeder" schools for approximately6 hours of practical skills training per week (2 days of 3 hours each).General education and other normal education support is provided in thefeeder (home) school. Adult evening courses vary in weekly contact timedepending on the type of course and clientele needs.

21. Technical Education was initiated by most of the OECS countriesduring the early 1970s when small 2-year, post-secondary technical collegeswere established to provide job preparation for youth of age 16-plus andfor adults. These colleges offer training programs of greater scope anddepth than the vocational schools and typically provide instruction in suchareas as building trades, cabinet and furniture making, automotive, generalmetals, electrical installation, radio-television repair, air conditioningand refrigeration, tourism and commerce, and, where not provided elsewhere,in home economics/tourism, secretarial science, and agriculture. Adulttraining programs are in considerable demand and are provided by allcolleges, normally as evening offerings. As with vocational education,because of r- ious space and/or equipment limitations, technical educationprograms are presently inadequate for the growing needs of the business,industry, agriculture, ard service sectors in all OECS countries.

Issues in Vocational and Technical Education

22. A major constraint to industrial development in the OECS region isthe low quality of training programs and the resulting low level of skillsproficiency among the work force. Graduates of training programs areinadequately prepared for employment and, because of their shortcomings,product quality and worker productivity remain low. As a result,industries of the OECS countries find it increasingly difficult to competesuccessfully in the market place. This situation results, at least inpart, from the fact that voca.ional and technical education programs in theOECS region have not yet attained the necessary standards required forpreparation of quality graduates. Training programs (both preservice andinservice) for the preparation of skilled workers and technicians in theregion are suffering from poorly qualified teachers, inadequate andoutdated instructional equipment, unsuitable training facilities, andtraining curricula and instructional methodology which generally need to beup-dated and made more relevant to employer needs. Resolution of theseproblems must receive special attention in Governmental plans to supportindustrial development efforts in the member states.

23. Inadeauate vocational and technical training capacity to meetlong-term needs for human resources development also causes growingconcern. Total employment in the projoct beneficiary states in 1983 wasapproximately 123,000 workers, of whom about 16,000 (13%) were estimated tohave been employed at the skilled worker and technician levels. Noofficial figures are currently available from the countries on long-termmanpower needs; however, IDA staff estimates indicate an increased domandover the next decade at a rate of about 3 percent per year to allow foreconomic growth and about 2 percent per year for attrition and normalemployee turnover. Thus, it is estimated, based on a country by countrysectoral analysios that during the decade of 1987-96, there will be acontinued total need among combined economlc sectors in the projectbeneficiary states for an average of about 1,050 newly trained workers peryear at the skilled and semiskilled worker and technician levels.Current preservice training output of about 600 newly-trained workers peryear at these levels is clearly insufficient to meet the long-termdevelopment needs. In addition to the inadequate capacity for preparingnow workers, inservice training opportunities for existing workers areconsiderably less then those needed for industrial development. Inresponse to identified training needs, individual and organizationaldemands are increasing for part-time inservice training of employed adults,generally in evening courses, as a means of improving their job skills andincreasing worker productivity. The need for such training is especiallyacute among the approximately 16,000 skilled workers and technicianscurrently employed in the project beneficiary states. Employercontributions to inservice training are almost non-existent due to thesmall size of most enterprises.

24. The OECS countries generally lack an integrated approach,internally and regionally. to manpower planning and development and toproviding special training courses to meet regional needs in cases wherethe costs of offering courses nationally are prohibitive. In response toindividual country concerns, ministries of education in the OECS countriesare establishing National Training Boards (NTBs) with representation fromthe public and private sectors, including both employers and workers, foradvising the respective ministries on manpower training needs and curriculacontent. Additionally, the International Labor Organization (ILO) hasassisted some OECS countries (notably Grenada) in establishing preliminarylabor market information systems (LMIS) to support planning for suchtraining. However, this initial effort needs to be strengthened throughcooperative arrangements with the NTBs and direct involvement fromemployers in each respective country. It also needs to be expanded amongthe OECS countries into a common-based LMIS, with intra-regional linkages,-which allows for regional approaches to manpower planning and development.The regional aspect of the training coordination concern would be addressedin this proposed project.

Education Finance

25. The project beneficiary states have experienced varying degrees ofdifficulty since their recent independence in meeting the recurrent costsof their Governmental operations. They have generated inadequatesurpluses, relying on external grants and loans to finance a largeproportion (if not all) of their capital investments. The 1985 current

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surpluses of the central Government budgets in these countries amounted to0.52 of GDP in Dominica, 0.72 in Grenada, and 4.82 in St. Vincent and theGronadines, with a 0.9% deficit in St. Lucia and a 6.7% deflcit in St.Kltts and Pavis. Because the education sector absorbs a large portion ofGovernmental funds, special efforts are being made to economize to theextent possible while still maintaining a viable education system. Thepublic coats of education in the OECS countries are relatively high,accounting for between 152 and 242 (with an average of 18.62) of theGovernmental budgets (1984-85), and between 3% and 6.42 (with an average of4.52) of GDP. The budgetary annual percentages compare with an overallaverage of 16.92 for all countries in the Latin America and CaribbeanRegion, while the average percentage of GDP is approximately the same asthe overall regional average.

26. The costs of vocational and technical education in the projectbeneficiary states, except for minor student fees, are financed throughregular budgetary appropriations to the respective Mlnistries of Education.Generally, only the technical colleges have separate allocation categorlesin the Governmental budgets. They therefore have greater flexibility andincentive for implementing innovatlve approaches to cost reduction. Overthe period 1981-1985 the education proportion of total Governmentalexpenditures in the project beneficiary states has remained relativelystable, but Governments are now finding it increasingly difflcult tomaintain, let alone to increase, this share. Any provision for new orexpanded programs will have to come from curtailment of some otherservices, andlor through increased cost-effectiveness and cost-recoverymeasures in the education sector. The proposed project would stimulatedevelopment of initiatives for increased cost-effectiveness and cost-recovery in education.

Government Strateties for Development of Vocational and TechnicalEducation

27. Major themes of Government strategy for human resourcesdevelopment throughout the project beneficiary states have been increasedoutput and higher quality of newly-traLned workers, improvement of jobskills among those already employed, special training for the unemployed,and imprn-ed mechanisms, both within couatries and regionally, fordetermining training needs. Current plans of the respective Governmentscall for:

(a) increasing the capacity of vocational and technical educationprograms and the provision of preservice training in a broaderrange of job skills with greater job relevance for a major portionof the 13-16 year age group to ensure their leaving the educationsystem better prepared for effectLve employment;

(b) provision of inservice training during non-working hours foremployed workers;

(c) provision of courses for out-of-school youth and unemployed adults,with a more equitable distribution of training opportunities amongspecial needs groups; and

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(d) strengthening the institutional base for human resources develop-mont, including improvement in the quality and provision of basiceducation and prevocational education.

Some assistance for attaining the objective under (c) and (d) has beenprovided by UNESCO and several bilateral donors, including a multi-stateproject financed by UNDP and the Arab Gulf Fund (AGFUND), which wasimplemented in the region during the October 1983 - December 1985 period.The main objective of the project was to establish a prevocational skilllearning program for the junior secondary age-group (12-15 years) insecondary and all-age primary schools as a base for subsequent acquisitionof more advanced vocational skills. UNESCO and ILO assisted inimplementation of the project. There have been other sources of foreignassistance for limited support of vocational and technical education andoccupational training, though these efforts too have been minimal, leaving acontinuing substantial void in the subsector. In general, NGO support inthe beneficiary states tends to be sporadic and not well focused on long-term initiatives in the education sector. Coordination of these activitiesis mostly under the Ministries of Education. This proposed project wouldbuild upon and complement accomplishments of the UNESCOIAGFUND project andother similar activities in the sector by consolidating all vocational andtechnical training efforts under a single coordinated system.

Bank/IDA Strategy for Development of Vocational and Technical Education inProlect Beneficiary States

28. The proposed project would be the Bank's first education lendingoperation in the OECS countries. Bank/IDA strategy in the vocational/technical education subsector, in conformity with the Governments'priorities, focuses on supporting the project beneficiary states' efforts toincrease labor productivity and industrial output and to improve the qualityof goods and services. It calls for expanding and upgrading skills trainingto meet critical manpower needs in the industry, commerce, agriculture, andservice sectors, while addressing issues related to increasing quality andefficiency in training programs. This strategy would also support skillstraining for various disadvantaged groups, such as school drop-outs, alongwith skills training leading to self-employment or income supplementingopportunities for low-income individuals and families and for theunemployed. In view of the serious financial constraints in the educationsector, the Governments' adoption of improved efficiency, cost effectivenessand cost recovery measures In the sector would be encouraged. The educationsystems within the project beneficiary states, which originate from theircommon historical past, are similar and offer good scope for a regionaldevelopment approach.

PART IV - THE PROJECT

Project Origin

29. The proposed project was identified and prepared by the fivebeneficiary states with assistance from UNESCO. It was jointly pre-appraised by IDA and CDB in August/September 1985, and IDA completed

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appraisal in January 1986. Post-appraisal discussions were held by IDA andCDB with the project beneficiary states in October of 1986 to resolveoutstanding issues. Negotiations were held in Barbados during the week ofMarch 23-27, 1987 with participation by representatives from IDA, CDB, andthe project beneficiary states.

Project Objectives and Scope

30. The proposed project would focus on improving the quality andquantity of trained manpower in the project beneficiary states by seekingto: (a) improve the quality of instruction; (b) expatnd training capacity;and (c) enhance sector management. It would initiate a regional approach toimproving vocational and technical education systems within the five OECScountries/beneficiary states, throughc (a) expansionfrehabilitation ofvocational/technical school facilities, including purchase of new equipmentand addition of new classrooms and shops; and (b) technical assistance toimprove the quality of vocationall technical education and to conductfeasibility studies for policy improvements in education, includingeducation finances, increased efficiency of the system, and enhancement ofcost recovery. Individual subproject components of the beneficiary statesare presented in Annex IV; the following paragraphs detail theircontribution to achieving project objectives.

Improving the Quality and Relevance of Instruction

31. The project would include upgrading and updating curricula, coursecontent, instructional aids, training staff, and instructional evaluationprocedures/standards under leadership of a Vocational and TechnicalEducation (VTE) Adviser to be employed under the project. Staff upgradingwould be accomplished through fellowships abroad for about 59 vocationaland 23 technical instructors plus 4 maintenance technicians, as a means ofupgrading instructional procedures and methodology. Apprenticeshiptraining programs would be initiated on a pilot basis at the seniorsecondary and college levels and, in general, would require a full-timeequivalent of about six months direct, on-job experience in theoccupational field for which training is being received, though the patternwould vary depending on individual country conditions. Studentsparticipating in the work practice phase of the program would be paid aminimal stipend by the host employer. The pilot programs would extend overa four-year period and those which prove to be successful would be expandedand replicated in other schools to the extent possible and appropriate.The apprenticeship program would be linked to a graduate placement programto assist graduates in obtaining first-time entry-level employment. As iscommon practice, individual instructors would be responsible forcoordinating employment arrangements. Additionally, entrepreneurshiptraining courses would be offered on a pilot basis, initially in thetechnical colleges, to assist individuals in learning to establish andmanage small enterprises and to seek sources of venture capital for initialdevelopment and operation.

32. In addition to the usual preservice training in the projectschools, special emphasis would be given in evening classes to the trainingof unemployed adults and out-of-school youth in broad-based "clusters of

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related skills," thus providing needed flexibility in meeting the demandsof the labor market for semi-skilled workers with a variety of job skills.Cooperative apprenticeship and "day release" training schemes with industrywould be expanded within the project achools to more rapidly andefficiently upgrade the skills requirements of employed workers.

33. All project beneficiary states are establishing NTBs to assist indetermiring local training needs and to advise the respective Ministries ofEducation on curricula content and relevancy to actual employer/jobrequirements. Sub-loan agreements between CDB and the beneficiarycountries would require each beneficiary country to certify to CDB, nolater than six months after credit effectiveness, that its respective NTBis operational and to provide names, periods of appointment, areas ofexpertise, and employer affiliation of its members. Under the project, theNTBs would be strengthened and become involved to a greater extent inmaintaining up-to-date training programs which are more responsive toemployer and trainee needs. The NTBs would help to establish both formaland informal institutional contacts with the agriculture, industry, andcommerce sectors and would assist in obtaining feedback on Job performanceof training programs graduates. They also would provide guidance, throughthe Ministries of Education, to their respective Governments forestablishing or expanding the labor market information systems for projectbeneficiary countries. The NTBs would be linked to a proposed RegionalTraining Board in order to enhance coordination of manpower informationsystenon and training programs on a regional basis.

Expanding Training Capacity

34. The proposed project would help to expand training capacity andimprove the quality of existing facilities so that the vocational/technicaleducation systems can respond more effectively to training needs ofindividuals and employers. Construction, equipment and furniture would beprovided for: (a) replacement of facilities and equipment for one technicalcollege (St. Lucia), partial renovation of existing spaces and provision ofequipment for three technical colleges (Dominica, Grenada, St. VincentlGrenadines), and provision of equipment only for one technical college (St.Kitts/Nevis); (b) provision of new or expanded training facilities andequipment for vocational programs of 7 senior secondary schools/trainingcenters and for prevocational programs of 10 junior secondary schoolsserving students from about 80 feeder schools; and (c) provision of aniniitial stcck of consumable supplies (including scpplies for repair shops),at an average cost of about US$60,000 per project beneficiary state, foruse in project-assisted schools on a revolving cost-recovery basis.Equipment to be procured in the project would include spare parts formaintenance. Sub-loan agreements between CDB and participating countrieswould require that no later than June 30, 1988, the respective beneficiarycountries would provide to CDB a formal plan for regular maintenance ofinstructional equipment and facilit'es for their individual vocational andtechnical education programs. Planned training capacities for therespective sectors in each participating country are based on the currentprojection of manpower needs over the next decade. However, as theprograms will be relatively broad, there will be a degree of flexibilityfor adapting to changing manpower demands over the long-term. Uponcompletion of project implementation, the additional training capacity to

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be provided would require an increase in instructional staff in the regionof about 50 vocational instructors, 13 technical instructors, and 2maintenance technicians, a major part of the expected increase in recurrentcoats. An adequate number of technically qualified individuals areavailable within the project beneficiary countries to meet these additionalrequirements. However, they would need refresher courses in theirtechnical specializations and updated knowledge on instructionalmethodology. This would account for a sizeable portion of those to receivespecial instructor training under the project's fellowship program.

Enhancing Sector Management

35. Labor Market Information Srstem (LMIS). The project beneficiarycountries, with assistance from a project manpower specislist(s), wouldestablish in their respective Ministry of Education or other appropriateMinistry, a LMIS for conducting labor marketijob analysis studies. TheLMIS would collect, generate, and analyze information on population trends,the labor force, wage rates and earnings, labor mobility and turnover,manpower and training needs, training capacity, etc. Processing of thisinformation would be accomplished by use of a microcomputer to be purchasedunder the project for each participating country. Such information wouldbe disseminated to various government agencies for planning and trainingpurposes. The NTBs, operating under the Ministry of Education, would bedirectly involved with this activity, mostly in an advisory capacity.Preliminary work in such an effort, including completion of job analysisstudies, has already been initiated in Grenada. In addition, the ILO hasconducted a number of seminars in the region to assist in preliminaryreviews of needs for such activities. A similarly qualified organization,or individuals, would be contracted in accordance with IDA guidelines forhiring consultants, to provide the manpower specialists for establishing aneffective labor market informatLon system with regional linkages in allproject beneficiary countries. IMIS representatives from participatingcountries would meet periodically on a regional basis to ensure regionalcoordination of the manpower system.

36. Regional Training Board. The project would include a review bythe VTE Advisor, working closely with the OECS Secretariat, of the scope,responsibility and authority of the individual country National TrainingBoards and expected requirements for a proposed Regional Training Board(RTB) to operate under the proposed project in close cooperation with theOECS Secretariat. A subsequent draft report with recommendations based onthe review would be submitted to the OECS countries, OECS Secretariat, CDB,and IDA for comments and approval. The OECS countries would implement,through the Secretariat, the recommendations relative to establishing theRegional Training Board and initiating its program of work. Membership onthe RTB is expected to comprise the technical education officer in eachcountry plus one representative from the respective NTBs. Resources forthe six-year period of project implementation would be provided under theproject to cover the costs of personnel and administrative support (OECScoordinator and clerical staff member at one-third time for six years ofproject implementation), materials, supplies, printing, etc., plus traveland operational costs for meetings of the Regional Training Board and forrepresentatives of the labor market information systems of each country.Such funding would be made available on an annually declining basis to

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enable individual countries to integrate the coats into their annualbudgets for its continuation. It is envisaged that the RTB would have thefollowing purposes: (i) planning, programming and implementation oftraining specializations which would be uneconomical for a single countryto undertake. With cooperation of individual country technical educationofficerst region-wide needs would be indicated, much as course syllabidevelopment, special inservice instructor training, improvement ofinstitutional management, seminars on effective and economic cost recoverytechniques for reducing net costs of consumable supplies, and otherpriority needs; (ii) standardization of curricula, testing, skilled workercertification, and regional infrastructure programs. Specialized coursespresently organized in an ad hoc manner in the various OECS countriesattract students from other member countries. To maximize benefits fromthis type of training, some common curricular elements are required; (iii)organization and establishment of regional arrangements for production andprocurement of educational materials; i.e., textbooks and essentialequinment; (iv) regionalization of the manpower labor information systemwhica would be implemented under the project on an individual countrybasis. Though restrictions exist relative to labor movement within theregion, it does happen on an informal basis.

37. Cost-savings in Education. In view of current financialconstraints in the project beneficiary states, the Governments concernedare seeking ways to ease the situation without sacrificing their basiceducation systems and the quality of their education. Aware of the need,some Governments have already been considering certain measures, includingthe feasibility of combining the technical college with the general collegeto form a comprehensive community college under a single administration.This has already been done in Dominica and St. Lucia. General educationcourses in the college would then be shared by both groups (technical andgeneral), with a resulting decrease in course duplication, concurrent witha decrease in total administrative costs.

38. The proposed project would make provision for conducting, in allproject beneficiary states, broadly based feasibility studies aimed atcost-savings and cost-recovery in education. These would include studiesto determine the feasibility of: (i) improving training efficiency in thetechnical and vocational school programs by increasing class size wherepossible and by merging some technical and skill courses which are commonto several training specializations and thus increasing the student-teacherratios; (ii) initiating student fees in the technical colleges andproviding scholarships and student loans to those unable to pay; (iii)initiating cost recovery schemes through training program services (automechanics, radio-television repair, etc.); and (iv) providing textbooks ona cost recovery basis with students paying a user's fee. Two educationfinance specialists would be provided under the project for six months eachto assist each project beneficiary country in conducting the costrecoverylsavings studies in accordance with terms of reference acceptableto CDB and IDA. During negotiations, CDB obtained and provided to IDA astatement describing each country's policy on implementing cost-savingmeasures in the education sector. The proposed studies would provide thebasis for implementing such policies. Feasibility studies on cost-savingsand cost-recovery possibilities would be completed and provided to CDB andIDA for their comments by December 31, 1988. Sub-loan agreements between

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CDB and the beneficiary countries would require the countries to inform CDBand IDA by June 30, 1989 regarding the measures which they propose to adoptas a result of the studiea.

Technical Assistance

39. The proposed project would include a comprehensive technicalassistance package for fellowships and project-related consjltants'services, the latter of which would be contracted under a single firm.This technical assistance would include common elements serving the needsof 5 countries and has been designed in a way to ensure it's provision in acost effective manner. The consultants' services would be as follows: (i)vocational-technical education advisor to assist and supervise refinementof curricula, course syllabi, institut"onal management policies andplanning procedures, and national and regional training board policies andprocedures (48 staff-months); (ii) procurement specialist for preparationand implementation of procurement actions for project equipment andfurniture (equivalent of about 36 staff-months); (iii) manpower planningspecialist for helping to establish a labor market information system ineach project country (equivalent of about 24 staff-months); and (iv) aneducation financial specialist (total of 12 staff-month.) to help conductfeasibility studies on cost recovery in education in all beneficiarystates. An architectfconstruction engineer would be provided by CDB forreview and advice on, and approval of, project civil works designs andconstruction (18 staff-months); The project consultants and CDB specialistwould comprise a Project Implementation Team (PIT), to be headquartered atthe CDB in Barbados, which would work under the direction of a ProjectCoordinator. Costs of the PIT, which would be included in the totalproject costs, would be borne by each project beneficiary stateproportional to its subproject's costs, as presently estimated. Fellowshiptraining abroad under the proposed project would be provided forinstructors, supervisors, and equipment maintenance specialists '632 staff-months). Terms of reference for the proposed technical assistancespecialistsffirms; qualifications and criteria for selection of fellowshipcandidates; a plan and schedule for fellowship training; qualifications forthe Project Coordinator and the local Project Managers; and dates foractual employment of the technical assistance specialists after crediteffectiveness have been reviewed by IDA and were confirmed and agreedduring negotiations. CDB would recruit and contract, on behalf of thebeneficiary country Governments, the technical assistance firm describedabove for assignment to the CDB's PIT under terms and conditionssatisfactory to IDA. CDB selection and country approval of the technicalassistance firm and confirmation of appointment of the CDB architect/construction engineer would be a condition of credit effectiveness.

Project Costs and Financing

40. Investment Cost Estimates. The total cost of the proposedproject, which would be exempt from taxes and duties, has been estimated atEC$35.1 million or about US$13.0 million equivalent, of which US$9.3million equivalent (722) would be in foreign exchange. Estimated projectcosts have been grouped according to: (a) the direct in-country component;i.e., five distinct subcomponents (subprojects -- one for each country),including the estimated costs for civil works, goods, and fellowships, and

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(b) the regional component, the costs of which would be distributed amongthe beneficiary states proportional to the cost of their respective in-country components, as presently estimated. If less than five projectboneficiary states ultimately participate in the proposed project, theproposed credit allocations for in-country components pertaining to non-participating states would be cancelled and adjustments would be made asnecessary in the estimated per-country costs of the PIT and other regionalservices. The costs of these regional components, to be included underthe proposed credit, would be distributed among the remaining beneficiarystates proportional to the costs of their country components: i.e., civilworks, goods, and fellowships.

41. Basis of Cost Estimates. All cost estimates are based on October1986 figures. Cost estimates for civil works in the respective countriesare based on costs of similar structures recently constructed. Equipmentand furniture costs are based on costs of similar equipment and furniturerecently procured in the area. Costs of technical assistance are estimatedon the basis of similar services being used in the region. Foreignexchange costs are estimated at 801 for civil works and for equipment andfurniture and 1002 for technical assistance. Physical contingencies wouldamount to 102 of total base costs. Price contingencies (calculated as anaverage for all participating countries) have been used for both local andforeign costs as follows: 32 for 1987, 1% for 1988 through 1990, and 3.51for 1990 through 1993. The same price contingencies have been used forboth local and foreign costs as, historically, inflation rates in the OECScountries have been, on average, similar to those in the United States.

42. Financing Plan. The financing plan for the total estimatedproject cost of about US$13.0 million equivalent would provide for lendingon a joint basis by IDA and the OPEC Fund and on a parallel basis withCDB. The CDB would finance 100% of the equipment and furniture costs whilethe OPEC Fund would finance 44% of civil works costs. IDA financing wouldcover the remaining 561 of civil works and all technical assistance.Additionally, there will be counterpart contributions totaling US$1.7million equivalent by the project beneficiary states. The proposed IDAcredit of US$6.0 million equivalent, co be channeled through CDB, wouldfinance about 462 of total project ct'sts. including about 542 of foreigncosts. The CDB would lend separately to the project beneficiary states atotal sum of US$2.8 million to finance about 222 of the total estimatedproject costs, including about 24% of the foreign exchange costs; the OPECFund would lend US$2.5 million which would finance 19% of total projectcosts, including 222 of foreign costs. A condition for effectiveness ofthe proposed IDA credit would be that all conditions for effectiveness ofthe corresponding OPEC Fund loan agreements, other than effectiveness ofthe corresponding IDA credit agreement or of the CDB loan agreements, havebeen met. (The OPEC Fund Governing Board approved its portion of theproject loan on November 19, 1986). The remaining project costs would befinanced by the beneficiary state Governments.

43. As in the case of the proposed project's recurrent costs, theproject beneficiary states' abilities to contribute their shares of theproject's capital costs during the proposed project's implementation

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period, FY1988 through 1993, weill depend on their continued willingnoes toattribute to the project a high priority in their budgetary plans and toarrange their investments accordingly within the public sector during theproject implementation period. However, a portion of local implementationcosts (local project manager, professional support staff, and, in somecases, local architects) are for individuals already employed by therespective governments and thus will require, for the most part, onlyadjustments and reassignment of existing staff. The project beneficiarystates' share of the proposed project's capital cost, about US$1.7 millionon a regional basis (including contingencies) and to be contributed overthe next six years, would amount to an average of about US$60,000 per yearper country. This would be equivalent (on the basis of their average 1983-84 budgetary data) to less than 4% of their current annual capitalexpenditure. While this indicates that there should be no serious problemfor the beneficiary states to meet their shares, there may be somedifficulty in individual country cases. Should such problems arise, IDAwould review them in its annual economic dialogue with the countries andduring project supervision to ensure that budget allocations are made inadvance for this purpose. Furthermore, CDB sub-loan agreements with thecountries would require assurances from their respective governments thatadequate counterpart funds for project implementation would be provided ineach annual budget.

Commitment Fees

44. To achieve the project's objective it is essential that the creditbecome effective for the majority of the countries concerned as rapidly aspossible. The credit would become effective when at least three countrie'have completed the general conditions for credit effectiveness, thetechnical assistance firm has been contracted, and the architect/construction engineer formally appointed. Countries which have not metthese conditions by September 30, 1987 would be dropped from the projectand their credit allocations cancelled. To avoid penalizing fast movingcountries, which could not draw upon the credit resources because ofadministrative delays in other countries, it is recommended that thecomitment fee be charged only upon credit effectiveness, as was the caseunder the Third CDB Project (Cr. 1364-CRG), or on a date 210 days after theboard presentation date, whichever is earlier.

CDB: The Intermediary Borrower

45. The Caribbean Development Bank would be the Intermediary Borrowerof the proposed IDA credit and would relend the credit proceeds to thebeneficiary states under IDA terms, except that the beneficiary states'payments to CDB would be made on a quarterly basis. The legal frameworkwould be similar to the pattern established under the previous IDA creditto CDB (Cr. 1364-CRG, May 1983). The CDB, established in 1970, has maturedinto a capable regional development bank. It has a particularly importantrole to play in channeling external resources to countries like those inthe OECS which experience problems in mobilizing resources directly becauseof their small size. The economic difficulties of some member countriesled them to accumulate arrears to CDB; to deal with the situation, CDB hasadopted appropriate policies on suspension of disbursements, non-accrualand provisioning. Only two countries are currently subject to such

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measures and CDB'. strong capital base and abundant liquidity should allowit to weather the difficulty. In consultation with IDA, CDB is in theprocess of taking measures to strengthen its policies and procedures,particularly in supervision and portfolio control aspects. In this regard,CDB adopted on March 20, 1987 a revised supervision manual and developedand successfully tested a new divisional portfolio review system. Adoptionof these measures, provision of the technical assistance consultants, andestablishment of the PIT in the CDB, should enable CDB to act as aneffective coordinating agency for the project.

Implementation and Supervision

46. Each country would bo fully responsible for implementing, withcdvice and assistance as appropriate from the project's technicalconsultants, its respective in-country components, and each has appointed alocal Project Manager (PM) for this purpose. CDB would be responsible forcoordination and supervision of the overall project, includingimplementation of the regional component; i.e., technical assistance,procurement, and implementation, in conjunction with the OECS Secretariat,of the proposed RTB. The CDB has established for this purpose the PIT,headed by a full-time, IDA approved, Project Coordinator (PC) reportingadministratively to the Senior Manager of the CDB's Project ServicesDivision (PSD) in the Projects Department, and comprising, in addition tothe PC, the Senior Manager of PSD an architectlconstruction engineer fromCDB's Infrastructure Division, and the technical consultants to becontracted under the project. CDB, as agent for the project countries,would arrange for procurement of furniture and equipment, with eachdecision in this respect being made only after the local PMs have beengiven two weeks to object. The same procedure would be used in contractingthe technical assistance firm. The PC would be responsible for planningand programming of consultant activities, coordinating with local ProjectManagers, budgeting project credit funds, making field visits to assesseffectiveness of implementation, and resolving outstanding issues, asnecessary. As current project supervision activities in CDB are a normalfunction of its Project Services Division, the Division's capabilities inthis regard would be enhanced through its PIT responsibilities under theproject. The Project Coordinator would be the main point of contactbetween IDA and the project beneficiary states for all of the project'scountry related matters. In thio regard, the Project Coordinator wouldmaintain strong communication and working linkages with the individualProject Hanagers in each of the project countries. Under this arrangement,IDA would retain normal supervision responsibility to help ensure thatresources allocated for the project are used effectively. Any subsequentreplacement of the Project Coordinator would be subject to IDA concurrence.To assist the Project Coordinator and project consultant advisors, twosupport staff (one full-time and one part-time for a total of 90 staff-months) would be included in the PIT. Costs of the Project Coordinator andsupport staff services would be shared by the project beneficiary states aspart of the regional component.

47. The project consultants (VTE advisor, education financespecialist, procurement specialist, and manpower specialist), and theproject architect/construction engineer, working under direction of theProject Coordinator, would provide leadership and advice to the

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beneficiary states on project implementation and would represent the CDB inproject supervision. The project architect/construction engineer wouldreview and approve construction plane and be responsible for supervision(from an overall project viewpoint) of all project civil works.Individual country consultants would provide on-mite supervision of projectconstruction as a normal part of their architectural contract. The projectprocurement advisor with assistance from project managers in the respectivecountries, would be reoponmible for assisting the countries in preparingprocurement lists and opocifications of all furniture and equipment forinstitutional expansion and improvement and for handling subsequentprocurement of all subproject goods and PIT services. The ProjectCoordinator would coordinate activities of all the consultants and reviewfor approval project-related procurement actions by the project'sprocurement advisor. The interaction of tlie technical assistanceconsultants and IDA staff with the variouw CDB staff; i.e., architects,procurement staff, disbursement staff, project supervision staff, etc. isdesigned to enhance CDB'o institutional capability for project lending andsupervision. Though CDB would have overall supervision responsibility, IDAand CDB would collaborate closely in this aspect of project implementation.After a joint IDA/CDB initial start-up mission, joint supervision missionswould be conducted annually, normally led by CDB project supervision staffwith support from IDA staff. Interim supervision visits would be made byCDB staff as appropriate and necessary.

48. Each project beneficiary state hao appointed a local ProjectMarnager (with qualifications acceptable to CDB and IDA) who would beresponsible for project implementation in the respective country concerned,with direct line authority from the Permanent Secretary of the Ministry ofEducation. Subsequent appointments of individuals to the position ofProject Manager would be subject to the sAme conditions as the initialappointment; i.e., qualifications acceptable to CDB and IDA. Thisrequirement would appear in the agreements between CDB and each projectcountry. The Project Managers would be responsible for: (a) ensuring thatnecessary annual budgetary appropriations are requested for the projectcomponent In the country concerned; (b) liaising with the CDB ProjectCoordinator; (c) overseeing development of architectural designs, (d)approving equipment proposals made by the PIT for equipment, furniture, andconsultant services; (e) assisting, as necessary, the procurementspecialist on matters of procurement and installation of relevant equipmentand furniture; (f) maintaining local financial records and preparingwithdrawal applications for the CDR to request disbursements from the IDAcredit proceeds; (g) timely recruitment of local staff; and (h) nominationof fellowship candidates.

49. The project preparation work in all five project beneficiarystates is well advanced. Preliminary architectural drawings for newconstruction and extension works have been completed and are satisfactoryto IDA. All new construction would be located close to existing buildingsand acquisition of new sites will not be required. Preliminary furnitureand equipment lists and the outline specifications have been prepared.Detailed final lists, specifications, and bidding documents would becompleted after the vocational technical education advisor and theprocurement specialist begin employment. These implementation activitiesare expected to be carried out in accordance with an Action Plan for

- 21 -

Project Implementation and an Implementation Schedule, both of which havebeen agreed by IDA. The specific country subprojects are essentially self-contained and, while it is desirable to maintain the project componentsintact in all five project beneficiary states, the deletion of one or twocountry subprojects would not seriously harm the overall project. However,a condition for offectivenons of the IDA credit would be evidence ofGovernment authorization for subproject execution, effectiveness of atleart three of the CDB subloan agrsoments with the project beneficiarystates in order to ensure achievement of regional project objectives, andrnsignment of CDB'o rights under such loan agreements to IDA.

50. The proposed project would have an implenmtation period of sixyears. The project would have no large-scale construction items (mostlyrenovationlextension), though it would Involve several parties and levelsof action and the beneficiary states have had limited experience with IDAproject requirements. On the other hand, all proposed project items are toan advanced stage of properation, the CDB Project Coordinator and thearchitect are experienced in project work, and experienced consultants willbe employed under the project to assist the countries with majorimplementation tasks. Furthermore, the beneficiary country Governmentshave expressed a strong desire to implement the project quickly.Considering these factors, the proposed six-year implementation period,though less than the Region profile of eight years, is consideredreasonable. On that basis, project completion would be June 30, 1993 andthe closing date would be set at December 31, 1993.

Procurement

51. Contracts for civil works (the largest expected to be in the orderof US$800,000) would be awarded by individual countries under localcompetitive bidding (LCB) procedures acceptable to IDA which would allowforeign contractors to compete. Civil works contracts in excess ofUS$500,000 would require prior review and approval by IDA. Equipment,furniture and other materials to be procured would be grouped, to theextent possible, to form attractive bid packages and would be procured inaccordance with CDB procurement guidelines. Bid evaluation would beaccomplished by the PIT/CDB procurement specialist(s) after which theprocurement recommendations would be submitted to the five local projectmanagers who would be given 2 weeks to express objections, if any.Contracts for technical assistance would be awarded in conformity with IDAGuidelines for the hiring of consultants with each country having areasonable time period to object to proposed technical assistance firms.

Disbursements

52. The OPEC Fund financing of project civil works will coverUS$500,000 equivalent in construction costs for each of the 5 participatingcountries. The proposed IDA credit disbursement for civil works would bemade on the basis of 100% for all construction costs beyond the OPEC Fundallocation up to the limit of total project funds allocated for civil worksof each project component in each respective country. The remainder of theproposed IDA credit would be disbursed on the basis of 100 percent forfellowships, the PIT, and consultants. CDB financing would cover 100% ofproject goods. Disbursements against civil works and fellowship contracts

- 22 -

with a value up to US$20,000 would be made on the basis of statements ofexpenditure. Related documents would be retained by CDB and thebeneficiary states, am appropriate, for review by IDA staff duringsupervision visits. Withdrawal requests for all other expenditures wouldbe fully documented. To facilitate timely withdrawal of the creditproceeds, CDB would open, maintain, and operate a Special Account(including six sub-accounts) with a bank acceptable to IDA and on terms andconditions satisfactory to IDA. Based on the estimated diaburmementschedule, the initial amount of deposit to the Special Account would beUS$600,000.

Accounting. Auditing and Evaluation

53. Fach project beneficiary state would maintain a separate budgetaccount ̂ or Its subproject's civil works component. Procurement ofequipment, furniture, other materials and technical assistance would beprocessed centrally by the procurement advisor in the PITICDB. Projectaccounts in CDB and In each country would be audited by Independentsuditors, accoptable to CDB and IDA, in accordance with appropriateauditing principles consistent with the Bank/IDA March 1982 Guidelines.CDB would provide to IDA, within six monthe after the end of each fiscalyear, an audit report covering each country's project account(s) and theProject Special Account, including a separate opinion by the auditor ondisbursement. against statemnts of expenditure.

54. To assist in determining the effectiveness of projectimplementation procedures and the success of project training programs, theCDB and IDA would make an interim assessment of project implementationperformance on or about September 30, 1990 an part of a joint mid-termreview mission. The CDB Project Coordinator would draw upon projectconsultants and the proposed Regional Training Board to assist in designingand implementing a project monitoring and evaluation program for theproject beneficiary states.

Project Benefits and Risks

55. The proposed project is expected to make significant contributionsto institutional development in the respective project beneficiarycountries and, perhaps of equal importance, to loint planning of regionaltrgini ctivitiLes in the OECS area. National planning would bestrengthened and regional planning would be initiated to provide amechanism for offering selected regional training activities which might beuneconomical for individual countries to undertake on their own. Thiswould be accomplished through the provision of a vocational-technicaltraining advisor and short-term consultants under the project to work withthe participating c untrieo individually and collectivoly. The regionaldesign of the project would enable the project beneficiary states toprocure equint and sexvices cheaper through quantity buying, to sharecommon services nd to pool technical expertise for mutual benefit.Through sach a regional approach, the countries concerned would alsomaintain and further develop the cosmatibility of their institutions andpolicies in the vocational and technical education field, with potentialbenefits in terso of labor mobility and cost effectiveness. Quality ofinstructlon in each country would be improved through upgraded facilities,

- 23 -

suitable equipment and training materials, improved course content, andupgraded instructors and administrators. Relevancy of instruction would beimproved through the creation and/or strengthening of National TrainingBoards, improving formal institutional contacts with industry, expandingjob-analysis studies and obtaining feedback of on-the-job performance ofgraduates. Development of a labor market information system in eachcountry would improve efforts for planning human resources developmentactivities. The major quantifiable benefits of the project, from aregional viewpoint, would be an additional annual output of about 65technicians, 425 semi-skilled workers from secondary schools and 570upgraded adult workers which would help to meet the requirements of thelabor market. It is estimated that approximately 10 percent of thetraining to be provided under the project would be directed towarddeveloping job skills of the unemployed thus serving the relatively poorersegments of society within each country. Particularly, the project wouldinclude training components which would enhance women's employment ingarment-making, commercial cookery, and the tourism-related trades.

56. Through its close collaboratlon with the CDB in financing andsupervision of the proposed project, IDA would extend its institution-building effort related to CDB through a new sector (vocational/technicaleducation and training). By working together with IDA staff, the CDB staffwould gain experience in dealing with a relatively comprehensivevocational-technical education project--an experience which could be ofvalue should CDB decide to pursue lending in the oducatior. sector in thefuture.

57. The risks associated with the execution of the proposed projectare based on the fact that successful implementation of the project wouldrequire coordinated efforts within the five project beneficiary states andby CDB. While project components in each country would be essentiallyself-contained, all beneficiary states would share common procurement andtechnical assistance under the project. The risks are: (a) there is apossibility that only 3 or 4 of the 5 countries may ultimately participatein the project, in which case, the full benefits anticipated would not berealized and (b) there may be considerable variability In implementationrates among the countries, thereby causing delays in implementation ofproject activities common to all of the beneficiary states, particularly,technical assistance and procurement of goods. While delays due to projectimplementation complexities cannot be ruled out, the probability of lessthan 5 countries participating is low due to the strong coamitmentexpressed by all countries to it. Also, the expected strong leadershipfrom the Project Team in the CDB would help to minimize anyimplementation/management problems.

- 24 -

PART V - RECOMMENDATION

58. I recomend that the Executive Directors approve the proposedcredit.

Barber B. ConablePresident

AttachmentsApril 9, 1987Washington, D.C.

- 25-

Pupulatin (10001 95 1191$) ANN2E IllP psr capita: 5s1160 (19851 page I of 1O

_IINICA - ECOMINiC ArA

bwntlulS SIR. at Irneth Rate (ii

current prices) -...

INBS 193I 1q92 19N 1964 1995

NATIONAL ACCOUNTS___ __..._____

Crss omutic Product 95.3 10.0 4.1 3.0 t.7 2.0Agriculture 23.2 21.9 2.4 1.0 5.7 -1.3Industry 6.3 15.9 17.5 1.1 2.1 8.2Services 49.7 -0.6 0.S 2.8 7.0 1.3

Consuqtion 92.0 5.4 -4.2 -0.8 3.3 10.1Gross Inveitmnt 27.1 -30.2 -7.9 9.1 30.3 -10.5Exports of GNFS 37.5 51.3 2b.3 3.9 10.7 -3.7leports of 6IfS 61.4 -5.9 -2.0 0.4 14.2 2.7

Cross heustic Savings 3.3

PRICES

GW at n.p. dfliter (1977 : 100) 160.1 167.8 179.1 196.3 197.7Exchange rate (ECSJUSSI 2.7 2.7 2.7 2.7 2.7

Share of GDP it abrket Prices (11 Avrqa knnual Increase IZ)(at current prices) a/ [at cmstant price)

1981 1982 1933 1984 1985 1911-93 1983-85 1981-95

Gross Domestic Product 100.0 100.0 100.D 100.0 100.0 5.7 3.9 5.2Agriculture 27.1 25.6 24.6 23.9 24.3 8.1 1.8 5.7Industry 6.4 7.6 7.2 b.4 6.4 11.2 3.9 9.8Services 52.1 50.9 51.7 52.9 52.2 0.9 3.7 2.1

Coasptie. 110.0 97.3 90.0 91.1 96.6 -2.6 6.6 1.9Gross Investment 33.4 21.2 28.2 33.9 29.5 0.0 9.0 3.9Exports of flfS 35.2 43.9 45.1 41.9 39.4 14.5 3.2 9.7Imports of 611S 78.7 69.5 63.3 41.9 64.5 -0.9 8.3 3.7

Cross Doeestic Savings . 2.7 10.0 8.9 3.4

As 2 of S6P

1991 1993 M9S

PUILIC FINANCE

Current Revenu 50.4 51.8 54.4Current Expenditure 59.7 51.9 50.9Surplus t1l or deficit (-I -9.3 -0.1 3.5Capital Expenditure 18.5 17.5 19.1Foreign Finamcing (net) 23.0 19.4 17.3

a/ Cuonents are expreuu at factor cost and mill not add to GOP at earket price due to exclusionof net indirect taes and subsidies.

- 26 -SKI

Popalatiim reElOs U (IMUW per caitAi UNItS (1MU Pagm 2 of 10

ifiB - ECI IIC ETA

burt Caautl, f 4orAgw basl laruae IIItg ala. at tlrchudi. trio (1) (at cnutaat pricul

corrat prical lat cwist pricial ms ~ n tin zuzt-n is-u twi-n

ERTEEIIINN Tl

HrcbaUndia Ieuti Euwur 24.2 INO.6 66.0 10.5 6.3 5 2as 13.3 *.7 I0.l 4.1 7.2 5.7

lthlr 12.9 51.3 49.2 14.4 -1.3 510

Parchouim apwitm 17.2 260.0 106.0 -1.5 7.7 3.6Fad 12.1 21.2 22. ... ...Chclcals 1.3 11.5 11.4 ... ...Iadaactwd heS 11.0 29.4 27.2 ... ...Capital WWI 12.4 I7. 22.5 ...rIlty 11.6 14.4 11.3 ...

Jul 29"2 I23 mei 2I5

Pricn e1m1 * 1001

Eapart Price 1.. 117.1 131.2 173.2 154.1 117.1Imat Price 15n 644.4 161.4 161.6 141.7 16.2Twa of Irade 15n .9.9 9. 107.4 3.6 A.

Jul 1932 196 193 291

ULE (F PAIITS fin aillim of U 1S e at cwruut pricU)

Eperbt MIC 2LS 31.7 5.7 31.9 37.5ofl suci Nrchmii 19.1 24.5 27.5 25.1 2l.4

lmwrts. S 12.0 SD. 1 50.1 3.9 61.4of diicha trcludia 49.71 U. 47.1 55.1 57.2

Hut Factor SEuices 4.4 -0.1 -1.3 -2.7 -S.0Irmsfsrm a) Le 4.1 5.0 1.3 6.5

Carrt kcout hkl e -23.3 -14.6 -10.9 -13.4 -20.4

Nract IRveatat 0.0 0.2 6.2 2.3 1.7Public Capital (lat) 12.3 14.0 9.0 17.1 17.1

but. 9.4 LU1 4.6 1. 14.4Lt Disbursement 3.4 Lw 5.7 L5 5.3bArtizatim 0.7 0.7 1.1 2.4 2.3

Coaacial tks Inuth 0.7 -1.1 -2.4 3.0 -0itt. Capital 11.3 1.E 4.5 -4.1 2.1

Cnam in *Eurv - * inure) -2.6 6.2 -0.4 0.2 -0.2

EITEt WUlTfL E mT

tra lisharat 13.0 14.7 10.1 19.9 29.9official raht l(pulic capitl) 9.6 5.1 4.4 14.1 14.4Lns 3.4 L. 5.7 5.3 5.3

Fsttrfal ht hutstaio I DsIbwwd bI 11.9 24.1 3.9 32.7 35.4

Mt ServiceTal SErvica Paatc 1.1 1.4 2.1 4.4 4.3

Payts at 2 of (aprtII, S 4.9 4.1 7.1 12.0 11.5

Arawg latarnt late Itl 2.7 3.2 4.4 5.1 4.7

a/ Privato trausfars aly.hi Ecuws. dekit to the 1IF d ECCA hat imclua publicly guarataa dot.

- 27 -

Popuiatiaf ('N:1 10I 1195)W per caitau U976 11(195) Paqe 3 of 10

U11S - EfIIC IOTA

meetIUSt ek. at Setb abt IlIcurrnt pricnl

1965 1931 1967 133 19 35 m

Gross Damstic Pruduct 96.6 3.0 0.4 -2.9 2.0 3.7Agriculture 15.7 15.3 -13.7 2.2 0.2 -10.2Industry 5.7 33.3 IZ.5 -11.3 -11., 17.6Service 75.0 3.1 6.7 -3.5 4.1 '.1

Cmsmwtmi 3.0 ... ... ... ... ...Gross la Htmt 33.6 ... ... ... ... ...Exports of W1f6 51.. ... ... ...leorts of 6lFS 77.7 ... .... ...

Gross Dbntic Saings 7.5 ... ... ...

PRICES

GO at np.. deflator 11990 * 101 309.5 117.3 124.2 132.7 137.6Exchange rate (ECIIJI 2.7 2.7 2.7 2.7 W

Sh_e of W at r irW cus !U IvorawhAn h lncrare (1)Eat curret price) a/ (at cntat pricel

1931 1932 1113 19" 195 Im-3 193 191-5

Gross heestic Priuct 160.0 100.1 10.0 166.0 1A.0 1.3 0.9 2.7Agriculture 21.9 13. 11.7 16.1 16.3 0. -2.7 -1.7Industry 7.5 3.3 6.4 5.6 5.9 .1 -2.9 1.5Services 7LA 73.1 74.3 76.3 77.1 1.4 2.4 t.O

Conswm tion 93.3 91.3 101.4 101.0 92.2Gross Invstmt 67.9 50.9 41.6 32.9 34.3 ... ...Exports of UlFS 53.3 47.7 47.2 44.9 5.5laprts o4 RS 94.5 96.9 93.1 78.8 U.6 ... ... ...

gross Destic Saving 6.7 1.7 -1.4 -1.0 7.3 ... ...

As e of W

1911 193 193

PIIILIC F INMICE

Current Rern 31.1 41.3 49.3Current Expeniture 32.1 33. 30.2Surplus 141 or deficit I-l-0.2 7.7 11.2Capitel Expenditure 37.1 42.6 33.9Foreign Finaning (nt) 36.4 32.1 23.7

- 28 -

Populatin VMN), 100 (1915)P Pr citat.l 1s21 (nn93) Page 4 of 10

1M" - ECEIC DATA

Anut Cpel tam of Avaerap. haul 1creU IUI(UN ell. at lHrchudis trade i7 lat CitHt pricel

currnt rices) t curreat pricESl -295 131 2935 193 1 2933-35 232-6

EITEIL TIIE

lHrchadilu Dooeatic Exports 22.D 20O.0 200.0 14.1 7.1 0.4Isnaaa 3.1 19.3 11.1 -5.3 -7.5 -3.7atlmr I.v m*0.1 n5.a 20.4 12.1 14.4

herbmldie Ipwts 69.1 100.0 1o0.0 71.3 3.6 t2Food 17.1 24.5 24.5 ... ... ...Ohicals LI 9.0 3. ... ... ...hrlactwed Coos 10.3 133 14.1 ...Catal Goods 23.3 14.7 19.1 ... ...eter 22.9 39.4 32.9 ... ... ...

tnt11 was 19u aim. tPriem IIYOO * 1001

Export Price Iain *iJ 0.5 71.5 79.0 79.6Ierit Pfics lIidn 20.5 "9. 9.5 94.1 95.5Trn rmle lde . 31.2 76.1 63.3 63.1

1331 132 2333 114 2935

ISAIE OF PAVNENTS lIn SIlIls of l6 dtll rs at curret pricn)

Exports, MS 39.6 31.2 N.E 41.3 51.6f tAcict Ulrchadia 19.4 13.5 11.1 IL7 Z2.5

lmpwrts, FS 70.2 77.6 71.2 70.7 11.6oS mili llsrchadiu 12.4 65.1 64.6 57.1 69.7

Ut Factor Services -5.0 -5.4 -4.8 -1.6 -2.3Trafes a1 10.4 11.0 16.. 11.7 3.4

Currest kcomnt hulce -25.2 -33.3 -29.4 -20.3 -2D.4

Direct 1.vntmt 0.0 2.9 2.5 2.3 2.5Public Capital (t)U 19.1 25.4 24.2 2L4 29.4

Grats 12.5 15.9 16.1 24.6 28.9LoAn ioburseent U. 10.1 15.2 6.3 4.6Imutizatim 0.7 D. 1.1 3.0 4.1

Other Capital 4.4 6.7 2.3 -11.3 -2.3

Chap in rve (- incresul 1.0 -0.2 -0.1 0.4 -0.2

EZTEIRI CE?IIL D Bt

6r.s Dslwnrunt 23.6 26.0 25.3 31.9 33.6Official Grats (plhic capital) 12.5 135.9 10.1 24.6 3.9LoDs 3.2 10.1 15.2 7.3 4.7

Exters kbt Ihatstalinq & Dishrsd h/ 13.0 26.6 40.7 42.1 45.2

lt ServiceTotal Service Payuts 1.5 2.4 2.6 1.2 10.5Payets as Z Sf Exports, EM 3.1 6.3 6.3 17.9 20.3

Avrwae Interest Pate 11 4.4 3.4 3.6 4.6 2.2

a/ Private transfrs ely.b/ Excludn debt to the IIF ad ECU but iscluds publicly guarantend dit.

- 29 -

Population (1'0001: 42 (1IM51OW per capita: USS11I60 095) Page 5 of IU

ST. KITTS AND NEVIS - ECONOMIC DATA

l1u0 elm. at Iromth Rte (12)currnot price) -------

195 1911 1m 3913 1994 I5

*AriMn accuIurs

Gross bomstic Product 69.7 4.0 -1.0 -0.3 3.9 2.1Agricuiture b.9 5.2 0.0 -11.4 4.3 -2.5Industry 9.3 -10.1 9.9 -11.1 11.7 -9.0Services 42.5 9.9 7.3 4.0 1.6 3.7

Consumption 91.1 25.1 5.9 10.9 -2.3 -3.7tross Investmnt 8.5 41.1 1.9 -13.2 -. 1 71.4Exports of GWS 42.1 19.6 -13.6 -1. 23.7 7.9Imports of GINS 63.0 17.6 -1.6 11.5 5.5 4.4

Grms Dmstic Savino' -12.4 . 42.7 52.6 -IL9 -21.9

PRICES

GOP at m.p. deflator 11977 4101 146.6 156.2 153.0 16.3 172.0Enchange rate CECt/IISSI 2.7 2.7 2.7 2.7 2.7

Shae of IIP at larket Prien 1I) Averwa Anul Increau IIfat current pricn) a) Eat constant prices)

1901 1992 1993 1984 1s15 19113-33 2934 19,1-3

Gross Domestic Froduct 100.0 100.0 100.0 190.0 100.0 0.9 1.9 1.7Agriculture 9.1 12.7 10.1 11.2 10.0 -5.0 -6.0 -2.7Industry 12.1 12.0 12.2 13.1 12.1 -0.6 -3.3 -2.4Services 50.6 61.9 63.5 60.5 61.9 1.7 3.2 5.1

Consumption 117.4 123.2 134.5 124.9 118.1 23.9 1.2 6.7gross Investmnt 10.9 10.5 9.0 7.5 12.4 -29.9 11.0 -11.5Exports of GI1S 69.4 56.1 53.3 59.2 61.3 0.6 9.5 6.3Imports of 61Ff 97.6 09.9 96.9 91.1 91.7 89. 7.1 7.3

6ross Dowstic Savinps -17.4 -23.2 -34.5 -24.9 -19.1

As Z of MP

1991 1983 1915

PU0LIC FINACE

Current Revnue 39.2 33.5 32.0Currmnt Exapeditue 43.2 31.1 35.0Surplus (4) or deficit f-I -5.0 -4.5 -3.3Capital Expnditure 9.4 8.4 15.3Foreign Finncing (net) 3.0 3.7 4.2

a/ Componots are eKprness at factor cost ad will noi add to GDP at urket price due to exclnsimiof net indirect taxes and subsidies.

- 30 -

Pplatim ' l um a-N e apial mites 11l1l Pp * of o U

ST. KITTS AND NEVIS - UCOOKC EATA

Alat Cupultim of Avag basl l1m ElI(I1S SIa. at WlrIUSU trail I fat casat pim)s

iwtrt pricel Eat tenet pricl29 22 9 11110m1N-S3I 2103IS 1102

,,,,,,...__.

Hhrcheuilu Iatic Epets 17.2 16.0 16.6 -7.2 4.1 -4.2h,ar I.E LI 12.2 -7.1 4.7 -4.7

thr L1 37.2 6.1 -7.5 IlI -I.4

hrchauiiu igeWte 53.6 1NO.0 26.0 5.9 7.9 5.6Fad 1.6 19.5 22.6 ... ... ...Ealcals 4.1 LI 1.6 ... ... ...aafaturui hi 9.2 34.1 15.3 ... ... ...

Caital hIns 9.6 26 11.9 ... ... ...ethr 10.1 16.4 16.6 ... ... ...

101 L"2 M i lWl I"rien ~ ~ ~ ~ ~ ~ a itS7 *t a a

Epert Price I.i. Ut? Ur 23.0 131.7 2 134.4lpel Prime lSa 26.5 123.7 13.L 132.5 123.3Term o Trmim aim 2#3.1 12.1 "9. 10.1 260.1

lLAC N lIMITS iEl Slime e " iSets at cwrSt pricne

Earts, 110 UL 34.2 31.7 u.s aIof Sucl ihadiso 2L3 21.0 IL.7 20.5 IL7laoWt, IFC 54.6 53.0 t.6 5.6 3.0ef Sichi mchmdIm 47.6 44.3 51.4 51.9 5L

ht F ettr Irvlce 0.9 0.1 1.0 .I -1.4Trades aJ 6.7 Li 7.6 9.! 10.6

Carrat kcmt hlss -6.2 9.3 -17.3 -11.1 -11.7

Slic Capital Intl 1.1 2.1 2.7 1.5 3.6Grats 1.6 2.3 LI 1.E 3.2[so kflrit 0.4 0.4 6.2 4.0 0.1bartizatim 0.2 .2 0.2 0.3 0.2

Caineial lt utl 3.5 -1.2 1.2 -4 4.2ither Capital 1.1 7.3 ILS I0.3 0.3

thag ia buem I- a iecrusel 4.1 0.7 4.1 -3.3 0.6

simlM rwITL a er

fram iehuast 2.0 32 Lo 7.9 6.1Official rats Iplic cpItl) 1.6 2.3 2.7 1.E LiIsam 1.2 0.9 1.1 L.i 3.0

Eblweal lSt htstaaii I lIers ti 11.4 11.4 12.6 17.1 29.1

hit erviceItal ervice Payr ets 0.6 0.7 0.7 1.2 1.5Payats t Il f EaWte, WI 1.3 1.4 1.7 2.3 2.9

ArW Eterst late 121 3.3 3.! 3.! LI 5.6

a/ Privab traifws nly.bhitcls itt tl tls IN i a CM ht ialui pubicly gwatha iset.

- 31 -

ibJEI Itplatime ('0001: 137 195I _W pwr capita: U111210 11M51 Page 7 of 10

ST. LUIA - ECIIIUIC DATA

AmntIV" .1n. at tllh Rate IlI

current prices)1M 5 1111 1912 VuS 1914 I5

............ ..................... .u_.. ............ .. ..... _. . .w ._ _._....... . .. _.__.. _.. __.__.... . ........... _ _. -------- -. -... __ -- - --------

NATIlONL ACCENTS

Eros hnetic Product 170.3 1.2 2.1 4.0 4.4 7.2Agriculture 21.4 -14.9 33.0 14.1 U.0 12.3Industry 13.1 -1.I I.1 4.5 0.0 2.5Service 109.3 4.0 -0.5 2.9 .I 6.9

Cmmptios 155.0 ... .. ... ...Urons lnvestmt 57.0 ... .. ... ... ...Exports of CIFS .3 ... ... ...Imports of GNF1 135.1 ... .. ... ... ...

tross uestic Savings 15.2 ...

PRICES

SW at o.p. deflator 11977 101 123.0 145.1 117.4 171.6 177.3Euchange rate IECSJUII 2.7 2.7 2.7 2.7 2.7

Uwe of WP at arhkt Pricm (2) Averae Annual Incrreas (2)(at current price) a/ (at castat pricesi

1911 1922 1133 1936 IM15 1911-33 191-IS 1911-15

Gross hcntic Prodct 100.0 100.0 10.0 100.0 110.0 L2. 5.9 6.2Aqricultwrc 8.3 10.0 12.4 11.2 12.7 15.1 11.7 9.5Industry 1.5 3.3 3.5 8.1 7.7 2.1 3.0 1.0Services 19.4 68.2 45.4 66.2 4.2 1.8 4.0 3.1

sptios 90.4 91.1 90.9 0.1 91.1 krss Inestmt 57.4 43.0 33.5 34.5 33.5iports of 1FS 53.0 54.9 53.2 5. 54.3 ... ...Ieorts of ClfS 101.0 39.1 77.5 01.1 79.4 ...

gross omtic Savigs 9.4 3.3 9.1 9.9 1.9 ... ...

AsmI of I

1911 nsi ams

PUILIC FIICE

Currnt Rnue 49.0 57.4 57.6Current Expediture 47.3 S5.2 53.4Surplus ( or dficit (-1 1.7 2.2 4.3Capital Expnditre 12.5 9.4 LIForeip Fiameig (Int) 3.7 4.9 0.4

a/ Coapiuts ae eprnsd at factor cat ad will not ad to IP at mrket prirn de to enclusionof net indiret taxes sd usidies.

- 32 -

Pe Nj<|.|llzn}r. 8 of l0IT. 11CIA - EC1IIC IATI

_lmmuat.... Ceeplog tim of Avwale bus Inerease uit4III We. at ierhmdle, trade (1? lat mutmtut pricnl

cwru,1 pricer lat curust priceulnm ii lm M-1 1 -] u w

krcMiue lestic Experts 47.5 I.0 100.0 -1. 3.4 4.5kman 30.2 40.3 61.6 12.6 20.1 17.1Dtbr 17.3 9.7 6.4 -9. -2.1 -4.5

bercauewImpte 125.4 110.4 IW0. -3.7 Li .1iFeu 21.2 20.4 z1.1 ...

CImecals 14.6 9.6 I.7 ... ... ...hmlactered led 39.7 34.2 33. ... ... .

Capital Seso 32.4 1I.9 1.41 ... ...

thur 1.3 135.7 i.4 ... ...

1111 LM| IM) 1N4 IM|

ice. illSl * 251

EsWpt Price lad 135.6 114.2 121.6 1iS.7 ii1.0'pet Pce ldO 300.5 ".3 .5 ".3 95.51em of Trade 1i 35.l 335.3 126.2 122.1 3ILS

1291 3932 95 Me 1915

'ALM1 IF RIIENS Ih milims u UI dollars at crael prienl

spertm, MIB 15.5 13.0 .A 95.5 97.6of Sict a HIrchdiw 41.2 41.6 47.5 47.1 52.0

lmpwtse ClFB 137.0 127.5 137.2 133.1 139.4o elicit HuchJwi. 129.2 313.3 1N3 £11. 125.0.t htetr lerien -2.1 -3.4 0.5 4.3 -0.3

Tralerg a 13.6 13.5 17 14.1 21.5

Curert kct halmce -50.0 -36.4 -20.1 -23.1 -20.6

Direct leamtt 3.2 72.5 12.0 12.0 II.7Public Capital I) 10.1 11.4 10.0 9.5 30.7

ltrt. 7.3 5.6 7.3 3.4 L4Lom IA eut 3.4 6.9 3.4 2.2 3.2ieutizatiu 0.6 1.3 0.7 1.1 e.1

Cmm_rial Dit. (iotl -2.9 4.7 -. 5 2.7 -6.IOther Capital 4.2 -4.7 3.7 0.6 -2.3

ChMe 3m eee -s erael *.4 4.1 4.1 -0.3 - 0. I 1

EnTW CAIr^L M N

ame Oiu-brt 10.7 12I 10.7 30.6 11.6Officil Irate (pulic c'pitdl 1.3 5.L 7.3 6.4 6.4Le 3.4 69 3. 2.2 L2

External kht Ohteteiau I bisned hI 24.4 25.5 27.4 26.2 J.7

Debt ServiceTotal Service Paymes 1.3 2.0 1.3 2.0 2.5Peyet n I ef Experts. 1i 3.7 2.5 2.2 Li 2.

berq lSweeat bte (11 Ll 3.5 4.4 3.3 1.2

.f Private trameere only.hf Ecludn ddt to tie N ad J iC but iKcia publicly quarutmd debt.

- 33 -

AMNEX IPopulation 1 00Cs: 110 0).....SW por capitat U2S1140 11995! PoRe 9 of 10

ST. VINCENT & THE GRENADINES - ECONOMIC DATA

AmuntIUSJ mIn. at Grosth late 171

current pricesi ------------------------------------------2995 1911 1912 1913 1984 1915

._._......_....._..._..........__. __... _._.___.. ____ ._.._ ..... _._.. _.__........ ....... ...........................

NATIONAL ACCOUNTS............ ...............

Gross Domestic Product 101.6 6.3 9.0 1.1 4.9 0.9Agriculture 16.3 41.1 5.b 4. E .6 0.6Industry 7.5 I.9 6.0 2.4 0.B -0.9Services 60.7 2.4 5.9 5.5 2.7 2.3

Conswption 86.9 -2.1 13.7 6.2 -4.6 -4.0GrDss Investment 30.8 -0.9 6.1 15.4 -9.0 24.1Exports of 6NFS 19 0 5.9 7.0 15.? 26.0 12.1Imports of GIFS 5. 1 -4.9 12.1 16.8 6.3 11.4

Gross Domestic Savings 14.17

PRICES

SW at a*p. deflator 11977 a 1001 106.5 103.2 104.3 114.0 116.9Eclhanqe rite IECI/USSI 2.7 2.7 2.7 2.7 2.7

Share of SIP at Narket Pricesm 11 Average Annual Increase 111lat current pricesl a/ fat constant pricesl

1991 1982 1983 1984 ISB5 1991-93 1913-85 19BI-95

Gross Domstic Product 100.0 100.0 100.0 100.0 100.0 6.0 3.9 5.2Aqricultlre 14.3 14.2 14.4 14.7 16.1 16.2 6.7 12.7Industry 9.9 9.5 9.9 9.5 7.4 3.4 0.9 .2.0Services 61.3 60.0 59.6 S.2 59.3 4.6 3.5 3.;

Consumption 93.9 96.9 94.1 8718 95.6 5.B -0.9 l.aGross Investmnt 33.2 30.4 31.9 27.0 30.3 1.6 6.6 4.9Exports of 6NFS 62.3 57.5 61.3 70.0 77.8 9.4 12.0 13.2Imports of SNIFS 99.5 94.7 97.3 94.8 93.7 7.6 11.4 9.1

Gross Domestic Savings 6.1 SI 5.9 12.2 14.4

As I of GDP

1981 1993 1905

PUBLIC FINANCE

Current Revenue 33.4 30.5 36.7Current Expenditure 32.3 30. 298.4Surplus 141 or deficit 1-1 1.1 -0.2 9.2Capital Expenditure 13.3 11.3 13.9Foreign Financing Inet) 9.9 ;.8 10.5

a/ Components are expressed at factor cost and mill nt add to GD' at market prices due to exclusinof net indirect taxes and subsidies.

- 34 -Ppulatim I'011 120 (1115IW pr capitas HUJO (IMP PatiO lOsf 10

ST, VINCENT & THE CRENADINES - ECONOMIC DATA

A_At Cempitlm of Averwe ONel IMAaMS (1(HI sIR. at Nerchadlue trade I) at cstant pric"l

curret. pricnl lat current pricns)291 INI l 195211143 21113-03 291121-1

__..... _ .......... . __... __...... . .... . _..__...............__..

ci ruou wu

hrchandllse amtic Experts 62. 100.0 200.0 12.0 19.5 15.5huena 26.9 36.9 27.0 11.9 18.0 14.1Oter 43.7 45.1 73.0 12.1 1.1 35.4

lNrcadise lqpwtm . 100.0 200.0 7.2 12.1 1.0Feud 22.0 3.1 25.7 ... ... ...Chemicals 9.2 11.9 10.1 ...Muacturd bds 27.1 21.5 32.3 ..Caital See I6.7 14.4 19.5 ... ... ...other 30.0 13.2 11.7 ...

1911 2932 19 19"3 15

Price 13930 * 100

ExpWrt Price Inds 152.7 31.1 155.2 151.3 154.1lsprt Price le. 163.5 363.2 157. 1355.7 13.9ermse of Trok mien 92.3 .2 9.4 97.5 97.0

2901 1m na IM 190

AIES IF PlYIEI1S

Exprits, iSM 44.5 47.9 510 69.0 79.0of uihicha lerchanim 29.3 34.3 41.1 54.2 63.7

lepart, IWS U.9 70. 79.7 .E4 1.2ef hictha lerchndi. 5t.2 13.6 70.4 76.6 C.5

Net Faetr Servicn -1.7 -3.7 -2.0 -2.2 -1.5Tranfers at 13.1 11.4 17.0 22.4 9.2

turrat kAcot lalec. -4.0 -20.0 -8.7 -4.4 -4.4

iraet lsamtt 0.5 0. 1.0 0.4 0.6Publil Caital (metl 7.3 6.0 5.6 4.7 11.5

6rents 3.4 3.6 3.0 2.5 4.3tun 3Ishumweut 5.0 2.9 L3 2.9 3.4Amertizatim 0.6 0.5 0.7 - 0.7 1.2

Ceercial lekh (cii 0.7 0.9 1.1 1.0 0.6

Other Capital -1.0 2.4 0.7 -1.1 -4.0

Chese in euvesn 1- a increame) 0.0 0.1 0.3 0.1 -0.3

EITEAL CAPITAL IDNU

troes ffhdr_mt 1.6 6.4 6.3 5.4 12.7Official braits (public capitall 3.4 .b 3.0 2.5 4.3Lomrs 5.0 2.9 3.3 2.9 3.4

Extenal Mt Ohtsteidq I liebarsd h/ 17.6 11.9 20.5 22.7 29.1

DMt Servicerotal rrvice Payetm 1.5 1.5 1.7 L3 3.2Paymts as I of Experts, E 2.6 2.3 2.3 2e 3.6

vraw lntmrnt Nete (U) 4.7 4.9 4.6 4.9 3.1

iJ Privnte tramsfs sly.hi Exclud deft te tth INF ad ECC t inldi publicIy urteed debt.

_ 35'_

s ~~~~~~~~~~NNEX Ix

TAtP$ 0 BAWK GROU? OPERATIONS WITH THECARIBErAN DEVELOPMENT BAZN

A. Statement of -3nk and Third Window Loons ond IDA Ctedeits o ofSe1tembor 320 1986

US$ Milllon AuountLoan or (Los cancellations)Credit FiscalNo. Year Borrovwer Purpose Bank Tw IDA Undisburaed

2 loan, fully disbursed 15.6 3.0

1775 1980 CDB Relending 23.0 3.5960 1980 CDB Relending 7.0 0.81364 1983 CDB Relending g7.9 7.7

Total 38.6 3.0 14.9of which has been repaid 5.8 0.5 0.0

Total now outstanding 32.8 2.5 L 4.9

Total Undisbursed 12.0

B. Statement of IFC Investments as of September 30 1986

None

- 36 -

ANNEX III

SUPPLEMENTARY PROJECT DATA SHEET

Section I - Timetable of Kev Events

(a) Project Preparation: Project was prepared by the respectivebeneficiary states with assistance from UNESCO, CDB and IDA.

(b) Appraisal Mission: January 1986.

(c) Completion of Negotiationss March 1987.

(d) Planned Date of Effectiveness: September 1987.

Section II - Special IDA Implementation Actions

Joint supervision with CDB's Project Implementation Team.

Section III - Special Conditions

(a) CDB would open a Special Project Account in a bank on terms andconditions satisfactory to IDA (para. 52).

(b) CDB and IDA would make an interim assessment of projectImplementation performance on or about September 30, 1990 as partof a joint mid-term review mission (pnra. 54).

(c) feasibility studies on cost-savings and cost-recoverypossibilities to be completed and provided to CDB and IDA fortheir comments by December 31, 1988 (para. 38).

(d) Conditions for credit effectiveness would be:

(i) evidence of Government authorization for subprojectexecution, effectiveness of at least three of the CDB sub-loan agreements with the project beneficiary states in orderto ensure achievement of regional project objectives, andassignment of CDB's rights under such sub-loan agreements toIDA (para. 49).

(ii) CDB selection and country approval of the technicalassistance firm and confirmation of appointment of the CDBarchitect/construction engineer (para. 39).

(iii) all conditions for effectiveness of the corresponding OPECFund loan agreements, other than effectiveness of thecorresponding IDA credit agreement or of the CDB loanagreements, have been met (para. 42).

-37 -

ANNEX IVg f 7

OECS REGIONAL VOCATIONAL AND TECHNICAL EDUCATION PROJECT

Descriptions of Individual Country Subproiecto

1. In the following paragraphs, various components of the propos-dregional project (subprojects) havo been presented in their particularproject beneficiary country contexts. Limited information on the economicand education sectors in each country has been included, as necessary, toplace each subproject within the overall sectoral context.

A. Dominica

2. Dominica a moderately small island country of approxmsately 290square miles, has a population of 76,500 with a labor force estimsted at30,500. Active employment currently stand. at just under 25,000, leavingabout 18 percent outside the economically productive sector. Wage levelsremain relatively low compared with other Caribbean and most westernindustrialized countries. Heavily dependent on agriculture, Dominica hasexperienced severe economic difficulties in recent years. The devastationby Hurricane David in August 1979, closely followed by Hurricane Frederickand Hurricane Allen in August 1980, resulted In significant declines inreal GDP in 1979 and 1980. The country is still recovering from thesedisasters. The basic development goal is to harness the economy'sproductive potential, to stimulate increasing income end exports and tocreate opportunities for employment. To helD achieve this long-term goal,the Government is seeking to improve and reform the education and trainingsystem to make its graduate. more suitable for employment.

3. The Government of Dominica has set for future development of itseducation sector clear objectives and guidelines, focusing on adapting thesystem to meeting perceived emerging national needs and to improving thosekey factors within the system which influence educational outcomes; i.e.,curricula, teaching methodology, equipment, and facilities. The countryhas 58 primary schools, 6 junior secondary schools, 2 senior secondaryschools,-* teachers college, a technical college, and a sixth form (generalcollege) program. Although the educational level of Dominicals populationis fairly high, the education system still falls short in meeting thecurrent training needs of the economy, which are mainly in the areas oftechnical and commercial skills. In the aftermath of a recentlyimplemented program to increase the literacy rate mong its population, theGovernment, with assistance from the Caribbean Examination Council (CXC),is now attempting to improve the quality of education and training throughreforms in teaching methodology, curricula, and facilities. Specialemphasis Is being placad upon developing ties with local enterprises andupon diversification of the system to gonerate greater occupationalawareness among young people and to better equip youth and young adults forsuccessful participation in the labor force.

_ 38-

ANNE IVPagej2lof 7

4. The proposed project would be consistent with the Government'eforegoing objectives and program for improving quality in itstechnical/vocational education and training system. It would provide forlimited renovation of the training facilities of Clifton Dupigney TechnicalCollege, together with the vocational blocks of two senior secondaryschools (Goodwill and Portsmouth) and six junior secondary schools (GrandBay, Castle Bruce, Portsmouth, Harigot Weir, St. Joseph, and Goodwill).Improved and updated equipment would be provided for all the schoola listedabove. Fellowship training would be provided in the Caribbean region(Jamaica) for 10 vocational education Lnstructore (90 staff-months) and 8vocational supervLsors (24 staff-months). Internships abroad would beprovided for 4 technical college instructors (12 staff-months).

5. Much of the emphasis in the Dominica subprojoet would be onimproving the quality sand expanding the capaecity of prevocational educationprograms at the junior secondary school level. It Is expected that thosewho complete this level of education, rather than going directly to thelabor market, would go on for specialized training in the secondaryvocational education programs, or eventually, in the technical colleges.It is recognized, however, that some students will leave the system priorto completion snd enter the labor market as semi-skilled or even unskilledworkers, depending on their points of exit.

6. At the secondary and post-secondary levels, the sain emphasiswould be on improving quality and output (rather than expanding physicalfacilities). Output from both levels combined would be increased by about70 graduates (30 percent) per year, due mainly to expected increases ininstructional efficiency. All schools listed in pars. 4 above wouldprovide evening courses for fnservice training for adults. The increasednumber of adults to be served is estimated to be about 160 per year(representing an increase of 80 percent).

7. Implementation of the Dominica subproject would require noincrease in instructional staff of the Technical College. Vocational staffof the senior secondary schools would have to be increased by 4 persons andthe junior secondary schools by 5 persons. Additional recurrent cost to beincurred (EC$241,000) are estimated to be 1.6 percent of Dominica's annualeducation budget and 0.3 percent of the Governmental budget. While theamount involved is not insignificant, it can be met particularly ifappropriate cost-reduction/cost-recovery measures are implemented.

B. Grenada

8. Grenada, has a land area of 116 square miles and an estimatedpopulation of 92,000. Approximately 28,000 of its almost 34,000 laborforce is actively employed, leving an unmploynmnt rate of about 17percent. The country'o *oil condition and abundant rainfall make theisland wll-suited for gzowing tropical crops. Thus, revitalization ofagriculture is a keystone of Government efforts to promoto economic growth.Further development of tourim and manufacturing sectors is also a highpriority In the Government's economLc growth progra. Exports of goods andservices are projected to rise by nearly 50 percent in real terms between

- 39 -

ANNEX IVPage 3 of 7

1984 and 1990 because of expected higher production of cocoa and bananas,recovery of exports of manufacturers, and a sharp increase in touristarrivals expected to begin in 1987. Improved education and training is akey element in the country's development plans.

9. Grenada's education and training system, in some ways, is lessadvanced than those in some other OECS countries though efforts are beingmade toward improvement with some assistance from the Caribbean ExaminationCouncil (CXC). In addition, special linkages are being established withemployers for increased relevance of instruction. The country has 64primary schools, 4 junior secondary schools, 17 senior secondary schools(which also include the lower secondary grades), a technical and vocationalinstitute, a teachers college, a domestic arts institute, and an institutefor further education (general college).

10. A manpower survey conducted in 1984 by the Grenada Ministry ofPlanning found that a number of occupational skills important to thecountry and its development were in very short supply. Prime among thesewere skilled worker and technician level skills In the areas ofelectricity, electronics, plumbing, welding, and building construction.The same survey revealed that the education system was not producinggraduates with these skills on the scale required for the country's mediua-and long-term industrial development.

11. The proposed project would help move the country's educationsystem toward a more work-oriented education and training program. TheGrenada subproject would include limited renovation for the GrenadaTechnical and Vocational Institute (GTVI) and the Domestic Arts Institute(DAI), both located at Tanteen, St. Georges, with new furniture andequipment to complement those which already exist in the two institutes.The subproject would also include constiuction, furniture, and equipmentfor a Multipurpose Training Center (MITC) at La Fortune, in St. Patrickparish. Fellowship training would be provided in the Caribbean region(Jamaica) for 16 instructors (144 staff-months), to be shared by candidatesfrom the aforementioned three institutions.

12. The GTVI and DAI would focus primarily on improving the quality oftheir existing programs. GTVI's capacity would be increased by only 10graduates per year, to a total of 108, as a result of adding a program inelectricity installation. The DAI would also expand its output onlyslightly by increasing output in its home management program by 5 graduatesper year-.-- No additional instructional staff would be required for thesetwo institutions. As the MTC would be a new institution, it would require8 new staff members. Additional recurrent costs which Grenada would incurby implementation of the subproject (EC$186,000) would be 2.3 percent ofthe annual education budget and 0.4 percent of the annual Governmentalbudget. This additional cost should be manageable.

C. St. Kitts and Nevis 4

13. St. Kitts and Nevis has a combined land area of 104 square milesand a total population estimated at 46,000. The labor force of the two-island country includes about 17,000 individuals of whom approximately13,500 are thought to be actively employed. The first half of the current

- 40-

ANNEX IVPage 4 of 7

decade has seen a relatively sharp decline of employment in the sugarindustry (-27.7 percent) with a compensating increase in manufacturing(28.7 percent). If projected expansion plans within the electronicassembly and garment subsectors materialize, the level of unemploymentshould decrease substantially. The country, as a result of direct policyinitiatives by the Government, has enjoyed considerable success inattracting enclave manufacturing activities. These operations includegarment ani shoe production, electronic component assembly, and dataprocessing activities. Furthermore, a number of smaller units (up to 25employees) have been established over the past three years by localentrepreneurs in metal processing, handicrafts, furniture, pottery, andboat building and repair. The Government hopes to strengthen the economyas a whole by giving special attention to the non-sugar sector. It isrecognized that achievement of this goal will require Improvements in theeducation and training system.

14. St. Kitts and Nevis has a school system whose quantitativeperformance is unusually high when compared with those in many othersimilar countries. It also is making improvements, with assistance fromthe Caribbean Examination Council, in the quality of educational andarticulation among grade levels. The country has ten years of compulsoryeducation, post-primary enrollment is as large as primary enrollment, grossenrollment ratio is over 100 percent for the 6-15 years age group; there isequal participation of boys and girls in the education system; and totalenrollment is equivalent to about 30 percent of the population. Thecountry has 31 primary schools, 6 secondary schools, two sixth formcolleges, a teachers college, and a technical college.

15. In order to enable the country to meet skilled and semi-skilledmanpower needs, the proposed project would include for St. Kitts and Nevisconstruction of classrooms and shops for two junior secondary schoolmultipurpose training centers (one in St. Kitts and the other in Nevis) andfurniture and equipment for these two schools plus the St. Kitts TechnicalCollege in St. Kitts. There would also be construction of a new HotelTraining Unit for the technical college. Fellowships would be provided for10 vocational instructors (90 staff months), 2 supervisors (8 staff months)and one maintenance technician (9 staff months). The capacity of thetechnical college would be expanded from an average 130 at present to 150graduates per year. The two multipurpose training centers would increasetheir outputs from a combined total of 245 at present to 360 students. Thenumber of additional teachers to be required would be one technical collegeinstructoc and 8 teachers for the multipurpose training centers.Additional recurrent costs to result from implementation of the St. Kittsand Nevis subproject (EC$360,000) are estimated to be equivalent to about3.7 percent of the annual education budget and 0.5 percent of the annualGovernmental budget. Thus, the increase in the education budget for St.Kitts and Nevis would be of considerable magnitude. Benefiting from thefeasibility studies which the proposed project would provide in theproject beneficiary states, the Government would consider wayes toreduce costs elsewhere in educadion or to introduce cost-recovery measuresin order to make adequate funds available for the proposed subproject.

- 41 -

ANNEX IVPage ) o 7

D. St. Lucia

16. St. Lucia, with 238 square miles of land area, has a population ofabout 131,000. Of its estimated 44,000 labor force, about 33,000 arethought to be actively employed. A main element of the Government'sstrategy for development continues to be diversification of the economy.Despite some progress in this effort, the economy is still excessivelydependent on agriculture, partiralarly bananas. Even with a reorganizationand modernization of agriculture, it is recognized that the potential forcreating jobs in this sector is limited. The Government's strategy,therefore, is to encourage industry and tourism in order to attain somebalance in the economy. The new industries attracted so far have beenmainly of the assembly type, so their value has been largely in employmentthey provide. Moreover, they are dependent on the CARICOM market, whoserecent trade restrictions have had a repressive impact on theirperformance. Tourism has experienced impressive growth in recent years andthe Government plans to expand the sector even further as part of thediversification effort. While the Government is firmly committed toestablishing and implementing new development policies, it has beenhampered by a scarcity of administrative, professional, skilled and semi-skilled workers. The Government recognizes that the country's educationand training system must be reformed to produce the kinds of trained peoplewith the skills necessary to implement its development plan.

17. St. Lucia, during the last two decades, has undergone a rapidtransformation toward improvement in its education system, bothqualitatively and quantitatively. The country now has 82 priaary schools,5 junior secondary schools, 6 senior secondary schools, a sixth forncollege, a technical college, a hotel trade school, a teacher trainingcollege, and a technical teacher training college. All tertiaryinstitutions have been integrated into the Sir Arthur Lewis College, whichalso will offer middle-management and first-year university courses.

18. The Governnent has taken Important steps during the last decade tocorrect deficiencies and inadequacies of its education system. Theseinclude raising academic standards, improving the output, and adjusting thesystem's orientation, operation and structure to the emerging needs of thecountry. Key actions under these areas have been the creation of newcriteria for student evaluation, new junior and comprehensive secondaryschools, preservice primary teacher training, and the consolidation ofpost-secondary institutions. These reforms have contributed to a greaterawareness and acceptance of the need for change and have laid thegroundwork for more fundamental reforms which are envisioned, particularlyin the areas of post-secondary education, teacher training, andoccupational education.

19. The proposed project would conform with the Government's plans forexpand_ng and improving the quality of work-oriented education andtraining. It would provide for St. Lucia construction of new classroomsand laboratory/shop buildings for the Horne Fortune Technical Collegeadjacent to others on space already owned by the College. Furniture andequipment would be provided to complement the new facility. The subprojectwould also include construction of 2 new classrooms and a workshop, plus

- 42 -

ANNEX IVPage 6 of 7

renovation of one workshop, for the Vieux Fort Senior Secondary School,along with appropriate furniture and instructional equipment. Fellowshiptraining would be provided in the Caribbean region (Jamaica) for 9vocational instructors and one maintenance technician (90 staff-months),plus one vocat$onal education supervisor (4 staff months). In addition,internships abfoad would be provided for 5 technical college instructors(15 staff-months).

20. Although Ilcreased quality in training would be of foremostconcern in the implementation of this subproject, expanded capacity inoutput will also be significant. The annual capacity of the Vieux FortSecondary School vocational program would be increased from 140 at presentto 220, while the technical college annual output would increase from 88 atpresent to 162. Implementation of the proposed subproject would require 7additional secondary school staff and 11 technical college staff.Additional recurrent costs to result from implementation of tie subproject(EC$641,000) are estimated to be 2.3 percent of the annual education budgetand 0.5 percent of the Governmental annual budget. While these percentagesare not insignificant for St. Lucia, they should be manageable,particularly with some cost-saving and cost-recovery measures to be takenIn the education sector.

C St. Vincent and the Grenadines

21. St. Vincent and the Grenadines is a small country of severalislands with a total land area of 150 square miles and a population ofabout 114,000 people. Its labor force is estimated to be about 42,000 ofwhom 34,000 are thought to be actively employed. Though the economyexperienced a slow-down in the early part of the present decade, there havebeen some improvements since 1983. Continued improvement in the economyand ultimate achievement of economic growth rate projections for the long-term will require expansion of activities in the agriculture, exportmanufacturing and tourism sectors. The Goverment plans to encouragedevelopment of the private sector in the industrialization process in aneffort to reduce unemployment. Development of the education and trainingsector is seen as a key ingredient of industrialization within the country.

22. As is the case with other countries in the OECS region, St.Vincent and the Grenadines is attempting, through several measures,including assistance from the Caribbean Examination Council, to increasethe quality of its education and training system. It is concerned aboutpreparing its youth for contributing positively to society; thus, thedevelopment of employment skills among its young people is a key element inthe Government's plans for educational reform.

23. The proposed project would assist the Government in achieving thegoal of having a highly skilled labor force with more individuals preparedto participate actively in it. The St. Vincent and the Grenadinessubproject would include limited renovation of teaching facilities in theSt. Vincent Technical College, located in Arnos Vale, the Girls BusinessSchool in Kingston, and Richmond Hill Home Economics Center. In addition,furniture and equipment would be provided to complement those which alreadyexist in these schools. Construction, furniture and equipment would be

_ 43 -

ANNEX IVFPag e' of 7

included for 2 new multipurpose training centers to be located in Carapanand Georgetown, for serving junior secondary feeder schools. Fellowshiptraining would be provided in the Caribbean region (Jamaica) for 12vocational instructors (108 staff-months), S vocational and/or technicalsupervisors (20 staff-months)p and 2 equipmnt maintenance tcchnicians (18staff-months) who would service and maintain instructional equipment of allvocational and technical schools in the country.

24. Output of the technical college would be increased by about 30graduates per year, with the addition of new program in electricalinstallation and radio-television repair and by expanding the existingbusin ess studies program. The Home Economics Center would double itsoutput to about 240 individuals per year by expanding training program infoods and nutrition and clothing and textiles, supporting expeetedincreased employment in tourism and the garment industries. No additionalInstructors would be required for the Technical College, Hoe EconomicsCenter, and Girls Business School, although the 2 new multipurpose trainingcenters would need * total of 12 teachers. Additional recurrent costs tobe generated for St. Vincent and the Grenadines by the proposed subproject(EC$134,000) vould be 2.1 percent of the annual education budget and 0.4percent of the annual Govermental budget. This additional cost should bemanageable.

Iz

GRANW ~~~~~~~~~~~~~~~~a- ---- .0

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tt ~ ~ ~ ~ ~ ~ ~~~~tl WALII. .li AtAIAV Vlnr.NCr ->11> Li ti-riIL ElTA 1 .

ANI)IIOS ~ ~ ~ ~ ON 1,fa .0A )

& ^KACLINS 1.

° HGREAT INAGUAI .

CAFMAN IS. -

JAMAICA r'IN, | BELIZE

GUATEMALA -'

HONDURAS

'NICARAGUA

Cos~~~~~~~~~~~~~~~*

90' CO538. ~~ ~". _--

¾ , PANAMA /~- r-CANAL

CARIFTA/OECS DISTANCES IN AIR ROUTE MILES f P A

_ u G | *_ _ Ul F I u e a 0_.r-c z - m

* . . ~~~~~~~ .3 0

ANTIGUA 454 293 232 63 35 991 991 555 1235 1749 320

BARBADOS 214 116 115 358 357 102 0 5 70 158 254. 1773

BELIZE 2171 1189 1847 1716 1742 758 2528 2133 1913 _ e".6 gaff k

DOMINICA 358 179 97 17G I SO 1155 715 153 Mr mms disaw or NM

GRENADA I I la 7 4 12 4 2 9 91 1M5 466 n l tus d of T O l *GUYANA 353 534 557 895 857 1770 CGuporshoa The d orwnufim

_ use _4 __ _d did he boudrn bmJAMKAICA 1413 1131 1089 953 9_ o 4 on o nuda nrot ,p on N

* -- -- parf af Thu WorlSW a-id IONTSERRAT 490 329 26B1 51 kftnmulFh h nv wn

ST. iiTrs 517 355 294 of any Mrnha or any

ST. LUCIA 230 5 sWc .M t er ot

ST. VINCENT 177 80°r~~~~~~~~~~~~~~~~~~~~~

IBRD 10611R3

THE CARIBBEAN AREAOrgonization of Eastern Caribbean States Members (OECS)

AN II(iUA Caribbeon Development Bank Members

-.-- International Boundaries

100 50 0 100 200 300 400

MILES

* UMAYA(IUANA t. 100 0 100 200 300 400 500 600

tz ,_CAICO}S It, KILOMETERS

20"-

HAITI, DOMINICAN VIrICIN ISAtw.)I REPUBLIC A.s.a NCIS UILLA

ST, MARTIN IlAIiRUIDIA

PUERTO RICO ST KIlTS ANTIGUAAND NI:VIS

MONTSE RRATGUADELOUPE

DOMINICA

MARTINIQUE

ST. LtiCIA

ST. VINCENT BARBADOS

ARUBACURAgAO GRENADA

BONAI RE

MARGARITA rOBAGO

rRINIoAD lop

!

t V E N E Z U E [ A(

GLUYANA

M B I A >

<B R A Z IL L-_f.

APRIL 1987