Do_nt of

The World Bank

FOR OFFICIAL USE ONLY

Report No. P-4342-ET

REPORT AND RECOMMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED CREDIT

IN AN AMOUNT EQUIVALENT TO SDR 39.6 MILLION

TO ETHIOPIA

FOR A

FORESTRY PROJECT

May 29, 1986

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 EQUIVALENT 1/

Currency Unit = Ethiopian Birr (Br)US $ 1.00 = Br 2.07Br 1.00 = US $ 0.48

FISCAL YEAR (FY)

Government: July 8 - July 7

WEIGHTS AND MEASURES

Metric System

1 meter (m) = 3.28 feet (ft)1 kilometer (km) = 0.62 mile (mi)1 kilogram (kg) = 2.20 pounds (lb)1 metric ton (m.ton) = 2,205 pounds (lb)

LIST OF ABBREVIATIONS AID ACRONYMS USED

CFD - Community Forestry and Soil Conservation Development Division

NRMD - Natural Resources Conservation and Development Department

PA - Peasant Association

PMU - Project Management Unit

MOA - Ministry of Agriculture

SFD - State Forests Conservation and Development Division

UDA - Urban Dwellers' Association

WCHE - Wood and Charcoal Production and Marketing Enterprise

1/ The currency equivalent between the US dollar and the Ethiopian birrhas been constant from 1973 to the date of this report.

FOR OFFICIAL USE ONLY

ETHIOPIA

FORESTRY PROJECT

CREDIT AND PROJECT SUMMARY

Borrower: Ethiopia

Amount: US$45.0 million equivalent

Terms: StandardC,

Project Description:

The project would increase the supplies of fuelwood andbuilding poles to Addis Ababa and Bahir Dar byestablishing plantations and upgrading existingplantations in nearby areas. Approaches used would bethrough direct Government control and management ofplantation operations and through mobilizing thecooperation of members of Peasant and Urban Dwellers'Associations in community tree pianting activities. Theproject would finance the establishment of 11,000 ha ofstate forest plantations and the upgrading of 13,000 ha ofexisting plantations occuring in large blocks. Communuityforestry activities would consist of: (i) state supervisedforestry activities for the establishment of 1,600 ha ofnew plantations and upgrading of 1,000 ha of existingplantations; (ii) self-help forestry activities for theestablishment of about 8,500 ha of new plantations andupgrading about 2,700 ha; (iii) planting trees aroundhomesteads and community buildings, amounting altogetherto about 250 ha.

The project would also support applied forestry researchaimed at improving forest plantation technology andin-service and post graduate training to update staffknowledge and provide the necessary graduate forestrystaff. A Project Management Unit would be established,which would be assisted by a Project CoordinatingCommittee. Monitoring and Evaluation would be supportedwithin the Ministry of Agriculture. Technical Assistancewould be financed in forest management and research,monitoring and evaluation and financial management. Theproject would finance civil works, vehicles, machinery,road construction, forest nurseries, office equipment, andincremental operating costs.

Th document has a rstried distribution and may be usd by recpients only in te perfonnanceof thei oici dueLs Its contents may not otherwis be discod without Wd Bonk auBxwthtbi

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The Project would encourage community participation inplantation protection and tree planting. Marketing andpricing arrangements would be changed so as to provideincentives that would encourage planting.

Benefits and Risks

The principal benefit would be increased fuelwoodproduction. The total incremental production would beabout 871,000 m3 annually at full development which wouldreduce the current deficit in the project area, and wouldhelp to provide soil and environmental protection tosustain agricultural production.

The main risks of the project are related to t:he abilityto introduce protection for the forest resourne, which hasbeen regarded as a free good for some years; _hepossibility that Associations prepared to cooperate incommunity forestry activities may not reach targetsexpected; and, the maintenance of effective incentiveprices and free marketing for a proportion of the fuelvoodproduced. To lessen these risks, the project wouldprovide for strengtnened forestry extension services tomotivate community participation in forestry services andprotection and to monitor prices and marketingcontinuously. The project would maintain a flexibleapproach permitting greater emphasis and support duringimplementation for those activities which prove mostsuccessful.

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Estimated CostsLocal Foreign Total

US$ Million

1. New Plantations 13.0 5.0 18.02.i Upgrading Plantations 10.0 3.7 13.73. Community Forestry 2.7 1.2 3.94. Research 1.8 0.1 1.95. Project Management 2.6 2.0 4.66. Technical Assistance 0.1 1.0 1.17. Training 0.4 0.8 1.28. Monitoring and Evaluation 0.5 0.3 0.8

Total Base Costs 31.1 14.1 45.2

Physical Contingencies 2.5 1.0 3.6Price Contingencies 10.7 2.7 13.3

Total Costs a/ 44.3 b/ 17.8 62.1

Financing Plan

IDA 27.2 17.8 45.0Government 17.1 - 17.1

Total 44.3 17.8 62.1

Estimated Disbursements

IDA Fiscal Year 87 88 89 90 91 92 93

Annual 3.0 7.8 9.8 9.8 7.8 4.6 2.2

Cumulative 3.0 10.8 20.6 30.4 38.2 42.8 45.0

Economic Rate of Return 16X

Staff Appraisal Report Report No. 6096-ET Dated May 29, 1986

Map IBRD No. 19596.

a/ Includes U.S.$445,000 financed under a PPFWI Includes taxes and duties of $7.0 million

INTERNATIONAL DEVELOPMENT ASSOCIATION

REPORT AND RECOMMENDATION OF THE PRESIDENTTO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO kIOPIA

FOR A FORESTRY PROJECT

1. I submit the following report and recommendation on a proposeddevelopment credit to Ethiopia for SDR 39.6 million (US$45.0 millionequivalent) on standard IDA terms to help finance a forestry project.

PART I - THE ECONOMY

2. The last economic report on Ethiopia (No. 4683a-ET) entitled'Ethiopia, Recent Economic Developments and Future Prospectst, Wscirculated to the Executive Directors on May 31, 1984. The report'sfindings, and the conclusions of an economic mission that visited Ethiopiain March and April 1985, are reflected in the following paragraphs.

Structural Characteristics

3. The boundaries of Ethiopia embrace a wide diversity of cultures,and have contained a long and vivid history. Centuries of tradition havebeen recently overtaken by fundamental social and political change.With a population of about 43 aillion in 1985, Ethiopia is the third mostpopulous country in Africa (after Nigeria and Egypt). It is also one ofthe poorest, and In terms of social indicators, one of the leastdeveloped. About 89 percent of the total population is rural. Thecountry's land area extends over 1.2 uiliion square kilometers and may bebroadly divided into two main geographical zones, namely: the highlandplateau of central Ethiopia, and the surrounding lowlands. Its capitalcity, Addis Ababa, located in the central highlands, has a populationestimated at around 1.5 million.

4. Agriculture accounts for about 50 percent of GDP, 90 percent ofexports, and 85 percent of total employment. Crops account for about 80percent of the gross value of production and livestock for most of therest. The main food crops are tef (a locally consumed cereal), maize,barley, sorghum, wheat, pulses, and oilseeds. Coffee, the principal exportcrop, generates over 60 percent of the country's export earnings. Otherexport crops include oilseeds, pulses, cotton, sugarcane, fruits andvegetables. The country's livestock herd is the largest in Africa; theexport of live animals has begun to increase in recent years. Ethiopia'sknown natural resources include gold, platinum, copper, soda ash, andpotash. Some petroleum exploration has taken place in the past, but nopetroleum reserves have yet been proven. None of these minerals has beenexploited on a large scale, and in most cases the potential for commercialexploitation remains to be established. There are prospects for theexploitation of geothermal energy. The country's main potential lies in

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agriculture, for which the natural conditions of several areas arefavorable. Nearly 95 percent of the land under cultivation is operated byindividual farmers who have user rights to landholdings averaging twohectares or less. Manufacturing industry, which accounts for about 10percent of GDP, is heavily dependent on agriculture; agro-based industryconstitutes around 70 percent of large- and medium-scale industry. Publicsector control and ownership covers almost all of large and medium-scalemanufacturing, all of banking and insurance, shipping, railway, airways,utilities, and a large proportion of construction. Handicrafts and smallindustry are operated by private owners. Domestic trade, especially retailtrade, and road transport are still largely in private hands.

5. GNP per capita is estimated at around US$110 (1984) and anestimated 60 percent of the population lives below the absolute povertylevel. Health serv±ces are limited and require major improvements tocombat high rates of morbidity, and infant and maternal mortality, worsenedby the drought. Life expectancy is still only about 46 years. Housing andsanitation facilities, especially in the towns, are poor and need urgentattention. Despite Ethiopia's rich endowment of fertile land andsubstantial agricultural potential, its wide variation in topography andextremely rugged terrain have been serious obstacles to internaltransportation, and economic development in general. Nearly three-quartersof Ethiopia's farms are more than half-a-day's walk from all-weather roads.

The Drought

6. The drought and famine in 1984/85 caused human suffering on anunprecedented scale. The number of people needing assistance soared tonearly 8 million. In response to the Government's appeals for assistanceand its efforts in dealing with the crisis, UN agencies, bilateral donors,multilateral agencies and non-government organizations have provided arecord US$470 million in relief assistance, compared with the past (para.8). The Government's hopes for some respite from the drought situationwere raised by improved rainfall in recent months albeit with less-than-normal intensity. It is too early to say whether the increased interest ofdonors in Ethiopia due to the drought disaster, will be successful ingenerating significantly increased concessionary aid for long termdevelopment. The drought relief effort, as well as the Government'sprograms to rehabilitate drought-prone areas and to resettle droughtvictims in the western provinces, have severely strained the Governmentadministration, and temporarily directed manpower and financial resourcesaway trom other development activities. In any event, the resettlementprogram, which the Government is currently consolidating, needs to beevaluated in terms of its potential benefits and costs before new proposalsare formulated.

Recent Macroeconomic Developments

7. Since the 1974 revolution, Ethiopia has made considerable socialprogress, as reflected by significant increases in literacy and schoolenrollment and a modest rise in life expectancy. The literacy rate rosefrom 7 percent in 1973 to over 40 percent in 1981 and the primary schoolenrollment rate increased from 19 percent to 47 percent over the sameperiod. These achievements have not, however, been accompanied bycommensurate economic growth. During the decade ending 1983/84, GDP grewat an average annual rate of only 2.5 percent in real terms.

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8. The economy witnessed a set-back during the three years from1980/81 to 1982/83, with GDP growth declining to an average rate of around3.1 percent per annum, compared with the highs of around 5.5 percent peryear during 1978/79 and 1979/80. This adverse trend became more pronouncedduring the past two years owing to the recent drought. GDP declined by 2.4percent in 1983/84 and by 6.8 percent in 1984/85. The principal causes forthe set-back in economic growth in recent years were droughts andinappropriate policies (para. 14) which affected agriculture, and capacityconstraints (notably in industry), owing to low rates of investment in thepast. The ratio of total investment to GDP has remained for many years ataround 11 percent, due largely to constraints on domestic as well asexternal resources. Domestic savings have averaged around 3.4 percent ofGDP during the four years ending 1983/84, partly reflecting the basicconsumer needs of a low income country and the high expenditure on defenseand security. Domestic savings turned negative in 1984/85 with totalconsumption exceeding output. Apart from the recent increase in emergencyaid arising from the drought disaster, official development assistanceaveraged only around US$9 per capita per year as compared to over US$20 percapita for developing countries in Africa.

9. The external current account deficit has continued to widen; itreached US$416 million, equivalent to 8.6 percent of GDP in 1983/84. Thesituation further deteriorated in 1984/85 with depressed exports andincreased imports; the current account deficit reached the equivalent ofabout 13 percent of GDP - the highest in the past decade. Meanwhile, netexternal reserves turned negative during 1984/85, owing to heavy drawdownsbut ended with a positive balance in June 1985. The external debt serviceratio increased significantly to about 22 percent.

10. Notwithstanding these recent adverse trends, the Government'sfiscal and monetary management has been generally prudent. The countryhas a relatively competent public service and in general, its ministries,departments and most public enterprises are reasonably well managed. Theoverall budget deficits remained below 5 percent of GDP for the period1978/79 to 1981/82 and modest current account surpluses were achieved inthese years. But since then the fiscal deficit has followed an unevenpath. During 1982/83, the overall budget deficit rose to a levelequivalent to about 13 percent of GDP, principally due to a near doublingof capital expenditure and an increase in current expenditure, reflectingin large part a government decision to settle arrears due to parastatals inone year. The overall deficit was brought back to a level equivalent to6.2 percent of GDP in 1983/84. Despite heavy drought related expendituresin 1984/85, the Government controlled the fiscal deficit to the equivalentof about 7.7 percent of GDP, imposing cutbacks on current expenditure andspecial drought levies.

11. The inflation rate (as measured by the Addis Ababa retail priceindex) had dropped from an average of 13 percent during 1978/79 and 1979/80to about 5 percent during the five year period ending 1983/84. But during1984/85 it rose to an annualized rate of about 16 percent, largelyreflecting food price increases, following food shortages, which becamemore pronounced since July 1984, owing to the drought.

4

12. Despite the growing internal and external distortions notedabove, there has been little or no change in Ethiopia's economic policyframework. Official pronouncements have stressed from time to time theimportance of revitalizing agriculture through increased investment,guaranteed producer prices and diffusion of improved technology to farmers;the need to restore confidence amongst entrepreneurs engaged in small scaleindustry; and the need to attract foreign investment and technology todevelop the country's resources. Other noteworthy steps include a JointVenture Code introduced in January 1983 to promote joint ventures betweenforeign investors (public or private) and Ethiopian public enterprises, andthe formulation of proposals to simplify and rationalize the system ofdirect and indirect taxes and to make the tax system more income-elastic.But actual progress in these directions has been very slow.

13. There are a number of issues which require urgent attention. Itis yet unclear whether the projected levels of investment can be financed,given the low domestic savings rate, the claims of the drought and otherpriorities for recurrent expenditure, and the limited inflow of officialdevelopment assistance (para. 8). While overall budgetary deficits reflectprudent financial management from an economic growth perspective, they alsoIndicate the need to strengthen efforts in attracting wore externalconcessionary assistance for investment. Likewise, with the value ofmerchandise imports running at double the value of merchandise exports, amajor expansion in exports and/or import substitution, and restraints onimports are called for, in order to reach a more sustainable externalcurrent account deficit. Higher coffee prices in the short term andprojected lower oil prices in the medium term have no doubt, improved theprospects in this regard. But, Ethiopia's real effective exchange rate hasappreciated by over 40 percent against the trade weighted basket ofcurrencies during the five years ending January 1986. The overvaluedexchange rate and the lack of an effective package of export incentiveshave tended to reduce margins for producers of export commodities in localcurrency and have inhibited the growth of exports.

14. As regards sectoral issues, several other factors apart from thedrought appear to have impeded agricultural growth. Some Initiatives havebeen made towards improving the Government's agricultural and marketingpolicies, and a serious dialogue with the Bank is in process. Otherconstraints include the low use of Improved seeds and fertilizer,inadequate agricultural extension and research, and restrictions oninter-regional grain movement by private operators. The precise role ofthe private sector is yet unclear - the business climate does not appear tobe conducive to savings and investment, particularly in industry. Althoughthere has been a remarkable Improvement in literacy and general education,all sectors are affected by the shortage of mnagerial, technical andprofessional staff, indicating the need for stepping up higher education.

Medium-Term Prospects

15. The Ethiopian economy remains hampered by its weak infrastructure(notably roads), low productivity In agriculture, heavy dependence on oneexport commodity (coffee) subject to international export quotas, a smallindustrial base, and shortages of skilled manpower. Apart from this set ofunfavorable initial conditions, the availability of domestic resources for

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investment is constrained by the Government's outlays on internal security,while import capacity is constrained by stagnating exports and by lowlevels of external resource transfers. The drought has no doubt, caused amajor setback, to the economy.

16. Ethiopia's rapid population growth also poses severe problems forthe future. Population growth, currently estimated at around 2.9 percentper annum, implies a doubling of Ethiopia's population in 26 years or less,and threatens to absorb most of the gains in economic growth and socialwelfare foreseeable in the next decade. The demand for food, energy andsocial services would increase dramatically and will lead to adverseconsequences in the ecological balance. The net impact could bestagnation or possibly a decline in the living standards of the Ethiopianpeople. Unless steps are taken to reduce fertility through an expansion offamily planning servicen, there could be little significant Improvement inper capita income nor of living standards. Ethiopia needs a multisectoralpopulation policy - which Implies an expansion and strengthening of basicmaternal and child health services into which family planning must beintegrated.

17. There are three areas of policy reform which warrant immediateattention. They are the improvement of agricultural pricing and marketingpolicies, an adjustment of the exchange rate to reduce external imbalance,and financing the fiscal deficit through non-inflationary sources as far aspossible. Ethiopia needs to orient economic policy towards expanding thedirectly productive sectors, particularly agriculture and industry, and toincrease economic efficiency in the use of resources. The incentivestructure in the agricultural sector needs to be improved in order to stepup agricultural growth, and the business climate for private small-scaleenterprises, particularly in industry, should be made more favorable forincreased investment, output and exports. In general, the authorities haveto make greater and more flexible use of macro-level policy instruments(e.g. exchange rate and price policies) and less use of direct,adm4nistrative controls. The attainment of higher growth rates would alsodepend on raising the operational efficiency of public enterprises and onalleviating skilled manpower shortages through better incentives andgreater emphasis on higher and technical education. There is also a needto develop a more realistic macroeconomic framework for the Government'sforthcoming three year plan (beginning mid 1986) within the framework ofthe Ten Year Perspective Plan and to present a well balanced portfolio ofviable projects. The financing of Increased public investment would callfor greater efforts in domestic as well as external resource mobilization.Despite several constraints and limited room for maneuverability on thepart of Ethiopia's economic policy-makers, conditions exist for a GDPgrowth rate of about 3 percent per annum over the medium-term, provided theGovernment makes a concerted effort to increase savings and investment andto pursue policies which foster accelerated growth.

PART II - BANK GROUP OPERATIONS IN ETHIOPIA

18. Bank Group lending to Ethiopia since 1950 has totalled aboutUS$850 million (less cancellations) as of March 31, 1986, consisting of 36IDA credits totalling about US$743 million, 12 Bank loans totalling aboutUS$109 million, and five IFC commitments totalling US$15.7 million. Much

of the lending (US$228 million) was committed between fiscal years 1974 and1978. Subsequently, the compensation issue led to a two-year interruptionin new lending. Since FY1973, lending has been on IDA terms only. IBRD'sshare of total public debt outstanding and disbursed as of December 31,1984,is estimated at about 3 percent, and IDA's at 27 percent. Theirshares of total debt service in FY1985 are estimated at about 9 percent and6 percent, respectively. Bank lending focussed on the construction oftrunk roads, power and telecommunications facilities until the late 1960s,when Bank lending gradually shifted to agriculture and education. Since1973, twelve credits totalling US$238 million have supported agricultureand some attracted co-financing or other complementary assistance. Credit1088-ET of February 2, 1981, together with co-financing from Sweden and theInternational Fund for Agricultural Development, assisted the agriculturalminimum package program, a major part of the G-vernment's efforts to assistpeasant agriculture. Credits approved during 1984 and early 1985 supportedcoffee processing and marketing, telecommunications, education,agricultural research, technical assistance, and a short term program fordrought recovery. A Credit for a Port Engineering and Construction Projectwas approved in April and one for an Energy Project in May of 1986. ALivestock Development Project should be ready for consideration in the nearfuture.

19. Project implementation in Ethiopia, although subject to somedifficulties, is generally quite satisfactory. Ethiopia's overall recordcompares favorably with other countries in the Eastern Africa Region. Inrecent years, security problems have affected three IDA-financedagricultural projects, but two of them eventually made satisfactoryprogress. Some projects, especially in agriculture, suffered frommanagement problems. But projects in the highways, education, andtelecommunications sectors continue to have strong management. Financialproblems, rising labor costs and occasional shortages of constructionmaterials have also detracted from efficient project implementation onoccasion. Efforts to recover from the drought, and the resettlementprogram, have recen-ly placed a particularly heavy burden on theadministration. However, the Government and the project management unitshave generally been successful in resolving these problems. Ethiopia'sdisbursement performance on projects assisted by the Bank Group has alsobeen reasonably satisfactory. The ratio of disbursements to undisbursedfunds in Ethiopia for 1985 was 22 percent, about equal to the Bank-wideaverage and above the average for the Eastern Africa Region.

Assistance Strategy

20. We propose to continue assisting the Government in devising andimplementing policies and programs to (i) improve the policy framework forincreased production and exports through economic and sector studies,advice on agricultural pricing and marketing policies and assistance inimplementing the Government's Drought Action Plan; (ii) improve the policyframework and institutional structure for domestic and external resourcemobilization and allocation through advice on tax reforms, as well asbetter planning and monitoring of foreign aid; (iii) improve the policyframework and institutional structure for public and private sectorefficiency, through advice on price policy reforms, and a clearer role forthe existing private sector; and, (iv) accelerate human resource

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development skilled manpower development. In our economic work, we intendto focus on resource mobilization issues, public investment reviews, exportincentive issue9, and human resource development. We have been carryingout studies of the agricultural sector, including a joint study with theGovernment on farmers' incentives and marketing efficiency, and alsostudies of the industry, education, and population, health and nutritionsectors. In our lending work, we plan to continue emphasizing theproductive sectors and essential infrastructure to help address thecountry's capacity constraints and deteriorating terms of trade. A peasantagricultural development project is being considered to help increase theproductivity and incomes of small farmers. A livestock project soon willbe submitted for your consideration. We are making concerted efforts toarrange co-financing for proposed projects. Informal discussions areunderway but no decision has been taken concerning a possible donorconference on 'Fthiopia, either a UNDP Round Table or a resumption of theConsultativc: Group.

III. FORESTRY SUB-SECTOR

The Setting

21. The recent drought in Ethiopia demonstrated the fragile nature ofthe country's ecology. Heavily forested at th.e beginning of this century,the Ethiopian landscape today is largely wasteland and open savannah withonly about three million hectares of dense forest remaining in thesouthwest. In the past 80 years, some 50 million ha of forests have beenlost in the process of clearing agricultural land and cutting wood fordomestic fuel. The impact on the ecology has been devastating; soilerosion has increased and soil fertility declined. Recent estimatesindicate that erosion on about half the country's land area is causingannual losses of some 2,000 tons of soil per square kilometer. Due to thesevere shortage and high cost of fuelwood, animal dung and crop residueswhich should be returned to the land as fertilizers are being dried andburned as household fuels, thus causing a decline in agriculturalproduction. The Government recognizes the urgency of reversing the presentdeterioration of forests and is taking steps to encourage replanting, butwith population growing at an annual rate of three percent, the outlook isnot promising. Development plans for the next decade call for the doublingof present forested areas, with the planting of three million hectares.However, given the institutional capacity of the Government, an achievabletarget would be less than half that amount. The project to be financed bythe proposed credit has been designed to address the critical needs, notsimply of technical assistance, but of institutional development, trainingand actual tree planting, so as to lay the foundation for more rapidimplementation of a long-term afforestation program.

22. Forestry plantations, mainly of Eucalyptus, are estimated tototal about 250,000 ha, of which about 20,000 ha are located near AddisAbaba and 60,000 ha in the vicinity of other towns. Originally establishedand managed by the private sector, plantation management passed to the

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rural and urban associations in 1975. Because of poor management,production has gradually declined to less than half of the potential.

23. An estimated 80,000 people currently remove wood illegally fromthe plantations for sale in Addis Ababa. Although a proportion are livingwithin the plantation areas, the majority travel each day from Addis Ababato collect wood. According to the Government, the income realized from thesale of wood for most of these people is additional to other income and isnot the basis of subsistence or the only source of support. Approaches forcurtailing this activity are addressed in the proposed project with a viewto providing alternative employment, yet not reducing the supply offuelwood.

24. kccording to Government estimates, which are based on tradedproducts, forectry provides about 2 percent to GDP. However, the inclusionof the value of fuelwood at current market prices p3aces its truecontribution at about 7 percent. About 24 million r&3 of wood are producedannually, of which some 10 percent is used for industrial and buildingpurposes and the remaInder for fuelwood and charcoal for domestic use.About 35,000 people are directly employed in the forestry sector.

25. Over 93 percent of Ethiopia's present energy supply is frombiomass, two-thirds of which is in the form of crop residues and dung, theother third from fuelwood and charcoal. Almost all of the biomass energysupply is for household cooking and heating. Annual demand for wood fuelis estimated et 42 million m3 or about twice the present annualproduction. Prices of wood frels have risen dramatically in the pastdecade, and are now probably the highest in Africa. Scavenging forfuelvood in agricultural zones, consequent deforestation and soil erosion,and the use of dung and crop residues as fuel threatens sustainableagriculture in many areas.

Institutional Setting

26. For administrative purposes, Ethiopia is divided into 15 regions,102 districts and 581 sub-districts. But, for agricultural developmentpurposes, the Ministry of Agriculture (MOA) in 1984, divided the countryinto eight agro-ecological zones. The zonal administration, headed by aGeneral Manager, is responsible for implementing approved work programs,and contains representatives of the main departments in the ministry.Central MQA staff are responsible for budget provisions, guidelines,approval of work plans, and monitoring and evaluation as their principalfunctions. Within MOA, the Natural Resources Conservation and DevelopmentDepartment (NHMD) is responsible for forestry and soil conservation. NWKDconsists of five sections, three semi-autonomous agencies and a number ofservice units. Professional foresters (degree or equivalent) numbered 120in 1984. About 400 technical staff (diploma or equivalent), 850lower-level technicians and clerks and 4,000 permanent field workerscomprise the remainder of NRMD staff. A total of 47 are receiving trainingto BSc level and above at institutions abroad. Compared to needs, graduateforesters, research workers and forestry teachers are in short supply.

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27. Under NRMD, the State Forest Conservation and DevelopmentDivision (SFD) is responsible for demarcating, conserving and managingdesignated state forests. Most of the reforestation projects and forestdevelopment programs are implemented through SFD. Operations have beenconstrained by lack of funds, transport and trained staff. Frequentchanges in leadership have affected planning and policy decision making.Nevertheless, some reforestation activities have been undertaken indrought-prone catchment areas and plantation establishment has beensuccessfully initiated for some urban centers. In order to einable SFD tomanage an expanded forestry program, its management and planning functlonswill need to be strengthened and its authority over plantations and forestareas increased.

28. Also under NRMD, the Community Forests and Soil ConservationDevelopment Division (CFD) is responsible for mobilizlng support for ruralforestry conservation and development by providing iuformatioL through themedia, technical advice and training and by establishing demonstrationnurseries. The aim is to assist community groups in establishing andmanaging plantations so as to meet local demands for fuelvood. CFD thoughunderstaffed, needs to be more fully integrated into the new zonaladministrative structure. Successful operation will depend on theavailability of adequate staff, equipment and transportation andconsiderable strengthening of monitoring and evaluation.

29. The Silvicultural Research Center undertakes research on nurserytechniques, silviculture of indigenous trees, species trials at higheraltitudes, natural regeneration of forests, agroforestry etc., with the aimof providing technical and scientific information for use by the forestryservices. The Center also conducts research on seed production and storageand supplies seeds for reforestation programs.

30. The Forestry Training Institute is situated at Wondo Genet and isthe only specialized forestry training institution in Ethiopia. TheInstitute offers a two year diploma course, and has a yearly output ofabout 70 students which satisfies the country's need for Forest Rangers.There is no degree level training in forestry in Ethiopia.

31. Other NRHD operations include the Land Use Planning andRegulatory Division, the Wood Utilization Research Center and the WildlifeConservation Organization. The semi-autonomous agencies are the NationalGum production and Marketing Enterprise, the Sawmills and JoineriesEnterprise and the Wood and Charcoal Production and Marketing Enterprise(WCME). The latter enterprise is the only institution legally permitted toprocure fuelwood from plantations and market it in Addis Ababa through anetwork of depots.

Institutional Relationships

32. At the grassroots level, the main institutions dealing withforestry management are the Peasant Associations (PAs), the Urban Dwellers'Associations (UDAs) and SFD. With the land reform decree of 1975, allrural land became the property of the Ethiopian people. Farmers were

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organized into PAs, each with 200-400 farming families having usufructrights for up to 10 ha per farm family. With respect to forestry, the mainPA responsibilities are to: (i) administer and conserve soil, water andforests; (ii) exclude forests from land distribution; and (iii) follow theland use directives of the Government. UDAs were established under theProclamation for the Public Ownership of Urban Lands (1976), with dutiesand responsibilities corresponding to those of PAs.

33. The proclamation by which PAs and UDAs were established did notgive the necessary authority to SFD to enable efficient centralizedconservation practices and forest management to be introduced. AGovernment order, instructing SFD to La&e over all forest areas larger than80 ha was not recognized by regional, district, and sub-districtadministrations or by PAs, as it was noc issued as a legal regulation.With responsibilities somewhat obscure, LAs and UDAs assumed control offorest and plantation areas, but since PAs and UDAs were neithertechnically competent nor conscientious enough to manage the resources, theforests became a free good to be used by the general population.

34. This situation was addressed by the Forestry Decree (ProclamationNo. 192) of 1980, under which NRMD is responsible for ensuring properprotection, development and rational utilization and management of forestand wildlife resources of the country. Each PA and UDA is required todevelop and conserve its own forests and to plant trees within its localityin areas designated bv SFD as forest reserve. Each PA and UDA is alsorequired to implement directives concerning conservation, protection,development and utilization of forests. However, since SFD can only takecontrol of forest land by declaring it to be forest reserve, effectivecontrol remains with PAs and UDAs and destruction of the forest andplantation reserves has continued. Forest protection and involvement ofthe local population in this process is of extreme importance. The projectwill finance a number of pilot efforts to generate such support.

Government Policy for Forestry Development

35. The main forestry policy documents are the Decree of 1980, andthe Ten-Year Perspective Plan. The major policy objectives are:

(i) rational use and management of natural resources; and

(ii) mobilization and coordination of the efforts of the population inthe development, protection and management of the country'sforests and wildlife resources.

The forestry section of the Plan aims at the establishment of a plantationarea of 2.9 million ha, demarcation of 39,000 sq. kms of forest, andinventory surveys on 475,000 ha. Investments in forestry and naturalresources (about US$690 million) over the Plan period, would representabout 52 of total investment outlays. In addition, about US$3.4 millionwould be allocated for recurrent costs. These targets are unrealisticallyhigh. They would require an annual planting program of 290,000 ha, whereasthe total achieved in 1984 with bilateral aid support was 18,000 ha by SFD

- 11 -

and the equivalent of 28,000 ha through community forestry methods.However, the Plan targets are used as guidelines and the NRMD annualtargets are set to conform with the capacities of the forestry agencies.

36. A strategy for forestry development was outlined in the EnergyAssessment Reportl/. The main features are the establishment of fuelvoodplantations near urban centers, and the improvement of agroforestrypractices on a massive scale in the rural areas. A potentially achievabletarget by 1992 was considered to be 195,000 ha. This would require anannual plantation program 60 percent greater than that achieved in 1984.The present project, while providing only about 11 percent of the targetedtotal area of new plantations does respond to the recommended strategy.The magnitude of the problem is enormous and the Government recognizes theneed to revise the forestry development plans in accordance with achievabletargets. Rapid responses to forestry problems are impossible; therefore,it is essential to begin tree planting as soon as possible.

Forestry Development Projects

37. External assistance for forestry has mainly been directed towardprotective reforestation, research, training and technical assistance, withsome larger scale afforestation projects supported by the AfricanDevelopment Bank and bilateral donors. Experience has shown that with sometechnical assistance, SFD staff can successfully manage the plantationprograms. As part of these programs, forest villages have been establishedand plantation protection has been organized and forest guards employed.Similar arrangements have been incorporated in the design of the proposedproject. To date, no damage to these new plantations has been reportedeither from illegal cutting or as a result of grazing by livestock.

38. The externally assisted forestry projects financed by Germany,Sweden and UNDP/FAO have been directed mainly towards protectivereforestation, research, training and technical assistance. The World FoodPrograms support protective forestry in about 19 selected catcbments andthe soil and water conservation programs of the Ministry of Agriculture;the major thrust of these projects is towards agricultural rather thanforestry production. Larger scale afforestation projects are receivingsupport from the African Development Bank (ADB), and the Finnish, Norwegianand Netherlands Governments in conjunction with the United Nations SahelianOffice. Sweden also provides assistance to the Forestry Training Instituteand is in the process of setting-up a National Center for CommunityForestry to provide training to a wide range of forestry staff, extensionagents and peasant farmers.

39. Government-sponsored schemes to reforest exploited, high altitudeforests have been started in recent years. PAs have also been encouragedto enter into replanting activities and have planted about 22,000,000seedlings each year since 1980 (equivAlent to 13,750 ha) in blocks, rowsand around homesteads. In addition, 50,000 people have been trained incommunity forestry techniques and 680 nurseries constructed in PAs.Unfortunately, no monitoring of these efforts was undertaken and noplantaticn records were kept, therefore the success of the planting efforts

1/ 'Ethiopia: Issues and Options in the Energy Sector." Report of theJoint UNDP/World Bank Energy Sector Assessment Program, June, 1984.(Report No. 4741-ET).

- 12 -

cannot be estimated. It is known however, that the seedlings provided werenot always of species adapted to the planting sites and seed shortagesprevented the production of specific seedlings (eg. fruit trees) requestedby farmers. The programs paid limited attention to agro-forestry, the useof multipurpose trees and the development of effective forestry extensionservices.

IDA Assistance to the Agricultural Sector

40. The Association has considerable experience in lending foragricultural development in Ethiopia. Two Minimum Package Projects(Cr.416-ET and Cr.1088-ET) focused on agricultural production in thehighlands. Coffee Projects (Cr.290-ET and Cr. 1429-ET) supportedprocessing, cultural practices and disease control, and the AgriculturalMarketing Corporation's storage and marketing activities were strengthenedunder Credit 789-ET. Other projects were for Drought Rehabilitation andLand Settlement (Cr.485-ET), Irrigation (Cr.707-ET), Agricultural Research(Cr.1521-ET) and Drought Recovery (Cr.1576-ET). An IFAD project isstrengthening the operational capacity of the Agricultural and IndustrialBank and channelling funds for on-farm development through cooperatives.

41. Implementation of agricultural projects compares favorably withsimilar projects elsewhere in Eastern Africa. Some projects were adverselyaffected by the security situation. The severe strain imposed on thegovernment administration by the drought relief effort, however, hascreated some difficulties due to the diversion of some management focus andmanpower away from project Implementation tasks. In particular, the burdenplaced on the Ministry of Agriculture due to its management focus andmnpower away from project implementation tasks. In particular, the burdenplaced on the Ministry of Agriculture due to its reorganization, thedrought situation, and resettlement, has tended to weaken its capacity toimplement production strategies as effectively as it otherwise could do.In recent years, the agricultural lending program has been adverselyaffected by differences between Government and the Association onagricultural policy issues. Goverment policies have constrainedagricultural growth by placing restrictions on marketing and producerprices, and mitigating against adoption of farm technologies (mainlyfertilizers and improved seeds) because of lack of incentives. TheAssociation has been pressing for marketing and pricing improvements,secure land tenure and increased efficiency with respect to agriculturalsupport services so as to provide incentives which are essential to achieveincreased agricultural production. The dialogue on these issues has beenconstructive.

PART IV - THE PROJECT

42. The proposed project was prepared by the Government of Ethiopiawith the assistance of the FAO/IBRD Cooperative Program. It was appraisedin November 1985, and negotiations were held in Washington from April15-25, 1986. The Ethiopian delegation was headed by Mr. Bekele Tamirat,Vice Minister of Finance. The staff appraisal report entitled "Ethiopia -

Forestry Project," dated May 29, 1986, (No. 6096-ET) is being distributedseparately.

- 13 -

Prolect Oblectives

43. The principal objectives of the project are to increase suppliesof fuelvood and building poles to the urban markets, and to reverse theprocess of forest and plantation degradation near Addis Ababa and BahirDar.

44. The following activities are designed to achieve theseobjectives:

(i) Establishing new state forestry plantations and upgradingexisting ones;

(ii) Increasing community forestry planting using innovativedevelopment models;

(iii) Expanding forestry research;

(iv) Providing technical assistance;

(v) Introducing monitoring and evaluation; and

(vi) Providing institutional support for project implementation.

Rationale for Support from IDA

45. This project would Involve significant policy initiatives incommunity forestry and in fuelwood marketing and pricing, which are theresult of the development dialogue underway between IDA and theGovernmernt. The desirability of the policy reforms incorporated in theproposed project became evident from the analysis contained in theBankIUNDP Energy Assessment Report. Consistent with the Bank's assistancestrategy for Ethiopia (para. 22), the proposed project would involve apolicy shift in favor of freer marketing and prices that include anincentive which will encourage tree planting; provide an indirectcontribution to agricultural productivity by diminishing the use of naturalfertilizers for fuel and by reducing soil erosion; and, help to increaseEthiopia's resistance to drought by gradually restoring its ecologicalbalance. IDA has had wide experience in the establishment of community andstate-run forestry plantations which should enable it to contribute usefulexpertise to other donors supporting the Government's comprehensiveafforestation program.

Project Area

46. Project activities would be concentrated in the priority areasaround the cities of Addis Ababa and Bahir Dar. The total population ofthe project area is almost 3.0 million, of which 1.6 million live in thetwo cities. The area of existing plantations of eucalyptus to be upgradedunder the project are located mainly to the east, west and north of AddisAbaba. The plantations have deteriorated over the past ten years, mostlyas a result of excessive and uncontrolled cutting. The area for new

- 14 -

plantations to the north-east of Addis Ababa consists of a series of hillsand ridges which presently are used for grazing. The new plantation siteto the west of Bahir Dar is a plateau already designated as forest land.Precise Information on the sites will be available following the completionof aerial and soclo-economic surveys. IDA has approved a projectpreparation facility (PPF) advance which would finance these surveys.The surveys would be completed and results analyzed and submitted to IDAfor revi.w before June 30, 1987. This would be well in advance of thefirst planting program in March 1988. Sufficient data is available topermit project activities to begin Immediately in parts of the projectarea. A relocation plan would be submitted to IDA by December 31, 1987, toensure that families affected by plantation activities would be residing inthe vicinity of the plantations and experiencing similar If not enhancedeconomic opportunities and llving standards. This would site villages onthe potentially more productive areas within the vicinity of the forestplantations. In establishing these villages, the Government wlll followprocedures similar to those already employed for the implementation of theon-going Addls Ababa Fuelwood Plantation project financed by the AfricanDevelopment Fund.

Project Description

47. State Forestry Plantation Program. As part of the Government'sprogram for expanding its state forests, the project would provide thesupport and infrastructure necessary to develop 11,000 ha of newplantations and rehabilitate 13,000 ha of existing plantations. As part ofthis process, the project includes provision for schools, clinics, watersupply and houses for about 4,200 families residing in the project area.

48. Community Forestry Program. The Government's new communityforestry program, designed to foster a participatory approach to forestrydevelopment, involves the active cooperation of about 190 Peasant and UrbanDwellers Associations. The two main elements of the program to besupported under the project are: (a) supervised forestry activities,including the establishment of about 1,600 ha of new plantations and therehabilitation of about 1,000 ha of existing plantations, on behalf oflocal groups; and (b) self-help forestry activities, in which individualcommunities themselves would establish about 8,500 ha of new plantationsand rehabilitate about 2,700 ha of existing plantations. Also,individuals would be encouraged to plant trees around their houses andcommunity buildings(250 ha).

49. Forestry Research. Research would be conducted on nurserytechniques, soils, fertilization, introduced species, plantation design andagro-forestry. This project-related research would be conducted in thefield in project nurseries and plantations. Some trials would be designedand executed in collaboration with internationally recognized foreigninstitutions.

50. Training. The p~roject would include overseas trainingfellowships for the graduate foresters needed under the project and wouldprovide vehicles, equipment and stipends for guest lecturers to supportspecialized in- country trtining courses and seminars.

- 15 -

51. Technical Assistance. Because of the shortage of forestrygraduates experienced in proJect-supported forestry activities, the projectwould require technical assistance, not only for the execution of the fieldplanting programs but also for financial management, monitoring andevaluation, and research. A senior forestry expert would be employed byDecember 31, 1986, under terms of reference and with qualifications andexperience acceptable to IDA.

Project Isplementation

52. To ensure smooth coordination among the agencies participatingin the project, a Project Coordinating Committee would be established underthe chairmanship of the Vice Minister for NRMD. A Project Management Unitwould be established within NRMD's State Forests Conservation andDevelopment Department (SFD) by October 1, 1986. It would be a conditionof effectiveness that a Project Manager had been appointed as head of theManagement Unit reporting directly to the Read of SFD. He would supervisedirectly the establishment of plantations and upgrading of existingplantations under the State Forestry Program. The new plantations at theproject sites would be managed separately by site managers. The upgradingprogram for large (more than 80 ha) blocks of plantations would be executedin cooperation with the PAs and UDAs Associations adjacent to theplantation areas. It is expected that many individuals now scavenging woodwould be employed under the project in plantation development activities.A phased development plan for upgrading existing plantations is beingprepared by SFD in collaboration with the Addis Ababa City Council and theEnergy Department of the Ministry of Mines and Energy. The CommunityForestry Program would be supervised directly by a Senior CommunityForester reporting to the Project Manager. Detailed planting programswould be worked out with each participating community and agreementsreached with the PMU on site locations, species to be planted andmanagement plans.

53. Annual work programs prepared by the Project Manager and theSenior Community Forester would be submitted to IDA for review andcomment. The first draft annual work program would be prepared andsubmitted by November 30, 1986, and thereafter, by February 15, each year.The final work programs would take into account comnents received from IDAand final programs would be submitted to IDA prior to implementation.

Monitoring and Evaluation

54. An internationally-recruited expert on monitoring and evaluationwould advise MOA's Monitoring and Evaluation Division on the procedures tobe followed and the variables ro be measured. Monitoring would becontinuous and would include measurer2nts of work progress (includingdetails of labor employed and actual areas planted), effects of the projecton the local populations, responses of target populations and fluctuationsin fuelwood prices. The Monitoring and Evaluation Division would furnishIDA with semi-annual progress reports In a form satisfactory to IDA. TheDivision would also be responsible for preparing the project completionreport six months after the completion date and would arrange a joint

- 16 -

government/IDA mid-term review of the project at the beginning of thefourth project year under terms-of-reference acceptable to IDA.

Cost Estimates and Financing

55. The total cost of the project, Including physical and pricecontingencies, taxes and duties Is estimated at US$62.1 million equivalent,of which the foreign exchange cost would be about US$17.8 millionequivalent (32Z of total project cost). Base costs are at December, 1985prices. Physical contingencies of about 10 percent have been provided forcivil works and of about five percent for other Items, except vehicles andequipment. Price contingencies, on the base cost plus physicalcontingencies have been provided for local costs on the basis of projectedannual increases of 9 percent for FY 87 and 88, and 10 percent annuallythereafter and for foreign costs at the following rates from FY1986 throughFY1991; 7 percent, 7.5 percent, 7.7 percent, 7.6 percent and 4.5 percent.Initial project costs for aerial surveys, photo-interpretation andcollection of essential socio-economic data are being financed under aProject Preparation Facility advance of US$323,000.

56. The proposed credit of US$45 million would finance the fullforeign exchange costs of the project and about US$27.2 million of localcosts, or about 82 percent of total costs net of taxes and duties. TheGovernment would provide about US$17.1 million equivalent, including taxesand duties. Farmers would provide an additional estimated US2.7 millionequivalent mainly as labor for self-help plantation activities.

Procurement and Disbursement

57. Vehicles, equipment, tools, nursery supplies, machinery andfertilizers to be financed by the proposed IDA Credit would be procuredunder international competitive bidding procedures following the annk Groupguidelines; eligible domestic bidders would be granted a margin ofpreference of 15 percent of the cif bid price of imported goods or actualcustoms and duties, whichever is lower. For coutracts valued at less thanUS$100,000, local competitive bidding procedures acceptable to IDA would befollowed. Small items of office equipment would be procured followinglimited international bidding. Prudent shopping, with a minimum of threeprice quotations could be followed for small, urgently needed, off theshelf items costing less than US$20,000 each, and for horses and mulesneeded for transport. It is expected that the aggregate amount of contractsprocured under this procedure would not exceed US$200,000. Due to thesmall scale and geographic disperssment of project construction activities,the civil works contracts would not be attractive to interaationalbidders. Therefore, the construction of buildings, houses, roads andcommunity facilities would be done either through local competitive biddingprocedures satisfactory to IDA or by force account. Consultancy serviceswould be retained in accordance with IDA guidelines on terms acc-ptable toIDA.

58. Disbursements *zader the Credit would be made against 100 percentof foreign expenditures for civil works and 75 percent of local

- 17 -

expenditures or 70 percent of local expenditures If done by force account;100 percent of foreign expenditures for vehicles, equipment, machinery andmaterials or 100 percent of the ex-factory price if manufactured locally,and 60 percent of local expenditures; 90 percent of local expenditures forpack animals; 100 percent of foreign expenditures for consultancy servicesand training; and, 70 percent of incremental operating costs up to anaggregate amount of SDR 7 million equlvalent and 50 percent thereafter.The proceeds of the Credit would be disbursed over a period of about sevenyears. Disbursement would be based on full documentation with theexception of incremental operating costs, local training course expenses,maintenance expenses, contracts for goods and services valued belowUS$20,000, labor for plantation establishment and construction carried outby force account for which statements of expenditure would be required.A schedule of disbursements which agrees with the profile of forestryprojects in East Africa appears in the Credit and Project Summary. Theclosing date for the proposed Credit would be June 30, 1993, six monthsafter project completion. For the purposes of the project, a SpecialAccount would be opened in the National Bank of Ethiopia, with an initialdeposit of US$1.5 million.

Accounts and Audit

59. The Project Management Unit would establish and maintain projectaccounts. These would be audited annually by the Ethiopian Audit ServicesCorporation, or other auditors acceptable to the Association. Auditedaccounts including audits of statements of expenditure and the SpecialAccount would be submitted to IDA within six months of the close of eachfinancial year.

Marketing, Pricing and Cost Recovery

60. Under the proposed project, the Government would introduce byJune 30, 1987, a revised system for both pricing and marketing of forestryproducts. The pricing system would be designed to increase the presentstumpage rate fixed by the Government to a level that would, at a minimum,cover producer costs for state-owned plantations and, in the case ofcommunity growers, include a margin sufficient to stimulate reinvestment inforest planting. At present, only public enterprises, essentially theGovernment marketing agency (WCME), are legally authorized to marketfuelwood. However, due to limited transport, financial and staff capacity,WCME currently handles only about 20 percent of the total quantity of woodmarketed in Addis Ababa. Under the revised system, the remaining 80percent of the supply which now reaches the market illegally, would befreely distributed and legally sold at either open market prices forcommunity-grown wood, or for wood produced by state-owned plantations, at aprice representing at least full cost recovery. The Government wouldsubmit a report to the Association annually on the marketing activities ofits marketing institutions, and would not increase the share of its publicsector marketing activities unless the Association is satisfied that theseinstitutions have a demonstrated capacity to do so. MOA's Monitoring andEvaluation Division will analyze annually the costs of production in theforestry sector and the Association will review this analysis together with

- 18 -

the adequacy of proposed producer Incentives in the course of agreeing withGovernment on the Annual Project Work Program.

Environmental Impact

61. The proposed project would be expected to have a significantbeneficial Impact on the environment within the project area. Forests andtree cover play a significant role in the ecology of Ethiopia and have beendepleated drastically since the beginning of the century as the demand forforest products has increased. The project would contribute to soilerosion control and, by providing alternative supplies of fuelwood, wouldreduce the demands on and the rate of degradation of the natural forestswhiclh are valuable gene pools and wildlife refuges.

Economic Justification

62. The principal benefit of the project would be incrementalproduction of fuelwood and poles estimated to amount to 871,000 cubicmeters in project year 12 and averaging 577.000 cubic meters insubsequent years. The Peasant Associations participating in the projectwould realize increased farm incomes from the sale of wood. Indirectbenefits would accrue as a result of increased rural employment, andimproved community facilities for families living in the project vicinity.In the long term, the environment in Ethiopia would benefit from a slowingof the deforestation process and agricultural production should benefit asdung and agricultural residues are not diverted from use as naturalfertilizers.

63. The estimated 16 percent economic rate of return includes allproject components, but excludes potential benefits which could result fromincreased agricultural production. This rate of return is relativelyInsensitive to changes in costs and benefits. Should benefits decrease by20 percent or costs increase by 20 percent, the rate of return would fallto 13.6 percent and 11.6 percent respectively.

Risks

64. Public interest in forests and fuelwood supplies is high, and theGovernment is dedicated to achieving its afforestation objectives.Overall, implementation risks are low. There are few technical risksassociated with the project as the forestry technology is available andsimple to apply. The project encourages community involvement in forestryactivities. Yet, there is some risk that the rate at which communitiescommence participation in project activities may be slower thananticipated. This risk has been addressed by provision for an activeforestry extension effort, retraining of forestry staff in comminityforestry activities and freer marketing of production at incentive prices.There Is also a risk that tne protection of state forest plantations wouldbe difficult to ensure given that prices of fuelvood are expected to riseand the fact that trees have been regarded as a free good for many years.The project would reduce this risk by providing forest guards whereessential, and by motivating community members to protect their forests andplantations.

- 19 -

PART V - RECOMMENDATION

65. I an satisfied that the proposed credit would comply with theArticles of Agreement of the Association and reco mmend that the ExecutiveDirectors approve the proposed credit.

A.W. ClausenPresident

May 29, 1986Washington, D.C.

-20- AunexI

awm 11. Page 1 of 6

UUIWI.IU*L 574.9 91.5 1. W i

mm c( m a) * .uu o l. we

-OM nin * mA mn..

(u.OUIM OI OIL QfUIVAIu) 6.0 2. O MOA 203 Na.!

PWAX M VTL _W lUpWIATI.NI,-1 (1uS) 22536.0 27.0a 4"MA6*goo0 PMHI.TIOU (B Or TOTAL) 0.4 0.7 4.0 3.1 22.0

NLATIUM PROJECTIONM9633ATION IN WUR US0 MUILL) 65.7hh*TZUS*31 16931*1An (NILL 1161.039U3AKM 3 1.9

n go. IN. 10.4 25.7 33.5 3.2 43.Jm 3Q. Mi. Ml. un 29.2 4*.9 67.1 112A 32

0-14 3s 43.9 44.7 450. 44.0 45.615 -443 33A 32. 0 51."GS AM AIM 2.5 I2A 2a. 2.9 2.7

NWUIA!IO cowril mu (3)TOTAL. 2.2 2.5 2.7 2.1 2.9OEM2 5.5 6.7 6.2 6.4 5.1

-1m Km3am (M T11) 43*7 43.2 40.5 47.2 47.0elm33*13 MU (M3 111003) 3.2 17.1 3.3 17.1 1.0- VIFOU mm 2.0 2.0 5.2 5.3J 2.2

£cmP0. AM 3) .. .. .. oSwn or0 1*13INNEu) .. .. 0 3.3 4.4

1o 01 FM 130. M CIu(169-71-100) I1.A 1o0a Va 8.3 2.

mm CAP=N 33371T WCaj.osuh(I W NQUINIM) 4.0 n.o na.0 0.7 UJ3Pon31s (M U M g7. 0A 62.0 60.0 51.9 55.4

69 1XC * 13 131.11 26.0 24.6 22A j - . 144J

cam (AM1 1-4) 311420 3*2 3.5 35.6 UAS 22.1 16.0

1.17 1131P. At KM (21*13) 423 41.1 4A 47A 32.0LW AW . 3*13A 35 CM ) 17.0 33.3 242a 3194 105.

*0330 20 3*33 3*35 (23)tU. .. .0 1 27.3 42.A

UM1 .. .. 5.9 19. 55.3- U mIA 33Mm1.~~~~OI 1-3ts~~~~~~~~~~~~~~~~~U 0. t.

&=01 20WUJI0CMK) O

SOAL .. 14a .. s 25.9133*3 .. 67.0 .- 45A4 57.7

L .. 5.0 " A 20.7

Pa. PM su 3 3 161730 6o96 5OA. 330A. 249Aop. a onL MlS0D 2360.0 2510.0 2 .1 12735 91.1UAW 250A 40"A MA 43.2 3611.5

OAL .. 0110.0 101301.0 23.5 421.

ADNXSUU3B PZROU 1AL M3 .. 10.0 .. .27.2

107*. . 4.5335*3 5.5 4.2 .. 33*1. .. * .. ..

134 3o0. or _/

33* 2.. .. .. .. .

2vIIUL .... *....

33*R.L.. .. .. *.9336014369 ..13 ..1 *- *.

.. .. . .- .

- 21 -T A IL IA3 Annex I

IOFIA - PCAL lto U ATPage 2 of 6tflhoflA mIrW aE OmUF (EwSSUD AVERAGES)

NMS (NMS REC:ENT SDA)Ji,uonk i~iLk LOW ICN ARCA Ng #wnE

maLb 197Lb- IrMACLb IOUT OF gLqm AflCA S. OF SAMARAalum mm(wur DUTo AuuM Er -LUr RATIOPRIHTi TOTAL 7.0 14.0 4E.0 37. 95.7

HALE 11.0 23.0 40.0 77.6 100.0FrLE 3.0 10.0 33.0 54.9 U3.2

SCONDART TOTAL 0.4 4.0 12.0 13.5 17.3HAL 1.0 4.0 16.0 17.9 25.0nma 0.1 2.0 o.0 9.1 14.3

VOCATIONAL (C 0F SW )SART) 20.3 4.5 44.0 13.2 5.9

FPUPILL-T&AUR RATIOPRIMARY 37.0 43.0 63.0 44.9 41.1SBCONDARY 13.0 23.0 ".0 27.1 25.5

PASSUNER CARS/TMOUSAMD rp 0.7 1.4 1. ff 3.0 . 20.0RAIto ICEI U /To S VW 4.3 5.5 4.4 55J. 107.ITV mCEIrALKSTNOU*AD POP .. 0.3 1.0 2.4 20.8

1 1PA VW CONWAL111T15) CIRCULATIONM TNOxSAJ POPIJLAIO . 1.9 1.0 1.0 5.0 13.4

CIA IANL ATIDEl/CATA .. .. .. 0.5 0.4

TonL Lma Fot (T5) 10064.0 12459.0 14914.0milL! tCPm) 35.7 35.2 32.9 34.2 36.2AGUCWLTU (CERGER) U.0 84.0 80.0 id 77.5 54.5OSTILT (PERCET) 5.0 4.0 7.0 9.7 15.3

PARTICIPATIOU RAT (PDA=ITTOTAL 44.7 43.1 24.5 39.3 34.83A 53.4 34.9 50.5 50.9 47.1

FUIALE 31.3 29.7 25.3 23.1 27.2

RCOZOC 0D RATo 1.0 1.1 13 1.3 1.3

- -PRC OP IVATE DUMRECEIVD 3!

310133 5S301 _OUID .. .- .....8115 201 OF 0 .. .. .. ..

LKS 2010 W _OLU .. .. .....UST 4OX OF mOs .. .. ...

-samAvou ra m mwoLVL CUS pn CAFIZA)

A .. .. 190.0 15.5 590.7AL .. .. 5.0 L *5.0 275.3

isSS m.m ow rLEVEL (gU PE CANTUA .. .. 77.0if 113.1 545.fLOAL .. .. 37.0 47.6 201.1

-D VW. 3OM A110LVn10135? ICWNK LEVRl. CZ)

U .. .. 60.0of 346AUSUAL .. .. .. [ 461.5

NOT AP1LZC1NOS ~~~~~~~N0

if Tb. grop averqa. fwr each ladleater awe pepalecl§B-volgbtod azlCUtbtC inam CvarM Steatuamong the ladicatet, dapemaf om avYalbSLUty of damtand la set aLfers.

1 USIA" tbwlea mated. -fDta for 196 r to a er S_b_a 1959 as 196; _'.s fOC batea1949 em 1971; _nS da for want at _teste" k 1961 _m 1963.

/c 1977; a L960; La 197; /f 1974; If Ads Abdo aly.

-. 1I5

- 22 - Annex I

Page 3 of 6

DOMITIONS OF SOCIAL INDICATORSNut Altough khe da ae drawn from nmmai gmeyJ the - audintatmm ndtab. it shoud ao he Dod that thes y atno e uuemauallycomptaral boom of the lack of standarda d&dona and cormp sd by dIllr cine im cmlleting th dat. The dt amr ohe. usul otdcibe aonm rm atude. indicae trends and taactenre mcrta uor dilMa bans. countri.The reeqnc roue drc (it the mm cOmtfl group of the sbect country and (2D a couny roup with somewhat hbr averg ime than the countrvIrop ofdie subect cotry gecept ror High IncomeOd Exponm goup whag Middle [am North Afhrri and Middlc Eis choe. becue of straersoo-cultural altiti. In the refence group da th averar are popuaa weaighti. antluec mat rfr eas idatr and shown onbl when niaont!othe coutries in tmrnip bu dat for that Widloatot Sies the overag ofrcoin amog thea Indimss dends on th avaiblhyIt ofdat and ms not niformcaution must be r medieing averages atone indiator toanote Thee avragear only ueul In sapafig the value fone idcator alta tm amomagthe country and I pu.

AREA (thousand sq.km.J Cud MrS atae (portheusaadi-Numberof live births in theyearTotal-Total surface area comprising land area nd inlnd watemrs per thousand of mid-yea population: 1960. 1970. and 1983 data.1960. 1970 and 19S3 data. Cue Deat RA (per rdeusdj-Number of deaths in the yrAgrfeubml-Estimate of agriutural a ued temporarily or per tbousnd of mid-year population: 1960. 1970. and 1983 data.permanendy for crops. pastures market and kthcken prdens or to em Repeddau re-Average nunber of daughtes a womanlie falow. 1960. 1970 and 1982 data will bear in hr normal reproductive period if sbe experiences

presnt age-speak fertility rates: usually five-year averages endingGNP PER CAPfTA (USS)-GNP per capita estimates at current in 1960. 1970. aDd 1983.market prices caulated by same conversion method as World tPfaum-Aeeprrs Anal ftheuadsj-Annual num-Bask Alirs 119S1-83 basis) 1983 data. berofaccptorsofbirth-controldevicesunderauspicesonational

ENERGY CONSUMPTION PER CAPITA-Annual apparent fmay pani progrua.consumption of commercial primary energy (coal and lignite. any pers ere f sdried 'remx -The percen-petroleum, natural ps and hvdro- nuclear and gothermal lec- tae of married women of child-bearing age who are practicing ortricity) in kilopamts of oil cquivalent per capita: 1960. 1970. and whose husbands are practicing any form of contracepion. Worn1982 'a'. orchild-bearing age are generally women aged 15-49. although for

some countries contraceptive usage is measured for other agePOPULATION AND VITAL STATISTICS groups.

Total P1p9l8matie..Mid-Vr Irhoasaads)-As ofJuly 1: 1960. 1970. FOOD AND NUTRlUlONand 1933 data.Utrk Popukri_n fpfemn of twat)--Ratio of urban to sotal h*x ofFeed Pdrtion Per C$ha (1969-71 - W0I-1ndex orp rpopulain dpuhr5mt (efritens of urbankRatismyO fct opr capita annual production of aN food commodities. Piroductionpopulation: different definitions olurban areas say affectconipar- excue adnima fedadse o giutr.Foomdteability of data among countries, 1960. 1970. and 1983 data. incude primar commodities fe.r sugr n ntu ste Food cofiuoditrespbpati*S Pftreriof which are edible and contain nutrients (eg. coffee and tea are

Rhpumaton - war 2000-The projection of population for 2000 excluded;: they compnse cereals root crops. pulses. oil heeds.made for each economt scparately. Starting with information on vgetbles. fruits, nuts. suprcane and sugar beets. livestock, andotal population by age and sfe fertilit rates, mortalit rates and ivestock products Aggregate proiduction of each country is basedinternational migration in the base year 1980. these parameters on national avenge producer price weights. 196145. 1970. andwrc projected at five-year intervals on the basis of genalized 1982 data.assumptions until the populauon becane stationary. * qCapit Supp ofCalris (percet efreq_'a em-Cotnput-Srarionary popudanon-ls one in which age- and sex-specific mor- ed from calorie equivalent of net food supplies available in counirytalitn mtes have not changed over a long period. while age-specfic per capita per day. Available supplies comprise domestic produc-fertility raes have simultaneously remained at replacenent level tion. imports less exports. and changes in stock. Net suppliectnet reproduction tate- 1. In such a population. the birth rate is exdude animal feed. seeds for use in agriculture, quantities used inconstant and equal to the death rate the age structure is also food processing- and losses in distribution. Requirements wereconstant. and the growth rate is zero. The staionary population estimated by FAO based on physiological needs for normal actitin

stum vas estmated on the basis of the projeed chatacteristics of and health considerintt environmental temperature. bods weights.the population in the year 2000. and the rate of decline of iertility age and sex dtstribution of population. md allowing Itt percent forrate to replcement level. naste at household klel: 1961. 1970 and 1982 data.PopuarisosM mmwnnn-ls the tendency for population growvth to Per Cate Supyf nOrweia (grasm per eey)-Proten content olcontinue beyond the tme that replacement-levle fertility has been per capita net supply of food per day. 'Net supply of food is definedachieed. that is even after the net reproduction rate has reached as above. Requirements for all countnes estabashed by USDAunity. 7he momentum of a population in the vear r is measured as provide for minimum allowances of 60 grams of total proton pera ratio of the ultimate stationary population to the population in day and 20 gams of animal and pulse protein. of whwch 10 gramsthe year r. given the assumption that fertiht remains at repace- should be animal protein. These standards.are lower than those ofment levl from year r onward. 1985 data. 75 grams of total protein and 23 grams of animal protein as anPb,sdu DPesirr average for the workl proposed by FAO in the Third World FoodPer sqAm.-Mid-year population per square kilometer I100 he- Supply; 1961. 1970 and 1932 data.tares) of total area: 1960. 1970. and 1983 data. PerCpCta AwreiSuspp&iym.rn Aaimand Parem-Protae n upplyPer sq.kr. nagiculural land-Computed as above for agricultural offood derived from animals and pulses in grams per da-. 1I*: -65.land only. 1960. 1970. and 1982 data. 19' MSand 1977 data.

_puleios Age Sscnmrr (percenur-Children (0- 14 years;. work- CAN (ages l-4j Death Rote (per rh.sandj- N umber of dea:b- fing aget 15-4 years. and retired (65 years and over; as perentage children aged 1-4 years per thousand children in the ume ageof mid-year population 1960. 1970. and 1983 data. group in a given year For nmost developing countnes data dernedRPipulatiem Growth Rate (percerr)--orol-:AnnuaI gtrowth rates of from life tabks: IQ60. 1970 and 1983 datatotal mid-year population for 19500. 1960-70. and 1970-83. HEALTHPbpelatiea Growth Rate (perce.tj-w-mF-Annual growth rates Life Erpectrnac s Byrr (yeerrj-Number of years a neunornof urban population for 1950-60. 190-70. and 1970-83 data. infant would live if prevailing patterns of mortalit for all people

- 23 - Annex IPage 4 of 6

sude tm of or Its bit war to my the m- throughut Its lire; hpdIm )r Jatio - prnwy. ad scmdur-Totm students e1960. 1970 nd IM) dat, roll in pmany and seondary lvls divided by numbe of_tw Nannkw B e (per Ihesemd-Number orinfau who die tuecs In the corruponding leveb.

beforr rhg one year slap p thouand Ive birts In g Sinyeai 1960 1,70ind19iU3 dt CONUMPflONeAnsre Si *bi (puss V p his-ok tel. hen, S Punge Corser smmed caur n car nura-Nub er orpeople (otl, urban sad nta) with reUaOnle i motor cas ating lee tan eight penon; exluda ambul-

access to .fa watr upply cude tmted surface water or a.es ibn and miliutry vehicls,unauted ba uncammineam water such a tat from protectedboeholm springs and suAniar well) u psrcetage of their respec- for radio roacss togneaPubi er thousnp ldo)Altpsan or poplaion;stie populations. In an urn ar a public founti or stanripost excludeun-bicense receiversuInc per thou ssad in popu yarn wnla ted not more than MD muet Rom a ouns may be cbtdeonderd otr ns wu

beag withi raoble ce or that hose In rural area mistmtion or rdio so wa in elect; data foor reopt yeas mayreasonabeaccess would Imply thiat the houewife or members rithe not be cimparble since mast coutrie abolishd lIensing.houseia do anot have to spend a dispoprionate part of the day TVReulmr (Po dtwd p npmui'y-ToV rec s forbroadcastIn fert the famiys water bnds to geer Publc pr thousand populadop; excludes unlicend TVti so Eh n Equ r l n r reeivr of avincu na od duin year wn registration oTV isns wasad awe--Number of People (totL urba, and rural) sefer by In elect.exet disposal as percentage of thei repectve pouain. AwIP' Chuilad (Par tmpelaalSosthe aver-Exacea dispos my Include ite collection ad dth or AP crulation of 'daFly genr interet newspaper." defid as awithout tresamt, of hund m excti as waste-water by w - periodia pub tndevotedprimariyto recoiggeneralnews.borne syms or the - of pit privie and similar installs It is considr etd be "dai It appear at last four tims a week.

pltole parb a uN puatio divided by number of pm- d CdSi Annmad Atteundaune mpoyd C pt w Yex-dased on thetising physica qualified from a medical school at university level. number of tikets sold during the year. including admisions tohpodaiu, r Nosia hne-lbpulation divde by number of drlve-in cinemas and mobile units.praccin male asd female grduate nurses. assistant nourLse {rpractica nurses asd nuring auxiliaries.ORFOCftp.Isie.pr Hos*a Bnd-w4 when ad , Taure hTalo Frc rthowsadsj-Economically active permsns. in-(totaL urban, as nnral) divided by teir rspective number of ciuding amed forces and unemployed but excluding housewies.hospita beds available in public and privateral a students. etc.. covering population of all ages. Dentions inhospitals and rehabilitation meter. Hospitals are esablishments various countries are not comparable. 1940. 1970 and 1983 data.Permanently staffed by at leas onme physicist. Estabishments pray- Female (pereeurj-Female labor force - P mperetage of total laborWin principaly custodial care are not included. Rural hospitals. force.howeveT. incude health a medical centers not permanently staffed Agvakuhwe (percetn-Labor force in farming, formtry. huntingby a physicia (but by a miedical assistant, nurse. midwife. etc.j and fishing as percentage of total labor force: 1960. 1970 and 1930which offer in-patient accommodatio nrd provide a limited range data.of medical facilities. Im'astry tpercent)-Lbor force in mining, construction. manu-Ahdissiea perw ipm hi-Total number of admissions to or facturnag an eletnritc. water and ps s percentage of total labordischarges from hospitals divided by the number of beds force: 1960. 1970 and 1980 data.

Hpdetim Roe (pamrcew-Wal, nck. efenifre -articipationHOt'S13NG or activity rtes are computed as totaL male, and femak labor forceAvege ;:r af HomIN i f(parer per hawesold . w , s percentages of total male and female population of all agesddrwal-A household consins of a group of individuals who share r specively 1960. 1970. and 1983 data. These are based on ILO'sliving quaters and their man meal. A boarder or lodger may or participation rates relcting ag-A structure ofthe popuation. andmay not be induded in the houshold for statistical purposes. long ime trend. A rew estmtes are from natonal sources.Avq hNiher of Parseu pa Ream-roea. when, ad rual- Econadc Dependency Reri-Ratio of population under 15. andAverage number of persons per room in all urban, and rural 65 and over. to the working age population (those aged 15-64.occupied conventional dweUinS. respecivdy. Dwelings excludenon-permanent structures and unoccupied parts. INCOME DISTRIBLTIONPercenrage of DwveEs with Eecikct -natal. whn. and ruvra- Pe e of Tae) DOispeske iten (hbth in csh ad kind)-Conventional dwelling with electricity in living quarers as percen- Accring to percentile groups of houscholds ranked by total house-tage of total. urban, and rural dwellings respectively. hold income.

EDULCATION POVERTY TARGET GROUPSA4utd Edroi&tar Ratios The following estimates are very approximate measures of povertyPmary sco - tota. mal md female-Gross total male and levels and should be interpreted with considerble caution.femakle crollment of al ages at the primary lee as percentages of E&ismedAhsue Pvwey nome Levd ElSS per caira -arhrespective primary school-age populations. While many counties ad rr-Absolute poverty income lvdel is that income levelconsider pimary school age to be 6-11 years. others do not. The below which a minimal nutritionally adequate diet plus essentialdifferences in country prcties in the agies and duration of school non-food requirements is not affordlble.are rdlected in the ratios gvn. For some countries with univerl Esfeod ative Pover Income Level (CST per capita-whoeducation. gross enrolment may exceed 100 peret since some ad real-Rural relative po " income level ts one-third ofpupils are beiow or above the cauntry's stndard primary-school average per capita personal income of the country. U:rban level isage. derived from the rural level with adjustment for higher cost ofSeconar school - toal. mak d femal-Computed as above; living in urban areas.secondary education requires at last four years of approved pri- Esf ed Popuktin kBr" Ahseure Povry lacew Lnd (per-mary mstructon; provides general. vocational or tacher training cetj-wan ad ral- Nrcent of population (urban and ruralinstructions for pupils usually of 12 to 17 years of age correspond- who are "absolute poor.-ence courses are generally excluded.Vocauetn Enrolmni fpercent of secondor)r-Vocational insitu- Compartive Analvsis and Dan Divisiontions include tehncal industiaL or other programs which operate Economic Analysis and Projections Deptmentindependently or as deparments of secondary mstitutions. June 1935

- 24 -

Amex IPage 5 of 6

ETIIOPIA - U01KOOIC INDICATORS

Cll fr Capita - 120.0 (1983)

AMIUAL RATE OF GlOIT OF GDPGROSS DOMESTIC ROCT IN FT 19851985 A1 AT OONSTANT FACTOR COST (1)

(Gscal Years)

US$ KIn. S 1981-83 1963 1984 1985

GCP at Market Prices 4835.9 100.0 3.1 5.1 -2.4 -6.8Investmet 522.5 10.8Gross Domestic Savings -251.5 -3.2Resource Balance -774.0 -16.0Exports of Goods and NFS 557.9 11.5Imports of Goods and NFS 1331.9 27.5

OUTPUT is 1985 I/

Value AddedUS$ Kin. Z

Agriculture 1921.6 44.3industry o94 .5 16.0Services 1722.7 39.7Total at Factor Cost U3.810.

GOVERNMENT FnINCE

central Government(Br. tan) X of GDP

nY1985 1982-84Current Receipts - 7 Z!O 5°9current Expendltures 2364.5 23.6 21.2Current Surplus 36.6 0.4 -0.3Capltal Expenditures 1275.8 12.7 8.3

MONEY, CREDIT AND PRICES 1980 1981 1982 1983 1984(Fiscal Years) (Hllion Br. outstanding end period)

Money and quasi-money 2332.1 2377.6 2643.7 3040.5 33B3.7lank Credit to Central Government 968.1 1107.9 1180.8 1980i. 2293.4Bank Credit to Private Sector nd

Financial Instltutlons 1644.2 1721.8 1944.3 1741.7 1861.9

(Percentages)

Money as S of CDP 27.3 26.7 28.8 30.4 33.7

Annual percentage changes In:General Price Index 4.5 6.1 5.6 -0.4 8.4Bank Credit to Public Sector 12.3 14.4 6.6 67.8 15.8Bank Credit to Private Sector 34.5 4.7 12.9 -10.4 6.9

Note: All conversions to dollars In this table are at the official exchange rateof US$1.00 - lirr 2.07

All Fiscal Years are from July 8 to July 7.

1/ Provisional Data for 1985.

-25 -

kcuw IPWe 6 of 6

waEz OF PAM*= nSDE&

l983 1984 1985 1/ 5 I E T'US$) (Fiscal Year Ayege 1983-85)

US$Hln. ZI zts Go ds, IES 55L.8 611.9 557.9 Ooffee 246.4 60.3liTats of Goods, 1ES 961.7 1115.8 1331.9 Pulses 10.8 2.6sau rce Cap (deficit - -) -49.9 -508.9 -774.0 OlIsesIs 9.9 2.4

1ides & S.Si 48.4 11.9Inv_eunt lTme (net) -13.6 -19.2 -38.4 I seed cda 5.5 1.4Private Traiufers (net) 84.9 107.2 169.1 Otber 87.5 21.4Bals] on Current Acet. -338.6 -415.9 -643.3 otal. 408.5 100.0

Offlcial Transfers (net) 92.5 161.9 472.0Private MT Cacdtal (net) 0.0 0.0 0.0Pbblic 1CLT bor=uidxa (net) 203.5 204.1 169.1 EIAL MEBT, 1HEMM 31, l9B4

nisbnme-nrx (253.3) (268.8) (293.5) US$ Mn.hAurtization (49.8) (64.7) (124.4)o5brt1-temn Caital -9.5 10.9 7.2 Total outstand%ix &

Dlsbzsed 1384.2C- in es

(- -Inceae) 71.5 42.3 53.1 MU SIW( RATD KR FTY 1984Min Itm (mil. errors) -19.4 -3.3 -58.1 ZNet Pocip Assets (ead year) 107.3 64.8 °Petrole Tapots 184.4 155.2 Total Ogutstair &Petrolem Prod±t imports 7.3 28.2 Disbred 16.1

Pte a noe 1973:$1.00 - Br. 2.07Br.1.00 - DS$0.48

=)D/MA I (hrch 31, 1986) (Millim S$)IT D Im

Outstwi%g and Dsbursed 39.8 42B.4nkdisbursed - 304.8

Outstamig incl. Ekxlsbursed 733.2

° not available

1/ Progisionall

1986

26-

Page 1 of 2

STAM OF BAlK 1P O(ERATIS IN EIHLEOPTASL4=1 (F BANK MAND AM Ma rts

(As of March 31, 1986)

Amountleam or (US$ filIon)Credit Less Cmncel3adn U ie-Nbe Year Borroer Bark Mk hbrsd

Tbe.ve lowsaEnd ntwnty credits fully disbursed 108.6 288.3

Cr. 603-El 1976 Ethiopia 1kvan Dew. 27.0 0.9Cr. 707-Er 1977 Ethoia1/ Revised Amibar 25.0 3.1Cr. 1088-Er L981 Ethiopi- Agric. Minmm Pkg. II 39.22/ 0.4Cr.1141-E 1981 Ethiopia EdoMtion V 35.O2/ 0.1Cr.1275-E 1982 Edtopioa Agric. & Irklst. Dev. Bank 30.0 23.3Cr.1366-E 1983 Ethiopia Urban Development 20.0 16.8Cr. 1386-Er 1983 Edhopia Petroleun Exploration 7.0 3.3Cr.1404-Er 1983 EthEopia SecovxPlRd Sector 70.0 9.4Cr.1429-El 1984 Ehiopda Coffee P Fcessing & M=Wtig 35.0 33.3Cr-1509-Er L984 Etbiopia Shch ecomlouc_tio#s 40.0 42.8C-.152D-W 1984 Eddopia Sixth l;dumm 70.0 75.0Cr.1521-E 1984 Ethopia Agric. Researdc 22.0 23.2Cr. l-E 1984 EtdopIa Tedi Asistance 4.0 4.3Cr-.1576-E 1984 Etiopa Drou&t PRcovery Program 30.0 18.9

Tota 108.6 742.5of stich bas been rpaid 68.8 9.3

Total n outstmadixg 39.8 733.2Amount sold 6.0

of *di has been repaid 6.0

Total nw held by BaEk & ID(prior to edaae adjustments) 39.8 733.2

Total Uodisbursed 304.8

11 US$1.7 mi11Ion disbursed i fomner Cr.418-Er, Anibar Irrigatio, bas beenrepaid out of the proceeds of the r Credit.

2/ Crdits 1088-Er, 1141-Er, 12755-El, 1366-ET, 138-ET, 1404-E, 1429-Er, L509-ET,1520-T, 1521-Er, and 1522--r and 1576-Er are enomnated in SDRs (SlR 31.4 udlUion,28.2 mIllion, 27.0 million, 18.0 miUioa, 6.5 million, 64.9 milinn, 33.2 millon, 38.7mfllson, 67.3 m[lioa, 21.1 mtlion, 3.9 millicn, ax! 31.3 million respectiely.

-27 -

Am= lPage 2 of 2

SrM OF INC MRVEMMS

(As of aEc 31, 1986)

US$ MillionFiscal 1ype of Year uspr Piness IT Euty Total

1965 Textile Mills of Dre Daw I Textiles 1.5 1.0 2.5

1966 FLhopia Pulp anl Paper CD. Paper - 1.9 1.9

1968 HVAI.htabra, S.C. Sur 5.5 3.5 9.0

1970 Textile Mlls of Dire Dm II Textile 0.4 0.2 0.6

1973 Textile Mills of Dire Dam III Textiles 1.5 0.2 1.7

Total Gross CaoOi;tents 8.9 6.8 15.7

-tes , 1ati,

repayments and sale 8.9 6.0 14.9

Total Cdamitnerts xw held by JFC - 0.8 0.8

Total Usdisbursed c h _ -

-28-

Annex IIIPage 1 of 2

ETHIOPIA

FORESTRY PROJECT

Supplementary Data Sheet

Section I - Timetable of Key Events

(a) Time taken to prepare project: Four months

(b) Project Prepared by : The Government with assistanceprovided by the FAO/CP Program

(c) Identification mission : May, 1984

Cd) Appraisal mission : November, 1985

(e) Negotiations April, 1986

(f) Planned date of effectiveness: (120 days after credit signing)

Section II - Special IDA Implementation Action:

Provision made for a Project Preparation Facility advance ofUS$323,000 to finance forest inventory surveys and socio-economic studies in project areas.

Section III - Special Conditions

Condition of Effectiveness

Appointment of a Project Manager under terms-of-reference andwith qualifications and experience acceptable to IDA (para.52)

Other Conditions

(a) The surveys financed under the project would be completed and theresults analysed before June 30, 1987. A relocation plan for familiesresiding in the Project area would be submitted to IDA byDecember 31, 1987 (para.46).

(b) A senior forestry expert wouid be employed by December 31, 1986, underterms of reference, and with qualifications and experience acceptableto IDA (para.51).

-29-

Annex IIIPage 2 of 2

(c) A Project Management Unit would be established within SFD byOctober 1, 1986 (para.52).

(d) Project annual work plans would be prepared and submitted toIDA. The draft of the first program would be submitted byNovember 30, 1986, and for subsequent years by February 15, andthe final work programs would take Into account comments receivedfrom IDA and would be in a form acceptable to IDA (para.53).

(e) The Monitoring and Evaluation Division would furnish to IDAsemi-annual progress reports on project implementaton (para.54).

(f) Terms-of-reference and membership of the mid-term review teamwould be agreed with IDA before September 30, 1989 the reviewcarried out at the beginning of the fourth project year and thereport submitted to IDA by March 31, 1990 (para.54).

(g) Accounting, auditing and reporting would be according to theprocedures outlined (para.59).

(h) The Government would introduce a revised system for pricing andmarketing fuelwood by June 30, 1987. Reports of the marketingcapacity of public marketing institutions, including thequantities of forest products handled, would be prepared annuallyand submitted to IDA (para.60).

71

S8RO 1959

ETH IOPIA ( , _ _4p GONDERFORESTRY PROJECT D arahlr Or

Project Areas ) Me;il W E L 0

_ Proposed Paonting Areas Dargla A \t A RW A_ Restng Plantatlon Area - DtE%S

Paved APhkectser Roads MataGrrovet ADl-weather ROaaosRivers *% I*M

S Admkslrate Region Capitols /7G ° JI MerteComrmunity Forestr Area F.IoO5te Beb lrIBoondodesAdminlstrOtRe RegionBoundarbes

- Intermsatlonl Boundoorles bJM

I. p DESISS O Delon Meod.J I t_ ,=Of s , JV a~~~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Jihu, r

0 se WI\ Goebela~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Jse O

w~~~ E L DE AMENAG H

I A x o f AWRAJAN

- w I ( t I > /I / \8 A

ETHIOPIA i' A R S IIZ K E F F A