Document of fjj I IIThe World Bank

FOR OFFICIAL USE ONLY

Report No. P-3041-PAK

REPORT AND RECOMMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED CREDIT

TO THE

ISLAMIC REPUBLIC OF PAKISTAN

FOR AN

AGRICULTURAL RESEARCH PROJECT

May 11, 1981

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

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CURRENCY EQUIVALENTS

Currency Unit - Pakistan Rupee (Rs)US$1 - Rs 9.90Rs 1 - IJS$0.101

FISCAL YEAR

July 1 - June 30

FOR OFFICIAL USE ONLY

PAKISTAN

AGRICULTURAL RESEARCH PROJECT

Credit and Project Summary

Borrower: Islamic Republic of Pakistan

Amount: SDR 19.7 million (US$24 million equivalent)

Terms: Standard

Project The objectives of the proposed project are to accelerateDescription: the implementation of institutional reforms needed to

provide Pakistan with the quality agricultural researchit requires to exploit its production potential; provideto federal and provincial institutes the physical and humanresources needed to plan, coordinate, support and conductresearch programs; and provide training and technicalassistance. The Credit would finance: (a) a headquarterssecretariat building for the Pakistan Agricultural ResearchCouncil (PARC); (b) incremental staff and facilities forthe improvement of PARC's administration; especiallyfinancial planning, procurement, audit, accounts, training,technical assistance, personnel and management, projectimplementation and supervision of construction of civilworks; (c) technical service units at PARC and at theNational Agricultural Research Center (NARC) for: collec-tion, publication and dissemination of research information;maintenance and repair of laboratory equipment; developmentof the research station at NARC and supporting researchprogram development in plant sciences; animal sciences;cereal diseases; oilseeds; agricultural engineering andagricultural economics; (d) supporting agriculturalresearch subprojects conducted by non-PARC researchagencies; (e) overseas and local training to M.Sc. andPh.D. levels and for short career development coursesfor research personnel; and (f) technical assistance inmanagement techniques and technical research programdevelopment and for a mid-term review of project progress.Risks pertaining to the appropriateness of project financedresearch to farmers' needs and the level of cooperationobtained from the provinces would be mitigated by closelinkages between farmers and the extension services and bythe provision of incentives to the provinces to encouragetheir active participation in the project.

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

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Estimated Cost: Items Local Foreign Total---------US$ million-------

PARC

Administration 2.48 0.79 3.27Research Information 0.78 0.46 1.24Laboratories EquipmentMaintenance 0.23 0.14 0.37

Civil Engineering Unit 0.58 0.15 0.73

NARC

Station Development 1.26 0.54 1.80Plant Sciences 4.08 1.20 5.28Animal Sciences 1.47 0.87 2.34Plant Introduction 0.81 0.22 1.03Oilseeds 0.51 0.28 0.79Cereal Oilseeds 0.24 0.15 0.39Agricultural Engineering 0.78 0.36 1.14Agricultural Economics Unit 1.41 0.55 1.96Contractual Res. Grants 2.73 1.82 4.55Training 0.10 4.80 4.90Technical Assistance 0.13 2.02 2.15Mid-term Review 0.01 0.06 0.07

Total Base Cost 17.60 14.41 32.01Physical Contingencies 0.88 0.54 1.42Price Contingencies 3.80 2.82 6.62

Total Project Cost 22.28 17.77 40.05Less Local Duties

and Taxes 3.30 - 3.30Total Project Cost Netof Duties and Taxes 18.98 17.77 36.75

US$ million equivalentFinancing Plan: Local Foreign Total

---------US$ million-------

IDA 6.23 17.77 24.00GOP 16.05 - 16.05

22.28 17.77 40.05

Rate of Return: Not applicable.

Estimated Disbursements: IDA FY FY82 FY83 FY84 FY85 FY86----------US$ million-----------

Annual 1.8 6.6 7.0 4.7 3.9Cumulative 1.8 8.4 15.4 20.1 24.0

Appraisal Report: Pakistan Agricultural Research Project, April 1, 1981Report No. 3242-PAK.

Map: IBRD 15488

INTERNATIONAL DEVELOPMENT ASSOCIATION

REPORT AND RECOMMENDATION OF THE PRESIDENTTO THE EXECUTIVE DIRECTORS

ON A PROPOSED CREDIT TO THE ISLAMIC REPUBLIC OF PAKISTANFOR AN AGRICULTURAL RESEARCH PROJECT

1. I submit the following report and recommendation on a proposedcredit to the Islamic Republic of Pakistan for SDR 19.7 million (US$24 millionequivalent) on standard IDA terms to help finance an agricultural researchproject.

PART I - THE ECONOMY

2. The most recent economic report "Pakistan: Economic Developmentsand Prospects" (No. 3328-PAK, dated April 10, 1981) was distributed to theExecutive Directors on April 20, 1981.

3. The past three to four years have witnessed a significant economicrecovery in Pakistan. GDP growth during FY78, FY79 and FY80 averaged over6% p.a. This growth has been accompanied by a recovery in agricultural andindustrial production well above the rate of population growth, currentlyaveraging 3% p.a., and by a rapid growth in exports. Exports increased inreal terms by 11% in FY78, 20% in FY79, and 22% during FY80. Value added inagriculture rose by 6% in FY80 following increases of 4.2% in FY79 and 2.5% inFY78, and in industry by 8.1% in FY80 following 9.2% growth in FY78 and 4.2%in FY79. This performance contrasts markedly with the economic stagnation ofthe early and mid-1970s, when the growth of GDP averaged only 3-4% and goodsproduction 1.1% p.a., and export growth was negligible.

4. The prospects for continuing economic improvements during the cur-rent year--FY81--appear to be promising. Overall GDP is expected to grow byabout 5%, with continued increases in agricultural and industrial productionand in exports. Following a number of favorable recent developments, includ-ing an Extended Fund Facility arrangement with the IMF, a short-term debtrescheduling arrangement with bilateral creditors of the Pakistan Consortiumand improved external aid inflows, both the budget and the balance of paymentsare under reasonable control and the short-term economic outlook has consider-ably improved.

5. The recovery in the economy since 1977 has been aided by severalfactors, including favorable weather, improved foreign demand for Pakistan'sexports and higher domestic demand associated with better crops, rising ruralincomes and workers' remittances from the Middle East. Various policy changesintroduced by the Government have also contributed significantly to the recovery.

6. In recent years the Government has taken a number of initiatives toimprove agricultural production. Particular attention has been given toimproving farmer incentives and input supplies. Support prices for all majorcrops have been raised so that they are now closer to world prices; andefforts have been made to improve the fertilizer distribution system by

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expanding the marketing network and by ensuring adequate supplies and timelydelivery of fertilizer imports. Steps have been taken to reduce the fertilizersubsidy (which has been creating budgetary problems) and by separating it fromthe development budget for agriculture in order to protect allocations forother priority agricultural projects and programs. An Agricultural PricingCommission has been recently set up to make recommendations on appropriatechanges in crop support and input prices on a consistent and timely basis.

7. In addition, the Government has begun to address the deep-seatedproblems affecting productivity at the farm level. A start has been made inimproving extension services through the adoption of the so-called trainingand visit system. Preliminary reforms have been initiated to the agriculturalresearch system in line with the findings of a recent USAID/World Bank study.The Government has also formulated and begun to implement a new agriculturalpolicy based on the main recommendations of a recently completed UNDP study onirrigated agriculture, which emphasizes the need to improve the efficiency ofthe water delivery system through the rehabilitation of distributaries andbetter scheduling of water deliveries to the farmer; and to expand the roleof the private sector, for example, through the promotion of private tubewelldevelopment in sweet groundwater areas. Other programs--in pesticides, seeds,agricultural credit and farm power--have also been strengthened. Theseinitiatives are still at an early stage and a breakthrough from the problemsof low productivity at the farm level is yet to take place.

8. Major changes have been made during the past three years in Govern-ment policies in the industrial sector. The policies pursued in the early andmid-1970s of extensive nationalizations, tight restrictions on the privatesector, and rapid expansion of the public sector to spearhead industrialinvestment and growth have been gradually reversed. Most agricultural proces-sing and some industrial units have been denationalized; constitutionalsafeguards have been provided to private industry against further arbitrarygovernment acquisitions; and the areas open to the private sector have beenwidened. A wide range of incentives including tax holidays, excise and importduty concessions, concessionary credit and income tax provisions, and directcash rebates have been granted to encourage private investment and exports.These have been supplemented by a partial liberalization of imports which willimprove the availability of inputs. The investment sanctioning procedure hasbeen streamlined. These measures have led to an improvement in private sectorconfidence and to a sharp increase in proposals for relatively smaller-scaleprivate investment projects; there is also evidence of increased interest byinvestors in larger projects, especially in cement, chemicals and fertilizersubsectors.

9. At the same time, the Government has embarked on the difficult andinevitably long process of reforming the public sector, which has been plaguedby low efficiency and profits. Major studies have been completed of themanagement and organization of the public sector, and the performance of indi-vidual enterprises. In accordance with the recommendations of these studies,the Board of Industrial Management (BIM) has been abolished, the number ofsector holding corporations has been reduced, and boards of directors havebeen established which have helped to increase autonomy at the enterpriselevel. Some public sector units which have little prospect of improved

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financial performance have been closed down. These measures, together withadditions to capacity and steps to retain skilled technical personnel throughsalary adjustments, for example in the fertilizer subsector, have helped toincrease production and capacity utilization substantially in the publicindustrial sector. In addition to the denationalizations mentioned earlier,further public disinvestment is being considered on a case-by-case basis.

10. The higher level of economic activity during the past three yearsand the Government's efforts to raise existing tax rates, introduce new taxesand reduce tax evasion have helped to improve public revenues. Nevertheless,the budget remained under strain as expenditures rose as rapidly as revenues.The Government's policies of encouraging production and exports throughsubsidized inputs and export rebates, and the political and social constraintsto making substantial price adjustments on a number of items of mass consump-tion, inflated subsidies. Rising debt service, following the expiration atthe end of FY78 of the four-year debt relief arrangement with member countriesof the Pakistan Consortium, and increased defense spending contributed to thegrowth in non-development expenditures. In addition, commitments under theongoing public investment program and higher subsidies for agriculture led tofurther increases in development spending between FY77 and FY79. Despite theincreased revenues, the overall budget deficit remained around 8% of GNP andthe bank-financed deficit around 3-4% of GNP.

11. The budgetary situation improved significantly during FY80. Govern-ment revenues, following increases of 21% in FY78 and 16% in FY79, rose by afurther 25% in FY80 as a result of the continued growth of the economy, taxand tariff increases announced in the FY80 budget, and intensified efforts toimprove tax collections. Although political developments outside Pakistan'sborders led to unplanned expenditures, tight restraints were maintained ontotal spending; the growth of public expenditures was limited to 12%. Bothdevelopment and administrative expenditures were cut back, while subsidiesother than those on farm inputs were held to the previous year's level innominal terms. These restraints on expenditures, continued revenue growth andsome improvement in surpluses generated by public sector agencies helped toincrease the availability of non-inflationary domestic resources. The overallbudget deficit declined from 8.4% of GNP in FY79 to 5.9% in FY80; and domesticbank borrowing from 4.1% of GNP to 2.5%. This improvement is likely to bemaintained during FY81. The overall budget deficit is expected to be around4.2% of GNP in FY81 and the bank-financed budget deficit around 1.2%, bothwell below the ratios attained in FY80.

12. Pakistan's export performance has improved considerably in recentyears. Rapidly rising workers' remittances from abroad, from US$578 millionin FY77 to over US$1.7 billion in FY80, have also greatly assisted in theexternal position. These increases have, however, been offset by a rapidincrease in the value of imports, mainly POL, fertilizer, edible oil andcapital goods. The current account deficit was US$1,150 million or 4% ofGNP in FY80, compared to US$1,050 million or nearly 7% of GNP in FY77 incurrent prices. The financing of these deficits had presented considerabledifficulties to the Government during the past few years, since program-typeassistance from OPEC countries (which was substantial in the mid-1970s) aswell as net aid flows from Consortium sources declined through FY79. However,

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a strong upsurge of remittances during FY80, a marginal increase in netlong-term capital inflows and substantial extraordinary receipts from OPECcountries (including a US$200 million loan from Saudi Arabia for the Zakat(Islamic welfare) Fund and US$220 million in deposits with the State Bank ofPakistan) eased the external financing problem in the second half of FY80and helped to build up foreign exchange reserves to about US$750 million atthe end of FY80, the equivalent of six weeks' imports.

13. The slight improvement in the balance of payments situation duringFY80 has been followed by a number of favorable developments during FY81.These have included the conclusion of an Extended Fund Facility arrangementwith the International Monetary Fund in November 1980; a positive responsefrom aid donors to the country's improved economic performance resultingin increased aid commitments and inflows; an agreement with bilateral credi-tors in the Pakistan Consortium for rescheduling of debt service paymentson official concessional debt falling due over an 18-month period beginningmid-January 1981; continued good performance of major crops and exports;and a further surge in remittances, which are expected to exceed US$2 billionthis fiscal year. These developments have substantially altered the balanceof payments outlook for FY81. While the current account deficit is expectedto widen sharply to about US$1.6 billion as a result of the recent liberali-zation of the import regime, the additional support available from the IMFand other sources is expected to limit the financing gap to about US$189million, a level which could be financed from reserves.

14. The recent favorable developments represent modest, though welcome,steps towards the solution of a set of problems which are essentially struc-tural and long-term in nature. Notwithstanding these improvements, furtherwide-ranging measures to address the basic issues which are limiting economicgrowth in the longer term are necessary if Pakistan is to sustain its recentlyimproved economic performance over the present decade and bring about a modestimprovement in the living standards of its population. These issues includethe farm-level factors affecting low productivity in agriculture; the struc-ture and competitiveness of the industrial sector; the need to improve per-formance of public sector enterprises; the factors lying behind continuedrapid growth in population; the need to redirect social service expenditures;and the problems of resource mobilization.

15. Agriculture remains the economy's mainstay, accounting directly forroughly a third of GDP, employing about 60% of the labor force and, directlyor indirectly, providing nearly two thirds of total exports. Despite recentimprovements in output and yields, a number of fundamental factors continue tolimit agricultural productivity at levels well below the potential implied bythe resources and technologies already available. Generally, output growthhas not been commensurate with the substantial increases in available inputs,especially water and fertilizer. While considerable potential still existsfor the additional use of fertilizer and other inputs, it appears essential togive greater priority to evolving complementary policies and programs whichwould have a direct impact on yields at the farm level. The importance ofincreasing farm productivity is now more widely recognized in the Governmentand a beginning has been made in addressing this problem. Nevertheless,support for programs to strengthen research, extension, water management and

other programs in the agricultural and water sectors needs to be intensified,while fertilizer subsidies must be further reduced, accompanied by necessaryadjustments in output and consumer prices.

16. Industry contributes about 15% of GDP and during much of the 1950sand 1960s provided a major stimulus to growth. Growth rates in manufacturingproduction, though recently better, remain well below those attained in the1960s. The textile industry, in particular, which accounts for nearly 40% ofvalue added in large-scale industry, has suffered from problems of ineffi-ciency, excess capacity and a lack of competitiveness in foreign markets,while manufacturing growth has been generally affected by the inadequateperformance of public sector enterprises. Although there have been somerecent improvements in the output and profitability of public enterprises,these improvements need to be carried further through appropriate reforms toremove distortions in pricing, improve performance criteria and incentives tomanagers and to further rationalize the sector. To assist and further encour-age the recovery in private investment which now seems to be taking place andto maintain the increased momentum in the industrial sector will require,among other things, an adequate supply of local and foreign financing bothfor investments and current inputs and the more rapid provision of necessaryutilities and other infrastructure requirements. At the same time, it isnecessary to ensure that the Government's incentive system supports thoseindustries in which Pakistan has a comparative advantage; more analysisis needed to determine levels of effective protection for formulating anappropriate industrial development strategy for the 1980s. The recoveryin industry also needs to be reinforced by improvements in labor-managementrelations and by further measures to rehabilitate the textile industryand generally to increase exports.

17. The Government's effort to deal with the energy situation by adjust-ing domestic oil prices, and by encouraging the substitution of other energyforms and the exploration and development of domestic oil resources, have metwith some success. Growth of petroleum consumption has been restrained by thedevelopment of hydro electricity and natural gas resources as well as bypetroleum price adjustments. At the same time, activity in the oil sector hasbeen stepped up, in some instances through joint ventures with foreign privatecompanies. Nevertheless, due to a variety of technical, geological and otherreasons, progress on exploration of new fields as well as the development ofexisting fields, has been slow; and the benefits of Pakistan's considerablepotential in the oil and gas sector is yet to be realized. A number of issuesrelating to such matters as energy planning, pricing and organization willneed to be addressed in order to realize this potential.

18. While it is clearly vital to sustain rapid growth in the commodity-producing sectors, it is also neceasary to contain the rapid growth in popula-tion, currently running at about 3% p.a., which has seriously handicapped thecountry's ability to improve living standards. Family planning programs haveso far had little effect and there have been few changes in the socio-economicenvironment of a type that usually accompany declines in fertility. Rapidpopulation growth places severe burdens on Government resources simply tomaintain education and health programs at their current inadequate standards.However, without higher literacy rates, improved health facilities and a

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reduction in child mortality, it is doubtful that population growth rates canbe much reduced. Expenditures on social services remain comparatively low andundue emphasis has been given to higher education and urban health facilities.High priority needs to be given not only to increased allocations for familyplanning and social service expenditure but also to its redirection to servethe wider interests of the population and the economy. While the substantialmigration from Pakistan to the Middle East over the past few years has to someextent relieved the pressures resulting from rapid population growth, thisclearly cannot be relied upon to provide an answer to the situation in thelong run. The Government has recently shown more awareness of this problem; anew population program has been adopted and is in the initial stages of imple-mentation.

19. Policies that face the longer term issues in both the productiveand the social sectors will take time to have an appreciable effect and willhave to be implemented in the context of continued domestic and externalresource constraints. To improve the budget and the balance of payments, afundamental improvement is required in the overall savings levels in the eco-nomy, particularly in public savings. Although national savings at around12% of GNP are substantially above the levels of the early and mid-1970s,there has been little further improvement over the past few years. The con-tinuation of the Government's recent efforts to restrain public spending andencourage private investment will help to reduce present imbalances betweeninvestment and savings flows, while increased opportunities for privateinvestment should attract resources from less productive uses. At the sametime, an increase in savings inevitably calls for restraining private con-sumption through appropriate price adjustments and selective duty increases onnon-essential imports. While the Government has made several price increasesin the recent past, further adjustments will directly reduce the budgetaryburden of subsidies. Continued restraints on development spending and mea-sures to further improve revenues through improvements in tax administrationand tax and rate increases (for example, property taxes, domestic water ratesand irrigation water charges) are also needed.

20. Increased agricultural production of major crops (particularly riceand cotton) will help directly to sustain export growth. Efforts are alsonecessary to stimulate the output of minor crops, for example, pulses, pota-toes, onions and fruits, for which markets exist in neighboring countries.In addition, substantial scope exists for increasing Pakistan's exports ofmanufactured goods such as textiles and engineering products, as well as of awide range of goods produced by the small-scale industries sector. Increaseddomestic output of wheat, edible oil, sugar, mineral fuels and fertilizarwould help to moderate import growth considerably.

21. External public debt outstanding at the end of FY80, excluding theundisbursed pipeline, amounted to about US$8.7 billion, of which US$5 billionwas owed to bilateral members of the Pakistan Consortium, US$1.3 billion toOPEC, US$1.5 billion to multilateral agencies, and the balance to otherbilateral and private lenders. Following the termination of the multi-yeardebt relief agreement in FY78, debt service including short-term interestpayments rose sharply to about US$500 million in FY79 and US$600 million inFY80. Debt service payments in FY81 and FY82 are presently projected at about

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US$700 million and US$740 million, respectively, after taking into account theeffects of the recent short-term debt rescheduling agreement with bilateralmembers of the Pakistan Consortium. As a proportion of exports, non-factorservice receipts and workers' remittances, debt service was about 13% in FY80.Pakistan's debt to the Bank and IDA at the end of FY80 was about 13% of itsexternal public indebtedness. The share of the Bank Group in debt serviceis now about 9%.

PART II - BANK GROUP OPERATIONS IN PAKISTAN

22. The cumulative total of Bank/IDA commitments to Pakistan (exclusiveof loans and credits or portions thereof which were disbursed in the formerEast Pakistan) now amounts to approximately US$2 billion. During its longassociation with Pakistan, the Bank Group has been involved in almost allsectors of the economy. This has included its involvement with other donors,over a 20-year period, in the major program of works to develop the waterresources of the Indus Basin. Through FY80, 38% of total Bank/IDA commitmentsto Pakistan were for public utility services, 30% for agriculture, 31% forindustry (of which 9% was for industrial imports) and 2% for education.Lending for public utility services has included loans and credits for rail-ways, electric power, gas pipelines, ports, highways, telecommunications andwater supply.

23. Lending operations in Pakistan have three main objectives: first,to support the directly productive sectors of the economy; secondly, to supportthe expansion of, and to improve the institutions which are responsible for,the principal public services supporting economic growth; and thirdly, to meetbasic needs in the areas of rural and urban development.

24. In pursuit of these objectives, the Bank Group has placed specialemphasis on lending for agriculture, which is the mainstay of the Pakistaneconomy. Projects in this sector are aimed at augmenting the supply of essen-tial inputs, principally irrigation water, fertilizer, seeds and credit;strengthening research, extension and other agricultural supporting services;improving water management; reclaiming land by controlling salinity and water-logging; and providing essential facilities including tubewells, livestockdevelopment and dairy processing. An important purpose of this lending is toassist the Government's program to increase the productivity of available landand water resources in the Indus Basin through quick-yielding investments, asrecommended recently in a UNDP-financed study for which the Bank was ExecutingAgency.

25. In industry, most lending for the private sector has been throughthe DFCs, principally through eleven loans/credits amounting to US$270 millionfor the Pakistan Industrial Credit and Investment Corporation (PICIC). Directlending for industry has been limited to three large fertilizer plants. Proj-ects are envisaged for further increasing domestic fertilizer capacity, as wellas for small-scale industry. IFC has made investments in 13 Pakistan enter-prises for a total of US$70.2 million, of which US$60.7 million was by way ofloans and US$9.5 million by equity participations (these are shown in Annex

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II). About US$35.9 million remains outstanding. The enterprises assistedby IFC include three in the field of pulp and paper products, two in textilesand one each in cement, steel, fertilizers, food processing, plastics, woodprocessing and petrochemicals. IFC is also a shareholder in PICIC.

26. The focus of Bank Group lending for transport and communicationshas shifted increasingly towards assisting Pakistan to better utilize existingcapacity by improving the efficiency of operations and strengthening the insti-tutions responsible for these services, especially the Karachi Port Trust,Pakistan Railways, Telephone and Telegraph Department, and Federal and Provin-cial highway agencies. In the power sector, the Bank Group has assisted theKarachi Electric Supply Corporation (KESC) and the Water and Power DevelopmentAuthority (WAPDA) with four and three projects respectively; the sector hasalso been assisted by the construction under the Indus Basin DevelopmentProgram of Mangla and Tarbela dams.

27. In the oil and gas sector, the two Sui gas transmission companieshave been assisted with five projects, while IDA has recently financed a pet-roleum development project and begun to play an important role in strengthen-ing the Oil and Gas Development Corporation. These efforts are assisting inthe efficient development and utilization of Pakistan's domestic energyresources. In the field of urban development, Bank Group missions have workedwith the municipal planning authorities of Karachi and Lahore, Pakistan's majorcities, and following UNDP and IDA-financed technical assistance efforts, aproject is now under preparation for Lahore. A second water supply projectin Lahore is currently under implementation. Five IDA credits for education,totaling US$62.5 million, have assisted in upgrading primary, post-secondaryand higher technical and agricultural education, middle-level training ofprimary teachers and agricultural extension agents.

28. Annex II contains a summary statement of Bank loans and IDA creditsas of February 28, 1981, and notes on the execution of ongoing projects.Credit and loan disbursements have been generally satisfactory. Some projectshave experienced initial delays due to government procedures for projectapproval, which are now being strengthened, and to slowness in appointmentof consultants. The Government has recently increased the rates charged bysome public utilities to improve their financial position. Rapid turnover ofmanagerial and technical staff, in part due to migration to the Middle East,and budgetary constraints have been problems in the case of some projects.

29. A number of further projects for Bank Group financing are currentlyunder appraisal or being prepared in Pakistan. These include projects foroil and gas development, water management and irrigation and flood rehabili-tation. Pakistan continues to have domestic resource constraints for thereasons set out in Part I. To assist the Government to finance agriculturaland other high-priority projects which have a low foreign exchange component,financing of some local expenditures in specific cases, as in the one nowproposed, is justified.

30. In addition to lending, economic and sector work provides the basisfor a continuing dialogue between the Bank Group and the Government of Pakistanon development strategy, and for the coordination of external assistancewithin the Pakistan Consortium.

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PART III - THE AGRICULTURAL SECTOR

Background

31. The total area of Pakistan is 79 million ha of which about 19 millionha are cultivable. Of the cropped area about 6 million ha are farmed underrainfed farming systems ("barani" areas) and 13 million ha are irrigated froma 64,000 km network of canals and 179,000 tubewells. There are only 3 millionha of exploitable forest. About 70% of farmers cultivate holdings of lessthan 5 ha and 40% of holdings are less than 3 ha. These small farms occupy12% of available cropping area. Sixty percent of farmers rent all or part oftheir land, mostly on a share cropping basis.

32. Agriculture is the mainstay of Pakistan's economy. It accountsfor about 30% of Pakistan's GDP, employs about 55% of the total labor forceof 23 million, and directly or indirectly provides 70% of the country'sexports, principally rice and cotton. Arable crops provide 69%, livestock28% and fishing and forestry 3% of agricultural GDP. Irrigated areas arethe origin of 90% of farm output. The complex irrigation system based onthe Indus river constitutes the largest integrated irrigation system in theworld.

33. Agriculture production grew substantially during the late 1960s (thegrowth rate in value-added averaging about 6% per year) as a result of a rapidincrease in the use of improved wheat and rice varieties and fertilizer, aswell as rapid private tubewell development. There was a marked slowdown, how-ever, during the period FY70-77, with the rate of growth averaging below 2%per year and remaining below the 3% population growth rate. This slowdown ofthe agricultural sector had a depressing effect on rural incomes, GDP andexport earnings, contributing significantly to the massive growth in the tradedeficit. Several years of adverse weather contributed substantially to thisdisappointing performance. Other contributing factors included inadequateprice incentives; poor water management within the Indus system; pest anddisease problems; and a deterioration in many supporting agricultural servicesincluding credit, extension, and research. During the last three years,growth performance has been encouraging: value added in agriculture increasedby 2.5% in FY78, 4.2% in FY79 and about 6% in FY80. Reasonably good cottoncrops in two of the last three years, a recovery in wheat in FY79 following arust attack in the preceding year, and consistently good rice harvests havecontributed to this growth in agricultural output. While much of this can beexplained by favorable weather, there are also signs that the recent changesinitiated by the Government (see paragraphs 6 and 7) are beginning to takeeffect.

34. In part, the recent growth in agricultural output represents arebound from depressed crops in the case of cotton and wheat, and in partthe effects of continued acreage expansion, particularly in rice and wheat.The acreage under rice increased by 15% between FY77 and FY79 and under wheatby 5% over the same period. There was also a modest improvement in per-hectareyields of some crops. While per-hectare yields in wheat rose sharply in FY79over the depressed level of the previous year, the improvement over the more

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normal level of FY77 was 3%, and in rice about 4%. "Per-hectare yields incotton have been erratic from year to year and do not provide a clear trend,while per-hectare yields in sugarcane have declined. The recent increases inagricultural output thus do not represent a major breakthrough from theproblems of low productivity constraining Pakistan's agriculture.

35. An objective of GOP's Fifth Five-Year Plan is a 6% annual growthrate for agriculture. Growth in livestock production is expected, but themajor emphasis will be on larger crops through increased yield. This willitself depend on increasing the availability and use of water, drainage, fer-tilizer and other inputs, improving land tenure systems so as to reduceshare-cropping, setting farm gate prices at levels which encourage production,and improving flood control. It will also depend on improving the technologyof agricultural production. While for the irrigated areas there is stillconsiderable room for the adoption of proven technologies, there is ampleevidence to suggest that the local store of yield-increasing technology willbe exhausted shortly and that better techniques will be needed for dealingwith pressing problems such as salinity, water loss from irrigation channels,insect attack and plant diseases. These techniques can be generated throughan agricultural research system that is effectively integrated to obtainnationwide results.

36. Bank staff have been working with GOP for some time to develop adetailed program of reform in the agricultural and water sectors, leading toa revised sector investment strategy. A "Revised Action Program for Agricul-ture and Water Development," the outcome of a three-year study financed byUNDP, for which the Bank was Executing Agency, was completed in mid-1979. Thestudy has highlighted the past deficiencies in government agricultural policiesand proposed a revised strategy designed, within the context of continuingresource constraints, to release existing resources for higher priority pur-poses and generating new resources through quick-yielding investments. Therecommendations of the UNDP study can be grouped into three major categories:(a) adjustment of pricing and subsidy policies, to reflect real resource costsmore accurately; (b) management policies to enable the transfer of responsibil-ity to the private sector for appropriate operations and facilities now in thepublic sector's domain; and (c) revised investment policies to facilitate quickreturns and complement the major irrigation facilities already provided ratherthan create new infrastructural facilities or extend the irrigated area. Thereport emphasizes water management, extension services, agricultural research,seed certification, animal husbandry and the provision of appropriate ruralinfrastructure. The Government of Pakistan has accepted the principal conclu-sions of the UNDP study and initial steps have been taken to implement someof its major recommendations, including improved institutional coordinationbetween irrigation and agriculture and increased emphasis on improving watermanagement, extension, credit, research and seed supply. A start has also beenmade in reducing input subsidies, notably on fertilizer and pesticides, andadjusting support prices to maintain farmer incentives. Under the FertilizerImports Credit (1066-PAK) signed in October 1980, the Government has agreed tocontinue this policy with the aim of eliminating the fertilizer subsidy by1985. An Agricultural Prices Commission is being established to carry outpricing reviews and to recommend appropriate adjustment.

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Agricultural Research

37. The agricultural research system in Pakistan is complex. Research,high level manpower training, planning and coordination are responsibilities

of the Federal Government; but under the Constitution, responsibility for agri-culture has been delegated to the provinces. The result has been that mostagricultural research which is applied or adaptive in nature is controlled bythe provinces while more fundamental research has remained with the FederalGovernment. The position is further complicated by the fact that responsibil-ity for agricultural research on a national basis is distributed among severalministries and semi-autonomous institutions such as the Ministry of Agricul-ture, Food and Corporatives, Ministry of Water and Power, Ministry of Education,Ministry of Commerce and Atomic Energy Commission.

38. Public budgetary allocation for agricultural research in 1978/79was about Rs 277 million or 0.5% of the contribution of the agricultural sectorto GDP. In more industrialized nations, and in India, this figure is closerto 1.5%. According to the World Bank policy paper on agricultural researchsystems in countries where agriculture is the key economic sector, an expen-diture of 2% of agricultural GDP on research is appropriate. 1/

39. The Pakistan Agricultural Research Council (PARC) is an autonomousbody working in coordination with the Ministry of Agriculture, Food andCooperatives, provincial Agricultural Departments, agricultural institutesand the agricultural universities, under the chairmanship of a scientist whoserves concurrently as Secretary, Agricultural Research Division in the Ministryof Agriculture, Food and Cooperatives of the Federal Government. The Councilconsists of 30 members, including scientists, vice chancellors of the agricul-tural universities, directors of the main research institutes and farmers.There is an Executive Board consisting of a chairman and four other full-timemembers representing plant sciences, animal sciences, social sciences, andfinance, which reports to the Council at two meetings each year. PARC operatesa number of research institutes. Some are well established; others are in theprocess of being established. The National Agricultural Research Center (NARC),the principal operational arm of PARC, is located near Islamabad, and is in theprocess of being developed on 560 ha into a national center for research inplant and animal production. Working in cooperation with the research insti-tutes and agricultural universities within the provinces, PARC has developed anumber of commodity-oriented research projects. The aims of the programs arecoordinated attacks on national problems through cooperative planning, coor-dinated resource allocation, and provision of leadership in the planning andexecution of research programs. The projects so far financed by PARC coverwheat, barley, triticale, rice, maize, millet and sorghum, forage and fodder,oilseeds, vegetables and potatoes. Other projects, covering additional crops,soils, agronomy, agricultural engineering and animal sciences are contemplated.Funds also provided through PARC for collaborative research programs supportindividual scientists working on priority research problems.

1/ "Agricultural Research Systems" - Sector Policy Paper - Report No. 2966,April 18, 1980.

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40. PARC's financing comes from funds collected by the Customs Depart-ment as a cess on agricultural products, regular budgetary allocations offunds provided by GOP, PL 480 funds and other sources of development assis-tance, primarily USAID.

41. Agricultural research is also conducted by the Pakistan CentralCotton Committee; Pakistan Tobacco Board; Pakistan Atomic Energy Commission;Water and Power Development Authority; Department of Plant Protection(Karachi); Soil Survey of Pakistan; Pakistan Science Foundation; PakistanCouncil of Scientific and Industrial Research; Council for Irrigation, Drain-age and Flood Control; Pakistan Forestry Institute; and the Leather Board.

42. Each of the four provinces has an agricultural research instituteand substations. In addition, some have commodity oriented institutes. Punjaband Sind have agricultural universities, and NWFP has a faculty of agricultureas part of the provincial university, and all these teaching institutions areconducting limited agricultural research programs.

43. Most agricultural research in Pakistan is applied or adaptive innature. Except for some programs at specialized institutions, there is littleemphasis on the more fundamental aspects of the problems studied. Research ongrain crops has received highest priority and has tended to concentrate onbreeding and selection of new varieties. Plant introduction has been largelyunorganized. Research workers have tended to confine their activities to theresearch stations rather than become involved in verifying their findings onfarmers' fields or in different agro-ecological zones.

44. Several constraints exist to the development of fully effectiveagricultural research in Pakistan. Better coordination between researchinstitutions is needed to avoid duplication of efforts; adequate and reliablefunding is essential if long-term research programs are to produce usefulresults; careers in research need to be more professionally rewarding; andlibraries and scientific information services need to be improved. Theproposed project attempts to address these various problems.

45. The extension services have been another weak aspect of the agricul-tural sector in Pakistan. A revitalization of extension services is essentialand has been started by the introduction of the Training and Visit extensionsystem in selected districts in Sind and Punjab through IDA-financed projects.In order to make research programs responsive to the nation's and farmers'needs, closer linkages are required between research scientists and extensionworkers. The proper foci for these linkages are the provincial researchinstitutes and their substations which are primarily involved in applied andadaptive research; the IDA-financed extension projects include provision forstrengthening such research and the application of research results at thefield level. However, a closer association is also required between thecentralized research activities and the extension services. Currently PARCis promoting this association by seminars, workshops, publications and coop-erative research projects which involve both professional staff and membersof the farmer community, and these efforts will be continued.

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46. Several international organizations have been involved in the develop-ment of agricultural research in Pakistan; notably USAID, which has supportedPARC and the establishment of a central management system for research. USAIDhas also provided effective assistance to NARC and the Mona Reclamation Schemewhich is designed to establish technologies for improved irrigation watermanagement. The ADB has helped in the setting up of the Maize and MilletsResearch Institute in NWFP. The Pakistan Forestry Research Institute, theVertebrate Pest Control Laboratory, Poultry Research Institute and the CottonResearch Institute, Multan, have received assistance from UNDP/FAO. IRRI iscooperating with GOP in the establishment of an Agricultural Machinery Unit inIslamabad. Ford Foundation is helping PARC in agricultural economics researchand documentation. The universities have received aid from UNESCO and from USuniversities. The Bank has provided support to the Agricultural Universitiesof Faisalabad and Tandojam, and to adaptive research in Punjab and Sind, inconnection with its lending for education and for agricultural extension anddevelopment respectively.

PART IV - THE PROJECT

47. Recognizing the need to strengthen the agricultural research systemin Pakistan, GOP requested the Bank and USAID in 1979 to organize an inter-national team to review the agricultural research subsector. A mission, underthe leadership of Sir Charles Pereira, visited Pakistan in October 1979, andthe report of this mission recommended policy objectives and a strategy forthe development of research, the essential elements of which have been acceptedby GOP. The proposed project was prepared by the Pakistan AgriculturalResearch Council (PARC) with assistance from FAO/CP. The project was appraisedin September/October, 1980. Negotiations were held in Washington, D.C. duringMarch 9-16, 1981. The Pakistan delegation was led by Mr. Ihsanul Haq, EconomicMinister, Embassy of Pakistan. A Report entitled "Pakistan--Staff AppraisalReport--Agricultural Research Project (Report No. 3242-PAK, dated April 1,1981) is being circulated to the Executive Directors. A supplementary datasheet is attached as Annex III.

Project Objectives

48. The proposed project aims to: (a) accelerate the implementationof the institutional reforms needed to provide Pakistan with the qualityagricultural research it requires to exploit its considerable productionpotential; (b) provide to federal and provincial institutes, the physicaland human resources needed to plan, coordinate, support and conduct researchprograms of high priority; and (c) provide training and technical assistance.

49. The proposed project seeks to assist the strategy outlined in thesubsector review and would constitute the first step in a longer term pro-gram to improve agricultural research in Pakistan. It would concentrateon developing the capabilities of PARC and NARC in order that they can providethe strong federal leadership that is required to obtain the full cooperationof the provincial research systems and to permit the coordination of thenational research effort. With this achieved, a second stage project to

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increase the research capabilities of provincial institutions would be alogical future development.

Project Description

50. The project would comprise:

(a) Strengthening PARC as a national apex research coordinatingagency by providing: (i) a headquarters secretariat build-ing; and (ii) incremental staff and facilities for PARCadministration; especially financial planning, procurement,audit, accounts, training, technical assistance, personnelmanagement, and supervision of construction of civil works;

(b) Strengthening PARC's ability to provide specialized assistanceto research agencies and workers by establishing service unitsfor: (i) collection, publication and dissemination of researchinformation; and (ii) maintenance and repair of laboratoryequipment;

(c) Strengthening the capability of NARC and other researchinstitutions by developing the research station at NARCand supporting research program development in: (i) plantsciences; (ii) animal sciences; (iii) cereal diseases;(iv) oilseeds; (v) agricultural engineering; and (vi) agri-cultural economics;

(d) Supporting a contractual agricultural research grant schemefor research subprojects at non-PARC research agencies;

(e) Funding overseas and local training to M.Sc. and Ph.D. levelsfor research workers as well as short career developmentcourses; and

(f) Funding long and short-term technical assistance in manage-ment techniques and technical research program development,and for a mid-term review of project progress.

Construction of PARC's Headquarters

51. A headquarters secretariat building would be constructed, at a siteto be provided by GOP, to enable PARC staff to be housed in a single buildingand to provide the necessary facilities for it to operate effectively as thenational research coordinating agency. The headquarters building wouldprovide office space for 270 staff members, an auditorium, committee meetingrooms, a small library, a cafeteria and other facilities. Housing for essentialstaff would also be constructed on sites to be provided by GOP in Islamabad.

Administrative and Technical Support

52. The present PARC staff would be inadequate for the implementationof the enlarged program envisaged under the project. Incremental staff

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positions would be financed for the following units: Project Implementation,Procurement, Financial Management, Civil Engineering, Training and Technical

Assistance Support, Secretariat and Chairman's Office. Design and supervisionof the buildings included in the project would be the responsibility of a

consulting architect/engineer with qualifications and experience satisfactory

to IDA and the final design would be approved by IDA (Section 3.02 of the

draft Development Credit Agreement). PARC has agreed to employ, by September30, 1981, in its Civil Engineering unit, three engineers and three overseersto supervise project civil works (Section 2.02(b) of the draft Project Agree-

ment). The problems of inadequate library facilities and maintenance of

laboratory equipment would be addressed by establishing two technical support

units. A unit would be set up at PARC which would be equipped for dissemina-

tion of information, data storage, data retrieval, publication and publicity.This unit would have access to the library at NARC and maintain contact with

libraries in other institutes and universities. It would supply abstracts,current specialized literature and copies of requested articles. A centralservice for instrument maintenance and repair with a ready supply of spareparts to keep laboratory equipment in operation would also be established

under the proposed project. The incremental cost of professional and supportstaff, vehicles, office equipment and operating expenses for these units wouldbe included in the project.

Farm Development at NARC

53. NARC is the main research institution of PARC. It is being developedto provide scientific support for applied and adaptive research at otherinstitutions in Pakistan and also as the site where research can be initiatedon topics that are of national relevance and are not suitable for or coveredby the provincial programs. Development of NARC, located 8 km from Islamabad,was started under the USAID project. Some roads, irrigation canals and land

leveling have been completed and some temporary buildings constructed. Itis expected that the auditorium, hostel, office blocks, cafeteria, training

center, documentation center and library facilities, 12 housing units and sixlaboratories will be provided through the ongoing USAID project before July,1981. The proposed project includes 7.5 km of watercourses, 8 km of roads,greenhouses, machinery and storage sheds, a second hostel and 77 housing units

for essential staff.

Research Program Development

54. The proposed project would include incremental staff, vehicles,office accommodation and equipment, laboratories, incremental operating expenses

and farm implements for expanded programs in plant sciences, animal sciences,cereal diseases, oilseeds, agricultural engineering and agricultural economics.The research program in plant sciences would be expanded to include drought,cold and salt tolerance in cereals, production of new crop varieties, pulsesand forage. Research in plant physiology would be initiated on problems ofenvironmental stress on crops, trace element deficiencies and nitrogen fixation.

The highest priority in livestock research would be on studying ways and meansof increasing output of animal products and providing basic data on villagefarm practices. For this purpose, the project would establish a livestockfarm center with 200 breeding animals at NARC, and a laboratory center, also

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at NARC, for animal nutrition, disease diagnosis, animal breeding, milk andmeat technology and fish biology. On cereal diseases, more detailed studieswould be initiated on the epidemiology of wheat rust disease and diseases ofrice, maize and sorghum. The introduction of new oilseed crops (safflower,sunflower, etc.) and the quality and protein content of oilseeds and pulseswould be studied with a view to assist in achieving higher domestic productionof edible oil. A new division for plant introduction and genetic resourcesand a new Agricultural Engineering Division to test new agricultural equipmentwould be established at NARC. Five agricultural economic research units wouldbe established, one at NARC and one in each province to study the economicviability of new agricultural technology, the economics of input use, farmmanagement and factors restricting crop yields.

Contractual Research Grant Scheme

55. The aim of the contractual research grant scheme (CRGS) would be tocontinue the development of cooperative research efforts at institutions otherthan those controlled by PARC. Three types of activity would be supported:(i) Coordinated Research Projects. These would be generated by PARC's esta-blished system. Financial support would be available for the expansion ofexisting coordinated research projects and for initiating similar projects onother commodities or production factors. (ii) Research Subprojects. Thesewould be substantial projects proposed by institutions desiring to establishpriority research programs in selected areas. Among others, research onpoultry, water management, artificial insemination and inland fisheries wouldbe included. (iii) Ad hoc Research Schemes. These would be relatively smallresearch programs, aimed mainly at supporting distinguished and proven scien-tists proposing to study problems of national importance.

56. All non-PARC research institutions in Pakistan would be eligibleto submit proposals for financing under CRGS. PARC would act as trustee ofthe funds for the subprojects and would prepare, review and approve them inaccordance with guidelines and procedures satisfactory to the Association(Section 2.11 of the draft Project Agreement). The procedures would bedesigned to ensure that only priority research topics under the control ofcompetent scientists who agree to PARC supervision would be supported. PARCalready supports a series of coordinated research projects and a number ofsmaller-scale projects under a contractual research scheme financed mainlyby PL 480 funds. GOP would continue to support these research programs atadequate levels of funding (Section 3.01(b) of the draft Development CreditAgreement). Priority would be given to subprojects which are national inoutlook and which merit immediate attention. In the long run, priorityresearch areas for which PARC would be prepared to consider subproject pro-posals would be identified in relation to the national research plan at presentbeing produced by PARC through its Status Review Committee system. A subprojecton on-farm testing of extension methodology has already been prepared by PARC.It is expected that this would be executed by provincial extension and researchagencies in collaboration with PARC. The concept of research into extensionas a multifactorial management system was developed in Sind and has alreadybeen applied to one district in Punjab. Under the subproject it would betried in other districts in locations suitable for the study of wheat (twodistricts) rice and oilseeds. Necessary incremental staff, vehicles, fieldequipment and operating costs would be financed under the subproject.

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Manpower Development

57. A training program would be included in the project to help overcomethe constraint of staff shortages. Training to the Ph.D. and M.Sc. levelswould be provided at both overseas and local universities. The courses would

be selected in response to the needs of the research programs supported by theproject and the need to fill manpower gaps in other programs, including thoseunder the control of the provinces. Short-term career development courses formore senior established scientists would also be offered. These would include

courses in research administration as well as technical matters.

Technical Assistance

58. About 20 man-years of technical assistance would be provided underthe project (16 man-years of foreign consultants and 4 man-years of local con-sultants). Most would be short term in-nature and would be employed to assistPARC in the development of research programs. Long-term assistance (8 man-

years) would be required for the agricultural economic units, on-farm testingof extension packages, research administration at PARC, and agriculturalengineering. It is expected that technical assistance for strengthening PARCadministrative services would be provided by local consultancy firms. A mid-term review of the progress of the project would be arranged, concentratingon the aims of agricultural research and assessing progress towards attainingtechnical objectives. The relationship of PARC to the provinces and theimplementation of the research subprojects scheme would also be reviewed.The mid-term review would also be the basis for the design of any subsequentagricultural research project. The terms of reference and composition of thereview team would be furnished to IDA for review and approval before July 31,1983 (Section 2.09 of the draft Project Agreement).

Organization and Implementation

59. PARC would be responsible for carrying out the project. PARC hasrecently been provided with increased autonomy by the Government. In particular,its Ordinance now enables PARC to function adequately as an autonomous agencyboth administratively and financially and to attract good staff with bettersalaries and career structure. In addition, PARC has been given full respons-ibility for federal action in the generation of improved technology in agricul-ture. PARC now appraises any proposals for new research initiatives whichrequire federal funding and has been appointed technical adviser to theUniversity Grants Commission to provide guidance on the award of grants foragricultural research.

60. PARC provides a national testing service for new agricultural tech-nology; primarily for evaluating new crop varieties. This service is part ofthe procedure for the release of varieties in Pakistan and provides data andrecommendation of varietal performance to the National Seed Council whichthen decides which varieties will be released. The results from the trialshave not always been accepted by provincial authorities for releases withinthe province and there was a danger that varieties with unsuitable traitsmay therefore be used. GOP has now decided that the recommendations for therelease of crop varieties emanating from the national yield trials system wouldbe accepted by the provinces as the basis for provincial release.

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61. The Chairman of PARC is its Chief Executive and would have overallresponsibility for project implementation. A project implementation unit wouldbe established (see paragraph 52 above) consisting of the DMember Directors ofthe Executive Board of PARC, one of whom would be elected chairman. The unitwould assist the Chairman of PARC in the day-to-day operation of the projectand would monitor and evaluate progress continuously in terms of key indicatorsand targets. Monthly reports would be collected from the agencies involvedin implementing project components and would be consolidated into quarterlyreports to IDA. The supervision of the execution of civil works both at PARCand NARC would be the responsibility of an Executive Engineer, head of theCivil Engineering Unit of PARC, who would report directly to the PARC Chairman.

62. Under the project, the workload of Members of the Executive Board(MEB) would be substantially increased. At present, the MEB includes Membersfor Plant, Animal, Socio-Economic Sciences and Finance. PARC already plansto split the responsibilities under the control of the Member, Plant Sciencesinto Plant Sciences and Natural Resources, and to appoint an additional MEBto be responsible for the additional topic. This additional MEB would beappointed before December 31, 1981 (Section 2.07(a) of the draft ProjectAgreement). Each MEB plans, coordinates, supervises and guides activitiesin the relevant sections of PARC.

Cost and Financing

63. Total project costs over a five-year period are estimated at US$40million equivalent. The foreign exchange component is estimated at US$17.8million, about 44% of the project cost. The cost includes duties and taxesestimated at US$3.3 million. Physical contingencies of 15% are included inall civil works, 10% on equipment and 5% on operating costs. The projectwould require about 20 man-years of consultancy services at an estimated totalcost of US$2.7 million. The average man-month costs for local consultants isestimated at US$1,000 and for overseas consultants at US$9,500, includingsalary, reimbursables and international travel.

64. The proposed IDA Credit of US$24 million would be extended to GOPon standard terms and conditions and would finance all foreign exchange costsand 28% of local costs or about 65% of total cost net of duties and taxes.GOP would finance the remaining cost of US$16 million. IDA funds would bechanneled to PARC in accordance with GOP standard arrangements for IDA-financedprojects. PARC would provide each year its budgetary proposals for IDA com-ments before presenting them to the Ministry of Finance (Section 2.01(b) ofthe draft Project Agreement). Approval by the Executive Committee of theNational Economic Council (ECNEC) of the PC-1 document for the project is acondition of Credit effectiveness 1/ (Section 6.01 of the draft DevelopmentCredit Agreement). GOP's commitment to improved agricultural research andPARC's central coordinating role imply provision of a substantially higherlevel of funds annually to operate PARC and its related research programs.This requirement is reflected in the financial allocations included in the

1/ A PC-1 (Planning Commission Proforma No. 1) is an outline of the projectand project cost necessary for GOP approval procedures.

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Government's new draft development program for FY82-84 which has been prepared

in consultation with Bank staff. In order to ensure an early start to the

project, retroactive financing of about US$0.2 million is proposed for expendi-

ture incurred after October 1980 for preparation of plans, specifications and

drawings for major civil works items.

Procurement and Disbursement

65. The main items to be procured with the proposed IDA credit are:vehicles, civil works, farm machinery, laboratory equipment, office equipment

and furniture, training, technical assistance and salary costs of incrementalstaff added under the project. All major civil works, estimated to cost a

total of US$6.4 million equivalent, for PARC and NARC in Islamabad would beprocured through international competitive bidding (ICB) in accordance with

Bank Group guidelines. Other civil works, which would be relatively small

and/or geographically scattered would not be suitable for ICB; contracts would

be let under local competitive bidding procedures satisfactory to IDA. Farm

equipment and vehicle requirements would be bulked whenever possible and con-

tracts above US$50,000 equivalent would be procured by international competitive

bidding in accordance with Bank Group guidelines. Contracts which cannot be

grouped into purchases of US$50,000 equivalent, and specialized laboratory and

research materials and equipment, would be procured by limited international

tendering. All procurement would be arranged through PARC's procurement unit,which would be suitably strengthened by providing additional staff. Disburse-ment under the Credit would extend over five years and would be against: (a)

80% of contractual payments for civil works; (b) 100% of foreign expenditures

for directly imported equipment, furniture and vehicles or, in the case of

locally manufactured items, 100% of local expenditures (ex-factory); (c) 50%

of expenditures for imported equipment locally procured; (d) 100% of foreign

and local expenditures for training and technical assistance; (e) 70% of

total costs of research subprojects; and (f) 27% (average) of expenditures on

incremental staff on a declining basis (50% of expenditures in FY82 and 25% in

FY83 and thereafter). Disbursements would be made against full documentation,

except for (f) above, for which disbursements would be against certifiedstatements of actual expenditures. Disbursements for research subprojectswould be at six monthly intervals as reimbursements against the advances made

by PARC to the cooperating agency.

Accounts and Audit

66. PARC and the cooperating agencies would maintain separate records

and accounts for the project. Under the revised Ordinance PARC's accounts

would be audited by private firms. Auditors employed by PARC would make field

inspections of subprojects and Economic Research Unit accounts. Institutions

participating in the Contractual Research Grant Scheme would be required to

give undertakings that these auditing arrangements would be accepted. A

certified copy of PARC's accounts and financial statements and the detailedauditor's reports would be submitted to IDA within six months following the

end of a financial year.

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Benefits and Risks

67. The yields of major crops and animal products in Pakistan haveremained relatively unchanged over the past decade. Consequently, overallproduction of staples has barely kept pace with population growth. Projectfacilitated research would concentrate on critical areas which have been rela-tively neglected in the past. Research would focus on problem-oriented pro-grams and their definition would involve both farmers and extension workers.It is impossible to quantify benefits from agricultural research in preciseterms because the uncertain nature of research defies averaging betweensuccess and failure. Even when research programs produce useful technology,their application depends on the efficiency of extension and other supple-mentary services.

68. The project is designed to improve the institutional arrangementsfor the national planning, monitoring, funding and implementing of researchprograms in Pakistan. As the first stage of a longer term program of researchimprovement, it would concentrate on the establishment of a strong federalagency able to coordinate the nation's research efforts. Benefits wouldaccrue from the ability to redirect research from unproductive areas to thoseof high priority; the reduction in wastage of valuable and scarce resourcesresulting from the rationalization of research efforts and elimination ofduplication; and improved cooperation between scientists.

69. There is a risk that the results of the research conducted under theproject may not be appropriate to farmers' needs or, if appropriate, may notbe conveyed to or used by farmers. The project is designed to minimize thisrisk. The procedure for the design of research programs involves inputs fromboth extension personnel and farmers. The senior staff of PARC are of highcalibre and fully aware of the need to encourage research on farmers' problems.The subprojects for on-farm testing of extension packages and agro-economicsresearch have been designed to provide research workers direct contact withboth farmers and extension services. The project would complement programsto strengthen extension services and adaptive research being conducted underother projects assisted by IDA.

70. Further development of a truly national agricultural research systemwould require the cooperation of the provinces. To obtain this cooperation,PARC must clearly demonstrate its leadership and capability in agriculturalresearch planning, coordination, evaluation and financing. The project aimsto establish PARC in this role and its standing and power vis a vis theprovinces will also be strengthened (see paragraphs 59 and 60 above). Inaddition, the provision under the project of research grants, training oppor-tunities and assistance in agricultural economics research would createincentives for provincial cooperation and for the creation of a favorableatmosphere in which greater provincial cooperation would be forthcoming forthe design and implementation of subsequent, more provincially orientedinvestments in agricultural research.

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PART V - LEGAL INSTRUMENTS AND AUTHORITY

71. The draft Development Credit Agreement between the Islamic Republicof Pakistan and the Association, the Project Agreement between the Associationand PARC and the Recommendation of the Committee provided for in Article V,Section l(d) of the Articles of Agreement, are being distributed to the Exe-cutive Directors separately.

72. Special conditions of the project are listed in Section III ofAnnex III. An additional condition of Credit effectiveness is the approvalby ECNEC of the PC-1 document for the project (paragraph 64).

73. I am satisfied that the proposed Credit would comply with theArticles of Agreement of the Association.

PART VI - RECOMMENDATION

74. I recommend that the Executive Directors approve the proposed Credit.

Robert S. McNamaraPresident

AttachmentsMay 11, 1981

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ANNEX ITABLE 3A

PAKISTAN - SOCIAL INDICATORS DATA SHEET

PAKISTAN REFERENCE GROUPS (WEIGHTED AVTCESLAND AREA (THOUSAND SQ. KM.) - MOST RECENT ESTIM&LTE)

TOTAL 803. 9 MOST RECENT LOW INCCtE MIDDLE INCM4EAGRICULTURAL 253.0 1960 /p 1970 /b ESTIMATE /b ASIA & PACIFIC ASIA & PACIFIC

GNP PER CAPITA (US$) 60.0 130.0 270.0 212.4 1114.7

ENERGY CONSUMPTION PER CAPITA(KILOGRAMS OF COAL EQUIVALENT) 61.0 98. 01 172.0 166.0 842.4

POPULATION AND VITAL STATISTICSPOPULATION, MID-YEAR (MILLIONS) 45.9 60.4 77.3URBAN POPULATION (PERCENT OF TOTAL) 22.1 24.9 27.4 20.8 39.1

POPULATION PROJECTIONSPOPULATION IN YEAR 2000 (MILLIONS) 139.0STATIONARY POPULATION (MILLIONS) 332.0YEAR STATIONARY POPULATION IS REACHED 2150

POPULATION DENSITYPER SQ. KM. 57.0 75.0 96.0 193.2 376.1PER SQ. IN. AGRICULTURAL LAND 201.0 249.0 305.0 409.6 2350.4

POPULATION AGE STRUCTURE (PERCENT)0-14 YRS. 43.8 46.3 46.5 42.0 40.4

15-64 YRS. 51.8 50.5 50.6 55.0 56.265 YRS. AND ABOVE 4.4 3.2 2.9 3.0 3.4

POPULATION GROWTH RATE (PERCENT)TOTAL 2. 3 2. 8 3. 1 2.2 2.4URBAN 5.0 4. 0 4.4 3. 9 4.1

CRUDE BIRTH RATE (PER THOUSAND) 48.0 47.0 45.0 37.4 28.7CRUDE DEATH RATE (PER THOUSAND) 23.0 18.0 15.0 14.6 7.9GROSS REPRODUCTION RATE 3. 2 3. 7 3. 3 2. 6 1.9FAMILY PLANNING

ACCEPTORS, ANNUAL (THOUSANDS) .. 1908.1 2085.0USERS (PERCENT OF MARRIED WOMEN) .. .. 6.0 15.6 39.0

FOOD AND NUTRITIONINDEX OF FOOD PRODUCTION

PER CAPITA (1969-71-100) 89.0 102.0 99.0 101.4 116.9

PER CAPITA SUPPLY OFCALORIES (PERCENT OF

REQUIREMENTS) 83.0 97.0 99.0 92.4 108.9PROTEINS (GRAMS PER DAY) 55.0 60.0 63.0 49.8 60.3

OF WHICH ANIMAL AND PULSE 22.0 20. 0 20.0 12.0 18.8

CHILD (AGES 1-4) MORTALITY RATE 27.0 21.0 17.0 17.9 5.3

HEALTHLIFE EXPECTANCY AT BIRTH (YEARS) 44.0 49.0 52.0 50.8 63.0INFANT MORTALITY RATE (PERTHOUSAND) 135.

0 1 . .. .. 52.8

ACCESS TO SAFE WATER (PERCENT OFPOPULATION)

TOTAL .. 21.0 29.0 30.2 42.4URBAN .. .. 60.0 66.0 62.1RURAL .. .. 17.0 20.0 29.7

ACCESS TO EXCRETA DISPOSAL (PERCENTOF POPULATION)

TOTAL .. 3.0 6.0 17.7 52.8URBAN .. 12.0 21.0 71.3 71.1RLRAL .. .. .. .. 42.4

POPULATION PER PHYSICIAN 11000. Od 4310.Ofe 3780.0/e 6322.7 4120.1POPULATION PER NURSING PERSON .. 8440.O0e 10040.0/e 9459.0 2213.6POPULATION PER HOSPITAL BED

TOTAL 2070.0 1870.0 2020.0 1758.4 819.4URBAN 370.0 500.0 570.0RURAL 22850.0 12390.0 12360.0

ADMISSIONS PER HOSPITAI RE .. .. .. .. 28.8

HOUSINGAVERAGE SIZE OF EIOUSEHOLD

TOTAL 5.4 5.3URBAN 5.6 5.5RURAL 5.4 5.2

AVERAGE NUR4BER OF PERSONS PER ROOMTOTAL 3. 1 2. 8 .fURBAN 3.1 2.7RURAL 2.8

ACCESS TO ELECTRICITY (PERCENTOF DWELLINGS)

TOTAL .. 17.9/fURBAN '' 54.4

RURAL .. 4. 9

- 23 -ANNEX I

TABLE 3APAYISTAN - SOCIAL INDICATORS DATA SHEET

REFERENCE rROUPS (WEIGHTED AVIRAGESPAKCISTAN - MOST RECENT ESTIHATE)

MOST RECENT Law INCOME MIDDLE INCOME1960 Lb 1970 /b ESTIMATE /b ASIA & PACIFIC ASIA & PACIFIC

EDUCATIONADJUSTED ENROLLMENT RATIOS

PRIMARY: TOTAL 30.0 44.0 51.0 80.9 98.6MALE 46.0 62.0 69.0 94.3 99.2FEMALE 13.0 24.0 32.0 66.7 97.7

SECONDARY: TOTAL 11.0 14.0 17.0 26.6 55.5MALE 18.0 22.0 25.0 34.8 60.7FEMALE 3.0 6.0 8.0 18. 2 49.9

VOCATIONAL ENROL. (7 OP SECONDARY) 1.0 1.5 1.5 9.9 13.7

PUPIL-TEACHER RATIOPRIMARY 39.0 41.0 42.0 41.1 34.6SECONDARY 24.0 20.0 19.0 20.5 28.5

ADULT LITERACY RATE (PERCENT) 15.0/R 20.0 21.0 40.9 85.8

CONSUMPTIONPASSENGER CARS PER THOUSAND

POPULATION 1.0 3.0 2.8 1.8 9.0RADIO RECEIVERS PER THOUSAND

POPULATION 6.0 18.0 16.0 25.8 118.9TV RECEIVERS PER THOUSAND

POPULATION .. 1.6 4.8 2.4 39.4NEWSPAPER ("DAILY GENERALINTEREST") CIRCULATION PERTHOUSAND POPULATION 7.0 .. 5.0 13.4 .CINEMA ANNUAL ATTENDANCE PER CAPITA 0.8 3. Oh .. .. 4.9

LABOR FORCETOTAL LABOR FORCE (THOUSANDS) 14447.6 17364.1 21270.0

FEiALE (PERCENT) 8. 7 9.3 10. 0 29.4 36. 8AGRICULTURE (PERCENT) 60.8 58.9 58.0 70.5 51.9INDUSTRY (PERCENT) 17.9 18.7 19.0 11.6 21.9

PARTICIPATION RATE (PERCENT)TOTAL 31.5 28.7 27.9 37.9 39.1MALE 55.2 50.4 48.6 51.3 48.5FEKALE 5. 7 5.5 5.7 23.7 29.6

ECONOMIC DEPENDENCY RATIO 1.5 1.7 1.8 1.2 1.1

INCOME DISTRIBUTIONPERCENT OF PRIVATE INCOMERECEIVED BY

HIGHEST 5 PERCENT OF HOUSEHOLDS 20.3/i 17.8 17.3HIGHEST 20 PERCENT OF HOUSEHOLDS 45.3/i 41.8 41.5LOWEST 20 PERCENT OF HOUSEHOLDS 6.4/i 8.0 8.4LOWEST 40 PERCENT OF HOUSEHOLDS 17.5/i 20.2 20.6

POVERTY TARGET GROUPSESTIMATED ABSOLUTE POVERTY INCOMELEVEL (US$ PER CAPITA)

URBAN .. 68.0 176.0 107.8RURAL .. 47.0 122.0 86.5 192.1

ESTIMATED RELATIVE POVERTY INCOMELEVEL (US$ PER CAPITA)

URBAN .. 34.0 88.0RURAL * 22.0 58.0 * 182.5

ESTIMATED POPULATION BELOW ABSOLUTEPOVERTY INCOME LEVEL (PERCENT)

URBAN .. 42.0 32.0 46.2RURAL * 43.0 29.0 51.7 33.2

Not availableNot applicable.

NOTES

/a The group averages for each indicator are population-weighted arithmetic means. Coverage of countriesamong the indicators depends on availability of data and ia not uniform.

/b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969

and 1971; and for Most Recent Estimate, between 1974 and 1978.

/c 1962-65; /d Includes Bangladesh; L Registered, not all practicing in the country; /f 1973;J& 1960-62; /h 1972; Xi 1963-64.

Most recent estimate of GNP per capita is for 1979, all other data are as of April, 1980.

October, 1980

- 24 -

ANNEX IDEFINITIONS OF SOCIAL INDICAYO0S

Notes: Aitiough the date ate drau f rot soucesgenraly judged themtauhraiv enrlab, it should aco be noted that they say not be Surer-nationlly coparabe becase ofthe leok of taudordieed deftoiinead c....epte used by differec onrist oletn the date. The date ere none-..

chelsee, ceful cdeoibe ordreofeaoiud, indicate trende, end charucteriee cetain neor difrences ere uorIe..

The refrence roups er (if ha see cutry group of the sub ject coutry end (2) a couctry group oiih eceesthu higher I-ree ocm then ch. country group

ofnnab)ctcutry-(eacoptfr' "eIte Surplus Oil tEpoosra" group where "Middle boom f orth Afrioa sod Middle Runt' is chosenb. ..o.u. of strongereoi-atus .fIntise) . It the refereuc group date the averages are population weighted rnithatio means for each in eo and sho- unly chat et

nethalf of the c-utrise in. grou bee data for that iudicator. Since the ce--rge of counries anoo theSdrco depends 00 tcbs vilebility ofdta en -sntuiform, aution must he' sercnd in celating aeae of one indiutor to snthec. Tbhe.. averges ere only useful In copering the valueofon indicetoc at e tine amog the countr~y and refereec. groups.

LODI AREA. (th-ousand eA.) Pcltoerriphositin-Ppuute duiose by numer on pr-tnucag pby-Total - Total. nufce arse compoising lend ure an inland oaeo.- ecians 1 quaifid rw m ashool at uni-ersity level

daiuluul-Utinain of agriculeuca erlua eprrly or pe-aoenly uulinecfurna Person -ouatio divided by numbe of praeslioigfun crops. pounuree, earkt und bitchec gardene or co lie fallow; 190daa ml an esagaat ure,pur lnra, n siea uss

Peeglatiener goenitalI. - total, urbantsd -racl P Popatian (tetal,GOP PER CAPITA (US$) -1Wpr capita estiatu at c-rreot market prices, ol- uh,enrra) divddb ther rpnies neater efbeit ed

culatad by san -- nvraioo method au gorld Sank Atlas (1977-79 basis); 1960, avilable in Publi aud prinane ggara1 mod spatialisad bespital wedfPa-1970 7.ad if979data. hbhilitarien cevee. aopital. ace establishmets per-nantly snag fd

~GYCONM~RV1011 PER ~ITA - A .. I of ... gy (coal by at Iecat one physician. Eatabliebmets prowiding poinoipelly nstedialiffll SNSMPIIS PE CPIt - ueal on.annio ofcoserialenngy(col care ar net included. uRsl1 hespitale, howevr,Seclude belnb sad msdinmland lignite. pancolaum, oruo-l gs. sad hydro-, nuln1c and geotherma .en- oenters non permnetly staffd by s physioic (bun by a medical sasitsat,d,-.,ii. .)ricity) In kilograme of coal eqiaetPer cc.pita; 1960. 19700. asd 1978 nreaiwec0)sith offer.-pten o-idadie sad pr-vida

done, ~~~~~~~~~~~~~~~limited range of medical facilities.Per statistiesi pnsrpnem trbts bei-

FPOPULATION AND FITAL STATISTICS tale Seclude WHOe prioipai general and apecielised hospitals. ma -snlhospitals locaIl ot rural hopitals and medical sad mstsrity -ssr.Ttloclno.Mid-veer (ailllon.). As of July 1; 1960, if970, and 1978 Adnision h, nctlnd-ltlnme e dlsoat rdehra

dana. from huepitale divideWd by the number uP bade.bra Polain cmnt of total) -Retio of urban to tonal .poplation;diffrsnt definitions uf urban area may effect ounparability of dana grSNioGamo- cutre;19ff, 1900, end 1978 dune. Aarau. Sine of HSo..ehold iprn..ons..ec house holdS - tetal. urban, and rael-.Puolaio Lr.; cin Ahueodcnisne of a group of fadividoale sh. shes living quarters

Penulatino inveer liii - Crrent populaton projeotion are based o 1960 ad their maio anla. A hoarder er lodger say or may lont be included Intotal population by age and .eo ..ed their mortality cod fertility rae. the hoeahod frseIsiipuoseProjeotion peraatnra for mortality rates coprise of three bone .:m-- Avcann f'persuns pr room nte.. urban, and rural - Avaraga-esisg life sopsetany at birth ieesn ith c...try'. per cap..ita ....u her ofpconpr too lo' all uhan end -1re occupied aeoaleve;l, an fI-', life n-pactanoy tnaillinig at 77.1 yeuce. The pare- dwellings, respect.ively. ve1lingE enclods nn-peemanet tuoturas endmeters fur fsrtilily race also hav thrs leel.1 nuin declinei So.unoccuied per-sfertilityaouoniding to income IevaIand peatifamily planning perfernanc. Ao.... tc El-tcrioity icerosnt of dwsllioas) - tonal, urban. and rural -Each contry isthou assigned one ofpth-s nin combinations of mortality Cofo-t Itnal delliege with e1-tocniity In living quartets as pernetagsan:d fertility trauda f-r projectie urne.of total,urban, and rursi dwellings e-pe-tively.0 aIonry noou1atioe- T.scsianypopulanioc thero s no growth since

the birth rate is equal no the death nets, ond also theg structure e- EIEUCATI Of_sius cons.tant. This ia achievd oely aftec fertility ratna. decline to Adlueted Euolot feothe ropIeusasn lc-n of unit net -ep-daunion rate, when each gene.ration, Primarysho -1-ntotl oeadiml-rs oa,el n el

of womenraplaus inself auncly.The sainrpoutonsewseoolnt of all ages at the prinary 1en1 aspanostegee otespotfaetinated on the basis of the projeotad uaatcaieof the ipopultion piaysho-t opltos omlyicldscide gd61inthe year 2000, aud the rate of decline of f-ctility cece no repleon- yearn but adjusted f or differe lengtho of pcimaoy educa.tion; fec

man level. countries nick universal education eureI..nt mey -cd 150 Parne..eY-c stationary Popalatien Is .ea.hed - The year aoftneac aypopuleiotn i. aIcao .pupils arebelow or above the offIiail school age.

si hebeen rnched. Secondary school - total, eels and femal - Computed am chew; e..o.daryPento .anait educatinrqre at least four pears of approved primary inetructine;

Perent h.l Mdyapoutiner square kilomter (155 hectares) of prvdsgcri oaional, or -- ah-r crc-ing inarrutio.s for popiktoal area..nuall of 12 to 17 years ofa go; ourreponde...e.courses ore generally

Pre.b.gario-Itur.1 lend -Coputed as above for- no e landeoudd

ly. -1~~~~~~~~~~~~~~~~~octoa enroll!metinaott of soeodR V..-.Oootionc1 imtitutionPPonlenion Aoe Stnuotare ieacoont - Children (0-14yer)wokn-g (17- Iouetechucel, Soucil r te egam hc pessidpn64 years), and1retired (65 years ond ovr) os peroencges of mid-y... POPO- dontly on en departments of secondary ins.titutionsution; 1960, 1970, and 1978 data.t. Pop1-te...hen ratio -. onJ-,r. and secondary - Total students enrlled In

.Pocltn Growh Rats ineroent) - ttl~Aunul grhbrutes of total odd- primary and seonay.. vl diiddbycobrs oft ... checs in theyer opt aicsfor 15-S 16-70, adio-7n oursodig levls

ouute r=wt hots inercent - urbee - Aonll growt-h reuse of urba y. pu-. Adolf liptersy rate (-...nt) - Literate adults (able to read and mots)lacio.. for 1950-60, 196-.70, and 1970-78...aaepcrcennsgo of total adultpopulation aged 15 years and eve r.

Crude linth gene irar thousad) - dun1 live births pen thousand of aid-yearpopolstiou; 1960, 1970,. ad 1978 dona. CONfSUMPfTION

Icude Death Oats (pec thousand) - A-Iua deaths Per thousand of mid-year Pusener inns me thousand cogultion - Passen ger cars copieetnrpopulation; 1965, 19y0, end 19 78 data. ce nting lens then eigh't persons; uclodee ambuleece, hoarses end

irons Roroduction Oats-Average -b-r of daughtocaooao ill bean In iiay eile

tility rtnso; usualy five-ye. an evragee sadog it 1960, 1975, and 1977. broadoa..ts nognea _ulo e thouan of population; anludsa uli-pualc Plnnin - .ceptors. Alnatul (tho.....ds) - Aanu.al cober of acetr osd neoiec i conns end Ioyer oh- regist-cell of rdio see

ofbnbcnnlUdario.... udrn ... pi.ea of natione 'fsully planeig progran. wa.O efart Oars f.tonrcn on a o b prbesnsmsPanhlo lannmun- User bermoan of satried wmu - Pciucego of married ..o.ofclne aoihed lIcenin.s

eeeochl-hearing ago il5-44 yearn) nho s birth-control devices to S esvc ctioun oueie)-T0rciesfrbedetcoil mrid c,tn In -m ogo group. ge..n-1 public yen chouod onunu;acae unlicensed TV eevr

P22Ol ANDt NUTRITIUON iN-uueinedi er hnngerto f1Fst aei tal1den of rood Production nor Capita (1969-71-105 -lOdn of per .. pit. auaual tiocp. of"al ecrlitreisapp asIa a panidical peb-

production of all food -oemdities. Production ecoludee aed and feed and li-otioo devuted primril noI orig eea -s In is eoaida-dis lon ralndor year haste. Conndiri-soner primary goldo (e.g. tuocae c be "decoy" If it -Ppeec 1 at .lese Ioun cOe a week.inteafd of sugar) hich are edible aed coutoin utcrinuc. (.g.ofe n Cfnn Alnnua Intendance ret Cenits pca Tea- -gesd en the noboc oftenr nldd.Aggregate peduotion of each counry isbndotiocets sold during the year. including dMaieton. to drive-in cinsesnatioa avrage producer peSos oighte; 196 1-65 , 1970, end 1979 data..-kbl-t.Per caIneeclyo alre frret of onureesut) - Computed froen mbl,uin

eterg equ111iPvalent f netfoo eup'eaelein country Pat caPita I FRCpor day. A-silable suppliescops domsic prodoctiou, imports lees Tonol abon Force dihousede) - tE-uoIcelly active persons, includingouPra c, and chonges It stock. Naet supplie _ldo atmial food, sands, amdforce ad eployed but co.. 1ding housowive- sudns to.q_tIOiss use u food iroeen, sd loesc. gio ldiethu-iun. Requir- Deficuioi.. In -uricun.. outciee arc cot comparble; 1960, 1970 and

eo u vn oumto-d by PAt bousd on physiological ndc for noma ucti- 1979 dti..city and hoalth coneidoriug euviroenenta1 temperatore *hdy voights. age PFnl (cotet) - Fon1l labor forts us peroentag.otf total abon foro..

an da distibutio of opo1utiun, ud ulbooieg 1i pe-rcn for unte no Arcutr (p-c...et) - lboc force In f.coing, foetry huninganhousehol1d leve; 19h1-65, 1 970, nod 1977 data. finhin& snperoo..tage of tonal labor force 1960, 1970 end 197da.

Fcru.rite.u yo prtin (oramu p en day) - Protein coutnot of penc .Pica Induutry (percent) - Labor fume. In eioig. coust.octiun, es Btdactunnuc supply of. foope day. Netspply of food in dofiedasehoon.. Se ed electricity, water a ad gauss. por.oet,!go of totul labor force; 1960.quirenni for all cu..netlee ontabliehod by USDA providc for mnma 1970 end 1970 deta.allcwunc of 60 gSeo of tucal pe trin Fer day and 20 inane ofo=nl und Pertiutaincre(eonl- oa,ml, n eae- Participation or

usepoti., of which 10 gSan shudbSenlpott.Toetu- ativc ae r ptd sitl,ml,sdfml anPrea

ends are lowe thou those of y5 gnom nof total yrotoin and 23 grans of porcntge ofttl saln end fenel population of allu-g- rosPativly1;aimal pco tein asa -veeg for the -cold, propo..ed by FA11 ho the Third 1960, 1970, and 1975 dote. Th.ao are ILO's participation venue reflecting

Worl,,d food Surey 1961-65. 1970 and 1977 data.... .g-otn...turn oS the pulto. ad beg time trend. A fe wesi-Pr usin I coteim upy rmanmlen u - Protein supply of food de- mtsaefrnnto_ uore

tired from animale ad putlne in grems per day; 1961-, 1970 and197d at. tu Diolpendec..y Ratio - Ratio of popu1ottn under 11 and 65 aed overChild fe..s 1-4 Motality cuts iron .. rusd) - -un..I deetha per thu..... In to the total labo forco.

age group 1-4 yer. to ohlldron in thin aggou;Iot most do-loping cou--tries Ages derived fin life rabies; 1960,l1970 aud 1977 data. INaCOME DISTRIBUTION

OEAI.Th Percemtaac~~~~~~F of riat bon (both in cash and bind) - Rle..iv-d byriohestHE etnyatnnh(ae)-AAaeLuTnoHerno iermann ecet ihs 2 ecn,pooreet 20 peocnt, end poorest hi par o.et

LiSf e p, .y th'- 7_ -. fy..o i.r i of bh...ehelds.atbrh 1960:j, 197 and 1900 data.

l,atso Moc.talitry Rts moe houand - dAuual deaths of iotfue under one year ?OET TARGET GiOolUPof ageIe huadlce bintus. Estimated AbouePcryIcm ee U)oropn ubem ald -rura-

Acesto Safe Water ipeco_r of noonlation) -itotal urban, end -ruc - S boueptec ooelve ste nom ee eo which a sditeaN-ubahe of people (total, urban, so Iua) wIch sonble access. to a e.f nnn clydequute disc plu aentia1 eon-food requirseer is not__s suppy finulades treated aurfeos oners or untraced bat onotnntd s odble.water suc ae thac from protected borsholee, springs, sod ... ottarywella) as fcmcd eaiePvet to=lee f)on nia utan1a

prstesof chair rup-ctive popolatione. I en urhe ea pubi Runa1 relanivepvryicm-ee is one-thir oft averageperca itfonaino e dposn loaned ant mere the 100 meters iro a hous.sa bn esoa incom of the coutrY. Urban leve is daniv-d fom the rura

cosdrd ablg wtin resnble eneeof thor h.uso. I tuna rt5 ee ihajsmetfrbw otr lnn cobnaesrmasosbleeue .-oud laply rho; the housewfe or mobors of the house hold E.tatmaedPo Bltia I0 Abeolote poverty Incm Leve (percent - arbedo net bare to spend disproportioutn part of the dy inftuhiug th.ndrna Percent of population (urban and rural) who c. esln peer".family's outer neade.

= '.T-Shmero people (total,`urban-md rurl) ervd byaoitdis:poa as I. peroestage of their reoPecciceppuains areta die- lonoicad Socim Data DtrisionP.su ma y inlude rho .uc-is o and disposal, wit on wihout ncatmenE, oeceO dA-lyie and Projentina Departmatof boma aorata and wats-wter by water-born syata en the use of October 1990pit privies and siilso iuaesllatione.

- 25 -

ANNE I

ECONOMIC DEVELOPMENT DATA

GROSS NATIONAL PRODUCT IN 1979/80 ANNUAL RATE OF GROWTH (Z. constant prices)

USS billion 2 1969/70-1974/75 1975/76-1979/80 1979/8O

GNP at Market Prices 25.05 100.0 3.5 6.1 7.8

Gross Domestic laveastent 4.16 16.6 -5.5 4.8 2.2Gross National S-ving 3.04 12.1 -2.1 8.9 8.3

Current Account Balance -1.16 -4.6

Resource Gap -2.77 -11.1 6.7 3.5 -17.2

OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1979/IN /a

Value Added Labor Force V.A. Per Worker

U0$ million % Million Z US$ million 2

Agriculture 6.694 31 12.8 54 523 58Industry 5,280 25 4.3 18 1,228 137Service.s 9,299 44 6.6 28 1.409 157

Total/Average 21,273 100 23.7 100 898 100

GOVERNMENT FINANCE

General Government Central Government(Re billion) 2 of GDP (Rs billion) % of GDP

1979/80 1979/80 1975/76-1979/80 1979/80 1979/80 1975/76-1979/80

Current Receipts 39.4 17.0 15.9 30.1 13.0 12.1

Currenct Empenditures 39.5 17.0 16.7 29.8 12.8 12.2

Current Surplus/Deficit -0.1 0.0 -0.8 0.3 0.2 -0.1Capital Expenditures 24.8 10.7 10.4 21.6 9.3 8.8External Assistance (net) 12.6 5.4 5.2 12.6 5.4 5.2

MONEY, CREDIT AND PRICES

1974/75 1975/76 1976/77 1977/78 1978/79 1979/80/-

Money and Quasi Money 33.1 41.6 51.7 63.6 76.4 91.1Bank Credit to Public Sector (net) 17.7 22.9 29.5 34.4 43.2 48.8Rank Credit to Private Sector (gross) 19.7 23.1 30.1 35.7 42.7 50.6

Money and Quasi Money as 2 of GDP 31.6 34.3 38.1 40.6 43.0 43.3Whole.ale Price Index (1969/70 - 100) 211.3 229.4 255.3 271.4 289.7 316.7

Annual Percentage Change in:Wholesale Price Index 23.6 8.6 11.3 6.3 6.7 9.3

Rack Credit ti Public Sector (set) 21.2 29.4 28.8 16.6 25.6 13.0Bank Credit to Private Sector (gross) 26.3 17.3 30.3 18.6 19.6 18.5

/a Labor force data are official figures of the Ministry of Finance and Planning. Serious undere-umeration ray exist, especially of women.

/b Provisional.

Not applicable.

April 1981

- 26 -

AYNIX I

3ALANCE OF PAYMENTS (US9 million) MERCHANDISE EXPORTS (AVERAGE 1976/77-1979/80)

1976/77 1977/78 1978/79 1979/80/1 US5 million 2__

Exports of Goods, NFS 1.404 1,651 2,107 2.964 Raw Cotton 135.4 8.5lmports of Goods, NFS 2,877 3,297 4.485 5,727 Cotton Yarn 157.0 9.8Reso.rc. Gop (deficit - -) -1,473 -1,646 -2.378 -2.763 Cotton Cloth 199.1 12.4

Rice 313.3 19.6Interest ?ayneets -172 -183 -261 -285 A.11 Other Commdities 795.6 49.7Workers' Remittances 578 1,166 1,395 1,74.3 Total 1,600.4 100.0Other Factor Payme.ts (set) 15 62 134 154Net TransfersBalance on Corrent Account -1,052 -601 -l1,l0 -1,151 EXTEFUIAL DEBT, JUNE 30, 1980

Direct Foreign I-vestment US$ sillionNet MLT Borrowing

Disb-rsmemst 961 841 813 1.420 Public Debt, Including Guaranteed 11,209.9A-rti..tito -175 -122 -235 -310 Non-guaranteed Privata Debt/fSob Total 786 719 578 1.110 Total Outstanding nd Disburead 11,209.9

Transactions with IMF/b 44 41 -14 78

Other Iemas n.e.i./c 24 163 238 325 DEBT SERVICE RATIO FOR 1979180/JLIncrease in Reserves (-) 198 -322 308 -362

Gross Reserves (year e.d)/d 372 694 386 748Net Reserves (year eod)/e -146 150 -92 340 Public Debt. Including Guaranteed 12.7Official Gold (year end; million) 1.6 1.7 1.8 1.8 Non-guarantaed Private Debt

Total 12.7Foal and Related Materials

Petroleum Imports 413 497 611 1.237 IBRD/IDA LENDING (JUNE 1979) (million USj)Petrole- m E.port. 27 63 56 178

RATE OF EXCHANGAE Outstanding and Disbursed 330.9 788.7Undisbursad 60.7 444.1

Through rMv 11, 1972 May 11, 1972 - February 15, 1973 Since February 15, 1973 Outstanding, Including Undisbursed 391.6 1.232,8

US$ - Rs 4.7619 US$ * 11.00 US$ - 9.90R. - US$0.2100 Rs - 0.0909 Rs - 0.1010

/a Government estimete./b Including Trust Fund./c Including net short-term borrowing and errors and omissions.d Foreign exchange and SDR holdings of the State Bank.

/e txcluding use of IMP credit.If Privace debt is negligible./ Ratio of debt service to exports of goods. no0-factor services and wrkers' remittances; not including short-teram or IMF charges.

Not available.

April 1981

- 27 - ANNEX II

STATUS OF BANK GROUP OPERATIONS IN PAKISTAN

A. STATEMENT OF BANK LOANS AND IDA CREDITS (as of February 28, 1981)

US$ million

Loan or Amount (less cancellation)

Credit Undis-

Number Year Borrower Purpose Bank TW IDA bursed

Seventy-eight loans and credits fully disbursed /a 611.2 581.3

422 1973 Pakistan Karachi Port III -- 18.0 0.2

492 1974 Pakistan Karachi Port IV 16.0 1.3

1107 1975 SNGPL Gas Pipeline IV 53.0 -- 1.7546 1975 Pakistan Industrial Development (NDFC) -- 30.0 1.5

1208T 1976 Pakistan Power Transmission -- 35.0 - 5.5

620 1976 Pakistan Seed -- 23.0 8.9

1326 1976 PICIC Industrial Development 25.0 -- 1.2

630 1976 Pakistan Lahore Water II -- 26.6 9.7

648 1976 Pakistan Irrigation and Drainage -- 14.0 8.0

1366T 1977 Pakistan Livestock -- 10.0 -- 9.8

1372/684 1977 Pakistan Railways 35.0 25.0 25.0

678 1977 Pakistan Education -- 15.0 10.7

751 1977 Pakistan Hill Farming -- 3.0 2.0

754 1978 Pakistan SCARP-VI -- 70.0 69.2

755 1978 Pakistan Hazara Forestry -- 1.7 1.6

771 1978 Pakistan Tarbela II 35.0 2.2

813 1978 Pakistan Punjab Extension -- 12.5 10.4

846 1978 Pakistan Fauji Fertilizer -- 55.0 20.6

867 1979 Pakistan Toot Oil & Gas Development -- 30.0 18.1

877 1979 Pakistan Salinity Control & Reclamation -- 60.0 59.5

892 1979 Pakistan Primary Education 10.0 9.1

922 1979 Pakistan Sind Agricultural Extension /b -- (9.0) (9.0)

957 1979 Pakistan Fourth Agricultural Dev. Bank -- 30.0 27.3

968 1980 Pakistan Third WAPDA Power -- 45.0 41.8

974 1980 Pakistan Third Highway -- 50.0 48.4

1019 1980 Pakistan PICIC Industrial Development - 40.0 40.0

1066 1981 Pakistan Fertilizer Imports(SDR 38.2 M) /d -- (50.0)(50.0)

Total 724.2 45.0 1,191.1

of which has been repaid 402.0 -- 24.0

Total now outstanding 322.2 45.0 1,167.1

Amount sold 23.9

of which has been repaid 22.3 1.6 -- --

Total now held by Bank and IDA /c 320.6 45.0 1,167.1

Total undisbursed 26.3 15.3 392.1 433.7

/a Excludes the disbursed portion of loans and credits wholly or partly for proj-

ects in the former East Pakistan which have now been taken over by Bangladesh./b Not included in totals: Credit number 922-PAK is not yet effective./c Prior to exchange adjustments./d Not included in totals.

- 28 - ANNEX II

B. STATEMENT OF IFC INVESTMENTS (February 28, 1981)

Fiscal Amount In US$ MillionYear Obligor Type of Business Loan Equity Total

1958 Steel Corp of Rolled Steel 0.63 - 0.63Pakistan Ltd. Products

1959 Adamjee Industries Textiles 0.75 - 0.75Ltd.

1962- Gharibwal Cement Cement 5.25 0.42 5.671965 Industries Ltd.

1963- PICIC Development - 0.52 0.521969- Financing1975

1965 Crescent Jute Textiles 1.84 0.11 1.95Products

1965- Packages Ltd. Paper Products 4.43 0.84 5.271980

1967 Pakistan Paper1976 Corp. Ltd. Paper 5.38 2.02 7.40

1969 Dawood Hercules Fertilizers 1.00 2.92 3.92Chemicals Ltd.

1969 Karnaphuli Paper Pulp and Paper 5.60 0.63 6.23Mills Ltd.

1979 Milkpak Limited Food & Food 2.40 0.40 2.80Processing

1979 Pakistan Oilfields Chemicals &Limited and Attock PetrochemicalsRefinery Ltd. 29.00 1.62 30.62

1980 Fauji Foundation Woven Polypropy-lene bags 1.78 - 1.78

1980 Premier BoardMills Limited Particle Board 2.70 - 2.70

Total Gross Commitments 60.76 9.48 70.24

Less: Cancellations, TerminationsRepayments and Sales 33.25 1.01 34.26

Total Commitments Now Held by IFC 27.51 8.47 35.98

Undisbursed (including participants) 17.72 0.37 18.09

- 29 -ANNEX II

C. PROJECTS IN EXECUTION I/

Credit No. 771 Tarbela Dam: US$35 Million Credit of March 10, 1978;Effective Date: April 4, 1978; Closing Date:June 30, 1982

This credit, together with other additional contributions arrangedin 1978, is intended to help finance the repairs and additional works requiredto complete the project. In September 1973, the Indus River was divertedthrough tunnels on schedule to enable the final stage--the construction ofthe closure section of the dam--to be undertaken. By end-June 1974, themain embankment had been completed to full height, and the first impoundmentbegan on schedule in July 1974. In early August, difficulties were encoun-tered in the operation of the tunnel gates and damage to one of the tunnelsnecessitated the emptying of the reservoir and repair of the tunnels andoutlet structure. Agreement was reached with the parties of the Indus Basinand Tarbela Development Funds whereby special contributions were made by anumber of parties, including IDA (Credit 581-PAK), to help with the cost ofrepairs and additional remedial works. The stilling basins suffered furtherdamage in August 1975 and again in April 1976. Stilling Basin 3 has now beenrepaired and has operated satisfactorily. Work to construct a flip-bucketat the outlet of Tunnel No. 4 is scheduled to begin in 1981 and will becompleted in 1983. Serious erosion in the plunge pool below the servicespillway during 1977 necessitated additional protection works. Final protec-tion work in the service spillway plunge pool and in the downstream channelwere completed in June 1980. Final protection work in the auxiliary plungepool will be completed in June 1982. Increased attention is being given todeveloping the O&M program and resources to insure the long term performanceand safety of the Tarbela Project. Since 1975, irrigation requirements fromthe dam have generally been met. Power generation by the first four unitsbegan in 1977.

Loan No. 1372 Tenth Railway: US$35 Million Loan and US$25 Millionand Credit of March 8, 1977; Effective Date: May 9, 1977;

Credit No. 684 Closing Date: June 30, 1982

The project is proceeding satisfactorily. Spare parts for diesellocomotives have been fully ordered. The telecommunications and signalingscheme is making good progress. Procurement has been completed and the totalproceeds of the Loan/Credit have been committed.

1/ These notes are designed to inform the Executive Directors regardingthe progress of projects in execution, and in particular to report anyproblems which are being encountered, and the action being taken toremedy them. They should be read in this sense, and with the under-standing that they do not purport to present a balanced evaluationof strengths and weaknesses in project execution.

- 30 - ANNEX II

Credit No. 422 Third Karachi Port: US$18 Million Credit of July 19,1973; Effective Date: December 14, 1973; ClosingDate: June 30, 1981

Credit No. 492 Fourth Karachi Port: US$16 Million Credit of July 8,1974; Effective Date: September 18, 1974; ClosingDate: December 31, 1981

The Third Karachi Port Project is almost completed and all theCredit funds are committed and most of Credit has been disbursed. The FourthKarachi Port Project is almost complete and at February 28, 1981, IDA had dis-bursed US$14.7 million. The partial adoption of a new tariff structure hasimproved KPT's financial position.

Loan No. 1326 Development Finance Company - PICIC: US$25 MillionLoan of September 14, 1976; Effective Date:November 29, 1976; Closing Date: December 31, 1980

This loan has been fully committed and at February 28, 1981, dis-bursements amounted to US$23.8 million.

Credit No. 546 National Development Finance Corporation (NDFC):US$30 Million Credit of May 15, 1975: EffectiveDate July 17, 1975; Closing Date: December 31, 1981

The Credit has been fully committed and US$28.5 million had beendisbursed as of February 28, 1981. The Closing Date, originally September 30,1979, has been postponed to December 31, 1981.

Loan No. 1107 Fourth Sui Northern Gas: US$60 Million Loan ofMay 15, 1975; Effective Date: July 5, 1975; ClosingDate: December 31, 1981

Project activities are on schedule. US$1.7 million remain undis-bursed and had earlier been retained to install gas dehydration facilities atMeyal oil field. These facilities are now being provided by the owner of thefield in conjunction with an LPG plant. The Borrower has therefore now beenauthorized to apply these undisbursed funds to increase the capacity of theIslamabad/Rawalpindi distribution system where extensive load shedding wasexperienced during the last winter months due to demand increases.

Credit No. 620 Seed Project: US$23 Million Credit of March 29, 1976;Effective Date: November 29, 1976; Closing Date:June 30, 1981

Project implementation remains behind schedule, with the most impor-tant delays being with the construction and equipping of the three seed pro-cessing plants due to disputes between contractors, consultants, and equipmentsuppliers and the Punjab Seed Corporation. There have been signs of improve-ment in the quality of pre-basic seed supplied by the research institutes,though there is still a problem with wheat seed in Sind. It is likely thatproject completion and credit closing dates will need to be further extended.

(Revised 4/21/81)- 31 - ANNEX II

Credit No. 630 Second Lahore Water Supply, Sewerage and DrainageProject US$26.6 Million Credit of June 8, 1976; EffectiveDate: September 21, 1976; Closing Date: December 31,1982

All the works have been contracted after some design delay andretenderings. Construction is about 2-1/2 years behind schedule. The engi-neering consulting service financed by UNDP has been strengthened and extendedto cover the prolonged project period. Technical assistance provided by ODA(UK) for engineering and financial management, leak detection and traininghas been reorganized to better meet the needs of the project. Financialresults are poor despite an interim tariff increase effective October 1980.There continues to be a need for a definitive long-range tariff policy.

Loan No. 1208-T Second WAPDA Power: US$50 Million Third Window Loanof February 19, 1976; Effective Date: April 30, 1976;Closing Date: June 30, 1981

Construction of the 336-mile transmission line between Faisalabad(formerly Lyallpur) and Guddu and installation of associated equipment hasbeen completed. The closing date, originally December 31, 1980, has beenextended to June 30, 1981, to accommodate payment of retention money.

Credit No. 648 Khairpur-II Tile Drainage and Irrigated Farming DevelopmentProject: US$14 Million Credit of July 22, 1976;Effective Date: March 14, 1977; Closing Date: July 31,1982

Overall progress is currently about two years behind schedule. Workon canal remodeling, surveys, and extension services are proceeding satisfac-torily. Initial break-in period of tile and collector drain construction hasbeen completed enabling better estimations of costs and implementation schedule.Experience obtained during this period indicates that project costs could besignificantly higher than appraisal estimates and completion may be delayed by3-4 years. IDA has begun a dialogue with GOP officials regarding possiblerevisions to project scope and implementation schedule with a view to containcost overruns and limit completion delays.

Credit No. 678 Third Education: US$15 Million Credit of February 18,1977; Effective Date: July 6, 1977; Closing Date:December 31, 1982

The project is making good progress. All project studies are nearcompletion. Nearly 100% of civil works contracts have been awarded and about75% have been completed. Tendering for about 75% of the project equipment isin progress and the balance is expected to be tendered shortly. Technicalassistance specialist services are now being provided satisfactorily and about90% of the fellowships have been used or committed.

- 32 - ANNEX II

Loan No. 1366-T Punjab Livestock: US$10 Million Loan of February 18,1977; Effective Date: August 3, 1977; Closing Date:December 31, 1982

The Government and the Bank have discussed the possible restructur-ing of the project and GOP has established a committee of senior officials tofurther review this matter. The invitation to tender for the rehabilitationof the Lahore Milk Plant (LMP) is ready to be issued; however, the Governmenthas been requested to complete its review before tenders are called for theLMP.

Credit No. 751 Hill Farming Technical Development: US$3 MillionCredit of December 1, 1977; Effective Date: March 7,1978; Closing Date: September 30, 1981

This project is generally proceeding satisfactorily. All keystaff are in post and pilot programs for food crop trials, vegetables, apples,forestry and livestock are operating close to schedule. Preparation of theproposed follow-up project has begun.

Credit No. 754 SCARP-VI: US$70 Million Credit of January 19, 1978;Effective Date: December 28, 1978; Closing Date:November 30, 1986

The project is about two years behind schedule. No significantprogress yet in implementation, due principally to serious delay in formal GOPapproval of project. To accommodate GOP resource constraints, the projectscope and cost have been reduced, with IDA assistance, which facilitated GOPapproval in February 1981. IDA is currently awaiting the receipt of necessarydocumentation of this approval.

Credit No. 755 Hazara Forestry: US$1.7 Million Credit of January 29,1978; Effective Date: July 14, 1978; Closing Date:December 31, 1983

There has been some progress in different project activities, butimplementation is significantly behind schedule. The silviculturist has notbeen recruited in spite of UNDP financial assistance. Forest inventory, withthe technical assistance of FAO, is underway and results are expected to beavailable in early Fall. A consulting firm will present a new proposal forthe verification and interpretation of the inventory data in order to identifythe scope of the follow-up industrial feasibility study.

- 33 - ANNEX II

Credit No. 813 Punjab Extension and Agricultural Development: US$12.5Million Credit of June 6, 1978; Effective Date:September 12, 1978; Closing Date: June 30, 1984

Project approval which was delayed by GOP for about 18 months hassince been granted. Implementation is behind schedule, but lately, there

has been tangible progress in staff recruitment, building site acquisitionand construction. There have been delays in obtaining the required con-sultants' services.

Credit No. 846 Fauji Fertilizer: US$55 Million Credit of September 14,1978; Effective Date: December 19, 1978;Closing Date: June 30, 1982

Engineering and procurement are practically completed and con-struction is well advanced. The marketing program is being implementedsatisfactorily.

Credit No. 867 Toot Oil and Gas Development: US$30 Million Credit ofJanuary 12, 1979; Effective Date: April 25, 1979;Closing Date: December 31, 1981

Project implementation is about eight months behind schedule mainlydue to technical difficulties in drilling and slow procurement. However, withthe availability of better equipment, materials and services, there has beena recent improvement in well drilling. A new drilling management contractorstarted work in April 1980. Two CIDA experts arrived in Pakistan in June1980 to assist in project implementation. A firm to provide project coor-

dination services under CIDA financing started work in August 1980. Trainingof OGDC personnel under the drilling management contract began in February1981. An ODA-financed management study of OGDC is expected to start in April

1981.

Credit No. 877 Salinity Control and Reclamation Project (SCARP) Mardan:US$60 Million Credit of February 7, 1979; EffectiveDate: October 16, 1979; Closing Date: June 30, 1986

The project is about one year behind schedule. No significantprogress yet in implementation, due principally to serious delay in formalGOP approval of project. To accommodate GOP resource constraints, theproject scope and cost have been reduced, with IDA assistance, which facil-itated GOP approval in February 1981. IDA is currently awaiting the receiptof necessary documentation of this approval that will enable a presentationto IDA management on the restructured project.

(Revised 4/21/81)- 34 - ANNEX II

Credit No. 892 Primary Education: US$10 Million Credit of April 18,1979; Effective Date: October 23, 1979; Closing Date:June 30, 1985

Good progress has been made with the evaluation component of thisproject after an initially slow start due to the renegotiation of the con-sultancy contract. Overseas fellowships have been completed. Civil works,furniture and equipment are about six months behind schedule. Some redesignof the evaluation program, especially in Baluchistan, may be needed due toremoteness and absence of adequate field staff.

Credit No. 957 Fourth Agricultural Development Bank: US$30 Million Creditof December 7, 1979; Closing Date: December 31, 1982

This Credit became effective June 5, 1980. Although the agricultureengineer training component is yet to start and project consultants are yet tobe hired, overall progress has been satisfactory.

Credit No. 968 Third WAPDA Power: US$45 Million Credit of January 10,1980; Closing Date: December 31, 1984

The project is at an early stage, with work being done in procurement,land acquisition and initial construction of substations.

Credit No. 922 Sind Agricultural Extension and Adaptive Research Project:US$9 Million Credit of June 12, 1979; Closing Date:June 30, 1984

This Credit is not yet effective.

Credit No. 974 Third Highway: US$50 Million Credit of April 9, 1980;Closing Date: June 30, 1984

Delays in credit effectiveness and contractor's inability to plantheir work effectively have delayed construction and will call for a revisionof contract timing to bring required outputs in line with the contractor'sabilities.

Credit No. 1019 PICIC Industrial Development: US$40 Million Credit ofMay 30, 1980; Closing Date: March 31, 1984

This Credit became effective October 29, 1980 and US$1.5 million hasbeen committed.

Credit No. 1066 Fertilizer Imports Credit: US$50 Million Credit ofOctober 17, 1980; Closing Date: March 31, 1981

This Credit became effective December 1, 1980.

- 35 -

ANNEX III

PAKISTAN

AGRICULTURAL RESEARCH PROJECT

SUPPLEMENTARY PROJECT DATA SHEET

Section I: Timetable of Key Events

(a) Time taken to prepare project:

Nine months.

(b) The agency which has prepared the project:

PARC, with the assistance of FAO/World BankCooperative Programme.

(c) Date of first presentation to IDA and date offirst IDA mission to consider project:

Identification mission: February 1980.

(d) Departure of Appraisal Mission:

September 1980.

(e) Date of completion of negotiations:

March 16, 1981.

(f) Planned date of effectiveness:

September 1, 1981.

Section II: Special Bank/IDA Implementation Actions

None

Section III: Special Condition of Effectiveness

Approval by ECNEC of the PC-1 document for theproject (paragraph 64).

- 36 -ANNEX III

Other Conditions

(a) PARC would employ, by August 31, 1981, in its Civil Engineer-ing Unit, three engineers and three overseers to superviseproject civil works (paragraph 52); -

(b) GOP would maintain the ongoing research subprojects atadequate level of funding (paragraph 56);

(c) TOR and composition of the mid-term review team wouldbe agreed with IDA before July 31, 1982 (paragraph 58);

(d) An additional Member of PARC's Executive Board, responsiblefor National Resources, would be appointed before December 31,1981 (paragraph 62); and

(e) PARC would provide each year its budgetary proposals for IDAcomments before presenting them to the Ministry of Finance(paragraph 64).

IBRD 15488640 680 / 720 U. S. S R. 5JANUARY 1981

PAKISTAN l L.- C CH I NA

MAIN AGRICULTURAL RESEARCH INSTITUTIONS ,'360 AND /

AGRO-ECOLOGICAL ZONES -_

RESEARCH INSTITUTIONS: V

* NARCANDPARC Approximate Le of Control

* PLANT. SOILS AND FORESTRY

ANIMAL SCIENCE AND FISHERIES v I ......

*MONANo

AGRO-ECOLOGICAL ZONES:

INDUS DELTAI'SOUTHERN IRRIGATED PLAIN R..lid

HI SANDY DESERT(a&b)IV NORTHERN IRRIGATED PLAIN &b) *

V BARANI LANDSVI WET MOUNTAINS

V'l NORTHERN DRY MOUNTAINSVII. WESTERN DRY MOUNTAINS

-320 IX DRY WESTERN PLATEAUX SULAIMAN PIEDMONT Sh.hi. 320

> RIVERS

0 MAIN TOWNSBi

- -- PROVINCIAL BOUNDARIES | IV_._ INTERNATIONAL *a

BOUNDARIES vmr,

4----~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~2-

i\ _. _-_-.J I/str

I R A N 70 5Dy/l

S_ I > 2 6 5 1 /N D KILOMETERS 0 100 200 300

Mc t_ < / X < ma 1MILES 0 100 200

720

;§~~~~~~~~~~ - ~\ ,.. Lic ci Co°- ra.

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CHINA

IRAN . 7 4 '

IT

Arabian Se 24 ,,

AUDI INDIATht ' " b pWomd b Vo. %*W Sb*.e WftP#AQ4* A*r ft0be6WARABIA/ of *f r#.*e ofooAmiotw !oOwO Ai 4owEmA.4 7~d.d d A

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