Documt of

The World Bank

FOR OffICIAL USE ONLY

Roput No. P-6061-BR

NEORAND AM AN E DATION

OF THE

PRESIDENT OF THE

ITRNATIONAL BANK FOR RECOSTRUCTI ONAD DEVELOPMENT

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED LOA

IN AN AMOUNT EQUIVALENT OF US$212 lILLION

TO THE

FEDERATIE REPUBLIC OF BRAZIL

FOR THE

SECOND NORTEEAST BASIC EDCATION PROJECT

APRL 20, 1993

This document has a restricted distribution and may be used by recipient only in the performance oftheit oMCl dties. Its contens may not otherwise be disclosed without World Bank autborization.

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C YU X EOQUIVALENIS

(as of July 15, 1992)

Currency Unit: Cruzeiro (Cr.)

US$1.00 = Cr.3789.9US$1 million = Cr.37.9 million

FISCAL YEAR

January 1 - December 31

P-NCWAL ACRONYMS USE)

DDE Departamento de Desenvolvimento de Sistemas de Ensino/Educational Systems Development Department

EDURURAL Northeast Basic Education I ProjectFAE Fundagio de Assistncia ao Estudante/

Foundaion for Student AssistanceFNDE Fundo Nacional de Desenvolvimeno da Educa/o/

National Fund for Education DevelopmentINEP Instituto Nacional de Estudos e Pesquisas Educacionais/

National Institute for Education Studies and ResearchMEC Ministerio da Educagio e do Desporto/

Ministry of Education and SportsSAEB Sistema da AvalWasao do Ensino BNsico/

Evaluation System for Basic EducationSEF Secretaria de Educagao Fundamental/

Secretariat for Primary EducationUEESP Unidade Estadual Encarregada do Suporte ao Projeto/

State Project Support UnitSupport Unit for the National Component

UNDP United Nations Development ProgramUNESP Unidade Nacional Encarregada do Suporte ao Projeto/

National Project Support Unit

FOR OMCIAL USE ONLY

BRAZIL

SECOND NORTHEAST BASIC EDUCATION PROJECT

LOAN AND PROJECT SUMMARY

Federative Republic of Brazil

Beneflelaesw Ministry of Education; State and Municipal Education Secretariats in 4Northeast States (Ceara, Maranhlo, Sergipe and Pernambuco)

Amount: US$ 212 million

Terms: Payable in 15 years, including a five year grace period, at the Bank'sstandard variable interest rate

Federal Goverment 75.3

State Governments 91.3

Proposed IBRD Loan 212.0

TOTAL 378.6

Rate of Retn: Not applicable

Staff Appraisal Rort: 11298-BR

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

MEMORANDUM AND RECOMMENATIONOF THE RENT

OF THE IBRD TO THE EXECUTVE DIRECTORSON A PROPOSED LOAN TO THE FEDERATIVE REPUBLIC OF BRAZIL

FOR THE NORTHEAST BASIC EDUCATION II PROJECT

1. I submit for your approval the following memorandum and recommendation on aproposed loan to the Federative Republic of Brazil for the equivalent of US$212.0 million to helpfinance a basic education project in the Northeast of Brazil. The loan would be at the Bank'sstandard variable interest rate, with a maturity of 15 years, including five years of grace.

2. Brazil's levels of human resources development are exceedingly low compared withother countries in the region and especially compared with other countries of similar per capitaincome: the mean education of the population is 4.5 years of schooling, and over 60 percent of thepopulation has completed four years or less of schooling. (For comparison, only 7 percent of theKorean population has had four or less years of schooling). Access to primary school is close touniversal, but repetition and dropout rates are among the worst in Latn America and two-thirds ofchildren do not complete the eight year primary school cycle. Conditions are worst in the Northeast,where about 80% of all children do not complete primary school. Low completion rates in theNortheast to some extent reflect access problems, especially in rural areas (the gross enrollment ratein the Northeast is 93%, compared to 104% nationally). But a more important problem is the lowquality of schooling; books and materials are scarce and close to a quarter of teachers in the Northeasthave not completed primary school themselves. Education spending in most municipal systems in theNortheast, at less than $50 per primary student per year, is far below the national average of US$250-300 per studeat per year, and there is a need for the states and federal government to reducethese disparities. Education management in state school systems (which handle about 35% of primaryerollments in the region) and municipal systems (with about 50% of enrollments) is generally weakand education secretarats are often substanially overstaffed.

3. Under Northeast Basic Education I, or EDURURAL (US$32 million, approved by theBoard in 1980), the Bank supported school construction, in-service teacher training and textbookprovision in rural primary schools. One of the key lessons learned from that project was that thesustainability of these investments was limited by the absence of reforms in education systemmanagement and financing. Thus, our dialogue with the Government since EDURURAL hasemphasized a more systemic approach to the education quality problems in the region, stressing theneed to address disparities between state and municipal systems, the need for shifts in the allocation ofresources, and the need to support urban (where the majority of students are enrolled) as well as ruralschools. Along with the proposed Second Northeast Basic Education Project, the Government is alsocurny prepari Northeast Basic Education m which follows the same design and will involve inthe other Northeast states. Ihere is strong support for these projects at the state level, and theMinistry of Education has demonstrated a high degree of commitment as well, playing a strong andconiwous role in project preparation despite three changes of Minister over the past year. Thanks toa Japanese grant of US$1.4 million for the preparation of both Northeast projects, intensive work atthe state level was possible, which has developed the states' sense of ownership of the projects.

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Relatonship of P&oWect to Bank Conmtra Assistance Strateg

4. The Bank's country assistance strategy in Brazil is to support policies and investmentsthat will encoae economic growth and social development, and greater macroeconomic stability.Our stregy strongly emphasizes the social sectors, because we believe that Brazil has significantlyunderinvested in human resource development in the past, and that this not only undermines Brazil'slong term economic potental, but is also a contributing faor to high income inequality and poverty.In all sectors, our strategy emphasizes Increased efficiency of public spending and better tagetng ofsevices to the poor. Within education, the focus of our strategy Is investment in primary education.becuse the country is far from achieving universal completion of primary education, and becauseprimary education has the highest social returns and the greatest potential for increasing the equity ofeconomic opportunity. Our Hfforts in the social sectors in general are heavily concentrated in theNortheast, where human resources are least developed and education and health systems are weakest.Reflecting these priorities, we have continuously invested resources in the development of NortheastBasic Education II and m, even when federal government support appeared uncertain.

Wed Motive mid Dmif

5. Proect Objtive. The project's goals are to increase student learning, reducerepetition and dropout, and increase primary school completion rates in the four states, throughimprovements in the quality of basic education and the efficiency of education management. Theproject will also contribute to expansion of primary school access, but this is not its focus. At thestate level (97 percent of project costs), the projec will: i) streamline state education bureaucraciesan help them achieve a more efficient allocation of spending; ii) increase state and municipal primarystdent access to textbooks and other instructional materials; iii) improve state and municipalteahers' skllls and classroom effectiveness and the management skills of school directors; iv)rehabiitate and exd state and municipal primary schools; and v) stimulate promisg newapproaches tO early primary education at the state and municipal level through an Innovations Fund.

6. he project also has a component at the federal level (3 percem of project costs), tostrengthen Ministry of Education (MEC) capacity for key oversight and support functions, such asnational standardized student testing; planning, policy and norm-setting; and financial transfers toequalize education spending across states. Finally, the project will support reform of the centalizednational wxtbook and school lunch distribution programs, in order to assure the timely and adequateavailability of learning materials in Brazilian primary schools and to improve the efficiency of schoollunch distibution. The insttional strengthening of MEC being carried out under the Northeast 11project Is critical for the successful aministraton of both Northeast projects (which require theMinistry to play a substatial coordination and supervision role) as well as for national educationmanagemen.

7. The statewlevel component will finance: i) technical assistance,training, and office equipment (ncluding computers) to assist the states in streamlining their educationsecretariats, modenizing education management and achieving a significant improvement in theefficiency of education spending; ii) textbooks, workbooks, reading books, teachers' guides and otherinstuctional maerials for all state and municipal students in grades 14; ii) in-service training toimprove the clssroom effectiveness of teachers and the management skills of school directors; iv) a

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time-slice of the states' five year programs for rehabilitation and construction of state and municipalschools; and v) grants to support innovative primary education programs at the state and municipallevels. The time-slice component is innovative in that financing fot states' annual investmentprograms will be conditional upon states' attainment of agreed annual targets for improving theireducation staffing ratios and the allocation of education spending. If a state doer not meet Itsmanagement efflciency targets in any given year, MEC and the Bank msy reallocate time-slice fundsto other, better-performing states.

S. The federal level component will finance technical assistance, training, studies, overseasstudy tours and graduate fellowships both at home and overseas, in connection with the followingobjectives: i) strengthening the capacity of the federal government for education policy analysis andnorm-setting; ii) improving the efficiency and equity of federal education transfers; iii) building anational capacity for student assessment; and iv) reform of the textbook and school lunch programs.

9. Project Co. The project will be carried out over five years. The total cost isestimated at US$378 million equivalent, with a foreign exchange component of US$38 million orabout 10 percem of the total. The proposed Bank loan of US$212 million equivalent will finance 65percent of total estimated costs excluding local taxcs, or 56 percent of costs including taxes. The Bankloan will finance 100 percent of foreign exchange costs and 51 percent of local expenditures. Therelatively high local cost financing under the project is a consequence of the project's small foreignexchange component. It is justified by the need to encourage implementation of the significant policychanges being sought under the project and by the fact that the project is targeted to Brazil's mostimpoverished region. Retroactive financing of up to US$15 million will be provided for expendituresincurred after July 31, 1992 (in the period up to twelve months prior to loan signing). A breakdownof costs and the financing plan are shown in Schedule A. Amounts and methods of procurement andthe disbursement schedule are shown in Schedule B. A timetable of key project processing events andthe status of Bank group operations in Brazil are given in Schedules C and D, respectively. The StaffAppraisal Report No. 11298-BR, dated April 20, 1993, is also attached.

10. Project Implementation. The implementing agencies will be the state educationsecretariats of Ceara, Maranhao, Sergipe and Pernambuco, and the Ministry of Educatian (includingthe Secretaiat of Basic Education, and the semi-autonomous agencies of the Ministry responsible foreducation funding transfers, the school textbook and lanch programs, and national student testing andresearch). In order to reduce disparities between state and municipal school systems, the states willensure that all support provided under the project is channeled to municipal schools as well as stateschools. The project will also encourage improvements in education management at the municipallevel though the criteria set for municipal participation in the Time-Slice component, which the stateswill monitor. Finally, the project includes technical assistance to support strengthening of educationmanagement at the municipal level.

Lessons 1-arned

11. World Bank lending to Brazil for education began in the early 1970s. Initially, Banklending emphasized skills training and secondary-level technical education; other projects includedsupport for basic research at the federal universities. In recent years, in line with a shift in overallWorld Bank policy, Bank lending to Brazil has focused increasingly on primary education,

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particularly in disadvantaged regions. Our first primary education project was Northeast BasicEducation I, known as EDURURAL. This US$32 million loan approved in 1980 sought to improveprimary schools in rural areas of the Northeast through financing of classroom construction andupgrading, provision of textbooks and other teaching materials, in-service teacher training, andinstitutional strengthening in selected poor municipalities throughout the nine Northeast states. Animportant feature of the project was support for large-scale, longitudinal evaluation of the impact onstudent learning and cost-effectiveness of the various types of investment financed under the project.Key conclusions were that textbook provision and school upgrading are highly efficient investments -in fact, each dollar invested in these areas under the project actally more than paid for itself in termsof budgetary savings in the project states due to lower student repetition.

12. The EDURURAL project ended in 1987. Our overall evaluation is that the projectsucceeded in bringing additional books and other inputs to mral schools, and these had measurableand highly cost-effective impacts on both student learning and overall education spending in theproject areas. However, the sustainability of these investments was limited by the absence of changesin tea;her hiring, salaries, and overall financing (for example, inadequate funding for books andschool maintenance) that are fimdamental factors in the low quality of rural schools. Also, while thepackage of investments delivered under the project had a dramatic impact on individual rural schools,overall the project's resources were very dispersed (reaching less than one in five municipalities in thenine states), and had almost no impact on the functioning of state and municip& education zystema inthe Northeast. In line with this assessment, the proposed Northeast Basic Education II and mprojects emphasize a more systemic approach, focusing on reforms of overall financing andmanagement of education in the selected states, and explicit attention to developing states' capacity forsustained investment in education quality after the project period.

13. A general lesson from our past education projects which is also supported by our projectexperience in the health sector in Brazil is that keeping project design as simple as possible facilitatesproject execution and increases the likelihood of project success. Given the weak institutions ofNortheast Brazil, the overwhelming problems of education quality in the region, and the inherentdifficulties of administering a multi-state project which involves multiple levels of government, aguiding principle has been to try to keep both the proposed Northeast Basic Education II andNortheast Basic Education m projects focused on a few key objectives, and to keep project financingarrangements as simple as possible. Simplicity in project design has been explicitly pursued at theexpense of many other worthwhile investments in education quality, such as support for pre-schooling, school health and nutrition interventions, or research, as are included in the Bank-financedSao Paulo Innovations in Basic Education Project. However, we believe that while a morecomprehensive project design is feasible in a state such as Sao Paulo, which has relatively strongadministrative capacity, such approaches are inappropriate in the Northeast.

Aged Actons

14. Agreement was reached during negotiations with the Borrower and each state that: (i)all project accounts will be audited annually in accordance with appropriate auditing principles byindependent auditors acceptable to the Bank; (ii) standard bidding documents and letters of invitationsatisfactory to the Bank will be used in all procurement financed by die Bank under the project; (iii)the Ministry will support a project coordination unit with a staffing plan acceptable to the Bank and

- -

the project coordinator and unit heads will at all times be persoiDs whose qualifications and experienceare acceptable to the Bank; (iv) each of the project states will support a project unit with a coordinatorreporting directly to the State Secretary of Educationi, with a staffing plan acceptable to the Bank, andthe project coordinator and unit heads will at all times be persons whose qualifications and experienceare acceptable to the Bank; (v) by August 31 of each year, each state will submit for Ministry ofEducation review its draft PAA, or annual implementation plan, for carrying out all projectcomporents during the following calendae year; these PAAs will include proposed programs of schoolconstru.tion and rehabilitation sub-projects (PAls) consistent with the agreed guidelines; (vi) bySeptember 30 of each yea, the Ministry of Education will submit the PAAs proposed for each of thefour states and UESCN to the World Bank for its review; thereafter, the Ministry and the states willprepare final versions of these PAAs, taking all Bank comments into account, by no later thanNovember 30; (vii) by October 31, 1993 and, thereafter, by not later than May 30 of each year, theMinistry of Education will conduct an assessment of each state's progress with respect to its AnnualMangmn Efieci Tg (AMETs) for that year; (viii) by November 30, 1993 and, thereafter,by not later than June 30 of each year, the Ministry will determine in consultation with and in amanner satisfactory to the Bank, the amounts to be allocated to each eligible state for the Time-Slicecomponent for the following calendar year; (ix) by not later than February 28 and August 31 of eachyear, the Ministry will furnish to the Bank progress reports on the execution of the project, based onprogress reports sumbmitted by the states one month earlier; (x) by October 31 of 1993 and June 30of each subsequent year, the states and the Ministry of Education will participate with the Bank in anoverall review of project execution based on agreed indicators; (xi) by May 31, 1995, the Ministry ofEducation will furnish terms-of-reference satisfactory to the Bank for the project mid-term review;(xii) by June 30, 1995, the states and the Ministry of Education will participate with the Bank in amid-term review of project execution; (xiii) the Ministry of Education will by March 31 of each yearfmrnish a report satisfactory to the Bank showing the amounts transferred to each project state andeligible municipality for the financing of basic education during the preceding year and the allocationsfor each project state and municipality for the year in which the report is prepared, such allocations tobe made in accordance with the objective and tansparent criteria set forth in the Ministry'sSitematka Para Fdrnwwlamto de Projetos na Area de Educavao BdsLca, Portar4a No. 1878)throughout the project period; (xiv) the Ministry of Education will maintain a program of technicalassistance to FAE and the states acceptable to the Bank for at least the first two years of projectimplementation; (xv) the Ministry of Education will by not later than June 30, 1993 develop andinstall within each state project unit and within the project coordination units at the Ministry ofEducation a computerized information system acceptable to the Bank for recording the financialcommitments and disbursements under the project; (xvi) the Ministry of Education will by not laterthan June 30, 1994 develop and install within each project unit the remaining modules of acomputerized project management information system satisfactory to the Bank; (xvii) the Ministry ofEducation will by not later than December 31, 1993 revise the project operational manual in a mannersatisfactory to the Bank; (xvli) the Ministry of Education will by not later than January 31, 1994furnish terms-of-reference satisfactory to the Bank for a study of the efficiency of the national schoollunch program; and (xix) retroactive financing of up to $15 million would be permitted.

15. Conditons of effeivnss will be: (i) submission by MEC of a final operational planfor the national component of the project acceptable to the Bank; (ii) submission by each of the statesof fina operational plans for the project acceptable to the Bank and MEC; (iii) formal establishmentby the Ministry of Education of the National Project Support Unit (UNESP) and the National

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Component Support Unit (UESCN), staffed by professionals with experience and qualificationssatisfactory to the Bank and formal establishment by each state of a State Project Support Unit(UEESP), stiffed by professionals with experience and qualifications satisfactory to the Bank; (iv)signing by each of the four states with the federal government of a subsidiary agreement acceptable tothe Bank, stipulating State concurrence with the conditions and project activities described in the Loanand Project Agreements; and (v) submission by the Ministry of Education of final terms-of-referenceacceptable to the Bank for a study of alternative financing mechanisms for the national textbookprogram.

16. Conditions of disbursements to any state for each year of the Time-Slice component willbe: (i) agreement with the Bank on a program of state and municipal construction subprojects andequipment and frniture purchases to be executed during the year in question; and (ii) achievement bythat state of its agreed Annual Management Efficiency Targts.

,Environmental Impac

17. The project is not expected to have any environmental Impact.

Benefits, Risks and Sutainability

18. The project wIll directly improve the quality of schooling for approximately 3 millionchildren per year in the first four grades of state and municipal primary schools in the four projectstates, which is approximately 75 percent of totl primary enrollmens in these states. The projecttarget group also represents 45% of the total number of students enrolled in the first four grades ofprimary school in the Northeast, and 30% of total primary enrollments in the Northeast. Byimproving quality, the project will contibute to reduced dropout and repetition rates, increasedstudent learning, and higher graduation rates in the four states. Improved student flows would alsoimprove the efficiency of state and municipal spending on primary education. Technical assistance insupport of management reforms under the project should produce significant improvements in thefunctioning of state education secretariats and will help state secretatiats develop a new role ascatalysts for improvements in municipal school quality as well. The project will also improve theefficiency of textbook and school lunch procurement and distribution and strengthen the Ministry ofEducation's capacity to carry out core oversight and technical assistance functions.

19. A risk is that states' commitment to implementing politically difficult administrativereforms and other actions to improve education quality and equity may falter after the change in stategovernors in 1995 and that the expectea improvements in state and municipal education systems mightnot result. This risk has been mitigated by the intensive preparation work at the state level dt waspossible thanlks to the Japanese grant, and the states' sense of ownership in the project design andconditionality. To reduce this risk further, the project design includes annual reviews of states'implementation of their programs and an explicit system for reprogramming time-slice resourcesacross states or to other project components in the event of nonperformance by any state. A secondrisk is slow implementation of the other state-level components, due to weaknesses in administrativecapacity. The project's cetral emphasis on strengthening states' institutional capacity, the amount and

- 7 -

types of technical assistance planned, and the supervision and coordination role which the Ministry ofEducation is expected to play, will all mitigate this risk.

20. The sustinability of the project is expected to be high, becarse one of its centralobjectives is to improve the efficiency of education management and resource allocation at the stateand municipal levels, in order to ensure that these can sustain the ievel of education investmentssupported under the project. The project's national component is also explicitly focused on reforms ofthe national tex;book distribution system that would make annual provision of adequate schoolbookssustainable. The project's time-slice component creates incentives for states and m'unicipalities tochange their current patterms of resource allocation in order to achieve savings in somv areas andpermit increased investment in the cost-effective education inputs supported by the project (sucb asbooks and materials). The project will also help pros -. education secretariats with the necessarymanagement tools (etter information systems and bette-Lrained staff) for achieving more efficientresource allocation.

,-,eoqmedation

21. I am satisfied tOat the proposed loan would comply with the Articles of Agreement ofthe Bank and recommend that the Executive Directors approve it.

Lewis T. Preston, President

by Sven Sandstrom

ttahdments

Washington, D.C.April 20, 1993

-8-Sdeduste-APage l of 2

BMANords hBa Education U Prje

Projec Cost Summay

Basc Costs in USS (millions) % Totalprojet Componet 1a Foreign Total Base Costs

A: Educational Manaemta) Strengthn plannig capacity 3.98 3.98 1.2b) Human resources maagment 3.82 3.82 1.2c) School quality monitoring 2.87 2.87 0.9d) lntegrated managemat nomatio 2.36 3.24 5.60 1.8e) Support unit 2.03 2.03 0.6

Subtotal 15.06 3.24 18.30 5.7

B: Educational Maweria&La) Textbools 56.15 56.15 17.6b) Reading books 15.72 15.72 31.44 9.9c) Didactic materials 6.38 6.38 12.75 4.0

Subtotal 78.25 22.10 100.34 31.5

C: Teacber TraiDing 25.26 25.26 7.9

D: Time Slice Ficinga) Civil works 140.25 140.25 44.0b) Equipment 3.41 3.88 7.29 2.3c) Booshelves 13.51 13.51 4.2

Subtotal 157.17 3.88 161.05 50.5

E: Innovation Fund 4.00 4.00 1.3

F: National Componenta) Education evaluation 2.14 2.57 4.71 1.5b) System policy analysis 1.25 0.11 1.35 0.4c) Education management 2.30 0.54 2.83 0.9d) Textbook & lunch progam reform 0.27 0.55 0.82 0.3

Subtotal 5.95 3.76 9.71 3.0

TOTAL BASE STS ;;.; .-- - 3.

Physical Contingencies 20.57 1.82 22.39 7.0Price Contingencies 34.03 3.46 31.48 11.8

TOTAL.-PROETCSSi02 82 7.418

Sct.edgleAPage 2 of 2

FINANCING PLANTotl Coas, Iolhding Con_igencies

(USS millions)

1. Slato Leve

....... . . ...... ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ .... ~ .4'N.>XN

B. Education Matw:al 26.7 64.3 25.0 26.7 89.3 116.1

D. Tu SHcO 55.6 45.5 92.0 5.0 55.6 45.5 97. 198.2Financing

EL National Level 1.5 5.5 4.6 1.5 101 11.6

wrotab may not add exacy due to ronding.

-10-Seedule BPage 1 of 2

SUMMARY OF PROPOSED PROCUREMEN ARRA¶GEMENTSTotal Costs Including Contingencies

(USS million equivalent)

,ProourementWellod

;. : -- -- - I~~~C:B- -LCID O-be -C3P Tota~l

Civil Wors - 17.5 157.0* - 174.5(8.5) (78.7) (87.3)

Textbooks and Teaches' Guides 66.1 - 66.1(43.0) (43.0)

Educational Marials 14.2 - - 3.0" 17.2(14.2) (0) (14.2)

Inovaon Fund Gannts 4.0 4.0_ (0) (0)

Maintenance, Supervision and Project Opatng Coats - - - 3.6' 3.6(0) (0)

Note: Valu in prseflect Bank financg.N.B.F.: Not Bank-financed* To be procured via Local Shopping."Of which, approimately US$500,000 in scholarships for overseas tain, not subject to procuti TeIacher taning materials to be finanaced by states and frdeal governmeat.

" Consukant servis, per diems, tranport and other costs of teacher training, to be financed by states andfedera government

" Staff salades and other operating costs to be financed by states and federal government.

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&hedule BPage 2 of 2

BRAZILNORTEWAS-RBASI EDUCATIO 11 MM=EC

MD MSB11NT CATEGRE AM CENTAIES

Caeo I AmountLoan Am tsbumenlUJSS millions}

1. Civil Works 70.4 50 percent of expenditures

2. Equipment and 1S.0 100 percent of foreign expenditures, 80Furniture percent of local expenditures

3. Books 75.1 100 percent of expenditures In years 1 and2, up to an aggregate amount of US$43.6

milion; 75 percent in year 3 up to anaggregate amount of US$59.5 million; 50

percent in year 4 up to an aggregate amountof US$67.6 million; and 25 percent in year S.

4. Educational Materials 14.2 100 percent of expenditures in years 1 and(other than Books) 2, up to an aggregate amount of

US$13,330,000; and 25% of the amountsdisbursed thereafter, but before December 31,

1997.

5. Teduilcal Assistance, 12.1 100 percent of foreign expenditures, 70Studies, and Trainig at the percent of local expendituresState levd (other thanTeacher Training)

6. Technial Assistance, 5.2 100 percent of foreign expenditures, 70Studies and Trang at the percent of local expenditures.National Level

7. Unallocated 20.0

TOTAL 212.0

ESTIMATED DISBURSEMETSTotal Costs, Including Contingencies

(US$ milion)

Annual 57.Ov 43.9 44.0 35.1 22.4 9.6Cumulative 57.0 100.8 144.8 179.9 202.4 212.0

.1)R ,

fI-n6 WUU b . flhE. mtg*&nu

-12-Schedule CPage 1 of 1

BRAZL

NQRTHEAS BASC EDUCATION 11 PROJECT

Timetable of Key Processine Events

Time taken to Prepare: Six years

Prepared by: Government with Bank assistanceBarbara Bruns (Task Manager)K.Y. Amoako (Division Chief)

First Bank Mission: September 30, 1987

Appraisal Mission Departure: June 28, 1992

Negotiatons: March 23-31, 1993

Planned Date of Effectiveness: July 1993

List of Relevant PCRs and PPARs:

Northeast Basic Education (EDURURAL) Project PCR (No. 8266-BR)

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Schedule DPage 1 of 4

THE STATUS OF BANK GROUP OPERATIONS IN BRAZIL

A. SUMMARY STATEMENT OF LOANS

(As of March 31, 1993)

Amount lessLoan XN BorrowerPu po Cancellation Y ndisbursed

---- (US$ million)One hundred and fortytwo loans fully disbursed 10,107.82

2523 1985 Brazil Rural Development 61.3 24.32524 1985 Brazil Rural Development 61.4 27.62563 1985 Brazil Railways 200.0 54.12564 1985 ELETROBRAS Power Transmission 251.8 9.52565 1985 ELETROBRAS Power Distribution 312.0 3.52623 1986 State of Santa Catarina Urban Development 24.5 6.92679 1986 Brazil Agriculture 155.0 82.72680 1986 Brazil Irrigation Eng. 48.0 7.82681 1986 Brazil Urban Development 36.6 24.82699 1986 Brazil Health 59.5 31.62718 1986 Brazil Rural Development 92.0 42.32719 1986 Brazil Irrigation 57.0 4.3?2721 1986 Brazil Public Sector 24.0 2.1

2727 1986 Brazil Credit & Marketing Reform 495.0 13.62761 1987 Brazil Rural Development 171.0 111.72762 1987 Brazil Rural Development 78.0 45.02763 1987 Brazil Ruml Development 122.0 79.12810 1987 Brazil Education 15.6 2.12830 1987 State of Sao Paulo State Highway 174.0 54.72831 1987 Brazl Industrial Pollution Control 50.0 32.32857 1987 FEPASA Railway Rehabilitation 100.0 18.22860 1987 Brazil Rural Development 60.0 36.82861 1987 Brazil Rurgal Development 55.0 41.32862 1987 Brazil Rural Development 84.0 60.62863 1987 Brazil Rural Development 42.0 30.22864 1987 Brazil Livestock Disease Control 51.0 37.82895 1988 State of Minas Gerais Forestry Development 48.5 24.02931 1988 Brazil Disease Control 89.0 53.12950 1988 Brazil Irrigation Subsector 195.0 118.22960 1988 Brazil Agro-Industries Credit 300.0 46.02971 1988 Brazil Agricultural Credit 300.0 21.12975 1988 CEF Rio Flood Reconstrction 175.0 62.32983 1988 CEF Municipal & Low-Income 80.0 59.23013 1989 Brazil Irrigation 71.0 53.0

* SECAL, SAL or Program tLoan

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A. SUMMARY STATEMENT OE LOANS (continued)(As of March 31, 1993) Page 2 of 4

Amount lessLoan No Year Borrower r Cancel1ation Undiakune

-(US$ million)-3018 1989 State of Parana Land Management 63.0 29.03043 1989 Cia. de Gas Sao Paulo Natural Gas Distribution 94.0 70.33072 1989 Brazil Amazon Basin Malaria Control 82.9 38.43100 1989 State of Parana Municipal Development 100.0 57.73102 1989 Cia. Saneamento Basico

Sao Paulo Water Sector 280.0 206.53129 1990 State of Rio Grande

do Sul Municipal Development 100.0 77.73130 1990 Brazil Agricultural Research 47.0 37.63135 1990 Brazil Basic Health 267.0 233.23160 1990 State of Santa Catarina Land Management 33.0 26.83169 1990 Brazil Highways Mgmt & Rehabilitation 310.0 242.33170 1990 Brazil irrigation 210.0 201.23173 1990 Brazil Environmental 117.0 96.42883-1 1990 ELETROBRAS Resettlement & Irrigation 100.0 27.93268 1991 BNDES Private Sector 300.0 98.73269 1991 Brazil Education 150.0 127.53375 1991 State of Sao Paulo Education 245.0 221.13376 1991 Petroleo Brasileiro S.A. Hydrocarbon Transport & Processing 260.0 260.03442L' 1992 Brazil Water Sector Moderization 250.0 250.034441' 1992 Jrazil Rondonia Natual Resource Management 167.0 167.03457 1992 Brazil Metro Transport - Sao Paulo 126.0 126.03480 1992 BNDES Pollution Control 50.0 50.03492 1992 Brazil Natural Resource - Mato Grosso 205.0 205.03503 1V 1993 Brazil Water Quality and Pollution Control 9.0 9.03504 L 1993 Brazil State of Sao Paulo Water Quality

and Pollution Control 119.0 119.03505 1' 1993 Brazil State of Parana Water Quality and

Pollution Control 117.0 117.03547 1 1993 State of Santa Catarina State Highway 50.0 50.03548 1' 1993 State of Alagoas State Highway 38.0 38.03554 1 1993 State of Minas Gerais Water Quality and Pollution Control 145.0 145.0

TOTAL 18,337.30 1Of which has been repaid to the Bank 7.759.81Total now outstanding 10,577.49Amount sold 45.83Of which has been repaid 45.83Total now held by Bank 10.531.66Total undisbursed 4.649.36

' Not yet effectivel No IDA credits have been made to Brazil

Note: The status of the prqjects listed in Part A is described in a separate report on all BankIIDA financed projects inexecution, which is updated twice yearly and circulated to the Executive Directors on April 30 and October 31.

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Page 3 of 4

B. STATEMENT OF IWC eMNTS(As of March 31, 1993)

USS Million_Q Obligor Type of Business Loanm Boitv lh

1957 Siemens do Brazil Cia do Eletricidade Electrical Equipment 2.86 - 2.861958 Olinkraft, S.A. Colulose a Papel Pulp and Paper 2.16 - 2.161958 D.L.R. Plasticos do Btasil, S.A. Automotive Paita 0.45 - 0.451958 Wilys-Overlnd do Brasil, S.A.-lnd. e Comercio Fabrc metal Produots 2.45 - 2.451959 Companhia Minoira de Cimento Portland, S.A. Cement 2.40 - 2.401959 Champion Celuloso, S.A. Pulp ad Paper 4.00 - 4.00196CJ69/89 PCC- Catarmnense Pulp and Paper 19.06 8.86 27.921966168t72 Acos Villaro, S.A. Stee 8.00 1.94 9.941967M Ultrafertl, S.A.-Ind. e Comercio do Feorlintes Frtizers & Pesticides 8.22 6.05 14.271969 Petroquimica Unilo, S.A. Petrochemicals 5.S0 5.76 11.261970 Poliolefinas, S.A. Industria a Comeroci Petochmicals 5.50 5.55 11.051971 Oxieno, S.A. Industria a Comercio Petrochemicals 4.60 2.68 7.281971 Rio randoe - Companhia dCelusose do Sul Pulp and Paper 4.90 - 4.90197217s/81/87 Cia. de Cimento Nacional de Minas - CIMINAS Cemnt 200.39 13.32 213.711973174177/81183184/85 Cia. Sidorurgica de Guanabaa - COSIGUA Steel 76.97 27.08 104.051973 Capital Market Development Fund - FUMCAP Capital Market Developmet 5.00 - 5.001973/78/83 Emp.do Deenvolvimento de Recursos Mineras-CODEMIN Nickel Mining & Refining 85.00 8.74 93.741974 IndustriasVillares, S.A. Elevators & lad. Equipment 6.00 - 6.001974/88 Fabfica de Tecido Tatuape, S.A. TeXtiles 39.80 - 39.801975/79 Capuava Carbonos Industrias Ltd. Chemicals & Petrohemicals 6.18 2.03 8.211975 Oxiteno Nordeste, S.A. Petrochemicals 10.00 - 10.001976 Santista Industria - Teitil do Nordoeste, S.A. Textiles 6.45 1.00 7.451976180 Tecanor S.A. - Textil Catarinense do Nordeste TeXes 16.20 - 16.201977 FMB S.A. Productos Metalurios Iron & Aluminum Castings 20.00 - 20.001977 Minoragac Rio do Norte S.A. Mining 15.00 - 15.001978/84 Cimetll Sidorugia, S.A. Iron & Steel 8.38 6.00 14.381979/83/87 Volvo do Brasil Motores e Veiculos, S.A. Motor Vehicles 60.00 11.95 71.951980 Hering do Nordeste, S.A. - Malhas Ready-made Garments 2.00 - 2.001980 Dende do Parn, S.A. - Dcnpasa - Agricultuta,

Industria a Comercio de Olaginosas Agric. & Liwstock Producs 3.50 1.96 5.461980 Villars Industrias de Base, S.A. - VIBASA Iron and Steel 5.00 - 5.001980/88 PPH - Companhia Indusral de Polipropikno Chemicals & Petochemicals 31.00 3.64 34.641980 Destilaria Cianortc, S.A. Chemicais & Pe_rohemical - 0.25 0.251980/83 Sotave Amazonia Quiic o Mineral, S.A. Fetilizes 35.00 9.97 44.971980/81/87 Polisul Petquinica Chemicals & Petrochmiab 43.00 11.00 54.001981 Brasilpar Money & Capital Markels - 2.69 2.691981 Compahia Brasieira de Agoecuaria - COBRAPE Pood & Food Pocessing 5.50 3.00 8.501981/87 Tnfo Chemials & Perohemials 46.00 7.07 53.07198V87 Cinento CAUE Cement & Construction Maerials 40.00 8.26 48.261982 Agileasing, S.A. - IOCHPE Money & Capital Marets - 0.90 0.901982 PLANIBANC (aAM) Leasig Companies 30.00 - 30.001983 Cia. Riogandense de Parfticpagoes (CRP) Money & Capitl Markets 0.01 0.011983 AjIas Fnigorifico Agric. & LIestock Products 13.00 - 13.001983 Companhia Dende do Amapa (CODEPA) Vegetable & Animal Oil 6.10 - 6.101983/85/88 PISA - Papal de Imprna, S.A. Pulp & Paper Products 82.00 12.37 94.371983 Sococo, S.A. orestry 3.00 2.50 5.501983 CIMAG Cement & Construction Materials 35.00 - 35.001986188 Nitroclor Produtos Drugs & Medicines 3.00 1135 14.351984 Companhia Alcoolqui Nacional - ALQUIM Chemicals & Pebtochiial 20.00 7.72 27.721985 Quinica da Bahia Chemicals & Pebtcmals 3.49 3.28 6.771987 Sao Paulo Alpargaas Ready-Made Gamets 30.00 - 30.00

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Page 4 of 4

B. STATEMENT OF IC NVESMEN (continued)(As of Marcb 31, 1993)

-_ USS MilliooDate Oblior TYvO of Business Loans £ik Total

1987 Amapa Florestal e Cclulose - AMCEL Pulp and Paper 14.00 - 14.001988 Fabrica Carioca de Catalisador - FCC Chenicals 20.50 - 20.501988 Equity Fund of Brazil Capitll Mare astitutions - 21.05 21.051988 S.A. Comercio e Industria - PDIGAO Agrio. & Livesock Products 20.00 - 20.001988 Banco Bozano Small & Medium Entrprises 20.00 - 20.001988 Banco Itau Small & Medium Enter_is 30.00 - 30.001988193 Mineragoes Brasiliras Reunidos - MBR Mining 80.00 - 80.001988 Unibanco - Unilo de Bancos Brasileiros Smal & Medium Enterprises 30.00 - 30.001988 Duratex, S.A. Strutur Clay Products 7.37 - 7.371988 Cebrace Glass and Glass Psoducts 40.00 5.00 45.001988 Brsital Textiles and Pibers 0.10 - 0.101988 Sanser Textles and Fibers 3.20 1.30 4.S01988 Moinho Santista Textils and Fibers 4.00 - 4.001988 Toaia Textiles and Fibers 1.90 - 1.901989/90 COPENE Chemicals 50.00 S0.001989 ELUMA Irn and Steel IS.00 - 15.001989 POLITENO Chemicals an Petrochemioals 18.50 6.50 25.001990/91/93 Babia Sul Pulp and Paper 100.00 21.00 121.001991 Santa Marina Cement 25.00 - 25.001991 RIPASA Pulp and Paper 20.00 5.00 2S.001991 Engepol Plastic Products 3.50 - 3.501992 Brazil Investmnt Fund Securties Market Financing - 3.00 3.001992 Excel Plastic Products 20.00 8.33 28.331992 Banco Bradesco Commercia Banks 60.00 - 60.001992 Peto Camacari Chemicals & Petrochemicals - - -

Total Gross Commitnents 1,64S.11 258.06 1,903.22Les Cancelations, Temniations, Repayments and Salea 1.163.4 US4 1318.6Total Commiments Now Hold by IPC 481.35 103.21 584.S6

Total Undisbursed 2U2 LZD 96.1