Public Disclosure Authorized

A-W C-6 6
Document of
The World Bank
FOR OFMCIAL USE ONLY

Report No. P-6089-

Public Disclosure Authorized

MEMORANDUM AND RECOMMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

TO THE

EXECUTIVE DIRECTORS

ON A
Public Disclosure Authorized

PROPOSED LOAN

IN AN AMOUNT EQUIVALENT TO US$206.6 MILLION

TO THE

FEDERATIVE REPUBLIC OF BRAZIL

FOR THE

THIRD NORTHEAST BASIC EDUCATION PROJECT

Public Disclosure Authorized

OCTOBER 29, 1993

MICROGRAPHICS

Report No: P- 6089 BR

Type: MOP

This document has a restricted distribution and may be used by recipients only in the performance of
their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
 CURRERC EMIALEM'I
(as of October 1, 1993)
Currency Unit: Cruzeiro (Cr.) Real

US$1.00 = Cr$ 128.06

US$1 million = Cr$ 128,060,000

FISCAL YA

January I - December 31

PRICIPL ACRONYM UA

AMETs Annual Management Efficiency Pargets

CAPES Fundaglo da Coordenago de Aperfeigoamento de Pessoal de
Nfvel Superior/Agency for Advanced Training of Higher Level
Personnel
CAICs Centros de Atengo Integral A Crianga e ao Adolescentel
Integrated Centers to Serve Children and Adolescents
CPS Coordenago de Planejamento Setorial/ Sectoral Planning Unit
DDE Departamento de Desenvolvimento Educacionall Educational
Development Department
EDURURAL First Northeast Basic Education Project
FAE FundaVo de Assistencia ao Estudante/ Foundation for Student
Assistance
FNDE Fundo Nacional de Desenvolvimento da Educagio/National
Fund for Education Development
INEP Instituto Nacional de Estudos e Pesquisas Educacionais/
National Institute for Education Studies and Research
PAA Plano de Ago Anual/ Annual Implementation Plan
PAI Programa Anual de Investimento/ Annual Investment Program
for civil works under the project
PTA Programa do Trabalho Anual/ Annual State Education
Investment Plan
MC Minist6rio da Educagio e do Desporto/Ministry of Education
RSBG Regional School Books Coordination Group
RTTG Regional Teacher Training Coordiration Group
SAEB Sistema da Avaliao do Ensino Bsico, or SAEB/Assessment
System for Basic Education
SE Secretarfa de bducagiol State Secretariat of Education
SEP Secretarfa de Educago Fundamental/ Secretariat for Primary
Education
STN Secretarfa de Tesouro Nacional/ Secretariat of the National
Treasury
UESP Unidade Estadual Encarregada do Suporte ao Projetol State
Project Support Unit
UFIR Unidade Fiscal de Referencia
UNDP United Nations Development Programme
UNESP Unidade Nacional Encarregada do Suporte ao Projeto/ National
Project Support Unit
 FOR OFFICIAL USE ONLY

FEDERATIVE REPUBLIC OF BRAZIL

THIRD NORTHEAST BASIC EDUCATION PROJECT

LOAN AND PROJECT SUMMARY

Borrower Federative Republic of Brazil

Benefeari: State and Municipal Education Secretariats in five Northeast States:

Alagoas, Bahia, Paraiba, Piaui, and Rio Grande do Norte

Amount: US$ 206.6 million

Rh= Payable in 15 years at the Bank's standard variable interest rate on a

fixed amortization schedule with a five-year grace period.

Financin Plan:
Iocal Foreign Total
Federal Government 74.8 74.8
State Governments 85.6 85.6
IBRD 74.8 3.1
ToUrAL 335.1

Rate of Return: Not applicable

Poverty atoy: Program of Targeted Interventions. Thaching materials,

teacher training, and school renoviations and expansions
would be provided to low-income urban and rural schools.

Staff Appraisal Report: 11959-BR

This document has a restricted distribution and may be used by recipients only in the performance
of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
 MFMORANDUM AND RECOMMENDATION
OF THE PRESIDENT
OF THE IBRD TO THE EXECUTIVE DIRECTORS
ON A PROPOSED LOAN TO THE
FEDERATIVE REPUBLIC OF BRAZIL
FOR THE THID NOEAST BASIC EDUTIN PROJEC

1. I submit for your approval the following memorandum and

recommendation on a proposed loan to the Federative Republic of Brazil for
the equivalent of US$206.6 million to help finance a basic education project
in the Northeast of Brazil. The loan would be at the Bak's standard
variable interest rate, with a maturity of 15 years, on a fixed amortization
schedule with a five-year grace period.

Backrund

2. Brazil's level of human resources development is very low compared

with other countries of similar per capita income. In 1990, mean years of
schooling for the adult population in Brazil was only 3.9 years,
approximately the same average educational attainment as El Salvador,
Guatemala, and Nicaragua, countries with less than half the per capita
income level of Brazil. In comparison, adult populations in Argentina,
Colombia, and Venezuela, neighboring countries with about the same per
capita income as Brazil, have an average educational level of 8.7, 7.1, and
6.3 years respectively. While initial access to primary school in Brazil is
close to uniNersal, the frequency of grade repetition and school dropout is
among the worst in Latin America.

3. The poorest performing school systems in Brazil are located in the

Northeast region, where on average only about 20 per 100 students complete
primary school, and 1 in 100 does so without repetition. One of the
principal reasons for poor education system efficiency is the exceedingly low
quality of public schooling in the Northeast. Persistently low recurrent
spending on primary education, ranging from about US$50 per pupil in the
municipality-run schools that enroll over half of the primary students in the
region, to about US$250 per pupil in the state-run schools, has resulted in
education systems that fail to provide children with books and basic
materials, cannot attract teachers with even minimum competencies, do not
deliver effective inservice training to teachers, and in many cases can only
provide schooling in severely dilapidated classrooms. State and municipal
education secretariats in the Northeast, characterized by overstaffed, under-
informed, and out-of-touch bureaucracies, have been until recently unable or
unwilling to address these problems.
 -2-

4. One of the key lessons learned from the Northeast Basic Education I
Project, also known as EDURURAL (Ln. 1867-BR, US$32 million,
approved by the Board in 1980), was that direct investments in education
quality in this region, particularly municipal investments, are not sustainable
in the absence of fundamental reforms in education management and
financing. Bank dialogue with the Government since EDURURAL has
emphasized a strategic approach to resolving the problem of extremely low-
quality schooling. The key feature of this strategy is to strengthen state-level
education institutions so that they in turn can assume appropriate state-level
roles, including system-wide quality control, teacher training and
certification, and improving tht equality of educational opportunity across the
states' municipalities. The Bank see this as a prerequisite for a primary
education system that is fully derentralized to the municipal level. One of
the first steps in this strategy is for state governments to confront the critical
management issues that continue to plague school systems in Brazil, and
particularly in the Northeast. These include overstaffing and poor
deployment of personnel, misallocation of financial resources, and
uninformed decision-making. This project, and its companion project, the
Second Northeast Basic Education Project (Ln. 3604-BR, approved by the
Board of Executive Directors on May 13, 1993) directly attacks these
problems. Besides providing essential quality-enhancing education
investments, including textbooks, reading books, and teacher training to all
public schools in the project states, the proposed project will link
disbursements under the schoolfacilities component, representing half of the
project's total cost, to the states' implementation of specific management
reforms in an agreed timeframe. Through these reforms, and through the
development of management systems to institutionalize them, states will
increase their administrative and financial capacity to support municipal
education systems and sustain public school quality.

S. The five project states--Alagoas, Bahia, Parafba, Piatf, and Rio

Grande do Norte-are clearly committed to reforming their state education
systems. As part of project preparation in early 1992, each of the states
participated in a management audit of its education secretariat, carried out by
iadependent consulting firms. In each of the five states, these audits
identified inefficiency in the deployment of staff and financial resources as
one of the most critical constraints to education system performance. With
technical assistance from the Ministry of Education, each state prepared a
five year reform plan that integrated findings from these management audits.
The Ministry of Education and the Bank reviewed these plans and discussed
with the states their reform objectives. On the basis of this analysis, the
Ministry of Education, together with the states, prepared a consistent and
overarching program of management reforms for all five states. Because of
 -3-

the critical nature of these reforms, the Bank and the M'-istry of Education
required that the states agree to implement these reforms as-a prendition
for entry into the project. The Governors of the five project states formally
agreed at appraisal both to reduce overstaffing and to increase expenditures
on non-salary classroom materials in accordance with quantitative annual
Urg.dg for the five years of the project. At neWtiatins, each state commited
itself to a five-year set of specific annual targets, acceptable to the Bank
(referred to as Annual Management Efficiency Targets, or AMETs), both for
reducing overstaffing and for improving the allocation of finances. To asses
state cpmpliance with these AMETs, a commission formed by Bank
consultants and Ministry of Education staff visited each of the project states
prior to appraisal and again before negotiations to review payroll and
financial records. It was agreed at negotiations that a similar commission
will carry out this review annually.

Relationship of Proiect to Bank Country Assistance Strategy

6. A major objective of the Bank's country assistance strategy in Brazil

is poverty reduction. Economic stagnation throughout the 1980s,
accompanied by an increasingly skewed income distributior., has left an
estimated 60 million Brazilians-40 percent of the populaticn-living in
poverty, the majority of wom (56 percent) are in the Northeast. Brazil's
underinvestment in human resources development has not only undermined
the country's long-term economic potential, but has contributed substantially
to the extreme income inequality and high poverty in the region.
Consequently, along with encouraging Brazil to adopt macroeconomic
policies that could stimulate broad-based growth, the Bank's assistance
strategy emphasizes investments in human resources and the targeting of
these investments to the poor to increase their labor incomes, and more
broadly to stimulate economic growth. Because of the Government's
dominant role in funding and operating the institutions that deliver education
and health services, Bank strategy also stresses increased efficiency of public
spending in these sectors. Within education, the Bank's focus is on primary
education, because Brazil, and particularly the Northeast, remains far from
achieving universal completion of primary education, and because primary
education has the highest social returns and the greatest potential for
increasing the equity of economic opportunity, as well as for promoting
economic growth. The Bank's efforts in the social sectors tend to be
concentrated in the Northeast, where relative to the country as a whole,
poverty is highest, human resource development is lowest, and education and
health systems are weakest.
 -4-

ft le OMJecti Oad DRiptO

7. Proect Oei. The project's overall goals are to increase student
learning, reduce grade repetition, and increase primary school completion in
the five project states. To achieve these goals, the proposed project will
deliver a package of essential educational inputs and services to all public
school children in the first four grades in the project states, support a
program of school renovation and expansion for urban and rural schools, and
provide the tools and incentives to improve the efficiency of education system
management and administration. The project has five nain objectives: (i) to
streamline state education bureaucracies and help them achieve a more
efficient allocation and utilization of resources; (ii) to increase students'
access to and utilization of textbooks and other instructional materials in all
public schools; (iii) to improve the skills of teachers and school directors in
all public schools; (iv) to improve or expand school facilities for both state
and municipal school systems; and (v) to stimulate innovations that would be
expected to advance educational quality in the region.

8. Proiect Dcron. The project is designed to achieve the above five

objectives by means of the following components:

(a) Streamlining Education Management: Provision of technical

assistance, training, and equipment to assist the states in
reducing inefficiencies in staff and resource allocation,
streamlining education management systems, modernizing
education administration, and achieving a significant
improvement in the efficiency of education spending (US$ 19.9
million, 5.4 percent).

(b) Delivering an Essential Package of Educational Materials:

Provision of textbooks, workbooks, reading books, and other
didactic materials for all state and municipal students in grades
one through four (US$ 118.7 million, 32.4 percent).

(c) Training Teachers and School Directors: Provision of

technical assistance, development of materials, and support for
intensive on-the-job training to improve the classroom
effectiveness of teachers and the management skills of school
directors (US$ 29.9 million, 8.1 percent).

(d) Improving School Facilities: Financing a time-slice of each

state's five-year infrastructure investment plans. Financing for
states' annual investment programs will be conditional upon
 -5-

states' attainment of agreed quantitative annual targets for

reducing overstaffing and for increasing the share of state
education expenditures on educational materials. If a state
does not meet its agreed targets in any given year, MEC and
the Bank will reallocate that state's time-slice funds for that
year to other, better-performing project states. (US$ 193.4
million, 52.7 percent).

(e) Stimulating Educational Innovation: Establishment of a fund

that will support, evaluate, and disseminate innovative
programs proposed and developed by project states and
municipalities to improve primary education quality (US$5
million, 1.4 percent).

9. Priect Costs. The total cost is estimated at US$366.9 million

equivalent, with a foreign exchange component of US$ 31.8 million or about
nine percent of the total. Retroactive financing of up to US$15 million
(seven percent of the proposed Bank loan) will be provided for expenditures
incurred during the 12 month period prior to loan signing.

p Impenai ad Sustainabilt

10. Prdect Impeme n. As with the Second Northeast Basic

Education Project (Ln. 3604-BR), the federal government will be the
Borrower, and the loan along with federal counterpart funds will be
transferred to the participating states on a grant basis. The financing that
each state will receive is based on the relative enrollments in grades 1-4 in
the state and municipal systems. The principal implementing agencies will
be the state education secretariats of Alagoas, Bahia, Parafba, Piauf, and Rio
Grande do Norte, which will work with the municipal education secretariats
in each of their respective states to carry out project activities. Each state
will establish a state-level project support unit, along with separate accounts
for project expenditures. Overall coordination will be the responsibility of
MEC, which, through the national project support unit (UNESP) financed
under the Second Northeast Basic Education project, will provide technical
assistance to the state and municipal education secretariats to help them
coordinate their project activities and monitor the execution of the project.
To facilitate project implementation at the state level, MEC has prepared a
comprehensive Project Operational Manual, and has assisted all of the project
states in the preparation of a multi-year action plan for each of the project
components. Each state has also prepared, with MEC assistance, a detailed,
costed, implementation schedule for the first year of the project that includes
time-bound monitorable indicators of project execution. Since the Federative
 -6-

Republic of Brazil, and not the states, will be the Borrower, whereas the
States are the executing agents, subsidiary agreements, acceptable to the
Bank, between the Borrower and each of the project States, and between the
project States and municipalities eligible for financing under the improving
schoolfacilities component, will establish the legal obligations that the
project states will undertake toward the Borrower, and that the eligible
mumicipalities will undertake towards their respective States. Finally, the
Borrower and the states agreed at negotiations to conduct a full project
review with the Bank 18 months into project execution (12 months before the
mid-term review would normally take place). This review will be timed to
coincide with political changes following the inauguration of new governors
in January 1995.

11. Sustainability. One of the project's central objectives is to improve

the efficiency of education maagement and resource allocation at the state
and municipal levels, to help ensure that these institutions can financially
sustain the education investments supported under the project. The education
management component provides the tools (including training and information
systems), and the improving schoolfacilities component provides the
incentives (including conditionality and finances) for states to achieve a more
efficient utilization and deployment of staff and financial resources. These
improvements in turn will result in budgetary savings for all five states that
can be applied to the incremental recurrent costs for sustaining project
benefits, both for the state and the municipal systems, which will amount to
about 6 percent of annual state spending on education. Two other factors
will help sustain project investments. One of these is a new federal textbook
financing policy (prepared prior to negotiations for this project) which will
annually earmark, for the purchase of textbooks for all public schools, a
portion of the federal education tax (called the salario-educagdo). A second
factor is the expected increases in federal education transfers to the states
associated with expanded revenues resulting from the 1988 tax reform.

Lessons 1earned

12. The design of this project is based on lessons learned from past
projects in Brazil, particularly the EDURURAL Project and the Urban Basic
Education Project (Ln. 2412-BR, approved by the Board of Executive
Directors in 1983). In particular, the three critical lessons that have
influenced the design of this project are: (i) textbook provision and school
upgrading are highly cost-effective investments; (ii) teacher training aimed at
improving specific skills and classroom management techniques are
promising investments whereas small doses of subject matter training are not;
and (iii) effective implementation and longer-term sustainability of education
 -7-

projects depend strongly on improving the efficiency of educational

management and the establihment of effective management systems at all
government levels.

Agreed ActsO

13. Ag=menwas reached dmring nang ais with the Borrower and
each state that: () all project accounts will be audited annually in accordance
with appropriate auditing principles by independent auditors acceptable to the
Bank, and these accounts will indicate expenditures for each prect
component, subdivided by expenditures financed by the Bank we Federal
Government, and each of the project states; (1l) standard bidding documents
and letters of invitation satisfactory to the Bank will be used in all
piecurement financed by the Bank under the project; (ill) MEC and each of
the states will support project units with staffing plans acceptable to the
Bank, and the project coordinators and nnit heads will at all times be persons
whose qualifications and experience are acceptable to the Bank; and (iv) by
May 31, 1995, MEC will ffrnish terms-of-reference satisfactory to the Bank
for a full joint review (mid-term review) of the project, and by June 30,
1995, the states and MEC will participate with the Bank in this review.

14. Conditions of effectiveness will be the submission by the Borrower of:

(i) signed subsidiary agreements, acceptable to the Bank, between the Federal
Government and zach project state indicating federal and state government
concurrence with the conditions and project activities described in the Loan
and Project Agreements; H) evidence that all five project UESPs, staffed by
professionals with experience and qualifications satisfactory to the Bank, have
been formally established; (ll) standard bidding documents, acceptable to
the Bank, for local competitive bidding; and (lv) evidence that adequate
counterpart funds, related to carrying out the Project, have been allocated in
the Borrower's and in each of the project state's 1994 proposed budgets.

15. Conditions of disbursements to any state for each year of the

Imn School flities will be: (1) agreement with the Bank
on a program of state and municipal construction subprojects and acquisition
of equipment, materials, and supplies to be executed during the year in
question; and (i) achievement by that state of its agreed Annual
Management Efficiency Tcrgets.
Environmental Asects

16. The project is not expected to have any significant negative

environmental effects as a consequence of the school expansion activities.
 -8-

17. Increasing educational quality and management efficiency represents a

significant challenge for the state secretariats in the project states. Given the
political character of institutional reform, and the relative complexity of
carrying out institutional and systemic reform in five separate and
autonomous states, above-average Bank supervision is varranted-particularly
during the initial years of implementation.

ProarM Obletiv CatLoie

18. This project relates directly to the Bank's antipoverty strategy in

Brazil. It has been well established that low levels of education is a
characteristic associated with poverty, and educational attainment In Bfazil
explains, to a substantial degree, the wide income differences in this country.
The project contributes to the goal of reducing poverty by Improving the
quality of education delivered to poor chldren in five of Brazil's poorest
states. In this way, these children will have greater opportunities to increase
their future productivity and incomes, and thereby lift themselves and their
children progressively out of poverty.

Beneft ad RIS

19. Benef The project will directly improve the quality of schooling
for approximately 3 million children per year in the first four grades of state
and municipal primary schools in the five project states, which is
approximately 75 percent of total primary enrollments in these states. The
project target group represents approximately 45% of the total number of
students enrolled in the first four grades of primary school In the Northeast
By improving school quality, it is expected that the project will contribute to
reducing grade repetition, raising student achievement, and increasing
attainment in the five states. The project will also improve the efficiency of
state and municipal spending on primary education. Technical assistance in
support of management reforms under the project should produce significant
improvements in the functioning of state education secretariats, and will also
help state secretariats develop a new role as catalysts for raising municipal
school quality.

20. Ri& There are several risks associated with this project. First,
there is the chance that the states' commitment to implementing the
politically difficult administrative reforms and other actions to improve
education quality and efficiency may falter after the change in state governors
 -9-

in 1995 and that the expected improvem-nts in state and municipal education
systems might not occur. To the degree possible, this risk has been mitigated
by the intensive preparation work at the state level made possible in part by a
US$1.4 million Japunese grant, as well as the states' sense of ownership in
the project design and conditionality. To further reduce this risk, the project
design includes annual reviews of states' implementation of their programs
and an explicit system for reprogramming time-slice resources across states or
to other project components in the event of nonperformance by any state. A
second risk is slow implementation of the other state-level components, due
to weaknesses in administrative capacity. The project's central emphasis on
strengthening states' institutional capacity, the amount and types of technical
assistance planned, and the supervision and coordination role which MEC is
expected to play, will all help to mitigate !his risk. A third risk is more
deep-seated and persistent. It concerns the fact that public school systems in
the Northeast have traditionally served political, and not only educational,
ends. Consequently, a significant share of school finances has been
historically absorbed by politicians' perceived need to provide jobs, award
construction contracts, and distribute schoarships. Given the tenacity of this
so-called "clientelism* In the Northeast, the project's goal of rationalizing
education management may be undermined after the new state governments
are installed in early 1995. It Is nevertheless expected that close and intense
supervision, both by the Ministry of Educatiorn and the Bank, accompanied by
a careful and early joint mid-term review, will provide .portunities to revisit
the project design and activities, and review the targets to keep the education
institutions in the Northeast on the steady path of reform.

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

Lewis T. Preston
President

Attachments
Washington, D.C.
October 29, 1993
 in

-
Scedule A
Page 1 of 2
BRAZII
THIRD NORTHEAST BASIC ED,ATIN PM

Components Project Cost Summary

(USS Million)
% Total
Local Foreign Total Base Cost
1. Education Management 11.9 5.9 17.8 6
2. Educational Materials 87.4 18.3 105.7 34
3. Teacher Training 26.4 - 26.4 8
4. Time Slice Financing 154.5 4.3 158.8 51
5. Innovations Fund 5.0 - 5.0 2
Total I ase Costs U
. 31 M
Physical Contingencies 27.1 1.4 28.5 9
Price Contingencies 22.9 1.8 24.7 8
Total PrMject Costs M 366.9 I,__

Expenditure Accounts Project Cost Summwry

(US$ Million)
% Total
Local Forein Total Base Cost
Base Costs
A. Civil Works 130.1 - 130.1 41
B. Equipment 24.5 7.7 32.2 10
C. Textbooks & hers' Guidea 49.7 - 49.7 16
D. Reading Books & Dictionaries 19.3 - 19.3 6
E. Didactic Materials 18.3 18.3 36.6 12
F. Technical Assistance 11.9 2.5 14.4 5
G. Taining 26.4 - 26.4 8
H. Innovations Fund 5.0 - 5.0 2
Total Base Costs .13.7 Ad.
Physical Contingencies 27.1 1.4 28.5 9
Price Contingencies 22.9 1.8 24.7 8
Totl Project Costs a .
 - 11

-
Page 2 of 2

BRAZI
TnIRD NORTHEAST BASIC EDMCATi PR.WC

Financing Plan, By Component

(Total Costs, Incuding Contingencies)
(US$mfion)

L.CAL FOREIGN TOTAL

Project Component Federal Stat. IBRD Federal Stats IBRD Pederal Stat. IBRD Toa

1) Educaional Mnagenuat - 5.0 8.1 - - 6.8 - 5.0 14.9 19.9

2) Eduatåonal~Matenals - 26.2 72.2 - - 20.3 - 26.2 92.5 118.7

3) TeachärTrainig 14.9 15.0 - - - - 14.9 15.0 - 29.9

4) Ip~wing Educ. 54.9 39.3 94.6 - - 4.6 54.9 39.3 99.2 193.4

T wTLo7.u8. 5.0 - 7. - - 3 7.8 8 2 5.0

TOTAL 74.8 l85.5 l174.9 - - 31.71 74.81 8W.S i=.6 L A6.
 12

Schedule-B
Page 1 of 2

BRZ
THIRD-NORTHEAST BASIC EDUCATION PROJECT

SUMMARY OF PROPOSED PROCUREMENT ARRANGEMENTS

Total Costs lacluding Contingencies
(US$ milion equivalent)
Procurement Method

Category ICB LCB Other N.B.F. Total

1. Civil Works - 16.2 145.2* - 161.4
(8.1) (72.6) (80.7)

2. Equipment and Furniture 28.8 5.0 2.0 - 35.8

(23.6) (4.0) (1.6)* (29.2)
3. Textbooks and Teachers Guides 56.4 - - - 56.4
(35.4) (35.4)

4. Reading Books 21.5 - - - 21.5

(16.1) (16.1)

5. Educational Materials 38.8 - 2.0 - 40.8

(31.4) (1.6) (33.0)
6. Consultancies (Inatitutional Development)' - - 16.1 - 16.1
(12.2) (12.2)
7. Training - - - 29.9 29.9
(0.0) (0.0)
8. Innovations Fund Grants - - - 5.0 5.0
I_ 1 (0.0) (0.0)

Total 145.5 21.2 165.3 34.9 366.9

TOW_ __ 1(106.5) (12.1) (88.0) (0) (206.6)

Notes: Values in parentheses reflect Bank financing.

Categories 3, 4, and 5 are financed on a declining basis.
N.B.F.: Not Bank-financed
* To be procured via Local Shopping.
"' Consultant services, per diems, transport and other costs of teacher training to be
financed by the states.
W Teacher training materials to be financed by states and federal government.
 13

Page 2 of 2
BRAZL
THID NORTHEAST BASIC EDUCATION PROJECT

Disbursement Categories and Percentages

Cateson lan AmowffiDbursmn

(US mi~ios
1. Civil Works 65.0 50 perent of total expenditures
2. Equipment and 26.3 100 percent of foreign expenditures and 80 percent of local
Furniture expenditure
3. Books (textbooks, 51.5 Financing of eligibe all expenditur made (ex-factory cost) on
reading books, or before jne 30, 1998,0o8 defining basis, as follows: 100
teaching guides) percent up to an aggregate amount equivaent to US$33.5
muIn;i 75 peent up to an aggregate amont equivalent to
US$45 ~ain; 50 percent up to an aggregate amount
equivalent to US$49.5 mill~s; and 25 percent with respet to
the remaiing amount.
4. Claisroom Dida~tie 33.0 Financing of elgible al ependitures made (ex-faetory cost) on
Materials or before Jne 30, 1998, oa a dning basis, as follows: 100
percent up to an aggregate amount equiva~et to US$19.1
muln; 75 percemt up to an aggregate amount equivaent to
US$30.4 m~len; 50 perent up to an aggregate amount
equivaent to US$32.1 mfien; and 25 peret with respet to
the remaining amount.
5. Teical Assistance, 11.0 100 percent of foreign expenditures and 70 percent of local
utudies, and training expenditures
(not for te~chers)
6. Umalocated 19.8
TOTAL 206.6

ESTIMATED DISBURSEMENTS
Total Costs, Including Contingenc (US$ million)
Bank Fiscal Year FY94 FY95 FY96 FY97 FY98 FY99
Annual 20.8u 29.7 55.2 53.8 32.9 14.2
Cumulative 20.8 50.5 105.7 159.5 192.4 206.6

1/ Including US$15 million in retroative financing.

 14
Schedule C
Page 1 of 1

THIRD NORTHEAST BASIC EDUCATION PROJECT

Thnetable of Key Processing Events

Time taken to Prepare: Six years

Prepared by: Government with Bank assistance
Robin Horn (Task Manager)
Alain Colliou (Division Chief)

First Bank Mission: September 30, 1987

Appraisal Mission Departure: April 12, 1993
Negotiations: August 23-27, 1993
Planned Date of Effectiveness: January 2, 1994
List of Relevant PCRs: Northeast Basic Education (EDURURAL) Project (Ln. 1867-BR)
 - 15

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Schedule D

THE STATUS OF BANK GROUP OPERATIONS IN BRAZII

A. SUMMARY STATEMMEN OF LOANS

(As of September 30, 1993)

Amount less
I,2&" N-2 Isar Boroe Purpose Cancellation Undisbuse
-(US$ million)-
One hundred and forty-five loans fully disbursed 10,904.82

2523 1985 Brazil Rural Development 61.3 21.4

2524 1985 Brazil Rural Development 61.4 25.3
2563 1985 Brazil Railways 200.0 46.6
2623 1986 State of Santa Catarina Urban Development 24.5 6.9
2679 1986 Brazil Agriculture 155.0 80.0
2680 1986 Brazil Irrigation Eng. 48.0 6.0
2681 1986 Brazil Urban Development 36.6 22.1
2699 1986 Brazil Health 59.5 29.7
2718 1986 Brazil Rural Development 92.0 40.2
2719 1986 Brazil Irrigation 57.0 4.3
*2721 1986 Brazil Public Sector 24.0 1.2
2727 1986 Brazil Credit & Marketing Reform 495.0 12.9
2761 1987 Brazil Rural Development 171.0 108.9
2762 1987 Brazil Rural Development 78.0 44.0
2763 1987 Brazil Rural Development 122.0 76.9
2810 1987 Brazil Education 15.6 2.1
2830 1987 State of Sao Paulo State Highway 174.0 46.8
2831 1987 Brazil Industrial Pollution Control 50.0 30.4
2857 1987 FEPASA Railway Rehabilitation 100.0 13.7
2860 1987 Brazil Rural Development 60.0 36.0
2861 1987 Brazil Rural Development 55.0 41.0
2862 1987 Brazil Rural Development 84.0 59.0
2863 1987 Brazil Rural Development 42.0 29.4
2864 1987 Brazil Livestock Disease Control 51.0 36.0
2895 1988 State of Minas Gerais Forestry Development 48.5 22.1
2931 1988 Brazil Disease Control 89.0 52.0
2950 1988 Brazil Irrigation Subsector 195.0 103.9
2971 1988 Brazil Agricultural Credit 300.0 20.9
2975 1988 CEF Rio Flood Reconstruction 175.0 62.1
2983 1988 CEF Municipal & Low-Income 80.0 54.2
3013 1989 Brazil Irrigation 71.0 51.0
3018 1989 State of Parana Land Management 63.0 25.5
3043 1989 Cia. de Gas Sao Paulo Natural Gas Distribution 94.0 67.0
3072 1989 Brazil Amazon Basin Malaria Control 82.9 37.4

* SECAL, SAL or Program Loan

 - 16

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A. SUMMARY STATEMENT OF LOANS (continued) Schedule D
(As of September 30, 1993)
Amount less
Loan No Year Borrower Emose Cancellation Undisbursed
-- (US$ million)-
3100 1989 State of Parana Municipal Development 100.0 50.2
3102 1989 Cia. Saneamento Basico
Sao Paulo Water Sector 280.0 195.6
3129 1990 State of Rio Grande
do Sul Municipal Development 100.0 73.8
3130 1990 Brazil Agricultural Research 47.0 34.6
3135 1990 Brazil Basic Health 267.0 231.2
3160 1990 State of Santa Catarina Land Management 33.0 25.2
3169 1990 Brazil Highways Mgmt & Rehabilitation 310.0 226.5
3170 1990 Brazil Irrigation 210.0 199.6
3173 1990 Brazil Environmental 117.0 94.5
2883-1 1990 ELETROBRAS Resettlement & Irrigation 100.0 23.0
3268 1991 BNDES Private Sector 300.0 87.5
3269 1991 Brazil Education 150.0 115.5
3375 1991 State of Sao Paulo Education 245.0 213.5
3376 1991 Petroleo Brasileiro S.A. Hydrocarbon Transport & Processing 260.0 260.0
3442 1992 Brazil Water Sector Modernization 250.0 247.9
3444 1992 Brazil Rondonia Natural Resource Management l67.0 150.6
3457 1992 Brazil Metro Transport - Sao Paulo 126.0 126.0
3480 1992 BNDES Pollution Control 50.0 50.0
3492 1992 Brazil Natural Resource - Mato Grosso 205.0 189.2
3503 1 1993 Brazil Water Quality and Pollution Control 9.0 9.0
3504 1993 Brazil State of Sao Paulo Water Quality
and Pollution Control 119.0 118.0
3505 1993 Brazil State of Parana Water Quality and
Pollution Control 117.0 116.0
3547 1993 State of Santa Catarina State Highway 50.0 44.4
354811 1993 State of Alagoas State Highway 38.0 38.0
3554 1993 State of Minas Gerais Water Quality and Pollution Control 145.0 145.0
3604 1' 1993 Brazil Second N.E. Basic Education 212.0 212.0
3633 Y 1993 Brazil Metropolitan Transport 128.5 128.5
363911 1994 State of Minas Gerais Management & Environmental
Infrastructure HQ& 10
TOTAL 18,760.99V
Of which has been repaid to the Bank 8,216.46
Total now outstanding 10,544.53
Amount sold 45.83
Of which has been repaid 45.83
Total now held by Bank
Total undisbursed 47

Y Not yet effective

' No IDA credits have been made to Brazil

Note: The status of the projects ist in Part A is described in a separate report on all Bank/IDA financed projects in
execution, which is updated twice yearly and circulated to the Executive Directors on April 30 and October 31.
 - 17

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Schedule D

B. STATEMENT OF IFC INVESTMENTS

(As of September 30. 1993)
USS Million
Date Olin True of .ulintess Ln gg& jW
1957 Siemens do Brazil Cia do Eetricidade Electrical Equipment 2.86 - 2.86
1958 Olinkraft, S.A. Colulose a Papel Pulp and Paper 2.16 - 2.16
1958 D.L.R. Plasticos do Brasil. S.A. Automotive Parts 0.45 - 0.45
1958 Willys-Overland do Brasil, S.A.-Ind. a Comercio Fabric moral Products 2.45 - 2.45
1959 Companhia Mineia do Cimento Portland, S.A. Cement 2.40 - 2.40
1959 Champion Celulose, S.A. Pulp and Paper 4.00 - 4.00
19661/89 PCC- Catarinenso Pulp and Paper 19.06 8.86 27.92
1966/68172 Acos Villares. S.A. Steel 8.00 1.94 9.94
1967/72 Ultratertil, S.A.-nd. o Coaecio de ortlitances Fertilizers & Pesticides 8.22 6.05 14.27
1969 Petroquitea Unilo. S.A. Petrochemicals 5.0 5.76 11.26
1970 foiofinas, S.A. Industria c Comercio Petrochemicals 5.50 5.55 11.05
1971 Oxiteno, S.A. Industria e Comercio Petrochemicals 4.60 2.68 7.28
1971 1io Grande . Companhis do Colusose do Sul Pulp and Paper 4.90 - 4.90
1972/75/81/87 Cia. do Cimento Nacional do Minas - CIMINAS Cement 200.39 13.32 213.71
1973/74/77/81/83/84/85 Cia. Siderurgica do Guanabar- COSIGUA Steel 76.97 27.08 104.05
1973 Capital Market Development Fund - FUMCAP Capital Market Development 5.00 - 5.00
1973/78/83 Emp.de Desenvolvimento do Rocuros Minersis-CODEMIN Nickel Mining & Refining 85.00 8.74 93.74
1974 Industrias Villare, 3.A. Elevators & Ind. Equipment 6.00 - 6.00
1974188 Fabrica do Tecido Tatusape, S.A. Textiles 39.80 - 39.80
1975/79 Capuava Carbonos Industrias Ltd. Chemicals & Petrochemicals 6.18 2.03 8.21
1975 Oxiteno Nordesfe, S.A- Petrochemicals 10.00 - 10.00
1976 Santista Industria - Textil do Nordoeste, S.A. Textiles 6.45 1.00 7.45
1976/80 Tecanor S.A. - Testil Catarinense do Nordesa Textiles 16.20 - 16.20
1977 FMS S.A. Productos Metalurgicos Iran & Aluminum Castings 20.00 - 20.00
1977 MineraW Rio do Norte S.A. Mining 15.00 - 15.00
1978/84 Cimeal Siderurgia. S.A. Iron & Steel 8.38 6.00 1438
1979/83/87 Volvo do BrasiMotores a Voiculos, S.A. Motor Vehicles 60.00 11.95 71.95
1980 Hering do Nordeste, S.A. - Malhas Ready-mado Garments 2.00 * 2.00
1980/94 Dende do Parm. S.A. - Denpasa - Agricultura,
Industris a Comercio do Oleaginosas Agrio. & Livestock Products 4.00 1.96 5.96
1980 Villares Industrias do Base. S.A. - VIBASA Iron and Steel 5.00 - 5.00
1980/88 PPH - Companhi& Industrial do Polipropilano Chemicals & Petrochemicals 31.00 3.64 34.64
1980 Destilaria Cianorte. S.A. Chemicals & Petrochemicals - 0.25 0.25
1980/83 Sotave Amazonia Quimica o Mineral. S.A. Fertilizers 35.00 9.97 44.97
1980/81/87 Polisul Petroquimica Chemicals & Petrochemicals 43.00 11.00 54.00
1981 Brasilpar Money & Capital Markets * 2.69 2.69
1981 Companhis Brasileira do Agropecuaria - COBRAPE Food & Food Processing 5.50 3.uO 8.50
1981/87 Triunfo Chemicals & Petrochemicals 46.00 7.07 53.07
1982187 Cimento CAUE Cement & Construction Materials 40.00 8.26 48.26
1982 Agrileasing. S.A. * IOCHPE Money & Capital Markets - 0.90 0.90
1982 PLANIBANC (IAM) Leasing Companies 30.00 0.90 30.90
1983 Cia. Riograndense de Parricipagoes (CRP) Money & Capital Markes 0.01 0.01
1983 Atlas Frigorifica Agric. & Livestock Products 13.00 - 13.00
1983 Companhia Dende do Amapa (CODEPA) Vegetable & Animal Oil 6.10 * 6.10
1983/85/88 PISA - Papel do Imp=esa. S.A. Pulp & Paper Products 82.00 12.37 94.37
1983 Sococo, S.A. Forestry 3.00 2.50 5.50
1983 CIMAG Coment & Construction Materials 35.00 - 35.00
1986/88 Nitroclor Produtos Drugs & Medicines 3.00 11.35 14.35
1984 Companhis Alcoolquimica Nacional - ALQUM Chemicals & Petrochemicals 20.00 7.72 27.12
1985 Quimica da Bahia Chemicals & Petrochemicals 3.49 3.28 6.77
1987 Slo Paulo Alpargatas Ready-Made Gaments 30.00 - 30.00
 - 18

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Schedule D

B. STATEMENT OF IFC INVESTMENTS (condnued)

(As of September 30, 1993)
USS Million
pat 0Tvm f L<-uai9
Laim T9w
1987 Amapa Floretale Celulosa- AMCEL Pulp and Paper 14.00 - 14.00
1988 Fabrica Carioca d CAUMedør FCC Chomicalk 20.50 - 20.50
1988 Equity Fund of Brazil Capitai m l2dution - 21.15 21.15
1988 s.A. Comeroio e Industrial - PERDIGAO Agric. & Livestock Products 20.00 - 20.00
988 Banco Bozano Small & Medium Enturprises 20.00 - 20.00
1988 Danco Itau Small & Medium Etmris 30.00 - 30.00
1988/93 Mineroes Baileir s Reunidos - MBR Mining 80.00 - 80.00
1988 Unibnco - Unilo de Banco Brauileiros Small & Medium Enterprises 30.00 - 30.00
1988 Duratex. S.A. Strucural Clay Products 7.37 - 7.37
1988 Cebrace Glass and Glass Products 40.00 5.00 45.00
1988 Brusital Textiles and Fibers 0.10 - 0.10
1988 Sanser Textila and Fibers 3.20 1.30 4.50
1988 Moinho Santista Texiles and Fibers 4.00 - 4.OC
1988 Toaia Toxtils and Fibers 1.90 - 1.90
1989/90 COPENE Chemicas 50.00 - 50.00
1989 ELUMA Lrn and Steel 15.00 - 15.00
1989 POLITENO Chemicas and Petrochemicals 18.50 6.50 25.00
1990/91193 Bahia sul Pulp and Paper 100.00 21.00 121.00
1991 Santa Marina Cement 25.00 - 25.00
1991 RPASA Pup and Paper 20.00 5.00 25.00
1991 Engepol Plastic Products 3.50 - 3.50
1992 Brazil Investet Fund Socuities Market Financing - 3.00 3.00
1992 Excel Plastic Products 20.00 8.33 28.33
1992 Banc Bradesca Commercial Banks 56.03 - 56.03
1992 BRADESCO-ROM Mtg. of Metal & Wood Workig 3.97 - 3.97
1992 Petro C&~ncu Chemicals & Petrochemicas - -

-
1993 CEBRACTEX Spinning & Weaving 6.00 4.00 10.00
1993 CEVAL Mfg. of Food, Bverages
& Tobacco 45.00 - 45.00
1993 Macedo Aimentos Gramin Mill Products 34.00 - 34.00
1993 Papel SIMAO Pulp and Papr 39.00 - 39.00
1994 SADIA Food Mtg. g -- 0.

Total Gross Commitments 1,829.61 262.32 2.091.94

Lems Cancellaaons. Terminainnm, Rpyment and Sales .262.65 1L 430
Total Commitmnt Now Held by IFC 566.94 94.12 661.06

Total Undisbursed n9n 2 24

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