Document of

The World Bank

]FOR OMCAL USE ONLY

-Repit No. P-4206-Z

REPORT AND RECOMMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE EXECUTIVE DIRECTORS

ON A PROPOSED CREDIT

IN AN AMOUNT OF SDR 75.4 MILLION

TO THE PEOPLE'S REPUBLIC OF BANGLADESH

FOR A

THIRD POPULATION AND FAMILY HEALTH PROJECT

December 24, 1985

Tsdoeemee.t bu a rIbledu disrbaMm umd may be mod by redpimts may in the paedurinne .1Ite eidm .'f e_mtm am .therwI be dsamd widbut Wedi B_mk .

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CURRENCY EQUIVALENT

The external value of the Bangladesh Taka (Tk) is fixed in relation to abasket of reference currencies, with the US dollar serving as interventioncurrency. On October 31, 1985 the official exchange rate was set at Tk 29.97buying and Tk 30.03 selling per US dollar.

ABBREVIATIONS AND ACRONYMS

CPR Contraceptive Prevalence RateDDS Drug and Dietary SupplementEEU External Evaluation UnitP 'Family PlanningFWA Family Welfare AssistantGDP Gross Domestic ProductEA Health AssistantICB International Competitive BiddingINK Infant Mortality RateIUD Intra-Uterine DeviceLCB Local Competitive BiddingNCR Maternal-Child HealthNIS Management Information System1DHPC Ministry of Health and Population ControlNCPC National Council for Population ControlNGO Non-Governmental OrganizationNIPORT National Institute for Population Research

and TrainingNSCPR. National Steering Committee for Population ResearchORS Oral Rehydration SaltsORT Oral Rehydration TherapyPCW Population Control Ving, Ministry of Health

and Population ControlPIACT Program for the Introduction and Adoption

of Contraceptive TechnologyTFR Total Fertility RateUHC Upazila Health ComplexUHFWC Union Health and Family Welfare CenterUNFPA United Nations Fund for Population ActivitiesUNICEF United Nations Children's FundUSAID United States Agency for International Development

FISCAL YEAR

July 1 - June 30

FOR OMCL41 USE ONLY

BANGLADESH

THIRD POPULATION AND FAMILY HEALTH PROJECT

Credit and Proiect Summary

Borrower: People's Republic of Bangladesh

Amount: SDR 75.4 million (US$78.0 million equivalent)

Terms: Standard

Proiect The primary objective of the project would be to reduceDescription: fertility and infant and maternal mortality by providing

support to the Government's family planning and maternal-child health (MCH) program during the Third Five-Year Planperiod (1985-90). In addition, the project would assistefforts to stimulate additional demand for family planningand to extend essential and affordable health care toBangladesh-s rural population. The project, which wouldcontinue support to activities begun under the first andsecond population projects (Credits 533-BD and 921-BD),would consist of seven components; (i) expansion andconsolidation of family planning service delivery;(ii) implementation of NCR programs; (iii) strengtheningof communications and public education; (iv) assistance towomen's programs; (v) support to non-government organiza-tions and innovative activities; (vi) research andevaluation; and (vii) project management support.

Proiect Risks: The major risks faced by the project relate to thestrength of the Government's determination to improve themanagement and supervision of family planning and MCFservice delivery; to strengthen and expand the nationalMCR program; to carry out specific institutional develop-ment efforts at the National Institute for PopulationResearch and Training and for the womenus programs; toimprove motivation of family planning! NCR field workers;and to maintain a stable organizational structure in theKinistry of Health and Population Control. Progress inthe implementation of improvements in each of these areaswould be carefully monitored through an annualGovernment-IDA- Cofinancier review of the project andthrough interim progress reports which would be preparedby the Government.

| This doment has a resticed distribution and may be used by recipients only in the performance of Itheir officidl duties. Its contents may not otherwise be dislosed without World Bank authorization.

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Estimated Proiect Costs; LaLocal Foreign Total--- US$ million

PP/MCR Service Delivery 94.4 53.0 147.4MCH Program 3.0 0.3 3.3 /aCommunications 8.2 0.8 9.0Women's Program 13.7 1.2 14.9NGO & Innovative Program 9.0 - 9.0Evaluation & Research 2.3 0.6 2.9Project Nanagement Support 1.6 0.1 1.7

Total Base Costs 132.2 56.0 188.2 La

Physical Contingencies 3.0 1.5 4.5Price Contingencies 11.2 9.9 21.1

14.2 11.4 25.6

Total Project Costs 146.4 67.4 213.8 /a

Duties and Taxes 14.6

Total Projects Costs, Net 199.2 Laof Duties and Taxes

Financing Plan:Local Foreizu Total

-uS$ million -

IDA 48.3 29.7 78.0Australia 3.4 3.8. 7.2Canada 22.1 1.4 23.5Federal Republic of Germany 13.3 15.4 28.7The Netherlands 3.9 2.2 6.1Norway 14.3 9.3 23.6United Kingdom 9.0 1.3 10.3Government of Bangladesb 17.5 4.3 21.8

Total 131.8 67.4 199.2

/aL Does not include US$9.7 million of support to the NCR program to beprovided by UNICEF outside the project.

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Estimated Disbursement:

IDA PY FY87 FY88 FY89 FY90 FY91 FY92

Annual 8.7 15.6 19.3 19.5 10.1 4.8Cumulative 8.7 24.3 43.6 63.1 73.2 78.0

Economic Rateof Return: Not Applicable

ADDraisal Report: Bangladesh: Report No. 5485-BD, dated December 11, 1985.

Bap: IBRD 18783r

INTERNATIONAL DEVELOPMENT ASSOCIATION

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

TO THE PEOPLE'S REPUBLIC OF BANGLADESH FOR ATHIRD POPULATION AND FAMILY HEALTH PROJECT

1. I submit the following report and recommendation for a proposeddevelopment credit to the People's Republic of Bangladesh for SDR 75.4 mil-lion (US$78.0 million equivalent) on standard IDA terms to help finance aThird Population and Family Health Project. Parallel financing of US$99.4million equivalent would be provided by the Governments of Australia (US$7.2million equivalent), Canada (US$23.5 million equivalent), the FederalRepublic of Germany (US$28.7 million equivalent), the Netherlands (US$6.1million equivalent), Norway (US$23.6 million equivalent), and the UnitedKingdom (US$10.3 million -.quivalent).

PART I - THE ECONOMY

Introduction

2. An economic report entitled "Bangladesh: Economic and SocialDevelopment Prospects," (Report No. 5409-BD, dated April 2, 1985) has beendistributed to the Executive Directors.

3. Bangladesh, which became independent in 1972 under very difficultcircumstances, is a country with a very high population density andvidespread poverty (annual income per capita is about US$130). The economy,dominated by agriculture, remains highly vulnerable to disruption by bothnatural and external factors. Although considerable progress has been madein terms of increased flood control, and extending the availability ofirrigation and other inputs, foodgrain production remains heavily dependenton weather conditions and falls short of domestic requirements. To meetminimum needs, the Government has to import foodgrains financed by aid orfrom its own resources. The uncertainties of foodgrain availability alsomake it necessary to maintain public foodgrain stocks, the financing of whichadds to the problems of fiscal management.

4. The economy is also characterized by low savings, which reflect thelow level of incomes, and by a large structural external payments gap.Domestic savings account fo only a negligible part of investment (which hasaveraged about 16% of Gross Domestic Product (GDP) in recent years). Exportearnings cover less than 30% of the import bill, with raw jute and jute goodsaccounting for about 60% of merchandise exports. The resource gap of about15% of GDP is financed by workers' remittances, which rose rapidly to morethan 5% of GDP in FY83, before declining significantly during the past two

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years, and by foreign assistance equivalent to about 10% of GDP per annum.The capacity to finance imports can be sharply affected by external factorsthat are beyond the control of the Government; the effect of such adversefactors on the economy is amplified by the heavy dependence of budgetaryrevenues on import duties and sales taxes, which together account for about60% of tax revenues.

Recent Economic Developments

5. In the late 1970s, Bangladesh enjoyed a period of political stabilityand economic consolidation and was able to plan for longer-term development.GDP growth of nearly 6% per annum from FY75 to FY80 was accompanied by risingpublic investment, financed by a substantial real increase in aiddisbursements. A combination of adverse domestic and external events afterFY80 disrupted the momentum of development. Between FY80 and FY82, theexternal terms of trade for Bangladesh fell by 30%, due to declining pricesfor jute and jute products, as well as to increases in import prices.External aid flows, which had been rising steadily up to FY80, declined inFY81 and in FY82 barely recovered to their FY80 level. Foreign exchangereserves declined to about US$120 million (equivalent to about two weeks'imports) by end-FY82. The deterioration in the terms of trade and stagnationof aid receipts in real terms had an adverse impact on public finances andforced the Government to impose severe cuts in domestic public investment inFY81 and FY82. At the same time, the rate of growth in GDP decreased fromabout 6X in FY81 to 1.4% in FY82, largely due to a decline in food cropproduction folloving a prolonged drought during FY82.

6. In response to these adverse developments, the Government took aseries of measures designed to stabilize the economy. In the FY83 Budget,growth of public expenditure was tightly restrained, new tax measures wereintroduced and a series of pricing adjustments were made to reduce subsidiesand improve the financial performance of public sector enterprises andutilities. Taken together, the tax, pricing, and subsidy-reduction measuresamounted to an impressive 2.3% of GDP. In FY83, the Government alsoannounced its New Industrial Policy designed to improve the efficiency ofpublic sector enterprises and provide an improved policy environment for theprivate sector. More than 100 public sector enterprises were subsequentlydenationalized, investment sanctioning procedures were streamlined and manyindustries were freed from investment sanctions. Imports were liberalized byincreasing access to imports through a secondary exchange market and byeliminating some quantitative restrictions. By the end of FY83, the balanceof payments position had improved considerably, due to a recovery in theterms of trade, an upsurge in workers' remittances, higher aid inflows, aswell as increasing exports stimulated by a substantial depreciation in theexchange rate. However, the reduction in the current account deficit, whichfell from 14.5% to 10.4% of GDP, was also due to the depressed level ofimports resulting from a continued slow rate of GDP growth, which recoveredto only about 3X in FY83. While more favorable weather conditions and

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increased inputs led to a 3-4Z growth in agriculture, most of the non-agricultural sectors remaiLed depressed; value added in the manufacturingsector actually declined by 1-2%.

7. Economic performance in FY84 and FY85 was seriously affected by aseries of damaging floods during 1984 whose intensity was comparable to thedevastating floods of 1974. Successive rice crops were hit causing netfoodgrain losses of over 0.5 million tons. Due to investments in more dis-persed food storage facilities, the improved efficiency of the Public FoodDistribution System, and the Government's large-scale foodgrain procurementsabroad, a famine was averted. Even though the immediate food crisis haspassed, the impact of the floods is reflected in lower agricultural growthrates of around 2.4% in FY84 and 3.0% in FY85. The cyclone and tidal boredisaster in May 1985 caused extensive loss of life and property along thesouthern coast and islands of Bangladesh; the effect on food production was,hovever, limited, although loss of agricultural livestock was considerable.

8. In the nonagricultural sectors there was in FY84 a slow, butgradually accelerating, recovery. Industry, in particular, rebounded sharplyfrom the weak performance of the preceding year. This was due to a combina-tion of factors including further liberalization and privatization measuresfollowing the promulgation of the Government's New Industrial Policy; easieraccess to imports during a period of less restricted foreign exchangeresources; increased non-traditional industrial exports (especially ready-made garments); and increased demand generated by a sharp expansion ofprivate credit (paragraph 11). Therefore, despite the severe setbacks inagriculture, the improvements in industry still led to a GDP growth of around3.5% for FY84. In FY85, preliminary Government estimates would suggest thatindustrial growth was only about 3Z; on the other hand, the recovery ofgrowth in the trade and transport sectors, helped maintain the rate of growthin F85 at about the FY84 level.

9. Following the major domestic revenue effort made in FY83, theGovernment sought to consolidate that effort in its FY84 and FY85 Bud2etssrather than to embark on major new initiatives. Farther modest tax andpricing adjustments were made to increase recurrent revenues, but totalrevenues for FY84 were well short of the budget target as dutiable importsand aid disbursements fell considerably below expectation. In FY85, taxrevenues benefitted from higher imports. A substantial budget deficit wasavoided in FY84 by a significant shortfall in development expenditures con-pared with the budget estimate; a similar shortfall in the Annual DevelopmentProgramme expenditures occurred during FY85. Such shortfalls arise partlyfrom overly ambitious development expenditure targets, but are alsoattributable to lower than expected disbursements of project aid as a resultof implementation constraints.

10. In its FY86 BudRet. the Government took further domestic resourcemobilization measures which, together with additional revenue measures intro-duced later in the fiscal year, are estimated to yield in excess of Tk 2billion in FY86, equivalent to 0.4% of GDP. As a result, the budget revenue

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to GDP ratio is projected to rise from 8.9% in FY85 to 9.5% in FY86. Inaddition the Government has enacted a series of significant pricingadjustments, including increases in natural gas prices averaging 20%, in theprices of fertilizer averaging 9%, and in power rates averaging 18%. TheGovernment &lso announced its intention to reduce food subsidies by Tk 600million in FY86.

11. During 1983 and 1984, the Government permitted a rapid expansion indomestic credit in an effort to stimulate economic recovery and, by means ofliberal rural credit, to mitigate the effects of the 1984 floods. Domesticprices have, nevertheless, remained relatively stable, although the rate ofinflation increased from about 12Z in FY84 to about 13% in FY85. In January1985, the Government took a series of strong measures to limit the growth ofliquidity, including increases in interest rates and quantitative restric-tions on the growth of domestic credit. These measures were instrumental inmoderating significantly the growth of credit during the second half of FY85.From December 1984 to June 1985, the annual rate of private credit expansionslowed to 12% compared with 40% in FY85 and 60% in FY84. The Bangladesh Bankh:s successfully continued to restrain domestic credit expansion in FY86.

12. The balance of payments and foreign exchange reserves positionimproved during FY84. Export earnings rose by 20%, due to higher interna-tional prices for jute, jute products, and tea, as well as a major boost innon-traditional exports, while imports remained closc to the FY83 level sinceeconomic recovery was slower than anticipated and aid-financed imports weredepressed by delays in project implementation. Even though workers' remit-tances began to decline in the second half of the fiscal year, gross foreignexchange reserves in March 1984 reached a peak of US$558 million, equivalentto about 3 months' imports. However, during FY85 there was a deteriorationin the balance of payments. Part of the growing pressure on the balance ofpayments arose from the additional foodgrain imports necessitated by thesevere 1984 floods. Non-food imports also increased significantly, partly asa result of the continued recovery in the non-agricultural sectors stimulatedby tbe rapid expansion in domestic credit. Workers" remittances alsodeclined further and although exports increased somewhat over FY84 levels,external reserves fell by about US$141 million in FY85. The decline inreserves would have been even more marked had not a substantial portion(about Us$190 million) of foodgrain imports been purch;sed on credit.

13. Bangladesh's balance of payments will be under very considerablepressure during FY86 and FY87. Merchandise export earnings are unlikely toexceed significantly the FY85 level in nominal terms. Even significant gainsin non-traditional exports, in particular garments, as well as in leather areestimated to no more than offset the expected losses in earnings from exportof jute and jute products due to the sharp decliue in international price.The inflow of workers' remittances is also unlikely to recover fully to theirformer levels, although some increase is expected in FY85 over FY84 levels.The situation will be further aggravated by the substantial loan repaymentsfalling due during FY86 and FY87 for recent purchases of foodgrain imports ondeferred terms. Bangladesh also has substantial repurchase ob'ligations due

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to the IMF in FY86 and FY87. The critical state of the country's externalpayments situation is demonstrated by the further decline of official grossreserves during the first quarter of FY86 to only $265 million, or about 1.3months of import requirements, as of end-September 1985.

14. In view of the deterioration in the balance of payments situation inFY85 and the unfavorable outlook for the next two years, the Government hasentered into a Standby Arrangement with the IMF in an amount of SDRs 180million covering the period December 1985 to June 1987. The stabilizationprogram to be supported by the IMF Standby Arrangement focuses on mobilizingadditional domestic resources, restrained monetary and credit policies and,through the pursuit of flexible exchange rate policies, strengthening thecompetitiveness of the traded goods sector.

External Debt

15. Since most of Bangladesh's borrowings have been on highly conces-sional terms, servicing external medium and long-term debts has not been amajor problem. Nonetheless, the burden of servicing this concessional debtis rising steadily as debts incurred in the first years after independenceare increasingly falling due for repayment. Total service payments on exter-nal public medium and long-term debt are expected to rise from about 13% ofexport earnings (goods, services, and workers' remittances) in FY84 to 14% inFY85 and a peak of 18% in FY87, gradually declining thereafter. However,when obligations to the IMF are included, the debt service ratio in FY85 wasabout 24%, and is estimated to stay at about this level during FY86 and FY87.The debt service ratio is forecast to decline thereafter, as food debts arerepaid, to about i-% by FY90. The Bank Group's share of Bangladesh's debcservicing obligationa will remain modest over this period, rising from 8.5%in FY84 to 8.9% in FY86. The Bank Group's share of total debt outstandingand disbursed is projected to increase from about 30% in FY84 to about 35Z inFY86.

Development Planning and Policy Issues

16. The Government is completing preparation of its Third Five YearDevelopment Plan which will cover the period FY86-90. In the meantime, theGovernment's development strategy continues to be largely based on thepriorities outlined in the Second Five Year Plan (FY81-85). The prioritydevelopment objectives are: (a) reducing population growth from the presentrate of 2.6% per annum; (b) achieving foodgrain self-sufficiency;(c) eliminating mass illiteracy; and (d) accelerating domestic enc.0ydevelopment. With appropriate producer incentives, adequate resources toprovide needed inputs to farmers, and an expanded role for the private sectorin the provision and servicing of modern agricultural implements and inputs,foodarain self-sufficiency could be achieved by the end of the decade. GivenBangladesh's high illiteracy rate (74%), the emphasis on primary education iswell founded; under the Second Plan the objective of achieving universalprimary education was adopted. Prospects for acbieving the objectives ofeducational expansion and improved foodgrain availability would be improved

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by success in reducing the oopulation growth rate; this will require moredetermined efforts than hitherto. The Government is taking steps, which willbe supported by the proposed project, to improve its family planning andhealth services at the field level, including increasing the number of fieldworkers and providing them with more intensive training and supervision. TheGovernment also intends to expand support to maternal and child healthservices.

17. Earl. development of the country's energy resources, particularlynatural gas, is very important since petroleum imports at present absorbabout two-thirds of merchandise export earnings. The Government is alreadyimplementing sizable investments to augment the supply of gas to meet growingdemand from the power and fertilizer sectors. The implementation ofappropriate energy conservation measures and the setting of energy prices ateconomically efficient levels will also be critical to the success of theenergy development program.

18. There is an urgent need to address the growing problems of ruralpoverty and unemployment. Fifty percent of the rural population is functiou-ally landless, and the employment situation has deteriorated significantlysince the 1970s, with only 70% of new entrants to the labor force finding.gainful employment. Increased foodgrain production alone will not suffice toresolve the unemployment and income problems, in view of the large projectedgrowth of the work force. Measures must be taken simultaneously, therefore,to develop other sectors, such as fisheries, livestock, forestry and non-foodgrain crops, and to strengthen the industrial sector -- especially ruralsmall-scale and cottage industries - so that incomes generated in one sub-sector will generate effective demand for the output of others.

19. As noted above, the Government'F New Industrial Policy has given agreater role to the private sector in industrial development increased theincentives for export industries, and liberalized the import regime.However, there remains an urgent need to strengthen the development financeinstitutions, whose financial structure has been undermined by an increasingproblem of debt arrears, and to rationalize industrial incentives. TheGovernment is now examining the future role of the development financeinstitutions in the light of recent consultants' studies. An ongoing programof IDA-financed studies is expected to lead to a program of action for therationalization of a broad range of trade and industrial policies.

20. In the Third Five Year Development Plan, the Government will need toensure that the size of the future public investment program is set at alevel consistent ith a realistic assessment of prospective external anddomestic financial resources. As external assistance will continue to beseverely constrained, there is a clear need for a sustained and intensivedomestic resource mobilization effort to raise tax revenues, increase thelevel of cost recovery, reduce subsidies, and improve the financial perfor-mance of public enterprises. In the medium term, the tax base will have tobe broadened to reduce its present dependence on import duties, therebyimproving the elasticity of the tax system.

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21. Realization of the Government's development objectives will alsorequire significant improvements in develonment administration. There isneed to strengthen project implementation, streamline administrativeprocedures, and improve decision-making processes. Recognizing that localgovernment bodies can play an effective role in the development effort, theGovernment has decided to decentralize a number of planning and administra-tive functions to the upgraded Upazila (Sub-District) level. The implementa-tion and impact of this policy will need to be closely monitored.

PART II - BANK GROUP OPERATIONS IN BANGLADESH

22. Cumulative Bank Group commitments to Bangladesh total US$3,382.92million. This figure includes reactivation of eleven credits (US$154.41million) made to Pakistan before 1971 and a consolidation loan (US$54.90million) and a consolidation credit (US$37.45 million) approved in 1975 tocover liabilities arising from projects completed prior to independence. Inaddition to these, the Bank has approved 90 new credits since Bangladeshbecame a member in 1972. In terms of total commitments, approximately 24%of IDA lending has been for agriculture, irrigation and rural development;IIZ for industry; 13X for power and energy; 9% for transportation andtelecommunications; 9% for education and technical assistance; 2% for urbaninfrastructure; 2Z for population control; and 30% for imports programsupport. Apart from increased emphasis on energy development, the composi-tion of IDA lending over the next several years is not expected to changemarkedly. On June 18, 1976, Bangladesh became a member of IFC and fiveinvestments have been approved to date.

23. IDA's country assistance strategy is designed to support theGovernment's priority development objectives set out in the Second Five YearPlan and summarized in paragraph 16 above. IDA's lending has emphasizedagriculture, with particular importance attached to increasing food produc-tion through augmenting the supply of essential inputs such as irrigationequipment, fertilizer, and improved seeds, the development of extensionservices, research programs, and rural cooperatives, the provision ofagricultural credit, and the promotion of input and output pricing policiesthat allow adequate incentives to farmers to increase production. IDA hasalso supported the Government's efforts to encourage greater private sectorparticipation in the supply and distribution of agricultural inputs. IDA'slending program will plice increasing emphasis on agricultural diversifica-tion through increased production of fish and forestry products.

24. IDA's lending for power and gas investments is designed to expand theuse of natural gas in substitution for imported oil, promote conservationmeasures and more efficient energy use, and eucourage further gas and oilexploration. IDA is also financing projects to expand the country's ruralelectrification system and power generation and transmission capabilities.Recognizing the critical shortages in traditional fuels, IDA is financinginvestments in forestry to increase the supply of fuelvood.

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25. In the education sector, IDA's lending strategy focuses on twoareas -- primary education and skills development. Lending for primaryeducation supports the national goals of achieving universal primary educa-tion and reducing illiteracy, expanding access to education, and upgradingquality. Projects for vocational and technical education promote the train-ing of craftsmen, technicians, and engineers.

26. In order to alleviate the severe economic and social pressurescreated by the extremely high population density and the continuing popula-tion increase, IDA, together with other donors, is assisting the Governmentin implementing an accelerated family planning program, of which this projectis an integral part. With Bangladesh's urban population expected to increasefrom about 16-18 million in 1985 to between 35-40 million by the year 2000,future IDA activities will also help the Government address the problem ofproviding low-cost shelter and infrastructure services to the urban poor; IDAis already financing water and sanitation improvements in Chittagong andDhaka.

27. To achieve a higher and sustained level of growth, provide productiveemployment for a rapidly growing work force, and improve the country's exter-nal trade and payments position on a sustained basis, industry will need toplay a more pivotal role in the economy. IDA's lending program seeks toassist the Government in: (a) increasing efficiency in public sectorenterprises; (b) reforming trade, industrial, and financial policies;(c) strengthening existing financial institutions; (d) establishing exportdevelopment programs; and (e) promoting rural and small-scale industries.In addition to assistance under program credits (paragraph 29), IDA hassupported projects to increase fertilizer production, rehabilitate the juteand textile industries, strengthen the development finance institutions, andpromote small-scale industries.

28. Because of the importance of river transport in this deltaic country,iA the transport sector, IDA has focused on the development of the inlandwater transport system. The road network in Bangladesh is extensive, but theroads are in poor condition and inadequately maintained. IDA's future lend-ing program will concentrate primarily on maintaining and upgrading existingroads.

29. Because of the urgent need for sustained transfer of substantialfinancial resources, the assistance strategy for Bangladesh provides a sig-nificant proportion of annual lending in the form of program credits. Inaddition to providing much-needed foreign exchange and local counterpartfinancial support, annual program credits have provided a useful vehicle foraddressing a wide range of sectoral and macro-economic issues. Due toBangladesh's savings/investment gap, IDA credits for project financing con-tinue to cover all foreign exchange costs and a significant portion of localcurrency expenditures. Given the severe limits on extermal concessionaryassistance, IDA has emphasized the need for Government to nobilize moredomestic financial resources and to utilize these resources more efficiently.IDA is promoting Government policies to set public utility prices at economi-cally efficient levels, to mobilize domestic financial resources, and toimprove the efficiency of public sector institutions.

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30. Project implementation is hampered not only by a shortage of domes-tic financial resources, but also by weak development institutions, limitedmanagerial capacity, and cumbersome bureaucratic procedures. IDA, in con-sultation with other donors, is engaged in a continuing dialogue with theGovernment on ways to improve project implementation. In support of broaderinstitutional reform, IDA is: (a) providing technical assistance for projectpreparation and implementation; (b) financing projects to train civil ser-vants and other managerial and technical personnel; and (c) encouraging theGovernment to introduce administrative reforms and improve staff salaries andincentives. Despite progress in implementing reforms, which includeadministrative reorganization and improvements in financial planning andbudgetary procedures, adequate institutional capabilities can be achievedonly over the long term.

31. IDA chairs the annual Bangladesh Aid Group meeting which provides aforum for aid donor consultation and IDA's Resident Representative chairsregularly scheduled donor meetings in Dhaka to exchange views on policyissues, project implementation, and aid coordination.

PART III - POPULATION AND HEALTH SECTOR

32. The population of Bangladesh is about 100 million, has more thandoubled in the past 35 years, and is growing at a rate of 2.6Z per annum.The population density, which is more than 600 people per square kilometer(km2), is among the highest in the world. Pressure on arable land isintense, and the number of landless, currently more than 50X of thepopulation, is rising. The health status of the population is low by allconventional measures. The infant mortality rate (IMR) is 132 per 1,000 (ascompared to 94 in India and 96 in Burma) and the child mortality rate is 19per 1,000 (India 11, Burma 12). Maternal mortality is estimated at 6 per1,000 live births, about 100 times the rate in some developed countries.Sixty percent of infant deaths occur in the first month of life, due mainlyto tetanus, birth trauma, prematurity, and pneumonia. Short birth intervalsalso contribute to high rates of infant mortality. Diarrhea, respiratoryinfections, and measles are the main causes of death for children who survivebeyond infancy. Malnutrition is a major contributor to mortality amongchildren, and to disease, weakness, and low productivity among adults. Percapita food intake has decreased from 2,300 calories in 1962/63 to 1,935calories in 1981/82. Worst affected are the rural, landless poor, whoseaverage calorie intake is marginal for sustaining basic functions.Bangladesh's total fertility rate (TFR) remains high at 5.8, although it hasdeclined from 7.0 in 1971 as a result of a rapid increase in the use ofcontraception as reflected by a rise in the contraceptive prevalence rate(CPR) from 10 in 1975 to 24-26Z today. Sustained economic development andsignificant improvement in health, social and economic conditions will bedifficult, if not impossible, to achieve without a substantial decrease infertility.

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The National Population and Maternal-Child Health Program

33. Policies and Objectives. Bangladesh's program to control populationgrowth began three decades ago when the Government of East Pakistan adopted anational family planning (PP) program and set up a network of FP clinics.While the program succeeded in creating public awareness about populationissues and the use of contraception, it had little, if any, impact on fer-tility rates. Following independence in 1971, the First Five-Year Plan of1973 was adopted, marking the start of a comprehensive national effort tomoderate fertility. In 1976 the Government revised the plan, adopting a morecomprehensive and, it was to prove, unrealistically ambitious set of policiesand objectives which called for zero population growth by 1985. This policyframework gave explicit recognition to the links between the level of fer-tility and socio-economic factors such as employment, female parU;icipation inthe labor force, education, improved health, and reduction in infant andchildhood mortality. During this period, however, nascent maternal-childhealth (MCR) services made very little headway. Population coiLtrol targetswere revised once again in the formulation of the Second Five-Year Plan(1980-85) which sought to achieve zero population growth by 1990, and anincrease in the CPR to 38% by 1985. These targets were revised in mid-1982and the current, more realistic, goal is to achieve a CPR of 38-40% by 1990which would lead to zero population growth by around 2025. Initial MCHtargets under the Second Five-Year Plan were also unrealistic. Program goalsof 5mmunizing 30% of children and treating 25% of malnutrition cases, ascompared to negligible immunization coverage and a 3X treatment rate ofmalnutrition in 1980, were not matched by implementation strategies, and, inpractice, priority continued to be given to the population control effort.

34. In the draft Third Five-Year Plan, the Government has emphasized theinterdependence of reduced fertility and increased child survival, and hasdeveloped a long-term MCH strategy. The plan's targets are to reduce the IMRto 100 per 1000 and maternal mortality to 4 per 1,000 by 1990. The basicstrategy under the plan is to increase the availability and improve thequality of family planning and NCR services, utilizing the existing servicedelivery system. Emphasis will be placed on developing the NationalInstitute of Population Research and Training (NIPORT), increasing the den-sity of female field workers, and establishing Union Health and FamilyWelfare Centers (UHIWCs) in at least 1,000 additional rural unions(paragraph 51), thereby increasing the total number of UHFWCs to about 2,670,about two-thirds of those needed to achieve the goal of complete nationalcoverage. Under the plan, the Government proposes to reverse the relativeneglect of MCH care through a major outreach effort to apply three major MCKinterventions: oral rehydration therapy, immunization of children under twoagainst six major diseases and women of child-bearing age against tetanus,and training of traditional birth attendants in safe delivery practices.

35. A controversial feature of the ongoing population control program hasbeen the system of Government payments to compensate clients, those who referclients, and workers who perform sterilization and insertion of intra-uterine

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devices (IUDs). A recent Government-funded study by the Program for theIntroduction and Adoption of Contraceptive Technology (PIACT), aninternational, non-government research organization, revealed a number ofproblems with the system. These included the exclusive use of sterilizationsand IUDs as the basis for referral fees without similar compensation for thepromotion of child-spacing methods and NCR service delivery, the negativeeffects of referral fees on worker follow-up of clients, and the danger thatclients will get only limited information regarding contraceptive methods andside effects. Some donors could like to see the system abolished butappreciate that any abrupt change would prove disruptive to the overallpopulation control effort. The Government has announced its intention tocontinue the system of client compensation and referral payments but, inresponse to the PIACT study and concerns expressed by the donors, it alsohas announced its intention to broaden the system to include MCH as well asfamily planning activities. In addition, the Government has carried outmeasures to improve worker follow-up of sterilization clients and to ensurethat workers adequately inform clients about all available forms of con-traception and their side-effects. Under the proposed project, theGovernment would (a) by December 31, 1986, carry out a study, under terms ofreference satisfactory to IDA, of the present system of client compensation,worker referral and service provider fees, and community and otherincentives, including the current and future need for such payments and theoption for the modification or gradual phase out of these payments;(b) promptly thereafter furnish to IDA for comment the findings of thisstudy; and (c) thereafter institute measures, to be agreed between theGovernment and IDA, to improve, modify, or gradually phase out the system ofclient compensation, worker referral and service provider fees, and communityand other incentives.

36. Proatram Organization. National policy for population control isformulated by the National Council for Population Control (NCPC), chaired bythe President and consisting of all 12 cabinet ministers. The NCPC isassisted by an Executive Committee headed by the Minister for Health andPopulation Control. The Ministry of Health and Population ControL (COHPC)is responsible for development, coordination, and implementation of thenational family planning and NCR program. Its structure has undergone fre-quent changes over the past ten years, alternating between integration andseparation of health and family planning services (paragraph 41). InApril 1983, the then separate divisions for Health and Population Controlwere converted into two wings under the MKHPC Secretary, with a PopulationControl Wing (PCW) responsible for MCR and FP and a Health Wing responsiblefor the remainder of health services. Each wing has its own Director Generaland a Secretariat responsible for planning, budgeting, and monitoring, anddirectorates responsible for specific operational aspects of the programwhich are supported by offices at the district and upazila levels.

37. Each of the 64 district offices is headed by a Civil Surgeon on thehealth side and a Deputy Director for Family Planning from the PCW. In the464 upazilas, health and family planning services are integrated under theHealth and Family Planning Officer who is assisted by a Family Planning

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Officer and Medical Officers. In the 4,365 unions, the staffing patternincludes an Assistant Health Inspector and a Family Planning Assistant (bothmales), as vell as a Medical Assistant, a female Family Welfare Visitor, anda Pharmacist who together are responsible for running the UEFWCB. Inaddition, the Family Welfare Visitors and Medical Assistants conduct villageclinic programs. At the ward level, a male Realth Assistant (HA) from theHealth Wing and a female Family Welfare Assistant (FWA) from the PopulationControl Wing deliver home outreach services. HAIFWA teams are currentlyworking in around 90Z of Bangladesh's 13,500 wards.

38. UHFWCs are the first-level referral facilities and provide common NCHinterventions, limited curative care, and family planning services includinginsertion of IUDs by Family Welfare Visitors and sterilization by visitingdoctors. Each of the approximately 1,600 operational UHFWCs serves anaverage population of 22,000. There is also a network of dispensaries at theunion level, some of which gradually are being converted to UHEWCs. Lowutilization has posed a problem for many UHFWCs. While the situation isimproving, few URFWCs have achieved the average case loads of 1,500 recordedmorthly by several pilot projects. The main reasons for low utilization havebeen lack of drugs, slow posting of residential staff, aud poor staffsupervision. The posting of residential medical assistants and family wel-fare visitors has begun to improve URFWC utilization. At the next referrallevel are Upazila Health Complexes (UHC), 31-bed facilities built to cover apopulation of about 200,000. Currently, there are 337 URCs, three-quartersof the number needed. District and subdivisional facilities represent thetwo final steps in the referral system; these include hospitals and about 93Maternity and Child Welfare Centers.

39. In addition to the MOHPC, seven other ministries serve as channelsfor the dissemination of FP information and, in some cases, provision ofcontraceptive services. The Population Planning Section of the PlanningCommission assists in the formulation of proposals for population control,reviews budgetary allocations for the population control program, and worksto ensure that the country's overall development program reflects nationalpopulation policy goals. It is also responsible for evaluation of keypopulation program activities through an External Evaluation Unit (EEU).Non-Governmental Organizations (NGOs) have been directly involved in popula-tion control activities for at least a decade, and more than 100 are nowactive in the program. Currently, NGOs work mostly in urban areas, althougha few organizations, such as the Swanirvar family planning project, areactive in rural areas. NGOs account for about 37Z of contraception by modernmethods in Bangladesh.

40. TraininR. Training for the national population control program isnainly organized and managed by NIPORT which functions as part of MOEPC andis headed by a Director General who reports to the Additional Secretary, PCW.NIPORT administers 12 Family Welfare Visitor Training Institutes and 20Regional Training Centers which are responsible for the training of allHealth Wing and Population Control Wing field workers and supervisors.NIPORT also provides technical supervision and support for the training of

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medical personnel in sterilization techniques by the Bangladesh Associationfor Voluntary Sterilization and Model Family Planning Clinics at medicalcolleges.

41. Program Constraints. The legacy of organizational changes revolvingaround the question of functional integration of family planning and NCRservices, the past emphasis on family planning at the expense of MCH, andpoor coordination between health and FP staff have hampered the developmentof an effective delivery system. Coordination between the health and popula-tion control sides of MOHPC began to improve with the restructuring in mid-1983 (paragraph 36). During the past two years, a number of Govern entinitiatives have been taken to further the integration including the estab-lishment of a high-level steering committee at headquarters (involving bothwings) to direct the maternal-child health program and the setting up of ajoint manpower development committee. In the field, the Government hassought to define work responsibilities more clearly and to unify managementunder the Upazila Health and Family Planning Officer. Current plans call forincreased joint training of MCR and FP staff, strengthened supervision, andrevision of work routines to ensure complementarity rather than competition.In this way the Government is attempting to move toward a more fully inter-grated system, while avoiding the disruption of program performance which hasmarked previous reorganizations. However, such Government efforts cannotprevent temporary declines in the performance of the FP program. After twoyears of record increases, the level of contraceptive use (as measured incouple-years of protection) for January-August 1985 showed a 20Z declinecompared to the same period in 1984. This decrease is largely attributableto resistance on the part of family planning officers to orders placing themunder the administrative control of the Upazila Health and Family PlanningOfficer. The Government has taken steps to accommodate the concerns offamily planning officers and the couple-years of protection level showed amodest upswing during September 1985.

42. Other fundamental and continuing constraints on implementation arepoor supervision, inadequate field staff density, and insufficient training.Supervision at the central and district levels is limited. The DirectorGeneral, PCW, is currently responsible for 64 districts with district DeputyDirectors for Family Planning reporting directly to him. This predominantlynon-medical staff is able to offer little technical support in the areas ofclinical contraception and NCR care. Supervisors lack mobility and tend toemphasize inspection rather than provision of support to field staff. FWAresponsibility for total ward coverage has become increasingly difficult asthe average ward population has grown from 6,000 to 7,400 since 1976 andtheir jobs have been broadened to include essential MCR services. FWA visitsto each household are now at least three months apart, compared with a recomr-mended frequency of once a month. Because of organizational and staffproblems, NIPORT has not sufficiently exercised its role in identifyingtraining needs, curriculum development, trainer training, preparation oftraining materials, evaluation of training, and development of managementtraining courses. There is also a lack of coordination among the majoragencies participating in the dissemination of FPIMCH information, as well asa lack of reinforcement of the mass media campaigns with face-to-face follow-up.

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43. A different set of constraints has hindered development of ruralwomen's programs whicb are managed by ministries other than MO9HPC and aredesigned to increase contraceptive use and generate income for participatingwomen through the production of marketable goods. These groups involve about110,000 women in income-generating activities and have recruited a cumulativetotal of about 230,000 FP acceptors. Contraceptive acceptance by members ofthese organizations is about twice the national average. However, inadequatequality control and marketing arrangements for goods produced by these womenpersist, mainly because budgetary cuts during the Second Five-Year Planblocked the setting up of a Marketing and Design Cell originally approved bythe Planning Commission. Budgetary cuts also reduced the nuaber ofmanagerial staff for the women's programs. An absence of credit facilitiesfor investment capital has limited development to those enterprises thatcould be financed by personal savings or income.

44. NGOs active in the population field face several constraints includ-ing cumbersome Government procedures for approval of external funding. TheGovernment, at the urging of donors, is moving to streamline these processes.USAID already has authorization to provide direct funding to approved NGOsand the United Kingdom's Overseas Development Administration, which isexpected to finance the NGO subcomponent of the proposed third project,intends to follow a similar approach. In addition, inadequately articulatedobjectives and screening mechanisms within MOEPC have hampered directGovernment support to NGOs. Hovever, under the proposed third project a workplan revising MOHPC screening procedures and setting up a secretariat for theexpeditious handling of NGO applications would be prepared (paragraph 55).

45. Government Expenditures. Government expenditures (capital plusrecurrent) for population and health have risen from 5.3% to 5.9% of totalexpenditures over the past five years. This level compares well withPakistan in 1980 (3.9M), and Nepal in 1982 (4.5%), and with countries ofsimilar per capita income in Africa. The total budget of the MOHPC grew fromabout US$18.3 million equivalent in 1974/5 to US$118.8 million equivalentin 1983/4. The average increase in real terms over the five-year periodending 1983/4 was about 4.752.

Role of External Assistance

46. Foreign aid for FP/MCH over the Second Five-Year Plan totaled aboutUS$285 million which constituted about 43% of the MNOPC budget during thisperiod. Major donors included the United States Agency for InternationalDevelopment (USAID), which has been the primary financier of the Government'svoluntary sterilization and IUD program and has provided substantial supportfor NG0s; the United Nations Fund for Population Activities (UNFA), whichhas been involved primarily in the delivery of FPIMCH services, and theUnited Nations Children's Fund (UNICEF), which has been involved in theprovision of MCH services. IDA and other donors have assisted theGovernment's population efforts for ten years through two projects. TheFi-st Population Proiect (Credit 533-BD) became effective on September 25,

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1975, and closed, after three one-year extensions, in December 1982. Totalcosts were US$45.7 million with an IDA credit of US$15.0 million and combinedcofinancing of US$25.4 million from Australia, Canada, the Federal Republicof Germany, Norway, Sweden, and the United Kingdom. A report by theOperations Evaluation Department is under preparation. A project completionreport, issued in September 1984, concluded that the project assisted inexpanding the population program at a time when service availability waslimited, field structure was non-existent, field staff were not motivated,and organizational capability was weak. The report indicated considerableprogress in improving service quality, worker productivity, and progr3mmanagement, while recognizing the need for continuing improvement in each ofthese areas. The Second PopuLation and Family Health Proiect (Credit921-BD)- was cofinanced by six bilateral donors: Australia, Canada, theFederal Republic of Germany, thIe Netherlands, Norway and Sweden. Totalproject costs were estimated at US$110.0 million, of which US$32.0 millionwas contributed by IDA. The project consisted of six major components:(i) NCH/FP service delivery; (ii) training; (iii) information, education, andmotivation; (iv) research and evaluation; (v) private sector and innovativeactivities, and (vi) project management support. The project contributedsignificantly to increased contraceptive prevalence through development ofboth the physical and human infrastructure for rural delivery of FP/NCHservices and information and education activities. During the course of thesecond project, underlying managerial weaknesses (paragraph 42), affectingstaff productivity and the effective utilization of physical resources,became increasingly clear. The project substantially achieved its plannedobjectives in terms of construction, training, and communications. However,a late start of the construction program and the slow preparation ofwithdrawal applications led to a two-year extension of the closing date toDecomber 31, 1985. The proposed third project is designed to address theadministrative and operational issues identified during implementation of thesecond project.

47. It is difficult to isolate the impact of donor-financed projectswithin the Government's overall family planning program. In addition, ascarcity of reliable demographic data impedes efforts to determine changes infertility and mortality rates. Nonetheless, the CPR appears virtually tohave doubled since 1979 to over 24Z, and around 95Z of eligible couples nowknow at least two modern contraceptive methods. Couple-years of contracep-tive protection have increased steadily; the average increase 1980-84 isalmost double that of 1976-80. Around 40% of women in the mothers' clubs andwomen's cooperatives have accepted family planning, which is well abovenational averages. It is not yet possible to attribute any change in mor-tality rates to the limited MCH coverage achieved to date. However, reducedfertility and longer birth intervals promoted through FP activities have apositive impact on the health, and ultimately the survival rate, of bothmothers and children.

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PART IV - THE PROJECT

48. The project was prepared by the Government with the assistance ofIDA. It was appraised in October 1984 by IDA, and representatives ofAustralia, Canada, the Federal Republic of Germany, the Netherlands, Norway,Sweden, the United Kingdom, UNICEF, UNFPA, and USAID. A timetable of keyevents relating to the project and special conditions of the credit arelisted in Annex III. Negotiations were held in Washington in September 1985.The Government of Bangladesh was represented by a delegation led byMr. A.B.M. Ghulam Mostafa, Secretary, Ministry of Health and PopulationControl.

Proiect Obiectives

49. The primary objective of the project, which would incorporate theassistance of most external donors to the Government's FP/HCR program overthe next five years, would be to reduce fertility and infant and maternalmortality. In addition, the project would assist efforts to stimulate addi-tional demand for family planning and to extend essential and affordablehealth care to Bangladesh's rural population. To accomplish these longer-term objectives the project would focus on improving the Government'scapacity to implement its FP/NCR program by strengthening the management andsupervision of the service delivery system and broadening MCR activitiesthrough programs of immunization, diarrhea management, and safer childbirth.Wider and more effective FP/MCH service coverage of rural areas would beaccomplished through improvements in field worker training aud the provisionof additional field workers, UHFWCs, medicines, medical supplies, andequipment. The project would also expand public education programs toincrease the demand for family planning. It would continue and expand sup-port for women's vocational training and cooperative programs which promoteacceptance of family planning and support NGOs which provide family planningservices, especially in rural areas. The project would strengthen M0EPC'smanagement information system and would support research concerning theperformance of family planning and health programs and experimentation withinnovative approaches to FP/MCR issues.

Proiect Description

50. The project, which would continue support to activities begun underthe first and second proiects, would consist of seven components: (i) FP/XCRservice delivery; (ii) NC4 programs; (iii) communications/public education;(iv).women-s programs; (v) NGO and innovative activities; (vi) research andevaluation; and (vii) project management support.

51. FP/MCH Service Deliverv: This component would strengthen managementand supervision; upgrade and expand in-service training for field workers andsupervisors; increase the density of female field workers; provide an ade-quate and assured supply of drugs, medicines, and medical supplies for NCHand clinical contraceptive activities; and expand the network of UHFWCs. To

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improve supervision and management, the project would finance the estab-liskment of a four-person national Supervision Directorate under the DirectorGeneral, PCW, and 464 female supervisory posts of Senior Family WelfareVisitors, one per upazila. It would finance a Management Development Unit,including four expatriates and four counterparts, to provide long-term tech-nical assistance and to facilitate field implementation of service delivery.The existing group of four expatriate and counterpart advisors, who overseesterilization quality, would continue their work, having been renamed theClinical Contraceptive Surveillance Team and reporting directly to theDirector General, PCW. The team would be strengthened through the additionof one expatriate and four counterpart nurses. The team would also oversee anew cadre of district-level medical officers wbo would supervise clinicalcontraceptive and MCH activities that the Government would finance in con-junction with the project. The project would continue and expand clientsatisfaction surveys to help monitor the clinical contraception program andidentify problems requiring corrective action. One such survey would takeplace in each of the first four years of the project. The terms of referenceand timing of these annual surveys would be satisfactory to IDA. The projectwould improve the mobility of workers and supervisors by providing four-wheeldrive vehicles, motorcycles, and bicycles. About 6,000 person-months oftraining for staff at and below the district level and 275 person-months oftrainer training would be financed yearly through the project's effort tostrengthen NIPORT. The project would also finance the creatiou of around10,000 new FWA posts and would finance the salaries of 4,500 FWAs, one thirdof the existing cadre. An FWA/population ratio of 1:4,000, compared to thecurrent ratio of 1:7,400, would be achieved by June 30, 1990. The projectwould also provide a regular supply of medications for NCR care at UHF Cs andwould improve the quantity and flow of these medications to other servicedelivery facilities. To extend the service delivery system further, theproject would finance the renovation, furnishing, and equipping of 73 UHFWCs,and const-ruction of up to 1,000 new UHFWCs. The project would finance themaintenance of UEFWCs and other buildings constructed under this and the twoprevious IDA-aided population and health projects.

52. Maternal and Child Health Care. The project would complement UNICEFsupport for expansion of the three key activities of the Government's MCRprogram: immunization, diarrhea management, and improved birtb practices.The immunization program would focus on the prevention of diphtheria,pertussis, tetanus, measles, polio, and tuberculosis among children, andtetanus among women of child-bearing age. By March 31, 1986, the Governmentwould prepare and, thereafter, implement a program satisfactory to IDA forincreasing the range and coverage of child immunization on a national basisand for providing tetanus toxoid immunization to women of reproductive age.The diarrhea management effort would focus on the production, distribution,and use of oral rehydration salts (ORS) and would supplement an ongoingprogram being conducted by the Bangladesh Rural Advancement Committee (aSwiss-aided voluntary organization) to educate the public in the use of oralrehydration therapy (ORT). Improvement of birth practices would take placethrough a national training and supervision program for 30,000 traditionalbirth attendants. Coupled with earlier UNICEF training of traditional birth

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attendants, the project would ensure that by 1990 at least one trained atten-dant would be available in more than 80Z of Bangladesh's 68,000 villages.Both initial and refresher training would take place, spread over 24 monthson a part-time basis. The curriculum would include safe delivery practices,risk assessment and referral, ante and post natal care, family planning, ORT,and immunizations. The project would finance vehicles and staff salaries forall three MCH interventions, operating costs for ORS production, traditionalbirth attendant training, and short-term training through NIPORT of 2,000Family Welfare Visitors who would train traditional birth attendants.

53. Communications/Public Education. Communications/public educationactivities would be targeted towards contraceptive users, to encourage con-tinuation or a shift to more effective methods; young adults, to delaymarriage; young couples, to space and limit births; and community leaders, tosupport population control efforts. The component also would include mes-sages concerning immunization programs, ante-natal care, and oral rehydrationcampaigns. Four agencies would implement the component. The Ministry ofInformation and Broadcasting through Bangladesh Radio would continue toproduce and broadcast daily radio programming and would produce radioprograms based on guidelines provided by MOHPC's Information, Education, andMotivation Unit. Bangladesh TV would produce and broadcast two daily and twofortnightly TV programs in prime time, totaling four hours of viewing timemonthly. MOHPC's Information, Education, and Motivation Unit would organizefilm shows, folksong performances, orientation workshops for religiousleaders, union council chairmen and youth leaders, FP motivational meetings,late marriage campaigns, and fortnightly radio programs. The HealthEducation Bureau of MOHPC would organize diarrhea management campaigns andhealth education workshops for service delivery personnel, community leaders,and volunteers. Swanirvar, a local NGO, would hold workshops on populationawareness and FP motivation for national and local leaders, provide short-term training for 700,000 of its members, and provide motivational awards toselected communities. The project would finance vehicles, audio-visual andoffice equipment, furniture, training and educational materials, communitysurveys and awards, staff salaries, and operating costs.

54. Women's Programs. The project would further strengthen women'scooperatives, mothers' centers, and women's vocational training programsassisted under the two earlier IDA population and health projects. Theseprograms are part of the Government-s long-term strategy to improve thestatus of women and afford beneficiaries the opportunity to participate inincome-generating activities involving the production of marketable goods.Support would continue to concentrate on improving the income and leadershipskills of women while motivating them to want smaller families and adoptfamily planning. Under the project, women's cooperatives would seek totriple present membership from 67,000 to 208,000 by 1990, to double memberincomes to US$93 yearly, and to reach a 50% contraceptive use rate amongmembers. This would be accomplished by expanding the 1,700 existing coopera-tive societies in 100 upazilas to 3,200, improving members' access to credit,and expanding training for members in marketable skills, literacy, health andnutrition education, and family planning motivation. Membership in mothers'

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centers would triple to 290,000 women of child-bearing age by 1990. Throughthese centers, efforts vould be made to recruit around 370,000 new familyplanning acceptors and to raise average annual incomes per member by 50% toUS$60. Coverage goals would be achieved by combined intensification of theprogram in 40 upazilas where it now operates and expansion to 40 additionalupazilas. Income objectives would be realized by improved training,production, marketing, and access to credit. Under the project, an addi-tional 19,800 women would receive training through the women's vocationaltraining Progran which would seek to raise beneficiary incomes to US$6monthly and recruit an additional 400,000 family planning acceptors. Thesegoals would be achieved by raising the quality and intensity of training ofboth trade instructors and trainees, making production centers more market-oriented and profitable, and inaugurating trainee access to credit throughcommercial banking channels. By June 30, 1986, the Government would prepareand furnish to IDA, and thereafter qarry out, a detailed strategy, programdesign, budget, and plan of action satisfactory to IDA, for each of the abovewomen's programs.

55. Non-Governmental Organizations and Innovative Programs. The projectwould provide increased support to population-related programs of voluntaryagencies, with an emphasis on the development of rural activities. ByJune 30, 1986, the Government would prepare and submit to IDA for comment astrategy for the utilization of NGOs in the lP/MCH program to be implementedduring the project period, including criteria for determining INGO eligibilityand the types of NGO projects suitable for Government support, and proceduresfor processing, monitoring, and evaluating proposals and projects.Innovative Programs under the project would be aimed at assisting theGovernment in designing and testing new approaches to generating additionaldemand for family planning and in developing cost-effective approaches tobasic NCH problems. Interventions to generate additional demand for familyplanning which have been proposed for testing include savings bond programsfor families who limit their numbers of children and bonuses for delayedmarriages, longer birth intervals, and continuation rather than only adoptionof contraception. The project would finance MCH/health sector analysis,including epidemiological studies, focusing initially on infant and childdiseases, to help prioritize health care needs within the context of healthfunding and expenditure patterns, and would provide for six man-months eachof foreign and local technical assistance to carry out, under terms ofreference satisfactory to IDA, a financial analysis and study of the healthsector. This study would, inter alia. separate MOHPC budget allocations andexpenditures into investment and recurrent cost categories, analyze therecurrent cost implications of the MOEPC investment plan, review the dis-tribution of expenditures between different tiers and types of service andmake recommendations for reallocation of expenditure to increase cost-effectiveness, and review the potential for cost recovery through user char-ges for different services. By March 31, 1987, the Government would furnishto IDA the findings and recommendations of this study and thereafter imple-ment recommendations of the study as agreed with IDA. In addition, theproject would support the further development of the national MCH strategy,including development and pilot-testing of a nutrition intervention program

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for pre-school children and, if feasible, pregnant vomen. Funds would alsobe provided to design and test the family planning/MCH impact of providingfield vorkers with a limited package of simple remedies for common disorders.The project would also support the preparation of plans for the fourth phaseof the FP/MCH program.

56. Evaluation and Research. The project would continue to support andstrengthen both the Management Informatiou System (MIS) for monitoring ofservice delivery outputs and the External Evaluation Unit (EEU) for impactand process evaluation. MIS would continue to provide monthly reports oncontraceptive acceptance and PCW projects and, by December 31, 1986, theGovernment would prepare and execute a work plan satisfactory to IDA for theincorporation of MCH indicators into the reporting system. EEU would con-tinue to provide independent evaluations of the national FP/MCH program forthe Planning Commission. The project would provide for continued improvementin EEU performance through foreign short-term training of two staff membersduring each of the project's first three years. A deputy chief and an assis-tant chief for computer applications would be added to the EEU staff and theexisting full-time expatriate post of advisor would be continued for theproject period. During the p-oject period, the Government would maintain andoperate the National Steering Committee for Population Research (NSCPR) as anational mechanism to set priorities for and encourage and supportpopulation-related research and to promote dissemination of research findingsand closer coordination among agencies involved in population research andevaluation. The Research Wing of NIPORT would act as secretariat to theNSCPR and would screen research proposals for NSCPR funding, assist in shap-ing the most promising proposals, and monitor the progress of projectsapproved by NSCPR to receive funding from an initial research fund which theproject would finance. Additionally, the Research Wing would contractlocally for national contraceptive prevalence surveys to be carried outbiannually under terms of reference satisfactory to IDA.

57. Project Manazement Support. The project would provide continuedsupport to the Project Finance Cell in the MOEPC's PCW to facilitate the flowof foreign aid, and to a small procurement unit to be set up under theDirector General, PCW. This unit would consist of two professionals andsupport staff within the PCW and would facilitate the procurement of project-related supplies and equipment. The project would continue to support thePopulation Program Office in the Bank's Resident Mission to coordinatecofinancier assistance. This office, which has been staffed by an expatriatepopulation specialist and a Bangladeshi senior assistant, would be expandedto include an expatriate MCH specialist.

Implementation

58. The project would be implemented over five years. Most of theimplementation arrangements under the second project would continue underthe third project. The MOEPC would manage service delivery activitiesincluding training, and is adequately staffed for this purpose. The Officeof the Director General/PCW, would post and supervise FWAs, Family Welfare

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Visitors, Medical Officers for NCR care, the Supervisory Directorate, theClinical Contraception Surveillance Team, and the Management DevelopmentUnit. The Director General's logistics staff and procurement unit would beresponsible for procurement, distribution, and control of project-financedvehicles, drugs, equipment, and supplies for the FP/MCH program. Expatriateadvisors from UNFPA, USAID, and the Canadian International Development Agencywould assist in logistical implementation. Project-financed training forMOHPC staff would be organized and managed by NIPORT with the assistance ofthree full-time expatriate advisors. The Government would maintain andoperate a Management Advisory Co ittee to guide NIPORT's overall institu-tionsl development. The Committee, which would meet quarterly and inform IDAof its findings, would be comprised of the Secretary, MOEPC, a PlanningCo,mission Representative, and the Director General of NIPORT.Responsibility for organization and management of the project-funded MCHprogram would be shared jointly by the MOEPC Health Wing and PopulationControl Wing through a coordinating committee reporting directly to theSecretary, MOHPC. The UHFWC construction program would continue to bemanaged by the Construction Management Cell, MOHPC. The Government wouldemploy local consultants to provide overall supervision of the constructionprogram and report monthly to the Chief Engineer of the ConstructionManagement Cell, MOHPC. Family planning communications activities -would beorganized and managed by the Information, Education and Motivation Unit ofMOHPC, headed by a Director reporting to the Director General, PCW. TheHealth Education Bureau of the MOHPC Health Wing would manage and implementcampaigns promoting immunization and home-based diarrhea management. ACommunications Steering Committee chaired by the MOHPC Secretary would reviewthe annual work plans and coordinate implementation with the help ofassociated district, upazila, and union committees. Steering committeemembership would include representatives of each communications implementingagency, NGOs, and the three major womenus programs. Women's programs underthe project would be organized and managed as follows: (a) women's coopera-tives by the Bangladesh Rural Development Board of the Ministry of LocalGovernment and Rural Development; (b) mothers' centers by the Office of theDirector General, Social Welfare, Ministry of Social Welfare and Iomen'sAffairs; and (c) women's vocational training by the Office of the Director,Women's Affairs, Ministry of Social Welfare and Women's Affairs.Coordination among the women's programs and with MOHPC would take placeinitially through the continued operation of the inter-ministerial committeeheaded by the Secretary, MOHPC. This arrangement would be reviewed as partof the development of the comprehensive strategy for women's programs(paragraph 54). The MIS would continue to be managed by a director and staffunder the Director General, PCW. Evaluation activities would be organizedand managed by EEU.

59. The Government would, by March 31, 1986, establish a system, satis-factory to IDA, for an annual Government-IDA-cofinancier review of theproject. The reviews would assess the qualitative and quantitative perfor-mance of the program as a whole and of each major project activity. Annualreports from the Clinical Contraception Surveillance Team, the SupervisionDirectorate, the Management Development Unit, NIPORT, the Construction

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Management Cell, the three women's programs, and the comunications,evaluation, and management information systems would be prepared in amutually agreeable format and furnished to participants at least four weeksbefore the annual review. Specific terms of reference for each annual reviewwould be worked out among the cofinanciers, IDA, and the Government not laterthan six morths before the review date. In addition, by June 30 of eachyear, the Government would provide IDA and cofinanciers with an interimprogress report on physical and financial implementation of each projectcomponent for the six-month period ending April 30 in a format reflecting theapproved budget and work plan for that fiscal year.

Project Costs

60. Total project costs are estimated at US$213.8 million equivalentincluding contingencies, of which US$67.4 million are foreign costs andUS$14.6 million are duties and taxes. Physical contingencies are estimatedat 10% of base costs for civil works and 5% for drug and dietary supplement(DDS) kits and spares. Price contingencies are based on annual escalationrates of 6.3% for FY86, 7.8Z for FY87, and 8Z for FY88-FY90 for foreigncosts, and 12Z for local costs for FY86, and 11Z for local costs of construc-tion and 10% of local costs of other goods and services thereafter.

Proiect Financinsk

61. An IDA credit of US$78.0 million equivalent would finance about 39%of total project costs net of duties and taxes. The IDA credit would includeUS$47.1 million equivalent in local cost financing (UHFNC construction andfurniture, US$26.0 million; medical and surgical supplies, US$15.5 million;innovative activities, US$5.0 million; contraceptive prevalence surveys,US$0.4 million; and the supervision directorate, US$0.2 million). Six otherdonors would provide grants for the project totaling US$99.4 millionequivalent, or 50% of total project costs net of duties and taxes, asfollows: Australia, US$7.2 million; Canada, US$23.5 million; the Federaliepublic of Germany, US$28.7 million; the Netherlands, US$6.1 million;Norway, US$23.6 million; and the United Kingdom, US$10.3 million. While notparticipating as a formal cofinancing agency, UNICEF would finance a largeshare of the MCH component through a grant of US$9.7 million equivalentoutside the project. (The United States and Sweden, which participated inthe appraisal mission, subsequently decided not to participate as cofinan-ciers of the proposed project. USAID will continue its substantial fundingof family planning activities on a bi-lateral basis. Sweden intends toremain active in the sector by financing selected primary health careactivities and the training of medical personnel.) The Government ofBangladesh would finance US$36.4 million equivalent of total project costs,including US$14.6 million equivalent in duties and taxes. Fulfillment of allconditions precedent to the effectiveness of cofinancing arrangements would

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be a condition of credit effectiveness. An additional condition of crediteffectiveness would be Government approval of the Project Proforma.l(

Procurement

62. Construction, renovation, aud furnishing of 1,073 UHFWCs (US$45.1million) would take place through local competitive bidding (LCB), underprocedures satisfactory to IDA, since the sites are too numerous and dis-persed for international competitive bidding (ICB). The ConstructionManagement Cell has set up satisfactory criteria for prequalifying contrac-tors ard would be responsible for review and award of all bids. TheGovernment of the Federal Republic of Germany would finance construction ofthe extension to NIPORT's building (US$235,000) under its own procurementarrangements. Furniture, other than that needed for UHFWCs, and equipment(US$2.5 million), vehicles (US$8.3 million), and medical and surgical equip-ment and supplies (US$17.9 million), would be procured through ICB in accord-ance with IDA guidelines, unless individual cofinanciers require other arran-gements in respect of their disbursements. Under ICB, domestic manufacturerswould receive a margin of preference equal to 15% of the CIF bid price ofimported goods or the actual customs duties and import tares, whichever isless. Such furniture, equipment, and vehicles would be grouped insofar aspossible in bidding packages valued at a minimum of US$100,000. Those whichcannot reasonably be so grouped would be awarded through LCB under approvedGovernment procurement procedures satisfactory to IDA. Drug and dietarysupplement kits (US$34.2 million) and other MCD kits (US$279,000), wouldcontinue to be procured insofar as feasible through UNICEF. Otherwise theywould be procured through ICB unless cofinanciers require other procedures.FWA supplies (US$201,000) would be procured through LCB. Equipment,furniture, and supplies valued at US$20,000 or less, except for UEFWCfurniture, would be procured through prudent shopping on the basis of atleast three price quotations, subject to a $200,000 ceiling on the sum of theitems so procured during the project period. Consulting services, includingsurveys and studies (US$9.0 million) would be procured in accordance withprocedures of cofinancing agencies or IDA guidelines as applicable. EachIDA-financed contract over US$100,000 would be subject to prior IDA review.

1/ The Project Proforma are internal Government documents, approval ofwhicb is a prerequisite for the release of funds and the hiring of staff.

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PROCUREMENT TABLE(uS$0000)

Procurement Method TotalProiect Element ICB LCB Other N.A. Cost

Civil Works and UEFWC 45,075 235 45,310Furniture La (41,150) (41,150)

Equipment and Other 2,322 206 2,528Furniture (14) (14)

Vehicles 8,337- NIPORT Training 400- Other 7, 937

(4,109) (4,109)

MCH Kits and FWA 201 279 48DSupplies

Medical and Surgical 17,929 17,929Equipment and Supplies (15, 519) (15,519)

Drug and Dietary 34,240 34,240Supplements (11,648) (11,648)

Technical Assistance 8,981 8,981Contract Services, (413) (413)Studies and Surveys

Training for Service 10,007 10,007Delivery /b

Other Training Costs 9,511 9,511

Innovative and IGO 9,546 9,546Activities (5,000) (5,000)

Recurrent Costs 66,979 66,979(140) (140)

Total Costs 28,188 45,276 35,360 105,024 213,848IDA Contribution (19,642) (41,150) (11,648) (5,553) (77,993)

/a Includes US$235,000 for construction of NIPORT extension building./b Expenditures for furniture, equipment, vehicles, civil works and

technical assistance in NIPORT Programs are distributed among theappropriate expenaditure categories.

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63. Disbursements. The IDA credit and any funds IDA may be authorizedto disburse on behalf of other donors, would be disbursed over six years onthe basis of full documentation for all items of expenditure except forinnovative programs, the Supervision Directorate and payments under smallcivil works contracts. Disbursements against these items will be made on thebasis of certificates of expenditure. The schedule of estimated disbursementis based on the phasing and programming of project activities, adjusted bycomparisons with Bank-wide disbursement profiles for the sector, forBangladesh, and for the first and second population projects, and shortenedto take into account the fact that problems which delayed implementationunder the first two projects have been largely remedied. Disbursementsagainst the IDA credit would cover: (i) 90X of civil works; (ii) 100Z offoreign expenditures, 100% of ex-factory local expenditures, and 65% ofexpenditures for locally-procured vehicles, equipment, and materials;(iii) 100% of foreign expenditures, 1002 of ex-factory local expenditures,and 65% of local expenditures for DDS kits; (iv) 1002 of the costs of theContraceptive Prevalence Surveys, innovative activities, and the SupervisionDirectorate. No disbursements would be made for DDS lots until a logisticssystem, satisfactory to IDA, is in effect for the distribution and control ofDDS, MCH, and IUD kits, MCH supplies, contraceptives, and medical aud surgi-cal requisites; no disbursements in excess of $25,000 would be made forinnovative activities without prior approval of IDA. In order to facilitatedisbursement a Special Account with an initial deposit of SDR 4.0 millionequivalent, would be established in the Bangladesh Bank on terms and condi-tions satisfactory to IDA.

Accounts and Audits

64. Each participating ministry or other implementiug agency wouldprepare and maintain project accounts in accordance with sound accountingpractices. The Project Finance Cell would continue to audit local currencyexpenditures quarterly and furnish these reports to IDA within six months ofthe completion of the audited quarter. Reimbursement in each succeedingquarter would be dependent on the availability of the Project Finance Cell'saudit for the quarter ending six months earlier. Audits of project accountsby independent auditors acceptable to IDA would be made available to IDAwithin nine months of the close of each fiscal year.

Benefits

65. Since the project would finance most of the major activities of thenational family planning and NCR program, its benefits cannot be separatedfrom those of the program as a whole. The program is intended to raise thecontraceptive prevalence rate from a level of about 24-26Z in early 1985 to38-40X by 1990. This rate of increase would be comparable with that achievedby other Asian countries with strong family planning programs. A 50Zincrease in contraceptive prevalence over the next five years appearsreasonable given the CPR increase of 100X over the past six years.Achievement of the CPR target of 40Z by 1990 would imply a reduction in thetotal fertility rate from 5.8 to 4.8. Thereafter, growth in the CPR is

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likely to be slower and will depend on improvements in socio-economic condi-tions and efforts to create additional demand for family planning. Theprogram's communication/public education component is designed to stimulatedemand for family planning services after 1990. With sustained effort, theCPR could reach 52%, with a TFR of 3.7, by the year 2000. Under thisscenario, Bangladesh would achieve replacement fertility by 2025-2030 with atotal population of over 220 million.

66. The MCH part of the program would contribute to an estimated fall inthe infant mortality rate from 132 to 100 per 1,000 and in the maternalmortality rate from 6 to 4 per 1,000 by the end of the project.Specifically, the project would provide better child spacing, tetanusimmunization to 6.6 million rural vomen, diphtheria, pertussis, tetanus,polio, and measles immunization to 4.2 million children, anddiphtheria/tetanus immunization to an additional 4.7 million children.Knowledge of the use of oral rehydration therapy would be extended to 7.7million families, approximately 60Z of total families in rural areas.

Risks

67. The main risks faced by the project relate to the strength of theGovernment's determination to improve the management and supervision ofservice delivery, to strengthen and expand the national MCR program, to carryout specific institutional development efforts for NIPORT and the vomen'sprograms, to improve the motivation of family planning/HCR field workers,and to maintain a stable organizational structure in MOHPC. The project isdesigned to increase the frequency of field supervision and to refocus super-vision on the support and guidance of workers which will require continuingsupport from senior management in MOHPC for the supervision component of theproject in general, and for the Management Services Development Team'sefforts in particular. Development of a national NCR program will requirepersistence in the Government's commitment to give the delivery of basichealth services more emphasis in a program which in the past has concentratedalmost exclusively on family planning. The success of the NCR program willalso depend on the degree to which field supervisors accept and reinforce thenew balance between services, and the degree to which the Government developsits reward system for MCH performance. The new structure of NOHPC allows anintegrated approach to service delivery, but this has not so far beenachieved in the field and persistent efforts to increase cooperation betweenpopulation and health staff in the field will be needed. Success of theinstitutional development programs planned for NIPORT and the women'sprograms will depend on the recruitment and retention of key professional andmanagerial staff. Finally, structural changes in the past have been a sourceof uncertainty and conflict within the MOHPC, and have proved to be a seriousbrake on performance in the field. The conceutrated effort needed to improvemanagement and supervision in the field and to introduce a major new NCRprogram will only be possible in the context of a stable organizationalframework. The proposed project has been designed to address these risks.Progress in the implementation of improvements in each of these areas and thecontinuing commitment of the Government to the institutional development and

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program performance goals of the project would be carefully monitored throughthe annual Government-TDA-Cofinancier review of the project and throughinterim reports to be prepared by the Goverument (paragraph 59).

Part VI - RECONMENDATION

68. I am satisfied that the proposed credit would comply with theArticles of Agreement of the Association and recommend that the ExecutiveDirectors approve the proposed credit.

A. W. ClausenPresident

Washington, D.C.

December 23, 1985

4. 1

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4%~

-29- ANNEX IT A b L L. 'A . as

IANCLA0ESH - SOCIAL I-DICARCS DATA MEEK?ANLADeSH aRENE JROUPS (UKICITLD AVERAGES) /L

'"ST (srS kSCENT £STINATV /bRECEIN Low lCO MIDDLE ICSE

1 9 601b- 19701k ISTmNAThIb ASIA A PFACIIC ASIA 4 PACIFIC

AU (71010B SQ. m11)TOTAL 144.0 144.0 144.0AGRICULTURAL 94.6 97.0 97.4

or CPITA (Cus) .. .. 13n.0 2/6.3 1011.1

MlUCt CDNITO PR CAPTA(KILOGRMS OP OIL EQUIVALENT)