PROJECT TO SUPPORT EDUCATION REFORMS

BORROWER AND

GUARANTOR:

Republic of Guatemala

EXECUTING AGENCY:

Ministry of Education (MINEDUC)

AMOUNT AND SOURCE:

IDB (OC): US$15.36 million

Local Counterpart funding: US$ 1.72 million

Total: US$17.08 million

FINANCIAL

TERMS AND

CONDITIONS:

Amortization period: 30 years

Disbursement period: 3 years

Grace period: 3 years

Interest rate: variable

Commitment fee: 0.75% annually on undisbursed balance

Inspection and supervision: 1% of loan amount

Currency: US Dollars - Single Currency Facility.

OBJECTIVES:

The project objective is to improve the quality of education at the pre-primary and primary levels. The project will contribute to reducing average primary school repetition from 15.3% in 1996 to 13% in the year 2001, and the first grade repetition rate from 27.1% in 1996 to 22% in 2001. This loan is conceived as the first phase of what is expected to be a three-phase program of support whose general objective is to make quality preschool and basic education available to all Guatemalans.

Contingent on meeting indicators for the prior phase, the second and third phases would be presented in subsequent loan proposals. The second tentatively sets as its objectives: (i) making quality preschool education available to all five- and six-year old children; (ii) deepening quality improvements for primary education; and (iii) making six years of quality primary education available for all children between seven and twelve years old. The third phase tentatively sets as its objective making nine years of quality basic education available to all Guatemalans less than sixteen years old. At this time it is estimated that Bank financing for the entire program of support would be approximately US$100 million.

DESCRIPTION:

The first phase will improve educational quality mainly through technical assistance and the provision of teacher training, textbooks and other educational materials. The project contains three components. The first component (US$10.9 million) will improve educational quality by integrating concepts of active learning, technical teaching skills, girls' education and intercultural values into teacher training, bilingual and Spanish textbooks, school and classroom libraries, and the curriculum. The second component (US$2.2 million) aims to lower the high repetition rate in first grade by supporting an expansion of the accelerated pre-primary school program (CENACEP). The third component (US$1.7 million) will support community participation in education and encourage the development and replication of educational innovations, principally at the local level.

ENVIRONMENTAL

CLASSIFICATION:

The CMA classified the project in Category II on May 30, 1995. At its meeting on September 19, 1997, the CESI/TRG commended the innovative aspects of the project and its special effort to address gender and ethnicity (cultural) factors. It also took note of the environmental content of the primary school curriculum.

BENEFITS:

Analyses have demonstrated high rates of return to education in Guatemala, particularly for investments in primary education. More specific benefits from project-financed investments include: (i) increased equity through the provision of educational services and improvement in the quality of these services for the most vulnerable groups (girls, indigenous persons and the rural poor); (ii) reduced illiteracy due to improvements in the quality of primary education; (iii) increased internal efficiency in the education sector; (iv) greater efficiency in the delivery of educational services; and (v) help in complying with the educational mandates of the Peace Accords.

RISKS:

Program execution. Timely execution of the project requires that the government: (i) take effective measures to improve its financial position and channel more resources to the social sectors, especially to education; and (ii) improve the public sector's institutional efficiency, especially in MINEDUC. In the past 15 years the government has not been capable of ensuring the timely execution of education projects financed by the World Bank and the IDB. However, three factors will help improve the execution of the proposed project: (i) the mandate in the Peace Accords to increase education expenditures; (ii) programs currently in preparation to modernize the State; and (iii) measures to modernize the Ministry of Education. In addition, the execution of an operation in phases will allow the Government time to restructure MINEDUC during the first phase prior to assuming responsibility for a larger Bank loan.

Government commitment to education. Historically low expenditures for education coupled with longstanding weaknesses in providing educational services raise doubts concerning the commitment of the Government to education. The Government insists that this has changed. As evidence of a strong, new commitment to education, the Government can point to: (i) commitments in the Peace Accords (50% more public expenditures for education in the year 2000 as a percentage of GDP, commitment to provide bilingual education for indigenous children, and universal access to at least three years of school for all children 7-12 years old); (ii) initial increases in enrollment from the PRONADE Program; (iii) initial steps to improve the efficiency of MINEDUC (selection of departmental directors and reorganization of some central divisions of the Ministry); and (iv) MINEDUC preparation of an ambitious program for improving equity through greater coverage and improved quality in low-income rural areas.

THE BANK'S

COUNTRY AND

SECTORAL STRATEGY:

The Bank strategy, as stated in the Guatemala Country Paper (CP) approved in 1996 has four thrusts: (i) the incorporation of the poor, indigenous and rural population into a sustained process of development; (ii) the expansion and improvement of social services; (iii) the modernization of the State and (iv) the growth and development of the private productive sectors. The CP included the Project to Support Education Reforms. The project directly supports the first three strategic thrusts and indirectly supports the fourth through the education of citizens needed for the growth and development of the private sector.

As an extension to the Bank's strategy, the latter will incorporate the expected second and third phases of the education program in the Bank's tentative lending program. This means that the Bank is making a programming commitment to support the second and third phases of the program (See paragraphs 1.41 and 2.04).

PROCUREMENT:

Public international bidding will be required for goods over US$250,000 and works over US$1.5 million.

EXCEPTIONS TO

BANK POLICY:

1. The Director of the Project Coordinating Unit (PCU) to be used for this project is currently responsible for carrying out the World Bank-financed Basic Education II Project and its recently approved Basic Education Reform Project (Paragraph 3.7). The Government has requested a waiver of IDB contracting procedures in order to contract with the same person without a new competitive selection process to direct the PCU which will jointly carry out the World Bank and IDB-financed education projects (Paragraph 3.15).

2. The expertise for incorporating Guatemalan intercultural materials and educational innovations into new pre-primary and primary school texts is unlikely to be found other than in firms, NGOs, and universities in Guatemala. The Government requests that the Board allow that these services, which will cost about US$250,000, be procured through nationally advertised competitive selection, thereby waiving the requirement of internationally advertised competitive selection for consulting services over US$200,000 (paragraph 3.15).

SPECIAL

CONTRACTUAL

CONDITIONS:

Special conditions for the first disbursement:

(a) Establishment of a Project Coordination Unit to manage the project (See paragraphs 3.8 and 3.9)

(b) Entry into effect of the Project Coordination Unit's operating manual (paragraph 3.11).

Special conditions for the first disbursement of funds to support educational innovations:

(a) Entry into effect of criteria satisfactory to the Bank for the use of resources to support educational innovations (paragraph 2.28).

POVERTY

TARGETING:

The project conforms to the high priority accorded to poverty reduction under the Eighth Replenishment, and automatically qualifies as poverty-targeted because it supports primary education (Document GN-1964-2). Moreover, more than 50% of project resources are expected to support education in rural and low-income urban areas of the country where poverty is most prevalent.