RESTRICTED

I REPORTSp; T |JReport No. TO-515bIREPORTs nOFq2jl r flnU

WITHIN imL wr vi

T This reaort was prerarod for use within the Bank and its affiliated organizations.They do not accept responsibility for its ac:uracy or completeness. The report may

-not be pnO may i! be quoted as renresenting their views.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

INTERNATIONAL DEVELOPM1ENT ASSOCIATION

COSTA RICA

AGRICULTURAL CREDIT PROJECT

July 21. 1966

Projects Department

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CURRENCY EQUIVALENTS

U.S. $1 : 6.60 Colones1 Colon 15 U.S. cents1,000,000 Colones a, U.S. $15,000

AREA EQUIVALENTS

1 hectare 1.4 manzana1 manzana = 0.7 hectare

CO0 S TA R I CA

AGRICULTURAL CREDIT PROJECT

P R E F A C E

This report is based on the f1indings of a Bank appraisalmission to Costa Rica in August-September 1965, composed of Messrs. D.Stoons (Leacder). J. Andreu (IBRD). P. Peperzak (FAO), F. Knobel (IBRDConsultant) and S. Wilson (IBRD Consultant). This report was preparedhv Mr. Jose Antirli

COSTA RICA

AGRICULTURAL CREDIT PROJECT

TABLE OF CONTENTS

Page No.,

SUM11lY i

I. INTRODUCTION 1

II. BACKGROUND OF THE COUNTRY'S AGRICULTURE 1

III. BACKGROUND OF AGRICULTURAL CREDIT 2

The Banco Central 3CjorLU,mercia'.L B

Organization and Management 3Resources 4

Lending Policies and Procedures 4I'oJvu-ga .rLauO wI (AJ%.LLUUJ.L'UL- 2

r,, . t-nn _.L_ s A_: ......................... \ | ._.

IV. THE PROJCT6

A. Scope of the rroject 6B. The Investment Program 6

Beef Cattle 7Bananas 7Cotton 7Pineapple 7Technical Services o

C. Administration 8

D. Lending Policies and Procedures 9

E. Financing 11

F. Procurement 11

G. Disbursement 12

V. PROJECT JUSTIFICATION 12

VI. CONCLUSIONS AND RECOMNENJDATIONS 13

Conttd...

ANNEAES

1. The Bianking System

2. Organizational Chart of the Banco Nacional de Costa Rica

3. Loan Portfolio of the Four State Commercial Banks, July 31, 1965

4. Consolidated Balance Sheets of the Four State CommercialBanks, 1960-1964

5. Consolidated Profit and Loss Statements of the Four StateCommercial Banks, 1960-1964

6. Loan Delinquency Record of the Four State Commercial Banks,1'360-1963 and Banco Nacional only, 196h

7. Distribution of Loan Portfolios of the Four State CommercialBanks by Fields of Economic Activity, 1960-196L

8. Proiectls Financial Plan

9. Trpakcdotw of TnuAntm.ntR

10. Agricultural Credrit Project Cash Flow

11. Prof:it and LOSS Statement of the Four State Commercial Banksin relation to the Agricultural Credit Project

12. Projected Assets, Liabilities and Net Income of Four StateConmumercia- I Ba.^l-s re'lated +- th+ gicl l rdt r

'13. Assw-,-pptions ;^elating to the V4innc4al -n4cn.c nlsso'Sq..Li4~J. ' -J.. L Vajj .o1 , ' wj v.'1J UU4 .L fl

6.L.,U4 ju aL -LOn .Q

the Agricultural Credit Project

14. Marketing

Map

C O S T A R I C A

AGRICULTURAL CREDIT PROJECT

S U M M A R Y

i. The Governiment of Costa Rica asked the Bank for a loan ofUS$32.6 million to assist in financing an agricultural credit projectfor medium- and lone-term on-farm investments. aericultural machinerv.expansion of cotton ginning capacity and technical services in the fieldsof beef cattle. hananas co±tton; coffee amd pineapnnle

ii= The srifz nf the nrnint. nnd nf the Bank loan rAnuesstd havebeen reduced due to technical and administrative limitations, mainly ofthe four statei commer;il hnnL.c q- well As chnngeq in the numbhor ann

the relative magnitude of investment categoriesn On this new basis theproject amounts to iv 66 -i4llion (US$10 miLtion) aIs i basicall so1ndand economically justified, warranting a Bank loan of 0 33 million\ U~Jy.) AIJ.L. .IZ .L VJO.y CLJ.LI SJ, v v L t .CL AJ r-v UCLL J.L J.ii .L.L LL" L~JL&.""AS , ; .-- 6 -

period. The borrower would be the Banco Central.

iii. The loan would be administered by the Banco Central throughtlhe four stIatL e co,.er-cia LULJJbasU#J (to 1,h con1te,-,.p±CLatedL e si0LVLL

of technica'l and administrative personnel, the above institutionsappear capable of handling appropriately the volume of lending envisagedThe training program designed to emphasize the technical and financialanalysis of farmers: investment proposals in making loan app-raisalswould further stren,gthen the commercial banks' capacity for administeringthe proposed loan.

C O S T A R I C A

ArC1DTr T'TTT rrTT,AT tr)lTIT) TV Dn Tt'C'D

-TM oosroATTn MrowT1.U 1iuz )U I IUN

1. The Government of Costa Rica requested a loan of US$32.6 million(para. 21) to assist in financing an agricultural credit project involvingmedium- and long-term on-farm investments, agricultural machinery, expan-sion Of cotton ginning capacity and technical assistance. The loan wouldbe administered by the Banco Central through the four state commercialbanks. This appraisal report is based on the findings of a field missioncomposed of Messrs. D. Stoops (Leader), J. Andreu (IBRD), P. Peperzak (FAO),F. Knobel (IBRD Consultant) and S. WHiilson (IBRD Consultant), which visitedthe country in August-September 1965.

II. BACKGROUND OF THEE COUNJTRY'S AGRICULTURE

20 Ccsta Rica has an area of 55,000 km2, most of it appropriate foragricultural uses, but less than half actually under cultivation andgrazing, principally of an extensive character. The country is dividedinto four main climatic zones: (1) hot and dry tropical (Guanacaste,North Puntarenas); (2) hot and monsooncl tropical (southern Puntarenasancl southern San Jose); (3) hot and humid tropical (Atlantic); (4) sub-tropical (Central Plateau). These four regions also mark the geographicalconcentration of agricultural production: cotton and cattle breeding inGuanacaste; bananas and cocoa in the Atlantic and South Pacific; coffeeancl dairy cattle in the Central Plateaut and a diversified production inthe South Pacific. Corn, beans, and rice are grown throughout the country.

3. Agricultural production represents approximately 33 per centof GDP, and agricultural exports 21 per cent, while industrial productionrepresents 14 per cent. Despite a rapid industrial expansion in thesixties, GDP has increased at a slower pace than population since 1956,resulting in a slowly declining per capita income through 1961. withan improvement thereafter.

4. Costa Rica will have to depend heavily on the agriculturalsector to strongly reverse the above general trend in the next decade.Since the country is self-sufficient in most agricultural products andits main traditional exports are either limited by absolute ceilings. e.g.coffee under the International Coffee Agreement, or have been decliningin past years, e.g. cocoa (due to an unfavorable cost-price relationship),the most promising opportunities for expansion seem to be in productseconomically produced and already exoorted but at relative-Ly low levels,

e.g. meat, bananas, cotton, and new exports, e.g. pineapple. The resultwoiuld 'e a higger and more balnced vo]lum-e cf 'nrnrution and exports.

.Beef cattle are rnised througrhou_t the cont but are mainlvconcentratecL in Guanacaste Province. IHost of the herds are criollo(native) or criollo crossed with Zebu. Di. seases and pests are relt-ivelywell controlled and the country is free of foot-and mouth disease. Bothproduction aLnd exp0orts have steadly increaed in the last deadcae, thela-tter amounting to US$5.1 million or four per cent of total exports in1965.'J* ~~4±O~ J.LV Uan a hUav bUL c4v±eA inV ex+ensiv -ra both i +he

Atlantic and South Pacific Regions since the beginning of the century.AEXpJ± o r 4IU1s a U,.Louintled tu o L C US$9 .LOIi Ul £r ) 2 t6J. pelr t U.L ofU. t a Uexiuort 4 W.4J.

Cotton has been produced at an annual average of only 6,000 bales inrecent yearS, but its o-utput has mnore t;han do-ubled in 'he crop years196!/66. Pineapple production has been recently started in the Province0±L rUI tlIreircs and results looK promising.

6. The Government has promoted a vigorous expansion of rice, bealnand sorghum through the establishment of price support policies involvingheavy consumer subsidization, especial:Ly in the case of rice which has,among other things, hampered the development of cotton as a substitutecrop. Subsidies are likely to be lowered under pressure from otnerCentral American Conmon Market partners.

7. Important Government contributions to the expansion of agri-cultural production, rendered primarily through a relatively well-organized Ministry of Agriculture, havea included the creation and develop-ment of two experimental stations, one at Taboga in Guanacaste Provinceand another at Los I)iamantes, in the Atlantic Region, coupled with anextension service whlich now numbers more than 100 technicians throughoutthe country. The Government has also started a program for the settle-ment of squatters irn the Atlantic and South Pacific Regions. This programis now administered by an autonomous body.

II]:. BACKGROUND OF AGRICULTURAL CREDIT

8. The agricultural sector has traditionally enjoyed the servicesof a relatively well extended and organized credit system which hascontributed greatly to its expansion in the recent past. Funds havebeen made available generally at six per cent for all types of agri-cultural lending, and a high percentage of credit has been supplied ona medium- and long-term basis. Another important function of the bankshas been the provision of storage facilities on a large-scale throughoutthe country. The commercial banks have provided their storage facilitiesin the absence of other suitable ones, both private and public. Wqhilethese facilities have filled an important need, the practice of theirbeing owned and oneratpd bv the commercial banks deserves careful analvsisto determine the best arrangement for ownership and administration of anationral storaep sy-tpem.

9. The Costa Rican banking system (Annex 1) was established more4hn W.-ne yd-ag d c onsists of Ithe 'arco Cen-tral -d f-veL,iZcaLl a. h-UI1UJ.eu years ag arL d.L± LIL W J I2.tZ"I DWI I J 1 1 cuL. .JI -.Ive

commercial bankst the Banco Nacional de Costa Rica, Banco de Costa Rica,Danco Il'gi-Cos 1%j-LcuL iU, iVo ag.LUUi.cL Ud Uc-tgL6 .LU .d0IU Bcoyon.

The latter iplays a minor role in agricultural lerding and did not wishto participate in the projected IBRD loan. It is, therefore, omuittUedfrom the following analysis of the banking system.

The Banco Central

10. The Banco Central was established as an autonomous institutionby Law No. 1552 of April 1953. Its only office is located in San Joseand is staffed by a body of professionals selected on the basis oftraining and experience in their respective fields.

11. The Banco Central has the responsibilities normally attachedto central 'banks. 'To discharge its credit responsibilities, it is empoweredto impose general and specific credit ceilings; to establish absoluteceilings, determine the eligibility of documents and fix rates of redis-counting; and finally, to change the percentage of legal cash reservesof' banks. The Banco Central has made extensive use of the first twomeasures. It makes preliminary annual estimates of credit supply anddemand, apportions the supply according to banks' credit programs andresources, both internal and external, and supplements these with alloca-tions of its own. It reviews constantly the credit market situation andadjusts its measures accordingly to promote the most appropriate andtimely use of funds. Finally, the Banco Central has participated directlyin the channeling of external funds, more than half of which (US$13.2million in the last eight and a half years), it has distributed tocommercial banks on the basis of performance, including IBRD loans formachinerv imnorts. 1/ The appraisal nmission checked the Banco Centrallsand commercial bankst records in processing external loans for agri-cult.ural marhinery imnnorts annd fou]nd them satisfactorv

Commernial Ranks

12 Thl'e fnAur nqvrtirinpating state commercial banks are autonomousinstitutions which enter all types of credit operations and which keepn fair degree of compe+ition amonng them;selves despite their officialcharacter and their basic similarities in organization and procedures.They -e jointlyr described below.

Organ -ization. an-d Manage.ment °/

13, fCn¶n,na.v.ner l ^l,s . a nP D; e^tors, a,r,nnv.nl

manager, legal office, and four basic departments and sections: (1) credit

y/ Loan No. 147, September 18, 1956.Loan No, 219, February 11, 1959.

2/ See Anniex 2 for the Organization Chart of the Banco Nacional deCosta Rica, regarded as typical.

(which receives loan applications and makes preliminary reviews); (2)appvraisa.l; I(3)-i co,,anerciaLC(hihprwese jJ.1v0the b ULIU ofU. short Li u A U,Le.-

term loans); and (4) mortgage (which processes loans with real estateOt~VU.ULJ.I.y Jo J.L.LW Dc.L1VU D 1N1CLUAd±J. I1ib Ci. -LL)d U LIU LUJV UVVpt:iJI.- V X iUrural credit section for small farmreirs. Three of the banks have their11=cWI UoLfL.Utl "c1LJ Josu WUl LIhU fua UWMZ3 reivu a countrywiUe nletworK of

local offices numbering 158 (see map), more than 75 per cent of whichbelong to the Ban-c- Nacional. Tne Livre to seven members oi the Board areselected by the National Government Cabinet for four-year terms, and inturn select; the general manager. Most of the country offices are managedby experienced administrators and the technical appraisal work is done byagriculturists of the banks.

Resources

14. The Government made the original capital contribution to thefour banks,, Their combined net worth amounted to 0 296 million onDecember 31:, 1964, roughly 50 per cent of which belong to the BancoNacional and 30 per cent to the Banco de Costa Rica. The banks have th eemain sources of credit capital, which in the last five years have remainedrelatively stable percentagewise as follows: (a) deposits, capital,reserves, bonds issued, 77 per cent; (b) short-term rediscounting withBanco Central, 12 per cent; (c) foreign loans, 11 per cent. Profitshave been mainly used to finance the construction of branch and agencybuildings. Capital and reserves have increased only 9 per cent since1960 as compared to 36 per cent increase in the volume of lending, whichiamounted to 0 1,147 million in July 31, 1965 (Annex 3 and 4). This hasbeen due mainly to decreased profitability of bank operations, netoperating income having been reduced from 1.54 per cent to o.88 percent of the total volume of lending between 1960 and 1964 (Annex 1, parall).Interest rates as low as six per cent are increasinalv insufficient inthe face of mounting administration costs (Annex 5). Other sources offinancing include denosits. rediscounts with the Banco Central. bonds andforeign loans. Main assets are loans to the private sector, whichrepresented more than 80 per cent of total assets on December 31. 1964(Annex 4). The credit record of the commercial banks shows a steadyincrease in arrears beyond 90 days. atlthough those over 180 days (excluldirnunmatured installments) amounted to only five per cent of the totalvolume of loans outstanding on DecePm-ber 31- 1961 (Annex 6) TnLoss havebeen kept at a very low level (Annex 1, para. 12).

Lending Policies and Procedures

15. Agricultural lending has been increasing at five per cent~rn.11ii -r.d has rersne 'toiiud 55 per cent of the bnk>;" s

loan portfolio since 1960. Industry is second with an average of 14n' n + 4'or tbe same &fllrd 7 / 0

16. The agrictltural and livestock loan portfolio is distributedrougUly as follows:

Ezbnu-r2pis rer uenii

Cofifee

Beef. cattle 21

Other livestock i4

Sugar cane

Cocoa 1

Not classified 24

Total agricultural credit has been almost equally divided between short-term operational and medium- and long-term investment 1/, the lattershowing a sLow rela-tive increase. In 1964/65, the distribution was 44per cent and 56 per cent, respectively. The relative importance ofmedium- and long-term credit has been due to heavy financing of invest-ments in land and s-tock purchases, land clearing and equipment forlivestock, rice, cotton and beans production. It is estimated thatbetween 65 and 75 per cent of the total number of 6h,ooo farmers areobtaining credit from the banks. The extent of private non-institutionallending is unknown, but appears unimportant.

17. LDan making procedures are practically the same throughout thebanking system. At the head office level applications are reviewed inthe credit section, handed to the appraisal section for inspection ofthe property and its uses, and technicans (agriculturists and financialtechnicians) review the investment plan. They are then checked by thelegal office and transferred to the manager and/or to the Board ofDirectors for final decision. In cases handled at the local level atechnician makes a field inspection of the property and the loan requestis subsequentlv decided upon by the manager and/or the local loancommittee. The legal status of real estate is certified by a publicregistrar whenevpr it is nledged as collateral, Insnections of loansapproved are regularly made and plans for distressed loans worked outbetwP.n bhrrower anrl lonripr-. Toan n rrctsqns are relativelv long andcumbersome duemainly to three factors: lack of personnel, excessivecen.tralization at the hend office nnvel and the exaggerated administrativeburden placed on field technicians. Pleasures proposed to correct thesedeficienci-es are stipanted ;n paras. 32

Forei. Lo3Tns to A--;i,1cq,i p

0 161 million as of June 30, 1965, 0 64 million of which was disbursed

I Defined as follows: short-term, up to 1 year, medium term, 1 to eyears; long-term., over 6 years.

in the last two years. Disbursement of' existing loans has progressed--..- ,-- mL. .~L ~ ~3L-. XI. rM'Trv, d -n0norm.aly. The [-ate of ClUsUtIrsemLenLt of. aJ, JLJD loar. of ¢ 1& 9.U M,L1 UlIo

(US$3 million) for livestock development to small farmers mainly in areasdcarmaged by the Irazu Volcano ha ,incr.sd notaby- in the last y1ear.Another IDB loan for 0 34.3 million (US$5.2 million) to replace productionlosses due to the -volcaiio eruption is i;tndezway anld a ¢ 33 milionl (uS$5million) loan from AID for small farmers for medium-term agriculturaland livestock operations and development is being negotiated. Repaymentof outstanding loans is on schedule. 2There would be no overlap betweenthe 1DB and AID loans to small farmers and the proposed Bank loan tomedium. and commercial farmers.

IV. THE PROJECT

A. Scope of the Project

190 The agricultural credit project would be for 0 66 million(US$10 million) approximately 50 per cent of which would be financedthrough a Bank loan and the remainder through loans made by the bankingsystem and through farmerst contributions. Funds would be invested inland preparation, pasture improvement, fertilizer, herbicides andinsecticides, fencing, water facilities, handling facilities, breedingstock and semen, farm buildings, machinery and equipment, expansion ofcotton ginning capacity and technical services. These investments wouldbe made in selected areas in the fields of beef cattle, bananas, cottonand pineapple in a period not to excee(d two and a half years. It isinteresting to note that the foreign exchange component of the proposedBank loan would be approximately 88 per cent (para. 35).

2o. The size of the_ _rit_ has heen reidiind by annroximately two-thirds of the ¢ 215 million (US$32.6 million) originally contemplatedin the loan ren uestsn This reduction a hs been determined bvy (1) thelimited availability of bank technicianls amd Ministry of Agriculturetsextension agents; (x) nroposd higher !:tandards that would be requiredfor appraisal and suLpervision which reduce the number of loans whicheac-h t+ePhnirnian an process annually; (3) a shortage of' heavv macthinervcontractors and operators for land clearance; (4) the limitation of the

lme11 oesM nfW bredngC cattle purc s under the ivesmtcok project;! (5 mnn

the elimination of investments in the coffee plantations due to a quickerthan e-.pected recovery of production f:rom the dami.ages of the Irazu volcanoeruption.

B. The Investment ProRram l/

21, The project, which is for 66 million (US$10 million)conteiiLates invesumets by sector as :J.lJ.lvWs, in 1JllionS 21: Beef

cattle ¢ 23.9 (Us$3.6); bananas, 0 23.0 (US$3.5); cotton, ¢lh4h (US$2.2);

%/ Annexes 8 to l14.

/I lge rownded,

- 7 -

andi pineapple, f 3.9 (Us$0.6). The cost of technical services andfacilities would be approximately 0 0.5 million (US$0.1).

Beef Cattle

22. The beef cattle industry presents one of the best possibilitiesfor long run expansion in the agricultural field. Production can beintensified mainly in Guanacaste and new development carried out in theCentral Atlantic and South Pacific Regions, which have good rainfalldistribution and fertile soils (see map). The leniding program wouldconcentrate on pasture improvement including fertilizer, fencing, handlingand water facilities for approximately 150 to 180 ranches, writh herds ofat least 200 animals each and to a lesser extent in the purchase ofseLected breeding stock and semen and some agricultural machinery (Annex 9).Domestic and. export demand would absortb the increase in production envisioned(Annex.14).

Bananas

23. Bananas are cultivated in medium and large farms and annualproduction is marketed through three concerns: The United Fruit Company,the Standard Fruit Comnanv and the T.Test Tndies Fr-uit Company. The con-templated investments would be made on approximately 3,000 ha. in theAtlantic Zon.e (se man) for develoPrment. an.d nr-nroduction nurnoses andinclude machinery and equipment, insect.icides, buildings, fertilizerand wate-r su.pply (Annpv 9). The demandn for the extra production wouldbe mostly assured by ten-year contracts with the Standard Fruit Company.Al,zno szimila r ontrc.Ts+1 +wh the + Tvir,+ Inrdie ii (Frl rnnn-%r q p-)a i ng

considered (Annex 14).

Cotton,

24. Cotton of upper middling fiber quality is cultivated on mediumnd la.rge-si.ze farr,s, somof -hi are. mechanlized. Ih 11lenin pL..ULLrogrl m.

contemplates an expansion of approximately 6,0o0 ha. in the Tempisque

through investments in machinery, land clearing, land improvements,

duction should be readily absorbed due to its comparatively small contri-butionr to world supply, expected doIMesic demUand, anld the reLativelyhigh quality of the fiber produced (Anunex 14).

Pineapple

25. Pineapple is cultivated on a small-scale by commercial plantersand its production is highly mechanized. The on-farm investmentJs planned,"mainly on machinery, fertilizer and buildings (Annex 9) would make thisessentially a pilot project covering an area of approximately 1,000 ha.in Buenos Aires and Puntarenas (see map). Approximately one-half of theexpected increased production would be sold to canneries in or aroundSan Jose and the rest exported to the UJnited States as fresh fruit, apractice already proven economically justified in trial shipments (Annex 14).

lechilunicdI SerV-ices

26, Thne project contemplates the prOviSiOn of technica specialissfrom abroad for agricultural credit administration, pasture improvementand livestock management, entomology and horticulture. The training ofmore agriculturists and agents, and the further training of existing onesin financial. analysis of projects will also be conducted to assure morethorough evaluation of loans in the future (para. 30). Related supplies,equipment, transportation and amenities necessary to support all technicalservices would also be eligible for financing out of the proposed loan.

C. Administration

27. The credit program conternplates on-farm investments with dis-bursement periods as follows on each farm: beef cattle, two years;bananas and cotton, one year; pineapple3, four years. The Project cash-flow shows the annual volume of lending and relending which is foreseenduring the :life of the proposed IBRD loan (Annex 10), as derived fromthe contempLated consolidated profit and loss statement of the statecommercial banks (Annex 11) and the statements of their assets andliabilities (Annex 1L2), both regarding the project.

28. The Banco Central will be responsible for the administrationof the investment program operating through the four state commercialbanks It will facilitate the provision of domestic bank financing andallocate to the commercial banks the funds from the Bank loan accordingto suitability of investment items, the pursuance of sound projectevaluation techniques, and pace of disbursement. It will constantlvsupervise the execution of the program and check the results obtainedafter investments have been made. The Banco Central will need three tofour technicians specialized in agricultural credit and farm managementto fulfill these functionsr Such technicians are available locally.

290 The four state commercial banks are -rneted to particinptein the lending program in the same relative order of magnitude asindicated by their present volume of onprations, The use of the fourbanks for the proposed credit would permit the fullest utilization ofmarnpower and other administration anyd technical resources avaJlehip in

the banking system, which should increase the speed of loan disbursementand t+he nveTa.11* irmnpct of the rnvestnmEnt program oni the nat-ional econo.qr.r

30. The follo.wPing specific staff allocation and technical speciallists

are necessary in the commercial banks and agricultural extension servicEto ir."pove their ca.pbl+v for carl ou+v the

'(1 ) FLV- 2_8 t-o Lo- co.mmerc-Lal luaarlk technI cijans an-d' asubstantial increase of clerical staff to handletlhei. a-,.nisurat'. L..Ve work.

(2) AU nclr-ease of fLo-ar extension officer-s -' thieMini.stry of Agriculture for the livestock project,and two for the cotton project.

(3) For approximately three months, a specialist in the-field11- of agri c 't +-a" finc to -r - - - 4-- -- Ia

.1.L'4A tJ. 5 4 .J U ~VL4 aL L JWJ. w V± AJf~'S .,.a.

bank technicians and extension agents of the Ministryof Ap,riculture who will be d-3 JurLe c4ULy ao t UwiL th1

the project, in farm budgeting and analysis of farmUeveLoprent plar1s.

V4J Fri- apprOx±irakeLy a year ariu a hail, a specaL-ui .uthe field of pasture improvement and livestock manage-ment to supervise the introduction of tropical legumesfor artificial pastures. Costa Rica offers an excellentvariety of soils, altitudes and climates in a relativelyrestricted physical area for pilot demnnstrations on theuse of tropical legumes which would be applicable bothin Costa Rica and in other semi-tropical and tropicalareas.

(5) An entomologist for the cotton project and a horti-culturist for the pineapple project. These specialistswould spend from 3 to 6 months in Costa Rica at theoutset of the Project and would be available for furtherconsultations as their services are needed.

After consultation with Costa Rican officials, it is believed that mostof the specialists would have to be hired abroad. The appointment ofspecialists would be made in consultation with the Bank. The BancoCentral will have the administrative responsibility for the specialists.

D. Lending Policies and Procedures

31. Loan applications would be processed following the currentpractices of the state commercial banks, which are considered appropriate,with the necessary irprovements noted belowr. Terms for loan repaymentare considered to be appropriate for the types of investments envisagedarid would be as follows:

(Years)

Term IncludingGrace Period Grace Period

Fleef cattle 10 h

Bananas 1

r: ot.tnn

F',on nl, v; 1

Th>.e interest rate charged to th.e farmer woT77d beT8 per cent. The farm.er'will also pay a service charge of up to one per cent. The maximum amountlCor th1e aggregate of' 10WAS to Wny - ndA. -' .-.- borroer+ w.hu rior 7nn

- 10 -

, ~ ..,~. N 7rI~ r. f -/L.* L iY rr, cl, n rx,-~~ -,^ iA Njappro-val. wou-lU b e )C. 7I00,000UUU (aboUt .UU,UUU tLj00 .0 V U- UIIU)jq exceptU UI Lhe

case of banana investments, where the corresponding figure would beW 1,500,uuu. ±na U2ciage -s5K WoUJU Lie UUr-IIe uy tuhe nanco Central.The repayments frana farmers would be used by the commercial banks forfurther ioan.s for similar investments over the life oI the proposed Bankloan, after they deduct the repayments of the Banco Central loan, madeto them in the same terms as those of the Bank loan to the Banco.

32. The follojing improvements are necessary for a proper andtimely utilization of the investment funds envisaged and appropriateassurances have been obtained during negotiations:

(l) The state commercial banks should speed the enforce-ment of their present decentralization plans throughthe delegation of authority to local bank offices.This would enable local loan approval up to 0 40,000for agencies, % 100,000 for managers of local branchesand up to 0 150,000 by the boards of directors oflocal branches and by managers of central offices.

(2) The state commercial banks should make technicaland financial analyses of loan applications beforegranting such loans.

(3) The state commercial banks should seek and receivefrom each other information regarding applicantstcredit history and debt situation on a confidentialbasis.

(L) The state commercial banks and the Ministry ofAgriculture should coorclinate the work ofextension officers directly associated with theproject with that of commercial bank technicians.

- 1:L -

E. Financinz_ _ ~~~~~.W

33. 'ITh. finamntial nlan for thp nronosed investments. includiTnsources o0' finance, are given below:

!:Million colones, with m.ill-ion dolln's in pnrenthesic) 1/

',o ces of F4_nanc

Total Banking ForeignT-,v c,l' I u S ;Lr t- e-i a,me rs I. B.'R. Uv1hi

BDeefP catt]e o 2,.9 3.6 4 .lL. ) I0(o6 ''6(.8 ' .'rAN AtA 11.0(1.(7)

ariar.a . as 23.0( 3.5) 7.0(1,0) 5.0(0.7) 10.9(1.7) 7.h(l.l)

Coti,on 4.4( -2 _.o.) 3.2'0.5) 7.6(1.1) 7.

.- ineapple 3. o9k .6 0.7(:0.1 0j6`0ol) -.6(o.4% 2.6U0

Technical Services 0. 5( O.i) 0.2i'0.o4) - 3 - ) 0.30.05' 0U.3.3k05)

Total: 65.7(10.0) 19.7<2.84 ) 13.0(1.9) 33.0(5.0) 28.9(4-4)

Percentage ofinvestment 100 30 20 50 44

Percentage ofBank loan - - - - 88

1/ Rounded figures

34. The farmiers' contribution is based on their estimatedcapabilities in each field. The banking system's contribution to theproject financing was calculated as feasible without causing undue strainin their medium- and long-term availabilities. The IBRD would providethe balance of fin.ancing. The state commercial banks would provide thenecessary short-term credit (estimated to be in the order of magnitudeof 0 60 million through 1968) to supplement the medium- and long-termcredit made available under the project.

F. Procurement

35. Procurement of all items financed would be through normalcommercial. channel.s. The countryz has a well established system ofl privateimporters and dealers of farm machinery and equipment, fertilizer andinsecticicles, and produces most of the pasture irmrovement and fencingmaterials needed under the project. Repair services are adequate.

- 12 --

G. Disbursement

36. The documents pertaining to :Loans under the project would beperiodically presented to the Banco Central by the conmercial banks showingdisbursements made. They would be examined and classified as eligible bythe Banco Central before being submitted to IBRD for 60 per cent 1/ reimburse-ment. Disbursements of direct costs of' technical services contracted by thecommercial banks would be for services rendered and associated costs asspecified in each contract with the consultants. The Bank would disburse 6Cper cent of the cost; of these services.

V. PROJECT JUSTIFICATION

37.~~~~.o POecX uber.efius can be cass 2ed int th flVVlowggneaJ I . I~~ e~J jaii J dI cL) U± _OLJ ..Lu JL -LA J it L %1 J i- V.L 4E

categories: Significant increases in production and exports in a relativrelysiortu periodi of tim. .te3 ( >uhe Valute L.L Ulothe eAtJu.Ls U' WLLU wo Ui 'd i a y d.j.p±I

¢ 25 rmillion in 1967 and by about 0 45 million in 1970, or approximately 6per cent of the pre-ent value of exports); eAport di-verslfication3 introcuc-tion of new and better plants and legumes and on-farm production techniques;IntroCduction ofI new and better lending policies and procedures in the fieldof agricultulre; improved technical preparation of bank technicians andfield extension officers; strengthening of staff connected with the aboveoperations as a permanent contribution for further development; and creationof newf employment opportunities, especially in the banana and cotton sec-tors.The project contributions to increased production and exports are particularlyrelevant in view of the past decline in per capita income and the importanceof improving the outlook for Costa Rica's balance of payments through higherexport earnings. Project benefits would compare favorably with those ofpast agricultural investments, which were not necessarily accompanied bythe above mentioned technical, economic and administrative improvements.

38. Project returns are estimated to be as follows:

Production Financial Return EconomicArea to Farmers 2/ Return

Livestock Guanacaste 14/5 16%Atlantic and Pacific 16%

Bananas Atlantic(a) 3/ 19% 35%(b) 3/ 25%

uouuon C'anjas 1 I,, 2

Tempisque 23%

Pineapple Puntarenas 35% 50%Buenos Aires 5%

1/ Sixty per cent of loans is equivalent to 50 per cent of theinvestment program.

2/ After taxes.

i, (a) Under Standard Fruit Company contracts.(b) Under West Indies Ynaui' Comparny con rac--s

- 13 -

39.7 fltullUINULs Luclc-LuiatdU on a _30d --.tyear- en;c UIILLu fLoL r U aIll

projects. The overall internal rate of return to the economy would beapproximate-Ly 20 per- cent after taking into account techrnical undadministrative costs associated with the project (Annex 13).

VI. CONCLUSIONS AND RECOHiMEVIbNDATIONS

40. Costa Rica, is endowed with a wide variety of climatic conditiornsand generally ferti]e soils. It has not made sufficient use, however, oilits agricultural resources, with the result that annual increases inagricu.turaL product-ion have lagged behind annual population increases irrecent yearS. At this critical stage, the proposed credit project whichemphasizes investments in the most productive enterprises would make animportant contribution to the development of the national economy.

41. Banco Cent;ral and commercial bankst staffs, when augmented andfurther trained, woulid be capable of adiministering the credit projectenvisaged.

42. The project is technically sound and economically justified,warranting an IBRD ].oan of US$5 million to be rapaid in 20 years includinga five-year grace period. The borrower would be the Banco Central, whichwould also bear the exchange risk.

43. The following assurances have been obtained during negotiation::

(:L) The Banco Central, the state commercial banks andthe M4inistry of Agriculture Extension Service wouldincrease their staff and would establish trainingprograms (paras. 28 and 30).

(2) The ,pecialists deemed inecessary under the projectwould be appointed in consultation wi-th the Bank(para. 30).

(3) The Banco Central will have the administrativeresponsibility for the specialists required (para. 30).

(1X) The upper limit for the aggregate of loans to anyindivicidial horrower without prior BRqnk annrovqI irnder

the project would be $9 700,0CO except in the case ofhanann investme-ntsq twhpre the corrpeqonding figure -wonuldbe Z 1,500,000 (para. 31).

(v) The cielegation of authority to agency managers toappMrrove loans up1 to ,M 40,00 ton brar.chnn mat.agersc

up to O 100,000, and to boards of directors ofbra-ches and head office managers up to M 150,000would be promptly put into practice (para. 32).

(6) The technical and financial analysis of farm planswo- 'k-41 - -be -h pr-u bss forI-- -o -pp-o--1 -anIVLL.WL WU L ULAVZ P .LI1104J &JC~LO- JAJ± ..L'JCUI L .JVF. LVVCkL O.14"

supervision (para. 32).

(7) Arrangements would be made for the interchange oflfl±.luatrLVuI Ube-1erJli tLhe sitiute oL;UI1 U±UaL UbarIM

regarding applicants' credit history and debti_ua tion (para. 32) .

(8) The PIinistry of Agriculture and the b-nks ha-veagreed on a system to coordinate the activities ofcommercial bank technicians and extension agents toimplement the project (para. 32).

(9) Short-term credit to complement the proposed invest-ments would be made available to farmers receivingloans under the project, (para. 34).

(10) The Central Bank would study the problem of storagefor agricultural products to determine the mostefficient utilization of resources in this field(para. 8).

Julr 51 i'?6

ANNEX IPage 1

C O S T A R I C A

AG(RTICUTTRAT. GR:RnTT PROJEGT

THER BANKMTG SYST DM

I. Introduction

1 PI,ie, rCSt n bankin s.,yt.i,-m, -is c ,r,n,rc,edA nof +thc Bnr, Cent4

ra.l

and five coirmercial banks. Institutional banking is more than one hundredyears ozld. FJour of. the -. o - - ..±a- banks -w --r oranizedL in 4t1h last cen-

tury and the remaining one in 1914. Three of the four private commercialuanks were nationca,.iLzLed Li-'Ln4V U UIz8 Dalinth U uB deYU1 LyVo w Ua L n1 private

hands with the limitation that it cannot accept deposits. The Banco Cen--tradl wvas cr-ta edU in " ince th.1 e D,arico Ue by UBl is noU t par ticipat-ing

in the administration of the credit project under consideration, it isexcluded fLrom'JLII tIhLe dc UsUs-Lo b w.

II. The Banco Central

Organizatio:n, Management and Functions

2. The Banco Central has a board of directors, manager, auditor,treasurer, and three main departments: economic studies, foreign commerce,and accounting.

3. Besides the general powers and functions referred to in the mainbody of the report, the Banco Central can:

(1) loan to commercial banks for terms shorter than oneyear for operations involving small farmers and inconditions similar to those prevailing in the JuntasRura:Les of the Banco Nacional;

(2) loan to commercial banks for terms not longer than90 days with the security of public bonds and intimes of emergency for the same period without sucha guarantee;

AINNEX 1Page 2

(3) loan for up to one year to institutions carry-ing out agricultural price stabilization program;

(lo) loan to commnercial banks, the proceeds of ex-ternal loans, and make disbursements in anticipa-tion of forthcoming external funds; and

(5) Buy and sell first grade highly liquid securities.

L. The Banco Central has also been useful in other ways. ItsEconomic Department has made marketing studies of agricultural and indus-trial commoidities and has also done valuable research in external tradeand Central American Common Market matters; special ad hoc committeeshave studied the structure of the banking svstem, its functions and limi--tations, and recommended desirable reforms; and it has either directedor cooperated in the nrepanratioTn nf 'cin=ifinrproets rveqniring externalfinancing, as was the case with the credit project submitted to IERD.

II. The o-Iercil Bankls

Organization and Management

5. The four State commercial banks have each:

(:L) a Board of Directors of five to seven members ap-pointed by the Central ovtme C- ffour-year terms;

(2) Manager;

(3) Auditor;

(h) Commercial and Mortgage Departments; and

(z) sections for Credit, Appraisals, Deposits, ForeignExchange, Accounting, branches and offices, Legaland Administration. An organization chart of theBanco Nacional appears in Annex 2.

6. Three of the four banks have their head offices in Jan Jose.The four banks have 158 offices distributed throughout the country asf ollows:

ANINEX 1Page 3

Banco Banco de Banco Anglo Credito AgricolaNacional Costa Rica Costarricense de Cartap-o

Central Office 1 1 1 1

Urban Officeos - h 3

7 -

Agencies lv^11 6 2

Ju.ntas RWurales(SmaLL Farmers) 54

Teller Windows 10

'rotal 122 23 10 3

These facilities are more than sufficient to meet present needs, sincethere exists a cert,ain degree of duplication of services in the maincenters of economic activity.

7. Approximately 235 administrative and technical staff are direct-ly concerned with making loans. Also involved are 22 members of boardsof directors and 300 loan committee members of branches, agencies andJuntas Rurales, who work on a per diem basis and pass upon loan applica-tions.

8. Management. both at the central office and local levels, ap-pears to be in the hands of technically prepared and experienced adminis-trators. Annraisal workc is nerformed by 107 graduates of an agriculturalcollege whc, usually enter the banks af'ter three to five years of experi-enGe elsewh.ere,

Powers

9 I'he banks are autonomous public institutions and have comnleteindependence with respect to administration and management. They arelegal.ly permitted t,o enter all relar comm..erial bankning nperations andcollaborate with the Banco in the implementation of public policies.

Resources

10. ]:nternal resources have been increasing at an annual rate ofI C . p tu II L.'~u i. ±lL a 1 .. fL ix't .a. aLA .nearsy t7h coffesrce prora but theelor rate of ;ncrexased ould uct elte-

rate as the coffee recovery program develops and expanded production tak:esp'lace. .

ANNEX 1Pcige 4

11. The relative importance of banks is given by the size of theirrespective loan portfolios (Annex 3). Total assets increased by 5.5 percent annually while liabilities increased at 7 per cent average from 1960to 196L. Although combined canital and reserves increased bv M 10.7million, they declined from 36 per cent to 27 per cent of total loans out-t.a.ndirng (An:nx )' This is due inr great measure to the fact that aggregate

net annual operating income of banks has decreased about 25 per cent since1961 when theyv ere 11- million This ieline in Parninr7.¢ hns nnfirmrro(i~~~~~ _, } _ _ _ *C,_ _________

despite an i:ncrease of 36 per cent in loan volume outstanding, mainlybecause of an increa'se of around 10 per cent in both the cost of money andadministrative expenditures which constitute 27 per cent and 40 per centrespectively of total ep enses whil.e- 1inte,rest rnate- s, -1on l h mane:1

unchanged. (Interest earned represents 80 per cent of total banks' income).(Annex - 5) NT-+ earnings ---- as a-n-,- pcl o.f-b +e+otl vorlume oC 1oans

outstanding have evolved in the following fashion:

AIs a percentluageLoan volume Net operating of loan volume

Year outstaldnI4-gl in lcm uo utstandinS

-~~~~~~~~~)

O. ri.

1961 81h 136 51lo66

1962 878 9. U tl.C)7

196 92h 9. 1.00 r on

1964 i,075 9.4 0.88

Average °9~C7 ir0 7 1vAtV0 0? LI.) -I k '.3r

r.ola-e- ont -. -- n 1of l +han per cent'. 1 a,n nnr+r1; - -nA 1 ne cS.kJ..ay 2 10 U 0a VI4±J.L3 I.jw v OLf lS u-1U ul10 V. ISISv. u v X E '.44 v .

than 3 per cent on equity points out the urgent need to increase income.

12. On the other hand, although the volume of delinquent loans haslncreased percentagewi s e, the volun,e of Uelinquent loan-Es over I8 du ays(excluding unmatured installments) is under 5 per cent, (Annex 6) and.losses have r-emained blw oneo per cnt of loan vo'L -UMI.

.LendiUnIg Polic ies andU Procedu-reas

13. Agricultural lending has always been given high priority andhas represented about 55 per cent of the banking system's loan portfolio

AN]TEX 1Page 5

in each of the last five years . General agriculture represents more thar70 per cent and livestock 30 per cent of the total outstanding volume ofagricultural lending (Annex 7).

11. Since records are kept only on the number of loans made andmany farmers have more than one loan w-Lth the same bank or have loans withmore than one bank, it is irpossible to have a precise estimate of thenimhbr of farmerqs heing servpe bhv the credit. svqft.Tem. buit other indlirectmethocds indicate that roughly 65 to 75 per cent of the 6h,o00 Costa Ricanfarmersq nhbtan bannk c-redit.

15. Greater attention is given to the collateral nositini of theborrowrer than to his repayment capacity as derived from the project beingfinnnrced, TTith the resul+s that many rerpaym,n ent schedules are not adaptedto the nature of the particular investments.

16. Total agricultural credit has been almost equally divided be-LI UV opera'-t onal arlmedi= and long-ter.,. lr.vestment uses,

the latter showing a slow relative increase. In 1964-1965 the distribu-tion vras ) l per centLf andu 56 per centu respec tively. TheI e&U>Ltl Jf pri.LVCtU

lending is unknown, but appears to be unimportant.

17. Loan making procedures are practically the same throughout thebanking sys-tem. At the head office level, they can be s-umm,arized asfollows: a prospective borrower submits a simple application form statingthe purpose of the ;Loan and offered security. The credit section of uriebank checks creditworthiness and status of title to real estate if it ispledged as Security. The application then goes to the appraisal sectionfor inspection of the property, its uses, estimated value, and in thelarger and more comp)lex cases, a development plan. The report with arecommendation from the chief of the appraisal section goes back to thecredit section, where it is reviewed thoroughly by a credit specialistand together with comments by the Section Chief transferred to the loancommittee or to the Board of Directors, depending on the bank in ques-tion. In branch, agency and Junta rural offices the loan comnittee iscomposed of the manager and three prominent local citizens wiho serve ona per diem basis. O)nce the loan is approved, the commercial or mortgagedepartments handle its administration after a final check is made by thelegal office. At the local level, the application is submitted to thebank manager who makes a preliminary review, sends a request to San Josefor information on the status of the security pledged if it is realestate and hands the application to a technician for field inspection.Depencling on the category of the local office and the amount involved,the loan request is decided upon by the manager alone or by the managerwith the local loan committee.

18. Loan processes are too long and cumbersome. It takes frequentlyup to three months to process loans involving real estate security. Fac--tors affecting speecl of processing are: lack of sufficient personnel at

ANUIEK 1Page 6

the real estate certification office; excessive centralization of decision-making an the head offi^e level! too grent an administrative burden (whichis highly tim.e consuaming) on the technicians who do the field work.

19. Inspections of loans approved are regularly made, developmentnlans -hecked- evi den.e of nhvsicrl 2 1invsPr.Trnent- repnired aind nIans for dis-tressed loans workel out between lender and borrower. Borrowers are ad-v4sed in ance ovf 1 nn pimPn±. a1-es.and thi--is -s fo11r^TTed Tp bIny 1le-te.Pr:s

reminding them about the payment due. If no news has been received fromthe borrower ninety days after date of repayment, the case is given to theLegal Section for inmediate action, which usually involves an arrangementwith the borrower, but would otherwise lead to foreclosure t. ens ionagents of the Ilanistry of Agriculture have assisted bank agriculturistswith on ~supervsion -workin the coffeezone.

Other Services

on. The bankinrg syste.. a-so provlde st-oraefclte o orwrand non-borrowers. It appears that these services could be better proviiedIOy otiher thar credit inostittLutiLonUsL VwichJUI, oiOn tUhe ot0her1 hanc', do ino ser Q to

make any profits on these operations. The Government should conduct aO UlsiUU '. Ul o ue lLirm il Iie IUe D 1 LI i U L U U , LI d. f A-UJII r) 1. tWoaOULzJ. on LI r11slo in Oi E.

BANCO NIACIONAL. DE COOSTA RICA

L BOARD OF DIRECTORS

GENERAL ". _-L SECRETARY ____ AUDITING_ _ _ _ _ _ _ _ _ _ IA D T N

| MANAGEIR

ASSISTANT MANAGER_________ _________ ~~~~EGAL

MANAGEMENT _ {_SEC1IONL SECRETARIAT _____ -

ORGANIZATIONALADM INISTRATIVE._ ~SECTION

GENERAL TRANSPORT LIVESTOCK | POARDTVFISOL APPRAISAL CREDIT I I SUPPLY | | PERSONNEL

TREASUFSECI10SECTIN I I L SECTION SECTION Ij SECTION I

INDUSTRIAL ~~~~~~~~~~~~~~~CONSTRUCTION ANaDINDUSECRIAL MAINTENANCE OF-SECTION EIUIL DINGS

OMMERCIAL t -RTG COOPERATIVEI COMMERCIAL I MORTGAGE I I ~~~~~~~~~DEVELOPMENT[ 1 )EPART-MENT L_DEPARTMEN DEPAIRTMENT

__ _ YE _ _n

FOREIGN AC NTTl TELLER I ENERAL STORCHE RAL CREDIT[ SECTON ON SECTION SECTIONS DEPAR TMENT ]F ____~~~~~~_ __1___

| COLL ECTIO F BRA NCH RURAL CREDj RURAL' CRECIT CTION [_MANlGEME? BDARD LTECHNICIANS

(R) IBRD-2804 )K_ _ _ _ ro~~~~~~~~~~~~~~~~~~~~~~~~~~~~

COSTA RICAAGRICULTURAL CREDIT PR0OJECT

LOAN i'ORTFOLI() OF THE FOUR. STT1',;i' CCI3V-FtCIAL 73ik:TKSj J'LY 31,_ 1965'

_L U ~~~~n-,, r* -nf,,, -a r , -rsn ,t

IjcU1t'~~. ±±±UU.~L 1Ur ±_L clUUrI du.L ~U Ud U L1Ic± Bank Agriculture Llestc Su-oa Ohes T.l

(Hlillion Colones)'JWtional Bank of Costa Rica

Commercial Department 109w9 51.5 161A4 181.1 3L2.51Hlortgage Department 58,0 - 58e0 95.2 153.2Rural Credit Department 53.3 75,6 128.9 2.2 131.1:yooneratives De.partment 7.0 .7 7.7 6.6 _L4.3

Sub-total 228.2 127,8 356.0 285,1 6L4l.lPer cent _77 66 - 0- --T

2'ink of Costa R:ica

Commercial Department 112.6 43..6 156.2 141.6 297.8liortgage Department 6.o 2,3 8.3 12.2 20.5

Sub-total 118.6 45.9 164.5 153.8 318.3Per cent 30 29 27 2

Ahgo-Costa Rican Bank

Commercia:l Department 27.8 1h.2 L2,0 83.5 125.5Hllortgage Departm.ent 3.4 1.8 5 2 10.7 .5.9

Sub-total 31.2 16.0 47.2 94.2 141.4Pe rcent 8 R 17 12

jqricu.itu:.raItln~ R nk f Gaztag o

n*mmnr-ciI Dpanrtment. 17. 53 22. P) )_7 _0

Per cent 3 4 4 _

T'OTAL ALL BANKS 395.3 195.0 590.0 557.5 1,1li7.8Private 100 100 100 100 100

_ = _ ._

CG(STAA RIIC4AGRICULTURAL CRTHTJIT PROJECT

CON;SOLI:DATED BALANCE SHEETS OF THE FOUR STATE COMŽIB'CRCIAD BANKS,, 1960-1964

Per centDec. 31 Dec. 3il Dec. 31 Dec 31 Dec. 31 change

Q(_n1960 1961 1 9A2 19h5 i96 19600-196L

(Million Colones)ASSETS

Cash 116.6 121.1 115.6 1'38.0 12)4.1 + 6Loans 792.5 81.0 r O2.8 A '7l.8 +AInvestments 118.4 119.7 105.2 126.9 lO-L.4 - 14Other Ass(ets 32.1 48.3 58.8 73.3 87.1 + 171

Sub-total 1,059.6 1,103.1 1,157.1 1,262.0 1,387.4 + 31

IIABILITIESDeposits up to 30 days 326.2 321.0 '377.2 )u28.8 e47.3.6 + 45Deposits - over 30 days 18.3 15.6 28.9 1L9,2 26.1 + 43Deposits foreign exchange 33.2 31.4 30.( 28.3 23.4 - 30Loans with Central Bank 260.9 268.0 207..9 237.0 262.4 + 1Loarn with Commercial Department 1/ 17.8 17.8 17. 8 17.8 17.8 -Loans with foreign banks 2/ 8.4 27.2 48.o 57.1 63.5 + 715Bonds in circulation 67.9 67.6 78.7 99.9 117.6 + 731Other Liabilities 29.6 42.2 46.4 '38.7 48.5 + 64

Sub-total 762.3 790.8 83)4.9 926.8 :1,037.9 + 36

CAP'ITAI. 131.5 3/ 132.3 128.3 14)4.3 1)44 .3 3/ + 10LEGArPL RESERVES 153.6 3/ 154.3 158.8 146.6 151.5 3/ - 1SfTJrJ9'L-cS ____ 12.2 25.7 35.:L 4)4.3 53.7 + 340

Sub-total 297.3 312.3 '322.2 3-35.2 349.5 + 18 '8

TOTAL 1,059.6 1,103.1 1,157.:L 1,262.0 1,387.-4 + 31 Y-

1/ Ruall, Credit Secticn. National Bank cf Cost- Rica, bcrrows internally frcr Cm miercial -z-artmient.2/ Includdez onaly foreir: Icians r.ade di'ectlj to th_ Lu,nerci Ear.ks3/ CapitL arnd Legal Reserves equaled 36% o. loarns outstandirLg in 1960 anid 2,7/% Jn 1964. (&xn'ce: Barico Cencra-L

COSTA RICA.AGRICULTiRAL CREDIT PROJEC,T

CONSOLIDATED PROFIT AND LJSS STATEi5jNTS OF THIS FOUli ST. L C. -196

- ~ Dec. 31 Eec. 31 Dec. 31 Dec. 3:L Dec. 311960 1961_ 1962 1963 1964

(Piillion Colones)

Interest Earned 53.198 55.679 56.099 6o.588) 65.6BL4Foreign Exchange 1 .3 90 1.318 1.230 1L.4Oc 1.651Comnissions 6.6oo 6. 897 7.044 '7.616 8.83LOther Profits 3.650 4.072 5.157 ').390 6.509

Total: 64.838 67.966 69.,530 75.003 32.7:28

EXPENSES

Interest Paid 13.130 16.107 16,,093 17.78 449.799Commissions .727 . 543 .648 .703 .752Board/Directors Fees .723 .825 ,882 .776 .835Salaries 21.35;2 23.631 26,,094 28.086 130.0,185Servicing Loans .ol6 .051 .757 .569 .612Other Administrative Expenses 6.306 6.104 6.466 7.577 8.816Depreciation and Reserves 8.916 4.121 7,212 8.452 9.899Other Expenses 1.424 3. oLo 1,937 :L .95 2.553

Total: 52.624 5La.L22 60,089 65 .802 73.311

NET OPERATINGj INCCE 12.214 13.544 9,441 9.20:L 9.417

COSTA RICAkGRICULTURAL CREDIT ?CROJECT

LOAN DE)LINQUENCY RECORD 0? THE ;;:?ei STATE COML EECKIAL BAN6 1960-1963 AND BANCO NACIONAL ONILY, 1964(iillion Colo:nes)

1960 1/ :1961 1/ 1.962 L/ 1963 2/ 16L64 3/Pericd Delinquent Amount Per cent Amount Per cent Amount Per cent Ajmount 3er cent Amount Per cent

30-90 days 90.977 17 10.95o 20 122.536 21 127.086 20 18t.308 26

91-180 days 17.889 3 27.215 5 38.328 7 29.972 5 3LI.834 7

.181 plus ciays 14.556 3 28.9819 5 58.292 10 70.632 11 42.312 7

Total delinquerLt 123.422 23 167 .1514 292 219.156 37 227.690 35 225.h54 39

Total non-deliruquent 413.65'7 77 401.577 71. 367.418 63 41.024 65 353.5544 61

Loan lVolume 4/ 537.11.9 100 56.731 lOC) 586.57h iOQ 6i 5.71- 10 57'.998 100

:l/ Septernber 302/ December 303/ National Bank of Costa Rica onlyi/ Represents about 70 per cent of the total loan volume outstanding

Note: Due to rounding, figures dLo not always add to totals shown.,

Amount reported cdelinquent inc:Ludes unmaeturecl priincipal baLance, matured principal past due, and accrued interest.If delinquency was reported as actual amount past due including accrued interest the total amount wou]ld besubstantially less than the above amount. For example, from data obtained from thLe National Bank of Costa Ricathe actual amount delinquent atl end of 196L was 34.183, miLLion colones as compared with 225.454 million colonesshoywn above. Thus only 6% of .Lts total loan volume is past due instead of 39% as shown in above tabulation.Furthermore only 2.5% is over 180 days old. Similar inforrnation for the other banks is not availablea.

Source: Banco Central

COSTA. RICAAOi-OWLOULT-uAL CRZDIi PROJECT

DISTR:IBUTION OF LOAN PORTFOLIOS OF THE FOUR STATE COPDiERCIAL BANKSBY FIELDS OF ECONOMIC ACTIVITY, 1960-196h

June 30 June 30 June 30 June 30 June 30 1960-19T6 4Sector 19,60 1961 1962 1963 1i964 Annual Average

Per Per rer F' Per Per PerAmount cent Amount cent Asmount cent Amount cent Amount; cent Aaount cent

(Milliona Colones)

AgriLculture 326.5 42 329.5 hi 3I0.3 O4 357.2 39 390.0, 37 h9 4L ho

Live6tock and F:i.sh 112.8 15 119.7 15 132.4 15 138.8 16 64h 3 16 133.t6 15

Slub-total 441.3 57 449.2 56 472.7 55 496.0 55 55L1.3 53 1h82.7 55

Industry 85.0 11 99.3 12 117.8 1L 136.3 15 170.0 16 121. 7 14

Electricitv 5.0 1 3.1 1/ 2.6 1/p 2.5 1/ 3.5 1/ 3.3 1/

G onmaer nial 55.7 8 56. 5 7 514. 64 59 .2 7 61.0 6 57.9 5

Services 40.8 5 41.2 5 h5'.3 5 46.7 5 58. 4 6 46.5 5

Housing 78.5 10 77.6 10 86.4 10 92.,7 10 97.3 9 86.5 10

Personal Credit 33.h 4 36.4 5 07.0 6 48.,7 5 55.5 5 44h 2 5

ITnclassified 35.0 4 35-5 I_5 5 251,7 3 52.1 5 36.8 4

Sub-total 336.4 43 349.6 4h 389.0 45 h 411.8 45 197 8 47 396.9 45

TOTAIL 777.7 100 798.8 iCio 861. 7 OC) 907.8 100 1, 052. L 100 879.6 100

I.. T,rss than 1 per cent

,Souce: Barnco Certx-tl

C 0 S T A RT I A' J J .. xi LI. ..L '.J LI

AGRICULTURAL CREDIT PROJECT

rmu<,m io r n Jap;u.u. r±\±'

1. The projected disbursements are based on: the absorptivecapacity of farmers in eacn fieid; the availaDbiity OI bark and othertechnicians; the new standards required for appraisal of farmers, loanapplications; technical requirements for farm operation (pineappie).

2. The basic assumption underlying the income statement and thecash flow regarding the project is that loans to farmers will be madeat 8 per cent interest, the minimum charge which would permit coverageof operating costs and provide a surplus for a reasonable accumulationof reserves.

3. It is also assumed that net annual flows after the initialloans are disbursed will be relent in the following proportions: 80 percent for livestock and 20 per cent for bananas, both of which offer themost ample possibilities for long run development. This relending willbe made on the same terms as above.

4. The four state commercial bankst contributions to loansconsist of the 40 per cent counterpart funds to the IBRD loan (60 percent). Taking into consideration that; the lending volume of the bankingsystem as a whole has increased by an average of ¢ 75 million annuallyin the last four years it is estimated that the financial effort demandedby the project, including short-term credit, can be satisfied reasonablywell.

5. Technical services expenses relate to the agriculturalspecialists and the study of storage of agricultural products in thecountry. Administration expenditures include the appointment ofbank supervisors and appraisers and junior personnel to undertake theadministrative work load of bank appraisers, as well as facilitiesneeded for the prolect. The share of general bank administrationexpenses is based on the percentage share of project loans as comparedto the nroieeted total volume of bank lendine.

6. n this basis annual net income shows an almost uninterruptedrise throughout the life of the project, which would permit a gradualrepturn townrd the rpeak nf i961 hankinng svstemts income levelsq

AiHJNEX 9

COSTA RICA

AGRICULTUFRL CREDIT PROJECT

BREAKDOWN OF IIJv-OTTMEWS _/

Beef Cattle Bananas Cotton PineapplePFer- Ie PIer Per

Amount cent Amcunt cent Amount cent Amount ccnt

Land clearing _ _ _ _ 3 21Fas'ure improvements u 3Fartilizer 3 13 2.3 10 _ _ 2 4SWater supply 4 16 1.2 3&encing 4 15 -

spncLuing iacilities 2 1U - -

'K:chinery 1 2 2.3 10 4 27 0.2 '12reeding stock 2 10 -. - - -

Land improvement,s - - - 3 24harm buildings - C ,.8 25 2 14 0.3 8Cotton gins - - - - 2 12Insecticides, herbicides - - 1.2 5 - -NWev. plants - - -

labor 2/ - - 10.2 44 165 32Other (small tools, etc.) - - 0.4 1 - -

Total 24 100 23 100 14 100 14 100

1/ Technical services excluded. Figures are rounded.

2/ Whereever it could be identified as such.

IQource: IBRD Mission

COSTA RICA

AGRICULTURAL CREDIT PROJECT CALSH FLOW

(Million Colones) 1/

1i966 :L967 1968 1969 1970 1971 1972 19 73 1974 1975 1976 1977 1978 1979 1980 1981 1982 19,3 198h I28

CASH INF?LCW

Loan frc IBRI) 4.8 17.5 9.2 1.6

Banks' contributions 4.3 13.8 8.6 3.4

Repayserit of principal by farmera - - 1.0 4.9 5.8 6.4 7.14 9.3 10.6 9.3 10.3 11.0 11.1 10.5 10.4 11.L 1u.8 12.4 12.8 12.9

Payment of interest by farmers 2/ - .6 3.0 4.4 5.0 5.2 5.14 5,5 5'.6 5.7 5.9 6.0 6.3 6.4 6.6 6.13 7.0 7,3 7.5 7.9

Total: 9.1 31.9 21.8 114.3 10.8 11.6 12.8 114.8 16.2 15.0 16.2 17.0 17.4 16.9 17.0 17.9 18.8 15.7 20.3 20.8

CASH OUTFLOW

Medium and long-termi loans to fairmers:

Beelf cattle 3/ 1.7 5.5 13.2 10.0 6.6 6.3 7.3 8.8 9,.9 8.9 9.9 10.6 10.7 10.3 10.14 11.1 11,.8 12.?6 13.0 13.4Ban;anas 3/ 3.3 16.7 2.8 1.9 1.7 1.6 1.8 2,2 2.5 2.2 2.5 2.6 2.7 2.6 2.6 2.8 3.0 :l.1 3.3 3.4Cotton 2.5 5.0 2.4Pinieapple, .5 2.3 .6

Amortization of IBRD Loan - - - - - 1.1 1.5 1.6 1.7 1.8 1.9 2.0 2.1 2.3 2.'I 2,5 2. .9 3.0 3.2

CommitDmsnt fee .1 .04

Interest on 1)3RD Loan .2 1.3 2.0 2.0 2.0 2.0C 1.9 1.8 ].7 1.6 1.5 1.4 1.3 1.1 1.0 .9 .7 .5 .14 .2

Tectsiical servrices - .2 .3

Administrationr / .7 .7 .3 .2 .3 .2 .2 .3 .3 .4 .3 .3 .5 .5 .5 .5 .5 .5 .5 .5

Share o:r gener-al admLinistration .1 .2 .2 .2 .2 .1 .1 .1 .1 .1 .1 .1 .1 .1 .]. .1 .1 .1 .1 .1

Total: 9.1 31.9 21.8 14.3 10.8 11.6 12.8 L4.8 16.2 15.0 16.2 17.0 17.4 16.9 17.0 17.9 18.8 19.7 20.3 20.8

1/ Figures may not add extactly due to roundiLng.

Lt eight i .er ce:t.

3/ Eighty per cent of the money available for relending will heD channeled into beef cattle; twenty per cent into bananas.

4! Services directly attributable to the project.

Source: IBRD Mission. w

COSTA RICA

PRO]FIT AND LOSS STATEBfENT O1 THE F.OUR STATE COWRC:EAL BAN1IS IN RELATION TO ACRICUITURAL CREDET PROJECT

(RM:llion Colones)

19)66 1967 1968 1969~ 19'70 1971 1L972 1973 1974 1975 1976 1977 L978 1979 1980 198:L 19,32 1983 9834 1985

Tnccsm

Interest payments by far-ers .6 3.0 [L.L 5,,0 .2 5.8 5.5 5.6 5.7 5,,9 6.0 6.3 6.4 6.6 6.8 7,0 '7.3 7.5 7.9

Expeses

Interest on IBRD Loan .,2 1.3 2.0 2.0 2.0 2.0 1.9 1.8 1.7 1. 1-.5 :L.4 1.3 1.1 1.0 .9 .7 .5 .4 .2

Commitment Fee .1 .04

Techni.cal Services .2 .3

Administration .,7 .7 .3 .2 J3 .2 .2 .3 .3 .4 .3 .3 .5 .5 .5 .5 .5 .5 .5 .5

Share of Gere ralAdministraLtion 14penses .1 .2 .2 .2 .,2 .1 .1 .1 .1 I .1 .1 .1 .1 .1 .:1 .1 .1 .1 .1

Total: 1.,1 2.4 2.8 2.4L 2.,5 2.3 2.2 2.2 2.1 2.1 1.9 1L.8 1.9 1.7 1.6 1.5 1.3 1.1 1.0 .8

Net Income 2/ (1.1) 1,1.8) 0.2 2.0 2.5 2.?9 3.2 3.3 3.5 3.6 4.o 4.42 h.4 L4.7 5.0 5.3 5.7 6.2 6.5 7.1

2.1/ Services directly attributable to th-e pro,ject.

2/ Negative figures in bradcets.

Source: IBR9O Mission.

COSTA RICA

PROJECTED ASSETS, LIABILITIES AND N].T INCOME OF 'FOUR STATE COMMERCIAL BANKS RELATED TO THE AGRICULTURAL CREDIT PROJECT 1/

(Million Colones) j

1966 1967 19/i8 1969 1970 1971 1972 1973 1974 1975 1976 1977 197,>8 1979 1980 1981 1982 1983 1988 1985Assets

Loans to fLr-ers 8.0 29.5 19.4) U.9 8,3 7.9 9.1 11.0 12.1 11.1 12.4 13.2 13.h 12.9 13.0 13.9 14.8 15.7 16.3 16.8ReFannenft .f prin,ipa'L tfr year - - 1.0 1.9 5 Q 6.- 7 9.3 l0,,6 9.3 10.3 li.v il.i 10.5 10.4 11.1 11.8 12.4 12.8 12.9

Balanice 8.0 29.5 18.0 7.0 2,5 1.5 1.7 1.7 1.,8 1.8 2.1 2.2 2.3 2.h 2.6 2.8 3.0 3.3 3.5 3.9CumLLative loans to far-ters 8.0 37.5 55.r5 62.5 65.,o 66.5 68.2 69.9 71,,7 73.5 75.6 77.8 80.1 82.5 85.1 87.9 90.9 94.2 97.7 101.6

Liabilities

Loan from IBRD 4.8 17.5 9.2 1.6 - (-1.1) (-1.5) (-1.6) (-1.,7) (-1.8) (-1.9) (-2.0) (-2.1) (-2.3) (-2.4) (-2.5) (-2.7, (-2.9) (-3.0) (-3.2)Cumulative 4.8 22.3 31.5 33.1 33.1 31.7 30.2 28.6 26.,9 25.1 23.2 21.2 19.1 16.8 114.4 11.9 9.2 6.3 3.3Deposits 4.3 13.8 8.6 3.4 - - - - - - - - - - - - -Cunml.ative 4.3 18.1 26.7 30.1 30.1 30.1 30.1 30.1 30.1 30.1 30.1 30.1 30.1 30.1 30.1 30.1 30.1 30.1 30.1 30.1

Neat Inccme

Accusslation of prev-icus year - (1.1) (2.59) (2.7). (0.7) 1.8 4.7 7.9 11.2 1,b.7 18.3 22.3 26.5 30.9 35.6 40.6 145.9 51.6 57.B 64.3Net income far year (1,1) (1.8) .2 2.0 2.5 2.9 3.2 3.3 3.5 3.6 4.0 4.2 h4.4 4.7 5.0 5.3 5.7 6.2 6.5 7.1

8.0 37.5 55.5 62.5 65.0 65.5 68.2 69.9 71.7 73.5 75.6 77.8 80.1 8,2.5 85.1 87.9 90.9 94.2 97.7 101.6

At end of year.

2/ Figures may not add exactly due to rounding.

Source: IBRD Mission.

Aim . -.- 1- ;

C 0 S T A R i: C A Page 1

AGRICULTURAL CR]3DIT PROJECT

ASSUT4PTIONS REIATLIG TO TIE FINAIqCIAL ANDECUNOMIC MIALYSIS OF THE AGR[CULTURAL CREDIT PROJECT

1. The geographical concentration and the relatively narrow vari-ance of farrm sizes in each field of investment permitted a more specificmicrofinancial and economic study of the individual subprojects than isusual in agricultural credit financing. 'ne remaining variables could beisolated and assumptions established on reasonably firm grounds.

Beef Cattle

2. I-t is expected that a total of 150 to 180 loans will beprocessed in a period of two and a half years; taking into accountdelays due to organ-ization of the administrative machinery and theintroduction of new appraisal and supervision techniques. This loanschedule involves a small investment soillover in the first half of thethird year of disbursements.

3. On the basis of the number of existing farms and readiness forcredit absorption, the mission estimates that approximately 80 per centof the on-fa3rm investments will be made in Guanacaste Province, and 20Der cent in the area of San Carlos (Central Atlantic Region) and alongthe Inter-Anerican Highway in the South Pacific Region. These latterareas apnear to be most promising long run development areas once thenecessary infrastructure is provided.

4. Roughly 30 per cent of the number of farms would be in the 400manzana (28', hectares) categorv: hO ner cent in the 800 manzana (570 hec.-tares) category and the remaining 30 per cent in the 1,000 manzana (710hectares) axroupn TMh financial rate.s of rf-tairn (14 ner eent for ruana-caste and 16 per cent for the other two regions) are conservative in thesense that in:crem.en"al cvrirent costs wJere heaayr¶l weighted nnr f-onsirdredas proportionately fixed regarding the different sizes of farms, whileit is reasonable to expect economies of scale as fnrm size increases.

Ban.anas

Region is several times bigger than the 3,000 ha. considered under the5.ojzt.M"is fig-e 4-ludes - --are e-a o of 2000 ha. t1o±L J.o 'j ec.' ,. 1L S .L. ,UJ q- k kJ.LLakILA~L W~ LJ. ..,CJ'. Ji. I

satisfy the immediate demand prospects of the Standard Fruit Company and,0UUU Lia. w' chl are L LLikely Uto be duevelopeU iu u dLul ucItr wvit u

Indies Fruit Company in the next one or two years.

ALIMTV 'I1.UuNhT.nV 1 )

Page 2

6~~~M- __he -aw of0 --4tn caluiaio shows a4 6 pe -cen different-l

between the two marketing arrangements which is based on the price perUox of -anax.ass U"' al.rv oy J UWIdIU Frui± COLaLpdIIy ri,U US$l. by ve VtV

Indies Fruit Company. If the latter cane in full force, the absolutereturns, both financial and economL.c, would increase appreciably. Theaverage size of farms (100 ha.) is based on Standard Fruit Company'sregulations regarding suitability for aerial spraying.

Cotton

7. One-half cf the investments planned are expected to be made inthe Tempisque River Basin and one-half in the Canas Area, both in Guana-caste Province. Yields are 15 to 20 per cent higher in the former, which.comprises alluvial soils with good drainage conditions. Average farmsize should be 70 ha. which permits the utilization of one set ofmachinery for on-farm work under intensive conditions.

8. The missicn allowed for a 6 per cent gradual price decline inthe first four years of operations due to expected export increases inthe United ctates, Another important assumption is that farm machinerywill not be transferred from rice production into cotton, which increasesinvestment costs accordingly.

Pineapiple

9. The mission estimates that one-half of increased productionwill take place in the Puntarenas Area and will be sold to canneriesaround. San Jose involving an average distance of 66 km. The other halfwould be produced in. Buenos Aires, in the South Pacific Region, andmarketed as fresh fruit in Florida. There is, on the other hand, aspecif'ic purchase of'fer by an American firm on the basis of productionon a mnarimum h40 ha.

10. Financial returns were calculated in all cases after taxes.The weight of taxes in the calculations is notable, particularly in thecases of nineanole. bananas. and cotton. All returns were calculated onan incremental basis and economic returns are weighted according toprobable developmpnt area Histribution.. The 20 per cent overall internal.rate of return to the economy takes into account technical assistance andincrement2l. dcmrinistratinon cost.eq

AiMT\E lah

Page 1

C O S T A R I C A

ArPTTTT.r rTPT.T CP;ITT PRn.TrPlT

M A DV rVT71

Beef

1 About 6,000 tons of meat are expected to be produced by 1975-aicier Ihe bUee cattle projUc, C ID xidUU±y u 60 pe cent for doUuwe" -±

consumption and 40 per cent for exports. Domestic consumption per capitahas increased in recent years, but it is expected that an im,Jpr-o-vement ingeneral economic conditions in the country will lead to a large increasein total internal consumption in the next ten years, which on the basis ofpopulation increases alone would be more than enough to absorb the expectedincrease in supply at that time according to projections made by CostaRican planners.

2. The West European Yarket should be characterized by an excessof demand relative to supply in the next five to ten years and shouldremain in balance for a period of several years thereafter. Costa Rica'sexpected export increases represent a very small addition to world marketsupply and should not face serious sales problems with its comparativelocation advantage vis-a-vis the Western European and United States markets.Trial shipments have already been made to Italy and results look promising.

Baranas

3. The market for the expected increase in banana productionseems mostly assured under present marketing contracts with the StandardFruit Company. An additional mar}et outlet might be operated by theWest Indies Fruit Company, which has already entered ten-year contractswith the Banana Producers' Cooperative at Bataan in the Atlantic and hasinclicated its desires to market the production of a further 2,000 ha.

Cotton

4. The export market should absorb the estimated 5,000 tons oflint forthcoming from the project's investments in full production., Theoutlook for exports to Japan and Western Europe of cotton of uppermiddling quality (which comprises Costa Ricals quality standards) isreasonably good and the projected increase in exports represents onlyabout 5 per cent of total Central American exports at present. Relativeshortage of suitable lands, pests and diseases, on the other hand, haveseverelv limited the overall exnansion of cotton production in Nicaraguaand Salvador. The Cotton Growers' Association is actively pursuingcommon mArket policies to assure early sales and the highest possibleprices for producers.

A __ __ ' I .

aIU~A J4.

Page 2

To the above -must be added b[at the lo-verIIlelun hacs recentlygiven tentative approval for the construction of three new textile mills,two of wnich would start operating in 1968 witn a combineu capacity of2,h00 tons of lint and the third in 1970 with a capacity of 950 tons.

6. Approximately two-thirds of the expected increase in the supplyof cotton seed would be domestically consumed by the livestock industry.The remaining one-third would have to be exported and efforts are underway to this effect. The relative value of these exports is, however,very small.

Pineapple

7. The existing two canneries in San Jose have publicly advertisedtheir readiness to go into contracts with pineapple growers to assure asteady supply of fruit up to 7,200 tons per year, This would representapproximately one-third of the projected increase in production.

8. The favorable geographic situation of Costa Rica vis-a-visthe East Coast Market in the United States gives it a comparativeadvantage to supply this area. The Kraft Company, Lakeland, Floridahas recently indicated their willingness to buy fresh pineapple inCosta Rica provided a minimum of 10,000 tons a year can be supplied tosatisfy their envisaged consumption needs and trial shipments havealready proven economically justified. This figure alone representsapproximately 50 per cent of the total increase in production envisagedunder the project.

COSTA RICA

DISTRIBUTION OF BANK OFFICESAND PROJECT AREAS

NATIONAL WNNA OF COSrA NICA

N i C A R A GU A CN-trAl b-,A

1. c, ~ ~ K - ONlBAA| >>)°Lc ,1 > ._ < - \ ,- -s SBAgnKcy -a]

bANK OF COSrA ltICA

CANt.1,1 1-s,k 0

AKNLA ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~,I TNGONOT 11- P

,~~~~~3////" *N .- OCaCAB~~~~~~~~~~~~~~~~W, bank *: 0 X/ jg ' _ A~~~~~~A A J U E L A I * (B ANGL O-CON klALA. bANKY

H E R E DI A \ AGI c -s-lt l .1 O -A -

CD UE.D LCNT<Cf -l- _ S A N0 -

/A/'4"/~~~ 1 '7 ~~/ COOAESAD SAN J E 'N *0 ~ ~~~~~~~~~ /~~~~~~

A N J N S E

ALASUELA | ^ Rofoel OSan Isedro rJ SobLAJI,EIOl C A

* son J00O~~~~~~~QIZ EPEg 5 onV112,_<it

|~~~~~~~~~~~~~~~~K |1 IANN Ofi N NR SAN'OS JOSNE |* IIfllI Cotto IIIIHPoL\,ntj

NN<CA1<Ajn __ N | I ineNIpes /-

N ' ~ ~ ~ PU RENAlS

LII ROJECAUA[ 0<

SAN JOSE A N JOS e

AK,

'N I PlO 7~~~~~~~~~~~~~~Id,IT,t .1

LJ-Y 11166~~~~~~~~U TA E A