El Salvador housing guaranty 006 A and B for marginal community improvement

The evaluation covered the period 5/83-5/86 and was based in part on interviews with all Salvadoran entities who participated in or observed the project. The evaluation was generally of excellent quality and identified policy options which have helped USAID/ES reassess its evolving shelter strategy and program. In 5/86, the GOES was able to close out the escrow of HG-006B thanks largely to A.I.D. flexibility in approving existing mortgages for refinancing and GOES agreement to program local currency generations in accordance with project guidelines. Given the continued instability of Salvadoran shelter institutions, both the GOES and A.I.D. wish to reduce the time spent "projectizing" expensive HG resources; this awareness has helped to revive AID-GOES housing policy dialogue. Two evaluation recommendations have already been addressed by USAID/ES: to stress institution building (not shelter production) and to help the GOES Housing Vice-Ministry eliminate management inconsistencies among institutions and establish uniform operating standards for low-income shelter programs. Action will be/is being taken on recommendations to: (1) help the GOES rationalize its housing interest rate policy; (2) before advertising HG"s, make sure the GOES is willing to borrow at market rates and that sub-borrowers" interest rates are attractive enough to ensure sound management and monitoring; (3) advise the GOES against borrowing HG funds for short-term construction advances unless a sub-borrower has demonstrated ability to manage such funds on schedule and within estimated costs; (4) if HG loans are to finance new long-term debt, ensure that the GOES establishes a replenishable local currency fund to provide implementing agencies with short-term working capital; (5) if an implementing agency can demonstrate its ability to adhere to pre-determined draw-down schedules to meet its construction funding needs, before advertising to borrow make sure the GOES is agreed as to whether the sub-borrower will use the same funds to meet its long-term mortgage requirements; and (6) ensure that project design teams conduct thorough institutional analyses of implementing agencies and major secondary affiliates. USAID/ES declined as too costly and involving too much dependence on expatriates a recommendation to provide a large amount of TA for future HG projects; instead, USAID/ES will provide guidance and budgetary control to the Coordination Office of the GOES National Popular Housing Program.