EVALUATION OF THE RURAL MUNICIPAL DEVELOPMENT LOAN

EVALUATION IS BASED ON A REVIEW OF THE ORIGINAL PROJECT DESIGN AND ON OBSERVATION AND ANALYSIS OVER AN EXTENDED PERIOD. A MUNICIPAL DEVELOPMENT FUND (MDF) WAS ESTABLISHED AS A PRINCIPAL ORGANIZATIONAL COMPONENT OF THE NATIONAL BANK OF PANAMA. THE FUND"S DEVELOPMENT HAS BEEN SLOWED BY UNDERSTAFFING AND POSSIBLY OVER-AMBITIOUS INITIAL TARGETS,BY INEFFECTIVENESS OF THE COORDINATING MECHANISMS (ADVISORY COUNCIL AND TECHNICAL COORDINATING COMMITTEE),AND BY THE INADEQUACY OF TECHNICAL ASSISTANCE AND TRAINING INPUTS. SUBLENDING UNDER THE MDF WAS LIMITED TO 9 LOANS TOTALLING B/.554,000 OUT OF A PROJECTED TOTAL OF 30 LOANS FOR APPROXIMATELY B/.1.3 MILLION,DURING THE FIRST YEAR. THE AVERAGE LOAN VALUE WAS CONSIDERABLY HIGHER THAN PROJECTED. TECHNICAL ASSISTANCE TO THE FUND WAS BELOW EXPECTATIONS,IN OPERATIONS AND EQUIPMENT AS WELL AS IN COORDINATION OF POLICIES, PROGRAMS AND TECHNICAL EXPERTISE. INADEQUATE TRAINING OF MUNICIPAL OFFICIALS RESULTED IN OVERWORKING THE MDF STAFF,REDUCING AVAILABILITY OF STAFF TO PROVIDE TRAINING. DUE TO THE SLOW DEVELOPMENT OF THE MDF,OTHER PROJECT PURPOSES HAVE FALLEN FAR SHORT OF PROJECT RARGETS,SUCH AS DEVELOPMENT OF MARKET TOWN SYSTEMS,IMPROVEMENT OF MUNICIPIO PLANNING AND PROJECT IMPLEMENTATION CAPABILITIES,AND PROVISION OF COORDINATED TECHNICAL ASSISTANCE AND TRAINING BY PARTICIPATING AGENCIES. EVALUATOR RECOMMENDS SUSPENSION OF REIMBURSEMENT OF FUNDS FOR RELENDING UNLESS A NEW ACTION PLAN IS DEVISED AND APPROVED BY COORDINATING AGENCIES TO ASSURE THE ACHIEVEMENT OF PROJECT PURPOSES,INCLUDING ADEQUATE MDF STAFFING AND CLEAR SOURCES ESTABLISHED FOR REQUIRED RESOURCES. (NOT A PES)