HOUSING INVESTMENT GUARANTY PROGRAM CENTRAL AMERICAN BANK FOR ECONOMIC INTEGRATION

THE AUDIT COVERS THE PERIOD 6/72 TO 5/31/75, AND ITS METHODOLOGY IS UNSPECIFIED. THE PROJECTS ARE BEING IMPLEMENTED AT A MUCH SLOWER PACE THAN PLANNED. HOUSING CONSTRUCTION WAS BEGUN AT THE HEREDIA, COSTA RICA SITE ON 6/1/74, BUT IS WELL BEHIND SCHEDULE AND CABEI HAS NOT SUBMITTED PLANS FOR THE LOW-COST HOUSING UNITS WHICH ARE TO MAKE UP 40% OF THE TOTAL PROJECT. FURTHERMORE, CONSTRUCTION OF CHURCH, SCHOOL, AND COMMERICAL FACILITIES HAS NOT BEGUN. THE SAN SALVADOR PROJECT ALSO HAS YET TO REACH THE CONSTRUCTION STAGE. FURTHER DELAYS, COUPLED WITH RISING CONSTRUCTION COSTS, MAY REDUCE THE NUMBER OF HOUSES THAT CAN BE BUILT FROM AVAILABLE RESOURCES AND ALSO INCREASE THE COST TO HOME BUYERS. THE RAINY SEASON, SHORTAGES OF CEMENT, STEEL, AND WATER NEEDED FOR CONSTRUCTION, AND INADEQUATE MATERIALS-TESTING PROCEDURES HAVE DELAYED PROGRESS AT HEREDIA. THERE HAVE ALSO BEEN PROBLEMS WITH INADEQUATE INSPECTION REPORTS AND DOWN-PAYMENT AND EARNEST-MONEY PAYMENT PROCEDURES BY THE SPONSOR. THE MAIN OBSTACLE IN THE SAN SALVADOR CASE HAS BEEN A DISPUTE AMONG CABEI, THE FINANCIERA NACIONAL DE LA VIVIENDA (WHICH IS TO PROVIDE MORTGAGE INSURANCE), AND THE CONTRACTOR OVER CONTROL OF THE PROJECT. A PROBLEM INVOLVNG DELINQUENT CABEI QUARTERLY PROGRESS REPORTS TO AID HAS BEEN RESOLVED. A NUMBER OF RECOMMENDATIONS WERE MADE, FOCUSING PRIMARILY ON ENSURING THAT CONSTRUCTION OF HOUSES AS WELL AS SCHOOL, CHURCH, AND COMMERCIAL FCILITIES BE ACCELERATED, THAT LOW-COST HOUSING PLANS BE COMPLETED, AND THAT INADEQUATE TESTING, FINANCIAL, AND REPORTING/EVALUATION PROCEDURES BE IMPROVED.