INSAFI SPECIAL EVALUATION

THE PRINCIPAL OUTCOME OF AN APRIL 1972 EXAMINATION OF THE LOAN WAS TO AMEND THE LOAN AGREEMENT BY MAKING UP TO $1.5 MILLION AVAILABLE FOR LOCAL CURRENCY FINANCING. AFTER THIS, THERE WAS A DRAMATIC UPSWING IN THE UTILIZATION OF THE LOAN. ASTUDY BY PEAT, MARWICK, AND MITCHELL STATES THAT AN ADDITIONAL 15-17 MONTHS WILL BE NEEDED BY THE INSTITUTO SALVADORENO DE FOMENTO INDUSTRIAL (INSAFI) TO COMMIT THE REMAINING LOAN FUNDS AND 21-27 MONTHS TO COMPLETELY DISBURSE THE FUNDS. THE LOAN AGREEMENT MAKES AVAILABLE UP TO 300,000 FOR TECHNICAL ASSISTANCE (LIMITED TO US SOURCE AND ORIGIN). BASED ON EXPERIENCE AND CONVERSATIONS WITH INSAFI, IT APPEARS INSAFI IS NOT INTERESTED IN TECHNICAL ASSISTANCE DIRECTED INWARD. THE EVALUATION DISCUSSES FACTORS SUPPORTING AND AGAINST THE EXTENSION AND ALTERNATIVES REGARDING EXTENSION OF THE LOAN. THE EVALUATORS RECOMMEND THAT: (1)THE TERMINAL COMMITMENT AND TERMINAL DISBURSEMENT DATES NOT BE MODIFIED AT THIS TIME; (2)THE MISSION CONSIDER EXTENDING THE TERMINAL COMMITMENT DATE IF SPECIFIED CONDITIONS ARE MET; AND (3)THE MISSION KEEP OPEN THE OPTION OF EXTENDING THE TERMINAL DISBURSEMENT DATE.