LOAN COMPLETION REVIEW AND REPORT

Purpose of loan was to assist the GOB in the expansion and institutionalization of its national rural road financing program. The program was created and managed by the Banco Nacional do Desenvolvimento Economico (BNDE). All 8 subprojects were completed by 6/30/76 except the one in the State of Santa Catarina. 1,819 kilometers were built in Mato Grosso, 1,190 in Goias, 905 in Maranhao, 234 in Pernambuco, 257 in Rio Grande do Norte, 581 in Bahia, and 198 (still under construction) in Santa Catarina. Project was delayed in starting due to the many subprojects in the various states. Also some difficulties were experienced as the BNDE was unable to contract for consultants to monitor the construction quality and schedules. However, the subprojects in Mato Grosso, Goias, Pernambuco, and Maranhao were completed as scheduled. In addition, a change in state governors and the high rates of inflation had a major effect on project implementation. The 1975 change in governors, specifically, resulted in delays in providing counterpart funding causing curtailment of the programs in Rio Grande do Norte and Bahia and was the major factor in the cancellation of the state programs in Piaui and Ceara. Inflation of about 50% during construction also caused delays in the implementation of the subprojects. The various states resolved this problem by negotiating supplemental loans with the BNDE or curtailing the program and also negotiating a supplemental loan.