MANAGEMENT AND UTILIZATION OF AID LOANS BY THE CENTRAL AMERICAN BANK FOR ECONOMIC INTEGRATION THROUGH AID REGIONAL OFFICE FOR CENTRAL AMERICA AND PANAMA (ROCAP) (8/16/71-11/24/71)

BANK"S PURPOSE IS TO PROMOTE BALANCED ECONOMIC INTEGRATION & TO PROVIDE FUNDS FOR CENTRAL AMERICAN (CA) BANK"S DEVELOPMENT. EVALUATION BASED ON ON-SITE OBSERVATNS. ECONOMIC INFRASTRUCTURE PROJECT (EIP)"S ARE BEING FINANCED UNIQUE TO EACH CA COMMON MRKT CTRY (CMC). STAFF WORKLOADS ARE ADEQUATE & PERSONNEL WELL QUALIFIED. THE ORDINARY FUND IS BEING EFFECTIVELY UTILIZED TO FINANCE INDUSTRIAL, SOCIAL, FEASIBILITY, HOTEL, CRED IT & EXPORT ACTIVITIES. ITS DELINQUENCY PROBLEMS ARE SOLVED & FUND HAS INCREASED TRADE AMONG CMC"S. INTEGRATION FUND,USED TO FINANCE EIP"S (ENERGY,SEAPORTS,AIRPORTS,RAIL & HIGHWAY CONSTRUCTION) IS PROVIDING BALANCED INTEGRATION BETWEEN CMC"S. HOUSE FUND IS BEING USED TO CREATE & SUSTAIN REGIONAL SECONDARY MORTGAGE MRKT FOR MEDIUM PRICED HOMES. ROCAP,WHICH ASSISTS BANK DESIGN & IMPLEMENT ITS OPERATIONS,HAS DONE WELL IN MONITORING ON-GOING PROJECTS & OBTAINING ASSISTANCE FOR IMPROVED ACCOUNTING SYSTEM. DESPITE ACCOMPLISHMENTS,INEFFECTIVE FUNDS ADMINISTRATION & LACK OF PROJECT DESIGN HAVE RESULTED IN MORTGAGE & SUB-LOAN DELINQUENCY & LACK OF PARTICIPATION BY CA INSTITUTIONS. THUS,AID RECOMMENDS BANK: 1)DEVELOP & UTILIZE CASH FORECASTS PROCEDURES; 2)REEXAMINE USEFULNESS OF REVOLVING FUND; 3)INSTITUTE MANAGEMENT ORIENTED AUDITS; 4)GRANT DIRECT LOANS; 5)PLACE EMPHASIS ON REDUCING INTEREST & DELINQUENCY RATES; 6)REVISE HOUSE FUND PROGRAM SO UNUSED FUNDS CAN BE REASSIGNED; 7)CONTINUE RELATIONSHIP WITH ROCAP; 8)ESTABLISH CONSTRUCTION MONITORING PROCEDURES; 9)DEVEL & IMPROVE FOLLOW-UP & MONITORING OF LOANS; 10)STREAMLINE LOAN APPROVAL PROCEDURES; 11)COMPILE STATISTICAL INFORMATION; 12)OBTAIN TECHNICAL ASSISTANCE & REVIEW INTEREST RATES; 13)ADVISE CMC"S OF EIP URGENCY; 14)REQUIRE CMC"S TO MAINTAIN HIGHWAYS; 15)ESTABLISH VEHICLE WEIGHT CONTROL STANDARDS; 16)OBTAIN CMC REGIONAL HIGHWAY CONSTRUCTION AGREEMENT; 17)REDUCE CA EMPLOYEE BONDING COVERAGE RATES; 18)REQUIRE SUB-LOAN CONTRACTS TO INCORPORATE COST PRINCIPLES,RECOVERY CLAUSE & OVERHEAD RATES;AND 19)ESTABLISH COST/PRICE ANALYSIS PROCEDURES & TRAIN STAFF TO USE THEM.