REVIEW OF THE RURAL & MUNICIPAL DEVELOPMENT LOAN PROJECT NO. 525-0176

Evaluation covers the period 11/28/75-3/31/80 and was based on an audit of project files, interviews with project personnel, and site visits. NBP was to channel project loan funds to municipalities for re-lending for small business subprojects. Most of the 47 approved subprojects were completed successfully in areas such as feeder roads, slaughterhouses, and water supply; an additional 14 projects of a similar nature are being considered. There were substantial problems in extending training and technical assistance to NBP and the municipalities. Possibly due to its pride, NBP resisted outside assistance in managing the credit program, asserting that such assistance was too costly and unnecessary. Assistance was needed, however, as evidenced by the municipalities" lack of current and sound accounting records for most subprojects. Due to USAID pressure, NBP has agreed to begin outside training of its staff as of 7/1/80. NBP has not provided USAID with a copy of a Government of Panama (GOP) audit report on project activities, nor has USAID requested such a copy. Other problems included the lack of any project evaluation and poor USAID monitoring and management, all of which is partially responsible for the absence of the A.I.D. emblem on project commodities; reimbursement delays of NBP"s project expenditures; and several other subproject management problems. It is recommended that, unless NBP implements a technical assistance and training program by 8/1/80, USAID withdraw from all subprojects and deobligate unused funds. Moreover, USAID and NBP should evaluate the project and discuss procedures for future audit coverage. USAID should request NBP to provide a copy of GOP"s project audit report and to comply with the commodity marking requirements. USAID should also detail the supporting documentation to be submitted along with reimbursement requests, schedule field visits, and require reports on the latter.