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., RETURN TO
RESTRICTED REPORTS DESK
REP 0 R T NO. Z· 6WITH 1 N ClRClIUTING COpy PART TWO
ONE WEEK _fO BE _NED TO ARCHffES DIrnION
A PROGRAM
FOR COLOMBIAN PUBLIC INVESTMENT
AND EXTERNAL BORROWING
Part Two: A PUBLIC INVESTMENT PROGRAM
FOR COLOMBIA
.. .. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
Washington, D.C.
February 1956
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Table of contents
Part 1\'[0 A Public Investment Program for Colombia
I. Methods Used in Formulating the
Investment Program 1
A. Collection of Investment Data 1
B•.Method of Reducing Investment to Level
of Resources 3
c. Questionnaire on Investment Programs of
Public Entities 6
II. Transportation 8
A. SQ~ary of Proposals and Recommendations 8
B. Highways 9
C.. Railroads 14
D.. Airports 19
E. Sea and River Ports 2Z
III. Electric Power 24
A•. Investment in 1956 24
B. Investment in 1957 and 1958-1960 26
IV. Viater..vorks 29
A.. Investment in 1956 29
B. Investment in 1957 and 1958-1960 31
V.. Municipal Services 34
A. Investment in 1956 34
B. Situation after 1956 43
VI .. Housing 45
A. Public Entities in Housing 45
B•. Investment in 1956 46
c. Investment after 1956 49
VII. Hospitals 51
A • Investment in 1956 51.. B. Investment after 1956 51
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VIII. Schools 54
A. Investment in 1956 54
B. Investoent after 1956 55
IX. National and Departmental ~~blic
Buildings 56
A. Investment in 1956 56
B. Investment after 1956 57
X. Industry 58
A. Investment in 1956 58
B. Investment in ~8ter Years 63
XI. Agriculture 64
A. International Bank Agricultural
r~ssion 64
B. Investment in 1956 65
c. Investment in 1957 and 1958-1960 71.
XII. CommuniC8tions 73
A. Investment in 1956 73
B. Investment in 1957 and 1958-1960 76
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A PUBLIC IN',r~S'L'1.LNT PE00l\.i\M FOR COLOMBIA
1. METHODS USED IN FOh:l'1UL'TING THE Ii"VES'I'N~NT PROGRAH
A. Collection of Investment Data
Upon its arrival i.r:l Colombia, the mission "Jas confronted
Nith the
fact that the available data on the magnitude ODd composition of
current
ald prospective public investment 1rJere quite inadequate. In
order to
obtain such information, the mission, in cooperation Hith the
Comite Nacimal
de Planeacion, prepared a questionnaire (see copy at the end of
this chapter)
.,hich ,-Jas sent to all public and selTli-public entities which
were thought to
have investn8nt prograpls. These included seven lr).inistries,
the nme
national institutes, t1rJelve o:'her official entities, sixteen
deiJartments,
the tiventy-three largest municipalities Bnd four departmental
11lelfare
agencies -- altogether seventy-one entities.
The questionnaire asked for the amounts to be invested yearly,
and
the source of the funds, for each project Hholly or partly
financed lo1ith
public money Hithin the yeBrs 1955-1960. Information ltIaS
received from the
51 most import8nt entities. In addition, partly in lieu of
information
from the four agricultural entities, the mission used the
recommendations
on future agricultural investment prepared by the recent
International Bank
Agricultur al Nission to Colombia. 1rJhile the response to the
questionnaire
tl1as incomplete, supporting information from other sources
indic ates that
the investment data received by the mission include the results
of virtually
all the planned investment activity Colombia.
The mission l s main attention has been directed to prepc:ring
an
action progre.rn for public investment in 1956. Naturally,
hOHever, this
~~ The mission consisted of the follovJing persons: fIlbert
l-;aterston, Chief of Mission; Adan1 J. Hazlett, Chief Adviser on
Steel Industry; Daniel R. Loughrey, !-dviser on Steel Technology;
Francis Juraschek,~dviser on Steel Marketing; J. HoodrO\oJ Mathews,
Adviser on Steel Industry~ccounting; o. R. Crooks, Adviser on
Railroads; Gordon Grayson, Project Adviser; Neil Bass, Engineer;
Clarence 1. Sterling, Jr.J, ~dviser on 'v,Jater Supply; Holfgang
Jahn, Project Analyst; and Henry Heuser, l!,conornist
http:progre.rn
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required mak:"ng some assumptions o.boat the future. Projects
which
are to be carried out in 1956 mey commit resources in lB.ter
years
and ?rojects which are to be started in the foreseeable future
may require
resources to be allocated in 1956 for preparator~T T-mrk. To the
extent
possible, these factors were taken into account. But aside from
this,
the mission made only a prelirninar:f en alysis of the ma6nitude
and
C0J11position of investr:1ent in 1957 and only the most
tentative formulation
of inyestmen t in tile ye ars from 1958 through 1960.
Even for 1956, it 1,1/"as clearly iJnpossible for the mission,
in the
time it had, to make 2 detailed appraisal of each oE the
hundreds of
projects vJhich it was plormed to have in process of execution
that year.
The mis sion hopes ths.t a iriell-orGanized and
2.dequately-staffed group in
the Comite Nacional de Planeacton can begin soon to accumulate
the
information and develop the btirfJ.ate knowledge VJhich will be
essential
in making a careful apprcis of t~1ese l)rojects for the 1957
public invest
ment progrE.m.
In spite of the lack of such detailed information and
intimate
knoi-lledge, it Has necessary for the mission, in viet'1 of its
objective, to
form judgments on all of the significal1t projects and prograns
contemplated
for 1956. In order to ma~e these judgments as intelligently as
possible,
members of the mission, assisted by the staff of the C01"1ite
Nacional de
Planeacion, held many intervievJS ,dth officers of many official
and semi
official entities. It benefited from the close cooperation of
these
officials 8lld also frorl ttle Hork of the Teclmic al iVliss ion
on Electric Power,
and the Interns,tional Bank I s Cauca Valley and !'gricultural
Nissions; in
addition, it drew heavily on the e~perience of the Bank in the
transport,
pOirIer and other economic sectors in Colombia.
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B. l
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After applying these first three tests to the planned
programs
for 1956, the mission fOlh'1d that it could recommend the
rejection or
curtailment of a sufficient number of projects to reduce
contemplated
nublic n1vestment L'1 1956 to about 800 million pesos. The
projects still
to be reyievJed were then subjected to additional tests in order
to bring
the total down to the level of available resources. These tests
were more
difficult to alJply and in mal1Y instances the mission felt that
it needed
more information than it was able to obtain in the limited
period it
sp ent in Colombia.
Applying one of these tests, the mission attempted to judge
in
appropriate cases ",Jhether there existed policies and
procedures designed
to secure economic ally sound and equitable sharing of the costs
of the
projects among governmental entities, or bet\~ee.'1 public
entities mld the
private groups benefited. It 2ppeared to the mission that many
cormnunites
were making an insufficient contribution to some of the projects
they were
planning and th&t they vIere relying unduly on contributions
from the National
Government. In many c especially those involving municipal
improve
ments, no system of assessing the private beneficiaries in
proportion to
their benefits could be discerned.
"mere projects involved the production of goods and services to
be
sold on the market, the mission at tempted to judge l~hether
there existed
an adequate market demand and l'Jhether the anticipated costs of
production
were reasonable. The scale of certain power projects could be
reduced on
the basis of this examination and other projects could be
rejected because
more economical methods of producing pOi-Ier to meet demand were
available.
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Hhile the mission could .9,.oply tl::.is test in the electric
power sector
Hith reasonable assurance that it had the data to do so, in
other
sectors such inforn12tion vias lacking. In the field of
telephones, for
exanple, the lack of data did not permit a careful study of each
project
from th is point of vievi, and the rrIission merely accepted the
forecasts
Hhich had been prepared by the autonomous companies operating
L.'1 this field.
Finally, some judgrl1ents had to 1.:>e made, often somelJhat
arbitrarily,
on the relative priority of projects and ~rograms in different
sectors in
order to bring the total plarl11ed volume of expenditures down
to the permitted
level. In applying these judgments, the mission "Jas guided by
its belief
that Colombia's economic development requires that large
expenditures be
made for transportation, electric poi,Jer and agriculture.
Hence, soundly-
conceived projects in these three sectors vIere placed first. In
viet,] of
the expressed policy of the National Government to accelerate
investment in
waterworks and its request that the miss ioa prepare an
investment progran
for Hatenvorks, the mission also gave precedence to. investments
in this sector.
As already indic ated, consideration also had to be given to
the
implications of decisions take:) on investment programs in 1956
for later years.
In making provision in 1956 for preliminary engineering studies
for Paz del
Rio's expansion, the mission was in effect recognizing that
heavy investments
night be made for ti1is purpose in later ye ars. In turn, this
prospect of
heavy investment in paz del Rio required caution in initiating
programs in
1956 1rJh ich vlould c all for large continuing expenditures.
For example, the
mission felt ~"lat expansion of the housing progr.9Il1 for 1956
was inadvisable,
not only because this program appeared to be of 10\'; priority
in 1956, but also
because if the progrWl tv-ere permitted to expand in 1956 j.t
TtJQuld be extremely
difficult to cut back in succeeding years.
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C. QUESTIOIJN,U:::..m ON INVES'IHENT PR.(X}RP.l\1S DF PlIBLlC
ENTITIES -- j - C' 'M •• if C ...... srp .. _
::-;:Jl'IDAD:
A - Nombre del Proyect~
1) - Cuando se comenz~o cuA:noC'- DC' C011ll311zarA' (mes y
ana)?
2) - Fecha probable de su terminaci6n si ya se comenz6 (mes y
ano):
. . /si no, tiempo que requiera su comp1eta eJecuc~on:
b - Inversiones Total 19601958 1959195719561955 Total de
inversiones requeridas:
Monto de bienes y
servicios importados que se utiliz,aran:
-",'..J - Contribuci6n
de los recursos ordinarios de 1a Entidad para el Proyecto:
) - Financiaci6n adicional requerida:
1- Aportes del
Gobierno liJacional, Departamental 0 Hunicipal, y de
Otras Entidades
Oficiales 0
Semi-Oficiales.*
11- De inversionistas privados .-:*
[II- Pr~stamos; I a) 1nternos-x-l:*i 1 b) ExternoS~HH~-i J
'i~ - ~specifique en hoja aparte que clase de compromisos 0
arreglos existen o estan previstos, 0 si no hay ninguno.
*'1~ - Indique 8i los inversionistas son nacionales 0
extranjeros. *'1* - En caso de poseer informacion sobre la manera
co~o obtuvieron 0 como se
van a obtener los prestamos, surninstrarla en hoja aparte.
~H'n~* - En caso de poseer informacion lienese el cuestionario
"F1NANCIACION
EXTERNA" que se incluye en hoja separada.
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FHJANC:::ACION EXTERUA
Hombre del P.royecto.;
Entidad que solicita el prestamo:
Prestamista.: *
Cantidad y discriminacion por divisas:
Plazo del prestamo y fecha del Ultimo ve~cimiento:
Costo del Credito:
a) Tipo de interes
b) Otros gastos 0 comisiones:
Sistema de arJlortizacion: ~B~
Clase de garantia, si existe: ~HH}
Lstado de las negociacio~es del,J,.'restamo: *")HHt·
-II' - Usese hoja separada para cad a credito.
iP~ - Anote la fecha de iniciacion de las amortizaciones y el
sistema de pago.
*.,H;- - Anote la Entidad que dara la garantia y si Jsta
inclllYe 0 no la obligacion de suministrar la moneda extranjera
necesaria.
~~~H~ - Indique uno de los siguientes estados: a) discusiones
preliminares, b) negociaciones iniciadas, c) contrato de prestamo
f1rmado, d) contrato de prestamo firmado y aprobado por el Gobierno
Nacional.
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A. SUIlll1'.ary of rroposals and reconnnendatioU,§
Investments for transportation, which includes highways,
railroads,
airports and ports, are greater than for any other sector, both
as proposed to
the mission and as recommended by it. In sUIlll1'~ry, investment
for each field of
the transportation sector for 1956 as proposed by governmental
entities and as
recommended by the mission is as follo\
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Field 1957 1958-60
Higmrays 215.0 215.0
Railroads 70.0 20.0
Airports 12.5 12.5
Ports _..L.2 ~
305.0 255.0
B. Hif-"hvrays
1. Investment in 1926
The National Government and departments in Colombia plan to
invest
304.6 million pesos in high~,rays in 1956 as compared to an
investment of 274.0
million pesos in 1955. The distribution of hieh~rey investment
between the
l:ational Government and the departments is as follows:
1955 1956 (million resos) (%) (million pesos) (%)
National Government 229.3 83.8 235.1 77.2
Departments 1,6.2 ~ 22.8~
274.0 lQQ."Q ~ 100.0
The cost of the National Government's program would be covered
from
the national budget and from a loan (the second for highways)
obtained from the
International Bank. HOl"ever, additional foreign exchange will
be needed for the
program, 1,-1hich the Government hopes to obtain from another
foreign loan. Mean
while, foreign currency requirements are being met from an
advance of U. S.
$5 million from the B::.nco de la Republica. The cost of the
departmental
~rograms is to be met from budgetary resources, from domestic
and foreign
bank loans, suppliers' credits and in some cases, valorization
(benefit) taxes.
The l>iinistry of Public TJorks advised the mission that it
ptoposes
to make the following investments for hieh~'Tays in 1956 as
compared to invest
ments in 1955:
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Program 1955 1956 (million pesos)
Plan Vial I 87.1 94.3 Earranquilla-Cienaga Highway 4.8 7.0
Highways outside Plan Vial I 97.6 92.1 Highway lJIaintenance
Program 39.8 41 ...7
229.3 23S.1
a. Plan Vial I
The most important highway program to be carried out by the
National
Government in 1956 is the continuation of YlOrk on PIHn Vial I,
the program of
construction and rehabilitation of the main trunk highways of
Colombia which
Was initiated in 1951 and which has to date received the
assistance of two
loans from the Internat.ional Bank. The roads included in the
project are those
which connect the important centers of the country and 'Hhich
must carry the most
traffic.
The mission believes that there is no project or program with a
higher
priority than the Plan Vial I. Further development of the
country is dependent
on the early completion of this program, which should proceed as
planned. This
would require 94.3 million pesos in 1956, of which 17.0 million
pesos (US$6.8
million) would be for foreign exchange.
b. Barranquilla-Gienaga Highway
This project is well adv,mced in construction and when completed
will
connect the important port of Barranquilla ~~th Cienaga, the
transfer point for
railroad traffic on the ,ntlantico Railroad (Magdalena Valley
Railroad and the
Extension to Santa Marta) now under construction. The highway
will require 7 millicn
pesos in 1956, of which about 2 million pesos (us~? ..8 million)
will be in foreign
exchange. This project is an essential part of the Atlantico
Railroad and should
move ahead to completion as quickly as possible.
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c. High\Jays Outside PIaLVial I
The Government has been carrying on a considerable amount of
high~my
work outside Plan Vial I. The amcunt of this Hork has increased
to a point where,
in the mission's opinion, it is impossible for the small
overworked staff in the
:Hinistry of Public 110rks to supervise properly such an amount
of outside vTork and
still administer effectively Plan Vial I and the Eigh'l'lay
I
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e. Departmenta.l Highway Programs
A number of Departments have submitted information on highway
constructicn
programs which are substantially in excess of their investments
in this sector in
1955:
19r)C) 1956 --(million pesos;-
Antioquia 2.5 3.5 Atlantico 3.1 2.9 Cauca 1.6 8.7 Cordoba .5 1.6
CUnoinamarca 4.2 18.6 r.;Iagdalena .7 2.7 Norte de Santander 6.0
Santander 1.1 1.B Tolima 6.0 8.7 Valle del Cauca 25.0 15.0
44.7 69.5
The mission did not study the departmental programs in detail,
but a
cursory examination of the various programs leads to the
conclusion that most
of them are too ambitious from the administrative point of view
and that, the
priority of some of the individual projects is low. The mission
recommends,
therefore, that departmental inve3tments in 1956 not exceed the
1955 level
of expenditures for this purpose, i.e., 45.0 million pesos,
including about 18
million pesos (113$7.2 million) in foreign currency. be
It would/desirable if, in selecting departmental projects,
primary
attention were given to those roads for 'which there is a
demonstrable necessity
and for which the Departments have adequate plans and the
administrative ability
to spend effectively the available funds. The specific proje~ts
should be selected
wi th the approval of the {.IIinistry of Public Works, which
already has a cctordinating
committee made up of the secretaries of Public Viorks of the
Departments which
cc:mld screen the projects and prepare a coordinated
departmental highway program
for the whole country.
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The mission also recommends that the Consejo Nacional de
Economia
approve the borr01ving of funds to pay for the construction of
departmental
highways only upon the recommendA.tion of the Ministry of Public
~'!orks.
f. Surnnary of Recommendations
In sWQ~ary, the mission recommends that 238 million pesos (of
which
61.6 million pesos - uS$24.6 million) be invested in highways in
1956, as follows:
Program Total Foreign F~change Component (million pesos)
(milI~on pesos) (mill~on doILiS
Plan Vial I 94.3 17.U 6.8 Ba:rranquilla-Cienaga Highway 7.0 2.0
.8 Highways outside Plan Vial I 50.0 20.0 8..0 Highway Maintenance
41.7 4.6 1.8 Departmental Highways 45.0, 18.0 7.2
Total 238.0 61 .. 6 24.6
2. Investment in 1957-1959
The mission envisages higlnvay expenditures by the National
Government
and the departments in 1957-1959 totalling no more than 215
million pesos annually,
as follows: Average annual
Program 1957 investment in (million pesos) 1958 and 1959
(million pesos) National Government
Completion Plan Vial I 73 Completion Barranquilla-Cienaga
highway 6
Highways OutSide Plan 50 50
Highway Maintenance 41 4, Plan Vial II 7,
Departmental Highways 45 45
215 215
To complete Plan Vial I in 1957 as scheduled, an investment of
73.0
million pesos would be required next year of which approximately
9.0 million
pesos would be in foreign exchange (US$3.6 million).
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As to highways outside the Plan Vial I the mission feels that in
view
of the heavy calls on Colombia's public resource"s, the level of
investment in
• these roads during 1957 and 1958-1960 ought not to exceed 50
million pesos.
The maintenance program will require 41 million pesos in 1957
and an
average of 45 million pesos annually in 1958-1960.
The Einistry of Public 'lorks is at present preparing Plan Vial
II, a
program of highway construction and rehabilitation intended to
include the major
higwNays of Colombia which are next in importance to those in
Plan Vial I. The
highways to be included in Plan Vial II have not yet been
designated and no
reliable cost estimates B.re available at this time. However,
preliminary plans
envision an expenditure of some 392 million pesos on Plan Vial
II, including the
equivalent of about 157 million pesos (US $62.8 million) in
foreign excr~nge.
About 75 million pesos (including the foreign exchange
equivalent of 30 million
pesos - US $12.0 million) would be needed in each of the first
two years. The
mission believes that it would be desirable for the l'iinistry
of Public T;Jorks to
start Plan Vial II in 1958, t-lhen Plan Vial I will have been
completed. Kot only
will this permit the limited highway staff of the linistry to
concentrate on the
completion of Plan Vial I, but it would allow time needed to
prepare reliable cost
estimates and speCifications for the new program.
Investment in departmental higm~y8 during 1957-1959 should not
exceed
the level proposed for 1956, i.e., 45 million pesos.
C. ~ilroad~
1. Investment in 1926
The Eational Railroads of Colombia, a tT,overnment-owned
autonomous entity,
is expanding and rehabilitating the railroad system of the
country. Costs in
Colombian currency are being financed from contributions of the
National Government
and from the Railroads' own resources; foreign exchange costs
are being financed
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by two International Bank loa.ns of US :)25.0 million and $15.9
million (the latter
loan has not yet become effective) and by contributions of the
National Government.
The program consists of three parts:
a. Construction of the hagdalena Valley Railroad (lviVRR)
from
Puerto Salgar to Gamarra and rehabilitation of shops.
b. Extension of the ~nnRR from Gamarra to Fundacion and re
habilitating the existing line beti-leen Fundacion and Santa
'Narta; purchase of rolling equipment for the extension and
tractor-trailer units to be used to haul freight between
Barranquilla and Cienaga; acquisition of ferries to carry
the
tractor-trailers over the l'agdalena River and the
construction
of ferry slips.
c. Rehabilitation of existing lines and shops; and the
acquisition
of rolling stock for existing lines and the l;fVRR.
The total investment required to complete the tl'1.ree parts of
the program
and the amounts planned to be invested in 1955 and 1956 are as
follows:
Planned Investment lli~ of Program Total 1955 1956
(million nesos) (million pesos)
Part "a" 60.5 J/ 26.8 46.3 Part "b" 6.3 50.370.8 ~ Part tic"
78.0 ~2.l s/ 11.3 s/
Total 209.3 ,*8.2 107.2
Amount required to complete project in 1956 and 1957.
The project was initiated in 1955 and is scheduled to be
completed in 1957.
The total cost of the project is estimated at 70.8 million
pesos.
Estimated cost for 1955-1960.
Tentative.
Full benefits of the present railroad investment program 1~ill
depend
on the completion of all parts of the progra.'ll. The mission
believes that this
program is one of the most important for the economic
development of the country
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and that every effort should be made to move ahead with it as
quickly as possible.
The mission's review of the project indicates that for several
administrative and
technical reasons, investments in 1956 are not likely to reach
the proposed level
of 108 million pesos. Instead, the mission estimates that 1956
expenditures are
likely to be as follows: Estimated Investment
Part of Program in 1956 (million pesos)
Part flail 40 •.0 Part lib!! 22.5 Part Hell 15..0
Total 77.5
Al though expenditures in 1956 for the construction of the
T·fVRR (Part !lafl
of the program) are likely to rise greatly over the level of 27
million pesos invested
in 19~5; it is the concensus of those closely connected with the
project that it
would be realistic to plan an expenditure of 40 million pesos in
1956.
In connection with Part "b ll of the program, the 6.. 3 million
pesos planned
to be invested in 1955 for construction was not spent in that
year. The estimate
that 50.3 million pesos would be invested for this part of the
program in 1956, in
addition to the 6.3 million pesos which were to have been spent
in 1955, now appears
too optimistic for two reasons:
(1) There have been delays in st~xting construction. Contractors
were
expected to begin working on the ~fVRR extension in January
1956, but it is now
certain that they cannot get to work until later in the year.
Total expenditures
for construction in 1955 and 1956 were estimated at 16.6 million
out of a total
of 56.6 mj.llion pesos (the 6.3 million pesos not spent in 1955
plus 10.3 million
pesos included in the projected expenditures for 1956). Taking
into account the
expected delay in beginning construction, the mission estimates
that 1956
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expenditures for construction will not exceed 10 million
pesos.
(2) Most of the equipment and materials to be obtained with
the
remaining 34.1 mllien pesos to be spent in 1956 for Part lib" of
the rrogram
will be paid for after 1956. It is likely that construction
equipment for
5 million pesos, which is needed immediately, will be purchased
and paid for
in 19j6. In addition, the mission estimates that orders will be
placed in 1956
for delivery in later years for rails, rolling stock,
tractor-trailer UIiits, a
ferry, etc. for an amount not exceeding 30 million pesos. On the
assumption that
down payments of 25% would be required for these orders,
expenditures for this
purpose would not exceed 7.5 million 1"'esos. Investments for
Part "b" of the
program would therefore amount to 22.5 million pesos, as
follows:
Construction Ps. 10.0 million Construction equipment 5.0 "
Deposits on additional
equipment " Total Ps. 22.5 million
Part "e lt of the program was scheduled to be initiated in 1955.
Proposed
investment in 1955 for this purpose was 15.1 million pesos, but
no expenditures
were actually JI'I.ade. Proposed eJo..."Penditures in 1956 are
11.3 million pesos. The
mission estimates that about 15.0 million pesos will be
spent.
Although the total of 77.5 million pesos is ~.aller than
origfnally
planned, it would permit satisfactory progress of the program;
and if expendi
tures were increased in following years, as recommended by the
mission, it would
not result in any delay in the completion date.
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In addition to the program of t!1e National Railroads, the City
of•
Pereira is contemplating the relocation of the raih1ay,..rithin
the City. This
is considered necessary to promote the development of the City's
residential and
corr~ercial districts. Total investment required would be about
3.3 million pesos,
of t-rhich 2.0 million would be needed in 1956. Although this
project may be
important from the local point of view, it does not deserve high
priority at
this time for the over-all development of the country. The
mission therefore
recommends that it be postponed for a later year.
2. Investments in 1957, 1958 and 1959-60
The pattern of expenditures in 1957, 1958 and 1959-60 for the
national
railroad program is expected to be as follows:
Purnose 12.21 ~ 1959-60 (million pesos) average
Part ua" complete l''NFffi 20 Part "bll
Complete extension 21
.t!:quipment 9 20
Part "e" rehabilitation 20 .2Q 10.0
Total 70 .1& 10.0
Foreign exchange requirements in these years are expected to
total
72 million pesos (US $29 million) as follows:
~ Eillion pesos Nillion dollars
1957 36 15 1958 23 9 1959 7 2.5 1960 .iJ. .k.2
Total 72 29.0
-
. -.19
D. Airports
1. Investment in 1956
t;olombia t s topography has made cir transport of passengers
and cargo
an important means of conveyance for many years. Plthough
surface transportatior
facilities are being improved greatly, air transport is likely
to maintain its
importance in the economy of the country.
The Empresa Colombiana de onerodromos, a recently-created
government-ollmed
entity which o~ns and operates most of Colombia's most important
airports, plans
to modernize and expand the airport facilities of the
country.1'he City of
M:'inizales also has under way the expansion of the municipal
airport C~antagueda).
The total 2.irport program between 1956 and 1958 calls for an
expenditure of 97.2
million pesos. "bout lEJ million pesos were planned to be
invested in airports
in 1955, but actual investment probably ras lov-rer. Present
plans would require
the investment of 24.6 million pesos in 1956. Only a small
fraction of the
cost of the Empresats program can be covered from its o-vn
resources; most of
the financing will have to be provided from contributions by the
National
Govern;-flent and from loans, for which no arrangements have
been completed yet.
The planned expenditures for 1955 and 1956 were as follows:
..
-
-.. 20 '.
Planned Investment in 19.5.5 19.56
j\'irports completed in 195.5 (millIO'il pesos) (million
pesos)
Tunja .6 Paipa .·7 1.3
Airports under construction to be completed in 1956
San ~.ndres 1 .. 2 1.3 Leticia 1.1 .9 Barrancabermeja 2..5 1.0
Araracuara .8 .2 Puerto Rey .5.6 .1 3 • .5
Airports under construction to be completed after 1956
Santagueda .1 .1 Quibdo 1.0 1.0 Bogota 7.0 18.0
Airports to be started in 1956
Monteria 2.0 2.0
Total 15.0 24.6
The traffic potentialities of the Quibdo airport do not appear
to
warrant the expenditure of 3 million pesos required to complete
the airport
in accordance with present plans. These plans should be
re-examined to see
whether it is not possible to reduce the cost of this airport by
50~. In the
meantime, expenditures in 19.56 should be reduced from 1 million
pesos to • .5
million.
The eXisting airport for Bogota is too small to handle present
and
future air traffic and, because of topographic conditions,
cannot be enlarged.
f\. new site has been purchased and construction of a new
airport was begun in
19.5.5. It is scheduled for completion in 1957 and would,
according to present
plans, require an investment of .50 million pesos by that time.
The mission has
not studied the project, although members of the mission visited
the site of
-
'C •
'- 21
the airport and conferred with the management of the Empresa
Colombiana de
Aerodromos concerning the project. TIie mission has been
informed that the new
airport is to have large terminal buildings "With the most
modern appointments".
In proceeding with plans to complete all buildings immediately,
the Empresa is
deviating from the practice followed by such large airports as
the New York
International Airport at Idlewild and London Airport which have
been operating
successfully for years with temporary facilities. The experience
of these and
other leading airports indicate that if initial investment is
limited to those
items needed to accornmodate the airplanes '~ri th safety and
efficiency, inves tment
for permanent buildings can be postponed. In view of the fact
that the National
Government will be called upon in the next fev·, years to supply
large investment
funds for high priori~ projects, the mission believes it is
imperative to limit
investments in airports to the basic necessities and to forego
expenditures in
the next few years on such postponable items as luxurious
airport terminal
buildings. If this were done, it should be possible to reduce
proposed 1956
investment on the Bogota airport from 18 million to the 7
million pesos planned
to be (although probably not) spent in 195.5. About.7 million
(U~.3 million)
of this amount would be required in foreign exchange.
The mission did not study the project for a new airport for
Monteria,
which is scheduled to be started in 1956 with an investment of 2
million pesos.
However, on the basis of its general knowledge of the situation
in Monteria, the
mission believes that it should be possible to improve the
existing airport to
the point needed to meet requirements with a much more modest
expenditure. The
mission therefore recommends that the project for a new airport
be reviewed;
initiation of the project for improving the present airport or
building a new
one should be delayed until the reappraisal is completed.
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- 22
The changes outlined above would reduce 1956 investments on
airports
to 11.1 million pesos, of which about 10%, or 1.1 million pesos
(us$.4 million)
would be required in foreign exchange.
2. Investment after 1956
If the country is to proceed \vith a program of balanced
economic develop
ment in the years immediately following 1956 vvithin the limit
of its available
resources, investments in airports will have to be kept at a
level no higher than
12 .. ,J.lnl1Iionpeso'fFanntIA,11y.This vrill require that where
airports are unsatisfac
tory, they be improved with modest expenditures whenever
possible and that the
construction of new airports be postponed.. Construction of new
airports in Cali
and Barranquilla is scheduled to begin in 1957, and will require
investments of
25 million and 20 million pesos, respectively. These plans
should be reviewed to
see whether the existing airports in these cities could not be
improved at lower
cost. For the Bogota airport, investment should be maintained at
no more than
about 7 million pesos in 1957 and at an annual average of 5 or 6
million in 195~
E. Sea and River Ports (and other If
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.- 23
that no more than 7.5 million pesos be invested in 1956 for
ports and hydraulic
works, of which 1.3 million pesos would be for the Port of
Buenaventura and the
remaining 6.2 million for the Ports of Santa Marta, Barranquilla
and cartagena
and for other vvorks.
2. Investment af~er 1956
In view of the foreseeable heavy demands on Colombia's public
investment
resources in 1957-59, annual investments for ports and hydraulic
works in those
years ought not to exceed the level recommended for 1956.
-,
-
- 24III. ]¥-ECTRIC POWER
A_ Investment in 1956
hnnex I to this part of this report contains a detailed
description and
analysis of plans for electric power development in Colombia
over the period 1955
1960, as presented to the mission by the Instituto Nacional de
Aprovechamiento de
Aguas y Fbmento Electrico (Electraguas) and other official
entities.
The program planned by the Government for 1956 calls for a total
invest
ment of about 181 million pesos, of which 105 million pesos
would correspond to
imported goods and services. This compares with a total
investment of about 63
million pesos in 1955. The following table shows the composition
of the 1955 and
planned 1956 programs:
TA:OLE 1 1955 1956
Imports Total ImportsProject Total (million- pesos) --rmIllion
pesos)
Bogota 23.4 15.6 23.5 15.7 21.9 12.41,iedellin 3.2 20.3 9.9CVC
18.0 7.5Caldas 9.1 5.9
Paipa 2.0 17.0 11.5 Anchicaya 9.0 6.2 11.4 7.0
8.0 7.0Norte de Santander· 3.6 1.4Sumapaz
5.2 0.9Bolivar 6.8 4.0 Transmission-Bogota
4.0 2.0System/l:lelgar 3.8 2.0Rio Coello
2.4Cali Distribution 1.0 0.1 3.4 3.0 1.6Rio Nevada
Boyaca Transmission and Distribution 1.6 1.1 3.1 2.2
2.3 1.6La Cabrera 2.2 0.7Lebrija 0.5 2.2 1.5Rio Sonson 0.1 2.0
1.4Cucuta 2.0 1.2Bucaramanga Trans. 2.0 1.4Rio Recio 2.0
1.3Buenavista
Small Projects
7.3 4.9(Sincelejo etc.) .6 .4
Rio Negro .2 .5
1.5 1.0Pereira Distribution System -
Caldas Trans. System .6 .3 .9 .6
11.3 5.9other projects 4.7 2.5
181.2 10j.0D'2.S .37.3- (US:}14.9 million) ( USJ;2.0
million)
-
- 25In the light of a study of the proposed 1956 program, the
mission
reconunends that some projects be eliminated. It considers that
certain areas,
for which relatively small local generating plants are proposed~
coul d be
better served by transmission lines connecting them vdth
important power
producing centers. This applies, for example, to the Sonson and
La Cabrera
projects listed in the above table since, in the mission1s
opinion, these areas
could be better served by transmission lines from plants in the
14edellin and CVC
systems. Correspondingly, the mission recommends that the
additional capacity
proposed for the Iledellin system be increased. other projects,
including those
proposed for the Departmento del Norte de Santander, have be.en
excluded as in too
preliminary a stage of planning to justify inclusion in a
current program.
In other cases, the r~ssi0n considers that further study is
necessary
to determine 'whether tl1e project proposed for a given area is
really the best
long run solution of its pcw/er problem. TI1US the mission
believes that the
question of the best source and form of power supply in the
Boyaca area, and
for meeting increased needs at the Paz del Rio steel plant needs
further study,
and that the Paipa project proposed for this purpose should be
held in abeyance
until other possibilities have been studied. Again, the mission
considers it
possible that the proposed Sumapaz hydroelectric plant might be
rendered
unnecessary by a transmission line from Bogota. other projects
which the mission
considers should receive further study, either wholly or in
part, include Bolivar,
Rio Nevado, Buenavista, and the Timba project of CVC.
As a result of these considerations, which are presented in
detail
in Annex I .to this re~ort, the mission recommends the following
revis~d
.program for 1?56:
-
- 26 TABLE II
Project
I - I Bogota
I -:2 CVC
I - 3 Caldas
I - 4 Medellin
I - 5 Anchicaya
II - 4 Boyaca System II - 5 Bolivar II - 7 Bogota System/Melgar
II - 8 Cali II - 9 Small projects
(Sincelejo etc.) -U! '::ucuta
II -14 Negro II .16 Bucaramanga-Cucuta II -18 Lebrija II -19
Pereira II - 20 Coello II -21 Rio Recio II -22 Caldas
Total
Total Imports (million pesos)
23.5 16.7 18.0 23.9
9.4
3.1 2.0 4.0 3.4
7.3 2.0 0.5 2.0 2.2 1.5 3.8 2.0 0.9
126.2
15.7 6.5 7.5
15.0 5.0
2.2 0.5 3.0 2.4
4.9 1.4
l.2 0.7 1.0 2.0 1.4 0.6
71.~
(US~28.4 million)
The mission recommends that 3.0 million pesos be added to the
above
amount for project planning and for the survey of ~ater
resources, thus in
creasing the total cost of the 1956 program to 129.2 million
pesos.
B. Investment in 1957 and 1958-1960
The following estimated investments in subsequent years will be
required to
complete the revised 1956 program:
million pesos
1957 1958 1960
125 75 10
The aim of the Government should be to sl1pplement these
investments in
1958 and subsequent years vdth the object of executing further
well-prepared projects
of dem~nstrated need as far as financial availabilities
permit.
-
- 21 .....
The mission believes t.batit should be possible to maintain
investment
at not less than the 1956-1957 level over the period
1958-1960.
A failure to attain an adequate rate of power development could
arise
as much from a lack of well prepared projects as from financial
stringency. The .::..
mission considers it essential that the planning of electric
power development
be supervised by a single agency, and it therefOre welcomes the
Government's
decision to centralize planning in a National Power COmmission.
The mission
strongly reco~mends that advantage be taken at the earliest
possible moment of
the arrangement made bet1ireen the Ministry of Development and
the Int.ernational
Bank whereby the latter would help the Government to obtain
assistance in pre
paring the legal and organizational bases of the Commission's
activities. It also
recommends that the allocation of 3.0 million pesos made in the
revised 1956
program for additional planning and survey work be continued in
subsequent years.
Central supervision and coordination of planning as proposed
should
enable Colombia to realize to the full the economies of
large-scale production in
the field of power. The general aim should be, where it is
economically and
technically feasible to do so, to concentrate power generation
in large plants,
each serving a ~~de area by means oi transmission lines. As iar
as possible,
systems of this kind should themselves be interconnected. If a
community cannot
at present be connected into such a system, but there is a
reasonable prospect
that this will be possible in the future, a temporary diesel
installation is
preferable to substantial investment in a pL;rmanent hydro or
thermal plant,
unless the latter can be shown to form part of an adequate long
run development
plan.
-
- 28
The mission strongly recommends that, in the planning, financing
and
execution of power projects, Colombian agencies avoid entering
into contracts
under vmich all these f~~ction8 are placed in the hands Of a
single firm pri
marily engaged in the manufacture of electrical equipment. Tnese
contracts
seem attractive because the.y apparently relieve the client of
trouble and res
ponsibility, and provide a solution of the financing problem.
This appearance
is usually illusory. v~ben the firm which is to supply the
equipment also designs
the plant, other considerations besides the most economical and
efficient way
of meeting the clientts needs are bound to influence the
designs. Lack of
competition also increases the price the client has to pay.
Financing provided
or negotiated by a supplier is usually for a shorter term than
is appropriate
to a power project, and at a higher rate of interest than could
be obtained
in other directions.
It is much more efficient and economical to employ consulting
engineers
to prepare designs and supervise construction, and to award
contracts for con
struction and the supply of equipment thxugh competitive
bidding. This, the
accepted procedure in all industrialized countries, gives the
best assurance
of adequate design and sound construction. In these
circumstances, the fees
paid to the consulting engineers are an amply justified
investment.
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- 29
IV. WATERWORKS
A. Investment in 1956
At the request of ~~e National Government, which had indicated
its desire
and intention to accelerate investment in water supply, the
mission studied the
water supply situation in Colombia ydth a view to drawing up an
accelerated program
of investment in this sector. The mission's analysis of the
situation and its
detailed recommendations are presented in Annex II to tilis
report.
The mission found that the projects to be continued or begun in
1956 fell
into two main groups:
(a) Those of the large cities which finance their own water
supply S,ystems with
out grants from nat,ional funds. In this category, the cities of
Bogota,
Cartagena, lVledellin, Cali, Armenia, Aanizales, Palmira, Cucuta
and Bucara
manga have projects which will require a total expenditure of
35.6 million
pesos in 1956, including the equivalent of 21.75 million pesos
in foreign
exchange. Of the 35.6 million pesos, 15.9 million pesos is
covered by
financing already arranged, leaving 19.7 million pesos ~f
additional loans
t() be obtained.
(b) Those of the smaller urban communities (nucleos urbanos)
~Jhere water supply
systems are financed with the help (to an extent depending on
the size of
community as indicated by its annual budget) of national grants.
These
grants have hitherto been administered by the Instituto Nacional
de Fomento
Municipal (mFOPAL), "Jhich vras recently incorporated in the
newly established
Corporacion de Servicios Publicos as the Departamento de Fomento
Municipal
(DFM). In 1955, I~TOPAL, with the help of an appropriation of 12
million
pesos, made grants of 10.2 million pesos tovJards the execution
of a 12.9
million pesos program in such communities.
-
- 30
The mission, ta~~ng into account the national desire to
accelerate
investment in water supply, has considered how far the national
program
for these smaller urban cormmmities can be expanded in 1956,
having regard
to the need for adequate planning and to the available
resources. The
mission recommends that in 1956 total investment in waterworks
in these
swaller urban communities (defined as having between 1,000 and
50,000 inhab
itants, rather than in terms of their annual budgets) be
increased to 22.5
million pesos, of which 19.5 million would be provided in the
form of grants
(on the basis of population) and 3 million in the form of loans.
Both
grants and loans would be made available from national funds
administered
by DFM as described in Annex II. It is estimated that, of the
22.5 million
pesos required for the program of assistance to smaller urban
communities,
the equivalent of about 10 million pesos (US $4 million) would
correspond
to ~ilported goods and services.
The mission recommends that, in order to enable D~~ to carry out
this
program, funds be provided on a continuing basis from:
(a) Departmental purchases of bonds of the Corporacion de
Servicios
Publicos to the extent of 2% of their annual budgets, a
source
,mich should yield about 8 million pesos in 1956. There
should
be no attempt to match investment in any Department against
that
Department's purchase of these bonds.
(b) National appropriations, >,[hich would amount to about
17.5 million
pesos in 1956 (including 14.5 million pesos for financing
the
programs and 3 million pesos for amainistrative expenses).
In
order to provide additional revenue for this purpose, the
National
Government, acting on the mission's reconnnendation, imposed a
new
liquor tax at the rate of 1 peso per 720 gr. "Iv-hich should
yield
about 30 million pesos in 1956.
-
- 31
'While endorsing the Government r s intention to raise
additional tax
revenue to finance developnent, the mission considers that
revenues from
this tax should not be earmarked for particular purposes, and it
recommends
that the announced intention of investing in each Department the
amount it
has contributed to'~rds this tax be abandoned as opposed to the
conception
of a national program. The mission believes that the program it
has out
lined in Annex II to this report wi1l result in national
contributions to
most Departments 1m.ich '\dll exceed their contributions.
Investment in 1957 and 1958-60
To continue the programs of the nine large cities, as now
envisaged,
will call for the follovnng investments in subsequent years:
l-'Iillion Pesos
Total 1957 1958 1959 1960
82 37 20 15 10
To make these planned investments, these cities vdll require new
loan financ
ing of 26.5 million pesos in 1957 and a total of 25 mi1lion
pesos for the
three follo,·Jing years, in addition to financing already
arranged. These
estiInates do not take account, hOii€Ver, of later expansion in
these planned
investments, or of the needs of the three other large cities in
this category,
1,;Thich are not currently carrying out water supply projects.
The mission
has therefore assumed that water supply investment by the cities
in this
group will not fa1l belm-r 25 million pesos annually in the
period under
revie\{.
The mission reconmends that the national program of assistance
to the
srnaller urban communities be increased in order to attain, as
nearly as
possible, the target of provision of adequate water supplies in
all commu
nities of more than 1,000 inhabitants by the end of 1961. This
would require
-
- 32
a total contribution by ioJay of grants and loans to these
communities of
nearly 200 million pesos over the period 1957-60, i.e., at an
average rate
of nearly 50 million pesos annually. These investments should be
financed
by the annual departnental purchase of bonds of the Corporacion
de Servicios
Publicos and by contributions from the national budget. The
mission
recomrnends, hmrever, that this average be attained by
allocating about 34
million pesos for this purpose in 1957 and increasing amounts in
subsequent
years as described in Annex II.
To the extent necessaI"J, DFH should also provide the loans
required
by the larger cities. On this basis, the total financing to be
provided
by the National Governrnent and the Departments in the form of
both grants
and loans would rise from about 60 million pesos in 1957 to
about 80 lnillion
pesos in 1960. 1{iell under half of the expenditures would be in
foreign
exchange.
The mission It.r:ishes to emphasize that the above scale of
investment
will not produce adequate results unless it is accompanied by
wise plan
ning and improved organization. It believes that the procedure
\lhereby
the functions of preparing plans, supplying materials and
equipment, and
executing the project are placed in the hands of a single
manufacturing
company, llhich iil8.y also offer med.:i..um-term credit
facilities, is unsatis
factory and i'l'asteful and regrets that some ITnlnicipalities
in Colombia
have entered into such contracts for the provision of
"I';ater'.lorks. These
contracts also mean neglect 01 Colombian sources of supply and
an urmec
essary loss of foreign exchange. The mission strongly
recommends
-
- 33
adherence to tIw normal procedure of entrusting the preparation
of plans
to experienced consultinc engineers and of a1'1e,rding contracts
for supply
and construction on the basis of intemational competH,ive
bidding.
The mission recommends that, in designing watervrorks,
primary
eraphasis be laid on the quality of the 'Vater. It believes that
more
attention should be given in Coloniliia to groUIlc water
supplies, Which
provide small cOlIllJ.11Jnities ,dth a more economical source of
water than
treated surface 'Vater.
In the sInaller urban comnrunities in Colombia, 'NaterHorks
fre
quently lapse into disrepair through the lack of skilled
personnel to
operate them and of management to collect and adnunister vJater
revenues.
To rer:1edy this situation, the nUssion recomra2:nds the e
stablisb,,;nent in
each Department of an agency Hhich l:,fOuld undertake these
functions on
behalf of the smaller urban commurlities.
-
v. MmaCIPAL SERVICES
A. Investment in 1956
1. In~roduction
A very large expansion is proposed in 1956 for municipal
services other
than waterworks, which i~cludes sewers, slaughter houses,
markets, paving and
construction of streets, public health centers, urban transport,
garbage disposal;
construction of puhlic buildings, stadia, prisons and hotels;
and slum clearance.
Expenditures are plarJ.led to reach almost 98 million pesos in
1956, compared with
25.4 million pesos in 1955.
The decision of the Colombian Government to accelerate the
eX'pansion of
waterworks and the nead ~or high priority investments in other
sectors severely
limits the financial resources vlhich governnental entities -
national, departmental,
and municipal - can contribute to investment in other municipal
services.
The mission vIas cOlilpelled, therefore, to recolnmend a
substantial reduc
tion in the investment pla.--med for 1956, even though it felt
that it did not have
sufficient info~ilation about illffily specific projects in this
sector. The mission's
recommendations are compared -vrith the proposed investment by
major fields and with
1955 investlnents 'Hithin this sector in the following
table:
TABLE III
.!?vestments in" 1955 and 1956
(mil~ions of pesos)
1955 1956
Investment Planned -Recommended 1. Sewers 12~I- 32.7 ItS·.0 2.
streets 7.4 20.1 6.1 3· Markets 1.0 14.0 1.5 4. Slum Clearance a/
9.0 3.5
. ~ 5. Slaughter-houses -08 1.9 ~3 6. Municipal Buildings 1.3
3.8 1.7 7. Public Health Centers a/ 1.7 .3 8. Stadia 2.2 0~ 9.
Hotels .7 .9 .4 10. Miscellaneous Projects .6 6.6 1.3 11. Urban
Transport 1.5 1.9 1.9 12. Garbage Disposal a/ .2 .2 13. Prisons y
2.0 2.0
Total 25 ..4 -'97.0 35.2 if No investment reported
-
- 35 2. Se'f,ers
In 1956, investments planned for set...rer "iJorl:s amount to
32.7 million pesos
compared to investnents of 12.1 million in 1955. The inves~~ents
planned for 1956
are shown in the follOltJing table:
TABLE IV
Investment in Sewer~'Planned for 1956
(millions of pesos)
Larger Cities:
Bogota 5.6
Barranquilla 2.2
PalMira 1.3
Barrancabermej a .5
Pasto, Neiva and Pereira 1.1
Cartagena 304
Cucuta and Tulua 7.3
Cali 6.0
Sub-total
Smaller tmms:
Valle del Cauca 2.0 Antioquia .4 Norte de Santa.'1der .3 Huila
.4 Caldas 1.0 Choco .2 Instituto de Fomento
l'Iunicipal 1.0 Sub-total
TOTAL
The mission was unable to undertake a careful analysis of the
planned
projects. In most of the larger cities, wh~re other methods of
sewage disposal
may not be feasible, investaents in sewage are generally
defensible. It does seem,
however, that all of the investment (5.3 million pesos) proposed
for the smaller « •
municipalities has a low priority. The building of sel"ers for
tOltms of small size
is a luxury 10Ihich the country cannot afford \-,hen it is
expanding investr.1ent for
waterworks. Uhile sewers serving small portions of such towns
may be justified
when restricted to business areas, they should only be
undertaken if the property
owners directly concerned are prepared to finance such systems
through special
-
- 36
assessments. It \lTOuld seem tl:at most 0:;:' the progra.i11.
outlined in 1956 for the
smaller municipalities does not conform to these pr~nciples.
Unless a demonstra
tion can be made that certain projects do conform, it is
advisable to postpone
sewer construction activity in the smaller municipalities.
The desirability of the proposed expansion in Cucuta a~d Tulima,
envisag
ing total expenditures of 7.3 million pesos in 1956 is also
questionable. Both
Cucuta and Tulua are pla.nning to rely to the extent of 907; on
the national govern
mente This scarcely seems an equitable arrangement for sharing
costs and it
suggests that these cities do not have a sound system of
financial charges to
impose on the beneficiaries. The mission believes that these
programs could be
reduced to .9 million pesos, of i
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- 37
Barranquilla, l~eiva, Pasto and Barr&ncabermeja vrill
finance the total cost
of their programs from current resources~ Bogota, Palmira,
Pereira and Cartagena
intend to finance a Gre&t part of their programs from
current resources with less
than half of the total cost of the works to be covered by
internal loans. On the
basis of inadequate inforr.1ation, the mission estimates that
foreign exchange require
ments for sewer construction will approximate 1.6 million pesos
(US$.64 million).
30 Paving and construction of streets
A very large expansion is planned for street paving and
construction by
the municipalities and departments reporting. Although the
majority of medium-sized
cities throughout the count~J must have programs for paving and
construction of
streets, only two departments and seven cities have actually
advised that they have
such programs. The Department of Hagdalena invested 0.4 million
pesos on street
construction in Santa Barta in 1955 and is considering investing
the same amount in
1956., Cundinamarca invested 0.3 million pesos in 1955 for the
paving of streets
in small muniCipalities, but it has not submitted its plans for
1956. Bogota,
Barranquilla, Cartagena, Aanizales, Popayan and Bucaramanga
invested 6.7 million
pesos in 1955 for paving. Tnese cities (except Bucaramanga) a~d
Pereira and Neiva,
are planning to invest 19.7 million pesos in 1956, of which
amount 14.0 million is
for Bogota and 2 million pesos for Cartagena.
It appears that many of the projects included in the programs of
Bogota
and Cartagena are secondary streets 1rJhich have a low priority
compared with other
municipal needs. Both programs are scheduled to be fiLanced
entirely on credits;
.. • in the case of Bogota, 1rri th foreign and internal credits
and in the case of Carta
gena with internal credits. In vim.r of the difficulty vIhich
these municipalities
are having in meeting all the financial demands upon them, they
must be particularly
careful not to undertake works of secondary priority unless
property Olmers bene
fited by a project contribute to the financing. ~lith these
considerations in mind,
it is recommended that Bogota and Cartagena reduce their
proposed investment in 1956
-
to the amounts which can be financed from their own resources,
i.e., 2 million
pesos for Bogota and .5 million for Cartagenao
The mission has not revievled the programs in Barranquilla.,
Manizales,
Pereira, Bucaramanga and Neiva. 'de suggest that the programs in
these cities be
exa'11ined to determine "\.,hether adequate charges in the form
of special assessments
or otherwise are being imposed on the property mmers directly
benefiting from the
construction.
The paving program of the Departments of l'1agdalena and
Cundinamarca might
well be eliminated because the beneficiaries are not
contributing and because it is
doubtful that traffic densities justify paving.
Under the recommendations contained here, expenditures in street
paving
and construction would total 6.1 million pesos, as outlined
below, on the assumption
that a favorable finding is made vU th respect to the system of
financial charges in
the five cities cited above. Foreign exchange requirements
vlOuld be negligible.
Investment Planned Reco:tn."1lended 1955 1956 1956
(millions of pesos) imillions of pesos) (millions of pesos)
Magdalena 0.4 none Cundinamarca not furnished none Bogota
cartagena
14,,0 2.0
2..0 0 ..5
Barranquilla, Y~izales) ~/
Pereira, Bucaramanga ) 6~7~ 3.7 3.6'91
Neiva and Popayan )
20~1 6.1
a/ Includes Bogota and Cartagena as well. §( On condition
indicated above.
4. I1arkets
One city, Barranquilla, is constructing ne'tV" markets and in
1956 pla,ns
to i..'1vest 1.0 million pesos. Popayan, Quibdo and
Bucara.vnanga intend to make altera
tions and improvements to their present markets, for which an
investment of 0.5
million pesos in 1956 is envisaged. A decentralized and
autonomous national entity,
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..
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La Corporacion de Defensa c.a Proc'.c.ctos Agricolas - INA -
inten::ls to invest 12~5
million pesos in 1956 in wholesale markets for agricultural
products in various
cities throughout the country.
No justification has been presented to support the plavned INA
invest
ment in wholesale markets. EA~erience in Colombia has
demonstrated that private
markets aYld warehouses operate efficiently. In vie"'l of the
prevailing policy of
the Colombian Government to stimulate private investment in
those fields where
private investors and operators can perform a useful function,
and also because
of the more important call on governn~ntal resources from other
sectors, the
mission recommends that construction of wholesale markets be
reserved for the
private sector.. Excluding the INA project, investment in 1956
"rould be reduced to
1.5 million pesos. Foreign exchange requirements are estimated
at approximately
0 ..5 million pesos (US:;:i~ 2 million).
5. Slum Clearance
Barranquilla and Cartagena, both vdth financial assistance from
the
national government" and the foriner 1,rith the additional
collabora.tion of the
Department, are planning to invest in 1956 in slum clearance"
Barranquilla" 1
million pesos, and Cartagena, 2 million pesos.
These projects appear to be justified since they involve the
reclamation
of land y,lith a potentially r.igher value and since they would
also contribute to
the solution of an acute social problenl. The slma areas which
would be cleared
have particularly serious characteristics, located as they are
in swampy areas.
It does not appear, however, that plans for slum clearance are
sufficiently lfell
advanced to permit the investment of 9 million pesos in 1956. 3
million pesos is
tentatively suggested for Barranquilla and .5 lnillion for
Cartagena. Foreign
exchange requirements are likely to be negligible. Since this
type of program
involves many difficult problems, it is suggested that detailed
~lans for the
execution of the program be prepared before the national
government provides finan
cial assistance.
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-JJJ
6. Slaughter-houses
• Two cities have slaughter-houses under construction: Manizales
and
Popayan. The first mentioned" with a total investment of 2.0
million pesos" is
considering the investment of 0.3 million pesos to terminate the
work in 1956, and
the second, having corrooenced in 1955, is considering investing
a total of 0.6
million pesos, 0.1 million of which to be invested in 1956.
Three cities are con
sidering commencing construction of slaughter··houses in 1956:
Cali, 1-Jhich in
1956-57 '\1;'111 invest 2.8 million pesos" approximately 0.6
million of which to be
invested in 1956: Pereira, 1-J11ich in the three years 1956-58
will invest in con
struction works 1.2 million pesos, approximately 0.4 million of
which to be in
vested in 1956, and Tulua which in 1956 ~dll invest 0.5 million
for the construction
of a slaughter-house.
In view of the fact that Hanizales has already invested 1.7
million pesos
in its slaughter-house and must invest only 0.3 million in 1956
to complete it, the
mission CaQDot recon~end against this investment. However,
further expansion of
municipal slaughter-houses cannot be recomr.'lended. Uhile
completion of projects
already underway is advisable, a completely new approach to the
problem must be
attempted. This is a field in lJhich investment by private
enterprise on an effi
cient basis should be encouraged. The present municipal system
of taxing slaughter
ing impedes the development of efficient private enterprises
serving a broader
market since each muniCipality, no matter how small considers
its own slaughtering
house a necessity in order to increase its tax revenues. The
desirability of a tax
on meat is questionable, but if municipalities can find no
better source of revenuesJ
it could be collected from slaughtering houses in private hands.
The mission
recommends that the National GoverrdUent attach as a condition
to the granting of aid
to the municipalities in other fields, a change in the m~Dicipal
slaughtering tax
system. On the basis of the recommendations made above, proposed
investments in
slaughtering houses in 1956 would be reduced from 1.9 million
pesos to 0.3 million.
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Foreign exchange requirements would be approximately .2 million
pesos (US$.08
million).
7. Public Buildings
Pereira and Hanizales are constructing public buildings for
H"hich they have
invested in 1955 1.3 million pesos and for which they are
proposing to invest 1.7
million in 1956. Cucuta ~~d Bucaramanga are proposing to
initiate construction of
buildings with an investment of 2.1 million pesos in 1956.
Completion of the buildings in l1anizales and Pereira, which are
in an ad
vanced stage of construction, is advisable. However, the
investraent of 2.1 million
pesos in Bucaramanga and Cucuta appears to have a low priority
relative to other
municipal needs, and the mission therefore recomnends that it be
eliminated. This
would reduce investment for public buildings L~ 1956 to 1.7
million pesos, of which
an estimated .4 million pesos (US$.16 million) l'll'ould be in
foreign exchange ..
8. Public Health Centers
Bogota and Bucaramanga have prograras for the construction of
public health
centers and are planning to invest in 1956 1.6 and 0.1 million
pesos, respectively.
The proposed expenditure for Bogota appears to be excessive. The
mission
believes that 0.2 million pesos would be sufficient to take care
of essential needs.
This would reduce total expenditures in this field to 0.3
million pesos. Foreign
exch&~ge required would be .1 million pesos (us$.04
million).
9. stadia
Armenia, 1tJith an invest.l1ent of 2.0 million pesos, and
Barrancabermeja, wit!:
0.2 million pesos, are planning to initiate construction of
stadia in 1956. The n~,
stadium in Armenia is planned for the Departmental Olympic games
to be held in 1956.
While the mission has not reviewed the plans for these stadia,
such invest
ment is clearly of low priority relative to other needs. The
investment in Armenia
would be 30% higher than the total amount collected in municipal
taxes in 1954. Th~
mission recommends that these investments be eliminated.
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42
10. Hotels
The Department of Magdalena, in order to promote the touri3t
trade, is con
structing a hotel on the outskirts of santa llarta. Having
invested 0.3 million
pesos in 1955 it ~vill b3 completed in 1956 ~;i.th an
investl.llent of 0.4 million, of
which foreign exc:1.ange .L'equlr.;;nents Hill be .12 million
pesos (us$.05 million).
K2~i?ales, also as an attraction to tourists, is constructing a
hotel to be com
pleted in 1759 on the outs.ldr:'s of the city" in which it
invested 0.4 million :L'1
1955 and will invest 0.5 million in 1956.
It is recommended that construction of the hotel in l~'1izales
be suspended
unless a demonstration can be made that there are good prospects
for the sale of
this hotel to private interests after it has been cOliLpleted.
There is no justifi
cation for government to enter this field in view of the many
responsibilities which
it must assume elsewhere. In view of the advar:ced stage of
construction of the
hotel in Santa Marta, tDis hotel should be completed, but an
effort should be made to sell it to private interests.
11. Urban Transport
Bogota is planning to invest 1.9 million pesos in 1956,
principally for the
acquisition of buses and the improvement of garage
installations, etc. Contracts
have already been negotiated for these purchases and will
require about 1.5 million
pesos: foreign exchange (US.6 million) in 1956. The mission did
not review this
project.
12. Garbage Disposal
Pereira is the only city which is planning to invest in this
category for
the acquisition of 0.2 million pesos worth of equipment in 1956.
The mission did
not review this project.
13. Prisons
Popayan, with the financial assistance of the national
government, is con
sidering the investment in 1956 of 2.0 million pesos for the
construction of a
prison. The mission has not reviewed this project.
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14. Miscellaneous Depa~~ntal Projects
Cundinamarca and Valle del Cauca have programs for the
construction of
facilities such as slaughter-houses, markets, etc., in the
poorer municipalities~
Cundinamarca invested o~6 million pesos in 1955 but it is not
knOlfn what amount this
Department is consider::.ng inV'esting in 1956. Valle del Cauca
is considering the
investment of 6QO million in 1956, but the amount invested by
this Department during
1955 for this saGle purpose is not Imovm. There are also t"vo
small projects, one in
Bucaramanga and another sponsored by a national official entity
(SENDAS), totalling
0.6 million pesos.
Hhile the mission did not have detailed information on the
projects in
cluded in these programs, they should be carefully revievled in
the light of the
comments made above on sL~ilar projects. In particular, the
investment planned by
Valle del Cauca appears eJ:cessive in view of the contribution
which this Department
will be called upon to mru{e for high priority projects
undertaken by the Cauca Valley
Corporation. One million pesos is tentatively reco,mnended for
the Valle del Cauca
prograra and 0.3 million for the Cundin~narca projects.
B. Situation after 1956
It is verJ unlikely that sufficient resources will be available
in later
years to maintain investment in other municipal services at the
levels proposed for
1956. The emphasis given by the national goverp~ent to the
expansion of waterworks,
the need for improvement and expansion of educational
facilities, etc. will reduce
resources available to the government at all levels for
financing the municipal
services discussed here.
There are some t~~es of projects in this field already cited
above where
the justification for government investment is very slight.
Reduction of government
invesunent in such fields as municipal slaughter-houses, hotels,
etc. will not,
however, release very much for investment in those municipal
services where govern
ment must assume a primary responsibility. If :i~portant
muniCipal services such as
http:consider::.ng
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streets and sewers are to advance with the further growth of
urban areas, measures ... • will have to be taken to increase
mWlicipal ta~es and other revenues •
The present s.ystem of mQ~icipal taxes and service charges is
woefully
inadequate, as repeatedly observed in many studies of Colombia1s
financial problems.
The rate of real property taxes is at present only four per
thousand, ~~th the
exception of some three or four cities. Even more serious, the
system in effect
since 1953 provides for property evaluation to be made by the
owner of the property.
In a great number of Colombian Cities, special improvements such
as street paving
and sewer construction are carried out vnthout the beneficiaries
being charged in
any way. In the majority of cities one or more of the municipal
services which
were intended to be self-supporting are being run at a loss.
The mission recolTh1'lends that financial assistance or
guaranties extended
by the national government to aid in the construction of
municipal facilities be
made conditional upon a demonstration by the municipality
concerned that measures
are being taken to ~nprove municipal finances.
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••
- 45 VI. :ruu:::;nrG
A. Public Entities in Housing
A high percentage of housing construction in Colombia is
financed privatelJ'
The most important semi-official institution grant~g long-term
loans to finance
the purchase price or construction cost of houses, is the Banco
Central Hipote
cario, ~rllich was founded 20 years ago. It obtains its funds
mainly from the sale
of its bonds. Savings barnes and insurance companies are
required by law to invest
a part of their deposits and reserves in these debentures. The
Banco entered the
housing construction field in 1954. It constructs houses valued
up to 30,000 pesos
and finances their purchase to tIle extent of 75 percent of
their value over a period
of 20 years. It also makes construction loans. The Banco has
about 30 million
pesos per annum available for this purpose, or enough to finance
the construction
of about 1,000 houses a year.
The National Government, the Federaci6n Nacional de Cafeteros
and a fe~
municipalities also have organizations for constructing and
financing housingo The
mission does not have information regarding Federaci6n Nacional
de Cafeteros and
the municipal housing entities, but their annual investments on
housing cannot
amount to mucho
The Institute de Credito Territorial, which was recently
incorporated into
the newly-created Corporacion de Servicios Publicos, is the
national entity respon
sible for constructing and financing housing. It ifas founded
fifteen years ago,
initially for the purpose of constructing rural housing. Later
it took over respon
sibilities for urban housing as Hell ..
With respect to rural housing, the Instituto makes loans up to
5,000 pesos,
at interest rates of 3 percent and , ..i th mortgages up to 30
years, provides pla.l1S
and supervises construction. vJith respect to urban housing it
constructs housing
developments and sells individual dwellings on liberal terms
with a 15 percent down
payment and mortgages of 20 year maturities. Interest rates on
urban mortgages
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--
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vary but go up to 8 or 8-1/2 percent. Urban housing is divided
into two categories,
one for the low-income groups and one for the medium-income
groups. Dwellings cost
ing from 4,000 pesos to 12,000 pesos have been constructed for
low-income groups
and dwellings costing from 15,000 to 30,000 pesos have been
constructed for the
medium-income groups. Up to the end of 1954 the Ins~ituto had
constructed 9,662
urban houses with a total cost of 86.8 million pesos and 8)948
rural houses with a
total cost of 40.6 million pesos.
B_ Investment in 1956
The Instituto pl.ans a substantial increase in its invest.ment
in housing
from a planned level of 56.8 million pesos in 1955 to 80 million
pesos in 1956.
The planned investment for 1955 was at a much higher level than
in previous years,
but the mission received indications that actual expenditures in
1955 would not
increase in accordance ,>lith the plan. Nevertheless, the
Instituto is preparing to
invest even more in 1956 than planned for 1955. :n 1956, the
Instituto wants to
build 9,000 urban houses in fifty different projects, varying in
size from 20 to
over 1,000 houses, and to continue construction of rural
houses.
Host of the Instituto's capital is provided by the National
Government ...
Savings banks have been required to invest 25 percent of their
deposits in the
Instituto's bonds. In 1955, the Goverrunent made a grant of 60
million pesos
financed by a loan from the Banco de la Republica to the
Instituto to retire its
indebtedness to the savings barJ(s. Hm'1ever, savings banks are
still required to
invest 25 percent of their total deposits in the Instituto's
bonds, which will pro
vide the Instituto with about 75 million pesos over the course
of the next year.
For a five-year period beginning in 1957, the Instituto is also
to benefit from a
requirement that all corporations must invest in non-interest
bearing bonds of the
Instituto a sum equal to that which they used to pay as a
capital tax. This
requir~~ent is expected to provide the Instituto with 30 million
pesos a year
beginning in 1957.
-
• :.. 47 The need for more housing in Colombia is very great,
both in rural and
urban communities. Eighty-five percent of rural houses have dirt
floors and are
without windovTs or sanitary facilities. Sixty percent of
Colombia's families live
in rural areas and have aJ:IDual cash incomes of less than 1,200
pesos a year.
The housing problem in urban centers is also acute because of
the rapid
growth of the cities. According to the 1951 census, 25 percent
of the families
living in the 26 most populated cities were in need of housing.
The situation is
particularly critical in Bogota and Cali, where ti'TO out of
every three families are
obliged to share a single dwelling.
In spite of the great housing shortage, hmvever, the mission
believes that
the proposed acceleration of the Instituto's program is
ill-advised. The increased
schedule for this year is not based upon clear and practical
policy objectives and
is not supported by clearly-defined operating procedures. The
technical and design
staff, which consists of only 5 architects, 5 draftsmen and 2
engineers, does not
have the personnel needed to carry out a program of the size
planned. Moreover,
despite the obvious social need for Lmproved housing, the
mission does not believe
it is wise or necessary at this stage of the country's economic
development, given
the other investment requirements which the government must
meet, to accelerate the
government housing program. If funds available to the Instituto
were utilized more
efficiently, a greater number of houses could be built with less
money.
The Instituto's approach to housing appears to be based simply
on the fact
that there is a need for more and better housing. The Institute
has not clearly
identified the type of Colombian family which a
government-sponsored credit program
can serve without involving the Government in financial losses
on a recurring basis.
In spite of the critical need for housing, the Instituto has
constructed houses
which are unoccupied because it cannot find bqyers with the
necessary funds. The
cost of much of the Institute's housing has turned out, in fact,
to be much higher
than many families could afford and mortgage p~ent delinquencies
have been
-
excessive, mling partly &lso to poor collection procedures,
particularly in
rural areas~ 'l'11e .mortJ;age c.elinquemcy r3.te, l':hich is
about 5$ per cent,
• clearly re'fi.ects the c.bsence sound polL:y objectives,
careful program'11ing
of construct.i. en, ane'. adequate administrative
procedures.
Ji1. 1955, t;18 Instituto contracted to purchase from Finland
3,000 pre
fabricated h'Ooden houses for uS ,,,3 lIl2.llion (7.5 million
pesos) payable in
coffee. S~.nce Colombi& has been able to sell all its coffee
to date,
coffee payments may be considered equivalent to dollars.
Originally planned
for rural areas, the present plan is to use them in Barranquilla
and Cartagena.
The problem created by the introduction of 1;.)0 0 den houses
sreat. A masonry
house of similar size requires a frontage of 6.50 meters; in
order to pro
vide fire protection, the frontage for a h'Ooden house must be
increased to
10.75 meters. vlliile such an increase in the amount of land for
each house
may be unimportant in rural areas, ivill greatly increase land
costs per
house in Barranquilla and Cartagena. Besides, there are the
problems of
termite protection and of educating people accustomed to masonry
houses to
live in 1;JOoden ones.
The Instituto is also purchasing from a foreign com;Ja.ny, 3,200
pre
fabricated aluminum houses of four different sizes, at a total
cost of US $3
million (7.5 million pe sos) • ivtembers of the mis sion visited
a model alwninUlIl.
house displayed near Bogota. The houses, vJhich ca,.'1 be
erected in a few
hours, are of light construction uithout any equipment or
facilities, and .. have no floor. Because of the way the houses are
constructed, it i'rould
be almost impossible to make them insect-proof. Originally
intended for
use in the Llanos, 500 of the houses are to be diverted to help
rehabilitate
http:com;Ja.ny
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- 49
the burned-over area of nunaco. The mission finds it difficult
to under
stand ,!>illy Co10mbh . ., which has a wealth of indigenous
building materials, and
a prefabricating factory of its own in Hedellin, should find it
necessary
to use scarce foreign exchange resources to import prefabricated
houses, at
a cost per house 'which cannot be considered inexpensive.
It seems clear to the mission that the Instituto is not
prepared, dur
ing 1956, to undertake a housing pr03ram of the size planned. In
the judg
ment of the mission, the funds available to the Instituto should
be sharply
curtailed so that expenditures on housing in 1956 will not
exceed 50 million
pesos. In view of the fact that the Instituto has funds of its
own and
obtains additional funds from the national budget (12 million
pesos in 1956),
from mu..'1icipalities (2.5 million) and from buyers of houses,
the &'11ount
required to be invested by the savings banks should be reduced.
There are
other projects of high priority which would have a much stronger
claim on
these savings bank resources.
C. Investm~ after 1956
In the next fevJ years, if large amounts of investment funds are
to be
found for Paz del Rio t s expansion, as 1:1e11 as for
l'later,.,'Or..cs, transportation,
electric power and agriculture., public investment in housing
vfill have to be
reduced to essentials. The mission believes this would require
that public
investment in housing be limited to about 20 million pesos
annually.
At the level of frulU1y incomes currently prevailing in
Colombia, there
is a ve'r1J definite limit on the rents that can be paid or on
the mortgage
service payments that can be met. The prograrr. of the Instituto
in the
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- 50
"101fT cost!! housing field should be carried out only as a
complement to
specific government projects \\!here housing accommodations must
be provided,
or in emergency areas such as 'i'UTllB.CO, vJhere fire recently
razed a large
area"
-v~1ile a government housing program designed to serve families
in the
middle income groups might be formulated on a sound financial
basis, the
government must seriously consider 1-Thether it would not be
more practical
to provide government guarantees to private credit institutions
for such
housing; than to extend credit directly through a government
institution.
Such a program might be devised in such a vlaY that the Q01rm
payment require
ments and the mortgage payment requirements could actually
increase private
savin:3s by inducing certain income groups to save for a
specific purpose •
..
http:i'UTllB.CO
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- -51
A. Investment in 1956
The construction of hospitals in Colombia is generally
financed
from the income of departmental charity organizations
(beneficencias) which
obtain most of their income from lotteries, but also from
certain ne.tiona1
taxes on entertainment, etc. Information was received of the
following hospi
tal construction and expansion projects, either planned or under
way.
Location Totsl Cost 1926 Investment (millions of pesos)
(millions of pesos)
Valle del Cauca 24.0 6.0 Bahia de Solano in Choco 0.2 0.2
Barranquilla 8.0 Expansion of Fental Hospital
in Antioquia 0.8
Total 11&
Foreign exchange expenditures for 1956 are estimated at 3.5
million pesos
(us $1.4 million).
There is a strong possibility that the beneficencia of
Cundinamarca,
the largest in Colombia, also has some plans to construct or
expand hospitals
in that Departffient., but no information was received from the
Cundinamarca
beneficencia. None of the projects for 1956 '~ere studied by the
mission. In
view of the great need for hospitals in Colombia the mission is
not recommend
ing tt~t the proposed investment for 1956 be reduced.
B. fnvestment after 1956
Although there is a great need for more and better hospital
care
in many parts of Colombia, improved conditions will have to come
in the next
few years from more efficient use of investment funds rather
than from an
incr-ease in the amounts in7ested. Indeed" some of the funds
invested in
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- 52
hospital buildings should be di'lEt'ted to increasing facilities
for training
doctors and nurses, since existing hospitals are poorly staffed
in both fields.
Between 1956 and 1959, when investment resources ~~ll be subject
to heavy
pressure from many high priority projects, it is unlikely that
more funds vull
be available to invest in this sector than are to be invested in
1956. But
nmch could be done to get greater benefits from investment
expenditures for