Mauritania - Gorgol Irrigation Project : Credit 1068 - Credit Agreement - Conformed

OFFICA CREDIT NUMBER 1068 MAU Development Credit Agreement (Gorgol Irrigation Project) between ISLAMIC REPUBLIC OF MAURITANIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated NovemI6sv 21.( , 1980 CREDIT NUMBER 1068 MAU DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated Nove e le, 1980, between TSLAMIC REPUBLIC OF MAURITANIA (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) the Borrower has requested the Association to assist in the financing of Parts A (ii) and B (i) through (iii) of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) the Borrower has applied to the International Fund for Agricultural Development (hereinafter called the Fund) for a loan (hereinafter called the Fund Loan) in an amount equivalent to seven million six hundred thousand Special Drawing Rights (SDR 7,600,000) to assist in financing Parts B (ii) and C of the Project on the terms and conditions set forth in an agreement (hereinafter called the Fund Loan Agreement) between the Borrower and the Fund; (C) the Fund has -ppointed the Association as Cooperating Institution to administer-the Fund Loan in accordance with the provisions of this Agreement and of the Project Agreement referred to in Recital (J) of this Preamble, and the Association has accepted such appointment; (D) the Borrower further has contracted or intends to contract, from several other institutions and governments, grants and loans in an aggregate principal amount equivalent to about sixty-two million dollars ($62,000,000), as listed in Parts B, C and D of Schedule 3 to this Agreement, to assist in financing the Project, on terms and conditions set forth in agreements entered into or to be entered into between the Borrower and such institutions or governments; (E) the Association, the Fund and the institutions and governments referred to in Recital (D) of this Preamble intend to enter into a memorandum of understanding to coordinate the admini- stration of the financing for the Project to be provided severally by each of them and regulating certain-other matters of common interest in connection with such financing; (F) by a development credit agreement dated June 12, 1974 between the Borrower and the Association, the Association granted -2- to the Borrower a development credit (No. S-16 MAU; hereinafter called the First Credit) in various currencies equivalent to one million one hundred thousand dollars ($1,100,000) to assist in financing surveys and studies required for the preparation of the Project; (G) the Association is prepared to refund the outstanding amount of the First Credit out of the proceeds of the Credit provided for herein; (H) pursuant to a development credit agreement dated April 8, 1977, the Association has also extended a further development credit (No. 694 MAU) to the Borrower for the purpose of assisting in financing, inter alia, further preparatory work required for the Project; (I) the Pi:oject will be carried out by Societe Nationale pour le Dfveloppement Rural (hereinafter defined as SONADER) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to SONADER the proceeds of the Credit and of the Fund Loan as hereinafter provided; and WHEREAS (J) the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth and in the Project Agreement of even date herewith between the Association and SONADER; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated June 30, 1980, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agreements of the Association being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the -3- General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "SONADER" means Socift6 Nationale pour le Dfvel- oppement Rural, an Etablissement Public of the Borrower estab- lished and operating under Decree No. 75-237 of July 24, 1975 of the Borrower, as amended by Decrees No. 76-036 of February 12, 1976 and No. 78-181 of June 22, 1978 of the Borrower, and as such Decrees may be further ammended from time to time; (b) "Project Agreement" means the agreement between the Association and SONADER of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement and all agreements supplemental to the Project Agreement; (c) "GPD" means the Gorgol Project Directorate to be estab- lished within SONADER in accordance with Section 2.01 (b) of the Project Agreement; (d) "Special Account" means the account to be opened by the Borrower pursuant to Section 3.02 (c) of this Agreement; (e) "Operating Account" means the account to be opened by SONADER pursuant to Section 4.01 (a) of the Project Agreement; (f) "BMDC" means the Banque Mauritanienne pour le D6vel- oppement et le Commerce established and operating pursuant to Law No. 61-030 of January 26, 1961 and Decree No. 74-128 of June 19, 1974 of the Borrower, as such Law and Decree may be amended from time to time; and (g) "Fund Loan Account" means the lon account established under the Fund Loan Agreement. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equiva- lent to eleven million four hundred thousand Special Drawing Rights (SDR 11,400,000). -4- Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Article III of this Agreement. Section 2.03. The Closing Date shall be March 31, 1987 or such later date as the Association shall establish. The Associ- ation shall promptly notify the Borrower of such later date. Section 2.04. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.05. Service charges shall be payable semiannually on April 1 and October 1 in each year. Section 2.06. The Borrower shall repay the principal amount of the Credit in semiannual installuents payable on each April 1 and October 1 commencing October 1, 1990, and ending April 1, 2030, each installment to and including the installment payable on April 1, 2000, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.07. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Allocation and Withdrawal of Proceeds of Credit and Fund Loan Section 3.01. Subject to the rights of suspension and can- cellation set forth in the Development Credit Agreement and the Fund Loan Agreement, the amount of the Credit and the amount of the Fund Loan may be withdrawn from the Credit Account and the Fund Loan Account, respectively, in accordance with the provisions of this Agreement and with the allocation of the proceeds of the Credit and of the Fund Loan set forth in Schedule 1 to this Agreement, as such allocation may be modified from time to time pursuant to the provisions of such Schedule or by further agree- ment between the Borrower, the Association and the Fund. Section 3.02. (a) The Borrower shall be entitled to make withdrawals from the Credit Account and from the Fund Loan Account -5- for expenditures made (or, if the Association and the Fund shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Crplit and the Fund Loan. (b) As of the Effective Date, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and pay to itself the amount required to repay the principal amount of the First Credit withdrawn and outstanding as of such date and to pay all unpaid charges thereon. (c) The Borrower shall, for the purposes of Part B (ii) of the Project, open a Special Account in BMDC or another commercial bank in its territory acceptable to the Association, on terms and conditions satisfactory to the Association. Payments out of the Special Account shall be made exclusively to pay the reasonable costs of goods and services required to carry out Part B (ii) of the Project and to be financed under this Agreement and the Fund Loan Agreement in accordance with the provisions of the table set forth in paragraph 1 of Schedule 1 hereto, but no such payments shall be made after the Closing Date. (d) The Association shall, promptly after the Effective Date, withdraw on behalf of the Borrower from the Credit Account and deposit in the Special Account an initial amount in the currency of the Borrower equivalent to $21,000 and notify the Fund to deposit in the Special Account an initial amount in the currency of the Borrower equivalent to $29,000. Thereafter, at the request of the Borrower, the Association shall further so withdraw from the Credit Account and deposit in the Special Account, and notify the Fund to deposit in the Special Account, such amounts as shall be required to replenish the Special Account with amounts equal to payments made out of the Special Account for expenditures for Part B (ii) of the Project eligible for financing under this Agreement and the Fund Loan Agreement, but only to the extent that the amount of any such deposit, together with any amount remaining on deposit in the Special Account as of the date of such request, shall not exceed in the aggregate the equivalent of: (1) $50,000; or (ii) in the case of any deposit pursuant to paragraph (e) of this Section, the sum of $50,000 plus the aggre- gate amount of any such deposits pursuant to said paragraph. Except as the Association shall otherwise determine, each such deposit after the initial deposits shall be withdrawn by the Association from the Credit Account, and notified to the Fund -6- for withdrawal from the Fund Loan Account, in the same respective amounts as have been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph (f) of this Section. (e) The Association shall, at the request of the Borrower, further withdraw from the Credit Account and deposit in the Special Account, and notify the Fund to deposit in the Special Account, such additional amounts in the currency of the Borrower, not exceeding in the aggregate $700,000 equivalent, as may be needed to finance goods and services required for Part B (ii) of the Project to be paid out of the Special Account, if and to the extent the Borrower and the Association agree that such deposit is required for carrying out the Project with due dili- gence and efficiency. (f) Prior to or at the time of each request for a deposit by the Association into the Special Account, the Borrower shall furnish to the Association in respect of each payment made by the Borrower out of the Special Account such documents and other evidence as the Association shall reasonably request, showing that the payment was made on account of the reasonable cost of goods or services required for Part B (ii) of the Project and to be financed out of the proceeds of the Credit and of the Fund Loan in accordance with the provisions of Schedule 1 to this Agreement. (g) If the Association shall have determined that any payment out of the Special Account (i) was made for any expendi- ture or in any amount not eligible for financing by withdrawal from the Credit Account or the Fund Loan Account, or (ii) was not justified by the evidence furnished pursuant to paragraph (f) of this Section, the Borrower shall, promptly upon notice from the Association and, unless otherwise determined by the Association, prior to any further deposit in the Special Account by the Asso- ciation or the Fund, deposit in the Special Account an amount equal to the amount of such payment or the portion thereof not so eligible or justified, except as provided in paragraph (i) of this Section. (h) Notwithstanding the provisions of paragraphs (d) and (e) of this Section, no further deposit in the Special Account shall be made by the Association or the Fund if the Association shall have notified the Borrower that it has determined that all further withdrawals from the Credit Account and the Fund Loan Account can be made directly by the Borrower from the Credit Account and the Fund Loan Account under paragraph (a) of this Section. -7- (i) If the Association shall not have received, within ninety days after the Closing Date or within ninety days of the date of a notification as referred to in paragraph (h) of this Section, whichever date shall be the earlier, the evidence re- qui,red pursuant to paragraph (f) of this Section in respect of any amount deposited in the Special Account in accordance with the provisions of this Section, or if any amount is to be paid by the Borrower after the Closing Date or the date of such notification pursuant to paragraph (g) of this Section, the Borrower shall, promptly upon notice from the Association, repay to the Associa- tion and the Fund, in the ratio of their respective total deposits in the Special Account, the equivalent of such amount, as of the date of such notice, in the currency specified in Section 2.07 of this Agreement (or the currency designated or selected instead thereof pursuant to paragraph (c) or (e) of Section 4.02 of the General Conditions); any such repayment to the Association shall be credited to the Credit Account. Section 3.03. (a) When the Borrower shall desire to withdraw any amount of the Credit or the Fund Loan, the Borrower shall deliver to the Association a written application in such form and containing such statements and agreements as the Association or the Fund shall reasonably request. Applications for withdrawal, with the necessary documentation as hereinafter provided shall, except as the Borrower, the Association and the Fund shall other- wise agree, be made promptly in relation to expenditures for the Project. (b) The Borrower shall furnish to the Association such documents and other evidence in support of the application as the Association or the Fund shall reasonably request, whether before or after the Association shall have approved any withdrawal requested in the application. (c) Each application and the accompanying documents and other evidence must be sufficient in form and substance to satisfy the Association or the Fund that the Borrower is entitled to withdraw from the Credit Account or the Fund Loan Account the amount applied for and that such amount is to be used only for the purposes of the Project. Section 3.04. Each such application by the Borrower for withdrawal shall be deemed to be a request to withdraw funds from the Credit Account and from the Fund Loan Account and the funds to -8- be withdrawn pursuant to such application shall be apportioned by the Association, as nearly as practicable in the circumstances, between the Credit and the Fund Loan in the ratio of the respec- tive amounts of the Credit and of the Fund Loan allocated to the Category in which the goods or services in respect of which a withdrawal is requested are included in the table in paragraph 1 of Schedule 1 to this Agreement, or such other ratio as shall be agreed between the Association and the Fund; provided, however, that, if such application shall be made in respect of expenditures that are to be financed out of the proceeds of the Credit or the Fund Loan only, such application shall be deemed to be a request to withdraw funds from the Credit Account or the Fund Loan Account only. Section 3.05. When the Association shall have approved an application by the Borrower for withdrawal, the Association shall: (i) pay the amount, if any, which the Borrower is entitled to withdraw from the Credit Account to or on the order of the Borrower in accordance with the provisions of the Development Credit Agreement; and/or (ii) promptly notify the Fund that it has received an application for withdrawal from the Fund Loan Account in the aggregate amount specified in such notice, that it has approved payment of the portion, if any, to be withdrawn from the Credit Account in the amount set forth in such notice, and that the portion to be withdrawn from the Fund Loan Account in the amount set forth in such notice is eligible for payment by the Fund. Section 3.06. If at any time the amount of the Credit or the Fund Loan shall have been fully withdrawn or cancelled, applica- tions by the Borrower for further withdrawals shall be deemed to be requested for withdrawal of the full amount applied for -from the Credit Account or the Fund Loan Account only, and the provi- sions of this Article III except for Section 3.04 hereof shall continue to apply mutatis mutandis until the full amount credited or to be credited to such Account shall have been withdrawn or cancelled. -9- Section 3.07. Upon the Borrower's request and upon such terms as shall be agreed between the Borrower and the Association, the Association may, on behalf and for the account of the Fund, entei into special commitments to pay amounts, out of the proceeds of the Fund Loan, to the Borrower or others in respect of the cost of goods required by the Project, subject to the provisions of this Agreement concerning the allocation and apportionment of the proceeds of the Fund Loan. The Fund has advised the Association that any such special commitment shall, once it has been notified to the Fund, constitute an obligation on the part of the Fund to pay, notwithstanding any subsequent suspension or cancellation of the Fund Loan, the amount to be disbursed out of the proceeds of the Fund Loan in fulfillment of such special commitment. Section 3.08. Except as the Association and the Fund shall otherwise agree, procurement of the goods and civil works required for the Project and to be financed out of the proceeds of the Credit or of the Fund Loan shall be governed by the provisions of Schedule 1 to the Project Agreement. Section 3.09. SONADER is designated as representative of the Borrower for the purpose of taking any action required or permit- ted to be taken under the provisions of Article III of this Agreement and Article V of the General Conditions. ARTCLE IV Execution of the Project Section 4.01. (a) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause SONADER to perform in accor- dance with the provisions of the Project Agreement all the obligations therein set forth, shall take and cause to be taken all action, including the provision of funds, facili- ties, services and other resources, necessary or appropriate to enable SONADER to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall make the proceeds of the Credit and of the Fund Loan available to SONADER on a grant basis. Section 4.02. Without any limitation or restriction upon its other obligations under the Development Credit Agreement, the - 10 - Borrower shall deposit in the Operating Account: (a) an initial amount equivalent to at least $35,000 to meet expenditures for the Project to be paid out of the Operating Account; and (b) thereafter, not later than January 31 of each year until comple- tion of the Project, such additional amounts as shall be required to ensure the timely availability of sufficient liquid funds for financing such expenditures during such year pending the reim- bursement thereof out of the proceeds of the grants and loans made to the Borrower to finance such expenditures. The aggregate amount of the funds furnished by the Borrower to SONADER pursuant to this Section shall be reimbursed to the Borrower as provided in paragraph (b) (i) of Section 4.01 of the Project Agreement. ARTICLE V Other Covenants Section 5.01. The Borrower shall maintain, in accordance with sound engineering practices, the M'Bout - Kiffa road, or any alternative access road to the Project area, to a standard ade- quate to permit all season traffic and shall provide, promptly as needed, the funds, services, facilities and other resources required for this purpose. Section 5.02. The Borrower shall provide, promptly as needed, the funds, facilities, services and other resources, including qualified teaching and health care staff in sufficient number, required for the efficient operation and adequate maintenance of the social infrastructure facilities to be constructed under Part B (v) of the Project. Section 5.03. The Borrower shall set paddy and rice prices at a level adequate to ensure sufficient incentives to farmers in the development area to be established under the Project and the recovery by SONADER of the cost of operating and maintaining the Project facilities. To this end, the Borrower shall in particu- lar: (i) periodically adjust the producer price for paddy as required for the purpose stated above; and (ii) gradually elimi- nate, over a period not extending beyond 1984, the subsidy of the consumer price of rice. Section 5.04. The Borrower shall prepare and thereafter implement, before completion of the Project, a national agricul- tural credit policy taking into account the experience of SONADER in this matter under the Project. - 11 - Section 5.05. The Borrower shall take all action necessary to ensure that SONADER receives, as and when due, the payments from farmers referred to in paragraph (b) (ii) of Section 4.01 of the Project Agreement, and undertakes to provide or cause to be provided to SONADER, promptly as needed, the amounts required to meet any shortfall in the funds available to SONADER in the Operating Account to cover its annual budget for the operation of the Project facilities and the provision of credit and services to farmers in the Project area. ARTICLE VI Remedies of the Association Section 6.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) SONADER shall have failed to perform any covenant, agreement or obligation of SONADER under the Project Agreement. (b) An extraordinary situation shall have arisen which shall make it improbable that SONADER will be able to perform its obligations under the Project Agreement. (c) Any of the Borrower's Decrees referred to in Section 1.02 (a) of this Agreement, or any provision of such Decrees, shall have been amended, suspended, abrogated, repealed or waived In such a way as to affect materially and adversely the ability of SONADER to carry out the covenants, agreements and obligations set forth in the Project Agreement. (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of SONADER or for the suspension of its operations. (e) (i) Subject to subparagraph (ii) of this paragraph: (A) the proceeds of any loan or grant listed in Part C of Schedule 3 to this Agreement shall not become available for disbursement, in accordance with the terms of the agreement providing therefor, as and when needed for the due and diligent execution of the Project; or - 12 - (B) the right of the Borrower to withdraw the proceeds of any grant or loan made to the Borrower for the financing of the Project, including grants and loans listed in Schedule 3 to this Agreement, shall have been sus- pended, cancelled or terminated in whole or in part, pursuant to the terms of the agreement providing therefor; or (C) any such loan shall have become due and payable prior to the agreed maturity thereof. (ii) Subparagraph (i) of this paragraph shall not apply if: (A) such delay in the availability of funds, suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obligations under such agreement; and (B) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement. Section 6.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) the event specified in paragraph (a) of Section 6.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower and SONADER; and (b) any event specified in paragraphs (c), (d) or (e) (i) (C) of Section 6.01 of this Agreement shall occur. ARTICLE VII Effective Date; Termination Section 7.01. The following events are specified as addi- tional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: - 13 - (a) GPD has been established and its Director has been appointed, all in accordance with the provisions of Section 2.01 (b) and paragraph (b) (i) of Section 3.01, respectively, of the Project Agreement. (b) The Special. Account has been opened as provided in Section 3.02 (c) of this Agreement. (c) The Operating Account has been opened as provided in Section 4.01 (a) of the Project Agreement and the initial amount specified in Section 4.02 (a) of this Agreement has been deposited therein. (d) The execution and delivery on behalf of the Borrower of the agreements providing for the loans and grants listed in Parts A and B of Schedule 3 to this Agreement has been duly authorized or ratified by all necessary governmental action and all other conditions (if any) precedent to the effectiveness of, or initial disbursements under, said agreements, other than ful- fillment of the conditions precedent to the effectiveness of this Agreement, have been satisfied. (e) Agreements providing for loans and grants as listed in Part C of Schedule 3 to this Agreement have been duly executed. Section 7.02. The following is specified as an additional matter, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association, namely, that the Project Agreement has been duly authorized by SONADER, and is legally binding upon SONADER in accordance with its terms. Section 7.03. The date 75;mor 2.1 19I is hereby speci- fied for the purposes of Section l2.0Z of the General Conditions. Section 7.04. The obligations of the Borrower under Article V of this Agreement and the provisions of paragraph (b) of Section 6.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty-five years after the date of this Agreement, whichever shall be the earlier. Section 7.05. If (i) the Fund Loan Agreement shall have come into force and effect and the Development Credit Agreement shall have failed to come into force and effect by the date specified in Section 7.03 of this Agreement or a later date - 14- established by the Association for the purposes of Section 12.04 of the General Conditions, or (ii) the entire principal amount of the Credit withdrawn from the CreOlt Account and all charges which shall have accrued on the Credit ohall have been paid before the Fund Loan Agreement shall have terminated, then, notwithstanding the provisions of Sections 12.04 and 12.05 of the General Condi- tions, the Development Credit Agreement shall be deemed to be, or to remain, in force and effect but only to the extent required for the purpose of implementing the Fund Loan Agreement and of orderly settlement of matters of mutual interest to the parties there- under, subject to such modifications of the Development Credit Agreement as shall be agreed between the Borrower, the Association and the Fund for such purposes. Section 7.06. If (i) the Fund Loan Agreement shall terminate in accordance with its terms before the Development Credit Agree- ment shall have terminated, or (ii) the Association shall notify the Borrower that its appointment as Cooperating Institution under the Fund Loan Agreement has terminated, the provisions of this Agreement shall, to the extent that they relate to the Fund Loan, forthwith terminate; provided, however, that-in respect of para- graph (ii) above, such termination shall apply only to the respon- sibilities of the Association as the Cooperating Institution. ARTICLE VIII Representative of the Borrower; Addresses Section 8.01. The Minister of the Borrower responsible for planning is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 8.02. The following addresses are specified for the purpose of Section 11.01 of the General Conditions: For the Borrower: Ministere de l'Economie et des Finances B. P. 238 Nouakchott Islamic Republic of Mauritania Cable address: Telex: MINIPLAN MPDI 540 MTN Nouakchott - 15 - For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. ISLAMIC REPUBLIC OF MAURITANIA Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By// o.re I to.~ cit C Akl w-j 4 Regional Vice President Western Africa - 16 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit and the Fund Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit and of the Fund Loan, the allocation of the amounts of the Credit and of the Fund Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of Amount of the the Credit Fund Loan Allocated Allocated % of (Expressed in SDR Expenditures Category Equivalent) to be financed (1) Civil works under 6,460,000 nil 32% Parts A (ii) and B (i) and (iii) of the Project (2) Force account 2,430,000 3,300,000 100% works under Part B (ii) of the Project (3) Services of nil 760,000 100% selected special- ists for Part C of the Project, as agreed between the Borrower, the Association, the Fund and SONADER (4) Operating expendi- nil 2,270,000 34% tures (including salaries of GPD staff, fuel, ferti- lizer, pesticides and other agri- cultural inputs) under Part C of the Project - 17 - Amount of Amount of the the Credit Fund Loan Allocated Allocated % of (Expressed in SDR Expenditures Category Equivalent) to be financed (5) Advances under 243,000 330,000 Section 3.02 (d) or (e) of this Agreement to pre- finance items under Category (2) above (6) Refunding of 380,000 nil Amount First Credit outstanding (7) Unallocated 1,887,000 940,000 TOTAL 11,400,000 7,600,000 2. The disbursement percentages have been calculated in com- pliance with the policy of the Association and the Fund that no proceeds of the Credit or of the Fund Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufac- ture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Credit or of the Fund Loan decreases or increases, the Association may, by notice to the Borrower, in- crease or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Association and the Fund. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expendi- tures prior to the date of this Agreement or the date of the Fund Loan Agreement, whichever shall be the later. 4. Notwithstanding the allocation of an amount of the Credit or of the Fund Loan or the disbursement percentages set forth in - 18 - the table in paragraph 1 above, and without limitation upon the provisions of Section 3.04 of this Agreement, if the Association has reasonably estimated that the amount of the Credit or of the Fund Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Cate- gory, the Association may, by notice to the Borrower: (i) reallo- cate to such Category, to the extent required to meet the esti- mated shortfall, proceeds of the Credit or of the Fund Loan which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expendi- tures, provided, however, that no such reallocation of proceeds of the Fund Loan shall be made to Categories (1) or (6); and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expen- ditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 5. If the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit or of the Fund Loan and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agree- ment or of the Fund under the Fund Loan Agreement, by notice to the Borrower, cancel such amount of the Credit and/or the Fund Loan as, in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit and/or the Fund Loan. - 19 - SCHEDULE 2 Description of the Project The Project is designed to provide gravity irrigation and agricultural development of a gross area of about 4,200 ha located in the Gorgol Noir Valley between Zreij and Mount Oua-Oua, about 75 km east of Kaedi. The Project consists of the following Parts: Part A: Dam and Conveyance Works (i) Construction of a dam on the Gorgol Noir River at Foum-Gleita in the Oua-Oua Mounts to create a reservoir with a storage capacity of about 500 million m3, including intake and outlet works. (ii) Construction of: (a) a main conveyance canal of about 3.6 km downstream from the Foum-Gleita dam on the left bank of the Gor2ol Noir River, with a capacity of about l0m- /sec; (b) a left bank conveyance canal of about 3 km down- stream from the end of the main conveyance canal, with a capacity of about 7m3/sec; and (c) a right bank conveyance canal of about 1.9 km downstream from the end of the main conveyance canal, with a capacity of about 3m3/sec, in- cluding a canal bridge to cross the Gorgol Noir River. Part B: Development Area Development of a gross area of about 4,200 ha, including net irrigated areas of about 2,480 ha on the left bank and about 1,140 ia on the right bank of the Gorgol Noir River, for irrigated rice, maize, sorghum and vegetable cultivation through: (i) Construction of gravity irrigation and surface drainage networks, including two primary irrigation canals, main drains and secondary canals and drains. - 20 - (ii) Construction of tertiary canals and drains and land clearing, levelling and on-farm development of about 3,620 ha to be irrigated. (iii) Construction of: (a) a primary road network totalling about 40 km, including roads along the conveyance and primary canals, a traverse road with a bridge across the Gorgol Noir River and a road link to M'Bout; and (b) a secondary*road network totalling about 140 km to provide access to each irrigation unit. (iv) Construction and equipping of offices for GPD, staff housing, a workshop, hangars, storehouses and a rice mill with a capacity of 5 t/h. (v) Construction and equipping of social infrastructure for 15 new villages to be established in the development area, including wells, schools, market sheds and health centers. (vi) Provision of agricultural and transport equipment and of vehicles for the operation of the facilities included in Parts A and B (i) through (v) of the Project. Part C: Settlement and Agricultural Development (i) Initial operation and maintenance of the facilities included in Parts A and B of the Project. (ii) Settlement of about 4,640 farm families in the develop- ment area to be established under Part B of the Project. (iii) Provision, on credit, of soil preparation services and inputs to such farm families, including seeds, ferti- lizer and pesticides. (iv) Provision of extension and marketing services to such farm families. The Project is expected to be completed by September 30, 1986. - 21 - SCHEDULE 3 Co-financing Arrangements for the Project Amounts Parts of (in millions) the in Currency in dollars Project Co-financing Unit of equiva- to be Institutions* Grant/Loan lent Financed A. Fund SDR 7.6 10 B (ii), C (including technical assistance) B. IDB 6 A (ii), B (i) and (iii) Libya 10 A (ii), B (i) and (iii) through (vi), C SFD SR 33.5 10 A (ii), B (i) and (iii) (in- cluding consultants' .services for supervision of construc- tion) * Abbreviations have the following meanings: Fund: International Fund for Agricultural Development IDB: Islamic Development Bank Libya: Government of the Socialist People's Libyan Arab Jamahiriya SFD: Saudi Fund for Development - 22 - Amounts Parts of (in millions) the in Currency in dollars Project Co-financing Unit of equiva- to be Institutions* Grant/Loan lent Financed C. ADFAED U.A.E.Dh 24 6.4 B (iv), (v) and (vi) FAC 5.4 C (tech- nical assistance) FED E.U.A. 9.385 13.2 A (i) (in- cluding consul- tants'ser- vices for supervision of constru- tion) KfW DM 16 8.5 A (i) (in- cluding consul- tants' services for super- vision of construc- tion), C (technical assistance) * Abbreviations have the following meanings: ADFAED: Abu Dhabi Fund for Arab Economic Development FAC: Fonds d'Aide et de Coopgration of the Republic of France FED: Fonds Europ6en de Dgveloppement of the European Economic Community KfW: Kreditanstalt fUr Wiederaufbau of the Federal Republic of Germany - 23 - Amounts Parts of (in millions) the ir. Currency in dollars Project Co-financing Unit of equiva- to be Institutions* Grant/Loan lent Financed D. FED 2.8 A (ii), B (i) and (iii) TOTAL 72.3 * Abbreviations have the following meanings: ADFAED: Abu Dhabi Fund for Arab Economic Development FAC: Fonds d'Aide et de Coopgration of the Republic of France FED: Fonds Europeen de D6veloppement of the European Economic Community KfW: Kreditanstalt fUr Wiederaufbau of the Federal Republic of Germany INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association, In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the 2L day of 198 iL. FOR SECRETARY