Morocco - Loukkos Rural Development Project : Loan 1848 - Loan Agreement - Conformed

OFFI A.%T DOCUMENW - -LOAN NUMBER 1848 MOR Loan Agreement (Loukkos Rural Development Project) between KINGDOM OF MOROCCO and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Date , 1980 LOAN NUMBER 1848 MOR LOAN AGREEMENT AGREEMENT, datedefflca - 2 - a , 1980, between KINGDOM OF MOROCCO (hereinafter called the Borrower)-and INTER- NATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). ARTICLE 1 General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated October 27, 1980 with the same force and effect as if they were fully set forth herein (said General Conditions ApplicaLle to Loan and Guarantee Agreements of the Bank 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 General Conditions have the respective meanings*therein set forth and the following additional terms have the following meanings: (a) "Dirham" or the sign "DH" means the,currency of the Borrower; (b) "CNCA" means the Borrower's Caisse Nationale de Cr6dit Agricole; (c) "CLCA" means any Caisse Locale de Credit Agricole operating as a local branch of CNCA; (d) "MARA" means the Borrower's ministry responsible for agriculture and agrarian reform; and (e) "Project area" means the area described in Schedule 2 hereto. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set for -, or referred to, an amount in various currencies equivalent to thirty-four million dollars ($34,000,000). -2- Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank, for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan. Section 2.03. Except as the Bank shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be June 30, 1987 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to the Bank a co-mmitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.06. The Borrower shall pay interest at the rate of eight and twenty-five hundredths per cent (8.25%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semiannually on March 1 and September 1 in each year. Section 2.08. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out Parts A, B, C, D, E (4), (5), F and I of the Project through MARA, Part E (1) through the ministry in charge of public works, Part E (2) through the ministry in charge of education, Part E (3) through the ministry in charge of public health, Part G through CNCA, and Part H through the various departments involved, with due dili- gence and efficiency, in accordance with Schedule 2 to this Agreement, and in conformity with appropriate administrative, financial, engineering, construction, and agricultural practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required therefore. (b) Without limitation upon its obligations under paragraph (a) of this Section, the Borrower shall ensure that CNCA, through CLCA, will make agricultural credit available to farmers in the Project area in accordance with its standard operating proce- dures and eligibility criteria so as to meet in a timely manner all needs for agricultural credit required under the Project. (c) With respect to the management of the Project, the Borrower shall take the necessary measures to ensure that: (i) the National Project Coordinating Committee, already established and composed of representatives of the departments involved in the Project, will meet at least once every six months during the Project execution period and will be responsible for the effective coordination of Project activi- ties at the national level; (ii) at the level of the Project area, an Inter- provincial Project Coordinating Committee composed of representatives of the departments involved will meet at least once every three months during Project implementation in order to coordinate the execution of the Project, except for Parts F and I thereof. The Provincial Director of Agriculture for Chaouen will be responsible for the management of the technical aspects of the Project as well as for the Committee's secretariat; (iii) the technical staff and extension agents will actively cooperate with the representatives of the villagers for the implementation of the Project soil conservation measures and related investments on the farm level; and (iv) Part F of the Project will be executed under the direction and responsibility of the Direction de la Conservation Fonciere et des Travaux Topo- graphiques of MARA. (d) The Borrower shall, through MARA, take all appropriate measures (i) to continue to employ suitably qualified and experienced technical and administrative personnel for the Project to be in charge of agricultural development, livestock, water and forestry, and rural engineering, (ii) to ensure that all tech- nical and extension staff referred to in Parts A (3) and B (3) of Schedule 2 shall be suitably qualified and experienced and shall have assumed their functions by June 30, 1982 (or such later date as may be agreed upon between the Borrower and the Bank) and that all technical staff referred to in Part C (3) of Schedule 2 shall be suitably qualified and experienced and shall have assumed their functions by June 30, 1981 (or such later date as may be agreed upon between the Borrower and the Bank), and (iii) to ensure proper coordination for the execution of Part C (2) of the Project. Section 3.02. In order to assist the Borrower in carrying out Parts D (3), H and I of the Project, the Borrower shall employ by June 30, 1981 (or such later date as may be agreed upon between the Borrower and the Bank), consultants whose qualifications, experience and terms and conditions of employment shall be satis- factory to the Bank. Section 3.03. (a) The Borrower undertakes to insure, or to make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such in- surance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) Except as the Bank shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the Project. Section 3.04. (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. -5- (b) The Borrower shall ensure that each of the Ministries of the Borrower responsible for the execution of the Project in accor.4ance with the provisions of Section 3.01 of this Agreement: (i) shall maintain records and procedures adequate to record and monitor the progress of the Project (including its cost and the benefits to be derived from it), to identify the goods and ser- vices financed out of the proceeds of the Loan, and to disclose their use in the Project; (ii) shall enable the Bank's accredited representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) shall furnish to the Bank at regular intervals all such information as the Bank shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Loan and the goods and services financed out -,f such proceeds. (C) Promptly after the end of each calendar year, but in any event not later than March 31 of the following year, the Borrower, through MARA, shall prepare and furnish to the Bank a report, of such scope and in such detai-l as the Bank shall reasonably request, on the execution and operation of the Project, and stating the investments and expenditures incurred under the Project during the previous calendar year. (d) Promptly after compleCion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Bank, the Borrower, through MARA, shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reasonably request, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Bank of their respective obligations under the Loan Agreement and the accomplishment of the purposes of the Loan. Section 3.05. The Borrower shall take or cause to be taken all such action as shall be necessary to acquire as and when needed all such land and rights in respect of land as shall be required for carrying out the Project and shall furnish to the Bank, promptly after such acquisition, evidence satisfactory to the Bank that such land and rights in respect of land are available for the purposes of the Project. Section 3.06. The Borrower, through MARA and the Ministry in charge of the Interior, shall cause the necessary measures to be -6- taken to develop and implement the program of collective grazing lands referred to under Part B (3) (b) of the Project. Section 3.07. With respect to Part F of the Project, the Borrower and the Bank shall agree from time to time on the parts of the program to establish a national land register which will be financed out of the proceeds of the Loan. In any event, such agreement shall be reached prior to the publication of the request for bids for such parts. Progress of the national cadastral program shall be reviewed annually between the Borrower and the Bank. Section 3.08. With respect to the carrying out of Parts A (1) (e) at-d B (1) (d) of the Project, the Borrower shall cause the beneficiaries to carry out the on-farm development works and maintenance and to contribute the non-skilled labor necessary for the construction, operation, aznd maintenance of the off-farm components of the irrigation system. ARTICLE IV Other Covenants Section 4.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, special security from the member con- cerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distri- bution of foreign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which w4.ll or might result in a priority for the benefit of the creditor of such external debt in the allo- cation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Borrower, in creating or permitting the creation of such lien, shall make express provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or administrative subdivisions, the Borrower shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank. -7- (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; and (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "public assets" means assets of the Borrower, of any political or administrative subdivision thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Borrower or any such subdivision, including gold and foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Borrower. Section 4.02. (a) The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with consistently maintained sound accounting practices the operations, resources and expenditures, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof, including, without limitation to the foregoing, separate accounts reflecting all expenditures described in Categories 3 and 5 of the table in paragraph 1 of Schedule 1 to this Agreement on account of which withdrawals are requested from the Loan Account on the basis of certificates of expenditures as set forth in Part E of Schedule 4 hereto. (b) With respect to the separate accounts referred to in Section 4.02 (a) of this Agreement, the Borrower shall cause: (i) such accounts for each fiscal year to be audited, in accor- dance with appropriate auditing principles consistently applied, by the Borrower's Ministry responsible for finance; (ii) a detailed report of such audit to be prepared by said Ministry and to be furnished to the Bank, not later than four months after the end of each fiscal year, such report to include, inter alia, a separate opinion by said Ministry in respect of such expenditures showing whether the proceeds of the Loan withdrawn from the Loan Account for the purpose of such works have been used for the purpose for which they were provided; and (iii) to be furnished to the Bank such other information concerning such accounts and the audit thereof as the Bank may from time to time reasonably request. (c) Without limitation upon the generality of paragraphs (a) and (b) of this Section, the Borrower shall retain, until at -8- least one year after the Closing Date, all records (orders, invoices, bills, receipts and other documents) evidencing the expenditures on account of which withdrawals are or have been requested from the Loan Account for the purpose of works carried out by force account (as set forth in Schedule 4 hereto) and shall enable the Bank's accredited representatives to inspect such records. Section 4.03. The Borrower shall cause all facilities, equipment, roads, and works included in the Project to be at all times staffed, operated and maintained in accordance with appro- priate agricultural, technical, training, traffic, education, and public health practices, shall cause all necessary repairs thereof to be made, and shall provide, promptly as needed, the funds, facilities, services and other resources required therefor. Section 4.04. For the purposes of carrying out Parts A and B of the Project, the Borrower shall maintain in effect the decree classifying the Project area as a soil conservation control zone ("perimetre de defense et de restauration des sols dtint6ret national"), the decree classifying and delineating the collective grazing lands as range improvement zones ("perimetres d'ameliora- tion pastorale"), and the "arretes" for the implementation of said decrees, it being understood and agreed that (a) the bene- ficiaries' contribution to the realization of the productive soil conservation investments referred to under Part A (1) (c) (d) (f) of the Project will consist of the provision of their labor, (b) the beneficiaries will be responsible for carrying out the main- tenance of all such productive soil conservation investments, and (c) the Borrower will finance the whole cost of construction and maintenance of erosion control works referred to under Part A (1) (a) (b) of the Project, whether on private or state land. ARTICLE V Remedies of the Bank Section 5.01. For the purposes of Section 6.02 of the General Conditions, the following additional event is specified pursuant to paragraph (k) thereof, namely that any of the follow- ing shall have been materially amended, suspended, abrogated, repealed or waived so as to materially and adversely affect the Project: Dahir No. 1-69-25 of July 25, 1969 of the Borrower, the decrees promulgated in connection therewith, Dahir No. 1-69-170 of July 25, 1969, and Dahir No. 1-69-171 of July 25, 1969, the -9- decrees and arretes promulgated in connection therewith, and the decrees and arretes referred to in Section 4.04 of this Agreement. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof, namely that any of the events specified in Section 5,01 of this Agreement shall occur and shall continue for a period of 90 days after notice thereof shall have been given by the Bank to the Borrower. ARTICLE VI Termination Section 6.01. The date 4AL e ! / 9OP, is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministere des Finances Rabat Kingdom of Morocco Cable address: Telex: MINISTERE FINANCES 31936 Rabat, Morocco - 10 - For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 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. KINGDOM OF MOROCCO By I Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Regional Vice President Europe, Middle East and North Africa - 11 - SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Construction of 7,200,000 70% buildings and houses (2) Civil works for 7,500,000 70% roads under Part E (1) (a) (b) of the Project (3) Erosion control 8,200,000 70% works, forestry development, irri- gation improve- ment, pasture im- provement, con- struction and improvement of markets and water points, and farm access tracks under Parts A (1) (a) (b), A (2) (a), B (1) (c), C (1) (a) (b) (c) (e), C (2), and E (4) (5) of the Project (4) Vehicles and 2,100,000 100% of foreign equipment expenditures and 80% of local expendi- tures - 12 - Amount of the Loan Allocated % of (Expressed in 7xpenditures Category Dollar Equivalent) to be Financed (5) Soil conservation, 2,500,000 70% of Govern- irrigation under ment expendi- Parts A (1) (c) (d) tures (e) (f) and B (1) (d) of the Project (6) Consultants and 1,000,000 100% of foreign training abroad expenditures and 80% of local expendi- tures (7) Cadastral survey 2,800,000 70% (8) Unallocated 2,700,000 TOTAL 34,000,000 2. For the purposes of this Schedule: .(a) the term "foreign expenditures" means expenditures in the currency of any country other than the Borrower or for goods or services supplied from the territory of any country other than the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower and for goods or services supplied from the territory of the Borrowr. 3. The disbursement percentages have been calculated in compli- ance with the policy of the Bank that no proceeds of the 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, manufacture, 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 Loan decreases or increases, the Bank may, by notice to the Borrower, - 13 - increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Bank. 4. 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, except that withdrawals in an aggregate amount not exceeding the equivalent of $800,000 may be made in respect of Categories (1), (3), (4) and (5) on account of payments made for such expenditures before that date but after October 15, 1979. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in para- graph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insuffi- cient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures provided, however, that the Bank shall not make such reallocation to or from Category (7) without the prior agreement of the Borrower; and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Bank 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 Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as, in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. - 14 - SCHEDULE 2 Description of the Project Except for Part F of the Project, the Project area comprises about 59,000 ha of the Loukkos basin in northwestern Morocco. It is divided into three subproject areas: the Upper Loukkos (about 15,000 ha), the Zaz Valley or Middle Loukkos (about 31,000 ha), and the Izarene Forest (about 13,000 ha). Part F will cover such areas as shall be agreed between the Borrower and the Bank. The Project is designed to increase incomes and productivity of farmers living within the Project area. This will be accom- plished through soil conservation measures designed to improve the present farming practices. The Project is also designed to improve social infrastructure in the Project area and to finance a slice of the national cadastre program. The Project consists of the following Parts: Part A: Upper Loukkos (1) Agricultural practices and investments: (a) establishment of firewood and forage plants on about 2,800 ha of badly eroded lands and hillsides; (b) construction of stone terraces on about 1,500 ha of cultivated lands and of some 3,500 stone check dams in rapidly eroding gullies; (c) establishment of contour strips of pasture and forage bushes (about 1,050 ha) on steeply sloping cultivated lands and establishment of permanent pasture on about 300 ha of eroded land; (d) establishment of fruit trees, particularly olive trees, on about 2,250 ha; (e) improvement of simple gravity irrigation systems on about 400 ha; (f) crop improvement on about 5,000 ha of field crops; and - 15 - (g) construction and equipment of a goat breeding station for the introduction and development of milking goats. (2) Infrastructure (a) construction of about 73 km of farm access tracks and provision of equipment for the construction and maintenance of such tracks; (b) construction of a work center, housing and offices, and provision of equipment and vehicles, for the staff at the work center of Mokrisset, and construction of a farm supply center. (3) Agricultural Support Services (a) the agricultural support services (foresters, agricultural extension staff and livestock experts), serving the Upper Loukkos area from the Mokrisset work center will be expanded to about 13 over the first two years of Project implementation. The agricultural support services will emphasize particularly: (i) fruit tree plantings, forage bush plantings, construction of erosion control works and pasture improvement; (ii) better forage conser- vation and utilization and profitable livestock management by concentrating on the introduction of milking goats for the production of cheese; and (iii) application of hillside farming practices resulting in better land and water utilization and soil conservation; and (b) establishment of a separate farm supply center at the Mokrisset work center for the sale of seed, fertilizers, insecticides, tools and other sup- plies. Part B: Zaz Valley (1) Agricultural practices and investments: (a) development of field crops on about 17,500 ha, including the planting of about 1,000 ha of sugar beets, and the introduction of mechanized hay and silage making; (b) introduction of contour farming; - 16 - (c) improvement of about 2,300 ha of collectively owned grazing land, particularly through shrub clearance, reseeding, and improved management practices; (d) rehabilitation of simple gravity irrigation on about 250 ha; and (e) construction and equipment of cattle serving centers, an artificial insemination station for cattle, and a sheep breeding station for the introduction of improved sheep breeds. (2) Infrastructure Construction of a work center, housing and offices, and provision of equipment and vehicles therefore, at Asjene and at three sub-centers in Hammara, Es Sebt, and Zeitouna, and construction of a farm supply center at Asjene. (3) Agricultural Support Services (a) the agricultural support services serving the Zaz Valley will be increased to about 35, including technical management staff; (b) extension agents will assist farmers in improving crop and livestock production techniques, with emphasis on increasing farm profitability and introducing soil conservation practices; they will also assist farmers and rightholders to collective lands in organizing farming and grazing associations and cooperatives, and, eventually, in engaging in cattle fattening operations and the management of cattle serving centers; and (c) establishment of a separate farm supply center at each work center for the sale of seed, fertilizers, insecticides, tools and other supplies. Part C: Izarene Forest (1) Plantation establishment, maintenance and protection: (a) vegetation clearance of about 3,500 ha with intro- duction, on an experimental basis, of mechanical strip clearance; - 17 - (b) plantation of pines on all cleared areas; (c) establishment of 25 km of access tracks and pro- vision of equipment necessary for the construction and maintenance of such tracks; (d) reinforcement of forest protection measures; and (e) maintenance of existing plantations (about 3,400 ha) and undergrowth clearing in all plantations established in 1972-1978 (about 1,600 ha). (2) Research Approximately 120 ha of research plantations will be established during the first three years of the Project to test new forest establishment and maintenance tech- niques developed in other parts of the Mediterranean Basin, including (a) avoidance of the use of planting trenches, (b) increasing planting density to 1,110/ha, (c) application of mineral fertilizer at planting, and (d) experimentation of forestry management techni- ques. (3) Forest Management One district chief each for Bou Nizer and Izarene, and two assistant foresters each for Bou Nizer and Izarene will be recruited for the Project. With respect to the plantations established under the forestry research program, research officers from the Forest Research Division of MARA will continue to assist the work of the local foresters. Part D: Training and Technical Assistance (1) Graduates of agricultural schools assigned to the Project will receive an additional one-year practical course in farm operation and management at the Sahel Boutahar training center. Subject matter specialists of the Chaouen agricultural support services will establish an in-service training program for existing extension staff. Additional on-the-job training in specialized technologies will be provided by consultants in live- stock production and range improvement and management. - 18 - (2) About twelve agricultural support staff members respon- sible for the carrying out of Parts A, B and C of the Project shall be provided with short-term trainee- ships abroad. (3) Assistance shall be provided to the agricultural support services serving the Project area as and when needed, particularly with respect to the establishment of goat cheese factories, the improvement of grazing lands, and the training of instructors for the extension staff, through the provision of short-term consultant services for an aggregate of about 48 man-months. Part E: Infrastructure (1) Roads (a) construction of about 58 km of all-weather unpaved farm access roads in the Upper Loukkos; (b) construction of (i) 68 km of tertiary roads: 27 km of CT 2670 connecting the Zaz Valley subproject area with Mzefroun and the RP 23 primary road, and 41 km of CT 2641 linking Asjene with Brikcha, and (ii) 54 km of unpaved all-weather farm and village access roads in the Zaz Valley; and (c) provision of road maintenance equipment for main- tenance of non-classified Project roads. (2) Education Construction, equipment and staffing of 11 new primary schools and expansion of 5 existing ones for a total of about 53 new classrooms, and construction of about 45 lodgings for teachers. (3) Health Construction, equipment and staffing of a new rural health center, two dispensaries and 8 lodgings for nurses. (4) Water Rehabilitation of approximately 40 water points each comprising a drinking fountain, clothes washing facil- ities and an animal drinking trough. - 19 - (5) Markets (Souks) Construction of a market at Asjene, and improvement of markets at Sebt Brikcha and Mokrisset through the construction of buildings, stores, a small slaugh- terhouse and their connection to the piped potable water system. Part F: National Cadastre Aerial and ground surveying of approximately 500,000 ha of land to be carried out as part of the Borrower's on-going program to establish a national land register. Part G: Credit Short-, medium-, and long-term credit for the Project will be provided through the CLCA serving the Project area. Additional credit windows will be opened as warranted by demand. Part H: Monitoring Evaluation All Project activities shall be monitored by the departments responsible for their execution. Periodic reports will be fur- nished to t7he Project Director who will forward them to the monitoring and evaluation unit established for the Project within the Planning and Economic Affairs Directorate of MARA for the purpose of enabling it to evaluate the implementation of the Project. This Unit shall also establish a program for moni- toring and evaluation of projects at the national level. Part I: Study of the Agricultural Investment Code MARA will review and evaluate the impact of the Agricultural Investment Code since its promulgation and, if appropriate, recommend modifications thereto. The Project is expected to be completed by December 31, 1986. - 20 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each March 1 and September 1 beginning September 1, 1984 through September 1, 2001 945,000 On March 1, 2002 925,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.04), the figures in this column represent dollar equiva- lents determined as for purposes of withdrawal. - 21 - Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.04 (b) of the General Conditions: Time of Prepayment Premium Not more than three years 1.10% before maturity More than three years but not 2.25% more than six years before maturity More than six years but not 4.10% more than eleven years before maturity More than eleven years but not 6.00% more than sixteen years before maturity More than sixteen years but not 7.50% more than twenty years before maturity More than twenty years 8.25% before maturity - 22 - SCHEDULE 4 Procurement A. International Competitive Bidding 1. Except as provided in Parts C and E hereof, goods and civil works shall be procured under contracts awarded in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. For goods and works to be procured on the basis of inter- national competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, the Borrower shall prepare and forward to the Bank as soon as possible, and in any event not later than 60 days prior to the date of availability to the public of the first tender or prequalification documents relating thereto, as the case may be, a general procurement notice, in such form and detail and containing such information as the Bank shall reasonably request; the Bank will arrange for the publication of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods and works in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods or works remain to be procured on the basis of international competitive bidding. 3. Grouping of contracts: contracts for vehicles, equipment, housing, buildings, and cadastral surveys shall, whenever prac- tical, be grouped to form appropriate bid packages. Bidders shall be allowed to bid for one contract or a combination of contracts. 4. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international competitive bidding: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for the imported goods, or the ex-factory price or off-the-shelf price of other goods, offered in such bid; and (ii) customs duties and other import taxes levied in connection with the importation, or the sales and similar taxes levied in connection with the sale or delivery, pursuant to the bid, of the goods shall not be taken into account in the evaluation of the bids. - 23 - B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A of this Schedule, goods manufactured in Morocco may be granted a margin of preference in accordance with,_ and subject to, the following provisions: 1. All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. 2. After evaluation, responsive bids will be classified in one of the following three groups: Group A: bids offering goods manufactured in Morocco if the bidder shall have established to the satisfaction of the Borrower and the Bank that the manufacturing cost of such goods includes a value added in Morocco equal to at least 20% of the ex-factory bid price of such goods. Group B: all other domestic bids. Group C: bids offering any other goods. 3. In order to determine the lowest evaluated bid of each group, all evaluated bids in each group shall first be compared among themselves, without taking into account customs duties and other import taxes levied in connection with the importation, and sales and similar taxes levied in connection with the sale or delivery, pursuant to the bids, of the goods. Such lowest eval- uated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. 4. If, as a result of the comparison under paragraph 3 above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the evaluated bid price of the imported goods offered in each group C bid, for the purpose of this further comparison only, an amount equal to: (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such - 24 - group C bid; or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from group C which as a result of the comparison under paragraph 3 is the lowest evaluated bid shall be selected. C. Other Procurement Procedures Notwithstanding the provisions of Part A of this Schedule: 1. Vehicles, equipment, housing, buildings and the cadas- tral survey may be procured in accordance with local procedures acceptable to the Bank, provided, however, that the cost of individual contracts is equal to or less than the equivalent of $300,000 for housing, buildings, or the cadastral survey and $150,000 for vehicles or equipment. 2. Works relating to erosion control, pasture improvement, clearing and forest establishment, irrigation, water points, market construction and improvement, and farm access tracks to be financed under Categories 3 and 5 of the table of paragraph 1 of Schedule 1 to the Loan Agreement will be procured in accordance with local procedures acceptable to the Bank or by force account as provided in Part E hereof. 3. With respect to all contracts procured under this Part C, the Borrower shall cause the Bank to be furnished, promptly after execution, with two conformed copies of the contracts together with the analysis of the respective bids received and the recommendations for award. D. Review of Procurement Decisions by the Bank 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts for road construction -nder Category 2 of the table of paragraph 1 of Schedule 1, and with respect to all contracts for housing, buildings, or cadastral survey in excess of $300,000 equivalent, and with respect of all contracts for vehicles or equipment in excess of $150,000 equivalent: (a) Before bids are invited, the Borrower shall furnish to the Bank, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together - 25 - with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Bor- rower shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and shall furnish to the Bank, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Bank's concurrence, materially differ from those on which bids were asked. (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the sub- mission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 2. With respect to each contract not governed by the preceding paragraph, the Borrower shall furnish to the Bank, promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract, two conformed copies of such con- tract, together with the analysis of the respective bids, recom- mendations for award and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. 3. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an exten- sion of the stipulated time for performance of such contract, or issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than 25% of the original price, the Borrower shall inform - 26 - the Bank of the proposed modification, waiver, extension or change order and the reasons therefor. The Bank, if it determines that the proposal would be inconsistent with the provisions of this Agreement, shall promptly inform tha Borrower and state the reasons for its determination. 9. Procurement Without Contracting Works to be financed under Categories 3 and 5 of the table in paragraph 1 of Schedule 1 to the Loan Agreement may h2 carried out by the Borrower by force account. Each withdrawal application with respect to works carried out by force account shall be supported by a certificate of expenditure listing the expen- ditures on account of which the withdrawal is requested and certifying that they were made for the Project. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this day of M& 198 0. FOR SECRETARY