Honduras - Second Agricultural Credit Project : Loan 1833 - Project Agreement - Conformed

OFFCIAL LOA~N NJ813ER M~33 HOB DOCUMENTS5 CREDIT NUMBER J66- HO Project Agreement (Second Agricultural Credit Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and BANCO CENTRAL DE HONDURAS Dated , 1980 PROJECT AGREEMENT AGREEMENT, dated A , 1980, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and BANCO CENTRAL DE HONDURAS (hereinafter called Banco Central). WHEREAS (A) by the Development Credit Agreement of even date herewith between Republic of Honduras (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equi- valent to five million dollars (US$5,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that Banco Central agree to undertake such obliga- tions toward the Association as are hereinafter set forth; (B) by the Loan Agreement of even date herewith between the Borrower and the Bank, the Bank has agreed to lend to the Borrower an amount in various currencies equivalent to twenty million dollars (US$20,000,000) (hereinafter called the Loan), on the terms and conditions set forth in the Loan Agreement, but only on condition that Banco Central agree to undertake such obligations toward the Bank as are hereinafter set forth; (C) by the Subsidiary Agreement to be entered into between the Borrower and Banco Central, the proceeds of the Credit and of the Loan will be made available to Banco Central on the terms and conditions therein set forth; and WHEREAS Banco Central, in consideration of the foregoing has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. -2- ARTICLE II Execution of the Project Section 2.01. Banco Central shall carry out the Project described in Schedule 2 to the Development Credit Agreement with due diligence and efficiency and in conformity with appro- priate administrative, financial, agricultural and engineering practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 2.02. In order to assist Banco Central in carrying out Part A of the Project, Banco Central shall employ consultants whose qualifications, experience, terms and conditions of employ- ment shall be satisfactory to the Association and the Bank. Section 2.03. Except as the Association and the Bank shall otherwise agree, the goods and works for the Project to be financed out of the proceeds of the Credit and the Loan, shall be procured in accordance with the provisions of Schedule 3 to the Development Credit Agreement. Section 2.04, Banco Central undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit and Loan made available to it by the Borrower against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by Banco Central to replace or repair such goods. Section 2.05. (a) Banco Central shall furnish and cause each Project Entity to furnish to the Association and the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association and the Bank shall reasonably request. (b) Banco Central: (i) shall maintain and cause each Project Entity to maintain records adequate to record the progress of the Project (including the cost thereof) and to identify the goods, works and services financed out of the proceeds of the Credit and Loan made available to it by the Borrower, and to disclose the use -3- thereof in the Project; (ii) shall enable and cause each Project Entity to enable the Association's and Bank's representatives to visit the facilities, construction sites, works, buildings and equipment included in or related to the Project, and to examine the goods financed out of such proceeds and any relevant records and documents; and (iii) shall furnish and cause each Project Entity to furnish to the Association and the Bank all such information as the Association and the Bank shall reasonably request concerning the Project, the expenditure of the proceeds of the Credit and the Loan made available to it and the goods, works and services financed out of such proceeds. Section 2.06. Except as the Association and the Bank shall otherwise agree, Banco Central shall: (a) enter into the Subsidiary Agreement with the Borrower; (b) for the purposes of carrying out Parts A.1 to A.3 of the Project, enter into lending contracts with each Participating Intermediary (the Project Administration Contracts) on such terms and conditions as shall be satisfactory to the Association, including such terms and conditions as are set forth in Section 1 of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower, the Asso- ciation, the Bank and Banco Central; (c) for the purpose of carrying out Part A.4 of the Project, enter into lending contracts with municipalities on such terms and conditions as shall be satisfactory to the Association and the Bank, including such terms and conditions set forth in paragraph 11 of Schedule 1 to this Agreement; (d) for the purpose of carrying out Parts B, C and D.1 to D.3 of the Project, enter into Project Administration Contracts with COHDEFOR, COHBANA and Ministerio, on such terms and condi- tions as shall be satisfactory to the Association and the Bank; (e) duly perform its obligations under the Subsidiary Agreement, each Project Administration Contract and each Municipal Sub-loan Contract and exercise its rights thereunder, in such a manner as to protect the interests of the Borrower, the Associa- tion, the Bank and Banco Central and to accomplish the purposes of the Credit and the Loan, and except as the Association and the Bank shall otherwise agree, Banco Central shall not assign, nor -4- amend, abrogate, waive or fail to enforce, the Subsidiary Agree- ment, each Project Administration Contract, and each Municipal Sub-loan Contract, or any provision thereof; (f) open and maintain on its books a Project Account, such Project Account to have as many sub-Project Accounts as shall be satisfactory to the Association and the Bank, to which the proceeds of the Credit and the Loan made available to Banco Central by the Borrower under the Subsidiary Agreement shall be credited and through which all payments under the Subsidiary Agreement, each Project Administration Contract, and each Muni- cipal Sub-loan Contract, shall be made; and (g) ensure that all amounts paid by: (i) the Participating Entities to Banco Central under each Project Administration Contract, less (ii) any charge paid by Banco Central to the Borrower under the Subsidiary Agreement, less (iii) such direct operating expenses of Banco Central which are attributable to the administration of the Project, and less (iv) such payments of principal made to the Borrower under the Subsidiary Agreement for purposes of servicing the Credit and the Loan, shall be used for further lending for the same purposes of Part A of the Project for a period of 20 years from the date of this Agreement on such terms and conditions as shall be agreed from time to time between the Association, the Bank and Banco Central. Section 2.07. (a) Banco Central shall, at the request of the Association or the Bank, exchange views with the Association or the Bank with regard to the progress of the Project, the per- formance of its obligations under this Agreement and under the Subsidiary Agreement, and other matters related exclusively to the purposes of the Credit and the Loan. (b) Banco Central shall promptly inform the Association and the Bank of any condition which interferes or threatens to interfere with, the progress of the Project, the accomplishment of the purposes of the Credit and the Loan, or the performance by Banco Central of its obligations under this Agreement, the Subsi- diary Agreement, each Project Administration Contract and each Municipal Sub-loan Contract. Section 2.08. Banco Central shall furnish to the Association and the Bank, promptly upon their execution, certified copies of every Project Administration Contract and every Municipal Sub-loan Contract, and shall furnish to the Association aiid the Bank upon request, copies of any Sub-loan Contract. -5- ARTICLE III Management and Operations of Banco Central Section 3.01. Banco Central shall: (a) conduct the Project activities through the Project Unit, such Unit to be provided with facilities in a manner satisfactory to the Association and the Bank and to be headed by the Project Director; (b) maintain the Project Unit until the Project completion report referred to in Section 4.03 of this Agreement has been delivered to the Association and the Bank in form and substance satisfactory to the Association and the Bank; (c) employ, upon terms and conditions of employment satis- factory to the Association and the Bank, a Project Director, acceptable to the Association and the Bank, who shall perform, inter alia, the functions referred to in Schedule 2 to this Agreement; (d) at all times take all action necessary or advisable to enable the Project Executive Committee to carry out its functions as provided in Section 3.02 of the Development Credit Agreement; (e) without limitation or restriction upon the provisions of paragraph (a) of this Section: (i) maintain and operate a Revolving Fund in Lempiras in amounts, satisfactory to the Asso- ciation and the Bank, adequate for meeting the financial require- ments of a timely execution of the Project, and (ii) maintain rules and guidelines, satisfactory to the Association and the Bank, for the operation of such Fund; and (f) establish and maintain, as part of the Borrower's monetary policies, rediscount facilities, satisfactory to the Association and the Bank, for the short-term financing to be provided by Participating Intermediaries to Beneficiaries together with the Sub-loans. ARTICLE IV Financial Covenants Section 4.01. Banco Central shall maintain and cause each Participating Intermediary and COHDEFOR to maintain records adequate to reflect in accordance with consistently maintained -6- appropriate accounting practices its operations and financial condition. Section 4.02. Banco Central shall: (a) have and cause each Participating Intermediary and COHDEFOR, to have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with sound auditing principles consistently applied, by independent auditors acceptable to the Association and the Bank; (b) furnish and cause each Participating Intermediary and COHDE- FOR, to furnish to the Association and the Bank as soon as avail- able, but in any case not later than four months after the end of each such year, (i) certified copies of its financial statements for such year as so audited and (ii) the report of such audit by said auditors, of such scope and in such detail as the Association and the Bank shall have reasonably requested; and (c) furnish and cause each Participating Intermediary and COHDEFOR to furnish to the Association and the Bank such other information concerning the respective accounts and financial statements of Banco Central, each Participating Intermediary and COHDEFOR and the audit thereof as the Association and the Bank shall from time to time reasonably request. Section 4.03. Promptly after completion 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, Banco Central, the Association and the Bank, Banco Central, through the Project Unit, shall prepare and furnish to the Association and the Bank a report, of such scope and in such detail as the Association and 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 perfor- mance by the Borrower, Banco Central, the Project Entities, the Bank and the Association of their respective obligations under the Development Credit Agreement, the Loan Agreement and the Project Agreement and the accomplishment of the purposes of the Credit and the Loan. ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. -7- Section 5.02. (a) This Agreement and all obligations of the Association and the Bank and of Banco Central thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) a date 20 years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify Banco Central of this event. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the Development Credit Agreement. ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For the Association and the Bank: International Development Association and International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) INTBAFRAD 248423 (RCA) or Washington, D.C. 64145 (WUI) -8- For Banco Central: Banco Central de Honduras Tegucigalpa, D.C. Honduras C.A. Cable address: BANTRAL Tegucigalpa Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of Banco Central may be taken or executed by its President or such other person or persons as such President shall designate in writing, and Banco Central shall furnish to the Association and the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collec- tively but one instrument. 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. INTERNATIONAL DEVELOPMENT ASSOCIATION By /sj F,z j" A-&x Regional Vice President Latin America and the Caribbean INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AcB,K Regional Vice President Latin serica and the Caribbean BANCO CENTRAL DE HONDURAS Authorized Representative -9- SCHEDULE 1 Lending and Operating Policies and Procedures under Part A of the Project SECTION I. PROJECT ADMINISTRATION CONTRACTS 1. Banco Central will enter into Project Administration Con- tracts with Participating Intermediaries wishing to participate in Part A of the Project, the qualifications of which satisfy, inter alia, the criteria: (a) satisfactory experience and good performance in agri- cultural lending; (b) adequate financial condition and management, including compliance with the auditing requirements established by the relevant national laws; (c) adequate managerial, administrative and technical capabilities at national, regional and branch levels; (d) adequate technical staff in terms of number, experience, and qualifications to be assigned to the project; and (e) adequate network of branch offices or agencies. 2. Project Administration Contracts will require that the proceeds of the Loan and Credit be used exclusively for granting Sub-loans to beneficiaries for carrying out Investment Plans under terms and conditions, satisfactory to the Association and the Bank, which will, inter alia, ensure that: (a) the objectives of the lending program would be to promote agricultural development through the provision of medium- and long-term credit in accordance with the eligibility and lending terms set out in Section II of this Schedule; (b) Project Administration Loans will be made and be repay- able in Lempiras; (c) Project Administration Loans will finance 85% of the amounts of Sub-loans disbursed to Small-Scale Farmers - 10 - and 80% of the amounts of Sub-loans d1isbursed to all other beneficiaries; (d) a commitment charge of 1% per annum on the principal of a Project Administration Loan would be debited to the Participating Intermediary from 60 days after the approval of an Investment Plan until the date of effec- tiveness of the Sub-loan. This charge would not be recoverable by the Participating Intermediary through the Sub-loan; (e) interest on the outstanding principal of each Project Administration Loan will be payable at the rate of 10% per annum; (f) a commitment charge of 1% per year on the principal amount of the Project Administration Loan not redis- counted shall be applied, commencing immediately following the end of the investment period shown in the respective Investment Plan; (g) the Participating Intermediary will repay the principal of, and pay the interest on, the Project Administration Loan on the dates that repayments of principal and payments of interest on the Sub-loans fall due; (h) the Participating Intermediary will provide the comple- mentary funds necessary to finance the investment lending program, and, in addition, such short-term loans on appropriate terms and conditions as may be required by Beneficiaries to complement their Investment Plans; (i) the Participating Intermediaries will assume the credit risk; (j) Banco Central, through the mechanism established in Section 3.08 of the Development Credit Agreement, will guarantee Sub-loans made by the Participating Interme- diaries in the event that the land of a Beneficiary which has been developed under an Investment Plan were to be expropriated; (k) the Participating Intermediary will make its best effort to accept interim land titles as security for Sub-loans; - 11 - (1) technical staff of the Participating Intermediary will assist, or cause assistance to be provided to, Benefi- ciaries for the preparation of Investment Plans and also provide financial supervision and technical assistance to project beneficiaries throughout the period of investment. Alternatively, technical assistance during the period of investment may be provided by Ministerio, Instituto or any other appropriate public agency; (m) the Participating Intermediary may be authorized by the Project Unit to approve Investment Plans, having regard to the past experience and performance of the Partici- pating Intermediary in agricultural lending; however, such participating institution would be required to refer to the Project Unit any Investment Plans which would require over 50% of the Sub-loan to be used for the purchase of breeding stock; (n) the Participating Intermediary will establish and maintain a separate Project Account; (o) the Participating Intermediary will have its Project Account and related statements inspected annually by external auditors satisfactory to Banco Central, the Association and the Bank; (p) the Participating Intermediary will provide the Project Unit or the Association and the Bank with such other information concerning the Project Account and related statements as the Project Unit or the Association and the Bank might reasonably request; and (q) the Project Administration Contract may be suspended or terminated by Banco Central in the event of any one or more of the following circumstances: (i) that the Participating Intermediary has failed to make due and punctual payment to Banco Central of any amount payable under the Project Administration Contract; (ii) that the Participating Intermediary has failed to carry out satisfactorily any other obligation under the Project Administration Contract; - 12 - (iii) that the Participating Intermediary has been unable to pay its debts as they matured; and (iv) that any legal proceeding has been initiated whereby any of the property of the Participating Intermediary could be attached, foreclosed or distributed among its creditors. SECTION II. SUB-LOAN CONTRACTS Eligibility of Sub-borrowers 3. Any farmer or organized group of farmers, any contractor or other entity will be eligible to apply for a Sub-loan who had a technically, financially and economically sound Investment Plan, consistent with national policy, for the development of crop or livestock production, with the exception of the purchase of livestock for fattening or small-scale crop farmers in the Guayape Valley Project Area and drainage and flood protection works to be financed under Category (4) of Schedule 1 to the Development Credit Agreement. Investment Plans will include cash flow projec- tions and estimates of expected changes in key production coeffi- cients. Investment Plans may include any one or more of the following categories: infrastructure, farm buildings and faci- lities, machinery and equipment, land clearing or improvement, inclu!ing the establishment or renovation of pastures, semi- permanent and permanent crops and trees, and breeding cattle less than four years of age. The costs of land survey and titling, and consultant services up to 5% of total costs, will be allowable within Investment Plans. Classification of Beneficiaries 4. An applicant for a Sub-loan who has fulfilled either of the following conditions will be classified as a Small-Scale Farmer: (a) if it derives at least 75% of the family income from farming activities and has net farm assets (including land, farm machinery and livestock, but excluding assets to be financed out of the Sub-loan) not exceeding the equivalent of $30,000; or (b) if it is being an agrarian reform beneficiary as defined in Chapter 1, Title IV of the Agrarian Reform Law. - 13 - Technical Assistance and Supervision 5. Credit applicants, other than Small-Scale Farmers, will be assisted in the preparation of Investment Plans by the technical staff of the Participating Intermediary or by private consultants previously approved by the Participating Intermediary and the Project Unit. The cost of private consultant services will be acceptable for financing up to a maximum of 5% of the total cost of the Investment Plan. Small-Scale Farmers would be assisted by the technical staff of the Participating Intermediary, Ministerio or Instituto in preparing their Investment Plans at no charge. 6. The Project Unit and the Participating Intermediary will ensure that amounts drawn on Sub-loans are applied exclusively to expenditures for the Investment Plans to be financed thereunder. 7. The staff of the Participating Intermediaries, or the staff of Ministerio or Instituto on their behalf, would regularly inspect the farms where Investment Plans are being carried out to ensure that Beneficiaries effectively and punctually carried them out and complied with the provisions of their Sub-loan Contracts. Creditworthiness and Approval of Investment Plans 8. The evaluation of the creditworthiness of applicants and the preparation and analysis of Investment Plans will be made by Participating Intermediaries. Unless otherwise specified in the Project Administration Contract, the approval by the Project Unit of an Investment Plan will be required before the respective Sub- loan Contract could be declared effective. Maximum Aggregate Borrowing 9. Unless prior approval has been obtained from the Association and the Bank, a Beneficiary will not be entitled to borrow in excess of the equivalent of $100,000 or an amount aggregating, with previous Sub-loans made under prior Credits, the equivalent of $150,000. For the purposes of this provision, Sub-loans to an individual Beneficiary will include any Sub-loans made to partner- ships or firms in which the Beneficiary had a financial interest. A Participating Intermediary will not be permitted to lend to a Small-Scale Farmer, under the special conditions applicable to Small-Scale Farmers, in excess of an amount aggregating with previous Sub-loans (including any Sub-loans made under Prior Credits), the equivalent of $25,000. For groups of Small-Scale - 14 - Farmers organized under the Agrarian Reform Law, the maximum will be the equivalent of $25,000, multiplied by the number of members of the group. Limitations on Livestock Purchases 10. The purchase of breeding livestock less than four years old under Investment Plans will be subject to the following limita- tions: (a) Participating Intermediaries will not be permitted to approve any Sub-loan for an Investment Plan which proposes that more than 50% of the investments be used for livestock purchase, however; (b) the Director of the Project Unit will be able to approve Investment Plans in which no more than 70% has been assigned for livestock purchase, provided that, over the whole Project, no more than 35% of the value of all Investment Plans has been assigned to the purchase of livestock. Sub-loans and Municipal Sub-loans 11. Each Sub-loan Contract and Municipal Sub-loan Contract will, inter alia, provide: (a) that such Sub-loans will be denominated and repayable in Lempiras; (b) that the amount of the Sub-loans will not exceed the equivalent of 90% of the estimated cost of the invest- ments to be financed therewith on Small-Scale Farms and not exceed the equivalent of 80% of all other Investment Plans and in the case of Municipal Sub-loans; (c) that a commitment charge of 2% per year on the principal amount of the Sub-loan not wit--irawn will be applied, commencing immediately following che end of the invest- ment period shown in the respective Investment Plan; (d) for an interest rate of 14% per year on the amount withdrawn and outstanding under each Sub-loan whih will - 15 - include any applicable charges, taxes, fees or commis- sions; no additional costs to be charged unless required by law, penalty clauses on arrears or as described in paragraph (c) above; (e) that the repayment terms reflect the payment ability of the Sub-borrower or Municipality and the cash flow position of the Investment Plan, provided, however, that such terms will be for at least two years and not exceed 12 years, including a grace period not exceeding five years; (f) that procurement procedures will be in accordance with the requirements contained in the Loan and Credit Agreements; (g) that the Sub-borrower or Municipality will insure, or make adequate provisions for the insurance of, goods to be imported specifically for the Investment Plan and to be financed out of the proceeds of the Sub-loan against hazards incident to the acquisition, transportation and delivery to the place of use or installation; (h) that the goods and services financed out of the proceeds of the Sub-loan be used exclusively in carrying out the Investment Plan; (i) for the right of Banco Central or the Participating Intermediary to require the Municipality or Sub-bor- rower, respectively, to carry out the Investment Plan and operate the facilit,es included therein with due diligence and efficiency and in accordance with sound technical, financial and managerial standards, and to maintain adequate records; (j) for the right of the Association and the Bank, the Project Unit and the Participating Intermediary to inspect the goods, land, sites, works and construction included in the Investment Plan, the operation thereof and any relevant records and documents; and (k) for the right of Banco Central or the Participating Intermediary to suspend or terminate access by the Municipality or Sub-borrower, respectively, to the use of the proceeds of the Sub-loan upon failure by the - 16 - Municipality or Sub-borrower to perform any of the obligations under the Sub-loan Contract or Municipal Sub-loan Contract. SECTION III. REVIEW OF LENDING CONDITIONS 12. The Association, the Bank, the Borrower and Banco Central will, from time to time, adjust the lending terms and conditions set forth in this Schedule to the extent necessary to: (a) ensure the compatibility of the interest rates under the Project with interest rates in Honduras for lending for investment, provided that such interest rates under the Project remain positive in real terms; and (b) ensure the continuance of the incentives for Partici- pating Intermediaries, including those designed to encourage lending to Small-Scale Farmers. - 17 - SCHEDULE 2 Authority and Responsibilities of the Project Director 1. The duties of the Project Director will include the following: (a) carrying out of the policy, objectives and goals of the Project; (b) directing the development and maiatenance of sound administrative policies and practices in respect of Investment Plans; (c) collaborating with public agencies in the design and execution of agricultural development credit programs; (d) determining and disseminating technical standards and operational procedures for the preparation, assess- ment, control and evaluation of Investment Plans; (e) developing, in collaboration with Project Entities, a technical training policy for the preparation, assess- ment, control and evaluation of Investment Plans; (f) participating in the preparation and delivery of tech- nical training courses for the staff of Project Enti- ties, or any other public agency concerned with the Project; (g) following-up, supervising and giving technical assis- tance to Sub-borrowers as necessary to ensure success of Investment Plans; (h) advising Participating Intermediaries to suspend or premature Sub-loans when the Project Director finds that the Investment Plans are not being carried out in accordance with the terms of the Sub-loan Con- tracts, and, in the case of suspension, informing the Participating Intermediaries when the Project Director is satisfied that such situation has been satisfactorily rectified; (i) establishing and maintaining, for purposes of Project evaluation, records for sample farms and ranches repre- senting at least 25% of Sub-borrowers; - 18 - (j) making recommendations with respect to: (i) remuneration and other compensation for staff of the Project Unit in order to ensure that the best personnel available are attracted; and (ii) recruitment, promotion., suspension and removal of such staff; (k) assisting Project Entities to achieve the purposes of the Project through improvement of their relevant organization and management procedures; (1) supervising the performance of the Project Entities in the carrying out of their obligations under the Project Administration Contracts; (i) ensuring that starting December 31, 1980, at least 50% of the total value of Sub-loans approved by Partici- pating Intermediaries will go to Small-Scale Farmers; provided that at the time all Sub-loans have been committed at least such percentage shall have been achieved and, for that purpose, advising Participating Intermediaries of the uncommitted funds available for sub-lending; (n) approving Investment Plans which allocate more than 50% but not more than 70% of the Sub-loan for acquisition of breeding cattle less than four years old, approving any changes to the Investment Plans and notifying the Association and the Bank thereof in the succeeding progress report of such approval; (o) approving such other Investment Plan as requires ap- proval under the procedures established for each Parti- cipating Intermediary; (p) estimating, from time to time, the aggregate cost of Investment Plans and the categories of goods and services therein and informing the Participating Inter- mediaries of the amounts of Credit and Loan remaining for acquisition of breeding cattle less than four years old; (q) ensuring that procurement procedures are in accordance with the requirements of the Loan and Credit Agreement; - 19 - (r) ensuring compliance with Project monitoring and report- ing requirements of the Loan and Credit Agreements; (s) ensuring that accounting and auditing procedures are in accordance with the requirements of the Loan and Credit Agreements; and (t) delegating, from time to time, one or more of the above duties to the Project Sub-Director or to Regional Project Chiefs. 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 If X i day of, L, 198 A0. FOR SECRETARY 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 Y day of 1910L. FOR SECRETARY