Madagascar - Cyclone Rehabilitation Project : Credit 1526 - Credit Agreement - Conformed

OFFICIAL CREDIT NUMBER 1526-0 MAG , 0CU ME NTS Development Credit Agreement (Cyclone Rehabiliration Project) between DEMOCRATIC REPUBLIC OF MADAGASCAR and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated J e 4q..j 1984 CREDIT NUMBER 1526-0 NAG DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated )QcemY /set- If , 1984, between DEMOCRATIC REPUBLIC OF MADAGASCAR (hereinafter calleL the Bor- rower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). 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 Agree- ments 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 General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following addi- tional terms have the following meanings: (a) "Project Preparation Advance" means the project prep- aration advance granted by the Association to the Borrower pur- suant to an exchange of letters dated June 5, 1984 and July 12, 1984 between the Borrower and the Association. (b) "Special Account" means the account referred to in Section 2.02 (c) hereof. (c) "Project Advance Account" means the account to be opened and thereafter maintained pursuant to Section 3.02 (a) of this Agreement. (d) "MTP" means the Borrower's ministry responsible for public works (ministere des travaux publics). (e) "MTRT" means the Borrower's ministry responsible for transport, supply and tourism (ministere du transport, du ravitaillement et du tourisme). - 2 - (f) "CNC" means the Comit9 National de Coordination, established and operating pursuant to Dfcret No. 84/260, as amended from time to time. (g) "ASECNA" means the Agence pour 1-o S9curit9 de la Navigation Agrienne en Afrique et A Madagascar, an international agency established and operating pursuant to the Convention de Dakar, dated October 25, 1974, as amended from time to time. (h) "SEPT" means the SociAt6 d'Exploitation du Port de Toamasina, established and operating pursuant to D4cret No. 76/430, dated December 4, 1976, as amended from time to time. (i) "SEIMAD" means Socift6 d'Equipement Immobilier de Madagascar, established and operating pursuant to the Borrower's D6cret No. 70-081 dated January 28, 1970, as amended from time to time. (j) "FIFABE" means Soci6t6 pour le Dgveloppement de la Plaine de la Betsiboka, established and operating pursuant to Arretg No. 3084/82 dated July 2, 1982, as amended from time to time. (k) "BTM" means Bankin'Ny Tantsaha Mpamokatra, the National Bank for Rural Development of the Borrower, established pursuant to the Borrower's Ordonnance No. 76-046, dated December 27, 1976, as amended from time to time. (1) "BFV" means Banky Fampandrosona ny Varotra, the National Bank for Commerce of the Borrower, established pursuant to the Borrower's Ordonnance No. 70/24, dated July 17, 1979, as amended from time to time. (m) "Intermediaries" means, collectively, BTM and BFV. (n) "Contrat Particulier" means the agreement between the Borrower and ASECNA referred to in Section 3.01 (b) hereof. (o) "SEPT Convention de Travail" means the agreement between the Borrower and SEPT referred to in Section 3.01 (b) hereof. (p) "SEIMAD Convention de Travail" means the agreement between the Borrower and SEIMAD referred to in Section 3.01 (b) hereof. (q) "FIFABE Convention de Travail" means the agreement between the Borrower and FIFABE referred to in Section 3.01 (b) hereof. -3- (r) "Project Documents" means, collectively, the documents referred to in paragraphs (n) through (q) above. (s) "ASCENA Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and ASCENA pursuant to Section 3.01 (c) of this Agreement, as the same may be amended from time to time. (t) "BTM Subsidiary Agreement" means the agreement to be entered into between the Borrower and BTM pursuant to Section 3.01 (d) of this Agreement, as the same may be amended from time to time. (u) "BFV Subsidiary Agreement" means the agreement to be entered into between the Borrower and BFV pursuant to Section 3.01 (d) of this Agreement, as the same may be amended from time to time. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Bor- rower,, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various cur- rencies equivalent to fourteen million eight hundred thousand Special Drawing Rights (SDR 14,800,000). Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit 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 Association, for expenditures made (or, if the Association 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 Credit. (b) Promptly after 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 Project Preparation Advance withdrawn and outstanding as of such date and to pay all unpaid charges thereon. The unwithdrawn balance of the authorized amount of the Project Preparation Advance shall thereupon be cancelled. -4- (c) The Borrower shall, for the purpose of the Project, open and thereafter maintain in the currency of the United States of America a Special Account in its Central Bank on terms and conditions satisfactory to the Association. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 4 to this Agreement. Section 2.03. Except as the Association 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 shall be governed by the provisions of Schedule 3 to this Agree- ment. Section 2.04. The Closing Date shall be June 30, 1987 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.05. (a) The Borrower shall pay to the Association a commitment charge at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of the Credit not with- drawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agree- ment to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii), without restrictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. Section 2.06. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/ of 1%) per annum on the principal amount of the Credit withdrawl and outstanding from time to time. Section 2.07. Commitment charges and service 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 Credit in semiannual installments payable on each March 1 - 5- and September 1 commencing March 1, 1995, and ending September 1, 2034, each installment to and including the installment payable on September 1, 2004, 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 2.09. The currency of the Unites States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end, shall: (i) carry out the Project through MTP, MTRT, ASECNA, SEPT, SEIMAD, FIFABE, BTM and BFV, with due diligence and efficiency and in conformity with appro- priate administrative, financial and engineering practices and under terms and conditions acceptable to the Association; (ii) provide, promptly as needed, the funds, facilities, services and other resources required for the purpose; and (iii) cause ASECNA, SEPT, SEIMAD, FIFABE, BTM and BFV to perform in accordance with the provisions of the Project Documents all their respective obligations therein set forth. (b) In order to define precisely their respective respon- sibilities under the Project and to make available to them part of the proceeds of the Credit, the Borrower shall enter into: (i) Convention de Travail with each of SEPT, SEIMAD and FIFABE under terms and conditions acceptable to the Association; and (ii) a Contrat Particulier with ASCENA under terms and conditions acceptable to the Association. (c) The Borrower shall relend the proceeds of the Credit needed for the carrying out of Part B (ii) of the Project under a Subsidiary Loan Agreement (the ASECNA Subsidiary Loan Agreement) to be entered into between the Borrower and ASCENA under terms and conditions acceptable to the Association, including a rate of interest of 10% per annum, a repayment period of 20 years, including 5 years of grace and the foreign exchange risk to be borne by ASCENA. (d) The Borrower shall make available the proceeds of the Credit needed for the carrying out of Part F of the Project under -6- subsidiary agreements to be entered into between the Borrower and the Intermediaries (BTM Subsidiary Agreement and BFV Subsidiary Agreement) under terms and conditions acceptable to the Associa- tion, including the obligation of the Intermediaries to make housing loans for the carrying out of Part F of the Project in accordance with the provision of the Annex to Schedule 2 to this Agreement. Section 3.02. (a) The Borrower shall, for the purposes of making available the Borrower's contribution for the Project, open and, thereafter, during the execution of the Project, main- tain an account (the Project Advance Account) in its Central Bank under terms and conditions acceptable to the Association, includ- ing provisions that the proceeds of this account shall be used exclusively for the purposes of the Project; and (b) the Borrower shall, on the first day of each quarter during execution of the Project, replenish the Project Account up to 1,000,000,000 FMG. Section 3.03. In order to assist the Borrower in carrying out the Project, the Borrower shall employ or, cause to be employed by SEPT and FIFABE, consultants whose qualifications, experience and terms and conditions of employment shall be satis- factory to the Association, such consultants to be selected in accordance with principles and procedures satisfactory to the Association on the basis of the "Guidelines for the Use of Con- sultants by World Bank Borrowers and by the World Bank as Execu- ting Agency" published by the Bank in August 1981. Section 3.04. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit 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 the Borrower to replace or repair such goods. (b) The Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the purposes of the Project. Section 3.05. (a) The Borrower shall furnish to the Associa- tion, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules -7- for the Project, and any material modifications thereof or addi- tions thereto, in such detail as the Association shall reasonably request. (b) The Borrower shall: (i) through CNC, 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 services financed out of the pro- ceeds of the Credit, and to disclose their use in the Project; (ii) enable the Association's representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) through CNC, furnish to the Association at regular intervals all such informa- tion (including monthly and quarterly reports to be prepared according to formats acceptable to the Association) as the Asso- ciation 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 Credit and the goods and ser- vices financed out of such proceeds. (c) Upon the award by the Borrower of any contract for goods, works or services to be financed out of the proceeds of the Credit, the Association may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. (d) 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 and the Association, the Borrower shall prepare and furnish to the Association a report, of such scope and in such detail as the Association 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 Bor- rower and the Association of their respective obligations under the Development Credit Agreement and the accomplishment of the purposes of the Credit. Section 3.06. 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 Association, promptly after such acquisition, evidence satis- factory to the Association that such land and rights in respect of land are available for purposes related to the Project. -8- Section 3.07. The Borrower shall exercise its rights under the Project Documents, the ASCENA Subsidiary Loan Agreement, the BTM Subsidiary Agreement and the BFV Subsidiary Agreement in such manner as to protect the interests of the Borrower and the Asso- ciaton and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive any of such agreements or any provision thereof. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall maintain, through CNC records (including separate accounts) adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations, resources and expenditures, in respect of the Project, of (i) the departments or agencies of the Bor- rower responsible for carrying out the Project or any part there- of and (ii) ASECNA, SEPT, SEIMAD, FIFABE, BTM and BFV. (b) The Borrower shall through CNC: (i) have the accounts referred to in paragraph (a) of this Section and the Special Account for each fiscal year audited, in accordance with appro- priate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Asso- ciation, as soon as available, but in any case not later than six months after the end of each such year, a certified copy of the report of such audit by such auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information con- cerning said accounts, records and expenditures and the audit thereof as the Association shall from time to time reasonably request. Section 4.02. The Borrower shall cause each of SEPT, SEIMAD and FIFABE to carry on its operations and conduct its affairs in accordance with sound administrative, financial and engineering practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 4.03. The Borrower shall adequately maintain, or cause to be maintained adequately, the installations and facili- ties constructed, improved, equipped or otherwise assisted under -9- the Project in accordance with appropriate administrative, tech- nical, financial and engineering practices, and provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. ARTICLE V Remedies of the Association Section 5.01. For the purposes of Section 6.02 of the Gene- ral Conditions, the following additional events are specified pursuant to paragraph (h) thereof, that: (a) The Decret No. 84/260 of the Borrower shall have been amended, suspended, abrogated, repealed or waived without the Association's prior consent. *(b) Any party to the Project Documents shall have failed to perform its obligations under any such document. Section 5.02. For the purposes of Section 7.01 of the Gen- eral Conditions, the following additional events are specified pursuant to paragraph (d) thereof, that: (a) The event specified in paragraph (a) of Section 5.01 of this Agreement shall occur. (b) The event specified in Section 5.01 (b) hereof shall occur and shall continue for a period of sixty (60) days after notice thereof shall have been given by the Association to the Borrower and the party concerned (if other than the Borrower). ARTICLE VI Effective Date; Termination Section 6.01. 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, that: (a) The Project Documents, the ASCENA Subsidiary Loan Agreement, the BTM Subsidiary Agreement, and the BFV Subsidiary Agreement have been executed on behalf of all parties concerned, as provided hereunder. - 10 - (b) The Borrower has opened the Special Account in accor- dance with the provisions of Section 2.02 (c) of this Agreement and the Project Advance Account in accordance with the provisions of Section 3.02 (a) of this Agreement and deposited into the Project Advance Account 1,000,000,000 FMG. Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be fur- nished to the Association, namely, that the Project Documents have been duly authorized or ratified by the Borrower and all other parties concerned and are legally binding upon the Borrower and all such parties, in accordance with their respective terms. Section 6.03. The date a hiQolea & is hereby specified for the purposes of 6ction 12.04 of the General Condi- tions. Section 6.04. The obligations of the Borrower under Section 3.07 and Article IV of this Agreement and the provisions of Sec- tion 5.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty (20) years after the date of this Agreement, which- ever shall be the earlier. ARTICLE VII Representatives of the Borrower; Addresses Section 7.01. The Minister responsible for 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: Minist8re aupres de la Pr6sidence de la R6publique chargE des Finances et de l'Economie Antananarivo, Madagascar Cable address: Telex: MINFIN 22489 Antananarivo - 11 - 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. DEMOCRATIC REPUBLIC OF MADAGASCAR By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION 0C-J~~L~k By B Regional Vice President Eastern Africa - 12 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for 1i:ems so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (1) Works 3,900,000 65% (2) Goods 1,900,000 100% of foreign expenditures and 65% of local expenditures (3) Consultants 900,000 100% of foreign expenditures and 50% of local expenditures (4) Housing credits 1,900,000 100% under Part G of the Project (5) Initial deposit 2,900,000 Amount due under in Special paragraph 1 (c) Account to of Schedule 4 prefinance hereto items under Categories (1) through (4) above (6) Refunding of 900,000 Amount due under Project Prepara- Section 2.02 (b) tion Advance of this Agreement (7) Unallocated 2,400,000 TOTAL 14,800,000 - 13 - 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in com- pliance with the policy of the Association that the proceeds of the Credit shall not 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; on this basis, if the amount of any such taxes levied on or in respect of items in any Category decreases or increases, the Association may, by notice to the Borrower, in- crease or decrease the disbursement percentage then applicable to such Category as required to be consistent with the aforemen- tioned policy of the Association. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expen- ditures prior to the date of this Agreement, except that with- drawals, in an aggregate amount not exceeding the equivalent of SDR 2,200,000, may be made in respect of Categories (1) through (4) on account of payments made for expenditures before that date but after July 1, 1984. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in para- graph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures; 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. - 14 - 6. 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 expenditure for such item shall be financed out of the proceeds of the Credit, and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Asso- ciation's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financ- ing out of the proceeds of the Credit. - 15 - SCHEDULE 2 Description of the Project The main objectives of the Project are to assist the Bor- rower in: (i) carrying out a physical and economic rehabilitation program for the areas of Madagascar damaged by a recent cyclone (April 1984); (ii) streamlining the institutional arrangements appropriate for the efficient coordination of that program; and (iii) helping develop measures to minimize the potential damage from natural disasters to vulnerable areas of Madagascar. To that end, the Project consists of the following Parts: Part A: Ports (i) Mahajanga: rehabilitation of the Vuilleman and Barriquand wharves, repair of offices, housing and warehouses and replacement or repair of port equipment (navigational aids, launches, tugs and spare parts). (ii) Antsiranana: rehabilitation of the old and new wharves, restoration of buildings and housing, and replacement or repair of port equipment (launches, navigational aids, tugs and spare parts). Part B: Airports and Meteorological Stations (i) Mahajanga: repair of air terminal, staff residences, hangar, runway markings and runway drainage. (ii) Mahajanga: repair or replacement of technical faci- lities and equipment (including radio beacons, pylons, antennas, 1 receiver, 1 VHF omni range/DME station, 2 power units, and meteorological equipment). (iii) Antsiranana: repair of air terminal, technical facili- ties under construction, hangar quarters, runway markings and runway drainage; replacement or repair of equipment (1 radio station, pylons and antenna, visual landing aids, fire. engine, 1 power unit and meteorological equipment). (iv) Restoration of Mahajanga and Antsiranana meteorological stations (including repair of technical buildings and quarters) and repair of communication, telex and telephone equipment. - 16 - Part C: Roads (i) Reconstruction of Amboromalandy dike, bridge and spill- way on RN4. (ii) Rehabilitation of the road linking Marovoay to the RN4 (RN8). (iii) Repair work on RN6 between Ambondromamy, Port Berge and Ambanja. Part D: Public Buildings (i) Repair of educational buildings (about 15 schools in Mahajanga and about 15 in Antsiranana). (ii) Repair of other public buildings, administrative offices and public housing (about 20 buildings in Mahajanga and 16 buildings in Antsiranana). Part E: Agriculture (i) Restoration of the FIFABE fleet by purchasing one tug and two barges. (ii) Re-establishment of the FIFABE spare parts stock (spare parts for diggers, pumps and power units). (iii) Repair of 15 FIFABE buildings at Marovoay and Mahajanga. Part F: Housing Credit Credits to be provided by the Intermediaries to private owners for the repair or rehabilitation of houses damaged by the cyclone Kamisy on the terms and conditions set forth in the Annex to this Schedule. Part G: Study and Technical Assistance (i) Technical assistance to CNC to strengthen its manage- rial and supervisory capabilities. - 17 - (ii) Technical assistance for supervision of Project execu- tion. The Project is expected to be completed by December 31, 1986. - 18 - ANNEX TO SCHEDULE 2 Part F of the Project Term and Conditions of Housing Credits 1. Eligibility Criteria: monthly income of the proprietor below 70,000 FMG 2. Terms and conditions of credits: (a) interests rate: 12% per annum (b) term: 10 years including 2 years of grace (c) maximum amount: 1,500,000 FMG - 19 - SCHEDULE 3 Procurement A. Procurement Procedures 1. Contracts for goods, whose estimated cost is less than $100,000 equivalent, shall be awarded after obtaining quotations from at least three local suppliers or, if appropriate, shall be contracted directly. 2. Contracts for goods, whose estimated cost is more than $100,000 equivalent, and contracts for civil works, shall be awarded on the basis of local procedures acceptable to the Asso- ciation. 3. Minor civil works may be carried out by force account. B. Review of Procurement Decisions by the Association 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts for civil works and goods estimated to cost the equivalent of $1,000,000 and $500,000 or more, respectively: (a) With respect to each contract for works and goods esti- mated to cost the equivalent of $1,000,000 and $500,000 or more respectively, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in August 1984 (the Guide- lines) shall apply; provided, however, that where payments for such contract are to be made out of the proceeds of the Special Account, the two conformed copies of the contract required to be furnished to the Association, pursuant to paragraph 2 (d) of Appendix I to the Guidelines, shall be furnished to the Associa- tion prior to the making of the first payment out of the Special Account in respect of such contract. (b) With respect to each contract not governed by the pre- ceeding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply; provided, however, that where payments for such contract are to be made out of the proceeds of the Special Account, the two conformed copies of the - 20 - contract required to be furnished to the Association pursuant to paragraph 3 of Appendix 1 to the Guidelines together with the other information specified therein, shall be furnished to the Association as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 4 to this Agreement. (c) The provisions of the preceding subparagraphs (a) and (b) shall not apply to contracts on account of which the Associa- tion has authorized withdrawals from the Credit Account on the basis of statements of expenditure. 2. The figure of 10% is hereby specified for purposes of para- graph 4 of Appendix 1 to the Guidelines. - 21 - SCHEDULE 4 Special Account 1. For the purposes of this Schedule: (a) the term "Category" means a category of items to be financed out of the proceeds of the Credit as set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "Eligible Expenditures" means expenditures in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit allocated from time to time to Categories (1) through (4) in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Initial Deposit" means an amount in the cur- rency of the United States of America equivalent to the amount allocated to Category (5) and to be withdrawn from the Credit Account and deposited in the Special Account pursuant to the first sentence of paragraph 3 to this Schedule. 2. Payments out of the Special Account shall be made exclu- sively. for Eligible Expenditures in accordance with the provi- sions of this Schedule. 3. The Association shall, at the request of the Borrower, with- draw on behalf of the Borrower from the Credit Account and depo- sit into the Special Account the Initial Deposit. Thereafter and on the basis of requests by the Borrower furnished to the Asso- ciation at such intervals as the Association shall specify, the Association shall further so withdraw from the Credit Account and deposit into the Special Account such amounts as shall be re- quired to replenish the Special Account with amounts equal to payments made out of the Special Account for Eligible Expendi- tures, but only to the extent that the amount of any such depo- sit, 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 the Initial Deposit. Except as the Association may otherwise agree, each such deposit after the Ini- tial- Deposit shall be withdrawn by the Association from the Cre- dit Account under the respective Categories (1) through (4), and in the respective equivalent amounts, as shall have been justi- fied by the evidence supporting the request for such deposit fur- nished pursuant to paragraph 4 of this Schedule. - 22 - 4. Prior to or at the time of each request by the Borrower for a deposit by the Association into the Special Account after the Initial Deposit, 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 such payment was made for Eligible Expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Sched- ule, any request of further deposit into the Special Account may be denied by the Association (a) when the Association shall have determined at any time that all further withdrawals can be made directly by the Borrower from the Credit Account in accordance with the provisions of paragraph (a) of Section 2.02 of this Agreement, or (b) unless otherwise agreed by the Association, when the total unwithdrawn amount of the Credit allocated to Categories (1) through (4), minus the amount of any outstanding qualified agreement to reimburse entered into by the Association and of any outstanding special commitment made by the Association pursuant to Section 5.02 of the General Conditions with respect to the Project, shall be equal to the equivalent of twice the amount of the Initial Deposit, whichever shall be sooner. With- drawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to Categories (1) through (4) shall follow such procedures as the Association shall specify by notice to the Borrower and shall, except as the Association shall otherwise agree, be made only after and to the extent the Asso- ciation shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice have been or will be utilized in making payments for Eligible Expenditures. 6. If the Association shall have determined at any time that: (a) any payment out of the Special Account (i) was made for any expenditure or in any amount not eligible pursuant to para- graph 2 of this Schedule, or, (ii) was not justified by the evi- dence furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Association and, unless otherwise agreed by the Association, prior to any further deposit into the Special Account by the Association, deposit into the Special Account or, if the Association shall so request, refund to the Association an amount equal to the amount of such payment or the portion thereof not so eligible or justified; or - 23 - (b) any amount outstanding in the Special Account will not be required to cover further payments for Eligible Expenditures, the Borrower shall, promptly upon notice from the Association, and unless otherwise agreed by the Association, refund to the Association such amount then outstanding in the Special Account. 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 day ofAe 198 FOR SECRETARY