China - Pishihang-Chaohu Area Development Project : Credit 1606 - Credit Agreement - Conformed

CREDIT NUMBER 1606 CHA OFFICIAL DO C UM ENTS Development Credit Agreement (Pishihang-Chaohu Area Development Project) between PEOPLE'S REPUBLIC OF CHINA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1985 CREDIT NUMBER 1606 CHA DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated & t %-, 8 , 1985, between PEOPLE'S REPUBLIC OF CHINA (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS: (A) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Association to assist in the financing of the Project; (B) the Borrower has also requested the International Bank for Reconstruction and Development (the Bank) to provide addi- tional assistance towards the financing of the Project and, by an agreement of even date herewith between the Borrower-and te Bank (the Loan Agreement), the Bank is agreeing to provLde such assistance in an aggregate principal amount equivalent to seven- teen million dollars ($17,000,000) (the Loan); (C) Parts A through D of the Project will be carried out by Anhui Province (hereinafter called Anhui) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to Anhui the proceeds of the Loan and part of the proceeds of the Credit as provided in this Agreement; (D) Part E of the Project will be carried out by Agricul- tural Bank of China (hereinafter called ABC) with Anhui's assistance and, as part of such assistance, Anhui will make available to ABC part of the proceeds of the Credit as here- inafter provided; (E) the Borrower and the Association intend, to the extent practicable, that the proceeds of the Credit provided for in this Agreement be disbursed on account of expenditures in respect of Parts A through D of the Project before disbursements of the proceeds of the Loan provided for in the Loa,, Agreement are made; and WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, to extend the Credit to the Borrower upon the terms and conditions set forth in this Agreement and in the Project Agreements (as hereinafter defined); NOW THEREFORE the parties hereto hereby agree as follows: -2- ARTICLE I General Conditions; Definitions Section 1.01. The General Conditions Applicable to Develop- ment Credit Agreements of the Association, dated January 1, 1985, Vthe General Conditions) constitute an integral part of this Agreement. Section 1.02. Unless the context otherwise requires, the several terms defined in the General Cohditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Anhui" means Anhui Province, a political subdivision of the Borrower, or any successor thereto; (b) "ABC" means Agricultural Bank of China, a specialized banking institution esftablished and operating under the laws of the Borrower, including, inter alia, the 1979 State Council Circular and the 1983 State Council Decision; (c) "1979 State Council Circular" means the circular of the Borrower's State Council on the Restoration of Agricultural Bank of China, dated February 23, 1979 (State Council Document No. (1979) 56); (d) "1983 State Council Decision" means the decision of the Borrower's State Council on the Exclusive Exercise of Central Bank Functions by the People's Bank of China, dated September 17, 1983 (State Council Document No. (1983) 146); (e) "ABC Laws" means the 1979 State Council Circular and the 1983 State Council Decision; (f) "ABC Anhui" means the branch of ABC established and operating in Anhui; (g) "Loan Agreement" means the agreement of even date here- with between the Borrower and the Bank for the Project, as such Agreement may be amended from time to time, and such term in- cludes the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated January 1, 1985, as applied to such Agreement, and all schedules and agreements supplemental to the Loan Agreement; -3 (h) "Anhui Project Agreement" means the agreement of even date herewith among the Association, the Bank and Anhui, as such Agreement may be amended from time to time, and such term includes all schedules and agreements supplemental to the Anhui Project Agreement; (i) "ABC Project Agreement" means the agreement of even date herewith between the Association and ABC, as such Agreement may be amended from time to time, and such term includes all schedules and agreements supplemental to the ABC Project Agree- ment; (j) "Project Agreements" means the Anhui Project Agreement and the ABC Project Agreement; (k) "Subsidiary Loan Agreement" means the agreement to be entered into between Anhui and ABC pursuant to Section 2.02 of the Anhui Project Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement; (1) "Sub-loan" means a loan made or proposed to be made by ABC out of the proceeds of the Credit and out of its own funds to a Sub-borrower, and "free-limit Sub-loan" means a Sub-loan, as so defined, which qualifies as a free-limit Sub-loan pursuant to the provisions of Section 2.09 of this Agreement; (m) "Sub-borrower" means a recipient of a Sub-loan; (n) "Implementing Agencies" means Anhui and ABC; (o) "Anhui Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (p) "ABC Special Account" means the account referred to in Section 2.02 (c) of this Agreement; (q) "Special Accounts" means the Anhui Special Account and the ABC Special Account; (r) "Appraisal Manual" means the appraisal manual issued by ABC on August 22, 1984 in connection with the Rural Credit Project (Credit No. 1462-CHA) between People's Republic of China and International Development Association; -4- (s) "MWREP" means the Borrower's Ministry of Water Resources and Electric Power, or any successor thereto; and (t) "ha" means hectare. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Bor- rower, on the terms and conditions set forth or referred to in the Development Credit Agreement, an amount in various currencies equivalent to seventy-five million seven hundred thousand Special Drawing Rights (SDR 75,700,000). 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 Asso- ciation, 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) The Borrower shall, for the purposes of Parts A through D of the Project, open and maintain, in the name of Anhui, in dollars, a special account in a bank acceptable to the Associa- tion, on terms and conditions satisfactory to the Association. Deposits into, and payments out of, this Special Account shall be made in accordance with the provisions of Schedule 4 to this Agreement. (c) The Borrower shall, for the purposes of Part E of the Project, open and maintain, in the name of ABC, in dollars, a special acount in a bank acceptable to the Association, on terms and conditions satisfactory to the Association. Deposits into, and payments out of, this Special Account shall be made in accordance with the provisions of Schedule 5 to this Agreement. Section 2.03. The Closing Date shall be June 30, 1991 or such later date as the Association shall establish. The Asso- ciation shall promptly notify the Borrower of such later date. Section 2.04. (a) The Borrower shall pay to the Association a commitment charge at the rate of one-half of one percent -5- (1/2 of 1%) per annum on the principal amount of the Credit not withdrawn from time to time. The commitment charge shall accrue from a date sixty (60) days after the date of the Development Credit Agreement 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 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Commitment charges and service charges shall be payable semiannually on April 1 and October 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each April 1 and October 1, commencing October 1, 1995, and ending April 1, 2035. Each installment to and including the installment payable on April 1, 2005 shall be one-half of one percent (1/2 of 1%) of such principal amount, and each installment thereafter shall be one and one-half percent (1-1/2%) of such principal amount. Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. Section 2.09. (a) No withdrawal shall be made from the Credit Account in respect of a Sub-loan unless: (i) the Sub-loan has been approved by the Association; or (ii) the Sub-loan is a free-limit Sub-loan for which the Association has authorized withdrawals from the Credit Account. (b) A free-limit Sub-loan shall be a Sub-loan in an amount to be financed out of the proceeds of the Credit which shall not exceed the equivalent of $300,000, when added to any other -6- outstanding amounts financed or proposed to be financed out of the proceeds of the Credit for the same Sub-project, such amount being subject to change from time to time as determined by the Association. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objective of the Project as set forth in Schedule 2 to this Agreement, and, to this end, without any limitation or restric- tion upon any of its other obligations under the Development Credit Agreement, shall cause: (i) Anhui; and (ii) ABC to perform, in accordance with the provisions of the Project Agreements, all the obligations of each of the Implementing Agencies therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable each of the Implementing Agencies to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall make available the equivalent of the proceeds of the Credit and the proceeds of the Loan to Anhui, under terms and conditions satisfactory to the Association. Section 3.02. Except as the Association shall otherwise agree, procurement of the goods and works required for the Project and the employment of consultants to assist: (i) Anhui; and (ii) ABC in carrying out the Project, to be financed out of the proceeds of the Credit, shall be governed by the provisions of Schedule 3 to this Agreement. Section 3.03. The Borrower and the Association hereby agree that the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to in- surance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) shall be carried out by each of the Implementing Agencies pursuant to Section 2.05 (a) of the Anhui Project Agreement and Section 2.08 of the ABC Project Agreement. -7- Section 3.04. TIe Borrower shall maintain the Project Unit established within MWREP, with functions and responsibilities acceptable to the Association. ARTICLE IV Remedies of the Association Section 4.01. Pursuant to Section 6.02 (h) of the General Conditions, the following additional events are specified: (a) Anhui shall have failed to perform any of its obliga- tions under the Anhui Project Agreement; (b) ABC shall have failed to perform any of its obligations under the ABC Project Agreement; (c) as a result of events which have occurred after the date of the Development Credit Agreement, an extraordinary situation shall have arisen which shall make it improbable that Anhui or ABC will be able to perform its obligations under the Anhui or the ABC Project Agreement, respectively; (d) either of the ABC Laws shall have been amended, suspended, abrogated, repealed or waived so as to affect mate- rially and adversely the ability of ABC to perform any of its obligations under the ABC Project Agreement; and (e) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of ABC or for the suspension of its operations. Section 4.02. For the purposes of Section 7.01 (d) of the General Conditions, the following additional events are speci- fied: (a) the event specified in paragraph (a) of Section 4.01 of this Agreement 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 (b) the events specified in paragraphs (c) and (d) of Section 4.01 of this Agreement shall occur. -8- ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the Borrower's State C6uncil has approved the Develop- ment Credit Agreement and the Anhti Project Agreement; (b) the Subsidiary Loan Agreement has been executed on behalf of Anhui and ABC; and (c) all conditions precedent to the effectiveness of the Loan Agreement have been fulfilled, except the effectiveness of this Agreement. Section 5.02. 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 furnished to the Association: (a) that the Anhui Project Agreement has been duly authorized or ratified by Anhui and is legally binding upon Anhui in accordance with its terms; (b) that the ABC Project Agreement has been duly authorized or ratified by ABC and is legally binding upon ABC in accordance with its terms; and (c) that the Subsidiary Loan Agreement has been duly authorized or ratified by Anhui and ABC and is legally binding upon Anhui and ABC in accordance with its terms. Section 5.03. The date ninety (90) days after the date of this Agreement is hereby specified for the purposes of Sec- tion 12.04 of the General Conditions. ARTICLE VI Representatives of the Borrower; Addresses Section 6.01. 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. -9- Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministry of Finance Sanlihe Beijing People's Republic of China Cable address: Telex: FINANMIN 22486 MFPRC Beijing 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) - 10 - 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. PEOPLE'S REPUBLIC OF CHINA By /Y7c,/ Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By I f 5 K; Acting Regional Vice Preside:it East Asia and Pacific - 11 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit and of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit and of the Loan, the allocation of the amounts of such proceeds to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Amount of the Loan Allocated - Credit Allocated (Expressed % of (Expressed in in Dollar Expenditures Category SDR Equivalent) Equivalent) to be Financed For Parts A through D of the Project: (1) Earthworks 2,830,000 2,700,000 20% under Part A of the Project (excluding on-farm works) (2) Earthworks 1,620,000 1,600,000 50% by mechani- cal dredges under Part B of the Project (3) Construction 20,380,000 3,800,000 50% and installa- tion under Parts A and B of the Project (excluding material and equipment under Category 4) - 12 - Amount of the Amount of the Loan Allocated Credit Allocated (Expressed % of (Expressed in in Dollar Expenditures Category SDR Equivalent) Equivalent) to be Financed (4) Materials 36,030,000 6,700,000 100% of (except foreign ex- fertilizer), penditures; equipment 100% of and vehicles local ex- penditures (ex-factory cost) (5) Fertilizer 10,800,000 2,000,000 100% of foreign expenditures (6) Technical 1,110,000 200,000 100% assistance and over- seas train- ing For Part E of the Project (7) S-ub-loans 2,910,000 - - - - - 50% (8) Equipment 20,000 - - - - - 100% of foreign expenditures; 100% of local expenditures (ex-factory cost)* TOTAL 75,700,000 17,000,000 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 - 13 - (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. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement. - 14 - SCHEDULE 2 Description of the Project The objective of the Project is to increase the production of crops and other agricultural products in central Anhui by developing water resources, reducing flood damage, developing rural infrastructure and support services, and improving Anhui's overall capability to plan and manage irrigation and flood con- trol schemes. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Association may agree upon from time to time to achieve such objective: Part A Improvement of irrigation facilities serving about 320,000 ha in the existing Pishihang irrigation area, through channel excavation, embankment construction, addition of control struc- tures and on-farm ditches and drains. Part B Improvement of flood control, drainage and irrigation water supply benefiting about 220,000 ha in the Chaohu area through contruction of flood channels, control gates, and pumping stations. Part C Strengthening of other rural infrastructure and agricultural support services over an area about 918,000 ha. Part D A training and technical assistance program designed to improve the planning and design of on-farm works and to raise the operational efficiency of the irrigation and flood control systems. - 15 - Part E Provision of rural credit for livestock raising, aquaculture and agroprocessing. The Project is expected to be completed by December 31, 1990. - 16 - SCHEDULE 3 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A. International Competitive Bidding 1. Except as provided in Part C hereof, goods shall be procured under contracts awarded in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in August 1984 (the Guidelines). 2. Contracts for goods to be procured on the basis of inter- national competitive bidding shall be grouped, to the extent possible, so as to permit bulk procurement. Part B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the proce- dures described in Part A.1 of this Schedule, goods manufactured in China may be granted a margin of preference in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraphs 1 through 4 of Appendix 2 thereto. Part C: Other Procurement Procedures 1. Equipment and breeding animals estimated to cost not more than $50,000 per contract, up to an aggegate amount not exceed- ing the equivalent of $2,000,000 may be procured under contracts awarded through limited international bidding procedures on the basis of evaluation and comparison of bids invited from a list of at least three qualified suppliers eligible under the Guidelines and in accordance with the procedures set forth in Sections I and II of the Guidelines (excluding paragraphs 2.8, 2.9, 2.55 and 2.56 thereof). 2. Construction of structures under Parts A and B of the Project may be procured on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association. - 17 - 3. Earthworks and on-farm development works may be carried out in accordance with local procedures acceptable to the Association. Part D: Review by the Association of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract estimated to cost the equivalent of more than $200,000, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply; provided, however, that where payments for such contract are to be made out of either of the Special Accounts, the two conformed copies of the contract required to be furnished to the Associa- tion pursuant to said paragraph 2 (d) shall be furnished to the Association prior to the making of the first payment out of either of the Special Accounts in respect of such contract. (b) With respect to each contract not governed by the preceding 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 either of the Special Accounts, the two conformed copies of the contract required to be furnished to the Associa- tion, 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 (the Anhui Special Account Schedule) or paragraph 4 of Schedule 5 (the ABC Special Account) to this Agreement. (c) The provisions of the preceding subparagraph (a) shall not apply to contracts on account of which the Association or the Bank has authorized withdrawals from the Credit Account or Loan Account, respectively, on the basis of statements of expendi- ture. Such contracts shall be retained in accordance with Sec- tion 4.01 (c) (ii) of this Agreement. 2. The figure of 15% is hereby specified for purposes of para- graph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants 1. In order to assist in carrying out the Project, the Borrower shall employ consultants whose qualifications, experience and - 18 - terms and conditions of employment shall be satisfactory to the Association. 2. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Association on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. - 19 - SCHEDULE 4 The Anhui 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 or the Loan 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 Parts A through D of the Project and to be financed out of the proceeds of the Credit or the Loan allocated from time to time to Categories (1), (2), (3), (4), (5) and (6) in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount of SDR 4,050,000 equivalent to be withdrawn from the Credit Account and deposited into the Anhui Special Account pursuant to para- graph 3 (a) of this Schedule. 2. Except as the Association and the Bank shall otherwise agree, payments out of the Anhui Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Association has received evidence satisfactory to the Association that the Anhui Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the Auhui Special Account may be made as follows: (a) On the basis of a request or requests by the Borrower for a deposit or deposits which add up to the aggregate amount of the Authorized Allocation, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into the Anhui Special Account such amount or amounts as the Borrower shall have requested. (b) The Borrower shall furnish to the Association or the Bank requests for replenishment of the Anhui Special Account at such intervals as the Association or the Bank shall specify. On the basis of such requests, the Association and the Bank shall - 20 - withdraw from the Credit Account or the Loan Account and deposit into the Anhui Special Account such amounts as shall be required to replenish the Anhui Special Account with amounts not exceeding the amount of payments made out of the Anhui Special Account for eligible expenditures. Each such deposit shall be withdrawn by the Association from the Credit Account or by the Bank from the Loan Account under the respective Categories (1), (2), (3), (4), (5) and (6), and in the respective equivalent amounts, as shall have been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph.4 of this Schedule. 4. For each payment made by the Borrower out of the Anhui Special Account for which the Borrower requests replenishment pursuant to paragraph 3 (b) of this 9hedule, the Borrower shall furnish to the Association or the Bank, prior to or at the time of such request, such documents and other evidence as the Association or the Bank shall reasonably request, showing that such payment was made for eligible expenditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into the Anhui Special Account shall be made by the Association or the Bank when either of the following situations first arises: (i) the Association or the Bank shall have determined that all further withdrawals should 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 from the Loan Account in accordance with the provisions of Section 2.02 of the Loan Agreement; or (ii) the total unwithdrawn amount of the Credit and the Loan allocated to Categories (1), (2), (3), (4), (5) and (6) for Parts A through D of the Project, minus the amount of any outstanding qualified agreement to reimburse made by the Association or the Bank and of any outstanding special commitment entered into by the Association or the Bank pursuant to Section 5.02 of the General Conditions with respect to Parts A through D of the Project, shall be equal to the equivalent of twice the amount of the Authorized Allocation. - 21 - (b) Thereafter, withdrawal from the Credit Account and the Loan Account of the remaining unwithdrawn amount of the Credit and the Loan allocated to Categories (1), (2), (3), (4), (5) and (6) for Parts A through D of the Project shall follow such procedures as the Association and the Bank shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Association or the Bank shall have been satisfied that all such amounts remaining on deposit in the Anhui Special Account as of the date of such notice have been or will be utilized in iaking payments for eligible expenditures. 6. (a) If the Association or the Bank shall have determined at any time that any payment out of the Anhui Special Account: (i) was made for any expenditure or in any amount not eligible pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Association or the Bank, deposit into the Anhui Special Account (or, if the Association or the Bank shall so request, refund to the Association or the Bank) an amount equal to the amount of such payment or the portion thereof not so eligible or justi- fied. No further deposit by the Association or the Bank into the Anhui Special Account shall be made until the Borrower has made such deposit or refund. (b) If the Association or the Bank shall have determined at any time that any amount outstanding in the Anhui Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Association or the Bank, refund to the Association or the Bank such outstanding amount for crediting to the Credit Account, or the Loan Account, as the case may be. - 22 - SCHEDULE 5 The ABC 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 Part E of the Project and to he financed out of the proceeds of the Credit allocated from time to time to Category (7) in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount of SDR 510,000 equivalent to be withdrawn from the Credit Account and deposited into the ABC Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Except as the Association shall otherwise agree, payments out of the ABC Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Association has received evidence satisfactory to the Association that the ABC Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the ABC Special Account may be made as follows: (a) On the basis of a request or requests by the Borrower for a deposit or deposits which add up to the aggregate amount of the Authorized Allocation, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into the ABC Special Account such amount or amounts as the Borrower shall have requested. (b) The Borrower shall furnish to the Association requests for replenishment of the ABC Special Account at such intervals as the Association shall specify. On the basis of such requests, the Association shall withdraw from the Credit Account and deposit into the ABC Special Account such amounts as shall be - 23 - required to replenish the ABC Special Account with amounts not exceeding the amount of payments made out of the ABC Special Account for eligible expenditures. Each such deposit shall be withdrawn by the Association from the. Credit Account under the respective Category (7), and in the respective equivalent amounts, as shall have been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph 4 of this Schedule. 4. For each payment made by the Borrower out of the ABC Special Account for which the Borrower requests replenishment pursuant to paragraph 3 (b) of this Schedule, the Borrower shall furnish to the Association, prior to or at the time of such request, such documents and other evidence as the Association shall reasonably request, showing that such payment was made for eligible expen- ditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into the ABC Special Account shall be made by the Association when either of the following situa-- tions first arises: (i) the Association shall have determined that all further withdrawals can be made directly by the Borrower from the Credit Account in accordance with the provisions of paragraph (a) of Sec- tion 2.02 of this Agreement; or (ii) the total unwithdrawn amount of the Credit allo- cated to Category (7) for Part E of the Project, minus the amount of any outstanding qualified agreement to reimburse made by the Association and of any outstanding special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions with respect to Part E of the Project, shall be equal to the equivalent of twice the amount of the Authorized Allocation. (b) Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to Cate- gory (7) for Part E of the Project shall follow such procedures as the Association shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Association shall have been satisfied that all such amounts -24- remaining on deposit in the ABC Special Account as of the date of such notice have been or will be utilized in making payments for eligible expenditures. 6. (a) If the Association shall have determined at any time that any payment out of the ABC 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 evidence furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Association, deposit into the ABC 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. No further deposit by the Association into the ABC Special Account shall be made until the Borrower has made such deposit or refund. (b) If the Association shall have determined at any time that any amount outstanding in the ABC Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Association, refund to the Association such outstanding amount for crediting to the Credit 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 vitness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the day of 198F SC T FOR SECRETARY