Burundi - Agricultural Services Sector Project : Credit 2024 - Credit Agreement - Conformed

OFFICIAL DOCUMENTSI CREDIT NUMBER 2024 BU Development Credit Agreement (Agricultural Services Sector Project) between REPUBLIC OF BURUNDI and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated T , 1989 CREDIT NUMBER 2024 BU DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated , 1989, between REPUBLIC OF BURUNDI (the "Borrovgr") and INTERNATIONAL DEVELOPMENT ASSOCIATION (the "Association"). WHEREAS (A) the Association has received a letter, dated March 10, 1989, from the Borrower describing a program of policies, goals and actions designed to achieve an adjustment of the Borrower's agricultural services sector (the "Program") and declaring the Borrower's commitment to the execution of the Program; (B) the Borrower, having committed itself to the execution of the Program and, as part of the Program, having undertaken to carry out the Project described in Schedule 2 to this Agreement, has requested the Association to assist in the financing of the Project and of urgently needed imports required during the execution of the Program; (C) the Borrower intends to seek additional funds from other donors to assist in financing the Project; 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; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Develop- ment Credit Agreements" of the Association, dated January 1, 1985, with the last sentence of Section 3.02 deleted (the "General Conditions") constitute an integral part of this Agreement. Section 1.02. 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 additional terms have the following meanings: -2- (a) "CICM" means Centre International U Crddit Mtual, a non-for profit organization established under the laws of France with the purpose of promoting cooperative credit, having principal offices in Paris; (b) "COOPECs" means gpratives d'nargne &I " gXAA, t Savings and Credit Cooperatives estabished in the Borrower's territory and the expression "Burau Central At COOECg" means the entity in charge of their support and promotion; (c) "DGPA" means Direction Gdndrale 4& JA Planification Agricole, the General Directorate of Agricultural Planning of MOAL (as hereinafter defined); (d) "DGV" means Direction G6ndrale " 1A Vulgarisation, the General Directorate for extension within MOAL; (e) "FAAGRO" means the Faculty of Agronomy of the Univer- sity of Burundi; (f) "ISABU" means Institut, A& Sciences Agronomiques 42 Burundi, the Borrower's National Agricultural Research Institute; (g) "MLDTE" means the Borrower's Ministry of Land Develop- ment, Tourism and Environment; (h) "MOAL" means the Borrower's Ministry of Agriculture and Livestock; (i) "MRDH" means the Borrower's Ministry of Rural Develop- ment and Handicraft; (j) "RDC" means any of the Regional Development Companies established pursuant to the Borrower's law-decree No. 1/17 of June 15, 1979; and (k) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the -3- Development Credit Agreement, an amount in various currencies equivalent to twenty-five million one hundred thousand Special Drawing Rights (SDR 25,100,000). 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 for expenditures made (or, if the Association shall so agree, to be made) in respect of the reason- able cost of goods and services required: (i) for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Credit; and (ii) during the execution of the Program and to be financed out of the proceeds of the Credit. (b) The Borrower shall open and maintain in Dollars in a banking institution satisfactory to the Association on terms and conditions satisfactory to the Association: (i) a special account (hereinafter referred to as "Special Account A") for the purposes of Categories (1) through (5) set forth in the table in paragraph 1 of Schedule 1 to this Agreement; and (ii) a special account (hereinafter referred to as "Special Account B") for the purposes of Category (6) set forth in the table in paragraph 1 of Schedule 1 to this Agreement. Deposits into, and payments out of, the Special Accounts shall be made in accordance with the provisions of Schedule 5 to this Agreement. Section 2.03. The Closing Date shall be December 31, 1996 or such later date as the Association shall establish. The Associa- tion shall promptly notify the Borrower of such later date. Section 2.04. (a) The Borrower shall pay to the Association a commitment charge on the principal amount of the Credit not withdrawn from time to time at a rate to be set by the Association as of June 30 of each year, but not to exceed the rate of one-half of one percent (1/2 of 1%) per annum. (b) The commitment charge shall accrue: (i) from a date sixty days after the date of this Agreement (the "Accrual Date") to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or cancelled; (ii) at the rate set as of the June 30 immediately preceding the Accrual Date or at such other rates as may be set from time to time thereafter pursuant to paragraph (a) above. The rate set as of June 30 in each year shall be applied as of the next payment date in that year, specified in Section 2.06 of this Agreement, except that the rate set as of June 30, 1988 shall be applied as of July 1, 1988. -4- (c) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without restric- tions of any kind imposed by, or in the territory of, the Bor- rower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other elig,ble currency or currencies as may from time to time be designated 1or selected pursuant to the provisions of that Section. Secti n 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 May 15 and November 15 in each year. Section 2.07. (a) Subject to paragraphs (b) and (c) below, the Borrower shall repay the principal amount of the Credit in semiannual installments payable on each May 15 and November 15 commencing November 15, 1999 and ending May 15, 2029. Each installment to and including the installment payable on May 15, 2009 shall be one percent (1%) of such principal amount, and each installment thereafter shall be two percent (2%) of such principal amount. (b) Whenever: (i) the Borrower's gross national product per capita, as determined by the Association, shall have exceeded $790 in constant 1985 dollars for five consecutive years; and (ii) the Bank shall consider the Borrower creditworthy for Bank lending, the Association may, subsequent to the review and approval thereof by the Executive Directors of the Association and after due consideration by them of the development of the Borrower's economy, modify the terms of repayment of installments under paragraph (a) above by requiring the Borrower to repay twice the amount of each such installment not yet due until the principal amount of the Credit shall have been repaid. If so requested by the Borrower, the Association may revise such modification to include, in lieu of some or all of the increase in the amounts of such installments, the payment of interest at an annual rate agreed with the Association on the principal amount of the Credit withdrawn and outstanding from time to time, provided that, in the judgment of the Association, such revision shall not change the grant element obtained under the above-mentioned repayment modification. -5- (c) If, at any time after a modification of terms pursuant to paragraph (b) above, the Association determines that the Borrowek's economic condition has deteriorated significantly, the Association may, if so requested by the Borrower, further modify the terms of repayment to conform to the schedule of installments as provided in paragraph (a) above. 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. The Borrower hereby entrusts the Director General of DGPA with responsibility for the preparation of with- drawal applications under Category (6) of the table set forth in paragraph 1 of Schedule 1 to this Agreement and for the collection of the documents and other evidence to be furnished to the Asso- ciation in support of such applications. 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 carry out the Project through MOAL with due diligence and efficiency and in conformity with appropriate administrative, financial and agricultural practices, and shall provide promptly as needed, the funds, facilities, services and other resources required for the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section and except as the Borrower and the Association shall otherwise agree, the Borrower shall carry out the Project in accordance with the Implementation Program set forth in Schedule 4 to this Agreement. Section 3.02. (a) The Borrower and the Association shall, from time to time, and in any case not later than September 30 of each year, exchange views on the progress achieved in carrying out the Program and the actions specified in Schedule 6 to this Agreement. (b) Prior to each such exchange of views as specified in paragraph (a) of this Section, the Borrower shall furnish to the Association for its review and comments: (i) a report on the -6- progress achieved in carrying out the Program, in such detail as the Association shall reasonably request; and (ii) the revised three-year rolling Programs of Investments and Public Expenditures for MOAL and MRDH with terms and conditions satisfactory to the Association. (c) During the exchange of views to take place not later than September 30, 1990, the Borrower and the Association shall also: (i) with respect to the extension staff working in the five provinces within Buyenzi and Kirimiro, assess the progress made in the transfer of their administrative and financial responsibility and prepare the transfer to DGV of their technical oversight; (ii) review the achievements of the new extension methodology, and more specifically the links between research and extension; (iii) review the proposals on the new salary system for agricul- tural services personnel; (iv) assess the performance of MRDH's Cooperative Department in providing efficient services to coopera- tives; and (v) review the progress in establishing a national federation of cooperatives. (d) Prior to the exchange of views mpecified in paragraph (c) of this Section, the Borrower shall submit to the Association a study on salary and benefit policy for agricultural services personnel satisfactory to the Association. Section 3.03. In the carrying out of Part B of the Project, the Borrower shall apply the principles on procurement, trans- portation, storage and disposal of pesticides set forth in the national regulation on pesticide usage to be formulated in accordance with paragraph 1 of Part B of Schedule 6 to this Agreement. Section 3.04. The Borrower shall include the costs of the provincial agricultural services under Part C of the Project in the rolling programs under Section 3.02 (b) (ii) of this Agreement and, without limitation upon the generality of Section 3.01 (a) of this Agreement with regard to the provision of funds, shall sustain such costs in their entirety starting not later than January 1, 1995. Section 3.05. In order to carry out Part C of the Project, the Borrower shall: (a) not later than December 31, 1992, transfer to DGV the technical oversight of the extension staff working in the five provinces within Buyenzi and Kirimiro; and -7- (b) maintain, or cause the RDCs of Buyenzi and Kirimiro to maintain, all extension staff working in the five provinces within Buyenzi and Kirimiro in their employment status as of the date of this Agreement, until the earlier of: (i) December 31, 1992; or (ii) the date of the transfer of the administrative and financial responsibility over such extension staff; (c) not later than April 30, 1991 submit a study satis- factory to the Association on RDCs garage operations; (d) not later than December 31, 1991 cause the RDC of Buyenzi to: (i) have the Ngozi and Kirundo rice mills managed as separate commercial and financial entities; and (ii) implement the recommendations of the action plan under paragraph 2 of Part A of Schedule 6 to this Agreement for the transfer of the Ngozi and Kirundo rice mills to the private sector or for their liquidation; and (e) starting not later than January 1, 1992, sustain, among others out of the profit margin on the sale of livestock drugs, the non-salary operating expenses of livestock agents in the five provinces of the RDCs of Buyenzi and Kirimiro. Section 3.06. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this Agreement. ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) of this Section, including those for the Special Accounts, for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; -8- (ii) furnish to the Association, 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 said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning said records, accounts and the audit thereof as the Association shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Associa- tion has received the audit for the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Association's representatives to examine such records; and (iv) ensure that such records and accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the proce- dures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. ARTICLE V Additional Events of Suspension Section 5.01. Pursuant to Section 6.02 (h) of the General Conditions, the following additional events are specified: -9- (a) a situation has arisen which shall make it improbable that the Prograi, or a significant part thereof, will be carried out; and (b) (i) Subject to subparagraph (ii) of this paragraph: (A) The right of the Borrower to withdraw the proceeds of any grant or loan made to the Borrower for the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the agreement providing therefor, or (B) any such loan shall have become due and payable prior to the agreed maturity thereof. (ii) Subparagraph (i) of this paragraph shall not apply if the Borrower establishes to the satisfaction of the Association that: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obligations under such agreement; and (B) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement. Section 5.02. Pursuant to Section 7.01 (d) of the General Conditions, the following additional event is specified, namely, that any event specified in paragraph (b) (i) (B) of Section 5.01 of this Agreement shall occur, subject to the proviso of paragraph (b) (ii) of that Section. ARTICLE VI Effective Date; Termination Section 6.01. 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: - 10 - (a) the Borrower has established in due form an Administra- tive and Financial Service within MOAL; (b) the Borrower has retained for the Service referred to in paragraph (a) of this Section a Chief Accounting Officer qual4fied and experienced; and (c) the Borrower has submitted to the Association the terms of reference of the study specified in Section 3.02 (d) of this Agreement. Section 6.02. The date ninety (90) days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Minister of the Borrower at the time responsible for agriculture 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: Ministbre de 1'Agriculture et de 1'Elevage B.P. 1850 Bujumbura Republic of Burundi Cable address: Telex: MINAGRI 5147 MINAGRI BDI Bujumbura For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America - 11 - Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, 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. REPUBLIC OF BURUNDI By VOoi~i Ld''a Authorized RepreseZative INTERNATIONAL DEVELOPMENT ASSOCIATION By A VL, Regional Vice President 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 items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (1) Civil works: 100% of foreign expenditures and 80% of local expenditures (a) under Parts A, 1,650,000 C and D of the Project (b) under Part B 40,000 of the Project (c) under Part E (ii) 180,000 of the Project (2) Equipment and 100% of foreign vehicles: expenditures and 80% of local expenditures (a) under Parts A, 1,700,000 C and D of the Project (b) under Part B 340,000 of the Project - 13 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (c) under Part E (i) 310,000 of the Project (d) under Part E (ii) 150,000 of the Project (3) Consultants'services: 100% (a) under Parts A, 3,830,000 C and D of the Project (b) under Part B 40,000 of the Project (c) under Part E (i) 350,000 of the Project (4) Training, research 100% of foreign and studies: expenditures and 80% of local expenditures (a) under Parts A, 3,950,000 C and D of the Project (b) under Part B 180,000 of the Project (c) under Part E (i) 180,000 of the Project (d) under Part E (ii) 320,000 of the Project - 14 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (5) Operating costs: 90% of expendi- tures paid through (a) under Parts A, 2,110,000 December 31, 1990; C and D of 80% of expendi- the Project tures paid from January 1, 1991 to (b) under Part B 930,000 December 31, 1991; of the Project 60% of expendi- tures paid from (c) under Part E (i) 310,000 January 1, 1992 to of the Project December 31, 1992; 40% of expendi- (d) under Part E (ii) 190,000 tures paid from of the Project January 1, 1993 to December 31, 1993; 20% of expendi- tures paid from January 1, 1994 to December 31, 1994 (6) Goods required 100% of foreign during execution expenditi4res of the Program: (a) fertilizer 3,400,000 (b) phytosanitary 2,120,000 products (c) veterinary 1,520,000 products and equipment for agriculture (7) Unallocated 1,300,000 TOTAL 25,100,000 - 15 - 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; (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; and (c) the term "operating costs" means salaries of incremental staff under the Project, adjustment indemnities for the extension staff of the RDC of Kirimiro, office supplies and vehicle operating costs. 3. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of payments made for expenditures: (a) prior to the date of this Agreement; (b) under Categories (1) (a), (2) (a), (3) (a), (4) (a) and (5) (a) of paragraph 1 above until: (i) the Borrower has appointed in DGV: (A) one technical assistant recruited internationally; (B) one technical assistant recruited in the Borrower's territory; (C) a chief of the Extension Service; and (D) a chief of the Training Service; (ii) a cooperation agreement satisfactory to the Association for the provision of scientific support to extension services has been entered into between DGV and ISABU; (iii) the Borrower has appointed in DGPA an officer in charge of monitoring and evaluating the Programs of Investments and Public Expenditures referred to in Section 3.02 (b) (ii) of this Agreement; (iv) the Borrower has appointed in DGPA a sector planner; and (v) the Borrower has appointed in DGPA a management advisor with special mandate on the supervision of Part D of the Project; (c) under Categories (1) (b), (2) (b), (3) (b), (4) (b) and (5) (b) of paragraph 1 above until: (i) a cooperation agreement satisfactory to the Association for the carrying out of Part B (ii) of the Project has been entered into between ISABU and FACAGRO; and (ii) a cooperation agreement satisfactory to the Association for the conduct of field trials and demonstrations in connection with Part B (ii) of the Project has been entered into between DGV, ISABU, and FACAGRO; - 16 - (d) under Categories (1) (c), (2) (c), (3) (c), (4) (c) and (5) (c) of paragraph 1 above until: (i) a Cooperative Promotion Committee has been established in due form to carry out the Borrower's cooperative development policy and coordinate the activities of donors' agencies and Borrower's entities involved in such policy; and (ii) the Borrower has employed a cooperative management advisor with MRDH's Directorate of Cooperatives; and (e) under Categories (2) (d), (4) (d) and (5) (d) of paragraph 1 above until a cooperation agreement providing for the continuation of assistance by CICM to the Bureau Central de CQQEC has been made. 4. (a) No withdrawal shall be made and no commitment shall be entered into to pay amounts to or on the order of the Borrower in respect of expenditures to be financed out of the proceeds of the Credit allocated to Category (6) of paragraph 1 above, unless the Association shall be satisfied, after an exchange of views based on evidence satisfactory to the Association: (i) with the progress achieved by the Borrower in the carrying out of the Program, and (ii) that the actions described in Part A of Schedule 6 to this Agreement have been taken. (b) No further withdrawal or commitment shall be made, under Category (6) of paragraph 1 above, after the aggregate of the proceeds of the Credit withdrawn from the Credit Account and the total amount of such commitments under said Category (6) shall have reached the equivalent of SDR 3,400,000, unless the Asso- ciation shall be satisfied after a further such exchange of views: (i) with the further progress achieved by the Borrower in the carrying out of the Program; and (ii) that the actions described in Part B of Schedule 6 to this Agreement have been taken. 5. If, after any of the exchanges of views described in para- graph 4 above, the Association shall have given notice to the Borrower that the progress achieved and actions taken are not satisfactory and, within 90 days after such notice, the Borrower shall not have achieved progress and taken actions satisfactory to the Association, then the Association may, by notice to the Borrower, cancel the unwithdrawn amount of the Credit allocated to Category (6) of paragraph 1 above or any part thereof. - 17 - SCHEDULE 2 Description of the Project The objectives of the Project are: (i) to develop MOAL's analytical, programming and budgeting capabilities, as well as its sector management capacity; (ii) to design and establish a national extension system based on: (A) work programming, continuing training and linkage with research; (B) analysis of farmers needs and practices; and (C) development of technologies adapted to the various ecological and farming systems; (iii) to improve efficiency and reduce the costs of agricultural services through reorganization of the RDCs of Buyenzi and Kirimiro; and (iv) to promote agricultural input delivery, food crop marketing and agricultural system management through support to the national agricultural input policy and through promotion of the private sector and of cooperatives. 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 objectives: Part A: Strengthening of MOAL's Programming, Budgeting. and Monitoring Capabilities (i) Strengthening of MOAL's General Directorate for Planning; (ii) establishment within MOAL of a Financial and Administrative Service and; (iii) strengthening within MOAL of the General Directorate for extension; - 18 - Par..A: Strengthening of Agricultural Research (i) Strengthening within ISABU of a Phytosanitary Research Service and design and implementation of a Phytopathology Service Program; (ii) design and financing of a National Fertilizer Research Program; and (iii) preparation activities for the reorganization of agricultural research. Part..: Reorganization and Strengthening of Agricultural Services (i) Reorganization and strengthening of extension services in the five provinces comprised in the RDCs of Buyenzi and Kirimiro; (ii) carrying out of a staff training program; (iii) carrying out, with the support of ISABU, of a program of adaptive and on-farm research in the five provinces specified under (i) above; (iv) strengthening of livestock services in the five provinces specified under (i) above; (v) land protection and development; (vi) promotion of rural youth employment in the provinces of Ngozi and Muramvya; and (vii) preparation of pilot communal development plans in the provinces of Ngozi and Muramvya. PrtL_D: Reorganization of RDCs' commercial activities (i) Development of private sector and cooperatives; and (ii) monitoring and evaluation. Part E: Strengthening of the Cooperative Movement (i) Equipment, technical assistance, training and studies for the MRDH's Cooperative Department; and - 19 - (ii) financing of the credit and saving cooperatives's movement. The Project is expected to be completed by June 30, 1996. - 20 - SCHEDULE 3 Procurement and Consultants' Services Section I. Procurement of Goods and Works for Categories (1). (2). (4) and (5) of paragraph 1 of Schedule 1 to this Agreement PAIL_A: International Competitive Bidding 1. Except as provided in Part D hereof, goods and works 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 May 1985 (the "Guidelines"). 2. To the extent practicable, contracts shall be grouped in bid packages estimated to cost the equivalent of $100,000 or more each. Part B: Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A.1 hereof, goods manufactured in the Borrower's territory 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: Preference for Domestic Contractors In the procurement of works in accordance with the procedures described in Part A.1 hereof, the Borrower may grant a margin of preference to domestic contractors in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraph 5 of Appendix 2 thereto. Part D: Other Procurement Procedures 1. Items which cannot be grouped, or groups of items estimated to cost less than the equivalent of $100,000 and not less than the equivalent of $20,000 may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association. - 21 - 2. Items which cannot be grouped or groups of items estimated to cost less than the equivalent of $20,000 per contract, up to an aggregate amount not to exceed the equivalent of $1,000,000, may be procured under contracts awarded on the basis of comparison of price quotations solicited from a list of at least three suppliers eligible under the Guidelines, in accordance with procedures satisfactory to the Association. 3. Civil works contracts for erosion and swamp control may be procured under force accounts from the RDCs and MLDTE in accordance with procedures satisfactory to the Association. 4. Items estimated to cost less than the equivalent of $2,000 per contract, up to an aggregate amount not to exceed the equivalent of $100,000 may be procured directly with the supplier. Prt.E: Review by the Association of Procurement Decisions 1. (a) With respect to each contract for civil works and to each other contract estimated to cost the equivalent of $80,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of Special Account A, such procedures shall be modified to ensure that the two conformed copies of the contract required to be furnished to the Association pursuant to said paragraph 2 (d) shall be furnished to the Association prior to the making of the first payment out of Special Account A in respect of such contract. (b) With respect to each contract not governed by the pre- ceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of Special Account A, such procedures shall be modified to ensure that the two conformed copies of the contract together with the other information required to be furnished to the Association pursuant to said paragraph 3 shall be furnished to the Association as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 5 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. Such contracts shall be retained in accordance with Section 4.01 (c) (ii) of this Agreement. - 22 - 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 the Borrower in the carrying out of the Project described in Schedule 2 to this Agreement, the Borrower shall employ consultants and experts whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Such consultants and experts 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. 2. Without limitation on the generality of paragraph 1 of this Section: (a) in order to carry out Part A of the Project, the Borrower shall: (i) retain the following staff and consultants for MOAL: (A) an agricultural economist for the Studies and Programming Directorate of DGPA; (B) a monitoring and evaluation specialist for the Directorate of Monitoring-Evaluation and Management Assistance of DGPA; (C) a financial management specialist for the Directorate of Monitoring-Evaluation and Management Assistance of DGPA; (D) an extension specialist for DGV; and (E) a training specialist for DGV; and (ii) not later than March 31, 1990 submit to the Association long-term manpower projections and a training program for agricultural extension activities in the Borrower's territory; - 23 (b) in order to carry out Part B of the Project, the Borrower shall: (i) retain a fertilizer expert for FACAGRO for the implementation of the National Fertilizer Research Program under Part B (ii) of the Project; and (ii) retain a phytopathologist for ISABU for the implementation of the Phytopathology Service Program under Part B (i) of the Project; and (c) in order to carry out Part C of the Project, the Borrower shall retain a financial management expert for each of the RDCs of Buyenzi and Kirimiro. Sention III. Procurement of goods for Category (6) of paragraph 1 of Schedule 1 to this Agreement 1. Contracts for the procurement of goods estimated to cost the equivalent of $500,000 or more each shall be awarded through international competitive bidding 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 May 1985 (the "Guidelines"), subject to the following modifications: (a) Paragraph 2.8 of the Guidelines is deleted and the following is substitutid therefor: "2.8 Notification and Advertising The international community should be notified in a timely manner of the opportunity to bid. This will be done by advertising invitations to apply for inclusion in a bidder's invitation list, to apply for prequalification, or to bid; such advertisements should be placed in at least one newspaper of general circulation in the Borrower's country and, in addition, in at least one of the following forms: (i) a notice in the United Nations publication, Develop- ment Forum, Business Edition; or (ii) an advertisement in a newspaper, periodical or technical journal of wide international circulation; or -24- (iii) a notice to local representatives of countries and territories referred to in the Guidelines, that are potential smppliers of the goods required." (b) The following is added at the end of paragraph 2.21 of the Guidelines: "As a further alternative, bidding documents may require the bidder to state the bid price in a single currency widely used in international trade and specified in the bidding documents." (c) Paragraphs 2.55 and 2.56 of the Guidelines are deleted. 2. Items which cannot be grouped or groups of items estimated to cost less than the equivalent of $500,000 and of not less than the equivalent of $100,000 per contract up to an aggregate amount not to exceed the equivalent of $2,000,000 may be awarded on the basis of comparison of price quotations solicited from a list of at least three suppliers from at least three different countries eligible under the Guidelines, in accordance with procedures acceptable to the Association. 3. Contracts for goods estimated to cost the equivalent of less than $100,000 each shall be awarded on the basis of the normal procurement procedures of the purchaser of such goods. 4. With respect to each contract referred to in paragraph 1 of this Schedule, the Borrower shall furnish to the Association, prior to the submission to the Association of the first applica- tion for withdrawal of funds from the Credit Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids and recommendations for award, a description of the advertising and tendering procedures followed and such other information as the Association shall reasonably request. 5. With respect to each contract referred to in paragraph 3 of this Section, the Borrower shall furnish to the Association, prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect thereof, such documentaticn and information as the Association may reason- ably request to support withdrawal applications in respect of such contract. - 25 - 6. Notwithstanding the provisions of paragraphs 3 and 4 of this Schedule, where payments under a contract are to be made out of the proceeds of Special Account B, the copies of such contract or the documentation and the information to be furnished to the Association, pursuant to the provisions of paragraph 4 or paragraph 5 of this Schedule, as the case may be, shall be furnished to the Association as part of the evidence required under paragraph 4 of Schedule 5 to this Agreement. 7. The provisions of the preceding paragraphs 4, 5 and 6 shall not apply to contracts on account of which the Association has authorized withdrawals from the Credit Account on the basis of statements of expenditure. - 26 - SCHEDULE 4 Implementation Program Measures Action Deadline A. Reorganization of the - consultant's - August 31, 1989 RDC of Buyenzi's mission management - consultant's - October 31, 1989 report - review by - December 31, 1989 Association - starting of - January 31, 1990 implementation of recommendations B. Reorganization of RDCs' - submission of a - March 31, 1990 extension services training program - agreement between - September 30, 1989 ISABU and DGV - transfer of ex- - December 31, 1992 tension services C. Reorganization of RDCs' - consultant's - February 28, 1991 garage operations report - approval of study - April 30, 1991 by Association D. Reorganization of RDCs' - agreement on - October 31, 1989 road maintenance terms of reference services - submission - March 31, 1990 of study - starting of - December 31, 1990 .implementation of recommendations - 27 - Measures Ac.tD Deadline E. Strengthening of DGPA - appointment of - September 30, 1989 monitoring and evaluation officer - appointment of a - September 30, 1989 sectoral planner - appointment of - September 30, 1989 management specialist - international - November 30, 1989 recruitment of sectoral planning expert - international - November 30, 1989 recruitment of monitoring and evaluation expert - international - November 30, 1989 recruitment of financial management expert F. Creation of MOAL's - creation of unit - September 30, 1989 Administrative and - appointment of - September 30, 1989 Financial Service chief accountant G. Strengthening of the - appointment of - September 30, 1989 General Directorate Chief of Training of Extension in MOAL Service - appointment of - September 30, 1989 Chief of Extension Service - recruitment of - September 30, 1989 training expert - recruitment of - September 30, 1989 extension expert - 28 - Measures Action Deadline H. Formulation of agri- - study presenta- - December 31, 1989 cultural services staff tion salary structure - consultation with - April 30, 1990 the Association - starting of - July 31, 1990 implementation of recommendations I. Preparation of three- - identification of - September 30, 1989 year Programs of monitoring Investments and Public indicators Expenditures for the - preparation of - September 30, 1989 Agricultural Sector guidelines for monitoring of the Program of Invest- ments and Public Expenditures J. Design of a national - establishment of - September 30, 1989 fertilizer program coordinating committee - agreement among - September 30, 1989 ISABU, FACAGRO and DGV - appointment of - September 30, 1989 an expevt in fertilization - implementation - December 31, 1993 of National Fertilizer Research Program K. Strengthening - creation of a - September 30, 1989 of the Cooperative promotion Department committee - 29 - Measures Actio Deadline L. Implementation of - application of - September 30, 1989 measures on agricul- a unified fiscal tural inputs policy for the public and private sectors - transfer of - December 31, 1993 retail marketing to cooperatives and private sector M. Design of a pest - appointment of - September 30, 1989 management program pest management specialist - design of a - June 30, 1990 national regulatory scheme on pesticides N. Design and implemen- - design of a - January 31, 1990 tation of a seed national seed program program 0. Reorganization - agreement on - September 30, 1989 of Agricultural terms of Research reference - recruitment of - January 31, 1990 consultants - approval - December 31, 1990 of the study by the Association P. COOPEC development - recruitment of - September 30, 1990 two experts - construction of - November 30, 1990 regional branches - 30 - SCHEDULE 5 Special Accounts 1. For the purposes of this Schedule: (a) the term "eligible Categories" means: (i) in the case of Special Account A, Categories (1) to (5) set forth in the table in paragraph 1 of Schedule 1 to this Agreement; and (ii) in the case of Special Account B, Category (6) set forth in said table; (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of: (i) goods and services required for the Project; and (ii) goods required during the execution of the Program; to be financed out of the proceeds of the Credit allocated from time to time to the eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; (c) the term "Authorized Allocation" means an amount to be withdrawn from the Credit Account and deposited into each of the Special Accounts pursuant to paragraph 3 (a) of this Schedule, equivalent, in the case of Special Account A, to $2,000,000 and in the case of Special Account B, to $1,000,000. 2. Payments out of the Special Accounts shall be made exclu- sively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Association has received evidence satisfactory to it that a Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish such Special Account shall be made as follows: (a) For withdrawals of the Authorized Allocation concerned, the Borrower shall furnish to the Association a request or requests for a deposit or deposits which do not exceed the aggregate amount of such Authorized Allocation. On the basis of such request or requests, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into the relevant Special Account such amount or amounts as the Borrower shall have requested. 31 - (b) (i) For replenishment of a Special Account, the Borrower shall furnish to the Association requests for deposits into such Special Account at such intervals as the Association shall specify. (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Association the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into the relevant Special Account such amount as the Borrower shall have requested and as shall have been shown by said documents and other evidence to have been made out of such Special Account for .eligible expenditures. All such deposits shall be withdrawn by the Association from the Credit Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of a Special Account, the Borrower shall, at such time as the Association shall reasonably request, furnish to the Association such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Association shall not be required to make further deposits into a Special Account: (a) if, at any time, the Association shall have determined that all further withdrawals should be made by the Borrower directly from the Credit Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or (b) once the total unwithdrawn amount of the Credit allocated to the relevant eligible Categories, less the amount of any outstanding special commitment entered into by the Associatioll pursuant to Section 5.02 of the General Conditions, shall equal the equivalent of twice the amount of the relevant Authorized - 32 - Allocation. Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to the eligible Categories shall follow such procedures as the Associa- tion 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 remaining on deposit in the Special Account concerned as of the date of such notice 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 a Special Account: (i) was made for an expenditure or in an amount not eligible pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence furnished to the Association, the Borrower shall, promptly upon notice from the Association: (A) provide such additional evidence as the Association may request; or (B) deposit into such 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. Unless the Associa- tion shall otherwise agree, no further deposit by the Association into the Special Account concerned shall be made until the Borrower has provided such evidence or made such deposit or refund, as the case may be. (b) If the Association shall have determined at any time that any amount outstanding in a Special Account will not be required to --over further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Association, refund to the Association such outstanding amount. (c) The Borrower may, upon notice to the Association, refund to the Association all or any portion of the funds on deposit in a Special Account. (d) Refunds to the Association made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Credit Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions. - 33 - SCHEDULE 6 Conditions for Release of Sector Import Financing (Category (6) of paragraph 1 of Schedule 1 to this Agreement) The following actions shall be taken consistent with the principles outlined in the Program and in a manner satisfactory to the Association: Part_A: Actions Referred to in Paragraph 4 (a) of Schedule 1 to this Agreement (Conditions for Release of First Tranche) 1. The Borrower has submitted the 1989 budget and the 1990 draft budget for the RDCs of Buyenzi and Kirimiro satisfactory to the Association. 2. The Borrower has submitted an action plan for the reorganiza- tion of the management, by the RDC of Buyenzi, of the Ngozi and Kirundo rice mills satisfactory to the Association. 3. The Borrower has increased or caused the RDCs of Buyenzi and Kirimiro to increase the consumer price of fertilizer sold by such RDCs by not less than 25% over the consumer price applied as of January 1, 1989. 4. A Fertilizer Policy Committee has been established with the following attributions: (a) to design the national policy on fertilizer research, production and imports; and (b) to coordinate the import of fertilizers. Part B: Actions Referred to in Paragraph 4 (b) of Schedule 1 to this Agreement (Conditions for Release of Second Tranche) 1. The Borrower has formulated a national regulation on pesticide usage. 2. The Borrower has formulated a national policy on seed production and marketing.. - 34 - 3. The Borrower has completed the transfer of administrative and financial responsibility for all the extension staff working in at least one province within Buyenzi and at least one province within Kirimiro. 4. The Borrower has submitted to the Association the MOAL's and MRDH's rolling Programs of Investments and Public Expenditures for the years 1990 through 1993. 5. The Borrower has started implementing the recommendations agreed with the Association of the study specified in Section 3.02 (d) of this Agreement in relation to the extension staff working in the five provinces within Buyenzi and Kirimiro. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Development Association. FOR SECRETARY