Conformed Copy - C1966 - Agricultural Marketing and Estate Development Project - Amendment 1

Page 1 October 1, 1992 The Governor Reserve Bank of Malawi Lilongwe Malawi Re: Agricultural Marketing and Estate Development Project (Cr. 1966-MAI) Amendment Dear Sir: I refer to (a) the Development Credit Agreement between the Republic of Malawi (the Borrower) and the International Development Association (the Association) and (b) the Project Agreement between the Association and Reserve Bank of Malawi (RBM), for the above- referenced Project, dated March 31, 1989. I also refer to the exchange of views between representatives of the Borrower and the Association in July 1992, proposing the inclusion of Investment and Development Fund Limited as a Participating Bank and the partial use of Credit funds for seasonal credit. Having reviewed the recommendations, we have proposed to amend the Development Credit Agreement as noted in the attached copy of our letter of even date herewith, to the Honorable Minister of Finance. It is therefore necessary that the Project Agreement also be amended as follows. 1. Section 2.04 (d) The amount "$200,000" in the second line is deleted and replaced by the amount "$50,000". 2. Schedule 1 2.1 Paragraph 1 is amended to read: "Sub-loans, other than those for seasonal credit referred to in sub-paragraph 3(c) of this Schedule, shall have maturities not exceeding twelve (12) years and bear interest at a rate which shall conform with the overall interest rate structure in the Borrower's territory. The interest rate shall be subject to the provisions of Section 2.08 of this Agreement." 2.2 In Paragraph 3 the word "and" after sub-paragraph (a) is deleted, the word "and" is added at the end of sub-paragraph (b), and a new sub-paragraph (c) is added to read: "(c) to finance seasonal credit, repayable in less than a twelve-month period, for the purchase of inputs for crops (other than tobacco) and livestock and incremental working capital (for seasonal commodity trading, rural multi-product trading and the purchase of items required for storage, including chemical fumigants and bags) by enterprises with annual sales of less than MK 200,000." 3. Schedule 2 3.1 Sub-paragraph 2 (a) The amount "$200,000" in line 3 is deleted and replaced by the amount "$50,000" and the word "and" at the end of sub-paragraph 2(a) is deleted. 3.2 Sub-paragraph 2 (b) Page 2 The "." at the end of sub-paragraph 2 (b) is deleted and replaced by "; and", and a new sub-paragraph 2(c) is added to read: "(c) at least 3% per annum, as determined by RBM, on sub-loans by Investment and Development Fund Limited for seasonal credit and medium-term credit under Part A(1) of the Project." Please confirm your agreement with the foregoing, on behalf of Reserve Bank of Malawi, by signing, dating and returning to us the enclosed copy of this letter. Very truly yours, Stephen M. Denning Director Southern Africa Department Confirmed RESERVE BANK OF MALAWI By: Authorized Representative Date: October 8, 1992