Conformed Copy - C2359 - Private Sector Development Project - Development Credit Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 2359 BU (Private Sector Development Project) between REPUBLIC OF BURUNDI and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated June 22, 1992 CREDIT NUMBER 2359 BU DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated June 22, 1992, between the REPUBLIC OF BURUNDI (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS (A) the Association has received two letters of development policy, dated April 15, 1992, from the Borrower describing a program of actions, objectives and policies designed to develop the private sector, to promote exports and to reinforce the financial sector (hereinafter called the "Program"), declaring the Borrower's commitment to the execution of the Program, and requesting assistance from the Association in the financing of the Project; (B) Part A of the Project will be carried out by the Banque de la Republique du Burundi with the Borrower's assistance, and as part of such assistance, the Borrower will make available to the Banque de la Republique du Burundi part of the proceeds of the Credit as provided in this Agreement; and WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, Page 2 to extend the Credit to the Borrower upon the terms and conditions set forth in this Agreement and in the Project Agreement of even date herewith between the Association and the Banque de la Republique du Burundi; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Development 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: (a) "BRB" means Banque de la Republique du Burundi, established pursuant to its Statutes; (b) "Project Agreement" means the agreement between the Association and BRB, of even date herewith, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the Project Agreement; (c) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and BRB pursuant to Section 3.01 (b) of this Agreement, as the same may be amended from time to time, and such term includes all schedules supplemental to the Subsidiary Loan Agreement; (d) "Statutes" means the statutes of BRB, dated January 3, 1976, as amended to the date of this Agreement; (e) "Participating Financial Intermediary" and "PFI" mean a commercial or development bank or credit institution acceptable to the Association to which BRB, under an agreement (a "PFI Agreement") with such bank or institution, has lent part of the proceeds of the Credit for relending to Investment Enterprises for Investment Projects; (f) "Sub-loan" means a loan or credit made or proposed to be made under Part A of the Project by a PFI to an Investment Enterprise for an Investment Project out of the equivalent of the proceeds of the Credit relent to BRB under the Subsidiary Loan Agreement; (g) "free-limit Sub-loan" means a Sub-loan, as so defined, which qualifies as a free-limit Sub-loan pursuant to the provisions of paragraph 2 (b) of Schedule 1 to the Project Agreement; (h) "Investment Enterprise" means an enterprise to which a PFI proposes to make or has made a Sub-loan or in which it proposes to make or has made an Investment; (i) "Investment Project" means a specific development project to be carried out by an Investment Enterprise utilizing the proceeds of a Sub-loan or Investment; (j) "Francs Burundais" and "FBU" mean the currency of the Borrower; (k) "Special Account" means each of the accounts referred to in Section 2.02 (b) of this Agreement; (l) "Project Management Unit" or "PMU" means the unit to be established within BRB pursuant to paragraph 2 of Schedule 2 to the Project Agreement for the carrying out of Parts A and C.1 of the Project; (m) "MCI" means Ministcre du Commerce et de l'Industrie of the Borrower; Page 3 (n) "SCEP" means Service Charge des Entreprises Publiques; (o) "DGUH" means Direction Generale de l'Urbanisme' et de l'Habitat; (p) "REGIDESO" means Regie des Eaux et d'Electricite du Burundi; (q) "PCU" means the policy coordinating unit to be established pursuant to Section 3.05 of this Agreement in the MCI for the purposes of Part C.3 of the Project; (r) "MTPDU" means Ministcre des Travaux Publics et du Developpement Urbain; and (s) "DGGM" means Direction Generale de la Geologie et de Mines; (t) "Project Preparation Advance" means the project preparation advance granted by the Association to the Borrower pursuant to an exchange of letters, dated December 9, 1991 and January 15, 1992, between the Borrower and the Association. 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 Development Credit Agreement, an amount in various currencies equivalent to twelve million four hundred thousand Special Drawing Rights (SDR 12,400,000). 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: (i) amounts paid (or, if the Association shall so agree, amounts to be paid) under Part A by BRB on account of withdrawals made by an Investment Enterprise under a Sub-Loan or Investment to meet the reasonable cost of goods and services required for the Investment Project in respect of which the withdrawal from the Credit Account is requested; and (ii) expenditures made (or if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for Parts B and C of the Project and to be financed out of the proceeds of the Credit. (b) The Borrower shall, for the purposes of Categories (1) 3 (a) and (e), and 4 (a) in the table in paragraph 1 of Schedule 1 to this Agreement, cause PMU to open and maintain in dollars a special deposit account (hereinafter referred to as "Special Account A") in a financial institution acceptable to the Association on terms and conditions satisfactory to the Association, including appropriate protection against set-off, seizure or attachment. (c) The Borrower shall, for the purposes of Category (2) in the table in paragraph 1 of Schedule 1 to this Agreement, cause DGDUH to open and maintain in dollars a special deposit account (hereinafter referred to as "Special Account B"), in a financial institution acceptable to the Association on terms and conditions satisfactory to the Association, including appropriate protection against set-off, seizure or attachment. (d) the Borrower shall for the purposes of Categories 3 (b) and 4 (b) in the table in paragraph 1 of Schedule 1 to this Agreement, cause PCU to open and maintain in dollars a special deposit account (hereinafter referred to as "Special Account C") in a financial institution acceptable to the Association on terms and conditions satisfactory to the Association, including appropriate protection against set-off, seizure or attachment. (e) Deposits into, and payments out of, any Special Account shall be made in accordance with the provisions of Schedule 5 to this Agreement. (f) 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 Page 4 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. Section 2.03. The Closing Date shall be December 31, 1997 or such later date as the Association shall establish. The Association shall promptly notify the Borrower and BRB 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 the 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; and (ii) at the rate set as of the June 30 immediately preceding the accrual date and 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 from the next date in that year specified in Section 2.06 of this Agreement. (c) 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. (a) Subject to paragraphs (b) and (c) below, the Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each April 1 and October 1 commencing October 1, 2002 and ending April 1, 2032. Each installment to and including the installment payable on April 1, 2012, 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. (c) If, at any time after a modification of terms pursuant to paragraph (b) above, the Association determines that the Borrower'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. Page 5 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. BRB, acting through the Project Management Unit (PMU) is designated as representative of the Borrower for the purposes of taking any action required or permitted to be taken under the provisions of Section 2.02 (a) (i) of this Agreement and Article V of the General Conditions. ARTICLE III Use of Proceeds of the Credit 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: (i) shall carry out Parts B, C.2, C.3 and C.4 of the Project, with due diligence and efficiency and in conformity with appropriate administrative and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project, and (ii) without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, shall cause BRB to carry out Parts A, C.1 and C.5 of the Project in accordance with the provisions of the Project Agreement and to carry out all the obligations of BRB 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 BRB to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (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. (c) The Borrower shall relend the portion of the Credit allocated and withdrawn under Category (1) in the table in paragraph 1 of Schedule 1 to this Agreement to BRB under a subsidiary loan agreement to be entered into between the Borrower and BRB under terms and conditions which shall have been approved by the Association which shall include, inter alia, (i) an undertaking by BRB to make loans to PFIs under PFI Agreements to be entered into with each PFI for financing Investment Projects under Part A of the Project, under the terms and conditions specified in the Project Agreement, (ii) an undertaking by BRB that the proceeds of the Credit shall be relent at a variable interest rate equal to the weighted average rate in the Borrower's auction market of three-month treasury certificates as determined by BRB, or such other rate as may be determined by agreement of the Borrower and BRB and satisfactory to the Association, (iii) an undertaking by BRB to reimburse the principal to the Borrower in ten (10) equal annual installments starting five (5) years after the Effective Date, (iv) an undertaking by BRB to collect and transfer to the Borrower all payments of interest and repayment of principal from PFIs under sub-loans agreements after retaining, an amount not exceeding one percent of the outstanding principal from the interest paid by PFIs or such other amount as may be determined from time to time by agreement between the Borrower and the Association, and (v) the Borrower's undertaking to bear the foreign exchange risk. (d) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association 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 the Subsidiary Loan Agreement or any provision thereof. Section 3.02. Except as the Association shall otherwise agree, procurement of the goods and consultants' services 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 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 and 9.07 of the General Conditions Page 6 (relating to insurance, use of goods and services, plans and schedules, records and reports, and maintenance, respectively) in respect of Parts A, C.1 and C.5 of the Project shall be carried out by BRB pursuant to Section 2.04 of the Project Agreement. Section 3.04. Not later than October 1993, the Borrower shall implement measures, satisfactory to the Association, reforming and decentralizing the Directorate of Notary Public and authorizing the creation of private paralegal professions including notaries public, process-servers, liquidators and auctioneers. Section 3.05. (a) The Borrower shall, not later than fifteen months after the Effective Date, conduct a Mid-Term Review: (i) to monitor progress in carrying out the Program, and (ii) to review the progress achieved in: (A) the implementation of Project, including management arrangements, policy, legal, regulatory and institutional reform measures, and the development and marketing arrangements of industrial sites and services; and (B) in the simplification of project investment administrative approval and implementation procedures. (b) Based on such review, the Borrower shall promptly prepare an action program, satisfactory to the Association, for the further implementation of the Project and shall implement such action plan. Section 3.05. The Borrower shall, for the purposes of Part C.3 of the Project, establish and maintain in the MCI a unit, the PCU, with functions, organization and operations satisfactory to the Association. ARTICLE IV Financial Covenants Section 4.01. (a) 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 sound accounting practices, records and accounts reflecting such expenditures; (ii) ensure that all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures are retained until at least one year after the Association has received the audit report for the fiscal year in which the last withdrawal from the Credit Account was made; and (iii) enable the Association's representatives to examine such records. (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) (i) of this Section and those for the Special Account for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; and (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 the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested, including a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals; and (iii) furnish to the Association such other information concerning said records and accounts and the audit thereof as the Association shall from Page 7 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 Association 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 procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. ARTICLE V Remedies of the Association Section 5.01. Pursuant to Section 6.02 (h) of the General Conditions, the following additional events are specified: (a) BRB or the PMU shall have failed to perform any of their obligations under the Project Agreement. (b) As a result of events which have occurred after the date of this Agreement, an extraordinary situation shall have arisen which shall make it improbable that BRB or the PMU will be able to perform their obligations under the Project Agreement, or that the Program, or a significant part thereof, will be carried out. (c) The Statutes shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the operations or financial condition of BRB or the PMU or their ability to carry out the Project or to perform any of their obligations under the Project Agreement. (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of BRB or for the suspension of its operations. Section 5.02. Pursuant to Section 7.01 (d) of the General Conditions, the following additional events are specified: (a) the event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower and BRB or the PMU; and (b) any event specified in paragraph (c) or (d) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of this Agreement within the meaning of Section 12.01 (b) of the General Conditions: Page 8 (a) the Subsidiary Loan Agreement has been entered into by the Borrower and BRB, respectively; (b) BRB has submitted to the Association a satisfactory action plan to reinforce the staffing capacity and performance of its inspection department and improve on-site and off-site inspection and controls of banks and financial institutions; (c) the Borrower has taken the necessary measures, satisfactory to the Association for: (i) the tax-deductibility of provisions against risks of losses on doubtful loans of banks based on BRB's guidelines on bank loan risk classifications and provisions thereof, and (ii) the rationalization of taxation of financial instruments through the institution of a unique tax on such instruments. 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 furnished to the Association: (a) that the Project Agreement has been duly authorized or ratified by BRB, and is legally binding upon BRB in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly authorized or ratified by, and is legally binding upon the Borrower and BRB in accordance with its terms. Section 6.03. 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. Section 6.04. The obligations of the Borrower under the provisions of paragraphs (a) and of Section 5.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on the date fifteen (15) years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. Except as provided in Section 2.09 of this Agreement, the Minister of the Borrower at the time responsible for finance 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: Ministre des Finances B.P. 1830 Bujumbura Burundi For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 197688 (TRT), Washington, D.C. 248423 (RCA), 64145 (WUI) or 82987 (FTCC) Page 9 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 /s/ Julien Kavakure Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Edward V. K. Jaycox Regional Vice President Africa 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) Part A of the 8,010,000 100% Project, Invest- ment Projects (2) Part B of the Project (MTPDU): (a) Civil works 1,820,000 100% of foreign expenditures and 90% of local expenditures (b) Vehicles, office 290,000 100% of foreign equipment and expenditures and consultants' 90% of local services expenditures (3) Part C of the Project: (a) PMU: Vehicles, 280,000 100% of foreign consultants' expenditures and services and 90% of local training expenditures (b) PCU/MCI: Vehicles, 290,000 100% of foreign Page 10 office equip- expenditures and ment, con- 90% of local sultants' expenditures services and training (c) Tribunal of Commerce: Vehicles, 110,000 100% of foreign office equip- expenditures and ment, con- 90% of local sultants' expenditures services and training (d) Ministry of Energy and Mining: Office equip- 55,000 100% of foreign ment, con- expenditures and sultants' 90% of local services and expenditures training (e) BRB: Consultants' 55,000 100% of foreign services and expenditures and training 90% of local expenditures (f) SCEP: Consultants' 51,000 100% of foreign services and expenditures and training 90% of local expenditures (4) Operating costs: (a) PMU 220,000 80% the first year 70% the second year and 50% the third year (b) PCU 36,000 100% the first year, 80% the second year and 70% the third year (5) Audits 150,000 100% (6) Refunding of 801,000 Amounts due pur- Project Prepa- suant to Section ration Advance 2.02 (f) of this Agreement (6) Unallocated 232,000 __________ TOTAL 12,400,000 ========== 2. For the purposes of this Schedule: Page 11 (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; (c) the term "operating costs" means incremental costs incurred by PMU and PCU for the implementation of the Project as follows: office supplies, maintenance and operation of vehicles and office equipment and telecommunications, in country missions and travel, advertisement and, concerning Category 4 (a), salaries of locally recruited staff; and (d) the terms "first year, second year and third year" mean respectively the first, the second and the third year from the Effective Date. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agreement; (b) a Sub-loan in respect of Category (1) unless: (i) the Sub-loan has been made in accordance with the procedures and on the terms and conditions set forth or referred to in Schedule 1 to the Project Agreement, (ii) a PFI Agreement has been signed by the concerned PFI and BRB, and (iii) the Borrower has set up PMU and the Policy Coordinating Unit under MCI, appointed their respective directors and supervisors, and approved their respective organizational structures, staffing, budget and operating policies and procedures, to the satisfaction of the Association; and (c) payments made for expenditures under Category (2) unless the Borrower has set up the Commission referred to in paragraph 3 of Schedule 4 to this Agreement responsible for the supervision of the implementation of Part B of the Project. SCHEDULE 2 Description of the Project The objectives of the Project are to: (i) assist in financing such productive facilities and resources in Burundi as will contribute to the economic and social development of the country, and (ii) foster private enterprise development through financial, economic, and institutional reforms. 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: Line of Credit Financing of Investment Projects through loans granted to Investment Enterprises by Participating Financial Intermediaries with the proceeds of the Credit onlent to them by BRB. Part B: Ministry of Public Works and Urban Development Development of industrial sites and services in Bujumbura's industrial zone for sale or lease at market prices to local and foreign private industrial promoters. Part C: Technical Assistance, Training 1. Technical support by PMU to Investment Enterprises including: advice on technical matters such as plant lay-out, selection of equipment, accounting and marketing, project implementation and start-up activities. 2. Legal Assistance Program (a) Studies on reform to legislation governing commercial, banking and business enterprise activities, real estate regulations and environment protection laws. Page 12 (b) Assistance for the creation and training of paralegal professions. (c) Improving the processing and administrative capacity of the Commercial Tribunal including: (i) acquisition of filing equipment and of word and data processing equipment, (ii) reorganization and computerization of commercial registry and archives, and (iii) training of magistrates and other staff of the Commercial Tribunal. 3. Assistance for Policy and Technical Assistance Coordination Setting-up of the Policy Coordinating Unit, under the MCI, for private sector development and export promotion and coordination of the various donor programs of assistance available in this respect. 4. Assistance to Ministry of Energy and Mining Assistance in negotiations for nickel mining exploration and revision of mining regulations and Codes. 5. Financial Sector Technical Assistance (a) Strengthening the supervision functions of BRB, through reorganization, training and professional advice and building up BRB's capacity to conduct monetary and credit policies including its capacity: (i) to monitor and forecast main economic and financial variables, (ii) to establish monetary objectives, (iii) to put into place adequate instruments of monetary supervision, such as open market operations and required reserves, (iv) to manage the liberalization of foreign exchange transactions, and (v) to supervise foreign exchange activities of commercial banks. (b) Study of training requirements of BRB and bank staff, in banking activities such as credit management and analysis, accounting, auditing and legal administration of litigious credits with a view to set up a comprehensive bank training program. (c) Assistance for study and implementation of new money market instruments and mechanisms, including expansion of the scope, and improvement, of the transparency of the treasury certificate auction market, the introduction of new financial instruments and securities, as well as for the assessment of the related training requirements. * * * The Project is expected to be completed by June 30, 1997. SCHEDULE 3 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: International Competitive Bidding 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). Part B: Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A hereof, goods manufactured in the Republic of Burundi 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. Page 13 Part C: Preference for Domestic Contractors In the procurement of works in accordance with the procedures described in Part A 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 or groups of items required under Part A of the Project, estimated to cost the equivalent of $750,000 or less per contract up to an aggregate amount not to exceed the equivalent of $11 million, may be procured under contracts awarded on the basis of procurement procedures acceptable to BRB which shall be consistent with commercial practice and satisfactory to the Association. 2. Items or groups of items required under Part B of the Project, estimated to cost the equivalent of an aggregate amount not to exceed the equivalent of $300,000 may be procured under contracts awarded on the basis of competitive bidding advertised locally, in accordance with procedures satisfactory to the Association. 3. Items or groups of items required under Part C of the Project estimated to cost the equivalent of an aggregate amount not to exceed the equivalent of $130,000, may be procured under contracts awarded on the basis of comparison of price quotations from a list of at least three suppliers from at least two different countries eligible under the Guidelines, in accordance with procedures acceptable to the Association. Part E: Review by the Association of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to (i) each contract for Part A of the Project estimated to cost the equivalent of more than $1,000,000, and (ii) each contract for Part B of the Project estimated to cost the equivalent of more than $150,000, 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 the Special Account, 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 the Special Account 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. Where payments for such contract are to be made out of the Special Account, 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 subparagraph (b) shall not apply to contracts on account of which withdrawals from the Credit Account are to be made on the basis of statements of expenditure. 2. The figure of 15% is hereby specified for purposes of paragraph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants In order to assist the Borrower in carrying out the Project, the Borrower shall employ experts and consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Such consultants Page 14 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. SCHEDULE 4 Implementation Program 1. (a) PMU which, under the administrative supervision of BRB, shall be responsible for implementing Parts A and C.1 of the Project, as provided for in Schedule 2 to the Project Agreement; (b) MTPDU, through DGUH, shall be responsible for implementing Part B of the Project; (c) SCEP shall be responsible for the implementation of Part C.2 (a) of the Project (d) the Ministry of Justice shall be responsible for implementing Part C.2 (b) and (c) of the Project; (e) MCI, through the Policy Coordinating Unit, shall be responsible for the overall coordination of Part C.3 of the Project; (f) the Ministry of Energy and Mining through DGGM shall be responsible for implementing Part C.4 of the Project; and (g) BRB shall be responsible for implementing Part C.5 of the Project. 2. PMU, BRB, SCEP, MCI, DGUH, DGGM and Commercial Tribunal shall submit to the Association for review quarterly and annual reports on the implementation of the various components of the Project. 3. The Borrower shall establish a Commission responsible for the supervision of the implementation of Part B of the Project, under terms of reference acceptable to the Association, including: (a) the Commission shall (i) include representatives of the private sector through both Chambre de Commerce d'Industrie de Burundi and the various industrial and trade associations, including PFIs, PMU, DGDUH and REGIDESO, (ii) set forth terms and conditions for sale including auctions of the developed plots to both local and foreign private industrial promoters, (iii) undertake the review of and recommend measures for the simplification of: (A) administrative, legal and regulatory procedures governing the process of land acquisition through sale or lease including titling and registration procedures; (B) the issuance of building construction permits and clearances; (C) the clearance and approval of investment projects by the National Investment Commission as the case may require; and (D) the process of registering and clearing real estate guaranties and other collateral required by participating financial intermediaries under the Project, and (iv) undertake a complementary review of lending and guarantee procedures applied by PFIs to private investment borrowers with a view to encourage their simplification and acceleration; and (b) In determining the selling prices to be applied, the Commission shall ensure maximum direct cost recovery and take into account fair and free market based land prices. SCHEDULE 5 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Category" means Categories (1), (3) (a) and (e), and (4) (a), in respect of Special Account A, Catego ry (2), in respect of Special Account B, and Categories (3) (b) and (4) (b), in respect of Special Account C set forth in the table in paragraph 1 of Schedule 1 to this Agreement; Page 15 (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 the eligible Category in accordance with the provisions of Schedule 1 to this Agreement, provided, however, that notwithstanding the provisions of paragraph 2 (b) of Schedule 1 to the Project Agreement, payments for expenditures to be financed out of the proceeds of free-limit Sub-loans may be made out of the Special Account before the Association shall have authorized withdrawals from the Credit Account in respect thereof. Such expenditures, however, shall qualify as eligible expenditures only if the Association shall subsequently authorize such withdrawals; and (c) the term "Authorized Allocation" means: (i) an amount equivalent to $500,000 to be withdrawn from the Credit Account and deposited into the Special Account A; (ii) an amount equivalent to $300,000 to be withdrawn from the Credit Account and deposited into the Special Account B; and (iii) an amount equivalent to $50,000 to be withdrawn from the Credit Account and deposited into the Special Account C. 2. Payments out of the 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 it that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the Special Account shall be made as follows: (a) For withdrawals of the Authorized Allocation, the Borrower shall furnish to the Association a request or requests for a deposit or deposits which do not exceed the aggregate amount of the 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 Special Account such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of the Special Account, the Borrower shall furnish to the Association requests for deposits into the 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 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 paid out of the Special Account for eligible expenditures. All such deposits shall be withdrawn by the Association from the Credit Account under the respective eligible Category, 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 the 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 the 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 Page 16 (b) once the total unwithdrawn amount of the Credit allocated to the eligible Category, less the amount of any outstanding special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions with respect to the Project, shall equal the equivalent of twice the amount of the Authorized Allocation. Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to the eligible Category 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 remaining on deposit in the Special Account 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 the 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 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. Unless the Association shall otherwise agree, no further deposit by the Association into the Special Account 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 the 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. (c) The Borrower may, upon notice to the Association, refund to the Association all or any portion of the funds on deposit in the 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. SCHEDULE 6 Modifications of the General Conditions For purposes of this Agreement, the provisions of the General Conditions are modified as follows: (1) The last sentence of Section 3.02 is deleted. (2) The following subparagraph is added to Section 2.01: "15. The term 'Project Agreement' has the meaning set forth in paragraph (b) of Section 1.02 of the Development Credit Agreement." (3) The words "the Association may, by notice to the Borrower, terminate the right of the Borrower to make withdrawals with respect to such amount. Upon the giving of such notice, such amount of the Credit shall be cancelled" set forth at the end of Section 6.03 are deleted and the following is substituted therefor: "or (e) by the date specified in sub-paragraph 3 (c) of Schedule 1 to the Project Agreement, the Association shall, in respect of any portion of the Credit: (i) have received no applications or requests permitted under sub-paragraphs (a) or (b) of said paragraph; or (ii) have denied any such applications or requests, the Association may, by notice to the Borrower, terminate the right to submit such applications or approvals or to make withdrawals from the Credit Page 17 Account, as the case may be, with respect to such amount or portion of the Credit. Upon the giving of such notice, such amount or portion of the Credit shall be cancelled."