Conformed Copy - C2350 - National Aids Control Project - Development Credit Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 2350 IN (National Aids Control Project) between INDIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated April 24, 1992 CREDIT NUMBER 2350 IN DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated April 24, 1992, between INDIA, acting by its President, (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS (A) the Borrower, having satisfied itself as to the feasibility and priority of the project described in Schedule 2 to this Agreement (the Project), has requested the Association to assist in the financing of the Project; (B) the Borrower expects to obtain from the World Health Organization (WHO) a grant of one million five hundred thousand dollars ($1,500,000) (the WHO Grant) towards financing of the Project on the terms and conditions set forth in an agreement to be entered into between the Borrower and WHO (the WHO Grant Agreement); and (C) certain parts of the Project shall be carried out by Page 2 States of the Borrower with the Borrower's assistance and for such purpose the Borrower and the Association intend to obtain from each such State certain undertakings in respect of the carrying out of its portion of the Project in accordance with terms and conditions set forth or referred to in this Development Credit Agreement; 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: (a) "AIDS" means Acquired Immunodeficiency Syndrome, a severe life threatening condition which represents the late clinical stage of infection with HIV; (b) "HIV" means Human Immunodeficiency Virus; (c) "IEC" means information, education and communication; (d) "Letter of Undertaking" means the Letter of Undertaking provided to the Borrower and the Association by a State or Union Territory pursuant to Section 3.03 of this Agreement; (e) "MIS" means management information system; (f) "MOH" means the Borrower's Ministry of Health; (g) "NACA" means the National Aids Control Authority, to be constituted by the Borrower in MOH pursuant to this Project; (h) "NGO" means non-governmental organization; (i) "Project State" means any State of the Borrower that is carrying out any portion of the Project; (j) "Project Union Territory" means a Union Territory of the Borrower that is carrying out any portion of the Project; (k) "STD" means sexually transmitted disease; and (l) "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 this Agreement, an amount in various currencies equivalent to fifty-nine million eight hundred thousand Special Drawing Rights (SDR 59,800,000). Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable Page 3 cost of goods, works and services required for the Project and to be financed out of the proceeds of the Credit. (b) The Borrower shall, for the purposes of the Project, open and maintain in dollars a special deposit account in the Reserve Bank of India on terms and conditions satisfactory to the Association. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 5 to this Agreement. Section 2.03. The Closing Date shall be September 30, 1997 or such later date as the Association shall establish. The Association 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 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 restric- tions 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 March 1 and September 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 March 1 and September 1 commencing September 1, 2002 and ending March 1, 2027. Each installment to and including the installment payable on March 1, 2012 shall be one and one-fourth percent (1-1/4%) of such principal amount, and each installment thereafter shall be two and one-half percent (2-1/2%) 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 International Bank for Reconstruction and Development (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 considera- tion 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, Page 4 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. 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. 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, without any limitation or restriction upon any of its other obligations under this Agreement, shall carry out the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, and health practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) Without limiting any of its obligations under the Development Credit Agreement, the Borrower shall cause each Project State and Project Union Territory to carry out its respective portion of the Project in accordance with the provisions of this Development Credit Agreement, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable such Project State or Project Union Territory to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (c) Without limitation upon the provisions of paragraphs (a) and (b) of this Section and except as the Borrower and the Associa- tion shall otherwise agree, the Borrower shall carry out, and shall cause each Project State and Project Union Territory to carry out the Implementation Program set forth in Schedule 4 to this Agree- ment. (d) The Borrower shall make part of the proceeds of the Credit available to each Project State or Project Union Territory, as the case may be, for such parts of the Project as are to be carried out by such Project State or Project Union Territory in accordance with the Borrower's standard arrangements for development assistance to the Project States or Project Union Territories. Section 3.02. Except as the Association shall otherwise agree, procurement of the goods, works and 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. Without limitation upon the provisions of any other part of this Agreement, the Borrower shall, and shall cause each Project State or Project Union Territory to carry out its portion of the Project, in accordance with a Letter of Undertaking issued by such Project State or Project Union Territory to the Borrower and the Association with terms and conditions satisfactory to the Association. Section 3.04. The Borrower shall by September 30, 1992, promulgate and thereafter maintain and enforce regulations requiring that condoms manufactured or sold in India conform at least to minimum quality standards established by WHO. ARTICLE IV Page 5 Financial Covenants Section 4.01. (a) The Borrower shall maintain and 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 as well as each Project State or Project Union Territory, 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 Account for each fiscal year audited, in accordance with appropriate auditing princi- ples consistently applied, by independent audi- tors acceptable to the Association; (ii) furnish to the Association, as soon as available, but in any case not later than nine 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 such 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 expenditures, the Borrower shall: (i) maintain or cause to be maintained in accordance with sound accounting practices, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Associ- ation has received the audit report 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 includ- ed in the annual audit referred to in paragraph (b) of this Section and that the report of such auditors contains a separate opinion by said auditors as to whether the statements of expendi- ture submitted during such fiscal year, together with the procedures and internal controls in- volved 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) Any Project State or Project Union Territory shall have failed to perform any of its obligations under its respective Letter of Undertaking. (b) As a result of events which have occurred after the date of this Agreement, an extraordinary situation shall have arisen Page 6 which shall make it improbable that any Project State or Project Union Territory will be able to perform its obligations under its respective Letter of Undertaking. (c) The Borrower shall have waived or failed to enforce any of the provisions of any Letter of Undertaking. (d) Any Letter of Undertaking shall have been amended, suspended, abrogated or repealed without the prior approval of the Association. (e) (i) Subject to paragraph (ii) of this paragraph, the right of the Borrower to withdraw the proceeds of the WHO Grant shall have been suspended, cancel- led or terminated in whole or in part, pursuant to the terms of the WHO Grant Agreement. (ii) Subparagraph (i) of this paragraph shall not apply if the Borrower establishes to the satis- faction of the Association that: (A) such suspen- sion, cancellation or termination 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 consistent with the obligations of the Borrower under this Agree- ment. Section 5.02. Pursuant to Section 7.01 (d) of the General Conditions, the following additional events are specified: (a) the event specified in paragraphs (a) and (c) 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 (b) the event specified in paragraph (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: (a) the Borrower shall have established NACA pursuant to paragraph 2 of Schedule 4 to this Development Credit Agreement and designated staff of NACA shall have been appointed and assumed office; and (b) all conditions precedent to the effectiveness of the WHO Grant Agreement have been fulfilled, other than those related to the effectiveness 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 Representatives of the Borrower; Addresses Section 7.01. The Secretary, Additional Secretary, Director, Deputy Secretary or Under Secretary of the Department of Economic Affairs in the Ministry of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: Page 7 For the Borrower: The Secretary to the Government of India Ministry of Finance Department of Economic Affairs New Delhi, India Cable address: Telex: ECOFAIRS 953-3166175 New Delhi 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) 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. INDIA By /s/ Lalit Mansingh Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Heinz Vergin Acting Regional Vice President South Asia 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 200,000 90% works (2) Equipment, 29,700,000 100% of foreign vehicles, expenditures, STD medicines, 100% of local laboratory expenditures, Page 8 and medical (ex-factory supplies, cost) and 80% IEC and MIS of local materials and expenditures furniture for other items procured locally (3) Local 90% consultants' services (other than by NGOs) (a) for Part F 400,000 (b) other 4,200,000 Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (4) Training and 12,800,000 80% services of NGOs (5) Incremental 3,700,000 90% of local operating expenditures costs incurred until March 31, 1994, and 60% of local expenditures incurred there- after (6) Advertisement/ 4,600,000 95% publicity services (7) Unallocated 4,200,000 __________ TOTAL 59,800,000 ========== 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower; (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 "incremental operating costs" means incremental costs incurred by the Borrower or any Project State or Project Union Territory for (i) salaries of additional staff; and (ii) operation and maintenance of vehicles, and office and laboratory equipment, in order to carry out the Project. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for: (a) expenditures prior to the date of this Agreement except that withdrawals, in an aggregate amount not exceeding the equivalent of SDR 2,100,000, may be made on account of payments made for expenditures before that date but after October 31, 1991; and Page 9 (b) expenditures incurred in, or by, any Project State or Project Union Territory unless that Project State or Project Union Territory has delivered to the Association, a Letter of Undertaking of such Project State or Project Union Territory satisfactory to the Association. SCHEDULE 2 Description of the Project The main objective of the Project is to slow the spread of HIV so as to reduce future morbidity and mortality and other types of adverse impact due to AIDS in India. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Association may agree from time to time to achieve such objective. Part A: Strengthening HIV Control Management Capability (1) Strengthening of Project planning, coordination, management and monitoring capabilities at the national level, as well as in Project States and Project Union Territories. This component would emphasize, in particu- lar, the following aspects: information, education and communication (IEC), condom programming, blood safety, epidemiology and research, case management, women's and children's health, popular participation and social aspects. (2) Training and orientation of personnel of the Borrower, Project States, Project Union Territories and selected NGOs in Project planning, coordination, management and monitoring. Part B: Public Awareness and Community Support (1) Carrying out by the Borrower, Project States and Project Union Territories, directly as well as through non- governmental organizations and private sector advertis- ing agencies, of an intensive public awareness and community support campaign under the Project including through radio, television, newspaper and bill board advertisements. This campaign would include the promotion of safe practices including safe sexual practices, use of sterilized needles and use of unin- fected blood and blood products as well as improving the knowledge of risk behavior groups, potentially vulnera- ble groups and health service providers about HIV and AIDS. (2) Sustained dissemination of information and health education about HIV and AIDS through existing health personnel at all levels by IEC; provision of training for trainers, health staff and social workers. (3) Mobilizing social and community leaders in support of the Project through conferences of opinion leaders at the national and state levels on the HIV and AIDS epidemic. (4) Training of personnel of the Borrower, Project States and Project Union Territories in agencies other than those in the health field, to increase their awareness and knowledge about HIV and AIDS transmission and prevention; and developing and implementing program strategies to integrate HIV and AIDS IEC activities into IEC activities of such agencies. Part C: Expansion of Blood Safety and Rational Use Page 10 (1) Upgrading blood banking capabilities and expansion of HIV screening of blood so as to increase coverage of HIV screening from a current level of about 30% to about 90% of all blood donated in the country, including by expanding testing capabilities and establishing zonal and reference testing centers; by linking such reference centers to blood screening facilities for quality control; by providing blood component separation equipment and supplies; and by collaboration of such reference centers with relevant agencies of the Borrower including the Indian Council for Medical Research. (2) Training of staff of blood banks, zonal testing centers, reference centers and other personnel involved in the HIV screening network. (3) Upgrading standards in blood banks for protection against blood transmissible diseases. Part D: Improving Institutional Capacity for Surveillance and Clinical Management Strengthening institutional capability at the national, state and union territory levels for monitoring the development of the HIV and AIDS epidemic and planning and programming interventions to control such epidemic; provision of HIV testing capability for sentinel surveillance at selected sites; carrying out of HIV point prevalence surveys at selected sites; training and research into socio-behavioral and epidemiological aspects of the epidemic including strategies for intervention to control the epidemic. Part E: Strengthening Capability to Control Sexually Transmitted Diseases Strengthening of clinical services and case management in STD centers in about 130 medical colleges and about 200 STD municipal clinics including by training of key staff, trainers and private practitioners and carrying out IEC on STD. Part F: Preparation of Future Projects Preparation of future projects in the health sector. * * * * The Project is expected to be completed by March 31, 1997. SCHEDULE 3 Procurement and Consultants' Services Section I: Procurement of Goods and Works Part A: International Competitive Bidding Except as provided in Part C hereof, goods shall be procured under contracts awarded in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the International Bank for Reconstruction and Development 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 India 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 Page 11 paragraphs 1 through 4 of Appendix 2 thereto. Part C: Other Procurement Procedures 1. Contracts for civil works shall be awarded, on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association. 2. Equipment, vehicles, STD medicines, laboratory and medical supplies and IEC and MIS materials, estimated to cost less than the equivalent of $200,000 per contract up to an aggregate amount not exceeding $8,000,000 equivalent may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association. 3. Furniture and equipment, off the shelf items or groups of items estimated to cost less than the equivalent of $50,000 per contract, up to an aggregate amount not exceeding $14,400,000 equivalent may be procured locally under quotations solicited from a list of at least three suppliers eligible under the Guidelines, in accordance with procedures satisfactory to the Association. 4. Equipment and medical and laboratory supplies up to an aggregate amount of $19,800,000 equivalent may be procured directly from the World Health Organization in accordance with procedures satisfactory to the Association. 5. Advertisement and publicity services under Part B of the Project up to an aggregate amount of $7,700,000, shall be procured in accordance with procedures satisfactory to the Association. Part D: Review by the Association of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract awarded under Part A of this Schedule, the first three contracts under paragraphs 1 and 2 respectively of Part C of this Schedule and contracts under Part C(4) of this Schedule estimated to cost the equivalent of $200,000 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 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 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 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 the Development Credit Agreement. (c) The provisions of the preceding subparagraph (b) 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. 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 and the Project States and Project Union Territories in carrying out the Project, each of them Page 12 shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Associa- tion. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Association on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the International Bank for Reconstruction and Development in August 1981 (the Guidelines on Use of Consultants). 2. (a) Notwithstanding the provisions of paragraph 1 of this Section, provisions of the Guidelines on Use of Consultants requiring prior review or approval by the Association of budgets, short lists, selection procedures, letters of invitation, proposals, evaluation reports and contracts shall not apply to contracts for consultants services estimated to cost less than the equivalent of $100,000 each, provided, however, that the terms of reference of such consultants shall be subject to prior review by the Associa- tion. In respect of each such contract, the Borrower shall, subject to subparagraphs (b) and (c) below, furnish to the Association, promptly after its execution and prior to the delivery to the Association of the first application for withdrawal of funds from the Credit Account in respect thereof, two conformed copies of such contract, together with the analysis of the respective evaluation and recommendations for award and such other information as the Association shall reasonably request. (b) Where payments for the contracts referred to in the preceding subparagraph (a) are to be made out of the Special Account, the two conformed copies of the contract together with other information required to be furnished to the Association pursuant to said subparagraph (a) 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 referred to in the preceding subparagraph (a) on account of which the Association has authorized withdrawals from the Credit Account on the basis of statements of expenditure. Copies of such contracts, together with other information required to be furnished to the Association pursuant to the preceding subparagraph (a) shall be retained by the Borrower in accordance with Section 4.01 (c) (ii) of this Agreement. (d) The Association shall, if it determines that the award of the contract, or the contract itself, is not consistent with this Agreement or the Guidelines on Use of Consultants, promptly inform the Borrower and state the reasons for such determination. SCHEDULE 4 Implementation Program Policy and Planning 1. The Borrower shall develop, under terms of reference satisfac- tory to the Association and provide to the Association by June 30, 1995, a strategic plan for the next phase of the Borrower's program for the control of HIV and AIDS. Project Implementation 2. The Borrower shall, by June 1, 1992, establish and thereafter maintain NACA, with adequate full-time staff and other resources and terms of reference satisfactory to the Association. 3. The Borrower shall, by October 31, 1992, establish and thereafter maintain, a Technical Advisory Sub-Committee on Social, Ethical and Legal Issues, with terms of reference which shall be issued by the Borrower in consultation with the Association. 4. Except as the Association may otherwise agree, the Borrower Page 13 shall cause Project States and Project Union Territories to establish by dates agreed with the Association, and thereafter maintain, AIDS Control Cells in their respective Departments of Health, with appropriate staff and resources, for planning, coordinating, implementing and monitoring implementation of the Project in the concerned Project State or Project Union Territory. 5. The Borrower shall select, and cause Project States and Project Union Territories to select, non-governmental organizations participating in the Project on the basis of criteria and procedures agreed with the Association. Review 6. Without limitation to Article IX of the General Conditions, the Borrower shall review with the Association annually by December 31 of each year the progress of Project implementation over the preceding twelve months and an annual work plan for Project implementation for the next following twelve months. 7. The Borrower shall carry out with the Association a mid-term review of Project implementation prior to March 31, 1995 and shall, thereafter, during Project implementation, take into account comments and suggestions made by the Association at such review. SCHEDULE 5 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1) through (6) set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods, works 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 Categories in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $5,000,000 to be withdrawn from the Credit Account and deposited into the Special Account pursuant to paragraph 3 (a) of this Schedule. 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 in 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 re- quests 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 Page 14 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 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 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 (b) once the total unwithdrawn amount of the Credit, allocated to the eligible Categories for the Project, less the amount of any outstanding special commitment entered into by the Association pursuant to Section 5.02 of the respective 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 Cate- gories 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; (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 Page 15 Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions.