Conformed Copy - C2541 - Private Sector Development Project - Amendment

Page 1 December 15, 1995 H.E. Mr. Marc Rugenera Minister of Finance P.O. Box 158 Kigali Rwandese Republic Re: Credit No. 2541-RW (Private Sector Development Project) Amendment to the Development Credit Agreement Excellency: I refer to the Development Credit Agreement (the Agreement) between the Rwandese Republic (the Borrower) and the International Development Association (the Association) dated November 18, 1993, for the above-referenced Project. We also refer to the discussions held between the representatives of the Borrower and the Association from October 28 to November 4, 1995 as well as to your letter, dated November 28, 1995. This letter is to propose the following amendments to the Agreement: A: The word "commercial" in line 4 of Section 2.02 (b) shall be deleted. B: Section 3.05 (a) shall be amended to read as follows: "The Borrower shall conduct, no later than December 31, 1996, jointly with the Association, a mid term review on the implementation and management arrangements of the Project. Without limitation upon the generality of the foregoing, the review shall, inter alia, cover the implementation and management aspects of the Project with particular reference to policy and institutional reform measures." C: Section 3.06 shall be deleted in its entirety. D: Section 4.01 shall be amended to read as follows: "The Borrower shall, no later than December 31, 1996, take all necessary measures for: (i) simplification of the procedures for authorization of non-scheduled freight and passenger charter flights; and (ii) liberalization of air transport so as to eliminate monopoly and liberalize pricing." E: Section 4.02 shall be amended to read as follows: "The Borrower shall, no later than December 31, 1996, take all necessary measures for: (i) eliminating dividend taxation; (ii) instituting official schedules of depreciation allowance and of a five-year tax credit allowance for operating losses of business firms; and (iii) allowing banks to deduct allocations to provisions for losses of non performing loans." F: Section 4.03 shall be amended to read as follows: "The Borrower shall, no later than December 31, 1996, take necessary measures for authorizing the creation and functioning of private legal and paralegal professions, including notaries public, process-servers, liquidators and auctioneers." G: Section 4.04 shall be amended to read as follows: Page 2 "The Borrower shall, no later than December 31, 1996, take all necessary measures for the (a) simplification and liberalization of the requirements for forming business enterprises including procedures for registering such enterprises; (b) simplification and updating of the regime of negotiable financial and commercial instruments (including commercial papers and documentary titles), guaranties, secured transactions, sales, leasing and factoring; and (c) modernization of bankruptcy procedures." H: Section 4.05 shall be amended to read as follows: "The Borrower shall, no later than December 31, 1996, take necessary measures for (a) establishing a regime of free- zones for the purpose of export processing; and (b) improving the functioning of the labor market, inter alia, through: (i) abrogating the obligation of prior enrollment in the registry of jobs, (ii) elimination of works permits for nationals, (iii) setting a uniform minimum wage system, (iv) permitting wages and annual increase to be freely negotiated between the employer and the employee, (v) clarifying the rules governing overtime, and (vi) reducing the number of the various paid leaves." I: The percentage of expenditures in Category 2 (c) of Schedule 1 to the Agreement shall be amended to read "100%". J: Category 3 of Schedule 1 to the Agreement shall be amended to read as follows: Amount of the Credit Allocated % of (Expressed in SDR Expenditures Category Equivalent) to be Financed (3) Part C of the Project (a) Consulting services 510,000 100% and training for Part C.1 (b) Consulting services 320,000 100% and training for Part C.2 (c) Consulting services 210,000 100% and training for Part C.3 (d) Vehicles, office 320,000 100% equipment and operating costs (e) Audits 70,000 100% K: Paragraph 2 (c) of Schedule 1 to the Agreement shall be amended to read as follows: "(c) the term "operating costs" means costs of: (i) maintenance and operation of equipment, vehicles and furniture, utilities and communications cost; (ii) cost of office refurbishing; and (iii) acquisition of office supplies for Project implementation, and office rental for the PSSF." L: Paragraph 3 (c) (iii) shall be deleted in its entirety. M: Paragraph 3 (d) of Schedule 1 to the Agreement is deleted in its entirety. N: Paragraph 3 (e) of Schedule 1 to the Agreement shall henceforth become "3 (d)" and the reference to Category 3 (a) Page 3 thereof shall be deemed to be reference to "Category 3 (b)". O: Paragraph 5 (vi) of Schedule 4 to the Agreement shall be amended to read as follows: "(vi) the PSSF shall apply the cost-sharing scheme indicated below: Cumulative Consulting Cost PSSF Benefificary up to $50,000 80% 20% $50,001 to $100,000 50% 50%" All other provisions of the Agreement shall remain in full force and effect. This amendment shall become effective on the date of countersignature by you or your authorized representative. If you agree to the proposed amendment, kindly sign, date and return the enclosed copy of this letter to us. Sincerely, Andrew Rogerson Director Central and Indian Ocean Department Africa Region CONFIRMED; RWANDESE REPUBLIC By: Marc Rugenera AUTHORIZED REPRESENTATIVE DATE: December 28, 1995