Conformed Copy - C2494 - Social Action Project - Development Credit Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 2494 BU Development Credit Agreement (Social Action Project) between REPUBLIC OF BURUNDI and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated June 10, 1993 CREDIT NUMBER 2494 BU DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated June 10, 1993, between REPUBLIC OF BURUNDI (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, has requested the Association to assist in the financing of the Project; (B) the Borrower has entered into an agreement (the Convention), dated April 20, 1993, with the Association Sans But Lucratif "Twitezimbere" (the Agency), authorized by ordonnance ministerielle No. 205.01/082/93, dated February 25, 1993, for the execution of the Project by the Agency; (C) the Borrower intends to contract from other donors in order to obtain grants in an aggregate amount necessary to assist in financing the Project on the terms and conditions set forth in the respective agreements to be entered into between the Borrower and other donors; and Page 2 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 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) "Operations Manual" means the manual of procedures that is attached to the Convention, forms an integral part there-of, and sets out the procedures governing the implementation of the Project, including the identification, evaluation, selection, implementation, and monitoring of sub-projects; (b) "Subproject" means the activities referred to in Part A.1 of Schedule 2 to this Agreement and financed by the Agency according to the terms and procedures set in this Agreement and the Operations Manual. (c) "Project Preparation Advance" means the project preparation advance granted by the Association to the Borrower pursuant to an exchange of letters, dated December 31, 1991, and February 3, 1992, between the Borrower and the Association; (d) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; and (e) "Statutes" means the statutes of the Agency, dated February 19, 1993. 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 seven million five hundred thousand Special Drawing Rights (SDR 7,500,000). 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 cost of goods and services required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Credit. (b) The Borrower, on behalf of the Agency, shall, for the purposes of the Project, open and maintain in dollars a special deposit account in the Bank of the Republic of Burundi on terms and conditions satisfactory to the Association, including appropriate protection against set-off, seizure or attachment. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 4 to this Agreement. (c) 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 amount of the Project Preparation Advance withdrawn and outstanding as of such date and to pay all unpaid charges thereon. The unwithdrawn Page 3 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 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 or at such other rates as may be set from time to time thereafter pursuant to paragraph (a) above. The rate set as of June 30 in each year shall be applied from the next payment 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, 2003, and ending April 1, 2033. Each installment to and including the installment payable on April 1, 2013, 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. 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. Page 4 Section 2.09. The Agency 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 of this Agreement and Article V of the General Conditions. ARTICLE III Execution of the Project Section 3.01. The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement and, to this end, shall cause the Agency to carry out the Project with due diligence and efficiency in accordance with the Convention and the Operations Manual attached thereto, shall take or cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable the Agency to carry out the Project, and shall not take or permit to be taken any action which would prevent or interfere with the carrying out of the Project by the Agency. Section 3.02. Except as the Association shall otherwise agree, procurement of the goods, works 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 shall, in pursuance of the Convention, transfer the proceeds of the Credit on a non-reimbursable basis to the Agency for the execution of the Agency's obligations thereunder. Section 3.04. The Borrower shall, through the Convention: (a) Cause the Agency to take all measures necessary to ensure that the Project is carried out with due diligence and efficiency and in accordance with appropriate administrative, financial and technical practices. (b) Ensure that the Agency is at all times during the implementation of the Project staffed by competent staff with terms of references, experience and qualifications acceptable to the Association and the Borrower, including a project director, a manager for income generating and social activities, a promotion officer and an administrative and financial officer. (c) Cause the Agency to promptly inform the Borrower of any condition which interferes or threatens to interfere with the implementation of the Project (including any sub-project) and the accomplishment of its purposes. (d) Cause the Agency to carry out the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06. 9.07 and 9.08 of the General Conditions, (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively). (e) Ensure that all sub-projects selected for financing under Part A.1 of the Project will be sub-projects that are to be implemented in the provinces of Ngozi, Muyinga and Muramvya. The Borrower shall cause the Agency to submit for approval to the Association the selection and implementation of sub-projects located in provinces other than Ngozi, Muyinga and Muramvya until the mid-term review referred to in Section 3.05 (a) of this Agreement. After the mid-term review, this procedure of approval shall no longer apply. (f) Cause the Agency to submit to the Association, for an evaluation of its selection process of sub-projects, the first five sub-project requests under each of the four respective components of Part A.1 of Schedule 2 to this Agreement. (g) Ensure that any amendment to the Convention (including the Operations Manual) is subject to the Association's prior approval. (h) Cause the Agency to submit short quarterly reports on the implementation Page 5 of the Project in a format acceptable to the Association and will promptly submit them to the Association. (i) Cause the Agency to submit more detailed annual reports on the implementation of the Project in a format accept-able to the Association and will promptly submit them to the Association. The annual reports will cover financial, procurement and general sub-project performance as well as the result of sub-project monitoring. Section 3.05. (a) The Borrower and the Association shall carry out a mid-term review of the Project in the period between 20 and 30 months after the Effective Date. The terms of reference of this review shall be acceptable to the Association and the Borrower shall prepare the inputs required for this review. During the review an assessment will be made of: (i) progress made in implementing overall Project objectives; (ii) the continued validity of the design assumptions in the light of implementation experience and the evolving context within which the Project is being implemented; (iii) the opportunity to reduce the periodicity of the audit reports referred to in Section 4.01 from a semi-annual basis to an annual basis in light of the audits previously conducted in application of Sections 4.01 and 4.02; (iv) the desirability of expanding the area of implementation of the sub-projects financed under Part A.1 of the Project to provinces other than Ngozi, Muyinga and Muramvya or to expand it to the entirety of the Borrower's territory; and (v) progress made in implementing the poverty and living conditions monitoring component and the desirability of launching an integrated survey. In addition, as part of the review, the Borrower shall also prepare a plan of action, satisfactory to the Association, to improve the Project implementation and deal with identified deficiencies. (b) Promptly after the review, the Borrower shall take or shall cause to be taken all necessary action required for the implementation of the aforementioned plan of action and take or cause to be taken all necessary action to implement the recommendations of the mid-term review. Section 3.06. (a) Without limitation on the provisions of Section 3.01, the Borrower shall: (i) provide in its budget amounts sufficient to cover its counterpart contributions to the costs of the Project; (ii) open and maintain, on behalf of the Agency, until the completion of the Project, an account (the Project Account) in a commercial bank acceptable to the Association and on terms and conditions acceptable to the Association; (iii) deposit into the Project Account an initial amount equivalent to $100,000 (the Initial Deposit); (iv) there-after at annual intervals following the deposit of the Initial Deposit, deposit in the Project Account an amount equivalent to the Initial Deposit or any other amount required for further implementation of the Project as agreed between the Borrower and the Association; and (v) ensure that the amounts deposited in the Project Account will be used exclusively for the Borrower's counterpart expenditures under the Project and are included in the Borrower's public expenditure program. ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower shall, pursuant to the terms of the Convention, cause the Agency to maintain records and accounts adequate to reflect in accordance with sound accounting practices the operations and financial condition of the Agency. (b) The Borrower shall cause the Agency to: (i) have its records, accounts and financial statements (balance sheets, statements of income and expenses and related statements) and the records and accounts for the Special Account for each semiannual period audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) submit to it for subsequent transmittal to the Association as soon as available, but in any case not later than three months after Page 6 the end of the semiannual period referred to: (A) certified copies of its financial statements for such period as so audited; and (B) 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 it for subsequent transmittal to the Association such other information concerning such records, accounts, financial statements and the audit thereof as the Association shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of statements of expenditure, the Borrower shall, pursuant to the terms of the Convention, cause the Agency to: (i) maintain, in accordance with paragraph (a) of this Section, records and acccounts reflecting such expenditures; (ii) retain, until at least one year after the Association has received the audit report for the semiannual period in which the last withdrawal from the Credit Account or payment out of the Special 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 each of the audits 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 audit period, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. Section 4.02. Without prejudice to Section 4.01 above, the Borrower shall, during the first 12 months following the Effective Date, cause the Agency to have its records and accounts referred to in Section 4.01 above audited every four months. Any additional audits to be carried out in pursuance of this provision shall be carried out, and reports thereof shall be submitted, in accordance with the same standards as set out in Section 4.01 above, with the exception that the additional audit reports will have to be submitted not later than two months after the end of the four-month period referred to. 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) The Borrower or the Agency shall have failed to perform any of their respective obligations under the Convention. (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 the Agency will be able to perform its obligations under the Convention. (c) The Convention shall have been amended, suspended, abrogated, repealed or waived without the prior approval of the Association. (d) The statutes shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of the Agency to perform any of its obligations under the Convention. (e) The Borrower or any other entity having jurisdiction shall have taken any Page 7 action for the dissolution or disestablishment of the Agency or for the suspension of its operations. Section 5.02. Pursuant to Section 7.01 (d) of the General Conditions, the following additional event is specified, namely, that any event specified in paragraphs (a), (b), (c), (d) or (e) of Section 5.01 of this Agreement shall occur and shall continue for a period of 30 days after notice thereof shall have been given by the Association to the Borrower. 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 Agency has selected 25 sub-projects for financing and the Association has approved the selection of at least ten of those sub-projects; (b) the Project Account has been opened and the Initial Deposit in an amount equivalent to $100,000 has been deposited therein by the Borrower; and (c) a management information system acceptable to the Association has been installed in the Agency and is operational. Section 6.02 The following is specified as an additional matter, 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, namely, that the Convention has been duly authorized or ratified by the Borrower and the Agency and is legally binding upon the Borrower and the Agency 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. ARTICLE VII Representatives of the Borrower; Addresses Section 7.01. The Borrower's minister in charge of 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: B.P. 1830 Bujumbura Burundi Telex: 9775135 BDI For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 248423 (RCA) Page 8 Washington, D.C. 82987 (FTCC) 64145 (WUI) or 197688 (TRT) 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/ Francisco Aguirre-Sacasa Acting 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 Part A of the Project (1) Civil Works 1,150,000 75% (2) Equipment, 1,510,000 100% of foreign materials, expenditures and vehicles 50% of local expenditures (3) Consultants' 1,620,000 50% services, studies, training and services to agencies Part B of the Project (4) Equipment, 290,000 100% of foreign vehicles and expenditures and material 50% of local expenditures (5) Consultants' 1,080,000 100% services, Page 9 studies and training (6) Operating 140,000 95% expenditures Part C of the Project (7) Equipment, 70,000 100% vehicles and material (8) Consultants' 320,000 100% of foreign services, expenditures and training and 50% of local studies expenditures (9) Operating 290,000 95% Expenditures (10) Refunding of 290,000 Amounts due Project pursuant to Preparation Section 2.02 (c) Advance of this Agreement (11) Unallocated 740,000 _________ TOTAL 7,500,000 ========= 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 "operating expenditure" means incremental recurrent expenditure incurred for Project implementation, such as local support staff salary, office rental and supplies, fuel, and maintenance; and (d) the term "services to agencies" means expenditures incurred by the Agency in support of entities, such as non-governmental organizations, in charge of the identification, execution and supervision of the sub-projects and in support of the coordination and development of non-governmental organizations. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement. SCHEDULE 2 Description of the Project The objectives of the Project are to assist the Borrower: (i) in encouraging the population to engage in small-scale income generating activities; (ii) in improving the living conditions of the population through the generation of employment and the improvement of the social services and infrastructure; Page 10 (iii) in fostering the participation of local governments such as municipalities, community groups, and non-governmental agencies in development-related activities; and (iv) in strengthening the Borrower's capacity to measure and monitor trends in the population's living conditions. 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: The Social Action Program 1. The support by the Agency to sub-projects furthering: (i) the creation and promotion of income-generating activities; (ii) the enhancement of small-scale economic infrastructure; (iii) the rehabilitation and construction of basic social infrastructure; and (iv) the development of social activities with priority in the areas of family planning, literacy programs and nutritional recuperation. 2. Support to development of national non-governmental organizations and assistance to the coordination of non-governmental organizations. Part B: Monitoring of Poverty and Living Conditions 1. Establishment of a survey system for the monitoring of trends in the population's living conditions. 2. The carrying out of surveys and studies in the social and economic sectors. 3. The support to the Borrower's capacity to carry out surveys and studies in the social and economic sectors. Part C: Project Management The coordinating and monitoring of the Project through a project management unit, including the acquisition of vehicles, equipment and material. * * * The Project is expected to be completed by 30 June 1997. SCHEDULE 3 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: International Competitive Bidding 1. 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 Bank in May 1992 (the Guidelines). 2. For fixed-price contracts, the invitation to bid referred to in paragraph 2.13 of the Guidelines shall provide that, when contract award is delayed beyond the original bid validity period, the successful bidder's bid price will be increased for each week of delay by two predisclosed correction factors acceptable to the Association, one to be applied to all foreign currency components and the other to the Page 11 local currency component of the bid price. Such an increase shall not be taken into account in the bid evaluation. 3. To the extent practicable, contracts for goods shall be grouped into bid packages estimated to cost the equivalent of $100,000 or more. Part B: Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A hereof, goods manufactured in 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. Part C: Other Procurement Procedures 1. Contracts for goods estimated to cost the equivalent of $100,000 or less but more than $30,000 per contract, up to an aggregate amount equivalent to $800,000, may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association and the provisions of the Operations Manual. 2. Contracts for goods estimated to cost the equivalent of $30,000 or less per contract, up to an aggregate amount equivalent to $1,400,000, may be procured under contracts awarded on the basis of comparison of price quotations obtained from at least three suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Association and the provisions of the Operations Manual. 3. Contracts for works, estimated to cost the equivalent of $30,000 or more per contract, up to an aggregate amount of $1,400,000 may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association and the provisions of the Operations Manual; provided that, should such procedures fail to attract a qualified contractor to execute such works, the contracts for works estimated to cost the equivalent of $30,000 or more per contract may be procured under contracts awarded on the basis of comparison of price quotations obtained from at least three suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Association and the provisions of the Operations Manual. 4. Contracts for works estimated to cost less than $30,000 per contract, up to an aggregate amount of $400,000 may be procured under contracts awarded on the basis of comparison of price quotations obtained from at least three suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Association and the provisions of the Operations Manual; provided that, should such procedures fail to attract a qualified contractor to execute such works, the contracts for works estimated to cost less than $30,000 per contract may be procured on the basis of direct contracting according to procedures acceptable to the Association and the provisions of the Operations Manual. 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 estimated to cost the equivalent of $50,000 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 preceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall Page 12 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 4 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. (d) 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 consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association and in accordance with the provisions of the Operations Manual. 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 Bank in August 1981 and in accordance with the provisions of the Operations Manual. SCHEDULE 4 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1) through (9) 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 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 $700,000 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 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 Page 13 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 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, 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 Categories 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.