Zambia - Health Sector Support Project : Credit 2660 - Credit Agreement - Conformed

CREDIT NUMBER 2660 ZA Development Credit Agreement (Health Sector Support Project) between REPUBLIC OF ZAMBIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1994 CREDIT NUMBER 2660 ZA DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated 1).CA1vt)54 0 , 199 , between the REPUBLIC OF ZAMBIA (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 Association has received from the Borrower a letter dated October 20, 1994 describing a program of actions, objectives and policies designed to implement the Borrower's rolling five-year health sector strategic plan (hereinafter referred to as the Strategic Plan) and investment program (hereinafter referred to as the Investment Program) (the Strategic Plan and the Investment Program are hereinafter collectively referred to as "the Program") and declaring the Borrower's commitment to the execution of the Program; (C) the Borrower intends to contract from the Swedish International Development Agency (SIDA) a grant (the SIDA Grant) to assist in financing the Program on the terms and conditions set forth in an agreement (the SIDA Grant Agreement) to be entered into between the Borrower and SIDA; (D) the Borrower intends to contract from the Overseas Development Association (ODA) a grant (the ODA Grant) to assist in financing the Program on the terms and conditions set forth in an agreement (the ODA Grant Agreement) to be entered into between the Borrower and ODA; (E) the Borrower intends to contract from the Danish International Development Agency (DANIDA) a grant (the DANIDA Grant) to assist in financing the Program on the terms and conditions set forth in an agreement (the DANIDA Grant Agreement) to be entered into between the Borrower and DANIDA; (F) the Borrower intends to contract from the Netherlands a grant (the Netherlands Grant) to assist in financing the Program on the terms and conditions set forth in an agreement (the Netherlands Grant Agreement) to be entered into between the Borrower and the Netherlands; -2- (G) the Borrower intends to contract from the World Health Organization (WHO) a grant (the WHO Grant) to assist in financing the Program on the terms and conditions set for :h in an agreement (the WHO Grant Agreement) to be entered into between the Borrower and WHO; (H) the Borrower intends to contract from the United Nations Children's Fund (UNICEF) a grant (the UNICEF Grant) to assist in financing the Program on the terms and conditions set forth in an agreement (the UNICEF Grant Agreement) to be entered into between the Borrower and UNICEF; 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 have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (b) "Project Preparation Advance" means the project pre- paration advance granted by the Association to the Borrower pursuant to an exchange of letters dated July 31, 1992, September 30, 1994 and November 7, 1994 between the Borrower and the Association; (c) "MOH" means the Borrower's Ministry of Health; and (d) "Implementation Program" means the program set forth in Schedule 4 to this Agreement.- -3- 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 thirty- eight million seven hundred thousand Special Drawing Rights (SDR 38,700,000). 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 shall, for the purposes of the Project, open and maintain in dollars a special deposit account in a commercial bank 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 5 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 balance of the authorized amount of the Project Preparation Advance shall thereupon be cancelled. Section 2.03. The Closing Date shall be December 31, 2000 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. -4- (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 May 1 and November 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 May 1 and November 1 commencing May 1, 2005 and ending November 1, 2034. Each installment to and including the installment payable on November 1, 2014 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 - 5 - 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. 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, shall carry out the Project and the Program through M0H, with due dilzf.gence and efficiency and in conformity with appropriate administrative, financial and public health practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. (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. 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. -6- Section 3.03. The Borrower shall: (a) not later than October 1 prior to each succeeding calendar year, submit to the Association, for its review and comments, the updated Strategic Plan and Investment Program, and an annual work, training and procurement plan and recurrent budget for its health sector for the succeeding calendar year; (b) not later than November 1 in each year: (i) review with the Association and other donors, the documents referred to in the preceding paragraph; (ii) identify implementation issues and propose appropriate solutions; and (iii) update Project timetables and performance indicators; and (c) not later than December 31 in each year, furnish to the Association the documents referred to in paragraph (a) hereto, revised in accordance with the review referred to in paragraph (b) hereto and so as to be satisfactory to the Association and, except as the Association shall otherwise agree, carry out the Project in the year in question on the basis of such documents as may have been so revised. Section 3.04. Not later than May I in each year commencing May 1, 1996, furnish to the Association, for its review and comments, a report in such detail as the Association shall reasonably request, including an evaluation of progress achieved in Project implementation in accordance with the Program and the Implementation Program and, in particular: (i) progress in meeting the agreed output targets in the district; (ii) progress in the number of health centers and other facilities offering the basic package of services; (iii) beneficiary assessments and other external reviews of the previous year's progress and the actions proposed and taken to correct any problems identified; (iv) progress in the implementation of revised policies and logistics systems in the areas of human resources, drugs and supplies, urban primary health care, family planning and nutrition; and (v) draft audit reports for the institutions that have received support from the Credit in the preceding year. Section 3.05. Without limitation upon the provisions of Article IX of the General Conditions, the Borrower shall: (a) prepare and furnish to the Association not later than six (6) months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Association, a - 7 - plan, of such scope and in such detail as the Association shall reasonably request, for the future operation of the Project and the Program; (b) afford the Association a reasonable opportunity to exchange views with the Borrower on said plan; and (c) thereafter, carry out said plan with due diligence and efficiency and in accordance with appropriate practices, taking into account the Association's comments thereon. ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower shall maintain or 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 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 v,!tth appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (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, 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 said records, accounts and the audit thereof as the Association shall from time to *time reasonably request. - 8 - (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) 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 Program or a significant part thereof will be carried out; and (b) (i) Subject to subparagraph (ii) of this paragraph, the right of the Borrower to withdraw the proceeds of any grant made to the Borrower for the financing of the Project shall have been suspended, cancelled or terminated in whole or in - 9 - part, pursuant to the terms of the agreement providing therefor; and (ii) Subparagraph (i) of this paragraph shall not apply if the Borrower establishes to the satisfaction of the Association that: (A) such suspension, 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 thc Project are available to the Borrower from othLr sources on terms and conditions consistent with the obligations of the Borrower under this Agreement. ARTICLE VI Effective Date; Termination Section 6.01. The following event is specified as an additional condition to the effectiveness of this Agreement within the meaning of Section 12.01 (b) of the General Conditions, namely, that the Borrower has made arrangements satisfactory to the Association for financing the Investment Program and its health sector's budget for 1995. 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 Representative of the Borrower; Addresses Section 7.01. The Minister 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: For the Borrower: Ministry of Finance P.O. Box 50062 Lusaka, Zambia -10- Cable address: Telex: MINFIN 42221 Lusaka 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 naotr±s of Qolumbd Tnin 44't Stce=5-'of-Ame.s, as of the day and year first above written. REPUBLIC OF ZAMBIA By 141 ~ f~ Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /0/ Regional Vice President Africa - 11 - 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 Expenditures Categry in SDR Equivalent) to be Financed (1) Civil Works 100% of foreign under Part B expenditures and of the Project 90% of local for: expenditures (a) District 19,320,000 level facilities (b) other 4,140,000 (2) Equipment, vehicles, 7,590,000 100% of foreign drugs and supplies expenditures, 100% of ex- factory local expenditures and 90% of local ex- penditures for other items pro- cured locally - 12 - Amount of the Credit Allocated % of (Expressed Expenditures Category in SDR Equivalent) to be Financed (3) Consultants' 2,070,000 100% services, studies, audit and training (4) Incremental 140,000 100% recurrent costs (5) Refunding of 1,040,000 Amount due pur- Project Prepara- suant to Section tion Advance 2.02 (c) of this Agreement (6) Unallocated 4,400,000 TOTAL 38,700,000 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; and (c) the term "Incremental recurrent costs" means the costs incremental to the Project of district health facilities and of the Planning and Management Unit within MOH, including salaries, per diem, utilities, office supplies, travel costs, fuel and vehicle and equipment maintenance. 3. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of payments made for: (a) expenditures prior to the date of this Agreement; - 13 - (b) expenditures in respect of any contract for works under Category (1) (a) until the Borrower has furnished to the Association standard architectural designs satisfactory to the Association for such works; and (c) expenditures under Category (1) (b) until disbursements under Category (1) (a) shall have reached SDR 6,900,000. 4. The Association may require withdrawals from the Credit Account to be made on the basis of statements of expenditure for expenditures under contracts for civil works not exceeding $250,000 equivalent and under contracts for goods and services not exceeding $100,000 equivalent under such terms and conditions as the Association shall specify by notice to the Borrower. - 14 - SCHEDULE 2 Description of the Project The objective of the Project is to assist the Borrower to improve access to, and the effective utilization of, quality health care, nutritional interventions and family planning services through the implementation of the Program. 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: Policy Development Carrying out of research and development to refine the Borrower's national health policy framework and to adapt operational strategies through phased testing of delivery systems, operations research and studies, including, inter alia: 1. Development of community health approaches in peri-urban areas. 2. Development of cost-sharing mechanisms and fees. 3. Reformulation of the multi-disciplinary skills required for effective delivery of health care. 4. Design of methods to strengthen management practices within health facilities and at the support levels. 5. Development of legislation to support and strengthen the Borrower's new health policy. Part B: Investments 1. (a) Construction and rehabilitation of health service facilities for District Health Boards, Hospital Boards and MOH; and construction and rehabilitation of staff houses for rural District Health service providers. (b) Acquisition of equipment. 2. Improvement of planning and implementation skills at district, regional and central levels in areas of clinical and public health - 15 - competence, quality assurance, corporate planning and management, outreach, monitoring, use of the computerized health management information system and supervision. 3. Acquisition of essential drugs and materials, including family planning commodities, for public health services. 4. Supporting district health facilities to offset incremental costs resulting from the phased implementation of the Borrower's health sector reform program, including costs of: (a) monitoring by staff of effective use by clients of the package of care; (b) conducting seminars for district staff on their new responsibilities; and (c) improving community outreach. Part C: Extern.l Monitoring and Evaluation Monitoring and evaluation of progress of the Program, including: 1. Beneficiary assessments focusing on structural and procedural changes within MOH and on client perceptions of improved health care service delivery. 2. Measurement of outputs, including utilization rate changes, and of specific program indicators such as nutritional status, vaccination coverage, antenatal care visits and contraceptive prevalence rates. 3. External evaluations, including technical, financial and procurement audits by private independent auditors. The Project is expected to be completed by June 30, 2000. - 16 - 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 1992 (the Guidelines). (a) When contract award is delayed beyond the original bid validity period, such period may be extended once, subject to and in accordance with, the provisions of paragraph 2.59 of the Guidelines, by the minimum amount of time required to complete the evaluation, obtain necessary approvals and clearances and award the contract. The bid validity period may be extended a second time only if the bidding documents or the request for extension shall provide for appropriate adjustment of the bid price to reflect changes in the cost of inputs for the contract over the period of extension. Such an increase in the bid price shall not be taken into account in the bid evaluation. With respect to each contract made subject to the Association's prior review in accordance with the provisions of Part E.1 (a) of th.i.s Section, the Association's prior approval will be required for: (i) a first extension of the bid validity period if the period of extension exceeds sixty (60) days; and (ii) any subsequent extension of the bid validity period. (b) In the procurement of goods and works in accordance with this Part A, the Borrower shall use the relevant standard bidding documents issued by the Bank, with such modifications thereto as the Association shall have agreed to be necessary for the purposes of the Project. Where no relevant standard bidding documents have been issued by the Bank, the Borrower shall use bidding documents based on other internationally recognized standard forms agreed with the Association. Part B: Preference for Domestic Manufacturers in the procurement of goods in accordance with the procedures described in Part A hereof, goods manufactured in Zambia may be granted a margin of preference in accordance with, and subject to, - 17 - the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraphs 1 through 4 of Appendix 2 thereto. 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. Local Competitive Bidding Civil works estimated to cost the equivalent of $500,000 or less per contract, up to an aggregate amount equivalent to $5,500,000 and goods estimated to cost the equivalent of $100,000 or less per contract up to an aggregate amount equivalent to $400,000, may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association. 2. Local Shopping Civil works estimated to cost the equivalent of $50,000 or less per contract up to an aggregate amount equivalent to $3,000,000 and goods estimated to cost the equivalent of $30,000 or less per contract, up to an aggregate amount equivalent to $700,000, 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. 3. Direct Contracting Goods estimated to cost the equivalent of $10,000 or less per contract, up to an aggregate amount equivalent to $200,000, may be awarded after direct negotiations with suppliers in accordance with procedures acceptable to the Association. - 18 - 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 each contract for civil works estimated to cost the equivalent of $250,000 or more, and each contract for goods estimated to cost the equivalent of $100,000 or more, the procedures set forth in paragtaphs 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 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 para- graph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants 1. 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. 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 - 19 - Executing Agency" published by the Bank in August 1981 (the Consultant Guidelines). For complex, time-based assignments, the Borrower shall employ such consultants under contracts using the standard form of contract for consultants' services issued by the Bank, with such modifications as shall have been agreed by the Association. Where no relevant standard contract documents have been issued by the Bank, the Borrower shall use other standard forms agreed with the Association. 2. Notwithstanding the provisions of paragraph 1 of this Section, the provisions of the Consultant Guidelines requiring prior Association review or approval of budgets, short lists, selection procedures, letters of invitation, proposals, evaluation reports and contracts, shall not apply to: (a) contracts for the employment of consulting firms estimated to cost less than $100,000 equivalent each, or (b) contracts for the employment of individuals estimated to cost less than $50,000 equivalent each. However, said exceptions to prior Association review shall not apply to: (a) the terms of reference for such contracts, (b) single-source selection of consulting firms, (c) assignments of a critical nature, as reasonably determined by the Association, (d) amendments to contracts for the employment of consulting firms raising the contract value to $100,000 equivalent or above, or (e) amendments to contracts for the employment of individual consultants raising the contract value to $50,000 equivalent or above. - 20 - SCHEDULE 4 Implementation Program 1. In carrying out the Project, MOH shall provide: (a) planning and management support through capacity building in district-based health care; (b) monitoring of performance and quality improvements of health care services; (c) donor coordination for the mobilization of resources; (d) technical expertise in basic health programs and clinical services to advise health care providers; (e) support for human resource development; (f) administrative support through responsive procurement and distribution systems for districts; and (g) budgeting, accounting and audit support. 2. The Planning and Management Unit in MOH shall be responsible for overall Project coordination and implementation; short term technical assistance shall be provided for specific advice and technical know-how; and the Planning and Management Unit shall liaise specifically with the Association on the implementation of the Project. MOH shall assign three staff full-time within the Planning and Management Unit for the purpose of handling all reporting, procurement, budgeting, accounting and auditing matters under the Project. The Planning and Management Unit shall develop standard procurement documents for both goods and civil works to be procured under the Project using local competitive bidding, and agree on such documents with the Association prior to their use. The Planning and Management Unit shall also be responsible for organizing the reviews with donors specified in Sections 3.03 and 3.04 of this Agreement. 3. The Borrower shall maintain national Program Managers to advise and assist districts in adapting the national health reform package and defining strategies for its delivery in their respective setting. The Program Managers shall: (a) assess improvements and/or the need for research; and (b) ensure that national standards and quality of health care services are maintained in light of international standards and developments in the health sector. Program Managers shall also directly support the household and community package by coordinating with relevant sectors to ensure community access to information, technical assistance and physical resources with respect, inter alia, to family planning, prevention of the spread of sexually transmitted diseases, including the Human Immunodeficiency Virus, diarrheal disease control and good nutrition. - 21 - 4. District Health Boards shall be responsible for supervising the delivery of essential health services provided by the national package in their respective geographic areas. The District Health Boards shall also: (a) in cooperation with communities and health centers, where appropriate, establish Area Health Boards (at sub- district level) with specific terms of reference and support such Boards in their work; and (b) in cooperation with neighborhood communities and health workers, develop appropriate structures for local decision-making, quality control and financial accountability. 5. In addition, the District Health Boards shall be responsible for: (a) management of district-based services including capital, recurrent, equipment and human resources; (b) provision of Integrated Health Programs meeting local priorities; (c) auditing district performance in terms of quality, quantity and accessibility; (d) preparation of annual health plans in light of available resources, local priorities and national goals; (e) consultation and collaboration with local Government and other agencies concerned with effective delivery of health care; (f) collaboration with and supporting the regional health management acting as local representative of MOH; and (g) encouraging community participation in health planning and delivery. 6. The Hospital Management Boards shall be responsible for: (a) management of their respective hospital services including capital, recurrent, equipment and human resources; (b) provision of cost- effective health services that complement but do not compete with services provided by health centers; (c) auditing hospital performance in terms of quality, quantity and accessibility; (d) preparation of annual health plans in light of available resources, local priorities and national goals; (e) consultation and collaboration with District Health Boards and private practitioners within the hospital catchment areas; (f) collaboration with and supporting the regional health management acting as local representative of MOH; and (g) encouraging client participation and feed-back in improving the quality of services rendered by hospitals. - 22 - SCHEDULE 5 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1) through (4) 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 $3,000,000 to be withdrawn from the Credit Account and deposited into the Special Account pursuant to paragraph 3 (a) of this Schedule, provided, however, that unless the Association shall otherwise agree, the Authorized Allocation shall be limited to an amount equivalent to $1,500,000 until the aggregate amount of withdrawals from the Credit Account and the total amount of all outstanding special commitments entered into by the Association pursuant to Section 5.02 of the General Conditions shall be equal to or exceed the equivalent of SDR 6,900,000. 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. - 23 - (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 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; (b) if the Borrower shall have failed to furnish to the Association, within the period of time specified in Section 4.01 (b) (ii) of this Agreement any of the audit reports required to be furnished to the Association pursuant to said Section in respect of the audit of the records and accounts for the Special Account; - 24 - (c) if, at any time, the Association shall have notified the Borrower of its intention to suspend in whole or in part the right of the Borrower to make withdrawals from the Credit Account pursuant to the provisions of Section 6.02 of the General Conditions; or (d) 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 $6,000,000, 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 Eor 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. - 25 - (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. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Development Association. FOR SECRETARY