Conformed Copy - L3860 - Second Municipal Development Project - Amendment 1

Page 1 November 20, 1997 Mr. Roque Fernández Ministro de Economía y Obras y Servicios Públicos Hipólito Yrigoyen 250 1086 Buenos Aires, Argentina Re: Loan No. 3860-AR (Second Municipal Development Project) Amendment to the Loan Agreement Dear Sir: Please refer to the Loan Agreement between International Bank for Reconstruction and Development (the Bank) and the Argentine Republic (the Borrower) dated October 18, 1995 (the Loan Agreement). We are pleased to inform you that, pursuant to your request and our recent discussions on the subject, the Bank agrees to amend the Loan Agreement as follows: 1. Schedule 1, paragraph 4 is hereby amended to read as follows in its entirety: "The Bank may require withdrawals from the Loan Account to be made on the basis of statements of expenditure for expenditures for training, for goods under contracts costing less than $150,000 equivalent, for works under contracts costing less than $1,500,000 equivalent, for consulting firms’ services under contracts costing less than $100,000 equivalent and for individual consultants’ services under contracts costing less than $50,000 equivalent, all under such terms and conditions as the Bank shall specify by notice to the Borrower (but the Bank may not so require if such expenditures are made under contracts covered by the provisions of Schedule 4, Section I, Part D.1 (a) of this Agreement).". 2. Schedule 4, Section I, Part D.1 (a) is hereby amended to read as follows in its entirety: "With respect to: (i) each contract to be procured in accordance with the provisions of Part A.1 of this Section; and (ii) the first two contracts per calendar year for goods and the first two contracts per calendar year for works to be awarded in accordance with the procedures set forth in Part C.1 of this Schedule, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contracts are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contracts required to be furnished to the Bank pursuant to said paragraph 2 (d) shall be furnished to the Bank prior to the making of the first payment out of the Special Account in respect of such contract.". Please confirm your agreement to the foregoing amendments by signing and dating this letter in the spaces provided below. This amendment letter may be executed in two counterparts, each of which shall be an original. Upon your confirmation, please return one fully executed original to us. The provisions of this amendment letter will become effective as of the date first above written upon receipt by the Bank of one fully executed original of this amendment letter. Very truly yours, INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Myrna L. Alexander Director Country Management Unit for Argentina, Chile and Uruguay ARGENTINE REPUBLIC Page 2 By: Roque Fernández Date: February 20, 1998