Conformed Copy - C1809 - Public Financial Management Project - Amendment 1

Page 1 May 27, 1988 Mr. Gonzalo Sa"nchez de Lozada Minister of Planning and Coordination Avenida Arce 2147 Casilla 3116 La Paz, Bolivia Re: Credit No. 1703-BO (Reconstruction Import Credit Project) 1719-BO (Vuelta Grande Gas Recycling Project) 1809-BO (Public Finance Management Project) 1818-BO (Power Sector Rehabilitation Project) 1828-BO (Second Reconstruction Import Credit Project) 1829-BO (Emergency Social Fund Project) 1842-BO (La Paz Municipal Development Project) 1882-BO (Second Emergency Social Fund Project) Amendment to the Development Credit Agreement Dear Mr. Minister: Please refer to the Development Credit Agreements entered into between the Republic of Bolivia (the Borrower) and the International Development Association (the Association), respectively dated June 2, 1986, September 11, 1986, July 31, 1987 (Nos. 1809, 1818, 1828 and 1829), August 7, 1987 and March 4, 1988 as amended. The Association has decided to institute a system of variable commitment charges on its development credits, set on an annual basis, with a maximum charge of 1/2 of 1 percent (0.5%) per annum, which has been the rate of commitment charges since their introduction in 1982. Under the new system, the Association will set the commitment charges payable on its development credits on June 30 in each year, and, for an initial period, commencing July 1, 1988, the rate has been set at zero (0). The current rate of 1/2 of 1 percent (0.5%) per annum will continue to be applicable until June 30, 1988. To effect these changes, the Association proposes to amend development credit agreements already signed. Therefore, the Association hereby amends Section 2.04 of each of the Development Credit Agreements entered into between the Borrower and the Association for the above-captioned Projects to read as follows: "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2.04 (a) The Borrower shall pay to the Association a commitment charge on the principal amount of the Credit not withdrawn from time to time at a rate to be set by the Association as of June 30 of each year, but not to exceed the rate of one-half of one percent (1/2 of 1%) per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shall accrue from a date sixty days after the date.of this Agreement to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or cancelled at the rates set from time to time pursuant to paragraph (a) above. The rate set as of June 30 in each year shall be applied as of the next payment date in that year specified in Section 2.06 of this Agreement, except that the rate set as of June 30, 1988 shall be applied as of July 1, 1988. (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." Kindly confirm the agreement of the Borrower to the foregoing by signing and dating the enclosed copy of this letter in the space below and returning it to us for our files. Very truly yours, Page 2 INTERNATIONAL DEVELOPMENT ASSOCIATION By Ping-Cheung Loh Director Country Department III Latin American and the Caribbean Confirmed: REPUBLIC OF BOLIVIA By /s/ Gonzalo Sanchez de Lozaoa Authorized Representative Date: June 14, 1988