Conformed Copy - L3078 - Second Agricultural Sector Adjustment Loan - Loan Agreement

Page 1 CONFORMED COPY LOAN NUMBER 3078 TUN (Second Agricultural Sector Adjustment Loan) between REPUBLIC OF TUNISIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated June 30, 1989 LOAN NUMBER 3078 TUN LOAN AGREEMENT AGREEMENT, dated June 30, 1989, between REPUBLIC OF TUNISIA (the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). WHEREAS (A) the Bank has received a letter dated April 28, 1989, from the Borrower describing a program of actions, objectives and policies designed to achieve an adjustment of the agricultural sector of the Borrower (hereinafter called the Program), declaring the Borrower's commitment to the execution of the Program, and requesting assistance from the Bank in the financing of urgently needed imports for the agricultural sector, required during such execution, and of high priority agricultural programs and projects; (B) the Borrower intends to obtain from Kreditanstalt fur Wiederaufbau (KfW) under an agreement (hereinafter called the KfW Loan Agreement) a loan (hereinafter called the KfW Loan) in an amount equivalent to $16,000,000 to support the Program on the Page 2 terms and conditions therein set forth; and (C) on the basis, inter alia, of the foregoing, the Bank has decided in support of the Program to provide such assistance to the Borrower by making the Loan in two tranches as hereinafter provided; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Loan and Guarantee Agreements" of the Bank, dated January 1, 1985, with the modifications thereof set forth below (the General Conditions) constitute an integral part of this Agreement: (a) Section 2.01, paragraph 11, shall be modified to read: "'Project' means the imports and other activities that may be financed out of the proceeds of the Loan pursuant to the provisions of Schedule 1 to the Loan Agreement."; (b) the last sentence of Section 3.02 is deleted; and (c) Section 9.07 (c) shall be modified to read: "(c) Not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Bank, the Borrower shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reasonably request, on the execution of the program referred to in the Preamble to the Loan Agreement, the performance by the Borrower and the Bank of their respective obliga- tions under the Loan Agreement and the accomplishment of the purposes of the Loan." 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) "Banque Centrale de Tunisie" means the Central Bank of the Borrower; (b) "FOSDA" means Fonds Special de Developpement Agricole, the Borrower's Agricultural Development Fund, established pursuant to Law No. 63-17, dated May 27, 1963; (c) "OC" means Office des Cereales, the Borrower's National Cereal Board; (d) "Dinars" and "TD" mean the currency of the Borrower; (e) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (f) "Fiscal Year" means the Borrower's fiscal year which runs from January 1 to December 31; (g) "Category" means a category of items to be financed out of the proceeds of the Loan as set forth in the table in paragraph 2 of Schedule 1 to this Agreement; (h) "DGPDIA" means Direction Generale de la Planification du Developpement et des Investissements Agricoles, the Department of Development Planning and Agricultural Investments within the Page 3 Borrower's Ministry of Agriculture; (i) "Agricultural Programs" and "Agricultural Projects" mean high priority agricultural programs and projects satisfying the eligibility criteria set forth in Part I of Schedule 6 to this Agreement; (j) "IOE" means the International Office of Epizootic, an intergovernmental organization established in Paris and operating under an international agreement of January 25, 1924; and (k) "Second Phase of the Cereal Marketing Master Plan" means the second phase of a study to be carried out by the Borrower under terms of reference satisfactory to the Bank on the rationalization of the commercialization of cereals. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Loan Agreement, various currencies that shall have an aggregate value equivalent to the amount of eighty-four million dollars ($84,000,000), being the sum of withdrawals of the proceeds of the Loan with each withdrawal valued by the Bank as of the date of such withdrawal. Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement. (b) The Borrower shall, for the purposes of the Program, open and maintain in dollars a special account in its Central Bank on terms and conditions satisfactory to the Bank. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 5 to this Agreement. Section 2.03. The Closing Date shall be December 31, 1994, or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.04. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.05. (a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time at a rate per annum for each Interest Period equal to one-half of one percent per annum above the Cost of Qualified Borrowings for the last Semester ending prior to the commencement of such Interest Period. (b) As soon as practicable after the end of each Semester, the Bank shall notify the Borrower of the Cost of Qualified Borrowings for such Semester. (c) For purposes of this Section: (i) "Interest Period" means the six-month period commencing on each date specified in Section 2.06 of this Agreement, including the Interest Period in which this Agreement is signed. (ii) "Cost of Qualified Borrowings" means the cost of the outstanding borrowings of the Bank drawn down after June 30, 1982, expressed as a percentage per annum, as reasonably determined by the Bank. (iii) "Semester" means the first six months or the second six months of a calendar year. Page 4 Section 2.06. Interest and other charges shall be payable semiannually on April 15 and October 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 2 to this Agreement. Section 2.08. (a) The Banque Centrale de Tunisie 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 with respect to Category (1). (b) Without limitation or restriction to the foregoing, the Borrower hereby entrusts Banque Centrale de Tunisie with responsibility for the preparation of withdrawal applications under Category (1) and for the collection of the documents and other evidence to be furnished to the Bank in support of such applications; such withdrawal applications shall to the extent practicable be consolidated so as to apply for withdrawal of aggregate amounts of not less than $1,000,000 equivalent. ARTICLE III Particular Covenants Section 3.01. (a) The Borrower and the Bank shall from time to time, at the request of either party, exchange views on the progress achieved in carrying out the Program and the actions specified in Schedule 4 to this Agreement. (b) Prior to each such exchange of views, the Borrower shall furnish to the Bank for its review and comment a report on the progress achieved in carrying out the Program, in such detail as the Bank shall reasonably request. Section 3.02. Except as the Bank shall otherwise agree, procurement of the goods, works and consultants' services to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 3 to this Agreement. Section 3.03. For purposes of coordinating the actions to be taken under the Program, and for reporting on the progress in achieving the objectives of the Program, the Borrower shall: (a) maintain the Coordinating Committee established under Loan No. 2754 TUN (Agricultural Sector Adjustment Loan); and (b) cause DGPDIA to assist the Coordinating Committee in the monitoring of the actions to be taken under the Program and the preparation of the reports referred to in Section 3.01 (b) of this Agreement. Section 3.04. The Borrower shall cause DGPDIA to: (a) select for appraisal Agricultural Programs and Agricultural Projects on the basis of the eligibility criteria and following the procedures set forth in Parts I and II of Schedule 6 to this Agreement; and (b) not later than October 31 in each year, in accordance with the procedures set forth in Part III of Schedule 6 to this Agreement, submit to the Bank for its review and approval a list of proposed Agricultural Projects and Agricultural Programs to be carried out during the following year. Section 3.05. The Borrower shall, not later than October 31, 1990, carry out a review of the level and structure of the charges applied to irrigation water in the Borrower's territory. Section 3.06. The Borrower shall: (a) not later than Page 5 March 31, 1990, carry out a study under terms of reference satisfactory to the Bank to design a pilot program permitting the private sector to import animal feed; (b) furnish to the Bank for review and comment the recommendations of such study; and (c) thereafter, based on such review, take all necessary measures satisfactory to the Borrower and the Bank to implement such recommendations. Section 3.07. (a) The Borrower shall maintain or cause to be maintained records and accounts adequate to reflect in accordance with consistently maintained sound accounting practices, the operations, resources and expenditures in respect of the Project of the departments or agencies of the Borrower responsible for the carrying out of 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 with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than nine 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 Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning said records and accounts and the audit thereof as the Bank shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan 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 Bank has received the audit report for the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Bank's representatives to examine such records; and (iv) ensure that such records and accounts are included in the annual 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 fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. ARTICLE IV Additional Event of Suspension Section 4.01. Pursuant to Section 6.02 (k) of the General Conditions, the following additional event is specified, namely, that a situation has arisen which shall make it improbable that the Program, or a significant part thereof, will be carried out. Page 6 ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as addi- tional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) that the Borrower has taken all necessary measures satisfactory to the Bank to open grain collection to the private and cooperative sectors; (b) that the Borrower has taken all action necessary to establish criteria satisfactory to the Bank for licensing olive oil exporters and has taken all action necessary to authorize the exporters meeting such criteria to export olive oil; (c) that the Borrower has taken all action necessary to: (i) establish sanitary norms for beef imports conforming with IOE norms; (ii) transfer beef to the list of freely importable products; and (iii) impose a variable tariff on beef of a level such as to permit achieving a 15% nominal protection; (d) that the Borrower has taken all necessary measures to eliminate quantitative restrictions on imports of powdered milk and has imposed a variable tariff on powdered milk imports of a level such as to permit achieving a 15% nominal protection; and (e) that the Borrower has authorized the importation of tractors of the same horse power as that of tractors manufactured in the Borrower's territory, subject to the imposition of a tariff which shall not exceed 35% and a temporary surcharge of up to 30%. Section 5.02. The date one hundred twenty (120) days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. Except as provided in Section 2.08 (a) of this Agreement, the Minister of Planning of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministere du Plan Place Ali Zouaoui Tunis Republic of Tunisia Cable address: Telex: MIPLAN 93415117 Tunis For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: Page 7 INTBAFRAD 440098 (ITT), Washington, D.C. 248423 (RCA) or 64145 (WUI) 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 TUNISIA By /s/ Abdelaziz Hamzaoui Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Kemal Dervis Acting Regional Vice President Europe, Middle East and North Africa SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. Subject to the provisions set forth or referred to in this Schedule, the proceeds of the Loan may be withdrawn from the Loan Account for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods, works and consultants' services required during the execution of the Program or required for Agricultural Programs and Agricultural Projects and to be financed out of such proceeds. 2. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocations of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Imports for the Agricultural Sector: (a) Agricultural 37,500,000 ) inputs, including ) animal feed, and ) agricultural ) equipment, includ- ) ing machinery ) 100% of foreign and spare parts ) expenditures ) (b) Petroleum 12,500,000 ) products ) Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (2) Agricultural Page 8 Programs and Agricultural Projects: (a) Civil works 23,000,000 60% (b) Equipment 10,000,000 100% of foreign expenditures and 75% of local expendi- tures (c) Studies and 1,000,000 100% Consultants' services __________ TOTAL 84,000,000 3. 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 supplied from the territory of any country other than that of the Borrower; and (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. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agreement; (b) expenditures for goods, works or consultants' services required for Agricultural Programs and Agricultural Projects unless, the Agricultural Program or the Agricultural Project has been approved by the Bank; (c) expenditures for goods under Category (1) procured under contracts costing less than $50,000 equivalent; and (d) expenditures for goods supplied under a contract which any national or international financing institution or agency other than the Bank shall have financed or agreed to finance. 5. No withdrawal shall be made and no commitment shall be entered into to pay amounts to or on the order of the Borrower in respect of expenditures to be financed out of the proceeds of the Loan after the aggregate of the proceeds of the Loan withdrawn from the Loan Account and the total amount of such commitments shall have reached the equivalent of $42,000,000, unless the Bank shall be satisfied, after an exchange of views as described in Section 3.01 of this Agreement based on evidence satisfactory to the Bank: (a) with the progress achieved by the Borrower in the carrying out of the Program; and (b) that the actions described in Schedule 4 to this Agreement have been taken. 6. If, after the exchange of views described in paragraph 5 above, the Bank shall have given notice to the Borrower that the progress achieved and actions taken are not satisfactory and, within 90 days after such notice, the Borrower shall not have achieved progress and taken actions satisfactory to the Bank, then the Bank may, by notice to the Borrower, cancel the unwithdrawn amount of the Loan or any part thereof. SCHEDULE 2 Page 9 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each April 15 and October 15 beginning October 15, 1994 through April 15, 2006 3,500,000 ____________________ * The figure in this column represents the dollar equivalent determined as of the respective dates of withdrawals. See General Conditions, Sections 3.04 and 4.03. Premiums on Prepayment Pursuant to Section 3.04 (b) of the General Conditions the premium payable on the principal amount of any maturity of the Loan to be prepaid shall be the percentage specified for the applicable time of prepayment below: Time of Prepayment Premium The interest rate (ex- pressed as percentage per annum) applicable to the Loan on the day of prepayment multiplied by: Not more than three years 0.18 before maturity More than three years but 0.35 not more than six years before maturity More than six years but not 0.65 more than eleven years before maturity More than eleven years but not 0.88 more than fifteen years before maturity More than fifteen years 1.00 before maturity SCHEDULE 3 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: International Competitive Bidding Contracts for the procurement of: (i) imports for the agricultural sector estimated to cost the equivalent of $5,000,000 or more each; (ii) civil works for Agricultural Programs or Agricultural Projects estimated to cost the equivalent of $2,000,000 or more each; and (iii) equipment for Agricultural Programs or Agricultural Projects estimated to cost the equivalent of $500,000 or more each shall be awarded through international competitive bidding 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 1985 (the Guidelines), subject to the following modifications: (a) Paragraph 2.8 of the Guidelines is deleted and the following is substituted therefor: Page 10 "2.8 Notification and Advertising The international community should be notified in a timely manner of the opportunity to bid. This will be done by advertising invitations to apply for inclusion in a bidder's invitation list, to apply for prequalification, or to bid; such advertisements should be placed in at least one newspaper of general circulation in the Borrower's country and, in addition, in at least one of the following forms: (i) a notice in the United Nations publication, Development Business; or (ii) an advertisement in a newspaper, periodical or technical journal of wide international circulation; or (iii) a notice to local representatives of countries and territories referred to in the Guidelines that are potential suppliers of the goods required." (b) The following is added at the end of paragraph 2.21 of the Guidelines: "As a further alternative, bidding documents may require the bidder to state the bid price in a single currency widely used in international trade and specified in the bidding documents." Part B: Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A hereof, goods manufactured in Republic of Tunisia 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 imports for the agricultural sector estimated to cost the equivalent of less than $5,000,000 each shall be awarded on the basis of the normal procurement procedures of the purchaser of such goods, including, when possible, the solicitation of quotations from not less than three suppliers. 2. Contracts for (i) civil works for Agricultural Programs and Agricultural Projects estimated to cost less than the equivalent of $2,000,000 each; and (ii) equipment for Agricultural Programs and Agricultural Projects estimated to cost less than $500,000 each, may be awarded on the basis of competitive bidding, advertised locally, in accordance with the Borrower's applicable procedures provided, however, that: (A) no preference shall be granted for purposes of bid comparison to any group of bidders; (B) all bidders shall be treated equally in terms of the requirements of furnishing bids and performance securities; and (C) bids shall be opened in public. Part D: Review by the Bank of Procurement Decisions 1. With respect to each contract referred to in Part A of this Schedule, the Borrower shall furnish to the Bank, prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids and recommendations for award, a description of the advertising and tendering procedures followed and such other information as the Bank shall reasonably request. 2. With respect to each contract referred to in paragraph C of this Schedule, the Borrower shall furnish to the Bank, prior to the submission to the Bank of the first application for withdrawal Page 11 of funds from the Loan Account in respect thereof, such documentation and information as the Bank may reasonably request to support withdrawal applications in respect of such contract. 3. Notwithstanding the provisions of paragraphs D.1 and D.2 of this Schedule, where payments under a contract are to be made out of the proceeds of the Special Account, the copies of such contract or the documentation and the information to be furnished to the Bank pursuant to the provisions of paragraph D.1 or paragraph D.2 of this Schedule, as the case may be, shall be furnished to the Bank as part of the evidence required under paragraph 4 of Schedule 5 to this Agreement. 4. The provisions of the preceding paragraphs D.1, D.2 and D.3 shall not apply to contracts on account of which the Bank has authorized withdrawals from the Loan Account on the basis of statements of expenditure. Section II. Employment of Consultants In order to assist the Borrower in carrying out Agricultural Programs and Agricultural Projects the Borrower shall employ agricultural, technical, financial and economic consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Bank 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. SCHEDULE 4 Actions Referred to in Paragraph 5 (b) of Schedule 1 to this Agreement 1. The Borrower has prepared and furnished to the Bank the recommendations of the Second Phase of the Cereal Marketing Master Plan. 2. The Borrower has adjusted the prices of subsidized ferti- lizers, animal feed, improved cereal seeds, seed potatoes and herbicide 2-4-D to eliminate 30% of unit subsidies. 3. The Borrower has established to the satisfaction of the Bank that FOSDA's volume of lending for agricultural credit purposes in 1990 has decreased by 15% compared to 1989. 4. Based on the review referred to in Section 3.05 of this Agreement, the Borrower has taken all necessary measures satisfactory to the Bank to improve cost recovery for irrigation water in the Borrower's territory. 5. The Borrower has taken all necessary measures satisfactory to the Bank to regulate the use of pesticides and herbicides. SCHEDULE 5 Special Account 1. For the purposes of this Schedule: (a) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods to be financed out of the proceeds of the Loan in accordance with the provisions of Sched- ule 1 to this Agreement; and (b) the term "Authorized Allocation" means an amount equivalent to $10,000,000 to be withdrawn from the Loan 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 Page 12 for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Bank 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 Bank 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 Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit in 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 Bank requests for deposits into the Special Account at such intervals as the Bank shall specify. (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Bank 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 Bank shall, on behalf of the Borrower, withdraw from the Loan 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 made out of the Special Account for eligible expenditures. All such deposits shall be withdrawn by the Bank from the Loan 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 Bank shall reasonably request, furnish to the Bank 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 Bank shall not be required to make further deposits into the Special Account: (a) if, at any time, the Bank shall have determined that all further withdrawals should be made by the Borrower directly from the Loan 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 Loan allocated to the eligible Categories less the amount of any outstanding special commitment entered into by the Bank 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 Loan Account of the remaining unwithdrawn amount of the Loan allocated to the eligible Categories shall follow such procedures as the Bank shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Bank 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 Bank shall have determined at any time that any Page 13 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; and (ii) was not justified by the evidence furnished to the Bank, the Borrower shall, promptly upon notice from the Bank (A) provide such additional evidence as the Bank may request, or (B) deposit into the Special Account (or, if the Bank shall so request, refund to the Bank) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Bank shall otherwise agree, no further deposit by the Bank 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 Bank 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 Bank, refund to the Bank such outstanding amount. (c) The Borrower may, upon notice to the Bank, refund to the Bank all or any portion of the funds on deposit in the Special Account. (d) Refunds to the Bank made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Loan Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions. SCHEDULE 6 Eligibility Criteria for Agricultural Programs and Agricultural Projects and Procedures for Appraisal and Approval of Agricultural Programs and Agricultural Projects I. Eligibility Criteria The Agricultural Programs and Agricultural Projects eligible for financing under Category (2) shall satisfy the following criteria, on the basis of a methodology acceptable to the Bank: (a) the Agricultural Programs and Agricultural Projects shall be included in the Borrower's VIIth Economic Development Plan (1987-1991) or in its VIIIth Economic Development Plan (1992- 1996); (b) the Agricultural Programs and Agricultural Projects shall be consistent with the subsector strategy defined in the Program; (c) the Agricultural Projects shall have an economic rate of return of at least 10%, based on economic pricing of inputs and outputs, including labor and foreign exchange; and (d) the Agricultural Programs shall represent the least cost solution to achieve the envisaged objectives. II. Procedures for Appraisal of Agricultural Programs and Agricultural Projects 1. The identification, preparation and appraisal of the Agricultural Programs and Agricultural Projects shall be the responsibility of DGPDIA. 2. Each appraisal of an Agricultural Project shall consist of a technical, financial, and economic analysis of such Agricultural Project satisfactory to the Bank. Each appraisal of an Agricul- tural Program shall consist of a technical and financial analysis of such Agricultural Program satisfactory to the Bank. III. Approval of Agricultural Programs and Agricultural Projects Page 14 1. Each year the list of proposed Agricultural Programs and Agricultural Projects to be carried out during the following year shall be prepared by DGPDIA and submitted to the Bank for approval. 2. When presenting Agricultural Programs or Agricultural Projects to be carried out during the following year to the Bank for approval, DGPDIA shall for each such proposed Agricultural Program or Agricultural Project furnish to the Bank, an application, in a form satisfactory to the Bank, together with: (i) an appraisal of such Agricultural Program or such Agricultural Project, including a description of the expenditures proposed to be financed out of the proceeds of the Loan; and (ii) such other information as the Bank shall reasonably request.