Burkina Faso - Enviromental Management Project : Credit 2229 - Credit Agreement - Conformed

CREDIT NUMBER 2229 BUR Development Credit Agreement (Environmental Management Project) between BURKINA FASO and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated 15 , 1991 CREDIT NUMBER 2229 BUR DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated l :2% e 5 , 1991, between BURKINA FASO (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 intends to contract from the Kingdom of Norway (Norway) and from the Federal Republic of Germany through Gesellschaft fdr Technische Zusammenarbeit (GTZ) and the Caisse Centrale de Coop6ration Economique (CCCE) loans and grants in a total amount equivalent to $6,950,000 to assist in financing the Project on the terms and conditions set forth in the respective loan and grant agreements (the Financing Agreements) to be entered into between the Borrower and each of the aforementioned entities; 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 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) "CFAF" means the currency of the Borrower; (b) "Project Preparation Advances" means the project preparation advances granted by the Association to the Borrower pursuant to two exchanges of letters dated June 4, 1986 and -2- October 16, 1986; and June 1, 1988 and June 30, 1988 between the Borrower and the Association; (c) "Special Account" and "Sub-Accounts" mean the accounts referred to in Section 2.02 (b) of this Agreement; (d) "IPSC" means the Interministerial Project Steering Committee referred to in Section 3.03 (a) (i) of this Agreement; (e) "PTCC" means the Provincial Technical Coordination Committee referred to in Section 3.03 (a) (ii) of this Agreement; (f) "OMU" means the Project Operational Management Unit referred to in Section 3.03 (a) (iii) of this Agreement; (g) "PTMU" means the Project Technical Management Unit at the provincial level referred to in Section 3.03 (a) (iv) of this Agreement; (h) "FMU" means the Forest Management Unit at the provincial level referred to in Section 3.03 (a) (v) of this Agreement; (i) "IGB" means Institut G6ographique du Burkina, a cartographic agency of the Borrower; (j) "INERA" means Institut National d'Etudes et de Recherches Agricoles, an agricultural research agency of the Borrower; (k) "IRBET" means Institut de Recherche en Biologie et Ecologie Tropicales, an agency of the Borrower for research in tropical biology and ecology; (1) "MAE" means the Minist&re de l'Agriculture et de I'Elevage of the Borrower; (m) "MET" means the Minist&re de 1'Environnement et du Tourisme of the Borrower; and (n) "MACP" means the Minist6re de l'Action Coop6rative Paysanne of the Borrower. -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 the Development Credit Agreement, an amount in various currencies equivalent to eleven million five hundred thousand Special Drawing Rights (SDR 11,500,000). 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 shall, for the purposes of the Project, open and maintain in CFAF 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. The Borrower may additionally open and maintain in CFAF, for the benefit of each PTNU and F4U, a total of seven Sub- Accounts of the Special Account in commercial banks and on terms and conditions satisfactory to the Association. (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, 1998 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 -4- 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 ConLitions 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 February 15 and August 15 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 February 15 and August 15, commencing August 15, 2001 and ending February 15, 2031. Each installment to and including the installment payable on February 15, 2011 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, -5- 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 French Republic 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 under the overall supervision of MAE and with the cooperation of MET and MACP, with due diligence and efficiency and in conformity with appropriate administrative, financial and environmental management 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 -6- 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 establish: (a) (i) one IPSC; (ii) five PTCCs; (iii) one OMU within MAE; (iv) five PTMUs in the provincial directorates of MAE in the provinces of Bougouriba, K6nddougou, Houet, Gnagna, and Kouritenga; and (v) two FMUs in the provincial directorates of MET in the provinces of Houet and Bougouriba; and (b) thereafter maintain said IPSC, PTCCs, OMU, PTMUs and FMUs with functions, responsibilities and staff in adequate numbers, all satisfactory to the Association. Section 3.04. The Borrower shall conclude contractual arrangements satisfactory to the Association: (a) with IGB for the purposes of carrying out Part D.1 of the Project; and (b) with IRBET and INERA for the purposes of carrying out Part D.2 of the Project. Section 3.05. The Borrower shall: (a) by December 31, 1993 carry out the studies referred to under Part F of the Project; (b) submit to the Association for review and comments the results and recommendations of said studies as soon as available; and (c) promptly implement the recommendations of said studies as agreed upon with the Association. Section 3.06. The Borrower shall ensure that any investment proposal to be financed under the Credit in the execution of Parts A and B of the Project shall be selected only in accordance with the selection criteria set forth in Schedule 6 to this Agreement. Section 3.07. The Borrower shall: (a) (i) each year prepare Project related work programs and budgets; (ii) submit them, not later than April 30 of each year, to the Association for its review and approval; and (iii) execute said work programs as approved by the Association; and (b) by June 30, 1994 carry out a mid-term review with the Association to assess the progress achieved in the execution of the Project and shall promptly implement any measures required as a result of said review to further the objectives of the Project. -7- 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 with 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 cacerning said records, accounts 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: (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 report for the fiscal year in which the last withdrawal from the Credit Account or payment out of the Special Account was made, all records (contracts, orders, -8- 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 audited separately each fiscal year in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association and that the report of such audit contain an 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, and furnish to the Association one conformed copy of said audit report not later than six months after the end of each fiscal year related thereto. ARTICLE V Remedies of the Association Section 5.01. Pursuant to Section 6.02 (h) of the General Conditions, the following additional event is specified, namely that: (a) subject to paragraph (b) of this Section: (i) the right of the Borrower to withdraw the proceeds of any loan or grant made to the Borrower for the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms thereof, or (ii) any such loan shall have become due and payable prior to the agreed maturity thereof. (b) Paragraph (a) of this Section shall not apply if the Borrower establishes to the satisfaction of the Association that: (i) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obli,gations under such agreement; and (ii) adequate funds for the -9- Project are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement. Section 5.02. Pursuant to Section 7.01 (d) of -he General Conditions, the following additional event is specified, namely that the event specified in Section 5.01 (a) (ii) of this Agreement shall occur, subject to the proviso of Section 5.01 (b) of this Agreement. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) all conditions precedent to the effectiveness of the Financing Agreements have been fulfilled, save for the effectiveness of the GTZ Financing Agreement and of this Agreement; (b) a revised land tenure legislation satisfactory to the Association has been enacted; (c) IPSC, OMU and all PTCCs, PTMUs and FMUs referred to in Section 3.03 of this Agreement have been established and staffed in a manner satisfactory to the Association; and (d) all contractual arrangements referred to in Section 3.04 of this Agreement have been concluded. 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 Representatives of the Borrower; Addresses Section 7.01. The minister of the Borrower responsible for planning is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. - 10 - Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Minist&re du Plan et de la Cooperation B.P. ,050 Ouagadougou Burkina Faso Cable address: Telex: SEGEGOUV 5555 BF Ouagadougou 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) Washington, D.C. 82987 (FTCC) 64145 (WUI) or 197688 (TRT) - 11 - 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. BURKINA FASO By /o,/ f1Z CA,~m~,.ce Authorized Represeftative INTERNATIONAL DEVELOPMENT ASSOCIATION By 114&"/&?4 he&;t7 Regional Vice President Africa - 12 - 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 (1) Civil works 4,200,000 100% (2) Vehicles 2,500,000 100% and equip- ment (3) Training 80,000 100% (4) Consultants' 1,200,000 100% services (5) Incremental 1,700,000 60% operating cost (6) Refunding of 420,000 Amounts due pur- Project Prepara- suant to Section tion Advances 2.02 (c) of this Agreement (7) Unallocated 1,400,000 TOTAL 11,500,000 - 13 - 2. For the purposes of this Schedule, the term "Incremental operating costs" means expenses incurred for items such as salaries for contractual staff, fuel, maintenance and repair of vehicles and equipment and subsistence expenses for travel related to the execution of the Project. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawpls shall be made in respect of payments made for expenditures prior to the date of this Agreement. - 14 - SCHEDULE 2 Description of the Project The objectives of the Project are to support the Borrower's efforts to: (a) prevent further degradation and rapid depletion of its natural resources; (b) promote sustainable agricultural growth; (c) protect and manage forest and wildlife resources on a sustainable basis; and (d) foster local communities participation in community land and natural resource management. 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: Community Land Management Plans Formulation of Community Land Management Plans and execution of said plans and of selected investment proposals in about 120 communities located in the provinces of Gnagna, K6n6dougou and Kouritenga with a view to promoting environmental protection and rehabilitation, and improving agricultural productivity and sustainable growth at the community level. Part B: Combined Forest and Community Land Management Plans Formulation of combined forest and community land management plans and execution of said plans in selected forests and surrounding communities located in the provinces of Houet and Bougouriba. Part C: Supplemental Support for Ongoing Pilot Operations Provision of technical services such as training, monitoring of environmental conditions, execution of surveys, agreed studies and photo mapping for ongoing pilot operations in 18 selected provinces. - 15 - Part D: Monitoring of the National Environment and Project Impact 1. (a) Establishment of an appropriate system to track and monitor the evolution of environmental conditions at the national level, thereby providing a better understanding of the causes, dynamics and trends of natural resource degradation. (b) Analysis of the changes observed in land use over the last twenty years, notably, the rate of expansion of cropped land and the resulting reduction of silvopastoral areas; and production of a comprehensive set of ecological maps and data, and incorporation of said data into a geographic information system. 2. Establishment of an information system to monitor the impact of the execution of the Project (control of erosion, bush fires and forest protection) on the surrounding environment at the community level through: (a) aerial photographs at a scale of 1:50,000 of villages selected through a sampling methodology, and comparative analysis and interpretation of said photographs as taken at different periods of time; and (b) monitoring of bush fires and vegetation cover (grass and trees biomasses) in selected villages, communities and forests. Part E: Human Resources Development 1. Training of technical staff, responsible for executing any part of the Project, to acquaint them with the new concept, methodology and techniques of community-based land management, and to strengthen their communication skills. 2. Execution of workshops to disseminate the methodology and techniques of community-based land management among civil service officials and local community leaders. Part F: Studies Execution of the following studies: 1. A study to assess the rate of adoption of the new community land management techniques by the rural communities and to analyze - 16 - the causes for a successful acceptance or rejection of said techniques by the communities selected under the Project. 2. A study to monitor the impact of the revised land law in the settlement of land tenure conflicts in the communities covered by the Project with a view to enact any further amendments that may be required. 3. A study to assess the progress achieved in the training of the relevant technical staff and to recommend any appropriate follow-up required. 4. An interim report on the execution of the Project (including an assessment of the adequacy of the institutional arrangements for Project management). The Project is expected to be completLd by June 30, 1997. - 17 - 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 1985 (the Guidelines). 2. To the extent practicable, contracts for vehicles, equipment and materials 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.1 hereof, goods manufactured in Burkina Faso 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. Civil works estimated to cost the equivalent of $100,000 or less per contract, up to an aggregate amount equivalent to $700,000, and goods estimated to cost the equivalent of $50,000 up to an aggregate amount not exceeding the equivalent of $300,000, may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association provided that: (i) all bids shall be opened in public and bidders' representatives shall be allowed to be present; (ii) criteria for evaluating bids shall be set out clearly and communicated to all bidders; and (iii) foreign companies shall not be required to be incorporated in Burkina Faso in order to participate in the bidding. - 18 - 2. Civil works estimated to cost the equivalent of $20,000 or less per contract, up to an aggregate amount equivalent to $3,500,000, and contracts for equipment, supplies and materials estimated to cost the equivalent of $50,000 or less per contract, up to an aggregate amount equivalent to $200,000, 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. 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 $100,000 or more, the procedures fet 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 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 the Association has authorized withdrawals on the basis of statements of expenditure. 2. The figure of 15% is hereby specified for purposes of paragraph 4 of Appendix 1 to the Guidelines. - 19 - 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. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Association on tha 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. - 20 - SCHEDULE 4 Implementation Program The following actions shall be carried out in accordance with the timetable indicated below: 1. Land Management Plans Formulation and execution of land management plans shall be phased so as to cover about 35 new villages/communities per annum and reach the number of about 167 villages/communities by December 31, 1996. 2. Environmental Monitoring (a) All materials and equipment required for environmental monitoring, i.e., remote sensing equipment, software programs, aerial photography and office equipment, shall be procured and installed by December 31, 1992. (b) Necessary remote sensing facilities shall be installed by December 31, 1992. (c) All required remote sensing data shall be obtained by June 30, 1992, their interpretation shall be completed by December 31, 1993 and the reconciliation of remote sensing and field data shall be finished no later than December 31, 1994. 3. Forestry Management Procurement of maps and remote sensing data, and execution of forestry surveys to be completed by June 30, 1993. 4. Project Monitoring (a) Three Project-related workshops shall be carried out during calendar years 1992, 1994 and 1996. (b) An annual review of the progress achieved in the execution of the Project shall be carried out by April 30 of each year. - 21 - SCHEDULE 5 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1) through (5) 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. - 22 - (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 'e withdrawn by the Association from the Credit Account under the re 'ctive eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. The Special Account shall not be replenished on account of deposits made into any Sub-Account unless the proceeds of such deposits have been used to make payments for eligible expenditures. 4. For each payment made by the Borrower out of the Special Account or out of a Sub-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. In addition to such documents, when the Borrower requests replenishment of the Special Account for funds deposited into any Sub-Account which have already been disbursed, the Borrower shall also furnish to the Association, prior to or at the time of such request, the bank statements of said Sub-Account. 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 - 23 - 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 follcw 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; and (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 paragraph 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. -24- SCHEDULE 6 Criteria for Financing of Investment Proposals under Section 3.06 To be eligible for financing, any investment proposal submitted shall meet the following conditions: 1. be included in the land management plan or in the combined land and forest management plan to be executed by the relevant village/community; 2. be susceptible of improving the use and management of community land or forestry resources (e.g., erosion control works, water-harvesting works, small dams or dikes, soil fertility improvement, agroforestry operations, pasture improvement, nursery establishment, tree planting, bush fire prevention, wind breaks, etc...); 3. be justified in terms of community participation as to the costs of the proposed investment in cash and/or in kind, including appropriate arrangements to ensure future maintenance and recurrent costs; and 4. investments of a purely social nature shall not be eligible. 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