Argentina - Social Protection Project : Loan 3957 - Loan Agreement - Conformed

LOAN NUMBER 3957-AR Loan Agreement (Social Protection Project) between ARGENTINE REPUBLIC and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated De cay/\')4 5 , 1995 Loan Number 3957-AR LOAN AGREEMENT AGREEMENT, dated Thceyw\-Oe 5 , 1995, between ARGENTINE REPUBLIC (the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). WHEREAS the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Bank to assist in the financing of the Project; WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to extend the Loan 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 Single Currency Loan and Guarantee Agreements for Single Currency Loans" of the Bank, dated May 30, 1995 (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) "APRENDER" means the Borrower's apprenticeship program for the unemployed instituted under Law No. 24465 of May 30, 1995 and MTSS' (as hereinafter defined) Decision No. 461/95, of June 13, 1995; (b) "ASOMA" means Apoyo Solidario a los Mavores, the Borrower's program of nutritional and health assistance to the elderly poor created by SDS' Resolution No. 1166 of April 21, 1995; (c) "Chagas Program" means Programa de Control de Enfermedades de Chaga, the Borrower's program for the elimination of the Chagas disease created by Law No. 22360 of December 23, 1980; -2- (d) "DEP" means Direcci6n de Evaluaci6n Presupuestaria, the budget evaluation directorate of MOE; (e) "DNGS" means Direcci6n Nacional de Proaramaci6n de Gasto Social, the national directorate of social expenditure programming of MOE; (f) "FOPAR" means Fondo Participativo de Inversi6n Social, the Borrower's social fund program to be established within the framework of PRODESO for the execution of Part B of the Project; (g) "FOPAR Operational Manual" means the operational manual for operation of FOPAR as approved by the Bank in accordance with the provisions of paragraph 4 of Schedule 5 to this Agreement; (h) "FORESTAR" means the Borrower's program for creation of employment through reforestation projects, instituted under MTSS Decision No. 122/95, of August 7, 1995; (i) "INDEC" means Instituto Nacional de Estadisticay Censo, the Borrower's National Institute of Statistics and Census; (j) "MCE" means the Borrower's Ministry of Culture and Education; (k) "MOE" means the Borrower's Ministry of Economy, Public Works and Services; (1) "MTSS" means the Ministerio de Trabajo y ! Seguridad Social the Borrower's Ministry of Labor and Social Security; (m) "PAI" means Programa Ampliado de Inmunizaci6n the Borrower's national immunization program; (n) "PEP" means Programa de Empleo Privado, the Borrower's apprenticeship program created by MTSS Decision No. 47, of January 18, 1995, as amended by MTSS Decision No. 110, of August 1, 1995; (o) "PRENO" means Programa de Entrenamiento Ocupacional, the Borrower's occupational training program created by MTSS' Resolution No. 1280 of 1994; (p) "PROAS" means Programa de Asistencia Solidaia. the Borrower's public works program created by MTSS' Resolution No. 1279 of 1994, as amended; -3- (q) "PRODESO" means Programa Participativo de Desarrollo Social, the program to be established by Resolution of the Secretary of SDS (as defined hereinafter) for the execution of Parts B and C of the Project; (r) "Project Preparation Advance" means the project preparation advance granted by the Bank to the Borrower pursuant to an exchange of letters dated November 10, 1994 and November 30, 1994 between the Borrower and the Bank; (s) "PRONAPAS" means Programa Nacional de Pasantias, the Borrower's program of on-the-job training for the unemployed created by MTSS' Resolutions No. 1547 of 1994 and No. 47 of 1995; (t) "Protected Programs" means PSA, PSE, the Selected Employment Programs, ASOMA, the Chagas Program, and PAI, as said list may be amended by agreement between the Borrower and the Bank; (u) "Provinces" means the provinces of the Borrower; (v) "PSA" means Programa Social Agropecuario. the Borrower's income support program for the economically active rural poor, created by Resolution No. 158 of 1993 from the Borrower's Secretariat of Agriculture, Livestock and Fisheries; (w) Plan Social Educativo or PSE means the Borrower's social education plan created pursuant to Law No. 24195 of April 1993; (x) "SDS" means Secretaria de Desarrollo Social the Borrower's Secretariat for Social Development or its successor; (y) "Sector Implementing Agencies" means MCE and MTSS; (z) "Selected Employment Programs" means APRENDER, FORESTAR, PEP, PRENO, PROAS and PRONAPAS, as such list may be amended by agreement between the Borrower and the Bank; (aa) "SIEMPRO" means Sistema de Informaci6n, Monitoreo y Evaluaci6n de Programas Sociales, the Borrower's system for information management, monitoring and evaluation of targeted social programs to be established within the framework of PRODESO for the execution of Part C of the Project; (ab) "SIEMPRO Document" means the document setting forth the objectives, activities, and expected results of SIEMPRO provided by the Borrower, through SDS, to the Bank under cover of its letter dated June 15, 1995; -4- (ac) "SIEMPRO Matrix" means the document incorporating specific key SIEMPRO actions and results, with corresponding timetables, set forth in the Annex to the letter dated October 6, 1995 from the Borrower to the Bank; (ad) "SIEMPRO Subsidiary Agreement" means the agreement dated June 7, 1995 between the Borrower, through SDS, and INDEC; (ae) "Social Cabinet" means the ad hoc group of representatives of the Secretariats and agencies of the Borrower created by the President of the Borrower responsible for actual or potential targeted social programs; (af) "Special Accounts" means Special Account A and Special Account B referred to in Section 2.02 (b) of this Agreement; (ag) "Subprojects" means subprojects financed or to be financed through FOPAR under Part B of the Project; (ah) "UCAF" means Unidad de Coordinaci6n Administrativo Financiera del Programa Participativo de Desarrollo Social, the coordination unit of PRODESO referred to in paragraph 16 of Schedule 5 to this Agreement; and (ai) "UEC" means Unidad Ejecutora Central the central execution unit to be established in accordance with paragraph 7 of Schedule 5 to this Agreement for the execution of Part C of the Project. ARTICLE H 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, an amount equal to one hundred fifty-two million dollars ($152,000,000). 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 for expenditures made (or, if the Bank shall so agree, to be made) in respect of: (a) grants for Subprojects; and (b) the reasonable cost of goods, works and services required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan. -5- (b) The Borrower may, for the purposes of the Project, open and maintain in dollars two special deposit accounts, one with respect to Part A of the Project ("Special Account A") and one with respect to Parts B and C of the Project ("Special Account B") in a commercial bank, on terms and conditions satisfactory to the Bank, including appropriate protection against set-off, seizure or attachment. Deposits into, and payments out of, Special Account A and Special Account B shall be made in accordance with the provisions of, respectively, Schedule 6 and Schedule 7 to this Agreement. (c) Promptly after the Effective Date, the Bank shall, on behalf of the Borrower, withdraw from the Loan 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 June 30, 1998 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 per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to tiine. Section 2.05. The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time in accordance with the provisions of Schcdule 3 to this Agreement. Section 2.06. Interest and other charges shall be payable in arrears on February 15 and August 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Loan in accordance with the provisions of Schedule 3 to this Agreement. Section 2.08. (a) The Secretary of the Secretariat of Finance of MOE 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 of the table set forth in paragraph I of Schedule 1 to this Agreement. (b) The Secretary of SDS 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 Categories 2 and 3 of the table set forth in paragraph 1 Schedule I to this Agreement. -6- 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 Part A of the Project through MOE and the Sector Implementing Agencies and Parts B and C of the Project through SDS with due diligence and efficiency and in conformity with appropriate administrative and financial 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 Bank shall otherwise agree, the Borrower shall carry out the Project in accordance with the Implementation Program set forth in Schedule 5 to this Agreement. Section 3.02. Except as the Bank shall otherwise agree: (a) procurement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 4 to this Agreement; and (b) grants for Subprojects shall be made in accordance with the procedures and on the terms and conditions set forth in the FOPAR Operational Manual. Section 3.03. For the purposes of Section 9.08 of the General Conditions, and without limitation thereto, the Borrower shall: (a) prepare, on the basis of guideimes acceptable to the Bank, and furnish to the Bank 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 Bank, a plari for the future operation of Parts B and C of the Project; and (b) afford the Bank a reasonable opportunity to exchange views with the Borrower on said plan. Section 3.04. The Borrower shall: (a) maintain policies and procedures adequate to enable it to monitor on an ongoing basis, in accordance with indicators satisfactory to the Bank, the carrying out of the Project and the achievement of the objectives thereof, and shall by March 31 and September 30 of each year of Project execution provide the Bank with semi-annual progress reports on the execution of each program included in Part A of the Project and on the execution of Parts B and C of the Project, in a format acceptable to the Bank and including the indicators referred to above; -7- (b) prepare, under terms of reference satisfactory to the Bank, and furnish to the Bank, not later than March 31, 1997, a report integrating the results of the monitoring and evaluation activities performed pursuant to paragraph (a) of this Section, on the progress achieved in the carrying out of Parts B and C of the Project during the period preceding the date of said report and setting out the measures recommended to ensure the efficient carrying out of said Parts of the Project and the achievement of the objectives thereof during the period following such date; (c) review with the Bank, by April 30, 1997, or such later date as the Bank shall request, the report referred to in paragraph (b) of this Section and ,thereafter, take all measures required to ensure the efficient completion of Parts B and C of the Project and the achievement of the objectives thereof, based on the conclusions and recommendations of the said report and the Bank's views on the matter; and (d) not later than December 15, 1995, the Borrower shall furnish to the Bank a set of indicators, satisfactory to the Bank, to be used in the monitoring of the execution of each of the Protected Programs. Section 3.05. The Borrower shall ensure that its expenditures in 1995 under the Protected Programs shall amount, in the aggregate, to no less than $300,000,000 equivalent, and shall inform the Bank in writing by February 28, 1996 of the level and composition of 1995 expenditures for the Protected Programs. Section 3.06. The Borroweir shall: (a) not later than December 15, 1995, forward to the Bank a report on the physical and financial performance of the Protected Programs for the first semester of the year; (b) not later than December 15, 1995, provide the Bank with a proposal, acceptable to the Bank, for the size and composition of the Selected Employment Programs to be financed by the Loan under Part A of the Project during 1996; and (c) allocate budgetary funds for the Protected Programs to be carried out in 1996 in amounts at least equal to $300,000,000. Section 3.07. The Borrower, through DNPGS, shall carry out a public social expenditure review on the basis of terms of reference provided to the Bank not later than December 15, 1995 for its review and comment, forward to the Bank for its review a copy of draft reports on federal social expenditures not later than May 31, 1996, and on provincial social expenditures not later than December 31, 1996. Section 3.08. Without limitation upon the provisions of Section 3.01 (a) of this Agreement, the Borrower shall make available, as and when needed, no less than $13,000,000 equivalent, in the aggregate, as counterpart funds for the execution of Parts B and C of the Project prior to the Closing Date. -8- ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained records and separate 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 Accounts 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 six months after the end of each such year, the report of such audit and such special examination 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, the audit thereof, and said special examination 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 or payment out of the Special 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 -9- (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 Termination Section 5.01. The date March 5, 1996 is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Minister of Economy and Public Works and Services 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: - 10 - For the Borrower: Ministerio de Economia y Obras y Servicios Piiblicos, Hip6lito Yrigoyen 250, 5to piso 1310 Buenos Aires Argentina Cable address: Telex: MINISTERIO ECONOMICA 121950 AR 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: INTBAFRAD Washington, D.C. 248423 (RCA) 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 Buenos Aires, Argentina, as of the day and year first above written. ARGENTINE REPUBLIC By 9 VV.C.aA Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By G; V 2A T. 1~6v Regional Vice President Latin America and the Caribbean - 12 - SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation 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 Dollar to be Categorv Equivalent) Financed (1) Plan Social Educativo and Selected Employment Programs under Part A of the Project: (a) civil works 35,500,000 75% (b) textbooks 5,600,000 75% (c) institutional development (i) consultants' 3,500,000 100% services (ii) computer and 1,300,000 100% office equipment (d) training and stipends 11,900,000 75% (e) remuneration for temporary and fixed term staff 46,500,000 75% (f) unallocated 11,600,000 - 13 - Amount of the Loan Allocated % of (Expressed in Expenditures Dollar to be Category Equivalent) Financed (2) Part B of the Project: (a) goods 200,000 40% (b) training and workshops 1,000,000 80% (c) consultants' services 5,400,000 80% (d) grants for Subprojects 18,500,000 70% of cost of Subprojects (3) Part C of the Project (a) goods 400,000 40% (b) training and workshops 1,700,000 80% (c) consultants' services 7,400,000 80% (4) Refunding of Project Preparation Advance 1,500,000 Amount due pursuant to Section 2.02 (c) of this Agreement Total 152,000,000 - 14 - 2. For the purposes of this Schedule: (a) the term "stipends" means grants for apprenticeships under APRENDER; (b) the expression "remuneration of temporary and fixed term staff' means remuneration for temporary and fixed-term employment under the selected Employment Programs; (c) the expression "training and workshops" means local and foreign seminars, courses and technical meetings, and related travel; and (d) the expression "technical assistance and studies" means the remuneration of outside experts and production expenditures of: (i) studies for the improvement of the Borrower's employment and training policy; (ii) the public social expenditure review referred to in Section 3.07 of this Agreement; and (iii) coordination of Part A of the Project. 3. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to the date of this AgrCernent, except that withdrawals: (i) in an aggregate amount not to exceed $28,400,000 equivalent may be made in respect of Category 1 on account of payments made for expenditures before that date but after March 15, 1995; and (ii) in an aggregate amount not to exceed $2,000,000 equivalent may be made in respect of Categories 2 and 3 on account of payments made for expenditures before that date but after June 12, 1995; (b) payments made for expenditures in respect of Category 1: (i) paid in 1995 unless the Borrower, through MOE, has appointed the Project coordinator for Part A of the Project; and (ii) paid in 1996 unless the Bank shall have agreed with the Borrower's proposal referred to in Section 3.06 (b) of this Agreement; (c) payments made for expenditures in respect of Category 2 unless: (i) FOPAR has been organized in accordance with the provisions of the FOPAR Operational Manual and its key staff (the national coordinator, the two line managers and the first provincial coordinator) have been employed; and (ii) the FOPAR Operational Manual has been approved by the Bank and has been issued; (d) payments made for expenditures in respect of Category 3 unless UEC has been organized in accordance with the provisions of the SIEMPRO Document and its key staff (the national coordinator, the national sub-coordinator and the three line managers) have been employed. 4. The Bank may require withdrawals from the Loan Account to be made on the basis of statements of expenditure for expenditures for works, for goods under contracts costing $350,000 equivalent or less, for consulting services under contracts with firms costing $100,000 equivalent or less and under contracts with individuals costing $50,000 equivalent or less (except for the key staff of FOPAR and SIEMPRO as defined in paragraphs 3 (c) and (d) above and the coordinator of UCAF), for Subprojects except for the first five Subprojects costing $100,000 equivalent or less, and for expenditures under Categories I (d), 1 (e), 2 (b) and 3 (b) of the table in paragraph I of this Schedule, all under such terms and conditions as the Bank shall specify by notice to the Borrower. - 16 - SCHEDULE 2 Description of the Project The objectives of the Project are: (a) to protect critical social programs for the poor during the period of severe fiscal constraint in 1995 and 1996; (b) to assist in providing employment and skills development opportunities to the poor and the economically vulnerable; and (c) to improve the focus and management of social programs by promoting transparency and efficiency, participation in society, and better targeting of social services to the poor. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Bank may agree upon from time to time to achieve such objectives: Part A: Priority Social and Income Support Programs Execution of the Protected Programs during 1995, 1996 and 1997. Part B: Pilot Participatory Social Investment Fund 1. Establishment and operation, on a pilot basis, of FOPAR for the financing, on a grant basis, of small-scale, community-based Subprojects for: (a) the development of community organizations; (b) the construction, rehabilitation, and extension of small infrastructure works (such as drainage and sanitation works, pedestrian bridges and sidewalks, health posts and education centers); (c) revolving funds of not more than $350,000 equivalent each to finance credits to micro-enterprises; and (d) other eligible types of Subprojects as defined in the FOPAR Operational Manual. 2. Institutional strengthening of FOPAR through, inter alia, the provision of technical assistance for training and for the appraisal, supervision and ex-post evaluation of Subprojects and the acquisition and use of appropriate office equipment. Part C: Improvement of Social Information and Management of Targeted Social Programs Establishment and initial operation of SIEMPRO through: (a) enhancement of social information and analysis to improve the targeting, design, monitoring and evaluation of social programs targeted to the poor; (b) establishment of a system of monitoring and evaluation of targeted social programs to assist the Social Cabinet in its coordination - 17 - function; (c) dissemination of social information, targeting and evaluation methods and systems to appropriate agencies of the Borrower and the Provinces; and (d) institutional strengthening of SDS and of the relevant ministries of the Provinces that apply for participation in SIEMPRO. The Project is expected to be completed by December 31, 1997. - 18 - SCHEDULE3 Interest and Principal Repayment Provisions A. General Definitions For purposes of this Schedule, the following terms have the following meanings. (a) "Disbursed Amount" means, in respect of each Interest Period, the aggregate principal amount of the Loan withdrawn from the Loan Account in such Interest Period. (b) "Interest Period" means the initial period from and including the date of this Agreement to, but excluding, the first Interest Payment Date occurring thereafter, and after the initial period, each period from and including an Interest Payment date to, but excluding, the next following Interest Payment Date. (c) "Interest Payment Date" means any date specified in Section 2.06 of this Agreerr ent. (d) "Rate Fixing Date" means, for each Disbursed Amount, the first day of the Interest Period next following the Interest Period in which such Disbursed Amount is withdrawn. B. Interest 1. The principal amount of the Loan shall be divided into Disbursed Amounts. Interest shall accrue on each Disbursed Amount outstanding from time to time at a rate based on a floating rate index prior to its Rate Fixing Date and at a fixed rate from its Rate Fixing Date, as described in paragraph 2 of this Part B. 2. (a) From the date of withdrawal of each amount of each Disbursed Amount withdrawn and outstanding, to but not including the Rate Fixing Date for such Disbursed Amount, interest on each such amount shall accrue, at a rate equal to the applicable: (i) LIBOR Base Rate; plus (ii) LIBOR Total Spread. (b) From the Rate Fixing Date for each Disbursed Amount until final repayment thereof, interest on such Disbursed Amount shall accrue, at a rate equal to the applicable: - 19 - (i) Fixed Base Rate; plus (ii) Fixed Total Spread. 3. For purposes of paragraph 2 of this.Part B, the following terms have the following meanings. (a) "LIBOR Base Rate" means, for the Interest Period in which a Disbursed Amount is withdrawn, the London interbank offered rate for six-month deposits in dollars for value the first day of such Interest Period (or, in the case of the initial Interest Period, for value the day occurring on the Interest Payment Date preceding the first day of such Interest Period), as reasonably determined by the Bank and expressed as a percentage per annum. (b) "LIBOR Total Spread" means, for the Interest Period in which each Disbursed Amount is withdrawn: (i) one half of one percent (1/2 of 1%); (ii) minus (or plus) the weighted average margin, for such Interest Period, below (or above) the London interbank offered rates, or other reference rates, for six-month deposits, in respect of the Bank's outstanding borrowings or portions thereof allocated by the Bank to fund single currency loans or portions thereof made by it that include such Disbursed Amount for such Interest Period; as reasonably determined by the Bank and expressed as a percentage per annum. (c) "Fixed Base Rate" means, for each Disbursed Amount, the equivalent of the London interbank offered rate for six-month deposits in dollars for value on the Rate Fixing Date for such Disbursed Amount, expressed as a single fixed interest rate based on the fixed interest rates corresponding to the repayment installments of such Disbursed Amount, as reasonably determined by the Bank and expressed as a percentage per annum. (d) "Fixed Total Spread" means, for each Disbursed Amount: (i) one-half of one percent (1/2 of 1%); (ii) minus (or plus) the cost margin, applicable on the Rate Fixing Date for such Disbursed Amount, below (or above) the London interbank offered rates, or other reference rates, for six-month deposits, in respect of the Bank's outstanding borrowings or portions thereof allocated to - 20 - fund single currency loans or portions thereof made by it that include such Disbursed Amount; plus (iii) the Bank's risk spread applicable on the Rate Fixing Date for such Disbursed Amount; as reasonably determined by the Bank and expressed as a percentage per annum. 4. The Bank shall notify the Borrower of LIBOR Base Rate, LIBOR Total Spread, Fixed Base Rate and Fixed Total Spread applicable to each.Disbursed Amount, promptly upon the determination thereof. 5. Whenever, in light of changes in market practice affecting the determination of the interest rates referred to in this Schedule, the Bank determines that it is in the interest of its borrowers as a whole and of the Bank to apply a basis for determining the interest rates applicable to the Loan other than as provided in this Schedule, the Bank may modify the basis for determining the interest rates applicable to amounts of the Loan not yet withdrawn upon not less than six (6) months' notice to the Borrower of the new basis. The new basis shall become effective on the expiry of the notice period unless the Borrower notifies the Bank during said period of its objection thereto, in which case said modification shall not apply to the Loan. C. Repayment 1. Subject to the provisions of paragraph 2 of this Part C, the Borrower shall repay each Disbursed Amount of the Loan in semi-annual installments payable on each February 15 and August 15, the first such installment to be payable on the seventh (7th) Interest Payment Date following the Rate Fixing Date for such Disbursed Amount and the last such installment to be payable on the twenty-fourth (24th)] Interest Payment Date following the Rate Fixing Date for such Disbursed Amount. Each installment shall be one-eighteenth (1/18) of such Disbursed Amount. 2. Notwithstanding the provisions of paragraph I of this Part C, if any installment of principal of each Disbursed Amount would, pursuant to the provisions of said paragraph 1, be payable after February 15, 2011, the Borrower shall also pay on said date the aggregate amount of all such installments. 3. After each Disbursed Amount shall have been withdrawn, the Bank shall promptly notify the Borrower of the amortization schedule for such Disbursed Amount. - 21 - SCHEDULE 4 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: General Goods and works shall be procured in accordance with the provisions of Section I of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in January 1995 (the Guidelines) and the following provisions of this Section, as applicable. Part B: Procurement Procedures 1. Procurement of Small Works (a) Works for Subprojects estimated to cost $50,000 equivalent or more but less than $100,000 equivalent; and (b) works under Part A of the Project estimated to cost $120,000 equivalent or less per contract but not exceeding $93,800,00 equivalent in the aggregate, shall be procured under lumpsum, fixed price contracts awarded on the basis of quotations obtained from three qualified domestic contractors in response to a written invitation. The invitation shall include a detailed description of the works, including basic specifications, the required completion date, a basic form of agreement acceptable to the Bank, and relevant drawings, where applicable. The award shall be made to the contractor who offers the lowest price quotation for the required work, and who has the experience and resources to successfully complete the contract. 2. National Shopping (a) Goods for Subprojects estimated to cost $50,000 equivalent or more but less than $100,000 equivalent; and (b) other goods estimated to cost $1,400,000 equivalent or less in the aggregate, shall be procured under contracts awarded on the basis of national shopping procedures in accordance with the provisions of paragraphs 3.5 and 3.6 of the Guidelines. 3. Community Participation Goods and works estimated to cost less than $50,000 equivalent, up to an aggregate amount not to exceed $22,500,000 equivalent, required for the execution of Subprojects - 22 - under Part B of the Project shall be procured in accordance with procedures acceptable to the Bank as set forth in the FOPAR Operational Manual. 4. Textbooks Textbooks procured prior to the date of this Agreement may be procured on the basis of direct contracting in accordance with the provisions of paragraph 3.7 of the Guidelines. Textbooks procured after the date of this Agreement shall be procured in accordance with procedures acceptable to the Bank. Part C: Review by the Bank of Procurement Decisions 1. Procurement Planning Prior to the issuance of any invitations to prequalify for bidding or to bid for contracts, the proposed procurement plans for Parts A, B and C of the Project shall be furnished to the Bank for its review and approval, in accordance with the provisions of paragraph I of Appendix 1 to the Guidelines. Procurement of all goods shall be undertaken in accordance with such procurement plans as shall have been approved by the Bank, and with the provisions of said paragraph 1. 2. Prior Review With respect to the goods and services to be financed under the first five grants for Subprojects (as well as under grants for any Subprojects that do not satisfy the eligibility criteria of the FOPAR Operational Manual), the procedures set forth in paragraphs 2 and 3 of Appendix I to the Guidelines shall apply. 3. Post Review With respect to each contract not governed by paragraph 2 of this Part, the procedures set forth in paragraph 4 of Appendix 1 to the Guidelines shall apply. Section II. Employment of Consultants 1. Consultants' services shall be procured under contracts awarded in accordance with 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 (the Consultant Guidelines). For complex, time-based assignments, such contracts shall be based on the standard form of contract for consultants' services issued by the Bank, with such modifications thereto as shall have been agreed by the Bank. Where no relevant standard - 23 - contract documents have been issued by the Bank, other standard forms acceptable to the Bank shall be used. 2. Notwithstanding the provisions of paragraph 1 of this Section, the provisions of the Consultant Guidelines requiring prior Bank 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 Bank 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 Bank; (d) amendments to contracts for the employment of consulting firms raising the contract value to $100,000 equivalent or above; (e) amendments to contracts for the employment of individual consultants raising the contract value to $50,000 equivalent or above; (f) the key staff positions defined in paragraphs 3 (c) and 3 (d) of Schedule 1 to this Agreement; and (g) any contract for technical assistance under Part A of the Project. - 24 - SCHEDULE 5 Implementation Program Part A of the Project 1. (a) Overall coordination of Part A of the Project shall be carried. out by MOE under the management of a Project coordinator assisted by a Project officer, with terms of reference and qualifications acceptable to the Bank. Said Project officer shall be employed by January 15, 1996. (b) Not later than January 31, 1996, the Borrower, through MTSS, shall hire hnd thereafter retain until completion of the Project a Project manager, with terms of reference and qualifications acceptable to the Bank. 2. The Borrower, through MTSS, shall continue to improve its employment and training policy, including: (a) a review of all employment and training programs, focusing on their consistency with employment issues, impact and level of compliance with targeted objectives, and administration and cost efficiency, in order to provide the basis for the design of new orientations for the employment and training policy; (b) design of an information system to strengthen control of beneficiaries of the unemployment insurance scheme; (c) improvement of the targeting and management of employment and training programs; (d) improvement of labor intermediation services; (e) institutional strengthening of MTSS (principally to build up the capacity to monitor and evaluate employment and training programs). Part B of the Project 3. The Borrower, through SDS, shall appoint a national coordinator and line and regional managers, all with qualifications and experience acceptable to the Bank, for the management of FOPAR. 4. The Borrower, through SDS, shall cause FOPAR to be carried out in accordance with an operational manual approved by the Bank (the FOPAR Operational Manual). Except as the Borrower, through SDS, and the Bank may otherwise agree, the Borrower, through SDS, shall not amend or fail to enforce any provision of the FOPAR Operational Manual. 5. Without limitation upon the foregoing, the Borrower, through SDS, shall ensure that: - 25 - (a) provincial councils shall be established as provided in the FOPAR Operational Manual before any FOPAR funds are disbursed for Subprojects in such Province; (b) any change in the types of Subprojects eligible for FOPAR financing is approved by the Bank in advance; (c) the Bank shall be furnished for its prior no-objection: (i) the first five grant agreements for Subprojects, including the appraisal reports therefor and such other information as the Bank may reasonably require; (ii) any proposed Subproject that does not meet the eligibility criteria set forth in the FOPAR Operational Manual; (iii) the standard form of solicitation for Subproject proposals for deprived neighborhoods (as such term is defined in the FOPAR Operational Manual); and (iv) with respect to the contract for trusteeship and management of the revolving funds for micro-enterprises to be established in accordance with the FOPAR Operational Manual: the letter of invitation, terms of reference for proposals, the evaluation report, the recommendation for award and the proposed contract; and (d) the Bank is furnished a copy of each Subproject summary sheet for its ex-post review, said summary sheet to be prepared in a format acceptable to the Bank. 6. The Borrower, through SDS, shall cause FOPAR to undertake annually ex-post evaluations of grants for Subprojects on a sampling basis on the basis of terms of reference acceptable to the Bank and shall forward a copy of the reports of such evaluations to the Bank promptly upon their completion. Part C of the Project 7. The Borrower shall establish, and thereafter maintain, within the Subsecretariat for Social Projects of SDS a central executing unit (UEC) for the overall management of SIEMPRO with an organization and staffing acceptable to the Bank. 8. The Borrower, through the UEC, shall establish a mechanism, as part of SIEMPRO, to finance: (a) the participation of the Provinces in SIEMPRO and the transfer of technology and related systems to the Provinces, all in accordance with the provisions of the SIEMPRO Document, including the execution of an agreement between SDS and each of the Provinces (Convenio de Adhesi6n); and (b) technical studies related to social programs supported under Part A of the Project. 9. Except as the Borrower, through SDS, and the Bank may otherwise agree, ti Borrower, through SDS, shall cause SIEMPRO to be operated in accordance with the SIEMPRO Document and the SIEMPRO Matrix. - 26 - 10. Except as the Borrower, through SDS, and the Bank may otherwise agree, the Borrower, through SDS, shall not terminate, amend or fail to enforce any provision of the SIEMPRO Subsidiary Agreement. 11. The Borrower, through SDS, shall furnish to the Bank for its review draft terms of reference and a draft design for the survey on access to social programs in relation to living conditions, prepared in coordination with DNGPS in the areas of its competence, to be carried out by INDEC under the SIEMPRO Subsidiary Agreement. 12. The Borrower, through SDS, shall furnish to the Bank for its review and comment the draft Convenio de Adhesi6n (as defined in paragraph 17 above) for the first two Provinces to participate in SIEMPRO. 13. The Borrower, through SDS, shall take all necessary measures to ensure that the second phase of SIEMPRO, as described in the SIEMPRO Document, shall start on or about the date of the review referred to in Section 3.04 (c) of this Agreement. 14. The Borrower, through SDS, shall evaluate the social programs included in Part A of the Project in accordance with the following schedule: (a) by January 15, 1996, the Borrower shall provide the Bank with draft terms of reference of two of said programs for its review and comment; (b) by May 31, 1996, the Borrower shall provide the Bank with the evaluation studies carried out on the basis of said terms of reference; and (c) by December 31, 1996, the Borrower shall provide the Bank with the evaluation studies of the remaining programs. 15. The Borrower, through SDS, shall ensure that any activities of SIEMPRO related to the evaluation of programs on the basis of a methodology that includes among its variables any public social expenditures are carried out in coordination with DNGPS. 16. For the purpose of providing administrative, budgeting, accounting, information management and legal support to FOPAR and SIEMPRO, the Borrower, through SDS, shall maintain a coordination unit (UCAF) with appropriate organization and staffing, including a coordinator with qualifications and experience acceptable to the Bank. - 27 - SCHEDULE 6 Special Account A 1. For the purposes of this Schedule: (a) the term "eligible Category" means Category 1 set forth in the table in paragraph I 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 Part A of the Project and to be financed out of the proceeds of the Loan allocated from time to time to the eligible Category in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $20,000,000 to be withdrawn from the Loan Account and deposited in Special Account A pursuant to paragraph 3 (a) of this Schedule. 2. Payments out of Special Account A shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Bank has received evidence satisfactory to it that Special Account A has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish Special Account A 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 Special Account A such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of Special Account A, the Borrower shall furnish to the Bank requests for deposits into Special Account A 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 Special Account A such amount as the Borrower shall have requested and as shall have been shown by said - 28 - documents and other evidence to have been paid out of Special Account A for eligible expenditures. All such deposits shall be withdrawn by the Bank from the Loan Account under the eligible Category, and in the equivalent amount, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of Special Account A, 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 Special Account A: (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) if the Borrower shall have failed to furnish to the Bank, 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 Bank pursuant to said Section in respect of the audit of the records and accounts for Special Account A; (c) if, at any time, the Bank 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 Loan Account pursuant to the provisions of Section 6.02 of the General Conditions; or (d) once the total unwithdrawn amount of the Loan allocated to the eligible Category, 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 Category 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 Special Account A as of the date of such notice will be utilized in making payments for eligible expenditures. - 29 - 6. (a) If the Bank shall have determined at any time that any payment out of Special Account A: (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 Bank, the Borrower shall, promptly upon notice from the Bank: (A) provide such additional evidence as the Bank may request; or (B) deposit into Special Account A (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 Special Account A 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 Special Account A 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 Special Account A. (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. - 30 - SCHEDULE 7 Special Account B 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories 2 and 3 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 Parts B and C of the Project and to be financed out of the proceeds of the Loan 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 $5,000,000 to be withdrawn from the Loan Account and deposited in Special Account B pursuant to paragraph 3 (a) of this Schedule, provided, however, that unless the Bank shall otherwise agree, the Authorized Allocation shall be limited to an amount equivalent to $3,000,000 until the aggregate amount of withdrawals from the Loan Account under the eligible Categories plus the total amount of all outstanding special commitments entered into by the Bank pursuant to Section 5.02 of the General Conditions under the eligible Categories shall be equal to or exceed the equivalent of $12,000,000. 2. Payments out of Special Account B shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Bank has received evidence satisfactory to it that Special Account B has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish Special Account B 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 Special Account B such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of Special Account B, the Borrower shall furnish to the Bank requests for deposits into Special Account B at such intervals as the Bank shall 1pecify. (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 - 31 - 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 Special Account B 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 Special Account B 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 Special Account B, 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 Special Account B: (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) if the Borrower shall have failed to furnish to the Bank, 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 Bank pursuant to said Section in respect of the audit of the records and accounts for Special Account B; (c) if, at any time, the Bank 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 Loan Account pursuant to the provisions of Section 6.02 of the General Conditions; or (d) 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 - 32 - only after and to the extent that the Bank shall have been satisfied that all such amounts remaining on deposit in Special Account B 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 payment out of Special Account B: (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 Bank, the Borrower shall, promptly upon notice from the Bank: (A) provide such additional evidence as the Bank may request; or (B) deposit into Special Account B (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 Special Account B 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 Special Account B 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 Special Account B. (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. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Bank for Reconstruction and Development. FOR SECRETARY