Colombia - Agricultural Technology Development Project : Loan 3871 - Loan Agreement - Conformed

LOAN NUMBER 3871-CO Loan Agreement (Agricultural Technology Development Project) between REPUBLIC OF COLOMBIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated JL V) -e I1 ,1995 LOAN NUMBER 3871-CO LOAN AGREEMENT AGREEMENT, dated J k1n e- , 1995, between REPUBLIC OF COLOMBIA (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; and 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 Loan and Guarantee Agreements" of the Bank, dated January 1, 1985, with the modifications set forth below (the General Ccnditions) constitute an integral part of this Agreement: (a) The last sentence of Section 3.02 is deleted. (b) In Section 6.02, subparagraph (k) is re-lettered as subparagraph (1) and a new subparagraph (k) is added to read: "(k) An extraordinary situation shall have arisen under which any further withdrawals under the Loan would be inconsistent with the provisions of Article III, Section 3 of the Bank's Articles of 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) "Approved Research Subproject" means a Research Subproject (as defined below) which the Borrower intends to finance or is financing partially out of the proceeds of the Loan and which has been approved by the Panel (as defined below) after its prior -2- screening by the corresponding Regional Panel (as defined below) if and when such Regional Panel has been established, and confirmed by the Executive Council (as defined below) as part of the corresponding group of semi-annual Research Subprojects submitted to it by the Panel, all pursuant to the provisions of the Operational Manual (as defined below); (b) "Coordinating Unit" means the unit or subcommittee established within the Ministry (as defined below) for purposes of Part B. 1 (a) of the Project pursuant to the provisions of the Ministry's Resolutions 476 of 1994 and 812 of 1994, dated August 4, 1994 and December 19, 1994, respectively; (c) "Department" means Departamento, a political subdivision of the Borrower; (d) "Executive Council" means Comit6 Directivo del Piogrma Naci&al de Transferencia de Tenologia Agropecuaria. a ommittee established by the Ministry's Resolutions referred to in (b) above, led by the Borrower's Vice Minister of Policy Coordination of the Ministry (President) and including in its membership the Director of Productive Development of the Borrower's Vice-Ministry of Rural Development of the Ministry, the General Director of the Borrower's Fondo de Cofinanciaci6n arga la Inversi6n Rural-DRI the chief of the Agricultural Development Unit of the Borrower's National Planning Department, a representative of the Agriculture Secretariats oi the Departments, and a professional expert on technology transfer to be designated by the above referred Vice Minister of Po!icy Coordination, which committee has the functions of, inter alia, overseeing the implementation of the Project, approving the portfolio management criteria and strategic targets, confirming the number of Approved Research Subprojects from the semi-annual group of such Subprojects to be presented to it by the Panel (as defined below) within the aggregate amount of funds allocated therefor for the period in question, and approving each of the budgets and plans referred to in Section 3.07 of this Agreement; (e) "Ministry" means the Borrower's Ministry of Agriculture and Rural Development and "Minister" means the Minister in charge of the Ministry; (f) "Municipality" means Municipio, a political subdivision of the Borrower; (g) "Operational Manual" means the manual to be issued by the Executive Council pursuant to the provisions of Section 6.01 (a) of this Agreement; (h) "Panel" means the consultative group of experts established for purposes of Part B.1 (b) of the Project pursuant to the provisions of the Ministry's Resolution No. -3- 00632 dated August 11, 1993 and to the letter of the Borrower's Vice Minister of Agriculture dated November 4, 1993; (i) "Participating Entity" means any legal entity, privately or publicly controlled, qualified under the Operational Manual to obtain financing from the Borrower for the carrying out of a Research Subproject that may be presented by such entity to the Borrower pursuant to the provisions of such Manual and this Agreement; (j) "Regional Unit" means a small unit comprising staff of the Ministry or personnel whose services are temporarily hired by the Ministry, operating at a field level and within the jurisdiction of one or more Departments, which unit has been established, or will have been established, by the Ministry for purposes of providing coordination services under the Project to the UMATAs operating within the applicable Department or Departments, Departmental Secretariats of Agriculture, Regional Panels or Participating Entities; (k) "Regional Panel" means a panel to be established pursuant to the provisions of Section 3.04 of this Agreement in one or more areas of one or more Departments, that shall contain not more than five professionals appointed by the Executive Council on recommendations from the Agricultural Secretariats of the Department or Departments in question or, in the absence of that appointment, the Ministry, and that shall set portfolio management criteria and targets to identify Research Subprojects for the applicable geographic area, which criteria and targets shall be compatible with the corresponding criteria and targets provided for in the Operational Manual, and that shall do the initial screening of Research Subprojects; (1) "Research Subproject" means any given set of agricultural research and/or technology development activities mentioned in Part A of the Project, as more precisely described in the Operational Manual, which have been prepared or will be prepared with the purpose of being submitted to the Borrower for financing, and which will be carried out by a Participating Entity, all pursuant to the provisions of the Operational Manual; (m) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (n) "Table" means the table set forth in paragraph I of Schedule 1 to this Agreement, as the same may be amended from time to time pursuant to the provisions of this Agreement; (o) "Territorial Entity" means each of the entities referred to in Article 286 of the Borrower's Constitution; and -4- (p) "UMATA" means Unidad Municipal de Asistencia Ticnica Agropecuaria a unit established in each Municipality to provide agricultural technical assistance to farmers, specially small farmers, within the jurisdiction of the Municipality in question. 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, various currencies that shall have an aggregate value equivalent to the amount of fifty-one million dollars ($5 1,000,000), being the sum of withdrawals of the proceeds of the Loan, with each withdrawal valued by the Bank as of the date of such withdrawal. Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement for expenditures made (or, if the Bank 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 Loan. (b) The Borrower shall, for the purposes of the Project, open and maintain in dollars a special deposit account in its Banco de la Repiblica on terms and conditions satisfactory to the Bank. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 5 to this Agreement. Section 2.03. The Closing Date shall be December 31, 2001 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.04. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.05. (a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time, at a rate for each Interest Period equal to the Cost of Qualified Borrowings determined in respect of the preceding Semester, plus one-half of one percent (1/2 of 1%). On each of the dates specified in Section 2.06 of this Agreement, the Borrower shall pay interest accrued on the principal amount outstanding during the preceding Interest Period, calculated at the rate applicable during such Interest Period. -5- (b) As soon as practicable after the end of each Semester, the Bank shall notify the Borrower of the Cost of Qualified Borrowings determined in respect of such Semester. (c) For the purposes of this Section: (i) "Interest Period" means a six-month period ending on the date immediately preceding each date specified in Section 2.06 of this Agreement, beginning with the Interest Period in which this Agreement is signed. (ii) "Cost of Qualified Borrowings" means the cost, as reasonably determined by the Bank and expressed as a percentage per annum, of the outstanding borrowings of the Bank drawn down after June 30, 1982, excluding such borrowings or portions thereof as the Bank has allocated to fund: (A) the Bank's investments; and (B) loans which may be made by the Bank after July 1, 1989 bearing interest rates determined otherwise than as provided in paragraph (a) of this Section. (iii) "Semester" means the first six months or the second six months of a calendar year. (d) On such date as the Bank may specify by no less than six months' notice to the Borrower, paragraphs (a), (b) and (c) (iii) of this Section shall be amended to read as follows: "(a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time, at a rate for each Quarter equal to the Cost of Qualified Borrowings determined in respect of the preceding Quarter, plus one-half of one percent (1/2 of 1%). On each of the dates specified in Section 2.06 of this Agreement, the Borrower shall pay interest accrued on the principal amount outstanding during the preceding Interest Period, calculated at the rates applicable during such Interest Period." "(b) As soon as practicable after the end of each Quarter, the Bank shall notify the Borrower of the Cost of Qualified Borrowings determined in respect of such Quarter." -6- "(c) (iii) 'Quarter' means a three-month period commencing on January 1, April 1, July I or October 1 in a calendar year." Section 2.06. Interest and other charges shall be payable semiannually on March I and September I in each year. Section 2.07. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commit.1ent to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end, shall carry out the Project through the Coordinating Unit with due diligence and efficiency and i conformity with appropriate agriculture, administrative and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) Without limitation or restriction to the provisions of paragraph (a) of this Section, the Borrower: (i) shall maintain the Coordinating Unit, its organization and structure, and terms of reference therefor, until one year after the Closing Date, except for changes thereto which, in the opinion of the Borrower and the Bank, shall not adversely affect the carrying out of the Project; (ii) shall not during such period, without previous agreement with the Bank, change the head of such Unit or &ppoint a new head thereof; and (iii) shall provide said Unit with all such resources as shall be necessary for its efficient operation and for the discharging of its functions and responsibilities. (c) Without limitation upon the preceding provisions of this Section, the Borrower, through the Ministry: (i) shall maintain the Operational Manual, the Executive Council, and the Panel and the terms of reference therefor until the final withdrawal from the Loan Account has taken place, except for changes thereto which, in the opinion of the Borrower and the Bank , shall not adversely affect the carrying out of the Project; (ii) shall not, without previous agreement with the Bank, fail to enforce the Operational Manual or any provision thereof; and (iii) shall provide the Executive Council and the Panel, promptly as needed, the funds, facilities, services and other resources required for the discharging of their respective functions and responsibilities under the Project. -7- (d) Without limitation upon the provisions of paragraph (a) of this Section and except as the Borrower, through the Minister, and the Bank shall otherwise agree, the Borrower shall: (i) carry out Part A of the Project in accordance with the Operational Manual; (ii) ensure that no payment is made to a Participating Entity in respect of a Research Subproject: (A) unless such Subproject has been approved by the Panel and confirmed by the Executive Council in accordance with the provisions of the Operational Manual and that the Borrower, through the Ministry, has entered with the Participating Entity in question (directly or through a fiduciary company) into contractual arrangements satisfactory to the Bank which shall include the provisions listed in Schedule 6 to this Agreement; and (B) if, by making such payment, the amounts paid to such Participating Entity in respect of the Approved Research Project in question shall have exceeded 50% of the cost of such Approved Research Project; (iii) not submit for approval of the Panel any Research Subproject: (A) the execution of which is estimated to last more than three years or the cost of which has been estimated to exceed the equivalent of an annual average of $50,000; or (B) to be carried out or sponsored by a Participating Entity, or involving such Participating Entity in any other fashion, if the estimated cost thereof shall exceed, when added to the cost of other Subprojects already approved by the Panel in respect of the Participating Entity in question, 606/o (or such other percentages as the Bank and the Minister, or such person or persons as the Minister shall appoint, shall agree from time to time) of the value of the estimated cost of the aggregate of all the Approved Research Subprojects at the time of the submission of the Subproject in question to the Panel. (e) For purposes of the carrying out of Approved Research Subprojects under Part A of the Project and such other activities under Parts B.2 (a), B.4, B.5 and B.6 of the Project, as the Borrower, through the Minister (or such person or persons as the Minister shall appoint), and the Bank shall from time to time agree, the Borrower may seek the assistance of one or more fiduciary companies acceptable to the Bank which shall provide their services under contracts satisfactory to the Bank to the Borrower in connection: (A) with the management of funds (other than Loan proceeds) for the Approved Research Subproject or Subprojects in question and for funding services under the other Parts of the Project referred to above, of the applicable Regional Unit; and (B) with the payments to be made by the Participating Entity or Entities in question for the acquisition of goods and services (including works) under such Subproject or Subprojects or for such Regional Unit. To that end, the Borrower, through the Ministry, shall ensure that any such fiduciary company or companies shall become a party to the contractual arrangements referred to in paragraph (d) (ii) of this Section or the contracts referred to above. In any event, it is hereby agreed that the Borrower shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving any of such contractual arrangements or contracts or any provision thereof. -8- Section 3.02. (a) Except as the Bank shall otherwise agree, 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. (b) Without prejudice to the provisions of paragraph (a) of this Section, the Borrower, through the Coordinating Unit and by a date eight months after the award of the first non-reviewed contract, and every six months thereafter, shall submit to the Bank a procurement evaluation report, such report to review and describe the processes followed for the award of a sample of non-reviewed contracts awarded during the six- month portion of the period ending on the date on which each such report is due and to evaluate whether the obligations of the Borrower under paragraph (a) of this Section have been met in respect of the contracts covered by such report. (c) For purposes of paragraph (b) of this Section: (i) the Coordinating Unit shall hire consultant services in a timely fashion and pursuant to the provisions of Section II of Schedule 4 to this Agreement; (ii) the term "non-reviewed contract" means each contract to be procured pursuant to the provisions of paragraph (a) #f this Section and subject to the provisions of Part E. 1 (b) of Section I of such Schedule; and (iii) the term "sample" means a sample determined in a manner acceptable to the Bank. Section 3.03. The Borrower shall, through the participation of its representatives in the Executive Council, ensure that Research Subprojects under Part A of the Project are processed and approved in accordance with the provisions of the Operational Manual. Section 3.04. The Borrower shall take all such action as shall be necessary to ensure that: (i) by a date not later than six months from the Effective Date, not less than three Regional Panels and not less than three Regional Units have been established, the members of said Panels have begun discharging their functions and the personnel of said Units have been hired or appointed, as the case may be, by the Miiistry, all in form and substance satisfactory to the Bank; (ii) by a date not later than twelve months from the Effective Date, a plan for the establishment of additional Regional Units and Panels and/or closing of those already established, satisfactory to the Bank, have been completed and furnished to the Bank; such plan to be flexible enough so as to foresee the possibility of establishing new and closing previously established, Regional Units and Panels, all as a function of the actual needs and requirements of the different geographical agricultural regions of the Borrower; and (iii) afford the Bank a reasonable opportunity to express its views on the aforesaid plan and the subsequent adjustments thereto throughout the execution of the Project, before said plan or adjustments are put into effect. -9- Section 3.05. The Borrower shall, through the Ministry and not later than: (i) three months from the Effective Date, hire the services of one or more consultants that will assist the Borrower in the carrying out of Par B.3 (a) (i) of the Project; (ii) three months after the hiring of the respective consultants shall have taken place, send the applicable findings and recommendations of the respective consultants, and of the Borrower, if different, to the Bank for comment; and (iii) two years after the Effective Date, and on or before January 1, 1999, hire the services of the one or more consultants that shall assist the Borrower in the carrying out, respectively, of Parts B.3 (a) (ii) and B.3 (b) of the Project. Section 3.06. (a) The Borrower, through the Ministry, shall take all such action as shall be necessary for presenting to the Bank for comments by a date not later than six months after the Effective Date proposals for detailed action plans for the carrying out of Part B.6 of the Project, including the hiring, in a timely fashion and pursuant to the provisions of Section II of Schedule 4 to this Agreement, of consultant services to help the Borrower in preparing such proposals. (b) Except if otherwise agreed with the Bank, the Borrower shall not incur in additional expenses intended to be financed under the Loan in respect of Part B.6 of the Project unless the Bank and the Borrower shall have agreed on a detailed action plan for the carrying out thereof. Section 3.07. The Borrower, through the Ministry, shall furnish to the Bank for review, on or before October 31 in each year: (a) the operational budget and plan for Project implementation of the Coordinating Unit for the next following year, and change any of them, if so required, to take into account Bank comments thereon, if any; and (b) a report on the adequacy of the portfolio management criteria and corresponding targets of the Operational Manual; without limitation or restriction upon the aforesaid, each operational budget shall be consistent with the matrix for cofinancing of Approved Research Projects of the Operational Manual (as such matrix may be changed from time to time in accordance with the provisions of Section 3.01 (c) of this Agreement), and each Project implementation plan shall provide details for the carrying out of Parts B.4 and B.5 of the Project. Section 3.08. The Borrower, through the Ministry, shall take all such action on its part as shall be necessary or convenient to ensure that: (a) by a date not later than 30 months from the Effective Date, the Borrower undertakes jointly with the Bank a mid- term review and evaluation of the activities carried out under the Project and the results achieved thereunder including, but not limited to: (i) the functioning of the Coordinating Unit, the Executive Council, the Panel, the Regional Units and the Regional Panels, and of the plan and adjustments thereto referred to in Section 3.04 of this Agreement; (ii) all - 10 - aspects of the carrying out of Approved Research Subprojects, particularly the i4ection process thereof and the response of the private sector to participate in such process; (iii) in general, the efficacy of the provisions of the Operational Manual and the application thereof; and (iv) the determination of which of the responsibilities of the Ministry under the Borrower's National Agriculture Technology Program could be transferred to the Agriculture Secretariats of the Departments or other appropriate agencies of Territorial Entities; (b) the aforesaid mid-term review takes place on the basis of the findings and recommendations of the report to be issued under Part B.3 (a) (ii) of the Project and the comments of the Borrower and the Bank thereon; and (c) after the aforesaid review shall have been completed at the satisfaction of the Bank, all required adjustments to Project execution, as well as changes to the Operational Manual agreeable to the Bank, are introduced. Section 3.09. Without limitation upon the provisions of Article IX of the General Conditions, the Borrower shall: (a) prepare, on the basis of guidelines acceptable to the Bank, and furnish to the Bank not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Bank, a plan for the future operation of the National system referred to in the objectives of the Project, including the institutional development under Part B thereof; (b) afford the Bank a reasonable opportunity to exchange views with the Borrower on said plan; and (c) thereafter, carry out said plan with due diligence and efficiency and in accordance with appropriate practices, taking into account the Bank's comments thereon. 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: - 11 - (i) have the records and accounts referred to in paragraph (a) of this Section including those for the Special Account for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year, the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning said records and accounts and the audit thereof as the Bank shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Bank has received the audit report for the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Bank's representatives to examine such records; and (iv) ensure that such records and accounts are included in the annual 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. - 12 - ARTICLE V Remedies of the Bank Section 5.01. Pursuant to Section 6.02 (1) of the General Conditions, the following additional events are specified, provided, however, that, if any of the events specified in paragraph (a) or (b) below shall have occurred and be continuing and such event relates to one or more Participating Entities, the suspension of the Borrower's rights to make withdrawals from the Loan Account may be limited by the Bank to withdrawals related to the Participating Entity or Entities or fiduciary or fiduciaries in question: (a) A Participating Entity or a fiduciary company or companies shall have failed to perform any of its respective obligations under the contractual arrangements between the Borrower and such Participating Entity or Entities in question entered into pursuant to the provisions of paragraph (d) (ii) of Section 3.01 of this Agreement or under the contract between the Borrower and such fiduciary company or companies entered into pursuant to the provisions of paragraph (e) of such Section. (b) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of a Participating Entity or a fiduciary company or for the suspension of their respective operations; provided, however, that the provisions of this paragraph (b) shall not apply to the dissolution or disestablishment or suspension of operation of a Participating Entity or fiduciary company, if such Entity or company shall have been replaced, in form and substance satisfactory to the Bank, by another Participating Entity or, fiduciary company, respectively, acceptable to the Bank. Section 5.02. Pursuant to Section 7.01 (h) of the General Conditions, the following additional events are specified: (a) any of the events specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower; and (b) any of the events specified in paragraph (b) of Section 5.01 of this Agreement shall occur. - 13 - ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) the Operational Manual has been issued by the Executive Council and adopted by the Coordinating Unit, both in form and substance satisfactory to the Bank; and (b) the Coordinating Unit shall have hired initial key staff for their respective operations, both in numbers and with qualifications and experience satisfactory to the Bank. Section 6.02. The date of -e t+ember I4 , 1995 is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Minister of Finance and Public Credit of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following L3resses are specified for the purposes of Section 11.01 of the General Conditions: - 14 - For the Borrower: Ministerio de Hacienda y Cr6dito Piblico Palacio de los Ministerios Santa Fe de Bogota, Colombia Cable address: Telex: MINHACIENDA 44473 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 197688 (TRT), Washington, D.C. 248423 (RCA), 64145 (WUI) or 82987 (FTCC) - 15 - IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF COLOMBIA By //~)~"? ai-SraZ? Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Regional Vice President Latin America and the Caribbean - 16 - 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 Category Dollar Equivalent) to be Financed (1) Payments made 25,000,000 100% by the Borrower, through the Ministry, to Participating Entities in respect of Re- search Project Expenditures (2) Goods for 100% of foreign Parts B.1, B.2 expenditures and and B.6 of the 85% of local Project: expenditures for other items pro- (a) Part B.1 of 100,000 cured locally the Project (b) Vehicles 4,200,000 under Part B.2 of the Project (c) Part B.6 of 1,800,000 the Project - 17 - Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (3) Training under 8,000,000 100% of foreign Part B.4 of the expenditures and Project (includ- 85% of local ing trainers' expenditures fees) and assistantship program under Part B.5 of the Project (4) Consultants' 85% of local services, and expenditures for Panel and Regional services of con- Panel member sultants domiciled honoraria and within the terri- travel and per- tory of the diem expenses: Borrower and of honoraria and travel and per (a) Consultants' 2,000,000 diem expenses, and services under 100% of foreign Parts B.1 and expenditures for B.3 of the services of other Project, and consultants auditing services under the Project (b) Honoraria, and 200,000 travel and per- diem expenses - 18 - Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (c) Consultants' 700,000 services under Part B.6 of the Project and other fixed-term ser- vices under Part B.3 of the Project (5) Incremental 5,000,000 in respect of Salaries and payments made Operating Supplies for expenditures: (i) on or before December 31, 1996, 85%; (ii) there- after but on or before December 31, 1997, 70%; and (iii) there- after, 60% (6) Unallocated 4,000,000 TOTAL 51,000,000 - 19 - 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower; (b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied front the territory of the Borrower; (c) "Incremental Salaries and Operating Supplies" means expenditures under the Project incurred after the date provided for in paragraph 3 (a) below and directly related to salaries of permanent and short term staff (about 23 employees for the Coordinating Unit, and all staff of the Ministry or personnel whose services are temporarily hired by the Ministry, both for providing services to the Regional Units and hired specifically for the Project and during the execution thereof), office supplies, equipment and vehicle maintenance and rental, travel by and per-diem for, such staff, publications, and other inputs agreed from time to time between the Bank and the head of the Coordinating Unit; and (d) "Research Expenditures" means expenditures in respect of goods, works or services required under an Approved Research Subproject, excluding transfer of assets or acquisition of rights on land (irrespective of the form it may take), which expenditures shall not exceed, in the aggregate, 50% of the cost of the Approved Research Subproject in question. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding the equivalent of $5,100,000, may be made on account of payments made for expenditures before the date of this Agreement but after July 31, 1994; (b) expenditures under Part B.6 of the Project, unless the Bank has agreed with the Minister on the detailed action plan for the carrying out of such Part of the Project; provided, however, that the foregoing provisions of this paragraph 3 (b) shall not apply to expenditures incurred pursuant to the provisions of paragraph (a) of Section 3.06 of this Agreement; and - 20 - (c) expenditures in respect of vehicles under Category (2) (b) of the Table, unless: (i) the Borrower shall have furnished to the Bank a plan for the acquisition of said vehicles and for making them available to the persons which would be using them for purposes of the Project; and (ii) the Bank shall have, by notice to the Borrower, expressed its acceptance to said plan. 4. The Bank may require withdrawals from the Loan Account to be made on the basis of statements of expenditures for expenditures under contracts for goods or civil works not exceeding the equivalent of $50,000, and under contracts for consulting firms and individual consultants not exceeding the equivalent of $100,000 and $50,000, respectively, except in the cases provided for in the last paragraph of point 2 of Section II of Schedule 4 to this Agreement; all of the above under such terms and conditions as the Bank shall specify by notice to the Borrower. - 21 - SCHEDULE 2 Description of the Project The specific objectives of the Project are: (i) to put in place a new approach in support of the Borrower's National System for Agricultural Technology Development and Transfer (including measures to build the institutional capacity required therefor) which would promote the development and testing of technical packages especially appropriate for small farmers and for divulgation of new technology; (ii) to promote private sector participation in agricultural research, by itself or jointly with the public sector; (iii) to improve the quality and efficiency of agricultural research (including adjustment and validation) by introducing a demand-driven competitive selection process, as part of the aforesaid new system, that would enable cofinancing of Research Subprojects by universities and other private and public sector entities; (iv) to support decentralization of agricultural research and extension activities through the training of providers of agricultural extension services, and the strengthening of Regional Units and the dissemination of information; and (v) to revitalize under-utilized assets (both physical and human) which currently exist within Colombia's research services system; all of the above with the aim of reducing rural poverty, increasing rural employment and improving the competitiveness of Colombian agricultural producers. The Project consists of the following parts, subject to such modification thereof as the Borrower and the Bank may agree upon from time to time to achieve such objectives: Part A: Technology Development and Adaptation 1. Execution of Approved Research Subprojects consisting in: (a) strategic research activities directed toward national priority goals, the results of which may lead to future activities of applied research and, eventually, adaptive research; and (b) applied research activities, the findings of which have the potential for immediato application by farmers, for such areas as sustainable production systems, integrated pest ranagement, post harvest technologies, fisheries, and environmental problems, and such other areas as the Borrower, with the approval of the Executive Council, and the Bank may agree from time to time that should be included in the Operational Manual. 2. Execution of Approved Research Subprojects consisting in adaptive research and/or technology development activities such as technology transfer through demonstration parcels, field days, training and other mechanisms as the Borrower, with the approval of the Executive Council, and the Bank may agree from time to time that should be included in the Operational Manual; such adaptive research activities will - 22 - include adjustment and validation, both to be done with participation of local farmers and of staff of the relevant UMATA, of technology generated at experimental stations so that technology could be tested under the most representative ecological setting before the technological packages are made available to providers of extension services. Part B: Institutional Development 1. Establishment, support and operation of: (a) the Coordinating Unit, including acquisition therefor, and utilization thereby, of office equipment and computers and services of consultants and personnel trainers, and carrying out its functions under the Project, including promotion and advertising activities; (b) the Panel; and (c) the Regional Panels, including hiring of the necessary services for the operation thereof. 2. (a) Establishment, support and operation of Regional Units, including hiring of the necessary fixed-term services therefor; and (b) enhancement of field services provided by the UMATAs or the Agriculture Secretariats of Departments or the Regional Units, through the acquisition by the Ministry and utilization for the Project of motor vehicles (including boats). 3. (a) Setting up by the Ministry of: (i) a supervision system for all activities under the Project; and (ii) a Project performance review report; and (b) determination by the Ministry, on the basis of the system under (a) (ii) above, of whether a follow-up project would be justified, on the basis of sample case studies. 4. Execution of training programs for: (a) personnel of the Ministry, particularly of the Coordinating Unit, Panel, Regional Panels, Regional Units and relevant Departments and UMATAs, all in management and implementation of the Project; (b) field technicians and other professionals in the effectiveness and relevance of available agricultural technologies and methodologies; (c) technical staff of public or private entities in the preparation and management of Research Subprojects; and (d) technical staff in Municipalities in all aspects of providing agricultural extension services to farmers. 5. Execution of an assistantship program that will link academic studies with practical work by means of enabling students enrolled in the program to complete their graduate work requirements at accredited faculties in Colombian universities while undertaking research and/or technology development activities in conjunction with specific Approved Research Subprojects to be or being carried out under Part A of the Project. - 23 - 6. Establishment of an information system for agricultural technological packages, including acquisition and utilization of equipment, and software therefor, which will serve the needs of entities engaged in Project activities (including universities) and regional research centers. The Project is expected to be completed by June 30, 2001. -24- SCHEDULE 3 Amortization Schedule* Payment of Principal Date Payment Due (expressed in dollars)* September 1, 1999 1,225,000 March 1, 2000 1,270,000 September 1, 2000 1,315,000 March 1, 2001 1,360,000 September 1, 2001 1,410,000 March 1, 2002 1,460,000 September 1, 2002 1,510,000 March 1, 2003 1,565,000 September 1, 2003 1,620,000 March 1, 2004 1,680,000 September 1, 2004 1,740,000 March 1, 2005 1,800,000 September 1, 2005 1,865,000 March 1, 2006 1,930,000 September 1, 2006 2,000,000 March 1, 2007 2,070,000 September 1, 2007 2,140,000 March 1, 2008 2,220,000 September 1, 2008 2,295,000 March 1, 2009 2,380,000 September.1, 2009 2,460,000 March 1, 2010 2,550,000 September 1, 2010 2,640,000 March 1, 2011 2,735,000 September 1, 2011 2,830,000 March 1, 2012 2,930,000 * The figures in this column represent dollar equivalents determined as of the respective dates of withdrawal. See General Conditions, Sections 3.04 and 3.05. - 25 - Premiums on Prepayment Pursuant to Section 3.04 (b) of the General Conditions, the premium payable on the principal amount of any maturity of the Loan to be prepaid shall be the percentage specified for the applicable time of prepayment below: Time of Prepayment Premium The interest rate (expressed as a percentage per annum) applicable to the Loan on the day of prepayment multiplied by: Not more than three years 0.18 before maturity More than three years but 0.35 not more than six years before maturity More than six years but 0.65 not more than eleven years before maturity . More than eleven years but not 0.88 more than fifteen years before maturity More than fifteen years before 1.00 maturity - 26- SCHEDULE 4 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: International Competitive Bidding Except as provided in Part D hereof, goods other than vehicles, laboratory and specialized agricultural equipment and other goods agreed upon between the Borrower and the Bank for purposes of Part C.1 of this Section I, 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 1992 (the Guidelines), and in accordance with the following additional procedures. (a) When contract award is delayed beyond the original bid validity period, such period may be extended once, subject to and in accordance with the provisions of paragraph 2.59 of the Guidelines, by the minimum amount of time required to complete the evaluation, obtain necessary approvals and clearances and award the contract. The bid validity period may be extended a second time only if the bidding documents or the request for extension shall provide for appropriate adjustment of the bid price to reflect changes in the cost of inputs for the contract over the period of extension. Such an increase in the bid price shall not be taken into account in the bid evaluation. With respect to each contract made subject to the Bank's prior review in accordance with the provisions of Part F.1 (a) of this Section, the Bank's prior approval will be required for: (i) a first extension of the bid validity period if the period of extension exceeds sixty (60) days; and (ii) any subsequent extension of the bid validity period. (b) In the procurement of goods in accordance with this Part A, the Borrower shall use the relevant standard bidding documents issued by the Bank, with such modifications thereto as the Bank shall have agreed to be necessary for the purposes of the Project. Where no relevant standard bidding documents have been issued by the Bank, the Borrower shall use bidding documents based on other internationally recognized standard forms agreed with the Bank. - 27 - Part B: Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A hereof, goods manufactured in Colombia 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 I through 4 of Appendix 2 thereto. Part C: Other Procurement Procedures 1. Contracts for vehicles, laboratory and specialized equipment and other equipment agreed from time to time between the Minister and the Bank and estimated to cost more than the equivalent of $50,000 may be awarded through limited international competitive bidding, on the basis of evaluation and comparison of bids invited from a list of qualified suppliers eligible under the Guidelines with established services facilities in Colombia and in accordance with the procedures set forth in Sections I and II of the Guidelines (excluding paragraphs 2.8, 2.9, 2.55 and 2.56 thereof). 2. Contracts for goods or works estimated to cost the equivalent of $50,000 or less may be awarded on the basis of comparison of price quotations solicited from at least three suppliers eligible under the Guidelines or three local contractors, as the case may be, in accordance with procedures satisfactory to the Borrower and the Bank. Part D: Other Procurement Provisions Without limitation upon the provision of the Guidelines, in respect of procurement of goods and works under Part A of this Schedule and, only in respect of (f) below, under Parts A and C thereof: (a) no requirements shall be made of local agents for foreign bidders, or for certification by Colombian consular authorities of translations into Spanish of support documentation in cases where the bidder assumes the responsibility for errors of the translation in question; (b) no prior registration of foreign bidders shall be required; (c) no provision regarding minimum number of bidders shall be applied; (d) bids of goods shall be evaluated on a cost, insurance, freight (c.i.f.) basis; (e) freight costs quoted by each bidder shall be used for purposes of bid evaluation; and - 28 - (f) awards shall be made to the lowest evaluated bidders, and no bidder shall be disqualified because the price of the corresponding bid falls above or below a predetermined given value, unless otherwise agreed with the Bank, or out of a post-bid- presentation-determined price band. 2. Unless otherwise agreed between the Borrower and the Bank, and notwithstanding the provisions of Part A (b) of Section I and of paragraph I of Section II, both of this Schedule, the Borrower shall invite bids in regard to the procurement of goods for the Project under Part C. 1 of this Schedule exclusively on the basis of standard documents agreed with the Bank from time to time and shall inform the Bank on any proposed departure from said documents before any such tender is made public. Part E: Review by the Bank of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract for goods estimated to cost the equivalent of $50,000 or more, the procedures set 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 Bank pursuant to said paragraph 2 (d) shall be furnished to the Bank prior to the making of the first payment out of the Special Account in respect of such contract. (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, said 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 Bank pursuant to said paragraph 3 shall be furnished to the Bank 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 withdrawals from the Loan Account are to be made on the basis of statements of expenditure. 2. The figure of 10% is hereby specified for purposes of paragraph 4 of Appendix 1 to the Guidelines. - 29 - Section II. Emplovment of Consultants 1. In order to assist the Borrower in the carrying out of the Project, the Borrower shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Bank on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981 (the Consultant Guidelines). For complex, time-based assignments, the Borrower shall employ such consultants under contracts using the standard form of contract for consultants' services issued by the Bank, with such modifications as shall have been agreed by the Bank. Where no relevant standard contract documents have been issued by the Bank, the Borrower shall use other standard forms agreed with the Bank. 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; or (e) amendments to contracts for the employment of individual consultants raising the contract value to $50,000 equivalent or above. - 30 - SCHEDULE 5 Special Account L For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1) through (5) set forth in the table in paragraph I of Schedule I 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 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 $2,000,000 to be withdrawn from the Loan Account and deposited into the Special Account 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 $1,000,000 until the aggregate amount of withdrawals from the Loan Account plus the total amount of all outstanding special commitments entered into by the Bank pursuant to Section 5.02 of the General Conditions shall be equal to or exceed the equivalent of $6,000,000. 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 Bank has received evidence satisfactory to it that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the Special Account shall be made as follows: (a) For withdrawals of the Authorized Allocation, the Borrower shall furnish to the Bank a request or requests for deposit into the Special Account of an amount or amounts 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 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 Bank requests for deposits into the Special Account at such intervals as the Bank shall specify. -31- (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Bank the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit into the Special Account such amount as the Borrower shall have requested and as shall have been shown by said documents and other evidence to have been paid out of the Special Account for eligible expenditures. All such deposits shall be withdrawn by the Bank from the Loan Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of the Special Account, the Borrower shall, at such time as the Bank shall reasonably request, furnish to the Bank such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Bank shall not be required to make further deposits into the Special Account: (a) if, at any time, the Bank shall have determined that all further withdrawals should be made by the Borrower directly from the Loan Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; (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 fitrnished to the Bank pursuant to said Section in respect of the audit of the records and accounts for the Special Account; (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 minus the total amount of all outstanding special commitments 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. - 32 - Thereafter, withdrawal from the Loan Account of the remaining unwithdrawn amount of the Loan allocated to the eligible Categories shall follow such procedures as the Bank shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Bank shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice will be utilized in making payments for eligible expenditures. 6. (a) If the Bank shall have determined at any time that any 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; 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 the Special Account (or, if the Bank shall so request, refund to the Bank) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Bank shall otherwise agree, no further deposit by the Bank into the Special Account shall be made until the Borrower has provided such evidence or made such deposit or refund, as the case may be. (b) If the Bank shall have determined at any time that any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Bank, refund to the Bank such outstanding amount. (c) The Borrower may, upon notice to the Bank, refund to the Bank all or any portion of the funds on deposit in the Special Account. (d) Refunds to the Bank made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Loan Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions. - 33 - SCHEDULE 6 Provisions for contractual arrangements with Participating Entities Proceeds of the Loan for the financing of expenditures under Approved Research Subprojects in amounts not exceeding 50% of the aggregate of said expenditures shall be made available to Participating Entities under contractual arrangements satisfactory to the Bank, on terms whereby the Borrower, through the Ministry, shall obtain, by written contract with the Participating Entity, directly or through a fiduciary company, or by other appropriate legal means, rights adequate to protect the interests of the Bank and the Borrower, including, the right to: (a) require the Participating Entity to carry out the Approved Research Subproject with due diligence and efficiency and in accordance with sound technical, agricultural and managerial standards and to maintain adequate records, all in conformity with the applicable provisions of this Agreement and the Operational Manual; (b) require that: (i) the goods and services to be financed out of the proceeds of the Loan shall be acquired exclusively with the purposes of carrying out the Subproject in question or, eventually, in the case of goods, other bona fie agricultural research activities, and procured in accordance with the provisions of Schedule 4 to this Agreement; and (ii) such goods and services shall be used exclusively in the carrying out of the Approved Research Subproject in question or such other bona fide activities, provided, however, that in the case the Participating Entity in question is owned or controlled directly or indirectly by the Borrower, such Participating Entity shall be further required to procure like items under single annual contracts, where possible, in order to achieve quantities of scale discounts; (c) require that the Loan proceeds shall not be used to defray transfer of assets such as land or farm purchases or leases, or severance payments, or to refinance existing debt; (d) inspect, by itself or jointly with representatives of the Bank, if the Bank shall so request, such goods and the sites, works, plants and construction included in the Approved Research Subproject, the operation thereof, and any relevant records and documents; - 34 - (e) require that: (i) the Participating Entity shall take out and maintain with responsible insurers such insurance, against such risks and in such amounts, as shall be consistent with sound business practice; and (ii) without any limitation upon the foregoing, such insurance shall cover hazards incident to the acquisition, transportation and delivery of goods financed out of the proceeds of the Loan to the place of use or installation, any indemnity thereunder to be made payable in a currency freely usable by the Participating Entity to replace or repair such goods; (f) obtain all such information as the Bank or the Borrower shall reasonably request relating to the foregoing and to the administration, operations and financial condition of the Participating Entity in question and to the benefits to be derived from the Approved Research Subproject, and to require that the audits of the separate accounts to be kept by such Participating Entity for the corresponding Approval Research Subproject are carried out pursuant to the provisions of Section 4.01 of this Agreement; (g). require that the Participating Entity shall maintain records and accounts adequate to reflect, in accordance with appropriate accounting practices consistently applied, its operations and financial condition, including records and separate accounts to reflect all resources and expenditures with respect to the Approved Research Subproject. Such accounts shall be audited for each fiscal year in accordance with procedures and by auditors acceptable to the Bank and the Borrower and the report of said audit shall be available within five months from the end of the respective fiscal year. Each Participating Entity shall furnish to the Borrower all information concerning its accounts and financial statements and the audits thereof as the Bank or the Borrower shall from time to time reasonably request; and (h) suspend or terminate, as the case may be, the right of the Participating Entity to the use of the proceeds of the Loan upon failure by such Participating Entity to perform its obligations under its contractual arrangements with the Borrower or, if such is the case, by the fiduciary company contracted by the Borrower, through the Ministry, for purposes of the carrying out of the Approved Research Subproject in question, particularly if the audit in respect of the Approved Research Subproject accounts identify significant irregularities. 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