Malawi - Third Education Project : Credit 0910 - Credit Agreement - 1 - Conformed

CREDIT NUMBER 910 MAI Development Credit Agreement (Third Education Project) between REPUBLIC OF MALAWI and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1979 CREDIT NUMBER 910 MAI DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated , 1979, between REPUBLIC OF MALAWI (hereinafter called the Borrower) and INTERNA- TIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Associa- tion). WHEREAS (A) the Borrower has requested the Association to assist in the financing of the cost of the Project described in Schedule 2 to this Agreement by extending the credit as herein- after provided; and (B) by the Special Action Credit Agreement (hereinafter called the Special Action Credit Agreement) of even date herewith, the Association has agreed to make available to the Borrower a Special Action Credit (hereinafter called the Special Action Credit) to assist in financing the Project on the terms and conditions therein set forth. Said Special Action Credit is granted by the Association in its capacity as the Administrator of the Special Action Account established by the Association with funds contributed by the Member States of the European Economic Community; WHEREAS the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as .follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agree- ments of the Association being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, 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: -2- (a) "MOE" means the Ministry of Education of the Borrower; (b) "PIU" means the Project Implementation Unit, estab- lished under the Development Credit Agreement concluded between the Borrower and the Association on November 24, 1975 for the Second Education Project; (c) "MCC" means the Malawi Correspondence College; (d) "Institute of Education" means the Institute of Educa- tion to be established under Part C (1) of the Project; and (e) "Development Division" means the Development Division of the Office of the President and Cabinet of the Borrowcr. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set- forth or referred to, an amount in various currencies equivalent to fourteen million five hundred thousand dollars ($14,500,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Association, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods 'and civil works to be financed cut of the proceeds of the Credit, shall be governed by the provisions of Schedule 3 to this Agreement. Section 2.04. The Closing Date shall be June 30, 1984 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. -3- Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn -d outstanding from time to time. Section 2.06. Service charges shall be payable semiannually on April 15 and October 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each April 15 and October 15 commencing October 15, 1989, and ending April 15, 2029, each installment to and including the installment payable on April 15, 1999, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the United Kingdom of Great Britain and Northern Ireland is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out the Project through MOE with due diligence and cfficiency and in conformity with appropriate administrative, financial, engineering and educational practices, and shall provide, promptly as needed, the .funds, facilities, services and other resources required for the purpose. Section 3.02. (a) The Borrower shall cause MOE to assign to PIU the overall responsibility for: (i) the preparation of the plans, architectural designs, specifications, contract documents and construction and procurement schedules for Parts A, B and C of the Project; (ii) the coordination and monitoring of all studies under the Project; and (iii) the supervision of all consultants' services and construction works under the Project. (b) In order to assist the Borrower in carrying out the Project, the Borrower shall employ, or cause MOE to employ, architectural/engineering consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. 4 Section 3.03. The Borrower shall: (a) not later than December 31, 1979, identify and coordinate, under a program satisfactory to the Association, the responsibilities and activi- ties of all agencies of the Borrower involved in the construction of classrooms and staff houses under Part A (1) of the Project; and (b) ensure that the Development Division will have all such staff as shall be required to carry out its activities under such program. Section 3.04. The Borrower shall cause MOE: (a) to allocate not more than 50% of the classrooms and staff houses, to be constructed under Part A (1) of the ?roject, equally among the r administrative districts of the Borrower; (b) to complete by December 31, 1980, or such other date as the Association may agree, a school mapping and location study; and (c) to allocate the remainder of such classrooms and staff houses after the completion of said study and in accordance with criteria accept- able to the Association. Section 3.05. In order to assist MOE in the review and revision of curriculum, training programs and enrollment require- ments, the Borrower shall cause MOE to establish and to operate a tracer system for the continuous monitoring of: (a) starting from July 1, 1980, the employment of graduates of the teacher training programs conducted at the Chancellor College; and (b) starting from December 31, 1981, the employment of graduates of the com- mercial training programs at the technical schools, referred to in Part B (4) of the Project. Section 3.06. The Borrower shall cause MOE: (a) to establish by July 1, 1980, and thereafter to maintain, an evaluation unit at MCC; and (b) to appoint suitably qualified staff to said unit. Section 3.07. The Borrower undertakes: (a) to establish the Institute of Education, referred-to in Part C (1) of the Project, by July 1, 1980, under such statutory, administrative and opera- tional procedures as shall entrust it, under the general supervi- sion of MOE, with the responsibility for curriculum development, materials preparation and in-service training for the primary and secondary education systems; and (b) to appoint a suitaoly qualified director to head said Institute and to provide it with specialists and administrative staff, materials and equipment required for its efficient operation. -5- Section 3.08. The Borrower shall cause MOE to employ an education specialist to assist in the preparation of the curricu- lum of, and the training of teachers for, the commercial and business training programs to be conducted at the schools referred to in Part B (4) of the Project. Section 3.09. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) Except as the Association shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the Project. Section 3.10. (a) The Borrower shall furnish to the Associa- tion, promptly upon their preparation, the plans, specifications, contract documents and construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Borrower: (i) shall maintain records and procedures adequate to record and monitor the progress of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of .the Credit, and to disclose their use in the Project; (ii) shall enable the Association's accredited representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) shall furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Ciedit and the goods and services financed out of such proceeds. (c) Promptly after completion of the Project, but in any event 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 Association, the Borrower shall prepare and furnish to the Association a report, of such scope and in such detail as the -6- Association shall reasonably request, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Association of their respective obligations under the Development Credit Agreement and the accomplishment of the purposes of the Credit. Section 3.11. The Borrower shall take or cause to be taken all such action as shall be necessary to acquire all such land and rights in respect of land as shall be required for the timely carrying out of all construction works under the Project. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained separate Project accounts adequate to reflect in accordance with consistently maintained appropriate 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 said Project accounts for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors accept- able to the Association; (ii) furnish to the Association as soon as available, but in any case not later than six months after the end of each such year, the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning said accounts and the audit thereof as the Association shall from time to time reasonably request. Section 4.02. The Borrower shall take or cause to be taken, through appropriate procedures, -all measurts required to ensure the adequate operation, maintenance, repair and renewal of buildings and equipment provided under the Project in accordance with appropriate engineering and financial practices. Section 4.03. The Borrower shall prepare by July 31, 1981, or such other date as the Borrower and the Association may agree, a plan for financing the provision of primary school textbooks following the implementation of the Project. -7- ARTICLE V Remedies of the Association Section 5.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) the right of the Borrower to withdraw the proceeds of the Special Action Credit shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms and conditions of the Special Action Credit Agreement; or (b) the Special Action Credit shall have become due and payable prior to the agreed maturity thereof. The foregoing paragraphs (a) and (b) shall not apply if the Borrower establishes to the satisfaction of the Association that: (i) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obligations under the Special Action Credit Agreement; and (ii) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following event is specified pursuant to paragraph (d) thereof, namely, that, the event specified in paragraph (b) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following event is specified as an addi- tional condition to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions, namely, that all conditions precedent to the effec- tiveness of the Special Action Credit Agreement, except for the effectiveness of this Agreement, have been fulfilled. -8- Section 6.02. The date 4 oM - 5' is hereby speci- fied for the purposes of Section 12.04 of the General Conditions. Section 6.03. The obligations of the Borrower under Section 4.01 of this Agreement shall cease and determine on Ihe date on which the Development Credit Agreement shall terminate or on a date ten years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representatives of the Borrower; Addresses Section 7.01. The Minister of Finance 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 addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Secretary to the Treasury Ministry of Finance P.O. Box 30049 Capital City Lilongwe 3, Malawi Cable address: FINANCE Lilongwe For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) -9 - IN WITNESS WHEREOF, the parties hereco, acting through their representatives thereunto duly authorized, 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 MALAWI By I ~i Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By ~ Regional Vice President Eastern Africa Ui - 10 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of amounts of the Credit to each Category and the percentage for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent to be Financed (1) Civil Works under 5,470,000 80% Parts A (1), B (3), (4), (5) and (6) and C (1) of the Project (2) Construction equip- 1,600,000 100% of foreign ment and materials expenditures and under Parts A (1) 80% of local and C--(l)-of the expenditures Project (3) Furniture under 1,920,000 100% of foreign Parts A (1), B (3), expenditures and (4), (5) and (6) and 100% of local C (1) of the Project expenditures ex- factory and 80% of other local expenditures (4) Equipment under 960,000 100% of foreign Parts A (1), B (3), expenditures and (4), (5) and (6) and 100% of local C (1) of the Project expenditures ex- factory and 80% of other local expenditures (5) Consultants' 580,000 100% of foreign services expenditures and 80% of local expenditures - 11 - Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent to be Financed (6) Studies 290,000 100% of foreign expenditures and 80% of local expenditures (7) Project admin- 480,000 80% istration (8) Unallocated 3,200,000 TOTAL 14,500,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower and for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in com- pliance with the poli y of the Association that no proceeds of the Credit shall be disbArsed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Association. 4. Notwithstanding the provisions of paragraph 1 above, no with- drawals shall be made in respect of payments made for expenditures prior to the date of this Agreement, except that withdrawals, - 12 - in an aggregate amount not exceeding the equivalent of $100,000 may be made in respect of Category (5) on account of payments made for such expenditures before that date but after April 1, 1979. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in para- graph 1 above, if the Association has reasonably estimated will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expendi- tures; and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be- financed out of the pro- ceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Associ- ation's reasonable opinion, represents the amount of such expendi- tures which would otherwise have been eligible for financing out of the proceeds of the Credit. -13- SCHEDULE 2 Description of the Project The Project consists of the following: Part A: Primary Education (1) The construction, furnishing and equipping of about 1,000 classrooms and about 500 staff housing units. (2) The provision of about 2.2 million textbooks to primary school students. (3) The construction, furnishing and equipping of facilities at Mzuzu Teacher Training College so as to increase its total enrollment capacity to about 540 students. Part B: Secondary Education (1) The construction, furnishing and equipping of about 30 satellite Centers for MCC, including about 30 staff housing units. (2) Improving the facilities at MCC headquarters through expanding and upgrading its recording studio facilities, providing it with recording and printing equipment and upgrading its electrical system. (3) The upgrading of about five secondary schools; includ- ing, inter alia, the provision of boarding facilities for about 280 students. (4) The construction, furnishing and equipping of facilities for the teaching of commercial and business subjects to about 120 students at the three technical schools in Blantyre, Mzuzu and Lilongwe. (5) The construction, furnishing and equipping of facilities sufficient to increase the enrollment capacity of the Chancellor College by about 225 teacher training students. (6) The construction and furnishing of about 6 staff houses, and the furnishing and equipping of boarding facilities - 14 - for about 60 students at the Colby College of Agricul- ture. Part C: Education Services (1) The establishment of the Institute of Education through the expansion and improvement of the facilities of the teacher in-service center at Domasi so as to accomodate about 150 students and 30 staff. (2) The provision of about 50 vehicles. Part D: Studies Unless otherwise agreed between the Borrower and the Association, the following studies will be carried out: (1) A tracer study of graduates of general secondary schools, teacher training programs at the Chancellor College and commercial training programs at the technical schools. (2) -A.school mapping study. (3) Studies to assist in the preparation of a national education plan and future education projects. (4) A study of the costs, durability and financing of primary school textbooks. (5) Monitoring and evaluation of the Project and of the project financed under the Development Credit ( Agreement concluded between the Borrower and the Association on November 24, 1975. The Project is expected to be completed by December 31, 1983. - 15 - SCHEDULE 3 Procurement A. International Competitive Bidding 1. Except as provided in Part D hereof, goods and civil works shall be procured under contracts awarded in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. Items of furniture, equipment and civil works shall be grouped so as to permit such bulk procurement as shall be con- sistent with appropriate technical standards and procurement practices. 3. For goods and works to be procured on the basis of inter- national competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, the Borrower shall prepare and forward to the Association as soon as possible, and in any event not later than 60 days prior to the date of availability to the public of the first tender or prequalification documents relating thereto, as the case may be, a general procurement notice, in such form and detail and containing such information as the Association shall reasonably request; the Association will arrange lor the publication of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods and works in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods or works remain to be procured on the basis of international compe- titive bidding. 4. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international competitive bidding: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex-factory price for domestically manufactured goods; (ii) customs duties and other import taxes on imported goods, and sales and similar taxes on domestically supplied goods, shall be excluded; and (iii) the cost to the Borrower of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. - 16 - B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A of this Schedule, goods manufactured in Malawi may be granted a margin of preference in accordance with, and subject to, the following provisions: 1. All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. 2. After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Malawi if the bidder shall have established to the satisfaction of the Borrower and the Association that the manufacturing cost of such goods includes a value added in Malawi equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in Malawi. (3) Group C: bids offering any other goods.. 3. All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest evaluated bid of each group. Such lowest evaluated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. 4. If, as a result of the comparison under paragraph 3 above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the evaluated bid price of the imported goods offered in each group C bid, for the purpose of this further comparison only, an amount equal to: (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such - 17 - group C bid; or (ii) 15% of the '-i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from group C which as a result of the comparison under paragraph 3 is the lowest evaluated bid shall be selected. C. Preference for Domestic Contractors With respect to the evaluation of bids for any contract for civil works included under Category (1) of the table set forth in Schedule 1 to the Development Credit Agreement and to be procured in accordance with the procedures described in Part A of this Schedule, the Borrower may grant a margin of preference of 7-1/2% to domestic contractors, in accordance with, and subject to, the following provisions: 1. Contractors shall be required to prequalify as provided in Part A of the Guidelines and applicants for qualification applying for such preference shall be asked to provide, as part of the data for qualification, such information, including details of ownership, as shall be required to determine whether, according to the classification established by,the Borrower and accepted by the Association, a particular firm or group of firms qualifies for a domestic preference. The bidding documents shall clearly indi- cate the preference and the method that will be followed in the evaluation and comparison of bids to give effect to such preference. 2. After bids have been received and reviewed by the -Borrower, responsive bids will be classified into the following groups: (i) bids offered by domestic contractors eligible for preference; and (ii) bids offered by other contractors. For the purpose of evaluation and comparison of bids an amount equal to 7-1/2% of the bid amount shall be added to bids received under group (ii) above. D. Other Procurement Procedures 1. Civil works under Part A (1) may be carried out under pro- cedures of the Borrower satisfactory to the Association or under - 18 - competitive bidding advertised locally pursuant to procedures satisfactory to the Association. 2. Without limitation upon the provisions of paragraph I above, contracts for the carrying out of civil works estimated to cost less than the equivalent of $250,000 per contract and contracts for the purchase of goods estimated to cost less than the equiva- lent of $50,000 per contract may be awarded in accordance with the Borrower's applicable procedures satisfactory to the Association. E. Review of Invitations to Bid and of Proposed Awards and Final Contracts 1. With respect to (i) all contracts for civil works estimated each to cost the equivalent of $250,000 or more, and (ii) all contracts for the procurement of goods estimated each to cost the equivalent of $50,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Association, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the .bidding, and shall make,such modifications in the said documents or procedures as the Association shall reasonably request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Borrower shall, before a final decision on the award is made, inform the Association of the name of the bidder to which it intends to award the contract and shall furnish to the Associ- ation, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, and such other information as the Association shall reasonably request. The Association shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to - 19 - the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract. 2. With respect to each contract not governed by the preceding paragraph, the Borrower shall furnish to the Association, promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids, recommendations for award and such other information as the Association shall reasonably request. The Association shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. 3. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an exten- sion of the stipulated time for performance of such contract, or issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than 15% of the original price, the Borrower shall inform the Association of the proposed modification, waiver, extension or change order and the reasons therefor. The Association, if it determines that the proposal would be inconsistent with the provisions of this Agreement, shall promptly inform the Borrower and state the reasons for its determination. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the dayLday of A , 1974. FOR SECRETARY