Madagascar - Second Village Livestock And Rural Development : Credit 1211 - Credit Agreement - Conformed

CREDIT NUMBER 1211 MAG OFFICIA Development Credit Agreemht (Second Village Livestock and Rural Development Project) between DEMOCRATIC REPUBLIC OF MADAGASCAR and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated 4i / , 1982 CREDIT NUMBER 1211 MAG DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated , 1982, between DEMOCRATIC REPUBLIC OF MADAGASCAR (hereinafter called the Bor- rower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) the Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) the Borrower has applied to the International Fund for Agricultural Development (hereinafter called the Fund) for a loan (hereinafter called the Fund Loan) in an amount equivalent to seven million Special Drawing Rights (SDR 7,000,000) to assist in financing the Project on the terms and conditions set forth in an agreement (hereinafter called the Fund Loan Agreement) between the Borrower and the Fund; (C) the Fund has appointed the Association as Cooperating Institution to administer the Fund Loan and the Association has accepted such appointment; (D) Parts A through E of the Project will be carried out by the Livestock Development Agency for Western Madagascar (herein- after called FAFIFAMA) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to FAFIFAMA parts of the proceeds of the Credit as hereinafter provided; and WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, to extend the Credit to the Borrower upon the terms and conditions 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 June 30, 1980, with the same force and effect as if they were fully set forth herein -2- (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 and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Fund Loan Account" means the loan account established under the Fund Loan Agreement; (b) "Project Agreement" means the agreement between the Association and FAFIFAMA of even date herewith, as the same may be amended from time to time; (c) "Subsidiary Agreement" means the agreement to be entered into between the Borrower and FAFIFAMA pursuant to Section 4.01 (c) of this Agreement, as the same may be amended from time to time; (d) "First Livestock Project" means the Village Livestock and Rural Development Project (Amended), dated May 25, 1977 (Credit Number 506 MAG), as agreed upon by the Democratic Republic of Madagascar and the Association; (e) "MDRRA" means the Borrower's Ministere de DAveloppement Rural et de la Reforme Agraire; (f) "SPA" means the Animal Production Service of the General Directorate for Rural Development and Agrarian Reform within the MDRRA; (g) "Pharmacie Centrale Vet6rinaire" means the institution within SPA responsible for the import and distribution of veterinary products; (h) "FOFIFA" means the Centre Nationale de Recherche Appli- qu6e pour le Dgveloppement Rural; (i) "Central Livestock Laboratory" means the laboratory within FOFIFA responsible for the production of vaccines; (j) "SECIAM" means the Soci6t6 d'Exploitation du Complexe Industriel et Agricole de Morondava; -3- (k) "SEVIMA" means the Sociftf d'Exploitation de Viande A Madagascar in Antananarivo; and (1) "SOFIRAC" means Sociftg des Viandes de Madagascar in Fianarantsoa. 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 equiva- lent to twelve million eight hundred thousand Special Drawing Rights (SDR 12.8 million). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Article III of this Agreement. Section 2.03. The Closing Date shall be December 31, 1987, or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.04. 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 and outstanding from time to time. Section 2.05. Service chargej shall be payable semiannually on June 15 and December 15 in each year. Section 2.06. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each June 15 and December 15 commencing June 15, 1992, and ending December 15, 2031, each installment to and including the installment payable on December 15, 2001, 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 2.07. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. -4- ARTICLE III Allocation and Withdrawal of Proceeds of Credit and Fund Loan Section 3.01. Subject to the rights of suspension and can- cellation set forth in the Development Credit Agreement and the Fund Loan Agreement, the amount of the Credit and the amount of the Fund Loan may be withdrawn from the Credit Account and the Fund Loan Account, respectively, in accordance with the provisions of this Agreement and with the allocation of the proceeds of the Credit and the Fund Loan set forth in -Schedule 1 to this Agree- ment, as such allocation may be modified from time to time pur- suant to the provisions of such Schedule or by further agreement between the Borrower, the Association and the Fund. Section 3.02. The Borrower shall be entitled to make with- drawals from the Credit Account and from the Fund Loan Account for expenditures made (or, if the Association and the Fund shall so agree, to be made) in respect of the reasonable cost of goods and service6 required for the Project and to be financed out of the proceeds of the Credit and the Fund Loan. Section 3.03. (a) When the Borrower shall desire to withdraw any amount of the Credit or the Fund Loan, the Borrower shall deliver to the Association a written application in such form and containing such statements and agreements as the Association or the Fund shall reasonably request. Applications for withdrawal, with the necessary documentation as hereinafter provided shall, except as the Borrower, the Association and the Fund shall other- wise agree, be made promptly in relation to expenditures for the Project. (b) The Borrower shall furnish to the Association such documents and other evidence in support of the application as the Association or the Fund shall reasonably request, whether before or after the Association shall have approved any withdrawal requested in the application. (c). Each application and the accompanying documents and other evidence must be sufficient in form and substance to satisfy the Association or the Fund that the Borrower is entitled to withdraw from the Credit Account or the Fund Loan Account the amount applied for and that such amount is to be used only for the purposes of the Project. -5- Section 3.04. Each such application by the Borrower for withdrawal shall be deemed to be a request to withdraw funds from the Credit Account and from the Fund Loan Account and the funds to be withdrawn pursuant to such application shall be apportioned by the Association, as nearly as practicable in the circumstances, between the Credit and the Fund Loan in the ratio of 65:35, or such other ratio as shall be agreed between the Association and the Fund; provided, however, that, if such application shall be made in respect of expenditures that shall be financed out of the proceeds of the Credit or the Fund Loan only, such application shall be deemed to be a request to withdraw funds from the Credit Account or the Fund Loan Account only. Section 3.05. When the Association shall have approved an application by the Borrower for withdrawal, the Association shall: (i) pay the amount, if any, which the Borrower is entitled to withdraw from the Credit Account to or on the order of the Borrower in accordance with the provisions of the Development Credit Agreement; and/or (ii) promptly notify the Fund that it has received an application for withdrawal from the Fund Loan Account in the aggregate amount specified in such notice, that it has approved payment of the portion, if any, to be withdrawn from the Credit Account in the amount set forth in such notice, and that the portion to be withdrawn from the Fund Loan Account in the amount set forth in such notice is eligible for payment by the Fund. Section 3.06. If at any time the amount of the Credit or the Fund Loan shall have been fully withdrawn or cancelled, applications by the Borrower for further withdrawals shall be deemed to be requested for withdrawal of the full amount applied for from the Credit Account or the Fund Loan Account only, and the provisions of this Article III except for Section 3.04 hereof shall continue to apply mutatis mutandis until the full amount credited or to be credited to such Account shall have been with- drawn or cancelled. Section 3.07. Upon the Borrower's request and upon such terms as shall be agreed between the Borrower and the Association, -6- the Association may, on behalf and for the account of the Fund, enter into special commitments to pay amounts, out of the proceeds of the Fund Loan, to the Borrower or others in respect of the cost of goods required by the Project, subject to the provisions of this Agreement concerning the allocation and apportionment of the proceeds of the Fund Loan. The Fund has advised the Association that any such special commitment shall, once it has been notified to the Fund, constitute an obligation on the part of the Fund to pay, notwithstanding any subsequent suspension or cancellation of the Fund Loan, the amount to be disbursed out of the proceeds of the Fund Loan in fulfillment of such special commitment. Section 3.08. Except as the Association and the Fund shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Credit or the Fund Loan for Parts F through J of the Project shall be governed by the provisions of Schedule 3 to this Agreement. ARTICLE IV Execution of the Project Section 4.01. (a) The Borrower shall carry out Parts F through J of the Project through SPA with due diligence and efficiency and in conformity with appropriate practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause FAFIFAMA to perform in accordance with the provisions of the Project Agreement all the obligations therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable FAFIFAMA to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (c) The Borrower shall make part of the proceeds of the Credit available to FAFIFAMA under a subsidiary agreement to be entered into between the Borrower and FAFIFAMA (the Subsidiary Agreement) under terms and conditions which shall have been approved by the Association. (d) The Borrower shall exercise its rights under the Subsi- diary Agreement in such manner as to protect the interests of -7- the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower sh411 not assign, amend, abrogate or waive the Subsidiary Agraement or any provision thereof. Section 4.02. In order to assist the Borrower in carrying out Parts F through J of the Project, the Borrower shall employ consultants or experts whose selection, qualifications, exper- ience and terms and conditions of employment shall be satisfactory to the Association in accordance with the principles and pro- cedures described in the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the World Bank in August 1981. Section 4.03. (a) The Borrower undertakes to insure, or to make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit or the Fund Loan for Parts F through J of the Project against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) Except as the Association and the Fund shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Credit or the Fund Loan to be used exclusively for Parts F through J of the Project. Section 4.04. (a) The Borrower shall furnish to the Associa- tion and the Fund, promptly upon their preparation, all reports, contract documents and procurement schedules for Parts F through J of the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall rea- sonably request. (b) The Borrower: (i) shall maintain records and procedures adequate to record and monitor the progress of Parts F through J of the Project, to identify the goods and services for Parts F through J of the Project financed out of the proceeds of the Credit or the Fund Loan and to disclose their use in the Project; (ii) shall enable the Association's and the Fund's accredited representatives to examine the goods financed out of the proceeds of the Credit or the Fund Loan for Parts F through J of the Project and any relevant records and documents; and (iii) shall -8- furnish to the Association at regular intervals all such inform- ation as the Association shall reasonably request concerning Parts F through J of the Project, its cost and, where appropriate, the benefits to be derived from it, the ezpenditure of the proceeds of the Credit and the Fund Loan for Parth F through J of the Project and the goods and services financed out of such proceeds. (c) Upon the award by the Borrower of any contract for goods, works or services to be financed out of the proceeds of the Credit, the Association may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. (d) 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 through SPA prepare and furnish to the Association and the Fund a report, of such scope and in such detail as the 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 and the Fund Loan. Section 4.05. By December 31, 1982 or by such other date as the Association may agree the Borrower shall, in carrying out Part G (ii) of the Project, furnish the Association for its approval: (i) a r6sum6 of each candidate proposed to be sent overseas for training; and (ii) an outline of the training program to be followed by each candidate. Section 4.06. The Borrower shall, in carrying out Part F of the Project: (i) by December 31, 1982 or by such other date as the Association may agree furnish the Association for its approval a program for the studies to be carried out under Parts F (i) and F (ii) of the Project; and (ii) exchange views with the Associa- tion on the findings and recommendations reached in such studies, as such findings and recommendations become available to the Borrower and the measures to be undertaken for the implementation of such recommendations. Section 4.07. By December 31, 1982 or by such other date as the Association may agree the Borrower shall, before carrying out -9- Part I of the Project, furnish to the Association for its approval a detailed program for the carrying out of such Part of the Project. ARTICLE V Other Covenants Section 5.01. (a) The Borrower shall, through SPA, maintain or cause to be maintained separate records and accounts adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations, resources and expenditures, in respect of Parts F through J of the Project, of the departments or agencies of the Borrower responsible for carrying out Parts F through J of the Project or any part thereof. (b) The Borrower shall through SPA: (i) have the accounts referred to in paragraph (a) of this Section for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by an auditor acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than six months after the end of each such year, (A) certified copies of its financial statements for such year as so audited and (B) 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 such accounts as the Association shall from time to time reasonably request. Section 5.02. The Borrower shall undertake all measures necessary to ensure that the villages benefitting from the roads, surface water points and wells established under Part E (i) and (ii) of the Project shall contribute in cash or in kind not less than twenty per cent (20%) of the total investment and maintenance costs thereof. Section 5.03. The Borrower shall, starting July 1, 1987, cause its services and agencies charged with road maintenance and maintenance of public utilities to maintain all roads and water supply facilities related to the Project in Mahajanga Province, to make all necessary repairs and renewals thereof promptly, all in accordance with appropriate engineering and financial practices and make appropriate financial arrangements therefore. Section 5.04. The Borrower shall, annually, exchange views with the Association and the Fund: (i) on key issues of the - 10 - Borrower's policy related to the livestock subsector and the Borrower's plan of action for the development of such sub- sector; and (ii) on the pricing of meat, including the criteria that should be applied to establish reasonable meat prices such as production costs, adequate profit margins, prices for different products and international price levels. Section 5.05. By December 31, 1982 or by such other date as the Association may agree, the Borrower shall prepare and submit to the Association a five-year plan for the Veterinary and Livestock Services within the MDRRA; such plan shall contain: (i) quantified targets for the activities of the Veterinary and Livestock Services that are projected for such period, including any increase of coverage to be provided by the Veterinary Ser- vices; and (ii) a projection of the budgetary allocations needed for the implemrentation of such plan. Section 5.06. By December 31, 1982 or by such other date as the Association may agree, the Borrower shall prepare and transmit to the Association a policy paper which shall define the major aims of livestock research in Madagascar and specify the topics of research to be undertaken over the period 1982 through 1986. Section 5.07. The Borrower shall take all measures necessary to ensure that all veterinary products sold by the Pharmacie Centrale Vgtgrinaire shall be sold at prices covering all costs incurred by the Borrower for such veterinary products, including transport and distribution cost and a margin of fifteen per cent for storage losses. Section 5.08. By December 31, 1982 or by such other date as the Association may agree, the Borrower shall make available to FAFIFAMA the services of all employees who were formerly employed by the Livestock Service in Mahajanga Province. Section 5.09. By June 30, 1987, the Borrower shall: (i) review all arrangements made for the continuation of the Veteri- nary and Livestock Services in Mahajanga Province; and (ii) take all financial and organizational measures appropriate to ensure the continuation of such services. Section 5.10. The Borrower shall inform the Association of any measure planned to change FAFIFAMA's management or capital structure sufficiently in advance of effectiveness of such measure to enable the Association to comment upon such measure. - 11 - Section 5.11. (a) The Borrower shall, annually while the Project is being executed, make sufficient budgetary and foreign exchange allocations for the purchase of veterinary products. (b) By December 31 of each year while the Project is being executed but only as long as Part H (i) of the Project is partly financed out of the proceeds of the Credit and Fund Loan, the Borrower shall prepare a list of veterinary products to be imported by the Borrower during the following year and their prices and furnish a copy of such list to the Association for its approval. Such lists shall exclude veterinary products to be distributed to FAFIFAMA for the Mahajanga component. (c) By March 31 of each year while the Project is being executed but only as long as Part H (i) of the Project is partly financed out of the proceeds of the Credit and Fund Loan, the Borrower shall prepare a report on the distribution of the veterinary products imported by the Borrower during the previous year and furnish a copy of such report to the Association for its comments. - Section 5.12. The Borrower shall ensure that MDRRA shall exercise, at all times, the authority for technical and management supervision of SECIAM, SEVIMA and SOFIRAC. Section 5.13. During all times while the Project is being executed the Borrower shall ensure that SPA shall assure the timely production of adequate quantities and qualities of vaccines produced by the Central Livestock Laboratory and the distribution thereof. ARTICLE VI Remedies of the Association Section 6.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) a default shall have occurred in the performance of any covenant, agreement or obligation on the part of FAFIFAMA under the Project Agreement; (b) the Borrower's legislation concerning fermes d'etats or FAFIFAMA's Cahier des Charges and its Annex dated March 1, 1977, - 12 - shall have been amended, suspended, abrogated, repealed or waived in such a way as to materially and adversely affect the ability of FAFIFAMA to carry out any of its obligations set forth in the Project Agreement; (c) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of FAFIFAMA or for the suspension of the operations of FAFIFAMA; (d) an extraordinary situation shall have arisen which shall make it improbable that FAFIFAMA will be able to perform its obligations under the Project Agreement; or (e) (i) Subject to subparagraph (ii) of this paragraph: (A) The right of the Borrower to withdraw the proceeds of the Fund Loan made to the Borrower for the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the Fund Loan Agreement; or (B) such loan shall have become due and payable prior to the agreed maturity thereof. (ii) Subparagraph (i) of this paragraph shall not apply unless the Borrower shall establish to the satisfaction of the Association that: (A) such suspension, cancellation, termination or pre- maturing is not caused by the failure of the Borrower to perform any of its obligations under such agreement; and (B) 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 6.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) the event specified in paragraph (a) of Section 6.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Association to the Borrower; and (b) any event specified in paragraph (c) or (e) (i) (B) of Section 6.01 of this Agreement shall occur; - 13 - ARTICLE VII Effective Date; Termination Section 7.01. The following events are specified as addi- tional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the execution and delivery on behalf of the Borrower of the Fund Loan Agreement has been duly authorized or ratified by all necessary governmental action and all other conditions precedent to the effectiveness of the Fund Loan pursuant to the Fund Loan Agreement (other than the effectiveness of this Agree- ment) have been duly fulfilled; and the Fund has appointed the Association as Cooperating Institution to administer the Fund Loan on terms and conditions acceptable to the Association; (b) the Subsidiary Agreement shall have been executed and authorized by the Borrower and FAFIFAMA in compliance with the provisions-of Section 4.01 (c) of this Agreement; and (c) FAFIFAMA's Cahier des Charges has been amended to empower FAFIFAMA to carry out Parts A through E of the Project. Section 7.02. The following is specified as an additional matter, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) that the Subsidiary Agree- ment has been duly executed and authorized by the Borrower and FAFIFAMA and is binding upon both parties pursuant to its terms; and (b) that the Project Agreement has been duly authorized by FAFIFAMA and is legally binding upon FAFIFAMA in accordance with its terms. Section 7.03. The date -4 /6/ I is hereby specified for the purposes of Secti 12.04 of the General Condi- tions. Section 7.04. The obligations of the Borrower under Sections 5.02, 5.03, 5.04, 5.07 and 5.10 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date 15 years after the date of this Agreement, whichever shall be the earlier. Section 7.05. If: (i) the Fund Loan Agreement shall have come into force and effect and the Development Credit Agreement - 14 - shall have failed to come intr force and effect by the date specified in Section 7.03 of this Agreement or a later date established by the Association for the purposes of Section 12.04 of the General Conditions; or (ii) the entire principal amount of the Credit withdrawn from the Credit Account and all charges which shall have accrued on the Credit shall have been paid before the Fund Loan Agreement shall have terminated, then, notwithstanding the provisions of Sections 12.04 and 12.05 of the General Condi- tions, the Development Credit Agreement shall be deemed to be, or to remain, in force and effect but only to the extent required for the purpose of implementing the Fund Loan Agreement and of orderly settlement of matters of mutual interest to the parties there- under, subject to such modifications of the Development Credit Agreement as shall be agreed between the Borrower, the Association and the Fund for such purposes. Section 7.06. If: (i) the Fund Loan Agreement shall terminate in accordance with its terms before the Development Credit Agree- ment shall have terminated; or (ii) the Association shall notify the Borrower that its appointment as Cooperating Institution under the Fund Loan Agreement has terminated, the provisions of this Agreement shall, to the extent that they relate to the Fund Loan, forthwith terminate; provided, however, that in the case described in the foregoing clause (ii) such termination shall apply only to the responsibilities of the Association as such Cooperating Institution. ARTICLE VIII Representatives of the Borrower; Addresses Section 8.01. The Ministre auprs de la Prfsidence de la R4publique chargg des Finances et du Plan of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 8.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministere aupras de la Prfsidence de la R&publique chargg des Finances et du Plan Antananarivo Madagascar - 15 - Cable address: Telex: MINFIN 22339 Antananarivo 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) IN WITNESS WHEREOF, the parties hereto, 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. DEMOCRATIC REPUBLIC OF MADAGASCAR By b-0g CT-u Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By~ Regional Vice President Eastern Africa - 16 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit and the Fund Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit and the Fund Loan, the allocation of the amounts of the Credit and the Fund Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Amount of the Credit Allocated Fund Loan % of (Expressed Allocated Expenditures in SDR (Expressed in to be Category Equivalent) SDR Equivalent) Financed (1) Veterinary pro- 1,530,000 $880,000 100% of for- ducts and agri- eign expendi- cultural inputs tures and under Parts A 90% of local and B of the expenditures Project (2) Vehicles and 1,110,000 $610,000 100% of for- equipment for eigh expendi- FAFIFAMA tures and 90% of local expenditures (3) Civil works 390,000 $220,000 100% of for- under Part E eign expendi- (iii) of the tures and 85% Project of local ex- penditures (4) Consultants' 390,000 $220,000 100% services under Parts B, C and D of the Project and training under Part C of the Project - 17 - Amount of the Amount of the Credit Allocated Fund Loan % of (Expressed Allocated Expenditures in SDR (Expressed in to be Category Equivalent) SDR Equivalent) Financed (5) Operating costs: (i) of FAFIFAMA 2,800,000 $1,530,000 85% under Parts B through E of the Pro- ject, in- cluding civil works under Part E (i) and (ii) of the Project (ii) of FAFIFAMA 2,080,000 $1,140,000 under Part A of the Pro- ject during each calendar year of the execution of the Project (i) year one 85% (ii) year two 75% (iii) year three 70% (iv) year four 60% (v) year five 55% (6) Veterinary 100% of for- products under eign expen- Part H (i) of ditures Project during the following calendar years of execution of the Project: - 18 - Amount of the Amount of the Credit Allocated Fund Loan % of (Expressed Allocated Expenditures in SDR (Expressed in to be Category Equivalent) SDR Equivalent) Financed (i) year 1 850,000 $460,000 (ii) year 2 680,000 $370,000 (iii) year 3 430,000 $230,000 (7) Equipment under 60,000 $30,000 100% of for- Part H (ii) of eign expen- the Project ditures and 90% of local expenditures (8) Equipment for 120,000 $60,000 100% of for- SPA under Part J eign expen- of the Project ditures and 90% of local expenditures (9) Operating costs 90,000 $50,000 85% of SPA under Part J of the Project (10) Consultants' 980,000 $530,000 100% services under Parts F through G and I of the Project and training under Part G of the Project (11) Unallocated 1,290,000 $670,000 TOTAL 12,800,000 $7,000,000 - 19 - 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than 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 or for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in com- pliance with the policies of the Association and the Fund that no proceeds of .the Credit or the Fund Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufac- ture, proeurement .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 or the Fund Loan 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 policies of.the Association and the Fund. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be m.de in respect of payments made: (i) for expenditures prior to NATCr 3 O /9 ?Z ; (ii) for expendi- tures under Categories (1) through'(5) of the table in paragraph 1 above during each year of execution of the Project prior to the approval of the annual work program for such year pursuant to the provisions of Section 3.04 (a) of the Project Agreement including the approval of the first annual work program; and (iii) for expenditures under Category (6) of the table in paragraph 1 above during each year of execution of the Project while such Part of the Project is being partly financed by the Association and the Fund, prior to approval of the list of veterinary products by the Association pursuant to the provisions of Section 5.11 (b) of this Agreement. 5. Notwithstanding the allocation of an amount of the Credit or the Fund Loan or the disbursement percentages set forth in the table in paragraph 1 above, and without limitation upon the - 20 - provisions of Section 3.04 of this Agreement, if the Association has reasonably estimated that the amount of the Credit or the Fund Loan then allocated to any Category 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 or the Fund Loan which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures; and (ii) if such reallocation cannot fully meet the estimated short- fall, 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 proceeds of the Credit and the Fund Loan 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 or of the Fund under the Fund Loan Agreement, by notice to the Borrower,. cancel such amount of the Credit and/or the Fund Loan as, in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have beeti eligible for financing out of the proceeds of the Credit and/or the Fund Loan. - 21 - SCHEDULE 2 Description of the Project The Project consists of the following components and parts: I. Mahajanga Component Part A An intensive animal health program in Mahajanga Province. Part B (i) A program to test different animal husbandry intensifi- cation methods in mixed farming systems in about 40 selected fokontany in Mahajanga Province; and (ii) Preparation and carrying out of a steer fattening program in Mahajanga Province. Part C. (i) Preparation of a permanent in-house training program for FAFIFAMA's staff in financial and managerial disciplines. (ii) Training of FAFIFAMA's staff in management of meat processing and marketing; and (iii) Training of key staff of FAFIFAMA's Public Works Depart- ment. Part D Setting up of a data collection and monitoring system to gather and organize information concerning Project activites in Mahajanga Province and the setting up of a management reporting system. Part E (i) Construction and maintenance of about 100 km of all- weather roads adequate for vehicles of up to one ton capacity to be determined in the annual work programs and maintenance of the roads constructed under the First Livestock Project; - 22 - (ii) Construction and maintenance of about 35 surface water points to be determined in the annual work programs and of about 80 wells in Mahajanga Province to be determined in the annual work programs; and (iii) Construction of 80 veterinary centers and 20 vaccination corridors to be determined in annual work programs. II. Livestock Subsector Component Part F (i) Studies to examine the structure of cattle and meat processing and marketing in the supply of Antananarivo; (ii) Studies to examine the roles, methods of operation, organization and financial status of parastatals and governmental institutions of the Borrower in the live- stock subsector; (iii) Studies for further livestock projects. (iv) Identification and collection of research material available on the livestock subsector in Madagascar. Part G (i) Preparation of a training program for managers of institutions in the livestock subsector; and (ii) Training, including training overseas, in livestock disciplines. Part H (i) Procurement and distribution of imported veterinary products including antibiotics, fasciolocides and anthelmintics; and (ii) Procurement of equipment and materials and supply of such equipment and materials to the Central Livestock Laboratory. Part I A research program on the development of dual or triple purpose cattle on the Central Plateau. - 23 - Part J Strengthening of SPA's monitoring and supervising capacity by the hiring of additional staff and by the supply of vehicles and equipment. The Project is expected to be completed by June 30, 1987. - 24 - SCHEDULE 3 Procurement A. International Competitive Bidding 1. Except as provided in Part D hereof, goods shall be procured under contracts awarded in accordance with procedures consistent with those set forth in the current edition to the "Guidelines for Procurement under World Bank Loans and IDA Credits" dated March 1977 (hereinafter called the Guidelines), on the basis of inter- national competitive bidding as described in Part A of the Guide- lines. 2. For goods to be procured on the basis of international competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, the Borrower shall prepare and forward, or shall cause FAFIFAMA to prepare and to 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 for 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, or shall cause FAFIFAMA to 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 competitive bidding. 3. 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 the imported goods, or the- ex-factory price or off-the-shelf price of other goods, offer _ i auch bid; (ii) customs duties and other import taxes levied in connection with the importation, or the sales and similar taxes levied in connection with the sale or delivery, pursuant to the bid, of the goods shall not be taken into account in the evaluation of the bids; and (iii) the cost of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. - 25 - 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 Madagascar 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 Madagascar 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 Madagascar equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other domestic bids. (3) Group C: bids offering any other goods. 3. In order to determine the lowest evaluated bid of each group, all evaluated bids in each group shall first be compared among themselves, without taking into account customs duties and other import taxes levied in connection with the importation, and sales and similar taxes levied in connection with the sale or delivery, pursuant to the bids, of the goods. Such lowest eva- luated 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 - 26 - have to pay for the importation of the goods offered in such group C bid; or (ii) 15% of the c.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 iich as a result of the comparison under paragraph 3 is the lowest evaluated bid shall be selected. C. Other Procurement Procedures - 1. Contracts for the supply of goods estimated to cost the equivalent of less than $120,000 but more than $40,000 may be awarded on the basis of competitive bidding advertised locally in accordance with procedures acceptable to the Association. 2. Contracts for the supply of goods estimated to cost the equivalent of less than $40,000 may be awarded on the basis of local shopping in accordance with procedures acceptable to the Association. 3. Civil works under Part E (i) and (ii) of the Project may be carried out by FAFIFAMA on force account in accordance with procedures acceptable to the Association. 4. Civil works under Part E (iii) of the Project may be awarded on the basis of competitive bidding advertised locally in accordance with procedure/, acceptable to the Association. D. Review of Procurement Decisio s by the Association 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts estimated to cost the equiva- lent of $100,000 or more: (a) Before bids are invited, the Borrower shall furnish, or shall cause FAFIFAMA to furnish, to the Association, for its comments, the text of the invitations to bid and the specifica- tions 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 modifica- tion to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. - 27 - (b) After bids have been rec,ived and evaluated, the Bor- rower shall, before a final decision on the award is made, inform, shall cause FAFIFAMA to inform, the Association of the name of che bidder to which it intends to award the contract and shall furnish to the Association, 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/or FAFIFAMA 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 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, or shall cause FAFIFAMA to furnish, to the Asspciation, promptly after its execution and prior to the submission to the Association of the first applica- tion for withdrawal f/f funds from the Credit Account in respect of such contract, two conformed copies of such contract, together with the analysis 'd the re ipective bids, recommendations for award and such other information as the Association shall reason- ably 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/or FAFIFAMA 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 extension 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/or FAFIFAMA 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 /LL. day of 198F E T FOR SECRETARY