Mali - Mopti Area Development Project : Credit 1597 - Credit Agreement - Conformed

DIT NUMBER 1597 MLI Development Credit Agreement (Mopti Area Development Project) between REPUBLrC OF MALI and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1985 CREDIT NUMBER 1597 MLI DEVELOPMIENT CREDIT AGREEMENT AGREEMENT, dated / , 1985, between REPUBLIC OF MALI (hWei4 ter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) the Borrower has requested the Association to as8sist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) the Borrower expects to obtain from the Caisse Centrale de Cooperation Economique of the Republic of France (hereinafter called CCCE): (i) a loan (hereinafter called the ODEM Loan) in the amount of 58,000,000 French Francs, and (ii) a loan in the amount of 4,200,000 French Francs; both loans, (hereinafter collectively referred to as the CCCE Loans) to be on terms and conditions set forth in agreements to be entered into between the Borrower and CCCE; (C) CCCE has made a loan to BNDA (as hereinafter defined) in an amount of 5,500,000 French Francs on terms and conditions set forth in an agreement dated October 16, 1984 between CCCE and BNDA; (D) the Borrower also expects to obtain from the African Development Fund (hereinafter called AfDF) a credit (hereinafter called the AfDF Credit) in the amount of six million Units of Accounts on terms and conditions set forth in an agreement to be entered into between the Borrower and AfDF; (E) the Borrower further expects to obtain from the Kingdom of the Netherlands, acting through its Directoraat Generaal voor Internationale Samenwerking (hereinafter called DIGIS) a grant (hereinafter called the DIGIS Grant) in the amount of one million five hundred thousand Netherlands Guilders (Nfl. 1,500,000) on terms and conditions set forth in an agreement to be entered into between the Borrower and DIGIS; (F) The Project will be carried out by the Borrower and by ORM, ODEM, IER and BNDA (all as hereinafter defined) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to ORM, ODEM, IER and BNDA, the proceeds of the Credit, of the CCCE Loans, of the ADF Credit and of the DIGIS Grant as hereinafter provided; -2- 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 and in the Project Agreement of even date herewith between the Association and ORM, ODEM, IER and BNDA; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLEK I General Conditions; Definitions Section 1.01. The'General Conditions Applicable to Develop- ment Credit Agreements of the Association, dated January 1, 1985, (the General. Conditions) constitute an integral part of this Agreement. Section 1.02. Wherever used in this Agreement and in the Project Agreement (as hereinafter defined), unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respec- tive meanings therein set forth and the following additional terms and acronyms have the following meanings: (a) "AP" means Association Pastorale, a voluntary livestock producers organization or cooperative operating in the Project Area; (b) "BNDA" means Banque Nationale pour le D6veloppement Agricole, a Societ& d'Economie Mixte organized under Loi No. 81-08 of the Borrower, dated February 11, 1981 and operating under Statutes approved by Decree No. 62/PG-RM of the Borrower, dated March 25, 1981; (c) "CFA Franc" means the currency of the Borrower; (d) "DNAFLA" means Direction Nationale de l'Alphab6tisation Fonctionnelle et de la Linguistique Appligu&e of the Borrower's Ministry of Education; (e) "DNGR" means the Direction Nationale du Genie Rural of the Borrower's Ministry of Agriculture; (f) "DNHE" means Direction Nationale de 1IHydraulique et de I'Energie of the Borrower's Ministry of State responsible for industrial developmert and tourism; -3- (g) "FY" or "fiscal year" means the Borrower's or ORM's or ODEM's fiscal year, depending on the context, which, in the case of the "crrower and ODEM coincides with the calendar year and in the case of ORM starts on July 1 and ends on June 30; (h) "Grant Agreements" means the ORM Grant Agreement and the ODEM Grant Agreement (both as hereinafter defined); (i) "IER" means the Institut d'Economie Rurale of the Borrower's Ministry of Agriculture, responsible for the conduct and coordination of crop research; (j) "ODEM" means Op"ration D'veloppement de l'Elevage Mopti, an op&ration de d6veloppement rural established within the Borrower's Ministry responsible for Natural Resources and Livestock pursuant to Decree No. 76/PG-RM of the Borrower, dated May 7, 1975; (k) "ODEM Grant Agreement" means the agreement to be entered into by the Borrower and ODEM pursuant to Section 3.03 of this Agreement, as the same may be amended from time to time, and such term includes all schedules to that ODEM Grant Agreement; (1) "ODEM Special Account" means the account referred to in Section 2.02 (c) of this Agreement; (m "OPAM" means Office des Produits Agricoles du Mali; (n) "ORM" means Operation Riz Mopti, an op6ration de d6veloppement rural established within the Borrower's Ministry of Agriculture pursuant to Decree No. 34/PG-RM of the Borrower, dated March 25, 1972; (o) "ORM Grant Agreement" means the agreement to be entered into by the Borrower and ORM pursuant to Section 3.02 of this Agreement, as the same may be amended from time to time, and such term includes all schedules to that ORM Grant Agreement; (p) "ORM Special Account" means the account referred to in Section 2.02 (c) of this Agreement; (q) "Production Improvement Fund Account" means the account referred to in Section 2.15 of the Project Agreement; -4- (r) "Project Agreement" means the agreement between the Association and ORM, ODEM, IER and BNDA of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement and all agreements supple- mental to the Project Agreement; (s) "Project Area" means the area of operations of ODEM and ORM covering approximately 95,000 km2 and including the Inner Delta region of the Niger River in Mali; (t) "Project Preparation Advances" means the project preparation advances granted by the Association to the Borrower pursuant to an exchange of letters dated June 11 and August 31, 1982, April 16 and July 16, 1983 and May 24 and August 29, 1984 between the Borrower and the Association; (u) "Special Account" means either the ORM Special Account or the ODEM Special Account, depending on the context; (v) "SRCSS" means the Service de R6glementation et Contr8le des Semences S6lectionnees of IER charged with the quality control of seed production; and (w) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and BNDA pursuant to Section 3.04 of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions set forth or referred to in this Agreement, an amount in various currencies equivalent to nineteen million seven hundred thousand Special Drawing Rights (SDR 19,700,000). Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, 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 -5- and services re4uired for the Project and to be financed out of the proceeds of the Credit. (b) Promptly after the Effective Date, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and pay to itself the amount required to repay the principal amount of the Project Preparation Advances withdrawn and outstanding as of such date and to pay all unpaid charges thereon. The unwithdrawn balance of the authorized amount of the Project Preparation Advances shall thereupon be cancelled. (c) The Borrower shall, for the purposes of the Project, open and thereafter maintain two special accounts in CFAF, the ORM Special Account and the ODEM Special Account, in a financial institution on terms and conditions acceptable to the Associa- tion. Deposits into, and payments out of, the ORM Special Account and the ODEM Special Account shall be made in accordance with the provisions of Schedule 3 to this Agreement. Section 2.03. The Closing Date shall be September 30, 1991 or such later date as the Association shall establish. The Asso- ciation shall promptly notify the Borrower of such later date. Section 2.04. (a) The Borrower shall pay to the Association a commitment charge at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of the Credit not with- drawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agree- ment to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without re- strictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. Section 2,05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. -6- Section 2.06. Commitment charges and service charges shall be payable semiannually on January 15 and July 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each Jan- uary 15 and July 15 commencing July 15, 1995, and ending Jan- uary 15, 2035, each installment to and including the installment payable on January 15, 2005, 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 Republic of France is hereby specified for the purposes of Section 4.02 of the General Conditions. Section 2.09. The following persons are designated as repre- sentatives of the Borrower for the purposes of taking any action required or. permitted to be taken under the provisions of Sec- tion 2.02 of this Agreement and Article V of the General Condi- tions: (a) the managing director of ORM with respect to Cate- gories (1) to (6), both inclusive, of the table set forth in paragraph I of Schedule 1 to this Agreeent; (b) the managing director of OPEM with respect to Cate- gories (7) to (12), both inclusive, of the table set forth in paragraph 1 of Schedule 1 to this Agreement; and (c) the general manager of BNDA with respect to Category (13) of the table set forth in paragraph 1 of Schedule 1 to this Agreement. ARTICLE III Execution of the Project Section 3.01. The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end: (a) shall carry out Part E.5 of the Project through its Ministry of Agriculture; and -7- (b) shall cause: (i) DNGR and DNHE to cooperate with ODEM in carrying out Part B.1 of the Project; (ii) the Regional Fores- try Service of the Borrower's Ministry responsible for Natural Resources and Livestock to cooperate with ORM in carrying out Part F of the Project; (iii) the Regional Health Service of the Borrower to cooperate with ODEM and ORM in carrying out Part G of the Project; and (iv) DNAFLA to cooperate with ORM and ODEM in carrying out the literacy component of Part H.3 of the Project; all with due diligence and efficiency and in conformity with appropriate agricultural, forestry, education and health prac- tices, and shall provide or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purposes; and (c) without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, shall cause ORM, ODEM, IER and BNDA 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 ORM, ODEM, IER and BNDA to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. Section 3.02. The Borrower shall, out of the proceeds of the Credit: (a) make available the equivalent of four million six hundred thousand Special Drawing Rights (SDR 4,600,000) or such other amount or amounts as shall be allocated from time to time to Categories (1) to (5), both inclusive, of the table set forth in paragraph 1 of Schedule 1 to this Agreement to ORM; and (b) make available the equivalent of five hundred thousand Special Drawing Rights (SDR 500,000) or such other amount or amounts as shall be allocated from time to time to Category (6) of the table set forth in paragraph 1 of Schedule 1 to this Agreement to IER through ORM, both under the ORM Grant Agreement to be entered into between the Borrower and ORM under terms and conditions satisfactory to the Association and which shall include the obligation of ORM to make available to IER such amounts as shall be allocated from time to time to that Category (6). Section 3.03. The Borrower shall, out of the proceeds of the Credit make available the equivalent of nine million four hundred thousand Special Drawing Rights (SDR 9,400,000) or such other -8- amount or amounts as shall be allocated from time to time to Categories (7) to (12), both inclusive- of the table set forth in paragraph 1 of Schedule 1 to this Agreement to ODEM under the ODEM Grant Agreement to be entered into between the Borrower and ODEM under terms and conditions satisfactory to the Association. Section 3.04. The Borrower shall, out of the proceeds of the Credit relend the equivalen- of two hundred thousand Special Drawing Rights (SDR 200,000) or such other amount or amounts as shall be allocated from time to time to Category (13) of the table set forth in paragraph 1 of Schedule 1 to this Agreement to BNDA under a subsidiary loan agreement to be entered into between the Borrower and BNDA under terms and conditions which shall have been approved by the Association and which shall include: (a) repayment by BNDA to the Borrower of amounts so relent to BNDA over a period of 15 years, from the date a credit is provided by BNDA to a beneficiary; (b) payment of interest at a rate of not less than 3% per annum on the principal amount withdrawn and outstanding from time to time; (c) bearing by the Borrower of the risk of fluctuations in the values of currencies so relent to BNDA by the Borrower; and (d) equal sharing by the Borrower and BNDA of the risk of default on credits provided by BNDA out of the proceeds of the Subsidiary Loan Agreement. Section 3.05. The Borrower shall exercise its rights under the ORM Grant Agreement, the ODEM.Grant Agreement and the Sub- sidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the ORM Grant Agreement, the ODEM Grant Agreement or the Subsidiary Loan Agreement or any provision thereof. Section 3.06. The Borrower shall allow private traders to trade in paddy and rice throughout the Project Area. Section 3.07. The Borrower shall at all times the Project is executed, employ a managing director of ODEM, a managing director of ORM and a general manager of BNDA, each of whose qualifica- tions and experience shall be acceptable to the Association. -9- Section 3.08. The Borrower shall, with respect to loans made by BNDA pursuant to Part C of the Project, cause BNDA to apply the BNDA Lending Terms specified in Schedule 3 to the Project Agreement. Section 3,09. Except as the Association shall otherwise agree, procurement of the goods and works required for the Project and to be financed out of the proceeds of the Credit and employment of consultants to assist ORM and ODEM in carrying out the Project shall be governed by the provisions of Schedule 1 to the Project Agreement. Section 3.10. The Borrower and the Association hereby agree that ORM, ODEM, IER and BNDA, each insofar as applicable to it, shall carry out the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respec- tively) pursuant to Section 2.17 of the Project Agreement. Section 3.11. In order to carry out Part E.4 of the Project, the Borrower shall: (i) not later than June 30, 1989 review with the Association the results of the studies carried out under Parts E.1, 2 and 3 of the Project; and not later than June 30, 1990, on the basis of that review, draft a development plan for the Project Area, acceptable to the Association. ARTICLE IV Other Corenants Section 4.01. Without limitation or restriction upon its obligations under Section 3.01 and 3.02 of this Agreement, the Borrower shall, any year the reserve created pursuant to Section 2.08 of the Project Agreement falls short of financing ORM's total operating costs, promptly provide the necessary funds to cover ORM's operating costs in that year. Section 4.02. The Borrower shall: (a) permit ORM to purchase, on behalf of OPAM, paddy grown by farmers in the Project Area at the floor price determined each year by the Borrower; (b) cause OPAM to prefinance any purchase of paddy by ORM on behalf of OPAM; and - 10 (c) cause ORM to be reimbursed for costs incurred by it for transport, handling and milling of that paddy. Section 4.03. Except as the Association shall otherwise agree, the Borrower shall cause the Sfvarg rice mill, managed by ORM, to be operated only as long as such operation generates a net profit, as such term is defined in Section 2.13 of the Project Agreement. Section 4.04. Notwithstanding the obligations set forth in Section 3.08 of this Agreement, the Borrower shall, not later than April 30 of each year, review with BNDA and the Association the interest rates charged by BNDA and thereafter cause BNDA to adjust, within the limits of the prevailing monetary regulations, its interest rates so that they remain positive in real terms. 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) ORM, ODEM, IER or BNDA shall have failed to perform any of its obligations under the Project Agreement. (b) As a result of events which have occurred after the date of the Development Credit Agreement, an extraordinary situation shall have arisen which shall make it improbable that ORM, ODEM, IER or BNDA will be able to perform its obligations under the Project Agreement. (c) The legislation referred to in Section 1.02 (b), (j) or (n) shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of ORM, IER, ODEM or BNDA to perform any of its obligations under the Project Agreement. (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution, disestablish- ment, reorganization or reassignment of responsbilities of ORM, ODEM, IER or BNDA or for the suspension of the operations of one or all of them without prior consultation with, and agreement of, the Association. - 11 - (e) (i) Subject to subparagraph (ii) of this paragraph: (A) The right of the Borrower, ORM, ODEM, IER or BNDA to withdraw the proceeds of any grant or loan made to the Borrower, ORM, ODEM, IER or BNDA for the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terLas of the agreement providing therefor, or (B) any such loan shall have become due and payable prior to the agreed maturity thereof. (ii) Subparagraph (i) of this paragraph shall not apply if the Borrower establishes to the satis- faction of the Association that: (A) such suspen- sion, cancellation, termination or prematuring is not caused by the failure of the Borrower, ORM, ODEM, IER or BNDA to perform any of its obliga- tions under such agreement; and (B) adequate funds for the Project are available to the Borrower, ORM, ODEM, IER or BNDA from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement and of ORM, ODEM, IER or BNDA under the Project Agreement. Section 5.02. 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 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 Association to the Borrower, ORM, ODEM, IER and BNDA; (b) any event specified in paragraph (c) and (d) of Section 5.01 of this Agreement shall occur; and (c) the event specified in paragraph (e) (i) (B) of Section 5.01 of this Agreement shall occur, subject to the proviso of subparagraph (ii) of that paragraph. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Development - 12 - Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the Subsidiary Loan Agreement has been executed on behalf of the Borrower and BNDA; (b) the ORM Grant Agreement and the ODEM Grant Agreement have been executed on behalf of the Borrower and ORM, and the Borrower and ODEM, respectively; (c) ORM and ODEM shall have made arrangements, acceptable to the Association, on the modalities of their cooperation in carrying out the Project; (d) ORM and IER shall have made arrangements, acceptable to the Association, on the modalities of their cooperation in carrying out Parts D.2 and D.3 of the Project and the financing of Parts D.1 and D.4 of the Project; and (e) BNDA shall have established a branch office in S6varf. Section 6.02. The following are specified as additional matters, 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 Project Agreement has been duly authorized or ratified by ORM, ODEM, IER and BNDA, and is legally binding upon ORM, ODEM, IER and BNDA in accordance with its terms; (b) that the Subsidiary Loan Agreement has been duly autho- rized or ratified by the Borrower and BNDA and is legally binding upon the Borrower and BNDA in accordance with its terms; (c) that the ORM Grant Agreement and the ODEM Grant Agree- ment each have been duly authorized or ratified by the Borrower and ORM and ODEM, respectively, and are legally binding upon the Borrower and ORM and upon the Borrower and ODEM, respectively, in accordance with the terms of each; and (d) that the arrangements referred to in Sections 6.01 (c) and (d) of this Agreement have been duly authorized or ratified - 13 - by ORM, ODEM and IER, respectively, and are legally binding upon ORM, ODEM and IER, respectively, in accordance with their terms. Section 6.03. The date OC4 U,/9' is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 6.04. The obligations of the Borrower under Arti- cle IV of this Agreement and the provisions of paragraphs (d) and (e) of Section 5.01 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date 20 years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. Except as provided in Section 2.09 of this Agreement, the Minister of the Borrower responsible for finance 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 purpose of Section 11.01 of the General Conditions: For the Borrower: Ministry of Finance and Commerce Bamako Republic of Mali Cable address: Telex: MINIFINANCES 972559 Bamako 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 (iLJT) - 14 - 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. REPUBLIC OF MALI By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION RegiBnal Vice President Western Africa - 15 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed I. ORM (1) Civil works 500,000 100% (2) Vehicles and 700,000 100% equipment (3) Consultants, 1,900,000 100% training, fellowships, studies and audits (4) Operating costs, other than salaries: (a) general 1,100,000 80% up to operations SDR 660,000; 50% up to SDR 990,000; 20% thereafter (b) research at 200,000 95% Mopti by IER and ORM (5) Goods and services 200,000 95% for Part F of the Project, other than salaries - 16 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (6) Operating costs, 500,000 95% other than salaries, for IER'S operation at Kogoni and opera- tion of SRCSS II. ODEM (7) Civil works 700,000 100% (8) Vehicles and 1,300,000 100% equipment (9) Consultants, 4,300,000 100% training, fellowships, studies and audits (10) Operating costs, 2,200,000 35% other than salaries (11) Goods and services 300,000 95% for Part G of the Project, other than salaries (12) Goods and services 600,000 100% to be financed out of the Production Improvement Fund III. BNDA (13) Line of credit fer 200,000 20% storage wells under Part C.4 of the Project - 17 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed IV. Other (14) Refunding of 1,000,000 Amount due under Project Prepara- Section 2.02 (b) tion Advances of this Agreement (15) Unallocated 4,000,000 TOTAL 19,700,000 2. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made: (a) in respect of Category (6) before the Association shall have approved the first five-year work program and budget in accordance with Section 2.09 of the Project Agreement; (b) in respect of Category (12) in excess of the equivalent of SDR 300,000 unless the Association shall be satisfied that the amounts deposited in the Production Improvement Fund were util- ized for payments of eligible expenditures as defined in Sched- ule 2 to the Project Agreement; and (c) in respect of Category (13) unless: (i) BNDA has fur- nished the Association with evidence that aLll requirements of Section 2.16 of the Project Agreement have been fulfilled; and (ii) all conditions precedent to the first disbursement of the ODEM Loan have been fulfilled. - 18 - SCHEDULE 2 Description of the Project The objectives of the Project are to develop and protect the production potential of the Project Area and, in particular, to increase rice and livestock production with a view to increasing incomes of small farmers and herdsmen, to strengthen the institu- tional framework for agricultural development at the local level, to decontrol and rationalize the paddy and rice pricing and marketing system, to improve seed production, and to acquire greater knowledge of land-use patterns in the Project Area with a view to devising a strategy for optimal interaction between agri- cultural and livestock activities. The Project consists of the following Parts: Part A: Crop Production 1. Improvement of the system for controlled flooding of about 27,000 hectares through the construction and maintenance of secondary distribution channels and secondary partition and access dykes. 2. Development of an annual flood forecasting model for the Niger and Sankarani Rivers and establishment and operation of associated monitoring units. 3. Implementation of a land-use and water management plan toge- ther with a reallocation of land among farmers in the Project Area. Part B: Livestock Production 1. Construction of about 44 stock ponds and about 30 deep wells and associated storage wells. 2. Identification and establishment of about 30 APs for the protection and rational use of grazing lands and provision of assistance to livestock producer groups in the formal establishment of APs. 3. Establishment of an animal healtE program, strengthening of veterinary services and distribution and sale of animal feed, vaccines and mineral licks. - 19 - 4. Improvement of about 5,000 hectares of "bourgou" pasture, including the introduction and multiplication of forage plants. 5. Construction of four cattle markets at Douentza, Tenenkou, Konna and Korientze and the rehabilitation of 9 rural slaughter slabs. 6. Establishment of a fund to finance minor livestock produc- tion improvements. Part C: Credit 1. Provision of short- and medium-term credit to livestock owners for livestock fattening, improvement of market facilities and other commercially oriented activities. 2. Provision of medium-term credit to farmers and farmers' groups for the purchase of work oxen, soil tillage equipment and threshers. 3. Provision of medium-term credit to village blacksmiths for purchase of repair equipment. 4. Provision of long-term credit to APs for the construction of storage wells. Part D: Rice Seed Production and Applied Research 1. Rehabilitation of the foundation seed production farm operated by IER at Kogoni, including the overhaul of hydraulic structures, reconstruction of buildings and provision of field and laboratory equipment and vehicles for conducting farm tests. 2. Construction and equipping of a small rice seed multiplication farm operated by ORM at Mopti; 3. Support of IER's applied research programs at Kogoni and Mopti for agricultural equipment, varietal improvements, fertili- zation, weed control, dryland and fodder crops, farming systems and seed production. 4. Support of SRCSS through the construction and equipment of a laboratory at Kogoni and the provision of vehicles for field inspections of rice seed multiplication operations. - 20 - Part E: Studies and Demarcation 1. Studies and monitoring of agricultural, livestock and fishing production systems, as well as land and water use, soil quality and labor, and other factors of production and output in the Project Area, including a special study of the area to be affected by the Djenne Dam. 2. Aerial photo coverage and preparation of photomaps of the Project Area to improve the quality of data on village land use. 3. Demarcation and landmarking of grazing areas and cattle routes in the Project Area. 4. Preparation of a development plan for the Project Area based on the studies formulated under Parts E.1, 2 and 3 of the Project. 5. Study of private rice milling and of private paddy and rice marketing in Mali. Part F: Village Forestry Activities Starting of tree nurseries, provision of seedlings to villages and testing of tree varieties throughout the Project Area. Part G: Rural Health Care Execution of a rural health program, including the strengthening of health services, the provision of medicines, the development of primary health care and the training of health officers and villagers. Part H: Training and Extension 1. Construction and operation of a training center at Sgvar6. 2. Training at Sevare and abroad by ORM of its extension work- ers in matters of financial management, training methods, farm mechanization, paddy marketing, and tree care; and by ODEM of its extension workers in matters of financial management, training methods, livestock owner development and range and pasture management. - 21 - 3. Training of and provision of extension services to village leaders, producer groups and farmers in the Project Area by staff of ORM, ODEM, BNDA and the Department of Water Resources and Forestry of the Borrower's Ministry responsible for Natural Resources and Livestock in matters of literacy, agricultural credit, communal paddy marketing, rice seed production, pest control, care and feeding of draft animals and small livestock, conservation and use of crop by-products, collection and rational use of manure, handling of agricultural equipment, village tree planting, repair and maintenance of farm equipment, primary health care, and other forms of village development. 4. Training of about 28 village blacksmiths in repair and adaptation of farm equipment. The Project is expected to be completed by September 30, 1990. - 22 - SCHEDULE 3 Special Account 1. For the purposes of this Annex: (a) the term "Category" means a category of items to be financed out of the proceeds of the Credit as set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit allocated from time to time to Categories (1) to (11), both inclusive, in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means, in respect of ODEM, an amount in CFAF equivalent to SDR 210,000 and, in respect of ORM, an amount in CFAF equivalent to SDR 210,000, which is to be withdrawn from the Credit Account and deposited in the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Except as the Association shall otherwise agree, payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Association has received evidence satisfactory to the Association that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent with- drawals to replenish the Special Account may be made as follows: (a) On the basis of a request or requests by ORM or ODEM, as the case may be, for a deposit or deposits which add up to the aggregate amount of the Authorized Allocation, the Association shall, on behalf of ORM or ODEM, withdraw from the Credit Account and deposit in the Special Account such amount or amounts as the Borrower shall have requested. (b) ORM and ODEM shall furnish to the Association requests for replenishment of the Special Account at such intervals as the Association shall specify. On the basis of such requests, the Association shall withdraw from the Credit Account and deposit into the Special Account such amounts as shall be required to replenish the Special Account with amounts not exceeding the - 23 - amount of payments made out of the Special Account for eligible expenditures. Each such deposit shall be withdrawn by the Association from the Credit Account under the respective Categories (1) to (6), both inclusive, in respect of the ORM Special Account, and under Categories (7) to (11), both inclusive, in respect of the ODEM Special Account, and in the respective equivalent amounts, as shall have been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph 4 of this Schedule. 4. For each payment made by ORM or ODEM, as the case may be, out of the Special Account for which ORM or ODEM requests replenishment pursuant to paragraph 3 (b) of this Schedule, ORM or ODEM shall furnish to the Association, prior to or at the time of such request, such documents and other evidence as the Association shall reasonably request, showing that such payment was made for eligible expenditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into the Special Account shall be made by the Association when either of the following situations first arises: (i) the Association shall have determined that all further withdrawals should be made directly by ORM or ODEM from the Credit Account in accordance with the provisions of paragraph (a) of Section 2.02 of this Agreement; or (ii) when the total unwithdrawn amount of the Credit allocated to Categories (1) to (6), both inclusive, in respect of the ORM Special Account, and Categories (7) to (11), both inclusive, in respect of the ODEM Special Account for the Project, minus the amount of any outstanding qualified agreement to reimburse made by the Association and of any outstanding special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions with respect to the Project, shall be equal to the equivalent of twice the amount of the Authorized Allocation. (b) Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to Catego- ries (1) to (6), both inclusive, in respect of the ORM Special - 24 - Account, and Categories (7) to (11), both inclusive, in respect of the ODEM Special Account for the Project shall follow such procedures as the Association shall specify by notice to the Borrower and ORM or ODEM, as the case may be. Such further withdrawals shall be made only after and to the extent that the Association shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice have been or will be utilized in making payments for eligible expenditures. 6. If the Association shall have determined at any time that any payment out of the Special Account: (i) was made for any expenditure or in any amount not eligible pursuant to paragraph 2 of this Schedule, or (ii) was not justified by the evidence furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Association deposit into the Special Account (or, if the Association shall so request, refund to the Association) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. No further deposit by the Association into the Special Account shall be made until the Borrower has made such deposit or refund. 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 day of __ , 198 7. FOR SECRETARY