Ghana - Industrial Sector Adjustment Credit : Credit 1672 - Credit Agreement - 2 - Conformed

CREDIT NUMBER 1672 GB OFFICIAL DOCUMENTS Development Credit Agreement (Industrial Sector Adjustment Credit) between REPUBLIC OF GHANA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated ,1986 CREDIT NUMBER 1672 GH DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated ,AA 1-7 , 1986, between REPUBLIC OF GHANA (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS (A) the Association has received a letter dated February 21, 1986, from the Borrower describing a program of policies, goals and actions designed to achieve an adjustment of the Borrower's industrial sector (the Program), declaring the Borrower's commitment to the execution of the Program, and requesting assistance from the Association in the financing of urgently needed industrial inputs required during such execution; (B) the Borrower, having committed itself to the execution of the Program and as part of the Program, having undertaken to carry out the Project described in Schedule 2 to this Agreement, has requested the Association to assist in the financing of the Project; (C) the Borrower has also requested the Association in its capacity as Administrator (the Administrator) of the Special Facility for Sub-Saharan Africa (the African Facility) to provide additional assistance toward the financing of the Project and by an agreement of even date herewith between the Borrower and the Administrator (the African Facility Credit Agreement), the Administrator is agreeing to provide such assistance in an aggre- gate principal amount equivalent to twenty-two million five hundred thousand Special Drawing Rights (SDR 22,500,000) (the African Facility Credit); (D) Parts A, B and C (1) of the Project will be carried out by Bank of Ghana in consultation with the Borrower and, for this purpose, the Borrower will make available to the Bank of Ghana part of the proceeds of the Credit as provided in this Agreement; (E) Parts C (2) and D of the Project will be carried out by the Borrower; 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 set forth in this Agreement and in the Project Agreement of even date herewith between the Association, the Administrator and the Bank of Ghana; NOW THEREFORE the parties hereto hereby agree as follows: -2- ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Develop- ment Credit Agreements" of the Association, dated January 1, 1985, with the modifications set forth below (the General Conditions) constitute an integral part of this Agreement: (a) Section 2.01, paragraph 9, shall be modified by adding next after the words "the Borrower and the Association" occurring therein the words "and shall include the industrial imports that may be financed out of the proceeds of the African Facility Credit pursuant to the provisions of Schedule 1 to the African Facility Credit Agreement"; (b) Section 9.06 (c) shall be modified to read: "(c) 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 Association shall reasonably request, on the execution of the program referred to in the Preamble to the Development Credit Agreement, the performance by the Borrower and the Association of their respective obligations under the Development Credit Agreement and the accomplish- ment of the purposes of the Credit."; (c) the last sentence of Section 3.02 is deleted; and (d) Section 6.02 (a) (ii) stall be modified to read: "(ii) under any other development credit agreement between the Borrower and the Association or under any African Facility Credit Agreement between the Borrower and the Association as Administrator of the African Facility," Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein - 3 - set forth and the following additional terms have the following meanings: (a) "Project Agreement" means the agreement between the Association, the Administrator and the Bank of Ghana of even date herewith, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the Project Agreement; (b) "Subsidiary Financing and Administration Agreement" means the agreement to be entered into between the Borrower and the Bank of Ghana pursuxant to Section 3.01 (c) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Financing and Adminis- tration Agreement; (c) "Special Account" means the account referred to in Sec- tion 2.02 (b) of this Agreement; (d) "Project Preparation Advance" means the project preparation advance granted by the Association pursuant to an exchange of letters dated July 24, 1985 and September 13, 1985 between the Borrower and the Bank; (e) "Investment Code" means the Investment Code, 1985 (P.N.D.C.L. 116) of the Borrower; (f) "SITC" means the United Nations Standard International Trade Classification, 1974 Revision (SITC, Rev. 2), published in Commodity Indexes for the Standard International Trade Classi- fication, Revised, Statistical Papers, Series M, No. 34/Rev. 2 (1975); and (g) "RP Enterprise" and "RP" have the meanings assigned to them in Section 1.01 of the Project Agreement. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Bor- rower, on the terms and conditions set forth or referred to in the Development Credit Agreement, an amount in various currencies equivalent to twenty-five million seven hundred thousand Special Drawing Rights (SDR 25,700,000). 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 Asso- ciation: (i) for expenditures made (or, if the Association shall Fo 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; and (ii) amounts paid (or, if the Association shall so agree, amounts to be paid) on account of withdrawals by an RP Enterprise under a Sub-loan to meet the reasonable cost of goods and services required for the RP in respect of which the withdrawal is requested. (b) The Borrower shall, for the purposes of the Project, open and maintain in dollars a special account in a commercial bank on terms and conditions satisfactory to the Association. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 3 to this Agreement. (c) 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 Advance withdrawn and outstanding as of such date and to pay all unpaid charges thereon. The unwithdrawn balance of the authorized amount of the Project Preparation Advance shall thereupon be cancelled. Section 2.03. The Closing Date shall be December 31, 1990 or such later date as the Association shall establish. The Association 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 -5- 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. Section 2.06. Commitment charges and service charges shall be payable semiannually on February 15 and August 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each February 15 and August 15 commencing August 15, 1996, and ending February 15, 2036. Each installment to and including the install- ment payable on February 15, 2006 shall be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter shall be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. Section 2.09. The Bank of Ghana is designated as representa- tive 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. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objecti es of the Project as set forth in Schedule 2 to this Agreement and, to this end, shall carry out Parts C (2) and D of the Project with due diligence and efficiency and in conformity with appropriate administrative and financial practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the said Parts of the Project. -6- (b) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause the Bank of Ghana to perform in accordance with the provisions of the Project Agreement all the obligations of the Bank of Ghana therein set forth, shall take and cause to be taken all action, including the provision of funds, facili- ties, services and other resources, necessary or appropriate to enable the Bank of Ghana 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 out of the proceeds of the Credit make available to the Bank of Ghana an amount or amounts equi- valent to $26,550,000 or such other amount or amounts as shall be allocated to Categories (1) through (4) in Schedule 1 to this Agreement under a subsidiary financing and administration agree- ment to be entered into between the Borrower and the Bank of Ghana, under terms and conditions which shall have been approved by the Association. (d) The Borrower shall exercise its rights under the Sub- sidiary Financing and Administration 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 Asso- ciation shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Financing and Administra- tion Agreement or any provision thereof. (e) The Borrower shall prepare an annual import program in each year for its industrial sector according to the principles described in Schedule 2 to the Project Agreement. (f) In addition to the Borrower's obligations which are set forth in the preceding paragraphs of this Section, the Borrower and the Association shall from time to time, at the request of either party, exchange views on the progress achieved in carrying out the Program and the actions specified in Schedule 4 to this Agreement. (g) Prior to the exchange of views referred to in para- graph 5 (a) of Schedule 1 to this Agreement, the Borrower shall furnish to the Association for its review and comment a report on the progress achieved in carrying out the Program, in such detail as the Association shall reasonably request. -7- Section 3.02. Except as the Association shall otherwise agree, procurement of the goods and consultants' services re- quired for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 1 to the Project Agreement. Section 3.03. The Borrower and the Association hereby agree that 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) in respect of Parts A, B and C (1) of the Project shall be carried out by the Bank of Ghana pursuant to Section 2.03 of the Project Agreement. Section 3.04. (a) Prior to carrying out each study included in Part D of the Project, the Borrower shall furnish to the Asso- ciation for its review and comment the terms of reference, time- table and budget for each such study. (b) Upon completion of each such study, the Borrower shall immediately furnish the Association with a copy thereof and thereafter, consult with the Association on the findings and recommendations of the study. Section 3.05. The Borrower shall: (i) exchange views with the Association on the plans for reorganizing the departments and other agencies of the Borrower which receive technical assistance under Part C (2) of the Project; and (ii) ensure that the Central Bureau of Statistics shall complete an industrial census by December 31, 1987 or such other date as may be agreed upon between the Borrower and the Association, which census shall be carried out under terms of reference agreed with the Association. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained separate records and accounts adequate to reflect in -8- accordance with sound accounting practices the operations, resources and expenditures in respect of the Project of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. (b) The Borrower shall: (i) have the accounts referred to in paragraph (a) of this Section including the Special Account for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association, as soon as available, but in any case not later than four months after the end of each such year, a certified copy of 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 the said accounts and the audit thereof and said records as the Association shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account are made on the basis of statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, separate records and accounts reflecting such expenditures; (ii) retain, until at l1ast one year after the Association has received the audit report for the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Association's representatives to examine such records; and -9- (iv) ensure that such separate accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report thereof contains, in respect of such separate accounts, a separate opinion by said auditors as to whether the pro- ceeds of the Credit withdrawn in respect of such expenditures were used for the purposes for which they were provided. ARTICLE V Remedies of the Association Section 5.01. Pursuant to Section 6.02 (h) of the General Conditions, the following additional events are specified: (a) the Bank of Ghana 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 the Program can be carried out or that the Bank of Ghana will be able to perform its obligations under the Project Agreement. (c) the Bank of Ghana Act, 1963 (Act 182) shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of the Bank of Ghana to perform any of its obligations under the Project Agreement; and (d) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of the Bank of Ghana or for the suspension of its operations. Section 5.02. Pursuant to Section 7.01 (d) of the General Conditions, the following additional events are specified: (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; and (b) the events specified in paragraphs (c) and (d) of Section 5.01 of this Agreement shall occur. - 10 - ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the Subsidiary Financing and Administration Agreement shall have been executed on behalf of the Borrower and the Bank of Ghana; and (b) an annual import program for the industrial sector for 1986, acceptable to the Association, shall have been prepared and approved by the Borrower. 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 the Bank of Ghana, and is legally binding upon the Bank of Ghana in accordance with its terms; (b) that the Subsidiary Financing and Administration Agreement has been duly authorized or ratified by the Borrower and the Bank of Ghana and is legally binding upon the Borrower and the Bank of Ghana in accordance with its terms. Section 6.03. The date 90 days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Provisional National Defense Council Secretary for Finance and Economic Planning of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. - 11 - Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: The Provisional National Defence Council Secretary for Finance and Economic Planning Ministry of Finance and Economic Planning P.O. Box M 40 Accra, Ghana Cable address: Telex: ECONOMICOM 2205 MIFA EPGH Accra 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) - 12 - IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF GHANA Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By 4 - SRegional Vice President Western Africa - 13 - 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 (1) Industrial raw 13,500,000 100% of foreign materials, spare expenditures parts and related inputs under Part A of the Project (2) Goods and services 9,000,000 100% of foreign financed out of expenditures the proceeds of Sub-loans under Part B of the Project (3) Consultants' ser- 1,640,000 100% vices under Part C of the Project (4) Equipment and 850,000 100% of foreign vehicles under expenditures Part C of the Project (5) Studies under 450,000 100% Part D of the Project - 14 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (6) Refunding of 260,000 Amount due Project Prepara- pursuant to tion Advance Section 2.02 (c) of this Agree- ment. TOTAL 25,700,000 2. For the purposes of this Schedule the term "foreign expendi- tures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower. 3. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made: (a) in respect of payments made for expenditures prior to the date of this Agreement except that withdrawals, in an aggre- gate amount not exceeding the equivalent of SDR 2,500,000 may be made in respect of Categories (1), (2) and (4) on account of payments made for expenditures before that date but after Octo- ber 1, 1985; (b) in respect of a Sub-loan unless: (i) the Sub-loan has been approved by the Association, or (ii) the Sub-loan is a free-limit Sub-loan for which the Association has au :horized withdrawals from the Credit Account; or (c) except as the Borrower and the Association shall other- wise agree, on account of expenditures by an RP Enterprise in respect of a Sub-loan subject to the Association's approval if such expenditures shall have been made more than ninety days prior to the date on which the Association shall have received in respect of such Sub-loan the application and information required by Part C (1) (b) of Schedule 2 to the Project Agreement or, in respect of a free-limit Sub-loan, more than ninety days prior to the date on which the Association shall have received in respect - 15 - of such free-limit Sub-loan the request and information required by Part C (1) (c) of Schedule 2 to the Project Agreement. 4. Notwithstanding the provisions of paragraph 1 above and except and to the extent as the Association shall otherwise agree, no withdrawals shall be made under Category (1) in respect of: (a) expenditures for goods included in the following SITC groups or sub-groups: Group Sub-group Description of Items 112 - Alcoholic beverages 121 - Tobacco, unmanufactured tobacco refuse 122 - Tobacco, manufactured 667 - Pearls, precious and semi- precious stones, unworked or worked 688 - Uranium depleted in U235 and thorium, and their alloys, unwrought or wrought, and articles therefor, n.e.s.; waste and scrap of uranium depleted in U235 and of thorium 718 718.7 Nuclear reactors, and parts thereof, n.e.s. 897 897.3 Jewelry of gold, silver or platinum group metals (except watches and watch- cases) and goldsmiths' or silversmiths' wares (in- cluding set gems) - 971.0 Gold, non-monetary (ex- cluding gold ores and concentrates) - 16 - (b) expenditures for crude oil; (c) expenditures for products which are on the list of items under price control and the list of items under distribu- tion control and raw materials for such products, other than ethical drugs, matches, matchetes and textiles. For the pu rposes of this paragraph, the term "products under price control" means any product for which the manufacturer is required to obtain prior authorization from the Price and Income Board or any successor Government Agency in order to increase the selling price of the said product. (d) expenditures for goods supplied under a contract which any national or international financing institution or agency other than the Association shall have financed or agreed to finance; (e) expenditures for goods financed from export retentioi. funds; (f) expenditures for goods intended for a military or para- military purpose or for private or public luxury consumption; and (g) expenditures for foodstuffs. 5. No withdrawal shall be made and no commitment shall be entered into: (a) under Category (1) to pay amounts to the Bor- rower or others in respect of expenditures to be financed out of the proceeds of the Credit after: (i) the amount of the proceeds withdrawn or committed under said Category (1), and (ii) the amount of the proceeds withdrawn or committed under Category (1) of the table set forth in paragraph (1) of Schedule 1 to the African Facility Credit Agreement, shall have amounted in the aggregate to SDR 22,500,000 unless the Association shall be satisfied, after the exchange of views described in Section 3.01 (f) of this Agreement (A) with the progress achieved by the Borrower in carrying out the Program, and (B) that the actions described in Schedule 4 to this Agree- ment have been taken; and - 17 - (b) under Category (2) until the Association has received evidence satisfactory to it that: (i) the Bank of Ghana has employed (A) the firm of consultants referred to in Section II of Schedule 1 to the Project Agreement, and (B) the following experts: two economists, one industrial engineer, two financial analysts, and one market analyst; and (ii) the experts referred to in paragraph (B) above have taken up their positions in the Development Finance Department of the Bank of Ghana. - 18 - SCHEDULE 2 Description of the Project The objective of the Project is to assist the Borrower in carrying out the first phase (1986-1988) of its Program for medium term industrial adjustment. The Project consists of the following Parts, subject to such modifications thereof as the Borrower and the Association may agree upon from time to time to achieve such objectives: Part A: Industrial imports Financing of importation of industrial raw materials, spare parts and related inputs. Part B: Rehabilitation of Existing Industrial Enterprises Financing of eligible rehabilitation investment proposals (RPs). Part C: Institutional Assistance (1) Strengthening of the Bank of Ghana through the provision of technical assistance and consulting services, training, equipment and vehicles. (2) Strengthening of specified ministries and agencies of the Borrower (as determined by the Borrower and the Association) through the provision of technical assistance and consulting services, training, equipment and vehicles. Part D: Studies Carrying out of studies to develop: (a) policy options in the areas of export incentives and procedures, protection regime, indirect taxes, import of adjust- ment policies on prices and income, and guidelines for implement- ing the Investment Code; (b) rehabilitation/restructuring plans for industrial enterprises, particularly state-owned enterprises; and - 19 - (c) strategies for restructuring of industrial subsectors. The Project is expected to be completed by June 30, 1990. - 20 - SCHEDULE 3 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means the Categories set forth in the table in paragraph I of Schedule 1 to this Agree- ment; (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 the eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount of $5,000,000 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 it that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the Special Account may be made as follows: (a) On the basis of a request or requests by the Borrower for a deposit or deposits which add up to the aggregate amount of the Authorized Allocation, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit in the Special Account such amount or amounts as the Borrower shall have requested. (b) The Borrower 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 amount of payments made out of the Special Account for eligible - 21 - expenditures. All such deposits shall be withdrawn by the Asso- ciation from the Credit Account under the respective eligible Categories, 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 the Borrower out of the Special Account for which the Borrower requests replenishment pursuant to paragraph 3 (b) of this Schedule, the Borrower shall furnish to the Association, prior to or at the time of such request, such 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 b& 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 the Borrower from the Credit Account in accor- dance with the provisions of paragraph (a) of Section 2.02 of this Agreement; or (ii) the total unwithdrawn amount of the Credit allo- cated to the eligible Categories, minus the amount 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 the eli- gible Categories of the Project shall follow such procedures as the Association shall specify by notice to the Borrower. 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. (a) 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 - 22 - 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. (b) If the Association shall have d'etermined at any time that any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from tLhe Association, refund to the Association such outstanding amount for crediting to the Credit Account. - 23 - SCHEDULE 4 Conditions of Second Tranche Release List of actions to be taken pursuant to paragraph 5 (a) of Schedule 1 to this Agreement: (1) the Borrower shall have approved an industrial import program acceptable to the Association for 1987; (2) the Borrower shall have approved a phased program of import liberalization acceptable to the Association; and (3) the Borrower shall have implemented export promotion measures in 1986 acceptable to the Association. 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 . FOR SECRETARY