Ghana - Cocoa Rehabilitation Project : Credit 1854 - Credit Agreement - Conformed

OFFICIAL D0)1f MFNTEi} CREDIT NUMBER 1854 GH Development Credit Agreement (Cocoa Rehabilitation Project) between REPUBLIC OF GHANA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated 1988 CREDIT NUMBER 1854 GH DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated "/ ot"OLL , 1988, between REPUBLIC OF GHANA (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS (A) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Association to assist in the financing of the Project; (B) the Borrower intends to obtain from the African Develop- ment Fund (ADF) a loan (the ADF Loan) in an amount of twenty eight million Funds Units of Account (FUA 28,000,000) equivalent to assist in financing the Project on the terms and conditions set forth in an agreement (the ADF Loan Agreement) to be entered into between the Borrower and ADF; (C) the Borrower intends to obtain from the Arab Bank for Economic Development in Africa (BADEA) a loan (the BADEA Loan) equivalent to ten million dollars ($10,000,000) to assist in financing the Project on the terms and conditions set forth in an agreement (the BADEA Loan Agreement) to be entered into between the Borrower and BADEA; (D) the Borrower intends to obtain from the Government of the United Kingdom of Great Britain and Northern Ireland (U.K.) a grant (the U.K. Grant) in an amount equivalent to eleven million nine hundred thousand dollars ($11,900,000) to assist in financing the Project on the terms and conditions set forth in an agreement (the U.K. Grant Agreement) to be entered into between the Borrower and the U.K.; (E) Parts A through J of the Project will be carried out by Ghana Cocoa Board (COCOBOD) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to COCOBOD part of the proceeds of the Credit as provided in this Agreement; 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 and COCOBOD; 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 last sentence of Section 3.02 deleted (the General Condi- tions) constitute an integral part of this Agreement. Section 1.02. Unless the context otherwise requires, whenever used in this Agreement, 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 have the following meanings: (a) "Project Agreement" means the agreement between the Association and COCOBOD 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 Loan Agreement" means the agreement to be entered into between the Borrower and COCOBOD pursuant to Section 3.01 (b) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement; (c) "Special Accounts" means the accounts referred to in Section 2.02 (b) of this Agreement; (d) "DFR" means the Department of Feeder Roads in the Borrower's Ministry of Roads and Highways; (e) "CRIG" means the Cocoa Research Institute of Ghana; (f) "CSD" means the Cocoa Service Division within COCOBOD; (g) "PBC" means the Produce Buying Company, Ltd., a wholly owned subsidiary of COCOBOD; (h) "PPMR" means the Policy, Planning, Monitoring and Research Department within COCOBOD; (i) "CSSVD" means the Cocoa Swollen Shoot Virus Disease; and (j) "PNDC" means the Provisional National Defense Council of the Borrower. - 3 - 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 the Devel- opment Credit Agreement, an amount in various currencies equiva- lent to thirty-one million three hundred thousand Special Drawing Rights (SDR 31,300,000). 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 for expenditures made (or, if the Association shall so agree, to be made) in respect of the reason- able cost of goods and services required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Credit. (b) The Borrower shall open and maintain in dollars in a commercial bank on terms and conditions satisfactory to the Asso- ciation: (i) a special account (Special Account A) for the pur- poses of Parts A through J of the Project; and (ii) a special account (Special Account B) for the purposes of Part K of the Project. Deposits into, and payments out of, the Special Accounts shall be made in accordance with the provisions of Schedule 4 to this Agreement. Section 2.03. The Closing Date shall be June 30, 1994, or such later date as the Association shall establish. The Associa- tion 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 percent (1/2 of 1%) per annum on the principal amount of the Credit not withdrawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agreement 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 restric- tions of any kind imposed by, or in the territory of, the Bor- rower; 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. -4- Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one percent (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 March 15 and September 15 in each year. Section 2.07. (a) Subject to paragraphs (b) and (c) below, the Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each March 15 and September 15 commencing March 15, 1998, and ending September 15, 2027. Each installment to and including the installment payable on September 15, 2007, shall be one percent (1%) of such principal amount, and each installment thereafter shall be two percent (2%) of such principal amount. (b) Whenever: (i) the Borrower's gross national product per capita, as determined by the Association, shall have exceeded $790 in constant 1985 dollars for five consecutive years; and (ii) the Bank shall consider the Borrower creditworthy for Bank lending, the Association may, subsequent to the review and approval thereof by the Executive Directors of the Association and after due consideration by them of the development of the Borrower's economy, modify the terms of repayment of installments under paragraph (a) above by requiring the Borrower to repay twice the amount of each such installment not yet due until the principal amount of the Credit shall have been repaid. If so requested by the Borrower, the Association may revise such modification to include, in lieu of some or all of the increase in the amounts of such installments, the payment of interest at an annual rate agreed with the Association on the principal amount of the Credit outstanding from time to time, provided that, in the judgment of the Association, such revision shall not change the grant element obtained under the above-mentioned repayment modification. (c) If, at any time after a modification of terms pursuant to paragraph (b) above, the Association determines that the Bor- rower's economic condition has deteriorated significantly, the Association may, if so requested by the Borrower, further modify the terms of repayment to conform to the schedule of installments as provided in paragraph (a) above. 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. -5- ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement and, to this end, without any limitation or restriction upon any of its other obligations under the Development Credit Agreement: (i) shall carry out Part K of the Project through DFR with due diligence and efficiency and in conformity with appro- priate administrative, financial and engineering practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for Part K of the Project; and (ii) shall cause COCOBOD to perform in accordance with the provisions of the Project Agreement all the obligations of COCOBOD 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 COCOBOD to perform such obliga- tions, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall: (i) relend, out of the proceeds of the Credit, an amount not exceeding an amount equivalent of SDR 11,200,000 or such other amount or amounts as shall be allo- cated to Categories (1)(b), 2(b), 3(b), (5), (6)(b) and (7)(b) in Schedule 1 to the Development Credit Agreement to COCOBOD under a subsidiary loan agreement to be entered into between the Borrower and COCOBOD, under terms and conditions which shall have been approved by the Association and which shall include repayment over twenty years, including five years of grace, interest at the rate of 8.50% per annum and the foreign exchange risk to be borne by COCOBOD; and (ii) make available to COCOBOD, out of the proceeds of the Credit, an amount not exceeding the equivalent of SDR 12,160,000 or such other amount or amounts as shall be allo- cated to Categories (1)(a), (2)(a), (3)(a), (4), 6(a) and (7)(a) in said Schedule on a grant basis. (c) The Borrower shall exercise its rights under 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 Subsidiary Loan Agreement or any provision thereof. Section 3.02. Without any limitation upon any of its obliga- tions under Section 3.01 of this Agreement, the Borrower shall: -6- (a) open and maintain in a commercial bank an account in the name of DFR (the DFR Cocoa Account) on terms and conditions satis- factory to the Association to be used exclusively for the purpose of meeting expenditures under Part K of the Project not financed out of the proceeds of the Credit; and (b) in addition to the initial amount referred to in Section 7.01 (c) of this Agreement, deposit in the DFR Cocoa Account, promptly before each quarter starting October 1, 1988, the Bor- rower's contribution towards expenditures under Part K of the Project as set forth in DFR's annual budget for the following quarter. Section 3.03. (a) Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for Part K of the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this Agreement. (b) Except as the Association shall otherwise agree, pro- curement of the goods, works and consultants' services required for Parts A through J of 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 3.04. 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, respectively) in respect of Parts A through J of the Project shall be carried out by COCOBOD pursuant to Section 2.03 of the Project Agreement. Section 3.05. (a) The Borrower shall, not later than August 31 of each year, submit to COCOBOD and the Association for their respective approval DFR's proposed budget for its activities under Part K of the Project and DFR's annual work program, said program to be presented in such format as agreed upon by the Borrower and the Association. (b) Following approval of the annual work program by COCOBOD and the Association, the Borrower shall carry out the activities under Part K of the Project in accordance with said annual work program. -7- Section 3.06. The Borrower shall ensure that the extension work to be carried out in the Volta Region under the pilot opera- tion referred to in paragraph 6 (b) of Schedule 2 to the Project Agreement shall be carried out by the extension staff of its Ministry of Agriculture. Section 3.07. The Borrower shall take all measures required on its part to enable COCOBOD to reduce the cocoa farm input sub- sidies and to privatize the farm input system pursuant to para- graphs 14 and 15 of Schedule 2 to the Project Agreement. Section 3.08. The Borrower shall not make any personnel changes in the positions of (i) Chief Executive and Deputy Chief Executives of COCOBOD, and (ii) the Director of DFR without prior consultation with the Association. ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of Part K of the Project of the depart- ments or agencies of the Borrower responsible for carrying out Part K of the Project or any part thereof. (b) The Borrower shall: (i) have the records and accounts referred to in para- graph (a) of this Section, including those for the Special Accounts 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 six 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 said records, accounts and the audit thereof as the Association shall from time to time reasonably request. - 8 - (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of stateme,.nts of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Associa- tion has received the audit 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 c-xaiine such records; and (iv) ensure that such records and accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the proce- dures and internal controls involved in their prep- aration, can be relied upon to support the related withdrawals. ARTICLE V Other Covenants Section 5.01. The Borrower shall maintain the roads con- structed or rehabilitated under the Project and, from time to time promptly as needed, make all necessary repairs and renewals there- of, all in accordance with sound engineering, financial and admin- istrative practices. ARTICLE VI Remedies of the Association Section 6.01. Pursuant to Section 6.02 (h) of the General Conditions, the following additional events are specified: (a) COCOBOD shall have failed to perform any of its obliga- tions under the Project Agreement. - 9 - (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 COCOBOD will be able to perform its obligations under the Project Agreement. (c) The Ghana Cocoa Board Law, 1984, of the Borrower shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of COCOBOD to per- form 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 or disestablish- ment of COCOBOD or for the suspension of its operations. (e) (i) Subject to subparagraph (ii) of this paragraph: (A) the right of the Borrower to withdraw the proceeds of any grant or loan made to the Borrower for the financing of the Project (including the ADF Loan, the BADEA Loan and the U.K. Grant) shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms 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 satisfaction of the Association that: (A) such suspension, cancellation, termination or prematuring 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. 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 6.01 of this Agreement shall occur and shall continue for a period of - 10 - sixty days after notice thereof shall have been given by the Asso- ciation to the Borrower; (b) the events specified in paragraphs (b), (c) and (d) of Section 6.01 of this Agreement shall occur; and (c) the event specified in paragraph (e) (i) (B) of Section 6.01 of this Agreement shall occur, subject to the proviso of paragraph (e) (ii) of that Section. 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 Subsidiary Loan Agreement has been executed on behalf of the Borrower and COCOBOD; (b) all conditions precedent to the ADF Loan Agreement, the BADEA Loan Agreement and the U.K. Grant Agreement (other than the effectiveness of this Agreement) have been fulfilled; (c) the Borrower has deposited into the DFR Cocoa Account an initial amount in Cedis equivalent to one million dollars ($1,000,000); (d) the Borrower has furnished to the Association the cocoa producer price arrangements satisfactory to the Association; (e) COCOBOD has submitted to the Association its audited accounts for fiscal years 1985 and 1986; (f) COCOBOD has appointed suitable persons with experience and qualifications acceptable to the Association for the following positions: (i) the Executive Director of CRIG; (ii) the Deputy Chief Executive for Finance and Administration; (iii) the Deputy Executive Director (Ope:ations) of CSD; (iv) the Technical Manager for Extension; (v) the Haulage Manager of PBC; (vi) Head of the Management Information System and Data Bank of PPMR; and (vii) the Head of M&E Units in COCOBOD headquarters. - 11 - Section 7.02. 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 furn- ished to the Association: (a) that the Project Agreement has been duly authorized or ratified by COCOBOD, and is legally binding upon COCOBOD in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly authorized or ratified by the Borrower and COCOBOD and is legally binding upon the Borrower and COCOBOD in accordance with its terms. Section 7.03. The date ninety (90) days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VIII Representative of the Borrower; Addresses Section 8.01. The PNDC 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. Section 8.02. The following addresses Ere specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: PNDC Secretary for Finance and Economic Planning Ministry of Finance and Economic Planning P.O. Box M40 Accra, Ghana Cable address: Telex: ECONOMICON 2205 MIFAEP GH Accra - 12 - 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 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 By ki1I Ex c O1 o Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By 1E V ~ A c Regional Vice President 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) Civil works: 100% of foreign expenditures and 70% of local expenditures (a) under Parts A 630,000 through H of the Project (b) under Part J 310,000 of the Project (c) under Lart K 5,780,000 of the Project (2) Equipment and 100% of foreign materials: expenditures and 70% of local expenditures (a) under Parts A 940,000 through H of the Project (b) under Part I 470,000 of the Project - 14 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (c) under Fart J 1,720,000 of the Project (d) under Part K 80,000 of the Project (3) Vehicles: 100% of foreign expenditures and 75% of local expenditures (a) under Parts A 860,000 through H of the Project (b) under Part I 390,000 of the Project (c) under Part J 1,560,000 of the Project (4) CSSVD incentive 3,910,000 50% payments (5) Farm inputs 5,310,000 100% of foreign expenditures and 90%.of local expenditures (6) Consultants' 100% services and training: (a) under Parts A 3,750,000 through H of the Project - 15 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (b) under Part J 390,000 of the Project (c) under Part K 630,000 of the Project (7) Operating costs: 100% of foreign expenditures and 40% of local expenditures (a) under Parts A 700,000 through H of the Project (b) under Part J 80,000 of the Project (c) under Part K 630,000 of the Project (8) Unallocated 3,160,000 TOTAL 31.300.000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower; (b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower; (c) the term "operating costs" means those costs normally referred to as recurrent expenditures, excluding salaries and allowances for Project staff, but including: - 16 - (i) cost of operating and maintaining vehicles, equip- ment, buildings and houses required for the Project; (ii) office running expenses, cost of stationary and supplies, library acquisitions and training materials; (iii) cost of maintaining the seed gardens and the irri- gation system; and (iv) such other Project related costs as the Borrower and the Association may from time to time deter- mine; and (d) the term "CSSVD incentive payments" means the payments by COCOBOD to farmers under Part E of the Project who are prepared to cut out CSSVD infested cocoa stock and receive cutting out and replanting grants in accordance with the program referred to in paragraph 2 of Schedule 2 to the Project Agreement. 3. Notwithstanding the provisions of paragraph 1 above, no with- drawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agreement except that withdrawals in an aggregate amount not ex- ceeding an amount equivalent to: (i) SDR 320,000 may be made in respect of Category (1); and (ii) SDR 200,000 may be made in respect of Category (6) (a) and (6) (b), on account of payments made for expenditures before that date but after January 1, 1988; (b) payments for expenditures under Categories (1) (b), (2) (c), (3) (c), and (7)(b) after the aggregate of the proceeds of the Credit withdrawn from the Credit Account under these Catego- ries and the total amount of commitments entered into to pay amounts to the Borrower or others in respect of expenditures to be financed out of the proceeds of the Credit allocated to the said Categories shall have reached the equivalent of SDR 2,080,000, unless: (i) the Association shall be satisfied, after an exchange of views during the mid-term review referred to in paragraph 3 of Schedule 2 to the Project Agreement, with the progress achieved by COCOBOD in carrying out Part J of the Project; and (ii) the Association and COCOBOD shall have reached agreement, in the con- text of the mid-term review, on the future strategy for the inter- nal cocoa marketing system; and - 17 - (c) payments made for expenditures under Categories (1) (c), (2) (d) , (6) (c) and (7) (c) unless: (i) COCOBOD has appointed a roads engineer in accordance with the provisions set forth in Section II of Schedule 1 to the Project Agreement; and (ii) the Borrower has appointed three training instructors, one procure- ment/contract administrator and three contract supervisors, all with qualifications and terms and conditions of employment satis- factory to the Association. - 18 - SCHEDULE 2 Description of the Project The objectives of the Project. are: (i) to support the Bor- rower's policy reforms in the cocoa sector; and (ii) to increase cocoa production. 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: Reorganization of COCOBOD's Cocoa Services Division (CSD) Support of CSD's reorganization through the preparation of a comprehensive manpower development program and staff training. Part B: Extension Services Strengthening of the extension services for cocoa farmers through: (1) the renovation and re-equipping of: (a) the Bunso Cocoa College; (b) the Farmer Training Centers; and (c) 150 houses for region as well as district staff and senior technical assistants; (2) the acquisition of equipment, including vehicles, motorcycles and a bus, for field staff and trainers; and (3) the provision of training and consultants' services. Part C: Production Technology Adoption of improved production technologies in rehabilitat- ing existing cocoa farms and launching a 10-year planting/replant- ing program of new cocoa stock. Part D: Seed Production and Distribution (1) Increase of seed production in existing seed gardens through the provision of equipment, materials and inputs, vehicles and motorcycles. - 19 - (2) Establishment and operation of a new cocoa station and 80 ha of seed gardens in the Western Region. (3) Introduction of irrigated seed pod production on a pilot basis. (4) Provision of training (in-service and abroad) for seed production staff. Part E: Disease Control (1) Cutting out and replanting of cocoa stock in CSSVD infected areas. (2) Strengthening the CSSVD control program through the provision of equipment, vehicles and consultants' services. Part F: Research Strengthening of CRIG's research capabilities through: (1) the preparation and implementation of a comprehensive staff development program, including training abroad and in-service training; (2) the rehabilitation and upgrading of CRIG's facilities, including acquisition of equipment and vehicles; and (3) the establishment and operation of a Farming Systems Research Unit. Part G: Monitoring and Evaluation Establishment and operation of monitoring and evaluation units within COCOBOD. Part H: Studies (1) A cocoa survey updating information on the tree stock. (2) A study of the socio-economic aspects of cocoa farming. (3) A review of COCOBOD's organizational structure. - 20 - Part I: Farm Input Supply (1) Acquisition of farm inputs for the cocoa sector. (2) A program for the gradual privatization of farm input supply and distribution. Part J: Internal Marketing Improvements to the internal marketing system through: (1) the expansion and rehabilitation of storage and transportation facilities; (2) the acquisition of equipment and materials; (3) the provision of training in the areas of accounting, administration, management, and vehicle and plant operation and maintenance; (4) the preparation of a feasibility study on the use of semi-mechanized methods.of produce handling; and (5) the introduction and operation of an appropriate cost accounting system. Part K: Road Program Upgrading of the road network subjected to cocoa haulage traffic through: (1) a remedial spot improvement program covering about 3000 km of roads and bridges; (2) a routine and recurrent road maintenance program; (3) the construction of about 60 km of new roads and bridges; and (4) the acquisition of equipment, materials and vehicles for field operations and site supervision. The Project is expected to be completed by June 30, 1993. - 21 - SCHEDULE 3 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: International Competitive Bidding 1. Except as provided in Part C hereof, works shall be procured under contracts awarded in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in May 1985 (the Guidelines). 2. To the extent practicable, contracts shall be grouped in bid packages estimated to cost the equivalent of $100,000 or more each. Part B: Preference for Domestic Contractors In the procurement of works in accordance with the procedures described in Part A.1 hereof, the Borrower may grant a margin of preference to domestic contractors in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraph 5 of Appendix 2 thereto. Part C: Other Procurement Procedures 1. Civil works and vehicles estimated to cost less th,n the equivalent of $100,000 per contract may be procured under con- tracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association. 2. Items or groups of items estimated to cost less than the equivalent of $60,000 per contract, up to an aggregate amount not to exceed the equivalent of $3,000,000, may be procured under contracts awarded on the basis of comparison of price quotations solicited from a list of at least three suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Association. - 22 - Part D: Review by the Association of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract estimated to cost the equivalent of $200,000 or more, the procedures set forth in para- graphs 2 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account B, such procedures shall be modified to ensure that the two conformed copies of the contract required to be furnished to the Association pursuant to said paragraph 2 (d) shall be furn- ished to the Association prior to the making of the first payment out of the Special Account B in respect of such contract. (b) With respect to each contract not governed by the pre- ceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account B, such procedures shall be modified to ensure that the two conformed copies of the contract together with the other information required to be furnished to the Association pursuant to said para- graph 3 shall be furnished to the Association as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 3 to this Agreement. (c) The provisions of the preceding subparagraphs (a) and (b) shall not apply to contracts on account of which the Associa- tion has authorized withdrawals from the Credit Account on the basis of statements of expenditure. Such contracts shall be retained in accordance with Section 4.01 (c) (ii) of this Agreement. 2. The figure of 15% is hereby specified for purposes of para- graph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants In order to assist the Borrower in carrying out Part K of the Project, the Borrower shall employ engineering, training and con- tract administration consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to - 23 - the Association. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Association on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" pub- lished by the Bank in August 1981. - 24 - SCHEDULE 4 Special Accounts 1. For the purposes of this Schedule: (a) the term "eligible Categories" means: (i) in the case of Special Account A, Categories (1) (a) and (b), (2) (a), (b) and (c), (3), (4), (5), (6) (a) and (b), and (7) (a) and (b) set forth in the table in paragraph 1 of Schedule 1 to this Agreement; and (ii) in the case of Special Account B, Categories (1) (c), (2) (d), (6) (c) and (7) (c) set forth in said table; (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 accord- ance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount, to be withdrawn from the Credit Account and deposited into each of the Special Accounts pursuant to paragraph 3 (a) of this Schedule, equivalent to $200,000 in the case of Special Account A, and equivalent to $500,000 in the case of Special Account B. 2. Except as the Association shall otherwise agree, payments out of any 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 a Special Account has been duly opened, withdrawals of the corresponding Authorized Allocation and subsequent withdrawals to replenish the respective 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 concerned, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into the respective Special Account such amount or amounts as the Borrower shall have requested. (b) The Borrower shall furnish to the Association requests for replenishment of such 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 such Special Account such amounts as shall be required to - 25 - replenish such Special Account with amounts not exceeding the amount of payments made out of such Special Account for eligible expenditures, provided, however, that the Association may refrain from making deposits into: (i) Special Account A upon failure by COCOBOD to meet its obligations pursuant to Section 2.01 (b) of the Project Agreement; and (ii) Special Account B upon failure by the Borrower to make the quarterly payments referred to in Section 3.02 of this Agreement. All such deposits shall be withdrawn by the Association from the Credit Account under the respective eli- gible 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 any Special Account for whi3h 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 documents and other evidence as the Association shall reasonably request, showing that such payment was made for eligible expen- ditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into any 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 by the Borrower directly from the Credit Account in accordance with the provisions of Article V of the General Condi- tions and paragraph (a) of Section 2.02 of this Agreement; or (ii) the total unwithdrawn amount of the Credit allo- cated to the eligible Categories, less 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 aggregate Authorized Allocations. (b) Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to the eligi- ble Categories shall follow such procedures as the Association shall specify by notice to the Borrower. Such further withdrawals - 26 - shall be made only after and to the extent that the Association shall have been satisfied that all such amounts remaining on deposit in any Special Account as of the date of such notice 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 a 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 furn- ished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Association, deposit into the said 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 any of the Special Accounts shall be made until the Borrower has made such deposit or refund. (b) If the Association shall have determined at any time that any amount outstanding in a Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Association, refund to the Association such outstanding amount for crediting to the Credit Account. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Development Association. FOR SECRETARY