Conformed Copy - C1995 - Socio-Economic Development Support Project - Development Credit Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 1995 GUI (Socio-Economic Development Support Project) between REPUBLIC OF GUINEA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated April 19, 1989 CREDIT NUMBER 1995 GUI DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated April 19, 1989, between the REPUBLIC OF GUINEA (the Borrower) and the 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 Development Fund (AfDF) a grant under the Technical Assistance Fund (the AfDF/TAF Grant) in an amount equivalent to about $1,850,000 to assist in financing the Project on the terms and conditions set forth in an agreement (the AfDF/TAF Grant Agreement) to be entered into between the Borrower and AfDF; (C) the Borrower intends to obtain from the Canadian Page 2 International Development Agency (CIDA) a grant (the CIDA Grant) in an amount equivalent to $840,000 to assist in financing the Project on the terms and conditions set forth in an agreement (the CIDA Grant Agreement) to be entered into between the Borrower and CIDA; (D) the Association has received a letter from the Borrower, dated June 4, 1988 (the Declaration of Development Policy), describing a program of objectives, policies and actions designed to achieve structural adjustment of the Borrower's economy (the Structural Adjustment Program), including measures dealing with the social dimensions of such adjustment, as described in paragraphs 100 to 107 of said Declaration; 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; NOW THEREFORE the parties hereto hereby agree as follows: 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 Conditions), constitute an integral part of this Agreement. 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 set forth, and the following additional terms have the following meanings: (a) "Fiscal Year" means the Borrower's fiscal year which coincides with the calendar year; (b) "Guinean Franc" and "GNF" mean the currency of the Borrower; (c) "Project Preparation Advance" means the project prepara- tion advance granted by the Association to the Borrower pursuant to an exchange of letters, dated January 24, 1989, and February 3, 1989, between the Borrower and the Association; (d) "Public Agencies" includes ministerial departments, local governments and other entities organized under public law; (e) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (f) "Sub-project" means any sub-project approved in the context of the Pilot Program and financed under the Credit in accordance with the criteria set forth in Schedule 4 to this Agreement; (g) "Pilot Program" means the Pilot Program of socio- economic development sub-projects referred to in Part C of Schedule 2 to this Agreement; (h) "Subsidiary Financing Agreement" means the agreement to be entered into between the Borrower and a NGO or Public Agency for the financing of a Sub-project, pursuant to Section 3.04 of this Agreement, as such Subsidiary Financing Agreement may be amended from time to time; (i) "DNIP" means MPCI's Direction Nationale des Investissements Publics; (j) "DNSI" means MPCI's Direction Nationale de la Statistique et de l'Informatique; Page 3 (k) "DRHPS" means Division des Ressources Humaines et de la Politique Sociale within MPCI's Direction Nationale du Plan et du Developpement Economique; (l) "MPCI" means Ministere du Plan et de la Cooperation Internationale, the Borrower's Ministry responsible for Planning, operating pursuant to decree No. 199/PRG/SGG/88 of September 23, 1988; (m) "NGO" means any non-governmental organization having a juridical personality and authorized to carry out its operations in the Borrower's territory; (n) "PPMU" means the Pilot Program Management Unit referred to in Section 3.03 and in Schedule 4 to this Agreement; and (o) "SED" means Secretariat d'Etat a la Decentralisation, operating pursuant to Decree No. 189/PRG/SGG/88 of September 19, 1988. 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 Development Credit Agreement, an amount in various currencies equivalent to six million nine hundred thousand Special Drawing Rights (SDR 6,900,000). 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, for the purposes of the Project, open and maintain in dollars a special account in a 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 5 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, 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 on the principal amount of the Credit not with- drawn from time to time at a rate to be set by the Association as of June 30 of each year, but not to exceed the rate of one-half of one percent (1/2 of 1%) per annum. (b) The commitment charge shall accrue: (i) from a date sixty days after the date of this Agreement (the accrual date) to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or cancelled; and (ii) at the rate set as of the June 30 immediately preceding the accrual date or at such other rates as may be set from time to time thereafter pursuant to paragraph (a) above. The rate set as of June 30 in each year shall be applied as of the next payment date specified in Section 2.06 of this Agreement. Page 4 (c) 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 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 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 semiannual installments payable on each March 15 and September 15, commencing September 15, 1999, and ending March 15, 2029. Each installment to and including the installment payable on March 15, 2009, 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 para- graph (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 withdrawn and 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 Borrower'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. 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, shall carry out the Project through MPCI with due diligence and efficiency and in conformity with appropriate administrative and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) The Borrower shall: Page 5 (i) establish and maintain in a bank a revolving account in GNF for the exclusive purpose of the Project; and (ii) after an initial deposit therein as described in Section 6.01 (d) of this Agreement, replenish said account as and when required to ensure that the amount available in such account shall never be less than one-third of said initial deposit. Section 3.02. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for 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. Section 3.03. The Borrower shall: (a) establish and thereafter maintain PPMU in accordance with the provisions of Part D of Schedule 4 to this Agreement; and (b) not later than December 31, 1989, establish and thereafter maintain the Pilot Program Screening Committee in accordance with the provisions of Part E of Schedule 4 to this Agreement. Section 3.04. The Borrower shall: (a) make the proceeds of the Credit allocated to Category (1) of the table set forth in paragraph 1 of Schedule 1 to this Agreement available to NGOs or Public Agencies under Subsidiary Financing Agreements, satis- factory to the Association, for financing of Sub-projects in accordance with the provisions of Schedule 4 to this Agreement; and (b) exercise its rights under all Subsidiary Financing Agreements 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 change, assign, amend or waive any Subsidiary Financing Agreement or any provision thereof. Section 3.05. The Borrower shall: (a) carry out the permanent household survey and the other studies, undertaken for the purpose of formulating the social policies referred to under Part B.1 of the Project, and promptly submit to the Association, for its review, the results of said survey and studies; and (b) promptly thereafter, use such results in the formulation of the Borrower's social policies and socio-economic development programs. Section 3.06. The Borrower shall, not later than December 31, 1989, establish and thereafter maintain the National Commission on Social Policy, which shall be responsible for coordinating the development and implementation of the Borrower's social policies. Section 3.07. (a) For the purposes of Part A of the Project, the Borrower shall, not later than September 1, 1989, establish and thereafter maintain a technical committee of users of the permanent household survey. (b) Said committee shall report to the chief of the Surveys and Price Indices Division of DNSI and include representatives of the main departments concerned by said survey; it shall, inter alia, ensure the active participation of all such departments in the execution of the survey and the dissemination and use of its results. Section 3.08. (a) The Borrower shall employ a socio-economic adviser reporting directly to the Minister in charge of Planning. (b) Said adviser shall be: (i) the Secretary of the Commission referred to in Section 3.06 of this Agreement; (ii) the chairman of the Pilot Program Screening Committee; and (iii) the Project coordinator. ARTICLE IV Financial Covenants Page 6 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 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 records and accounts referred to in para- graph (a) of this Section, including those for 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 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. (c) For all expenditures, with respect to which withdrawals from the Credit Account were 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, 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 examine 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 pre- paration, can be relied upon to support the related withdrawals. 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) Any of the instruments governing PPMU, the Committee referred to in Section 3.03 (b) of this Agreement or the Commission referred to in Section 3.06 of this Agreement, shall have been amended, suspended, abrogated, repealed or waived so as to affect, in the opinion of the Association, materially and adversely the ability of the Borrower to perform any of its obligations under this Agreement. Page 7 (b) (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 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 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 5.02. Pursuant to Section 7.01 (d) of the General Conditions, the following additional events are specified: (a) any event specified in paragraph (a) of Section 5.01 of this Agreement shall occur; and (b) any event specified in subparagraph (b) (i) (B) of Section 5.01 of this Agreement shall occur, subject to the proviso of subparagraph (b) (ii) of that Section. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of this Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) PPMU has been established, and its manager has been appointed; (b) the socio-economic advisor referred to in Section 3.08 of this Agreement, the adviser to the chief of DNSI's Surveys and Price Indices Division, the adviser to the manager of PPMU, all with qualifications, experience and terms and conditions of employment satisfactory to the Association, have taken up their positions; (c) all conditions precedent to the effectiveness of the AfDF/TAF Grant Agreement and of the CIDA Grant Agreement, except for the effectiveness of this Agreement, have been fulfilled; and (d) the account referred to in Section 3.01 (b) of this Agreement has been opened, and the Borrower has deposited therein an initial amount in GNF equivalent to $50,000. Section 6.02. The date one hundred and twenty (120) 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 Minister of the Borrower responsible for Page 8 Planning is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministere du Plan et de la Cooperation Internationale B.P. 707 Conakry Republic of Guinea Telex: 22311 MPCI-GE 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 GUINEA By /s/ Kekoura Camara Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Callisto E. Madavo Acting Regional Vice President Africa 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) Goods and 4,530,000 100% Page 9 services for Sub- projects (2) Consultants' 340,000 100% services (3) Equipment (including computers): (a) for Parts A, 80,000 100% B and C.1 of the Project (b) for Part D 230,000 100% of the Project (4) Vehicles 40,000 100% (5) Fuel and 50,000 40% lubricants (6) Operating 1,140,000 80% costs Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (7) Refunding of 110,000 Amount due pur- Project Prepara- suant to Section tion Advance 2.02 (c) of this Agreement (8) Unallocated 380,000 _________ TOTAL 6,900,000 2. For the purposes of this Schedule, the term "operating costs" means expenditures in respect of Project-related activities for maintenance of vehicles and equipment, office supplies, fees of contract employees and subsistence expenses for travel of Project staff. 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; (b) payments for expenditures to be financed from the proceeds of the Credit allocated to Category 1 for any Sub- project, unless such Sub-project shall have been made in accordance with the procedures and on the terms and conditions set forth or referred to in Schedule 4 to this Agreement, and approved by the Association prior to the signing of the Subsidiary Financing Agreement related thereto; and (c) payments for expenditures to be financed from the proceeds of the Credit allocated to Category (3) (b), unless the construction of the new building referred to in Part D of the Project has been started. SCHEDULE 2 Page 10 Description of the Project The objectives of the Project are to: (a) strengthen the Borrower's capability to monitor the living standards of the population; (b) strengthen the Borrower's capability to formulate and implement social policies aimed at improving the living standards of the most vulnerable and most destitute segments of the population; and (c) finance a pilot program of socio-economic development sub-projects. 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: Living Standards Monitoring Strengthening of DNSI's capacity to plan and carry out a permanent household survey to track the evolution of living conditions of households, including establishment of a Surveys and Price Indices Division and a permanent household data base. Part B: Social Policy Planning 1. Strengthening of DRHPS's capacity to: (a) develop and implement, in cooperation with the concerned ministries, a study program on important social policy issues; (b) integrate the results of such studies, of the permanent household survey and of the Pilot Program into the design of social and structural adjustment policies and programs. 2. Establishment of a social documentation section specialized in the collection and processing of documents concerning social policy issues within the Centre National de Documentation et d'Information pour le Developpement. Part C: Pilot Program of Socio-Economic Development Sub-projects 1. Establishment of PPMU and development of its capacity to: (a) identify, appraise and monitor the Sub-projects of the Pilot Program; and (b) assess, in cooperation with SED, the implementation capacity of the NGOs or other agencies submitting such Sub- projects for financing under the Project. 2. Financing of Sub-projects through grants or loans to NGOs or Public Agencies in accordance with the provisions of Schedule 4 to this Agreement. Part D: Infrastructure of MPCI 1. Construction of a new building for MPCI, intended, inter alia, for DNSI. 2. Acquisition of furniture and equipment for said building. * * * The Project is expected to be completed by December 31, 1993. SCHEDULE 3 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: International Competitive Bidding 1. Except as provided in Part B hereof, goods and works shall be Page 11 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 for goods shall be grouped in bid packages estimated to cost the equivalent of $100,000 or more each. Part B: Other Procurement Procedures 1. Contracts for goods or works estimated to cost less than the equivalent of $100,000 may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association. 2. Goods or works estimated to cost less than the equivalent of $25,000 per contract, up to an aggregate amount not to exceed the equivalent of $500,000, may be procured under contracts awarded on the basis of comparison of price quotations solicited from a list of at least three reputable suppliers or contractors eligible under the Guidelines, in accordance with procedures acceptable to the Association. 3. Goods and works for Part C.2 of the Project shall be procured in accordance with the provisions of Part C.4 of Schedule 4 to this Agreement. Part C: 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 for Parts A, B and C.1 of the Project estimated to cost the equivalent of $25,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contracts are to be made out of the Special Account, 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 furnished to the Association prior to the making of the first payment out of the Special Account in respect of such contract. (b) With respect to each contract not governed by the preceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contracts are to be made out of the Special Account, 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 5 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 the Project, the Borrower shall employ consultants whose qualifications, experience and terms, and conditions of employment shall be satis- factory to the Association. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Page 12 Association on the basis of the "Guidelines for the Use of Consul- tants by World Bank Borrowers and by The World Bank as Executing Agency" published by the Bank in August 1981. SCHEDULE 4 Operations of the Pilot Program A. Eligibility Criteria for NGOs or Public Agencies Sponsoring Sub-projects To qualify for financing under the Project, any NGO or Public Agency wishing to submit any Sub-project proposal shall meet the following conditions: 1. have juridical personality and be legally authorized to carry out the activities envisaged under the Sub-project; 2. have the experience and qualifications, and a demonstrated capacity to mobilize human and financial resources required to carry out the proposed Sub-project; for national NGOs lacking the required experience and qualifications, cooperation arrangements with more experienced NGOs shall be taken into consideration; and 3. submit its financial statements for its last fiscal year indicating the adequacy of its accounting and financial management systems. B. Criteria for the Selection of Sub-projects To be eligible for financing, any Sub-project proposal shall be submitted by an NGO or Public Agency eligible pursuant to the provisions of Section A of this Schedule and meet the following conditions: 1. be directed primarily to the following segments of the population: (a) households with an income below the poverty line as defined by the household surveys; (b) households without access to basic services; (c) population disadvantaged due to their isolation and lack of basic infrastructure; (d) women and children of the poorest segments of the population; (e) people losing their jobs or without jobs as a result of the Borrower's administrative and economic reforms; 2. show that it will improve the standard of living, the access to employment or the working conditions of its beneficiaries in a sustainable way; 3. be consistent with the sectoral strategies of the Borrower; 4. be feasible from a practical and operational point of view, its costs to be justified by its expected benefits; 5. a clear assessment of the recurrent costs of the Sub-project, and how to cover them, to be provided; 6. total cost of the sponsoring NGO's or Public Agency's permanent staff to be financed by such NGO or Public Agency; 7. include a description of the specific measures to be taken to ensure the participation of the beneficiaries in the development, implementation and management of the Sub-project; and 8. for Sub-projects implemented by, or with the assistance of Page 13 foreign NGOs, the latter shall train nationals in the management of said Sub-project or similar projects. C. Terms and Conditions to be included in the Subsidiary Financing Agreements between the Borrower and sponsoring NGOs or Public Agencies 1. The financial conditions specifying, inter alia, whether on a grant or loan basis and, if applicable, the conditions under which such grant or loan may be passed on to beneficiaries. 2. Contribution of the NGO or Public Agency to the cost of the Sub-project, including the costs referred to in Part B.6 of this Schedule, to be spelled out in detail. 3. The NGO or Public Agency shall carry out and operate the Sub- project with due diligence and efficiency, and in accordance with sound technical, financial and managerial standards, and shall maintain adequate records and accounts. 4. (a) Goods and services to be financed out of the proceeds of the grant or loan shall be purchased at a reasonable price, after, in the case of contracts estimated to cost the equivalent of $1,000 or more, price quotations from at least three reliable suppliers have been furnished; and (b) such goods and services shall be used exclusively in the carrying out of the Sub-project. 5. The Association's right to inspect, by itself or jointly with representatives of the Borrower, goods, sites, works and construc- tion included in the Sub-project, the operation thereof and any relevant records and documents. 6. Release of all such information as the Borrower or the Association shall reasonably request relating to the Sub-project, to the administration, operations and financial condition of the NGO or Public Agency, and to the benefits to be derived from the Sub-project. 7. Disbursement schedule and conditions shall include specific criteria to be met prior to disbursement of each installment of the loan or grant; such criteria to include the submission of progress reports and financial statements on the Sub-project and compliance with the provisions of the Subsidiary Financing Agreement. 8. The right of the Borrower to have the records and accounts of the NGO or Public Agency audited from time to time by auditors acceptable to the Association. For Sub-projects estimated to cost the equivalent of $250,000 or more, such audits shall be carried out at least once a year. 9. The right of the Borrower to suspend or terminate the right of the NGO or Public Agency to the use of the proceeds of the grant or loan upon failure by such NGO or Public Agency to perform any of its obligations under the Subsidiary Financing Agreement. D. Responsibilities of PPMU 1. PPMU shall carry out the following tasks: - Evaluation of Sub-projects proposals. - Submission of Sub-project evaluation reports to the Pilot Program Screening Committee. - Preparation of Subsidiary Financing Agreements to be concluded between the Borrower and the NGO or Public Agency sponsoring an approved Sub-project. - Submission to IDA for approval of the evaluation reports of Sub-projects selected by the Screening Committee and of the related draft Subsidiary Financing Agreements. Page 14 - Monitoring and supervision of implementation of selected Sub-projects. - Preparation in cooperation with DRHPS and SED of an annual report on the operations of the Pilot Program, including detailed financial statements, evaluation of the progress in implementing Sub-projects and lessons learned from Pilot Program operations. 2. PPMU shall be headed by a manager with experience and qualifications satisfactory to the Association, reporting to the director of DNIP and assisted by a project adviser and operations officers. E. Screening Committee 1. The Pilot Program Screening Committee shall be chaired by MPCI's socio-economic adviser and comprise representatives of MPCI, SED and the ministries in charge of finance, social affairs and employment; depending on the Sub-project being discussed, the Committee shall also include a representative of the concerned technical ministry. 2. Said Committee shall be responsible for the selection of Sub- projects to be financed, in accordance with the eligibility and selection criteria, and for the submission of selected Sub- projects to the Minister responsible for Planning for approval. SCHEDULE 5 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1) through (6) 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 the eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount of $100,000 to be withdrawn from the Credit Account and deposited into the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. 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 shall be made as follows: (a) For withdrawals of the Authorized Allocation, the Borrower shall furnish to the Association a request or requests for a deposit or deposits which do not exceed the aggregate amount of the Authorized Allocation. On the basis of such request or requests, the Association shall, on behalf of the Borrower, with- draw from the Credit Account and deposit into the Special Account such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of the Special Account, the Borrower shall furnish to the Association requests for deposits into the Special Account at such intervals as the Association shall specify. Page 15 (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Association the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into the Special Account such amount as the Borrower shall have requested and as shall have been shown by said documents and other evidence to have been made out of the Special Account for eligible expenditures. All such deposits shall be withdrawn by the Association from the Credit Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of the Special Account, the Borrower shall, at such time as the Association shall reasonably request, furnish to the Association such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Association shall not be required to make further deposits into the Special Account: (a) if, at any time, 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 Conditions and paragraph (a) of Section 2.02 of this Agreement; or (b) once the total unwithdrawn amount of the Credit allocated 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 equal the equivalent of twice the amount of the Authorized Allocation. Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to the eligible Categories 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 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 an expenditure or in an amount not eligible pursuant to paragraph 2 of this Schedule; and (ii) was not justified by the evidence furnished to the Association, the Borrower shall, promptly upon notice from the Association: (A) provide such additional evidence as the Association may request; or (B) 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. Unless the Associa- tion shall otherwise agree, no further deposit by the Association into the Special Account shall be made until the Borrower has provided such evidence or made such deposit or refund, as the case may be. (b) If the Association shall have determined 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 the Association, refund to the Association such outstanding amount. Page 16 (c) The Borrower may, upon notice to the Association, refund to the Association all or any portion of the funds on deposit in the Special Account. (d) Refunds to the Association made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Credit Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions.