Conformed Copy - L2991 - Fourth Agricultural Credit Project - Amendment

Page 1 February 21, 1989 Lic. Gonzalo Carias Pineda Presidente Banco Central de Honduras Tegucigalpa, D.C., Honduras Re: Loan 2991-110 (Fourth Agricultural Credit Project) Amendment to BCH Project Agreement Dear Sir: Please refer to the Loan Agreement dated November 21, 1988, between the Republic of Honduras and the International Bank for Reconstruction and Development (the Bank), and to the Project Agreement between the Bank and the Central Bank of Honduras (BCH Project Agreement), and to the Project Agreement between the Bank and the National Federation of Credit Unions (FACACH Project Agreement), both also dated November 21, 1988. Pursuant to your request dated February 2, 1989, and acknowledging that the ration "UPCA's portfolio to deposits from the general public" in BANADESA is currently higher than the one stipulated in the BCH Project Agreement, and to permit that those BANADESA branches that fulfill the loan recovery performance criteria stipulated in Schedule 2, Section I, para 1 (b) (i) of the BBCH Project Agreement to participate in the Project, the Bank has agreed to amend said ratio from 1.1 to 1.5. The Bank, therefore, hereby proposes to amend Schedule 2, Section I, para 1 (b) (i) of the BCH Project Agreement as follows: "(b) BANADESA (i) this institution will not have access to financing under Part A (1) of the Project as a whole because there are substantial differences in performance among its various branch offices and thus, each BANADESA branch office will qualify independently to the extent the branch in question meets, at the satisfaction of UPCA, the criteria stipulated in (ii) and (iii) below; provided, however, that to enable said access to its branches, (A) during the First Year and, subject to (C) below, each Successive Year, BANADES, as a whole will be required to maintain an amount of funds disbursed and outstanding under Sub-loans and under Loans made by BANADESA under Prior Agreements equal to more than 1.5 times the amount of deposits outstanding from the general public during the Year in question (excluding any compulsory or compensating deposits and/or any deposits from public section institutions), (B) such ratio shall be reviewed at the end of the Year in question by UPCA with a view to requiring a lower ratio between funds disbursed and outstanding from the Loan Account and from the accounts opened by the Bank or the Association under the Prior Agreements and deposits, and to exploring the possibility of having this criterion on a branch by branch basis, and (C) if no lower ratio or no branch by branch based criterion are agreed with the Bank the following Successive Year and, further provided, that, if another ratio is agreed, such ratio shall be deemed replacing, for the period in question, the ratio stipulated in (A) above." If you agree with the foregoing, please confirm your agreement by signing and duly dating the duplicate original of this amendment Page 2 letter in the space provided below and returning it to us. This amendment letter will become effective on the date the BCH Project Agreement becomes effective. Very truly yours, INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT /s/ Kye Woo Lee Acting Director Department II Latin America and the Caribbean Regional Office AGREED AND CONFIRMED BANCO CENTRAL DE HONDURAS REPUBLIC OF HONDURAS /s/ Gonzalo Carias Pineda BY By Authorized Representative Authorized Representative Date: March 8, 1989 Date: March 8, 1989 cc: Lic. Efrain Bu Giron Ministro Secretaria de Hacienda y Credito Publico Tegucigalpa, Honduras Ing. Mario Nufio Gamero Director, Unidad Proyecto Credito Agropecuario Banco Central de Honduras Tagucigalpa, Honduras