India - Agricultural Development Project- Tamil Nadu : Credit 2215 - Credit Agreement - Conformed

000UENT% CREDIT NUMBER 2215 IN k,~C,A-,4 3 :; -' 0/ Development Credit Agreement (Agricultural Development Project - Tamil Nadu) between INDIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1991 CREDIT NUMBER 2215 IN DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated , 1991, between INDIA, acting by its President (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 has also requested the International Bank for Reconstruction and Development (the Bank) to provide additional assistance towards the financing of the Project and by an agreement of even date herewith between the Borrower and the Bank (the Loan Agreement as herein further defined), the Bank is agreeing to provide such assistance in an aggregate principal amount equivalent to twenty million dollars ($20,000,000) (the Loan); (C) the Borrower and the Association intend, to the extent practicable, that the proceeds of the Credit provided for in this Agreement be disbursed on account of expenditures in respect of the Project before disbursements of the proceeds of the Loan are made; (D) the Project will be carried out by the State of Tamil Nadu with the Borrower's assistance and, as part of such assistance, the Borrower will make available to such State the proceeds of the Credit as provided in this Agreement and the proceeds of the Loan as provided in the Loan 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 among the Association, the Bank and the State of Tamil Nadu; 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. -2- 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) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (b) "Loan Agreement" means the agreement of even date herewith between the Borrower and the Bank for the Project, as such agreement may be amended from time to time; and such term includes the "General Conditions Applicable to Loan and Guarantee Agreements" of the Bank, dated January 1, 1985, as applied to such agreement, and all schedules and agreements supplemental to the Loan Agreement; (c) "Project Agreement" means the agreement among the Association, the Bank and the State of Tamil Nadu 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; (d) "Tamil Nadu" means the State of Tamil Nadu, a state of the Borrower, or any successor thereto; (e) "SPC" means the State Planning Commission of Tamil Nadu; (f) "DOA" means the Directorate of Agriculture of Tamil Nadu; (g) "APC" means the Agriculture Production Commissioner of Tamil Nadu; (h) "PCC" means the Project Coordination Committee es- tablished by Tamil Nadu for the purpose of coordinating the activities under the Project; (i) "SLTI" means the State Level Training Institute of Tamil Nadu; (j) "TNAU" means Tamil Nadu Agricultural University; (k) "WPCC" means the Watershed Planning and Coordination Cell established within DOA; - 3 - (1) "DAH" means the Directorate of Animal Husbandry of Tamil Nadu; (m) "DOF" means the Department of Forestry of Tamil Nadu; (n) "PWD" means the Public Works Department of Tamil Nadu; (o) "DRD" means the Department of Rural Development of Tamil Nadu; (p) "DEAR" means the Department of Evaluation and Applied Research of Tamil Nadu; and (q) "Fiscal Year" means the Fiscal Year of the Borrower beginning on April 1 and ending on March 31 of the following calendar year. 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 sixty four million one hundred thousand Special Drawing Rights (SDR 64,100,000). 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 reasonable cost of goods and services required for the Project 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 deposit account in the Reserve Bank of India 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. Section 2.03. The Closing Date shall be September 30, 1998 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. -4- Section 2.04. (a) The Borrower shall pay to the Association a commitment charge on the principal amount of the Credit not withdrawn 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 the 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 and 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 from the next date in that year specified in Section 2.06 of this Agreement. (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 April 15 and October 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 April 15 and October 15 commencing April 15, 2001 and ending October 15, 2025. Each installment to and including the installment payable on October 15, 2010 shall be one and one-fourth percent (1-1/4%) of such principal amount, and each installment thereafter shall be two and one-half percent (2-1/2%) 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 -5- Association may, subsequent to the review and approval thereof by the Executive Directors of the Association and after due considera- tion 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 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, without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, shall cause Tamil Nadu to perform in accordance with the provisions of the Project Agreement all the obligations of Tamil Nadu 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 Tamil Nadu to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall make the proceeds of the Credit available to Tamil Nadu in accordance with the Borrower's standard arrangements for developmental assistance to the States of India. -6- Section 3.02. Except as the Association shall otherwise agree, procurement of the goods, works and services required 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 Agree- ment. 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, respectively) in respect of the Project shall be carried out by Tamil Nadu pursuant to Section 2.03 of the Project Agreement. Section 3.04. The Borrower shall: (a) participate in the carrying out of the mid-term review of the Project referred to in paragraph 12(b) of Schedule 2 to the Project Agreement; and (b) participate in the final evaluation of the Project referred to in paragraph 12(c) of Schedule 2 to the Project Agreement. ARTICLE IV Financial Covenants Section 4.01. (a) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of statements of expenditures, the Borrower shall: (i) maintain or cause to be maintained in accordance with sound accounting practices, records and accounts reflecting such expenditures; (ii) ensure that all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures are retained until at least 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; and (iii) enable the Association's representatives to examine such records. - 7- (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) (i) of this Section and 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 nine months after the end of each such year the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably re- quested, including a separate opinion by said auditors as to whether the statements of expendi- tures submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals; and (iii) furnish to the Association such other information concerning said records and accounts and the audit thereof as the Association shall from time to time reasonably request. 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) Tamil Nadu 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 Tamil Nadu will be able to perform its obligations under the Project Agreement. Section 5.02. Pursuant to Section 7.01 (d) of the General Conditions, the following additional event is specified, namely, that the event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days -8- after notice thereof shall have been given by the Association to the Borrower. 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) that all conditions precedent to the effectiveness of the Loan Agreement have been fulfilled, other than those related to the effectiveness of this Agreement; and (b) that Tamil Nadu shall have deployed key staff, satisfac- tory to the Association, of the administrative units established within its relevant departments and agencies for purposes of implementing the activities under the Project. Section 6.02. The following is specified as an additional matter, 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, namely, that the Project Agreement has been duly authorized or ratified by Tamil Nadu, and is legally binding upon Tamil Nadu in accordance with its terms. Section 6.03. 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. Section 6.04. The obligations of the Borrower under Section 3.03 of this Agreement and the provisions of Section 5.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on the date twenty years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representatives of the Borrower; Addresses Section 7.01. The Secretary, Additional Secretary, Joint Secretary, Director, Deputy Secretary, or Under Secretary of the - 9 - Department of Economic Affairs in the Ministry of Finance of the Borrower 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: The Secretary to the Government of India Ministry of Finance Depa::tment of Economic Affairs New Delhi, PIN 110001, India Cable address: Telex: ECOFAIRS 953-3166175 New Delhi For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 197688 (TRT) Washington, D.C. 248423 (RCA) 64145 (WUI) or 82987 (FTCC) - 10 - 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. INDIA By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By 1 WtJ3LDL L Regional Vice President Asia - 11 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit and of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit and of the Loan, the allocation of the amounts of the Credit and of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of Amount of the Credit the Loan Allocated Allocated (Expressed (Expressed % of in SDR in Dollar Expenditures Category Equivalent) Equivalent) to be Financed (1) Civil works 20,900,000 6,500,000 90% (except under Parts D.2, D.4 and F.1 of the Project) (2) Watershed and 12,600,000 3,800,000 90% forestry deve- lopment works under Parts D.2, D.4 and F.1 of the Project, in- cluding related civil works - 12 - Amount of Amount of the Credit the Loan Allocated Allocated (Expressed (Expressed % of in SDR in Dollar Expenditures Category Equivalent) Equivalent) to be Financed (3) Equipment, 6,300,000 2,000,000 100% of foreign .materials, expenditures, vehicles, 100% of local furniture, expenditures livestock, (ex-factory seeds and cost), and 80% semen of local expen- ditures for other items procured locally (4) Overseas con- 1,900,000 700,000 100% sultants' ser- vices under Parts A.1 and E.l(e) of the Project, and training (5) Incremental 16,000,000 5,000,000 90% of operating expenditures costs incurred until March 31, 1994, 75% of expend- itures incurred thereafter until March 31, 1996, and 60% of expenditures incurred there- after (6) Unallocated 6,400,000 2,000,000 TOTAL SDR 64,100,000 $20,000,000 - 13 - 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; and (c) the term "incremental operating costs" means the incremental costs for salaries and allowances of staff, for the operation and maintenance of equipment and vehicles, and for the maintenance of works incurred by Tamil Nadu afid its relevant departments and agencies for purposes of implementing the Project. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expendi- tures prior to the date of this Agreement except that withdrawals, in an aggregate amount not exceeding the equivalent of SDR 2,100,000 may be made on account of payments made for expenditures before that date but after June 30, 1990. - 14 - SCHEDULE 2 Description of the Project The objectives of the project are: (a) to improve Tamil Nadu's capability to analyze developmental constraints limiting agricul- tural productivity and growth, establish investment priorities in the agricultural sector and make better policy choices; (b) to assist in institutional development for rendering more cost- effective services to farmers; and (c) to support selected priority investment programs of Tamil Nadu in agricultural and rural development. 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: Agricultural Planning 1. Strengthening the planning capabilities of SPC through administrative changes and the provision of additional staff, training, computers and office equipment, and technical assistance. 2. Carrying out of the following studies to assist in the analyses of public policy issues impacting on agricultural develop- ment for a better management of market forces in Tamil Nadu: (a) productivity per unit of water under various land use mixes; (b) marketing practices of paddy and its fiscal and production impact; (c) the changing structure of demand for agriculture products and Tamil Nadu's comparative advantages in agriculture; (d) state livestock policy and its impact on private veterinarians; and (e) such other studies as may be mutually agreed upon relating to agricultural policy and development in Tamil Nadu. Part B: Agriculture Extension 1. Strengthening the agricultural extension service in Tamil Nadu through broad-basing and consolidation of extension services, enlarging the coverage and improving the quality of such services. 2. Construction of one DOA office building, about 50 sub- divisional offices and upgrading of SLTI. - 15 - 3. Provision of training for improving the quality of agriculture extension services and strengthening the training capabilities of SLTI. 4. Strengthening DOA's management information system for resource-based decentralized extension planning from the district level. 5. Carrying out of a study on DOA's personnel policy. Part C: Seed Production 1. Strengthening the infrastructure facilities for the production of breeder and foundation seeds in seven existing TNAU seed farms, one new TNAU seed farm in Kumulur, and about forty five foundation seed farms operated by DOA, including the provision of vehicles. 2. Establishment of three seed testing laboratories and six enforcement units for seed quality. 3. Promoting the privatization of the seed industry in Tamil Nadu including the carrying out of a study on Tamil Nadu's seed pricing policy and its impact on private sector seed industry. Part D: Watershed Development 1. Promotion of watershed activities in Tamil Nadu. 2. Treatment of the Palar and Vellar watersheds. 3. Establishment of a multi-disciplinary task force in each of the Palar and Vellar watersheds for the preparation of watershed plans. 4. Introduction of watershed technology, including stabilization of drainage line structures, in about 12 districts (outside of the Palar and Vellar watersheds). 5. Technical assistance to WPCC and the multi-disciplinary task forces in the Palar and Vellar watersheds for land resource mapping and nursery development. 6. Establishment of an operational research program in the Palar and Vellar watersheds to adapt watershed technology to local conditions and develop alternate land use practices including the - 16 - identification of suitable species for agro-forestry, fodder and silvipastoral development. 7. Services of consultants to WPCC for developing appropriate strategies for interactive and multi-disciplinary watershed development planning, including cost-benefit sharing and management of common property resources related to watershed development. 8. Provision of training on watershed technology, equipment and vehicles. Part E: Livestock Development 1. Strengthening the capacity of DAH to produce, procure and distribute frozen animal semen from both exotic breeds and stabi- lized cross-breeds through: (a) improvement of semen production facilities on Eachenkottai/Orathanad farm for buffalo, and on Hosur farm for cattle; (b) acquisition of livestock for breeding purposes and of frozen semen of selected types of pure- and cross-bred animals not produced in Tamil Nadu; (c) establishment of about 10 liquid nitrogen and semen storage centers, including the provision of training and equipment and vehicles; (d) provision of training and equipment required for the expansion of the frozen semen artificial insemination service to existing artificial insemination centers; (e) establishment of a Division within DAH responsible for coordinating semen production and distribution functions, including provision of equipment and vehicles and services of consultants to assist in the preparation of implementation plans for the breeding program and training of staff in animal breeding and genetics; (f) carrying out of a study on artificial insemination operations to identify measures for improving the conception rate; (g) strengthening the overall planning capabilities of DAH by augmenting its planning and statistical units, including provision of computers and office equipment; and - 17 - (h) establishing an embryo-transfer unit at the Hosur farm. 2. Developing forage production through: (a) acquisition of forage seed for research and promotional activities; (b) establishment of forage development teams at the district and state levels, including provision of training and equipment; and (c) services of consultants to assist TNAU in the develop- ment of a forage production computer based monitoring and data management system. 3. Improving veterinary diagnostic and epidemiological services through: (a) strengthening the Animal Disease Surveillance Unit at DAH; (b) establishment of four regional veterinary diagnostic laboratories each with a regional epidemiological unit; (c) strengthening eight disease intelligence units in the monitoring and disease surveillance program; (d) provision of training and computers and office equip- ment; and (e) consultancy services. Part F: Forestry Development 1. Carrying out of a forestry plantation establishment program aiming at rehabilitation of degraded reserve forests in selected catchment areas focussing on the Western Ghats. 2. Institutional development of DOF, including: (a) at the state level, the establishment of seed supply and technology transfer units, and strengthening of the Economic Office and motivation and social/statistical units, and forestry research; and - 18 - (b) at the district level, the establishment of five forest divisions serving the catchment areas selected under the Project. Part G: Rural Roads 1. Upgrading and improving rural roads focussing on areas and villages serving key market centers in selected districts charac- terized by large proportions of cultivable areas and agriculture production, and on districts where watershed and forestry activities are carried out under the Project. 2. Strengthening the supervision and inspection capabilities of PWD through the provision of training, equipment and vehicles. Part H: Rural Water Supply 1. Construction of rural water supply installations in selected districts. 2. Strengthening the technical capabilities of DRD at the state, district and block levels, through the establishment of a technical cell at the state level and a rural water supply division in each of the selected districts, augmentation of district, division and block level technical staff, provision of training, equipment and vehicles, and services of consultants. 3. Provision of spare parts for India Mark II and Mark III handpumps for block level stores in the selected districts. Part I: Monitoring, Coordination and Evaluation 1. Strengthening the coordination and monitoring role of the office of the APC through the establishment of a monitoring and coordination cell with additional staff, computers and office equipment, and vehicles. 2. Services of consultants to DOA for reviewing and developing a management information system, and provision of training, computers and office equipment. - 19 - 3. Carrying out of a base-line survey, a mid-term review and a final evaluation of the Project, and provision of computers and office equipment for DEAR. The Project is expected to be completed by March 31, 1998. - 20 - SCHEDULE 3 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1), (2), (3), (4) and (5) in the table in paragraph 1 of Schedule 1 to the Development Credit 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 or the Loan allocated from time to time to the eligible Categories in accordance with the provisions of Schedule 1 to the Development Credit Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $5,000,000 to be withdrawn from the Credit Account or the Loan 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, withdraw from the Credit Account or the Loan Account and deposit in 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. - 21 - (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 replen- ishment is requested. On the basis of each such request, the Association shall, on behalf of the Borrower, withdraw from the Credit Account or the Loan 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 paid out of the Special Account for eligible expenditures. All such deposits shall be withdrawn by the Association from the Credit Account or the Loan 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. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, the Association shall not be required to make further deposits into the Special Account: (i) 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 the Development Credit Agreement or from the Loan Account in accordance with the provisions of Section 2.02 of the Loan Agreement and Article V of the General Conditions applicable thereto; or (ii) once the total unwithdrawn amount of the Credit and the Loan allocated to the eligible Categories for the Project, less the amount of any outstand- ing special commitment entered into by the Association or the Bank pursuant to Section 5.02 - 22 - of the respective General Conditions with respect to the Project, shall equal the equivalent of twice the amount of the Authorized Allocation. (b) Thereafter, withdrawal from the Credit Account and the Loan Account of the remaining unwithdrawn amount of the Credit and the Loan 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; (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 or the Bank) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Association 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 or the Bank such outstanding amount. (c) The Borrower may, upon notice to the Association, refund to the Association or the Bank all or any portion of the funds on deposit in the Special Account. (d) Refunds to the Association or the Bank made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Credit Account or the Loan Account, as the case may be, for subsequent withdrawal or for cancellation in accordance with the relevant provisions of the Development Credit Agreement or the Loan Agreement, including the General Conditions applicable thereto. 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