Conformed Copy - C2474 - Food Security and Nutrition Project - Development Credit Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 2474 MAG Development Credit Agreement (Food Security and Nutrition Project) between REPUBLIC OF MADAGASCAR and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated April 9, 1993 CREDIT NUMBER 2474 MAG DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated April 9, 1993, between REPUBLIC OF MADAGASCAR (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 stated in a letter, dated February 4, 1993, its policies and objectives designed to improve food security in its territories (the Food Security Policy); (C) by agreements dated February 20, 1991 and September 27, 1991 (the Japanese Grant Agreements), the Association has agreed to administer grant funds made available by Japan (the Japanese Grants), to the Borrower in an aggregate amount principal amount of twenty-six million five hundred thousand yen (\1a26,500,000) and forty-one million nine hundred thousand yen (\1a41,900,000), respectively, to finance the cost of technical assistance activities for the preparation of the Project on the terms and conditions set Page 2 forth in the Japanese Grant Agreements; (D) the Borrower intends to contract from other donors loans or grants in an aggregate amount equivalent to $7,700,000 dollars to assist in financing the Project on the terms and conditions set forth in respective agreements to be entered into between the Borrower and those donors; (E) Part A.1 of the Project will be carried out by Fonds d'Intervention pour le Dhungarumlautveloppement (FID) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to FID a portion 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 FID; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Development 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) "Project Preparation Advance" means the project preparation advance granted by the Association to the Borrower pursuant to an exchange of letters dated January 24 and February 15, 1991, and January 19 and March 25, 1993 between the Borrower and the Association; (b) "Special Account" means any of the accounts referred to in Section 2.02 (b) of this Agreement; (c) "BPS" means the Bureau d'Exhungarumlautcution du Projet SECALINE established and operating pursuant to the Borrower's Decree No. 92- 612 dated June 5, 1992, as amended from time to time; (d) "Convention" means the agreement to be entered into between the Borrower and FID pursuant to Section 3.01 (c) of this Agreement, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the Convention; (e) "Manual of Procedures" means the manual of procedures governing FID's operations; (f) "Statuts" means the articles of agreement of FID dated January 13, 1993, including the Borrower's Decree No. 93-044, dated January 27, 1993, portant reconnaissance d'utilithungarumlaut publique de l'association dhungarumlautnommhungarumlaute FID, and the internal regulations of FID; (g) "Project Agreement" means the agreement between the Association and Fonds d'Intervention pour le Dhungarumlautveloppement (FID), 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; (h) "Sub-project" means any of the sub-projects to be carried out under Part A.1 of the Project and to be financed out of the proceeds of the Credit; Page 3 (i) "Beneficiaries" means community groups and local collectivities deriving benefits from Sub-projects, directly or indirectly, including those individuals or private small-scale enterprises operating in the economic sector; (j) "Executing Agency" means any of the regional services of governmental agencies or of the non-governmental entities which proposes to assist Beneficiaries in carrying out a Sub-project; and (k) "IEC" means Information, Education and Communication. 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 fifteen million five hundred thousand Special Drawing Rights (SDR 15,500,000). 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 name of BPS (the BPS Special Account) and a special deposit account in the name of FID (the FID Special Account), in a commercial bank on terms and conditions satisfactory to the Association, including appropriate protection against set-off, seizure or attachment. Deposits into, and payments out of, the Special Accounts 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 July 31, 1998 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.04. (a) The Borrower shall pay to the Association a commitment charge 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 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 from the next payment 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 restrictions 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 Page 4 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 February 15 and August 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 February 15 and August 15, commencing August 15, 2003 and ending February 15, 2033. Each installment to and including the installment payable on February 15, 2013 shall be one percent (1%) of such principal amount, and each installment thereafter shall be two (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 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. Section 2.09. FID is designated as representative of the Borrower in respect of Part A.1 of the Project for the purposes of taking any action required or permitted to be taken under the provisions of Section 2.02 of this Agreement and Article V 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: (i) shall carry out Parts A.2, B and C of the Project 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 such Parts of the Project; and (ii) without limitation or restriction upon any of its other obligations under the Development Credit Page 5 Agreement, the Borrower shall cause FID to perform all its obligations set forth in the Project Agreement, shall take or cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable FID to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) Without limitation upon the provisions of paragraph (a) of this Section, and except as the Borrower and the Association shall otherwise agree, the Borrower shall carry out Parts A.2, B and C of the Project in accordance with the Implementation Program set forth in Schedule 4 to this Agreement. (c) The Borrower shall make available to FID, on a grant basis, the proceeds of the Credit allocated to Category (1) of the table set forth in paragraph 1 of Schedule 1 to this Agreement under a Convention to be entered into between the Borrower and FID, on terms and conditions which shall have been approved by the Association. (d) The Borrower shall exercise its rights under the Convention 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 Convention or any provision thereof. (e) Without limitation upon the provisions of this Section, the Borrower shall, for the purposes of making available its contri- bution to the Project, open and maintain in a commercial bank: (i) in the name of the BPS for Parts A.2, B and C of the Project, a separate account and make an initial contribution of the equiva- lent of $75,000 into such account; and (ii) in the name of FID for Part A.1 of the Project, a separate account and make an initial contribution of the equivalent of $75,000 into such account; said accounts to be replenished at least on a quarterly basis or whenever their respective balance shall be less than the equivalent of $25,000 up to the amount of the initial contribution. Section 3.02. (a) 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. (b) Without limitation to its obligations under paragraph (a) of this Section and subject to the provisions of said paragraph, the Borrower shall, through the BPS, employ a specialized consulting firm or agency, satisfactory to the Association, to assist in the execution of Part A.2 of the Project. 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 Part A.1 of the Project shall be carried out by FID pursuant to Section 2.03 of the Project Agreement. 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 Parts A.2, B and C of the Project of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. Page 6 (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) of this Section including those for the BPS 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 Association has received the audit report for the fiscal year in which the last withdrawal from the Credit Account or payment out of the BPS Special 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 procedures and internal controls involved in their preparation, 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) A situation has arisen which shall make it improbable that the Food Security Policy, or a significant part thereof, will be carried out. (b) FID shall have failed to perform any of its obligations under the Project Agreement. (c) 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 FID will be able to perform its obligations under the Project Agreement. (d) The Statuts of FID shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of FID to perform any of its obligations under Page 7 the Project Agreement. (e) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of FID or for the suspension of its operations. (f) (i) Subject to subparagraph (ii) of this paragraph: (A) the right of the Borrower to withdraw the proceeds of any loan or grant 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 thereof, 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 5.02. Pursuant to Section 7.01 (d) of the General Conditions, the following additional events are specified: (a) any event specified in paragraph (b) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower; (b) any event specified in paragraphs (d) and (e) of Sec- tion 5.01 of this Agreement shall occur; and (c) the event specified in paragraph (f) (i) (B) of Sec- tion 5.01 of this Agreement shall occur, subject to the proviso of subparagraph (ii) of this paragraph. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the Convention has been executed on behalf of the Borrower and FID; (b) the Manual of Procedures, satisfactory to the Borrower and the Association, has been adopted by FID; (c) accounting and financial management systems, satisfactory to the Association, have been set up by the BPS for Parts A.2, B and C of the Project and by FID for Part A.1 of the Project; (d) the auditors referred to in Section 4.01 (b) of this Agreement and in Section 4.01 (b) of the Project Agreement have been appointed for a period of three years; (e) the Borrower has made the initial contributions into the two accounts referred to in Section 3.01 (e) of this Agreement in accordance with the provisions of such Section; Page 8 (f) the monitoring and evaluation specialist at the national level has been employed by the BPS in accordance with the provisions of Section II of Schedule 3 to this Agreement; and (g) the executive director of FID and the regional directors for FID offices in the Provinces of Antananarivo and Toliary have been appointed. Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association, that: (a) the Project Agreement has been duly authorized or ratified by FID and is legally binding upon FID in accordance with its terms; (b) the Convention has been duly authorized or ratified by the Borrower and FID and is legally binding upon the Borrower and FID in accordance with its terms; and (c) the Manual of Procedures has been duly approved by FID and is legally binding upon FID 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 Sec- tion 4.01 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on the date fifteen years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. Except as provided in Section 2.09 of this Agreement, the Minister of the Borrower responsible for finance 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: Ministry of Finance Antananarivo Madagascar Cable address: Telex: MINFIN 22489 Antananarivo For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 248423 (RCA) Washington, D.C. 82987 (FTCC) 64145 (WUI) or 197688 (TRT) Page 9 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 MADAGASCAR By /s/ Pierrot Rajaonarivelo Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Francisco Aguirre-Sacasa 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) FID expenditures: (a) Goods and 5,460,000 85% services for Sub-projects (b) Consultants' 1,140,000 100% services, training and studies (c) Equipment, 370,000 100% vehicles and materials (d) Operating costs 470,000 100% (2) Equipment, 1,820,000 100% vehicles and materials for Parts A.2, B and C of the Project Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (3) Consultants' ser- 2,380,000 100% vices, training and studies for Parts A.2, B Page 10 and C of the Project (4) Civil works for 1,100,000 70% Part B of the Project (5) Transport, 370,000 100% shipping and handling costs for Part A.2 of the Project (6) Operating costs 540,000 70% for Parts A.2, B and C of the Project (7) Refunding of 1,100,000 Amounts due Project pursuant to Preparation Section 2.02 (c) Advance of this Agreement (8) Unallocated 750,000 __________ TOTAL 15,500,000 ========== 2. For the purposes of this Schedule, the term "operating costs" means expenditures related to operation and maintenance of Project vehicles and equipment, travel within Madagascar and per diem of staff involved in the Project, office rent and maintenance, office supplies, and salaries of local contractual staff for activities relating to the Project. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement. SCHEDULE 2 Description of the Project The objectives of the Project are to reduce food insecurity and malnutrition in the Borrower's Provinces of Antananarivo and Toliary. 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: Income Generating Activities 1. Preparation and execution of Sub-projects in the Borrower's Provinces of Antananarivo and Toliary, and such other Provinces as may be agreed upon between the Borrower and the Association. 2. Provision of short-term food transfers to about 90 of the poorest fokontany in Greater Antananarivo recruited to maintain, rehabilitate and construct community infrastructure. Part B: Nutrition Program 1. Carrying out of a community nutrition program to help households make more efficient use of available resources and to provide food supplements for children through the operation of about 250 community nutrition centers to be established and 9 nutrition rehabilitation centers to be renovated in the Borrower's Provinces of Antananarivo and Toliary. Page 11 2. Carrying out of a national control program for iodine deficiency disorders, through the provision of iodized oil capsules to children up to four years of age and to women of child-bearing age, including iodization of salt. Part C: Institutional Development Support 1. Carrying out of an IEC program supporting the activities under Parts A and B of the Project, with a view to provide links between said activities and to ensure their complementarity, including the development and application of a communication strategy. 2. Development of a national food security strategy. * * * The Project is expected to be completed by January 31, 1998. 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, goods 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 1992 (the Guidelines). For fixed-price contracts, the invitation to bid referred to in paragraph 2.13 of the Guidelines shall provide that, when contract award is delayed beyond the original bid validity period, the successful bidder's bid price will be increased for each week of delay by two predisclosed correction factors acceptable to the Association, one to be applied to all foreign currency components and the other to the local currency component of the bid price. Such an increase shall not be taken into account in the bid evaluation. 2. To the extent practicable, contracts for goods shall be grouped into bid packages estimated to cost the equivalent of $300,000 or more. Part B: Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A.1 hereof, goods manufactured in Madagascar may be granted a margin of preference in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraphs 1 through 4 of Appendix 2 thereto. Part C: Other Procurement Procedures 1. (i) Items or groups of items for works and goods under Sub- projects estimated to cost between the equivalent of $10,000 and $55,000 per contract, up to an aggregate amount equivalent to $3,200,000 for works and $500,000 for goods, (ii) items or groups of items for works for community nutrition centers and nutrition rehabilitation centers under Part B.1 of the Project estimated to cost between the equivalent of $10,000 and $50,000 per contract, up to an aggregate amount equivalent to $1,800,000, and (iii) items or groups of items for goods under Parts A.2, B and C of the Project estimated to cost between the equivalent of $50,000 and $300,000 per contract, up to an aggregate amount of $1,000,000, may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association, provided that the technical and financial bids are simultaneously opened in public. 2. (i) Items or groups of items for goods under Sub-projects estimated to cost the equivalent of less than $10,000 per contract, Page 12 up to an aggregate amount equivalent to $800,000, and (ii) items or groups of items for goods under Parts A.2, B and C of the Project estimated to cost the equivalent of less than $50,000 per contract, up to an aggregate amount equivalent to $1,000,000, may be procured under contracts awarded on the basis of comparison of price quotations obtained from at least three suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Association. 3. Items or groups of items for works under Sub-projects estimated to cost less than $10,000 per contract, up to an aggregate amount equivalent to $900,000, may be procured under contracts awarded on the basis of price quotations obtained from at least three contractors eligible under the Guidelines, in accordance with procedures acceptable to the Association. 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 $40,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of a 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 a 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 contract are to be made out of a 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 paragraph 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 subparagraph (b) shall not apply to contracts on account of which withdrawals from the Credit Account are to be made on the basis of statements of expenditure. 2. The figure of 15% is hereby specified for purposes of paragraph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants 1. In order to assist the Borrower and FID in carrying out the Project, the Borrower and FID shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to 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" published by the Bank in August 1981 (the Consultant Guidelines). 2. Notwithstanding the provisions of paragraph 1 of this Section, the provisions of the Consultant Guidelines requiring prior Association review or approval of budgets, short lists, selection procedures, letters of invitation, proposals, evaluation reports and contracts shall not apply to contracts estimated to cost less than $40,000 equivalent each. However, this exception to prior Association review shall not apply to the terms of reference for such contracts nor to the employment of individuals, to single source selection of firms, to assignments of a critical nature as reasonably determined by the Association and to amendments of contracts raising the contract value to $40,000 equivalent or above. Page 13 SCHEDULE 4 Implementation Program 1. Overall Project Execution and Coordination (a) At the National Level The Comithungarumlaut Inter-ministhungarumlautriel de Coordination du Projet SECALINE (CICS), chaired by a national coordinator, with qualifications and experience satisfactory to the Association, shall be responsible for the overall coordination of Project activities and liaising with FID. The national coordinator shall be assisted by the Bureau d'Exhungarumlautcution du Projet SECALINE (BPS) which shall be staffed at all times with the following personnel, all with qualifications and experience satisfactory to the Association: an office director, an administrative and financial officer, an accounting officer, an IEC specialist and a monitoring and evaluation specialist. The BPS shall also be staffed with adequate support staff. (b) At the Regional Level In each of the Provinces of Antananarivo and Toliary, a regional coordinator, reporting to the above-mentioned national coordinator, shall be responsible for the coordination of Project activities and liaising with FID, and shall be assisted at all times with an IEC specialist, a specialist in community nutrition and an accountant, all with qualifications and experience satisfactory to the Association; he shall also be assisted by adequate support staff. The regional coordinator shall be responsible in particular for ensuring the execution of the community nutrition program under Part B.1 of the Project with due diligence and efficiency, in accordance with a Livret du Programme Communautaire de Nutrition (PCN), satisfactory to the Association, and with the assistance of qualified non-governmental organizations and community nutrition agents. 2. Project Review (a) Not later than September 30 of each year, the Borrower shall furnish to the Association for its review and approval, in respect of the forthcoming year, detailed work programs and budgets for Parts A, B and C of the Project. In addition, the Borrower shall furnish to the Association an evaluation report of Project activities undertaken during the previous twelve-month period between July 1 and June 30. Said programs, budgets and report shall be prepared by the BPS, and with FID's assistance with respect to Part A.1 of the Project. (b) The Borrower shall, not later than June 30, 1996, carry out jointly with the Association and with the participation of FID a midterm review of the Project and, soon thereafter, shall implement the recommendations of such a review. In order to facilitate this review, the Borrower shall prepare and furnish to the Association, not later than four weeks before the scheduled date of this review, a report of Project activities of such scope and in such detail as the Association shall have reasonably requested. The review shall cover inter alia: (a) overall Project performance against established and agreed key performance indicators; (b) evaluation of Project success and problems to take into account for the future expansion of Project activities; (c) assessment of Project sustainability; and (d) evaluation of consultants' performance. SCHEDULE 5 Special Accounts 1. For the purposes of this Schedule: Page 14 (a) the term "eligible Categories" means (i) Category (1) in the case of the FID Special Account, and (ii) Categories (2), (3), (4), (5) and (6) in the case of the BPS Special Account, 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 (i) an amount equivalent to $500,000 for the BPS Special Account, and (ii) an amount equivalent to $700,000 for the FID Special Account, to be withdrawn from the Credit Account and deposited into the Special Accounts pursuant to paragraph 3 (a) of this Schedule. 2. Payments out of a 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 Authorized Allocation and subsequent withdrawals to replenish a 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 a Credit Account and deposit into a Special Account such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of a Special Account, the Borrower shall furnish to the Association requests for deposits into a Special Account at such intervals as the Association shall specify. (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 a 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 a 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 a 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 a 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 ofArticle V of the General Conditions and paragraph (a) of Section Page 15 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 a 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 an expenditure or in an amount not eligible pursuant to paragraph 2 of this Schedule; or (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 a 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 Association shall otherwise agree, no further deposit by the Association into a 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 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. (c) The Borrower may, upon notice to the Association, refund to the Association all or any portion of the funds on deposit in a Special Account. (d) Refunds to the Association made pursuant to paragraph 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.