Mexico - Second Basic Health Care Project : Loan 3943 - Loan Agreement - Conformed

LOAN NUMBER 3943 ME Loan Agreement (Second Basic Health Care Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and NACIONAL FINANCIERA, S.N.C. Dated , 1995 LOAN NUMBER 3943 ME LOAN AGREEMENT AGREEMENT, dated , 1995, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) and NACIONAL FINANCIERA, S.N.C. (the Borrower). WHEREAS (A) the Guarantor and the Borrower, having been satisfied as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, have requested the Bank to assist in the financing of the Project; (B) by an agreement (the Guarantee Agreement) of even date herewith between the Guarantor and the Bank, the Guarantor has agreed to guarantee the obligations of the Borrower in respect of the Loan and to undertake such other obligations as set forth in the Guarantee Agreement; and WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to extend the Loan 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 Loan and Guarantee Agreements for Single Currency Loan-" of the Bank, dated May 30, 1995 (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) "Decentralization Program" means the program, contained in Attachment I of the Implementation Letter, for transferring public administration functions in the health sector in Mexico from the federal government to the States (as hereinafter defined); (b) "DSU" means a Decentralization Support Unit referred to in Section 3.11 (c) of the Guarantee Agreement; -2- (c) "Federal Advisory Committee" means the committee referred to in Section 5.01 (c) of this Agreement; (d) "Implementation Agreement" means an agreement entered into between the Guarantor and a State and containing the terms set forth in Schedule 2 to the Guarantee Agreement; (e) "Implementation Letter" means the letter of even date herewith from the Guarantor to the Bank, containing, inter alia, the schedule and targets referred to in Section 3.01 of the Guarantee Agreement; (f) "Jurisdiction" means a regional unit (Jurisdicci6n Sanitaria) of an SESA (as hereinafter defined) or of an SCSP (as hereinafter defined) which participates in the administration of health programs in a specified geographical region within a State and is listed in Attachment II of the Implementation Letter; (g) "Operational Manual" means the manual referred to in Section 5.01 (b) of this Agreement, as such manual may be amended from time to time with the agreement of the Bank; (h) "PCTJ" means the Project Coordination Unit referred to in Section 3.11 (a) of the Guarantee Agreement; (i) "Project States" means: (i) the States (as hereinafter defined) of Oaxaca, Chiapas, Hidalgo, Guerrero, Michoacdn, Zacatecas, Puebla, Yucatin, Veracruz, Campeche and San Luis Potosi; and (ii) any other States (as hereinafter defined) as may be agreed by the Guarantor and the Bank; (j) "SCSP" means the SSA's (as hereinafter defined) Servicios Coordinados de Salud P'Iblica (Public Health Coordinated Services) in each of the States where administration of public health services is carried out by the federal government and where there therefore is no SESA (as hereinafter defined); (k) "SESA" means the Servicios Estatales de Salud (Siate Health Services) or equivalent entity in those States where administration of public health services is carried out by the State and where there therefore is no SCSP; (1) "SHA" means a State (as hereinafter defined) health authority (i.e., either an SESA or an SCSP); -3- (m) "SHCP" means the Guarantor's Finance and Public Credit Secretariat (Secretaria de Hacienda y Cr6dito Pfiblico); (n) "SPCU" means a State Project Coordination Unit referred to in Section 3.11 (b) of the Guarantee Agreement or Section 1 (a) (i) of Schedule 2 to the Guarantee Agreement; (o) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (p) "SSA' means the Guarantor's Health Secretariat (Secretaria de Salud); (q) "State" means any one of the states (Estados) and the Federal District (Distrito Federal that constitute the United Mexican States; (r) "Subproject" means a package of pi%ventative services and/or essential clinical care delivery initiatives (in the areas covered by Part A.1 of the Project) to be carried out under the Project in Project States at the Jurisdiction level; and (s) "TAPs" means ticnicos de atenci6n primaria (primary care technicians), i.e, paramedics who are SSA or SESA employees and provide rudimentary health care services in remote areas where there are no medical facilities. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Loan Agreement, an amount equal to, three hundred and ten million Dollars ($310,000,000). Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods, works and services required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan. -4- (b) The Borrower may, for the purposes of the Pro;ect, open and maintain in Dollars a special deposit account in Banco de Mexico on terms and conditions satisfactory to the Bank. Deposits into, and payments out of, the Spec lal Account shall be made in accordance with the provisions of Schedule 4 to this Agreement. Section 2.03. The Closing Date shall be June 30, 2001 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor of such later date. Section 2.04. The Borrower shall pay to the Bank a cominitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.05. The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time in accordance with the provisions of Schedule 3 to this Agreement. Section 2.06. Interest and other charges shall be payable in arrears on April 15 and October 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Loan in accordance with the provisions of Schedule 3 to this Agreement. ARTICLE M Transfer of Loan Proceeds; Other Covenants Section 3.01. The Borrower shall enter into contractual arrangements with the Guarantor, satisfactory to the Bank, providing, inter alia, for: (a) the transfer to the Guarantor of the proceeds of the Loan; and (b) the transfer by the Guarantor to the Borrower of such funds as the Borrower shall be required to pay to the Bank on account of principal, interest and other charges on the Loan. Except as the Bank may otherwise agree, the Borrower shall not amend or fail to enforce any provision of such contractual arrangements. The Borrower shall exercise its rights under such contractual arrangements in such a manner as to protect the interests of the Borrower and the Bank and to accomplish the purposes of the Loan. -5- Section 3.02. The Bank and the Borrower hereby agree that the obligations set forth in Sections 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 of the General Conditions (relating respectively to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition) shall be carried out, or caused to be carried out, by the Guarantor pursuant to Section 3.04 (a) of the Guarantee Agreement. Section 3.03. The Borrower shall participate in the annual reviews referred to in Section 3.10 (b) of the Guarantee Agreement. ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained records and separate accounts adequate to reflect, in accordance with sound accounting practices, the resources and expenditures in connection with the execution of the Project. (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) of this Section, and the records and accounts for the Special Account for each fiscal year audited, in accordance with generally accepted auditing standards and procedures consistently applied, by independent and qualified auditors; (ii) furnish to the Bank as soon as available, but in any case not later than six 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 Bank shall have reasonably requested; (iii) furnish to the Bank each month certified statements of the Special Account; and (iv) furnish to the Bank such other information concerning said records and accounts as well as the audit thereof as the Bank shall from time to time reasonably request. -6- (c) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of statements of enpenditure, the Borrower shall provide to the Guarantor any information that may be required by the Guarantor to comply with the Guarantor's obligations under Section 3.05 of the Guarantee Agreement. ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as additional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) that the contractual arrangements referred to in Section 3.01 of this Agreement have been entered into; (b) that the Operational Manual, satisfactory to the Bank, has been issued by SSA and put into effect; (c) that the Federal Advisory Committee and PCU have been established and staffed as set forth in Section 3.11 (a) and (d) of the Guarantee Agreement; (d) that an Implementation Agreement has been entered into between the Guarantor and at least five Project States; and (e) that an SPCU is established for each of the Project States which have entered into an Implementation Agreement in satisfaction of the condition set forth in paragraph (d) of this Section. Section 5.02. The following are specified as additional matters, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank: (a) that on behalf of each of the Borrower and the Guarantor, the contractual arrangements referred to in Section 3.01 of this Agreement have been duly authorized or ratified, and executed and delivered, by the Borrower and the Guarantor and are legally binding upon the Borrower and the Guarantor in accordance with the terms of such contractual arrangements; and -7- (b) that on behalf of the Guarantor and each Project State which entered into an Implementation Agreement in satisfaction of the condition set forth in Section 5.01 (d) of this Agreement, the Implementation Agreement in question has been duly authorized or ratified, and executed and delivered, by the Guarantor and the relevant Project State and is legally binding upon the Guarantor and said Project State in accordance with the terms of such Implementation Agreement. Section 5.03. The date / , is hereby specified for the purposes of Section 12.04 of the General C diti6ns. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Director Internacional of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 248423 (RCA) Washington, D.C. 82987 (FTCC) 64145 (WUI) or 197683 (TRT) For the Borrower: Nacional Financiera, S.N.C. Dirección Internacional Torre IV, piso 8 Plaza Inn, Insurgentes Sur 1971 01020 México, D.F. México Cable address: Telex: NAFIN NAFIME 383-1775765 Mexico City Mexíco City -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. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Regional Vice President Latin America and the Caribbean NACIONAL FINANCIERA, S.N.C. By e / Authorized Representative SCHEDULE 1 Withdrawal of the Proceeds of the Loan The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures CateRory Dollar Equivalent) to be Financed (1) Civil works 28,200,000 70% under Part A of the Project (2) Goods (a) Printed materials 4,500,000 100% of foreign under Parts A, B expenditures, 100% and C of the Project of local expendi- tures (ex-factory cost) and 87% of local expenditures for other items procured locally (b) Pharmaceuticals 19,300,000 87% until with- and consumable drawals under medical supplies this Category under Part A of have reached an the Project aggregate amount (including dis- equivalent to tribution thereof) $8,200,000; 66% until withdrawals under this Category have reached an aggregate amount equivalent to $15,000,00; and 33% thereafter - 11 - Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (c) Vehicles 32,900,000 100% of foreign under Part A expenditures, 100% of the Project of local expendi- tures (ex-factory cost) and 87% of local expenditures for other items procured locally (d) Furniture and 45,500,000 100% of foreign equipment expenditures, 100% of local expendi- tures (ex-factory cost) and 87% of local expenditures for other items procured locally (3) Training 7,700,000 100% (4) Consultants' services, 70,000,000 100% technical assistance and information campaigns - 12 - Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (5) Incremental staff 66,700,000 87% until with- and operating drawals under costs (not inclu- this Category ding items and have reached an their distribution aggregate amount covered under equivalent to Categories (2) (a) $25,600,000; 66% and (b) above) until withdrawals under this Category have reached an aggregate amount equivalent to $48,500,000; and 33% thereafter (6) Unallocated 35,200,000 TOTAL 310,000,000 2. For the purposes of this Schedule: (a) "incremental staff and operating costs" means c6sts that would not have been incurred absent the Project and which are covered by the following SSA budget line- item classification codes ("clasificadores") in effect as of August 1, 1995: 1200, 1300, 2400, 2600, 2700, 3400 (only for shipping costs but not for insurance), 3700 and 4100 (only with respect to TAPs and midwives). In no case may any of such costs include salaries or other staff remuneration other than with respect to: (i) hardship post incentives for doctors, nurses and paramedics under Part A.2 (b) of the Project; (ii) SSA and SHA technical-level temporary fixed-term staff hired for purposes of carrying out Parts A and C of the Project; (iii) temporary fixed-term PCU and SPCU staff hired for purposes of the Project; and (iv) TAPs and midwives selected for purposes of carrying out Part A of the Project). In addition, in no case may any of such costs include maintenance costs; - 13 - (b) "foreign expenditures" means expenditures in the currency of any country other than that of the Guarantor for goods or services supplied from the territory of any country other than that of the Guarantor; (c) "local expenditures" means expenditures in the currency of the Guarantor or for goods or services supplied from the territory of the Guarantor; (d) "training" means remuneration for trainers and travel and per diem costs for trainers and trainees in connection with the training components set forth in Parts A, B and C of the Project (but does not include educational and informational materials); (e) "vehicles" means ambulances, four-wheel drive fully-equipped medical mobile units, bicycles and motorcycles; and (f) "information campaigns" means expenditures for the design, production and carrying out of health information campaigns. 3. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not to exceed $3,100,000, may be made in respect of Categories (1), (2) (d) and (4) on account of payments made for expenditures before that date but after November 21, 1994. 4. The Bank may require withdrawals from the Loan Account to be made on the basis of statements of expenditure, under such terms and conditions as the Bank shall specify by notice to the Borrower, for expenditures: (i) under Category (3) and salaries or remuneration for temporary fixed-term staff under Category (5); (ii) under contracts for works estimated to cost less than $2,000,000 equivalent per contract; (iii) under contracts for goods, materials and equipment estimated to cost less than $350,000 equivalent per contract; (iv) under contracts with individual consultants estimated to cost less than $50,000 equivalent per contract; and (v) under contracts with consulting firms estimated to cost less than $100,000 equivalent per contract. - 14 - SCHEDULE 2 Description of the Project The objectives of the Project are to: (a) support equitable access to a cost- effective package of quality health services for those in the Project States who lack health insurance and those in the Project States who are underserved by the current public health system; (b) support institutional development of public health authorities in all States through the improvement and decentralization of technical, managerial and financing processes pertaining to the health sector; and (c) support the modernization and restructuring of SSA so that it may assume an active leadership role in the health sector. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Bank may agree upon from time to time to achieve such objectives: Part A: Basic Health Care Services 1. (a) Strengthening of public health outreach programs in the Project States in areas to be selected per Project State from among the following: (i) reproductive health (by distributing devices and medication for reversible birth control and for the prevention of sexually transmitted disease, as well as by training and equipping midwives to provide prenatal, pregnancy and delivery care); (ii) infant care (by immunizing zhildren and childbearing-age women against measles, polio, diphtheria, pertussis and tetanus, by providing well-baby clinics for infant growth monitoring and maternal nutrition counselling, by providing vaccine-related supplies such as syringes and needles, as well as by providing, using and maintaining storage and delivery equipment and facilities, such as refrigerators, other cold chain equipment, mobile units and storage rooms, for such vaccines); (iii) school-age care (by implementing programs within schools with an emphasis on the provision of nutrition counselling, ophthalmologic testing, bucodental health examinations and deparasitation); (iv) infectious disease and vector control (by detecting, treating and carrying out surveillance of infectious diseases such as tuberculosis and leprosy, as well as by providing fumigation equipment and supporting mobile outreach teams for purposes of achieving early detection and treatment of vector-borne diseases such as malaria and dengue fever and controlling the relevant vectors); and (v) water and sanitation (by constructing latrines and by supporting drinking water testing, monitoring and chlorination initiatives). (b) Provision of support for health education and promotion programs in the Project States by preparing, printing and distributing educational pamphlets and posters, preparing teaching materials and holding seminars at the school and community levels, - 15 - broadcasting messages through the electronic media and implementing social marketing programs (all in Spanish and other relevant indigenous languages and with respect to priority topics to be selected per Project State from among the following: children's health, food hygiene, reproductive health, nutritional education, early cancer detection, mental health, accident prevention, addiction prevention, oral health, vector-borne disease prevention and healthy lifestyle promotion). 2. (a) Carrying out of Subprojects in the Project States; and (b) supporting such Subprojects, as well as the initiatives covered by Part A. 1 (a) of the Project, through the tionstruction, upgrading, expansion and maintenance of first- and second-level health sector physical facilities (health posts, centers, clinics and hospitals) in small rural and other underserved communities, the provision of basic equipment for first- and second- level health care (such as surgical instruments, scales and delivery tables), the provision of essential office, laboratory and radio equipment for such health facilities, the provision of ambulances, mobile units, bicycles and motorcycles for use in connection with the delivery of health services, the provision of pharmaceuticals and birth control devices, the provision of technical training and hardship post incentives to health sector staff, as well as the provision of remuneration to incremental health sector personnel (such as TAPs, midwives and community volunteers). Part B: Institutional Development and Decentralization 1. Provision of management training, consultant services and technical assistance to SSA and SHAs in all States for purposes of: (a) defining and adapting health sector administrative and financial (including budgetary) functions and responsibilities to be transferred from the federal level to the state and local level as part of a decentralization of the sector; (b) designing an implementation plan for the carrying out of such decentralization; and (c) adapting the relevant policy and regulatory framework so as to coordinate an eventual merger of health services provided by the public sector to the uninsured population. 2. (a) Provision of training courses, seminars and study tours to senior SHA managers in order to support the carrying out of their responsibilities for health sector administration and for providing technical support to local health sector jurisdictions in their States; and (b) provision of general management training to more junior SHA managers at the state and local levels in order to support the carrying out of their health service delivery management responsibilities. -16- 3. Provision of training to SHA staff on how to apply the concept of total quality management in obtaining, organizing and analyzing epidemiological information, as well as in using such information to make, implement and thereafter evaluate the impact of decisions with respect to health services delivery. 4. Provision of training to SHA staff on how to take full advantage of the management information system strengthened pursuant to Part C.4 of the Project, including the presentation to such staff of seminars on the usefulness and operation of the management information system modules identified in said Part C.4. Part C: Modernization and Restructuring of SSA 1. (a) Identification (through a diagnostic process) of the mission, objectives and function of the SSA, as well as of its organizational structure, human resource, technology, infrastructure, training, information system and legal firamework needs required to support and optimize the decentralization process referred to in Part B.1 of the Project and make SSA's role congruent with the decentralized health sector resulting therefrom; and (b) implementation of the SSA modernization requirements identified pursuant to said diagnosis, as well as provision of support for such implementation in the form of training workshops for SSA personnel. 2. Carrying out of policy studies with respect to, inter alia, the following health sector topics: (a) regulatory instruments; (b) financing mechanisms for the purchase from, or sale to, third parties (including the private sector) of health services; (c) health budgeting and planning systems; and (d) cost-effective vaccine production and quality control (by public, private or joint public-private entities). 3. Pilot testing of innovative institutional, policy or operational models designed to contribute towards the modernization of the health sector, such as: (a) alternative health care delivery models involving private sector, community, municipal or non-governmental orga .,.ation participation; (b) models for health care delivery through the social insurance sector, and (c) incentive models to improve performance of health sector personnel and institutions. 4. (a) Carrying out of an inventory and assessment of existing SSA and SHA management information system procedures, hardware and software; (b) improvement of said management information system on the basis of the findings of such inventory and assessment; and (c) design, implementation and application at federal, state and local levels of new management information system modules in the areas of health service administration, budgeting, planning, procurement and stock control, epidemiological surveillance, sanitary regulation and hospital management and accounting. - 17 - 5. Provision of technical assistance and operational support to the PCU and SPCUs to assist in the monitoring, supervision, continuous process evaluation and periodic impact evaluation of the Project. The Project is expected to be completed by December 31, 2000. - 18 - SCHEDULE 3 Interest and Principal Repayment Provisions A. General Definitions For purposes of this Schedule, the following terms have the following meanings. (a) "Disbursed Amount" means, in respect of each Interest Period, the aggregate principal amount of the Loan withdrawn from the Loan Account in such Interest Period. (b) "Interest Period" means the initial period from and including the date of this Agreement to, but excluding, the first Interest Payment Date occurring thereafter, and after the initial period, each period from and including an Interest Payment date to, but excluding, the next following Interest Payment Date. (c) "Interest Payment Date" means any date specified in Section 2.06 of this Agreement. (d) "Rate Fixing Date" means, for each Disbursed Amount, the first day of the Interest Period next following the Interest Period in which such Disbursed Amount is withdrawn. B. Interest 1. The principal amount of the Loan shall be divided into Disbursed Amounts. Interest shall accrue on each Disbursed Amount outstanding from time to time at a rate based on a floating rate index prior to its Rate Fixing Date and at a fixed rate from its Rate Fixing Date, as described in paragraph 2 of this Part B. 2. (a) From the date of withdrawal of each amount of each Disbursed Amount withdrawn and outstanding, to but not including the Rate Fixing Date for such Disbursed Amount, interest on each such amount shall accrue, at a rate equal to the applicable: (i) LIBOR Base Rate; plus (ii) LIBOR Total Spread. - 19 - (b) From the Rate Fixing Date for each Disbursed Amount until final repayment thereof, interest on such Disbursed Amount shall accrue, at a rate equal to the applicable: (i) Fixed Base Rate; plus (ii) Fixed Total Spread. 3. For purposes of paragraph 2 of this Part B, the following terms have the following meanings. (a) "LIBOR Base Rate" means, for the Interest Period in which a Disbursed Amount is withdrawn, the London interbank offered rate for six-month deposits in Dollars for value the first day of such Interest Period (or, in the case of the initial Interest Period, for value the day occurring on the Interest Payment Date preceding the first day of such Interest Period), as reasonably determined by the Bank and expressed as a percentage per annum. (b) "LIBOR Total Spread" means, for the Interest Period in which each Disbursed Amount is withdrawn: (i) one half of one percent (1/2 of 1%); (ii) minus (or plus) the weighted average margin, for such Interest Period, below (or above) the London interbank offered rates, or other reference rates, for six-month deposits,- in respect-of the Bank's outstanding borrowings or portions thereof allocated by the Bank to fund single currency loans or portions thereof made by it that include such Disbursed Amount for such Interest Period; as reasonably determined by the Bank and expressed as a percentage per annum. (c) "Fixed Base Rate" means, for each Disbursed Amount, the equivalent of the London interbank offered rate for six-month deposits in Dollars for value on the Rate Fixing Date for such Disbursed Amount, expressed as a single fixed interest rate based on the fixed interest rates corresponding to the repayment installments of such Disbursed Amount, as reasonably determined by the Bank and expressed as a percentage per annum. (d) "Fixed Total Spread" means, for each Disbursed Amount: (i) one-half of one percent (1/2 of 1%); - 20 - (ii) minus (or plus) the cost margin, applicable on the Rate Fixing Date for such Disbursed Amount, below (or above) the London interbank offered rates, or other reference rates, for six-month deposits, in respect of the Bank's outstanding borrowings or portions thereof allocated to fund single currency loans or portions thereof made by it that include such Disbursed Amount; plus (iii) the Bank's risk spread applicable on the Rate Fixing Date for such Disbursed Amount; as reasonably determined by the Bank and expressed as a percentage per annum. 4. The Bank shall notify the Guarantor and the Borrower of LIBOR Base Rate, LIBOR Total Spread, Fixed Base Rate and Fixed Total Spread applicable to each Disbursed Amount, promptly upon the determination thereof. 5. Whenever, in light of changes in market practice affecting the determination of the interest rates referred to in this Schedule, the Bank determines that it is in the interest of its borrowers as a whole and of the Bank to apply a basis for determining the interest rates applicable to the Loan other than as provided in this Schedule, the Bank may modify the basis for determining the interest rates applicable to amounts of the Loan not yet withdrawn upon not less than six (6) months' notice to the Borrower of the new basis. The new basis shall become effective on the expiry of the notice period unless the Borrower notifies the Bank during said period of its objection thereto, in which case said modification shall not apply to the Loan. C. Repayment 1. Subject to the provisions of paragraph 2 of this Part C, the Borrower shall .repay each Disbursed Amount of the Loan in semi-annual installments payable on each April 15 and October 15, the first such installment to be payable on the seventh (7th) Interest Payment Date following the Rate Fixing Date for such Disbursed Amount and the last such installment to be payable on the eighteenth (18th) Interest Payment Date following the Rate Fixing Date for such Disbursed Amount. Each installment shall be one-twelfth (1/12) of such Disbursed Amount. 2. Notwithstanding the provisions of paragraph 1 of this Part C, if any installment of principal of each Disbursed Amount would, pursuant to the provisions of said paragraph 1, be payable after April 15, 2011, the Borrower shall also pay on said date the aggregate amount of all such installments. - 21 - 3. After each Disbursed Amount shall have been withdrawn, the Bank shall promptly notify the Borrower and the Guarantor of the amortization schedule for such Disbursed Amount. -22- SCHEDULE 4 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1) through (5) set forth in the table in paragraph I of Schedule I 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 Loan 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 equivalent to $20,000,000 to be withdrawn from the Loan Account and deposited into the Special Account pursuant to paragraph 3 (a) of this Schedule, provided, however, that unless the Bank shall otherwise agree, the Authorized Allocation shall be limited to an amount equivalent to $13,000,000 until the aggregate amount of withdrawals from the Loan Account plus the total amount of all outstanding special commitments entered into by the Bank pursuant to Section 5.02 of the General Conditions shall be equal to or exceed the equivalent of $37,000,000. 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 Bank 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 Bank 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 Bank shall, on behalf of the Borrower, withdraw from the Loan 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 Bank requests for deposits into the Special Account at such intervals as the Bank shall specify. - 23 - (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Bank 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 Bank shall, on behalf of the Borrower, withdraw from 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 Bank from 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 Bank shall reasonably request, furnish to the Bank 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 Bank shall not be required to make further deposits into the Special Account: (a) if, at any time, the Bank shall have determined that all further withdrawals should be made by the Borrower directly from the Loan Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; (b) if the Borrower shall have failed to furnish to the Bank, within the period of time specified in Section 4.01 (b) (ii) of this Agreement, any of the audit reports required to be furnished to the Bank pursuant to said Section in respect of the audit of the records and accounts for the Special Account; (c) if, at any time, the Bank shall have notified the Borrower of its intention to suspend in whole or in part the right of the Borrower to make withdrawals from the Loan Account pursuant to the provisions of Section 6.02 of the General Conditions; or (d) once the total unwithdrawn amount of the Loan allocated to the eligible Categories, less the amount of any outstanding special commitment entered into by the Bank pursuant to Section 5.02 of the General Conditions with respect to expenditures - 24 - covered by such eligible Categories, shall equal the equivalent of twice-the amount of the Authorized Allocation. Thereafter, withdrawal from the Loan Account of the remaining unwithdrawn amount of the Loan allocated to the eligible Categories shall follow such procedures as the Bank shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Bank 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 Bank 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; or (ii) was not justified by the evidence furnished to the Bank, the Borrower shall, promptly upon notice from the Bank: (A) provide such additional evidence as the Bank may request; or (B) deposit into the Special Account (or, if the Bank shall so request, refund to the Bank) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Bank shall otherwise agree, no further deposit by the Bank 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 Bank 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 Bank, refund to the Bank such outstanding amount. (c) The Borrower may, upon notice to the Bank, refund to the Bank all or any portion of the funds on deposit in the Special Account. (d) Refunds to the Bank made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Loan Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Bank for Reconstruction and Development. O E 'RETARY