Madagascar - Program Support Project : Credit 2729 - Credit Agreement - Conformed

CREDIT NUMBER 2729 MAG Development Credit Agreement (Agricultural Extension Program Support Project) between REPUBLIC OF MADAGASCAR and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1995 CREDIT NUMBER 2729 MAG DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated / + , 1995, between REPUBLIC OF MADAGASCAR (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS: (A) the Borrower has issued a policy statement on agricultural extension, dated February 22, 1995, describing a program of actions, objectives and policies designed to achieve an adjustment of the Borrower's agricultural extension services (hereinafter referred to as "the Program"), and declared its commitment to the execution of the Program; and (B) 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; and WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, to extend the Credit to the Borrower upon the terms and conditions set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Development Credit Agreements" of the Association, dated January 1, 1985, with the modifications thereto set forth below (the General Conditions) constitute an integral part of this Agreement: (a) the last sentence of Section 3.02 is deleted. (b) the second sentence of Section 5.01 is modified to read: "Except as the Association and the Borrower shall otherwise agree, no withdrawals shall be made: (a) on account of expenditures in the territories of any country which is not a member of the Bank or for goods produced in, or services supplied from, such territories; or (b) for the purpose of any payment to persons or entities, or for any import of goods, if such payment or import, to the knowledge of the Association, -2- is prohibited by a decision of the United Nations Security Council taken under Chapter VII of the Charter of the United Nations." 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) "DA" means Direction _e I'Agriculture of MEADR; (b) "MEADR" means the Borrower's Minist6re du D6veloppement Rural et de la R6forme Fonci6re; (c) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement. 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 sixteen million two hundred thousand Special Drawing Rights (SDR 16,200,000). Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule i 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 described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Credit. (b) The Borrower may, for the purposes of the Project, open and maintain in dollars a special deposit account in a commercial bank on terms and conditions satisfactory to the Association, including appropriate protection against setoff, seizure or attachment. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 5 to this Agreement. -3- Section 2.03. The Closing Date shall be December 31, 2000 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 canceled; 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 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 per cent (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 October 15, 2005 and ending April 15, 2035. Each installment to and including the installment payable on April 15, 2015 shall be one percent (1%) of such principal amount, and each installment thereafter shall be two percent (2%) of such principal amount. -4- (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. -5- ARTICLE II Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end, shall carry out the Project through MEADR with due diligence and efficiency and in conformity with appropriate administrative, financial, technical and environmental practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. (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 the Project in accordance with the Implementation Program set forth in Schedule 4 to this Agreement. Section 3.02. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this Agreement. Section 3.03. Without limitation upon the provisions of Article IX of ihe General Conditions, the Borrower siall: (a) prepare and furnish to the Association not later than six (6) months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Association, a plan, of such scope and in such detail as the Association shall reasonably request, for the future operation of the Project; (b) afford the Association a reasonable opportunity to exchange views with the Borrower on said plan; and (c) thereafter, carry out said plan with due diligence and efficiency and in accordance with appropriate practices, taking into account the Association's comments thereon. Section 3.04. Without prejudice to its obligations under Section 3.01 of this Agreement, the Borrower shall open, in a commercial bank and on terms and conditions satisfactory to the Association, an advance account in local currency, to be operated and -6- maintained by DA, into which it shall deposit from time to time its local counterpart contribution to the cost of the Project. (b) The Borrower shall: (i) make an initial deposit of the equivalent of $100,000 into the account referred to in subparagraph (a) of this paragraph; and (ii) have such account replenished on a bi-monthly basis, or whenever the balance thereof equals not more than one third of the amount of the initial deposit, whichever occurs first. 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 the Project of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) of this Section including those for the Special Account for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association, as soon as available, but in any case not later than six (6) 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. -7- (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 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 event is specified: namely, a situation has arisen which shall make it improbable that the Program, or a significant part thereof, will be carried out. ARTICLE VI Effective Date; Termination Section 6.01. The following event is specified as an additional condition to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 -8- (b) of the General Conditions; namely, that the account referred to in Section 3.04 of this Agreement has been duly opened, and the initial amount of $100,000 equivalent deposited therein. Section 6.02. 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 6.03. The obligations of the Borrower under Article IV of this Agreement shall cease and determine on the date on which this 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 Minister 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: -9- For the Borrower: Ministry of Finance and Budget Antananarivo 101 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) -10- IN WITNESS WH4EREOF, 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 / Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By O z Regional Vice President Africa - 11 - 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 Credit % of Allocated Expenditures (Expressed in to be Category SDR Equivalent) Financed 1. Vehicles and 7,590,000 100% of foreign equipment expenditures and 75% of local expenditures 2. Civil works 1,355,000 100% of foreign expenditures and 75% of local expenditures 3. Consultancy services, 300,000 100% subcontracts, and audits 4. Training 570,000 100% 5. Operating costs 5,735,000 95% 6. Unallocated 650,000 TOTAL 16,200,000 -12- 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; (c) the term "operating costs" means the incremental operating costs arising under the Project on account of travel allowances and other field benefits (other than salaries), maintenance of vehicles, fuel and equipment, and office rent, supplies and utilities; and (d) the term "subcontracts" has the same meaning as in paragraph 3 of Schedule 4 to this Agreement. 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 SDR 325,000 may be made in respect of Category (5) of the table in paragraph I of Schedule I to this Agreement on account of payments made for expenditures before that date but after July 1, 1995. 4. The Association may require withdrawals from the Credit Account to be made on the basis of statements of expenditure for expenditures for civil works under contracts not exceeding $200,000 equivalent, goods and consultants' services (firms) under contracts not exceeding $100,000 equivalent, consultants' services (individuals) under contracts not exceeding $50,000 equivalent, operating costs and training, under such terms and conditions as the Association shall specify by notice to the Borrower. - 13 - SCHEDULE 2 Description of the Project The objectives of the Project are to increase agricultural productivity and farmers' incomes in an environmentally sustainable manner, and to rationalize the use of public resources in support of agricultural services. 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 Extension. Research Linkages and Support for Farmer Organizations 1. Expansion of the Program to cover all of the Borrower's 28 agricultural districts, including: (a) introduction of an agricultural extension delivery mechanism involving a fixed schedule of visits to farmers, regular training of extension staff, clear division of training and supervision responsibilities, and the development of appropriate technologies through a process of diagnosis of farmer needs involving researchers, subject matter specialists, extension staff and farmers; (b) provision of an adequate contingent of additional extension staff capable of producing a ratio of not more than about 600 farm families per extension agent, depending on local population density and constraints imposed by poor rural transportation means; and (c) acquisition of vehicles and equipment, and rehabilitation of office buildings. 2. Promotion and strengthening of farmers' organizations through provision of advice to farmers for the organization and management of groups and associations, and better access, in particular, to commercial marketing and supply outlets, credit institutions, and seed producers, plant and improved livestock breeders. - 14- Part B: Training and Human Resource Management 1. Implementation of a training and human resource management program, including: (a) fortnightly training of ground level extension staff by subject matter specialists; (b) monthly technological review meetings involving research and extension staff, and farmers; (c) training of farmer organization specialists; (d) training in field diagnosis; monitoring and evaluation, and surveys; (e) training of trainers; (f) training in supervisory techniques; (g) training in internal audit; (h) training in computer use; (i) management training; () training in techniques involved in carrying out tests and trials in farmers' fields; (k) training in documentation; and (1) overseas study tours. 2. Rehabilitation of agricultural colleges at Bezaha and Ambanja, and four other locations, with a view to providing skills upgrading training for field staff and farmers, and initial training for extension workers to be attached to the agricultural services. 3. Acquisition of computers to strengthen the capacity of the Human Resources Management Directorate of MEADR to handle personnel data, and thus provide needed support and advice on staffing and training decisions pertaining to the Project. Part C: Financial Management, Accounting and Internal Audit Introduction of a financial management system responsive to modern management information requirements, including establishment of adequate budget preparation, monitoring and evaluation systems, and introduction of double-entry and accrual-based accounting. Part D: Monitoring and Evaluation 1. Regular monitoring and evaluation of the impact of the Program, with particular reference to: (a) the level of participation of farmers, and (b) the rate of adoption of the technical messages involved. 2. Carrying out of an independent evaluation of the Program at the end of a two- year period, to determine both the impact of the Program and the effectiveness of the monitoring and evaluation criteria used. - 15- The Project is expected to be completed by June 30, 2000. -16- SCHEDULE 3 Procurement and Consultants' Services Section 1. Procurement of Goods and Works Part A: General Goods and works shall be procured in accordance with the provisions of Section I of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in January 1995 (the Guidelines) and the following provisions of this Section, as applicable. Part B: International Competitive Bidding 1. Except as otherwise provided in Part C of this Section, goods and works shall be procured under contracts awarded in accordance with the provisions of Section II of the Guidelines and paragraph 5 of Appendix 1 thereto. 2. The following provisions shall apply to goods and works to be procured under contracts awarded in accordance with the provisions of paragraph 1 of this Part B: (a) Grouping of contracts To the extent practicable, contracts for goods shall be grouped in bid packages estimated to cost $100,000 equivalent or more each. (b) Preference for domestically manufactured goods and domestic contractors The provisions of paragraphs 2.54 and 2.55 of the Guidelines and Appendix 2 thereto shall apply to goods manufactured in the territory of the Borrower and works to be carried out by domestic contractors. -17- Part C: Other Procurement Procedures 1. National Competitive Bidding Goods estimated to cost $100,000 equivalent or less per contract and $500,000 equivalent or less in the aggregate, and works estimated to cost $200,000 equivalent or less per contract and $1,700,000 equivalent or less in the aggregate, may be procured under contracts awarded in accordance with the provisions of paragraphs 3.3 and 3.4 of the Guidelines. 2. National Shopping Goods estimated to cost $30,000 equivalent or less per contract and $200,000 equivalent or less in the aggregate, may be procured under contracts awarded on the basis of national shopping procedures in accordance with the provisions of paragraphs 3.5 and 3.6 of the Guidelines. Part D: Review by the Association of Procurement Decisions 1. Procurement Planning Prior to the issuance of any invitations to prequalify for bidding or to bid for contracts, the proposed procurement plan for the Project shall be furnished to the Association for its review and approval, in accordance with the provisions of paragraph I of Appendix 1 to the Guidelines. Procurement of all goods and works shall be undertaken in accordance with such procurement plan as shall have been approved by the Association, and with the provisions of said paragraph 1. 2. Prior Review With respect to each contract for civil works estimated to cost the equivalent of $200,000 or more, and goods estimated to cost the equivalent of $100,000 or more, the procedures set forth in paragraphs 2 and 3 of Appendix 1 to the Guidelines shall apply. 3. Post Review With respect to each contract not governed by paragraph 2 of this Part, the procedures set forth in paragraph 4 of Appendix 1 to the Guidelines shall apply. -18- Section II. Employment of Consultants 1. Consultants' services shall be procured under contracts awarded in accordance with the provisions 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). For complex, time-based assignments, such contracts shall be based on the standard form of contract for consultants' services issued by the Bank, with such modifications thereto as shall have been agreed by the Association. Where no relevant standard contract documents have been issued by the Bank, other standard forms acceptable to the Association shall be used. 2. Notwithstanding the provisions of paragraph I 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: (a) contracts for the employment of consulting firms estimated to cost less than $100,000 equivalent each, or (b) contracts for the employment of individual consultants estimated to cost less than $50,000 equivalent each. However, said exceptions to prior Association review shall not apply to (a) the terms of reference for such contracts, (b) single-source selection of consulting firms, (c) assignments of a critical nature, as reasonably determined by the Association, (d) amendments to contracts for the employment of consulting firms raising the contract value to $100,000 equivalent or above, or (e) amendments to contracts for the employment of individual consultants raising the contract value to $50,000 equivalent or above. -19- SCHEDULE 4 Implementation Program 1. (a) The Borrower shall appoint the Deputy Director, DA, responsible for agricultural extension to be the national project coordinator, reporting to the Director, DA, and, as such, to be responsible for the day-to-day management of the various components of the Project. (b) At the level of each agricultural district, the head of the agricultural district shall be responsible, subject to normal administrative control, for the day-to-day management of activities of the Project located in the district. 2. (a) The Borrower shall submit to the Association, for its review and approval, where appropriate: (i) not later than September 30 of each year, a proposed annual work program, including the proposed budget and financing plan, and training proposals and proposed procurement procedures, under the Project for the forthcoming fiscal year; (ii) not later than March 31 and September 30 of each year, progress reports on the status of each component of the Project; (iii) reports as needed on the award of individual contracts under the Project; and (iv) quarterly procurement reports giving details of: (A) updated cost estimates for individual contracts and for the Project, including best estimates of allowances for physical and price contingencies; (B) revised timing of procurement actions, including advertising, bidding, contract award and completion time for individual contracts; and (C) status of compliance with aggregate limits on prescribed procurement procedures. - 20 - (b) Adoption of the annual work program referred to in paragraph (i) of the preceding subparagraph shall be subject to the prior approval of the Association, and based, inter alia, on a review of the accompanying proposed budget and financing plan, and an evaluation of the results of the annual work program for the current fiscal year and the independent evaluation referred to under Part D.2 of the Project. 3. For purposes of Part A. 1 (b) of the Project, where there are private providers of extension services able and willing to continue to provide such services under the Project, the Borrower shall seek to conclude formal agreements with such private providers (hereinafter referred to as "subcontracts"), on terms and conditions acceptable to the Association, specifying the terms and conditions governing the provision of such services, including the respective obligations of the parties and the resources to be provided by the Borrower thereunder. 4. For purposes of Part A.1 (c) of the Project, the Borrower shall ensure that motorbikes intended for use by extension agents shall be provided to such extension agents on a personal transfer basis, and according to a four-year replacement cycle based on the expected useful life of such motorbikes, and on such other terms and conditions as shall be acceptable to the Association. 5. For purposes of Part B.2 of the Project, the Borrower shall not proceed to rehabilitate the four other colleges referred to thereunder unless the rehabilitation of the two colleges at Bezaha and Ambanja has been satisfactorily completed, and both colleges successfully reopened. 6. Prior to the introduction of the Program in each of the agricultural districts, the Borrower shall organize a workshop to evaluate the strengths and weaknesses of existing extension services in the district, and, on the basis thereof, to prepare an action program, outlining the content and objectives of a proposed package of extension services appropriate for the district and consistent with the Program. 7. (a) The Borrower shall, not later than October 31, 1996, and, thereafter, not later than October 31 of each subsequent year, undertake, in conjunction with the Association, a joint annual review (or, in the case of the review to be held not later than October 31, 1998, a midterm review) of the Project, during which they shall exchange views generally on all matters relating to the progress of the Project and the performance by the Borrower of its respective obligations under this Agreement and, in particular: -21- (i) the progress achieved by the Borrower during the current fiscal year, having regard to the monitoring indicators agreed upon between the Borrower and the Association; (ii) the status of financial and procurement performance under the Project; (iii) a review of the public expenditure program for the agricultural sector; and (iv) in the case of the midterm review, a review of recommendations for the preparation of the next phase of the Program. (b) Not later than one month prior to each review, the Borrower shall furnish to the Association, for its comments, a report, in such detail as the Association shall reasonably request, on the progress and status of the Project, and giving details, in particular, of the various matters to be discussed at such review. (c) Following each review, the Borrower undertakes to act promptly and diligently, in order to take any corrective action deemed necessary to remedy any shortcoming noted in the implementation of the Project, or to implement such other measures as may have been agreed upon between the parties in furtherance of the objectives of the Project. - 22 - SCHEDULE 5 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 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit allocated from time to time to the eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $300,000 to be withdrawn from the Credit Account and deposited into the Special Account pursuant to paragraph 3 (a) of this Schedule, provided, however, that unless the Association shall otherwise agree, the Authorized Allocation shall be limited to an amount equivalent to $200,000 until the aggregate amount of withdrawals from the Credit Account plus the total amount of all outstanding special commitments entered into by the Association pursuant to Section 5.02 of the General Conditions shall be equal to or exceed the equivalent of SDR 325,000. 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 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 and deposit into the Special Account such amount or amounts as the Borrower shall have requested. - 23 - (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. (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Association the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into the Special Account such amount as the Borrower shall have requested and as shall have been shown by said documents and other evidence to have been paid out of the Special Account for eligible expenditures. All such deposits shall be withdrawn by the Association from the Credit Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of the Special Account, the Borrower shall, at such time as the Association shall reasonably request, furnish to the Association such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Association shall not be required to make further deposits into the Special Account: (a) if, at any time, the Association shall have determined that all further withdrawals should be made by the Borrower directly from the Credit Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Secticn 2.02 of this Agreement; (b) if the Borrower shall have failed to furnish to the Association, 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 Association pursuant to said Section in respect of the audit of the records and accounts for the Special Account; (c) if, at any time, the Association shall have notified the Borrower of its intention to suspend in whole or in part the right of the Borrower to make withdrawals - 24- from the Credit Account pursuant to the provisions of Section 6.02 of the General Conditions; or (d) once the total unwithdrawn amount of the Credit allocated to the eligible Categories, less the amount of any outstanding special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions with respect to the Project, shall equal the equivalent of twice the amount of the Authorized Allocation. Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to the eligible Categories shall follow such procedures as the Association shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Association shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice will be utilized in making payments for eligible expenditures. 6. (a) If the Association shall have determined at any time that any payment out of the Special Account: (i) was made for an expenditure or in an amount not eligible pursuant to paragraph 2 of this Schedule; 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 the Special Account (or, if the Association shall so request, refund to the Association) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the 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 - 25 - 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 the Special Account. (d) Refunds to the Association made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Credit Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions. 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