OFFICIAL DOCUMENTS. Loan Agreement LOAN NUMBER 8764-MX. (Improving Access to Affordable Housing Project) between UNITED MEXICAN STATES.

Transcription

1 OFFICIAL DOCUMENTS LOAN NUMBER 8764-MX Loan Agreement (Improving Access to Affordable Housing Project) between UNITED MEXICAN STATES and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Dated October 26th,2017

2 LOAN AGREEMENT AGREEMENT dated October 26th,2017, between UNITED MEXICAN STATES ("Borrower") duly represented by its Ministry of Finance and Public Credit (Secretaria de Hacienda y Crdito Pblico) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ("Bank"). Whereas the Borrower has informed the Bank that the proceeds of the Loan (as set forth in' the table in Section IV.A.3 of Schedule 2 to this Agreement and for purposes of supporting the project described in Schedule 1 to this Agreement (the "Project")), shall be used in conformity with the requirements of the Borrower's income, budgetary and public debt laws and the terms of this Agreement. NOW THEREFORE the Borrower and the Bank hereby agree as follows: ARTICLE I - GENERAL CONDITIONS; DEFINITIONS The General Conditions (as defined in the Appendix to this Agreement) constitute an integral part of this Agreement Unless the context requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the General Conditions or in the Appendix to this Agreement. ARTICLE II - LOAN Noting that the Borrower has informed the Bank that the proceeds of the Loan shall be used in conformity with the requirements of the Borrower's income, budgetary and public debt laws and the terms of this Agreement, but without limitation to the provisions of Section 8.01 of the General Conditions, the Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in this Agreement, the amount of one hundred million Dollars ($100,000,000), as such amount may be converted from time to time through a Currency Conversion in accordance with the provisions of Section 2.08 of this Agreement ("Loan"), to assist the Borrower in financing the Project The Borrower may withdraw the proceeds of the Loan in accordance with Section IV of Schedule 2 to this Agreement. Unless the Borrower's Representative designated in Section 6.01 of this Agreement otherwise informs the Bank, the Borrower's Representative for purposes of taking any action required or permitted to be taken pursuant to this Section is the NAFIN's Director(a) de Organismos Financieros Internacionales or any person or persons whom such representative shall designate in writing.

3 The Front-end Fee payable by the Borrower shall be equal to one quarter of one percent (0.25%) of the Loan amount The Commitment Charge payable by the Borrower shall be equal to one quarter of one percent (0.25%) per annum on the Unwithdrawn Loan Balance The interest payable by the Borrower for each Interest Period shall be at a rate equal to the Reference Rate for the Loan Currency plus the Variable Spread; provided, however, that the interest payable shall in no event be less than zero percent (0%) per annum; and provided furthermore that, upon a Conversion of all or any portion of the principal amount of the Loan, the interest payable by the Borrower during the Conversion Period on such amount shall be determined in accordance with the relevant provisions of Article IV of the General Conditions. Notwithstanding the foregoing, if any amount of the Withdrawn Loan Balance remains unpaid when due and such non-payment continues for a period of thirty days, then the interest payable by the Borrower shall instead be calculated as provided in Section 3.02 (e) of the General Conditions The Payment Dates are January 15 and July 15 in each year The principal amount of the Loan shall be repaid in accordance with the provisions of Schedule 3 to this Agreement (a) The Borrower may at any time request any of the following Conversions of the terms of the Loan in order to facilitate prudent debt management: (i) a change of the Loan Currency of all or any portion of the principal amount of the Loan, withdrawn or unwithdrawn, to an Approved Currency; and (ii) a change of the interest rate basis applicable to: (A) all or any portion of the principal amount of the Loan withdrawn and outstanding from a Variable Rate to a Fixed Rate, or vice versa; or (B) all or any portion of the principal amount of the Loan withdrawn and outstanding from a Variable Rate based on a Reference Rate and the Variable Spread to a Variable Rate based on a Fixed Reference Rate and the Variable Spread, or vice versa; or (C) all of the principal amount of the Loan withdrawn and outstanding from a Variable Rate based on a Variable Spread to a Variable Rate based on a Fixed Spread; and (iii) the setting of limits on the Variable Rate or the Reference Rate applicable to all or any portion of the principal amount of the Loan withdrawn and outstanding by the establishment of an Interest Rate Cap or Interest Rate Collar on the Variable Rate or the Reference Rate. (b) Any conversion requested pursuant to paragraph (a) of this Section that is accepted by the Bank shall be considered a "Conversion", as defined in the General Conditions, and shall be effected in accordance with the

4 -3- provisions of Article IV of the General Conditions and of the Conversion Guidelines. (c) Promptly following the Execution Date for an Interest Rate Cap or Interest Rate Collar for which the Borrower has requested that the premium be paid out of the proceeds of the Loan, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and pay to itself the amounts required to pay any premium payable in accordance with Section 4.05 (c) of the General Conditions up to the amount allocated from time to time for the purpose in the table in Section IV of Schedule 2 to this Agreement (a) If on any given day, the Total Exposure exceeds the Standard Exposure Limit (as said terms are defined in sub-paragraphs (b)(ii) and (b)(iii) of this Section), the Borrower shall pay to the Bank a surcharge at the rate of one half of one percent (0.5%) per annum of the Allocated Excess Exposure Amount (as defined in sub-paragraph (b)(i) of this Section) for each said day ("Exposure Surcharge"). The Exposure Surcharge (if any) shall be payable semi-annually in arrears on each Payment Date. (b) For purposes of this Section the following terms have the meanings set forth below: (i) (ii) (iii) "Allocated Excess Exposure Amount" means for each day during which the Total Exposure exceeds the Standard Exposure Limit, the product of: (A) the total amount of said excess; and (B) the ratio of all (or, if the Bank so determines, a portion) of the Loan to the aggregate amount of all (or the equivalent portions) of the loans made by the Bank to the Borrower and to other borrowers guaranteed by the Borrower that are also subject to an exposure surcharge, as said excess and ratio are reasonably determined from time to time by the Bank. "Standard Exposure Limit" means the standard limit on the Bank's financial exposure to the Borrower, which, if exceeded, would subject the Loan to the Exposure Surcharge, as determined from time to time by the Bank. "Total Exposure" means for any given day, the Bank's total financial exposure to the Borrower, as reasonably determined by the Bank.

5 -4- ARTICLE III - PROJECT The Borrower declares its commitment to the objectives of the Project. To this end, the Borrower, through the Comisi6n Nacional de Vivienda (CONAVI), shall carry out the Project, in accordance with the provisions of Article V of the General Conditions and the Contrato de Mandato Without limitation upon the provisions of Section 3.01 of this Agreement, and except as the Borrower and the Bank shall otherwise agree, the Borrower, through CONAVI, shall ensure that the Project is carried out in accordance with the provisions of Schedule 2 to this Agreement. ARTICLE IV - REMEDIES OF THE BANK The Additional Event of Suspension consists of the following, namely, that any of the parties to the Contrato de Mandato shall have failed to perform any of their obligations under the Contrato de Mandato, and such failure, in the opinion of the Bank, materially or adversely affects the objective of the Project The Additional Event of Acceleration consists of the following, namely, that the event specified in Section 4.01 of this Agreement occurs and is continuing for a period of sixty (60) days after notice of the event has been given by the Bank to the Borrower. ARTICLE V - EFFECTIVENESS; TERMINATION The Additional Condition of Effectiveness consists of the following, namely, that the Contrato de Mandato has been duly executed by the parties thereto The Additional Legal Matter consists of the following: (a) the Borrower (through SHCP and CONAVI), have issued two separate legal opinions -one for SHCP and one for CONAVI-satisfactory to the Bank, by the Borrower and CONAVI's counsel acceptable to the Bank respectivelyindicating that the Contrato de Mandato has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower (through SHCP and CONAVI), and is legally binding upon the Borrower and CONAVI in accordance with the Contrato de Mandato's terms; and (b) NAFIN has issued a legal opinion satisfactory to the Bank, by NAFIN's counsel satisfactory to the Bank, indicating that the Contrato de Mandato has been duly authorized or ratified by, and executed and delivered on behalf of, NAFIN, and is legally binding upon NAFIN in accordance with the Contrato de Mandato's terms.

6 The Effectiveness Deadline is the date ninety (90) days after the date of this Agreement. ARTICLE VI- REPRESENTATIVE; ADDRESSES Except as provided in Section 2.02 of this Agreement, the Borrower's Representative is the Titular de la Unidad de Cridito Ptblico of SHCP. The authorized representative to make requests for Conversions or for an IBRD Hedge (as defined in the Hedging Guidelines) on behalf of the Borrower shall be: (a) the Titular de la Unidad de Cridito Publico of SHCP or any person or persons whom he or she shall designate in writing for this particular purpose; or (b) NAFIN's Director(a) de Organismos Financieros Internacionales The Borrower's Address is: The Bank's Address is: Secretaria de Hacienda y Cr6dito PTiblico Unidad de Asuntos Internacionales de Hacienda Insurgentes Sur 1971, torre HI, piso 3 Colonia Guadalupe Inn Ciudad de M6xico M6xico International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C United States of America Telex: Facsimile: (MCI) or (MCI)

7 -6- AGREED at Mexico City, United Mexican States, as of the day and year first above written. UNITED MEXICAN STATES By Name: Authorid Representative io rer re' aorc Title: _7 l r nl~ (,i 0~ 0~ y~~ R~ (/Nio INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Name: Authorized Representative 14ar~,. &t&6aam2 Title: I(C-O&, ajmlla and MV~ec

8 -7- SCHEDULE 1 Project Description The objective of the Project is to increase access to affordable housing for Lowincome Beneficiaries. The Project consists of the following parts: Part 1. Acquisition of Housing Units The purpose of this activity is to enhance access to housing by assisting Low-income Beneficiaries to purchase their first new or existing housing unit in Eligible Locations through the provision of Direct Supports. Part 2. Self-Production of Housing Units The purpose of this activity is to enhance access to housing by assisting Low-income Beneficiaries in the design and construction of their housing units through the provision of Direct Supports. Part 3. Strengthening Urban Management The purpose of the activities described below is to foster the development of affordable housing through the carrying out of: (a) technical and analytical studies to assist in the formulation/revision of selected municipal urban planning instruments including, inter alia: (i) housing demand diagnostics; (ii) infrastructure requirement analysis for urban renovation and/or densification master plans; (iii) technical-prefeasibility studies; (iv) architecture urban design studies; and (v) financial structuring for affordable housing investments; and (b) citizen awareness campaigns and other dissemination/communication activities.

9 -8- SCHEDULE 2 Project Execution Section I. Implementation Arrangements A. Institutional Arrangements. 1. The Borrower, through CONAVI, shall: (a) (i) carry out the Project in accordance with a manual, acceptable to the Bank (Project Operational Manual or POM); and (ii) not amend, abrogate or waive the POM or any of its provisions without the Bank's written prior consent. In case of conflict between the provisions of the POM and the provisions of this Agreement, the provisions of this Agreement shall prevail; and (b) assign responsibility for the management, implementation, monitoring and reporting of the Project among its units, all staffed with personnel in adequate numbers, with functions and responsibilities as described in the POM. 2. For purposes of implementing Parts 1 and 2 of the Project, the Borrower, through CONAVI, shall: (a) maintain the existing agreement; or (b) if applicable, enter into an agreement, with each Executing Entity (Convenio de Adhesi6n), all under terms and conditions set forth in the POM, including, inter alia: (a) CONAVI's obligation to provide, in timely manner as needed and as set forth in the POM, the funds, in the form of Direct Support, required for implementing Parts 1 and 2 of the Project to the pertinent Executing Entity; (b) the Executing Entity's obligation, pursuant to the pertinent Convenio de Adhesi6n, to: (i) (ii) (iii) comply with all applicable provisions as laid out in this Agreement, including the obligation to carry out, or cause to be carried out, Parts 1 and 2 of the Project in accordance with the POM (including the pertinent provisions of the IPP and the ESMF) and Section I.D of this Schedule; maintain records in accordance with sound accounting standards and practices to adequately reflect the Direct Supports that have been made available to assist CONAVI in the implementation of Parts 1 and 2 of the Project; and after having selected and approved a Direct Support proposal following the selection criteria and procedures set forth in the POM:

10 -9- (A) enter into an agreement with each Low-income Beneficiary, under terms and conditions as set forth in the POM; and (B) in respect to Part 2 of the Project, enter into an agreement (Convenio Marco) with each Works-Executing Entity (OEO) under terms and conditions as set forth in the POM, including, inter alia, the obligation of each OEO to: (1) provide technical assistance to the Low-income Beneficiary; and (2) carry out the activities on behalf of the Low-income Beneficiary in accordance with the Commercial Practices set forth in the POM, all pursuant to an agreement with the Low-income Beneficiary under terms and conditions as set forth in the POM. 3. For purposes of implementing Part 3 of the Project, the Borrower, through CONAVI, shall enter into an agreement (Collaboration Agreement) with each Participating Municipality under terms and conditions acceptable to the Bank and set forth in the POM, including the obligation of the Participating Municipality to collaborate with CONAVI in the technical implementation of the activities under said Part of the Project. 4. The Borrower, through CONAVI, shall: (a) exercise its rights and carry out its obligations under each Convenio de Adhesi6n and each Collaboration Agreement; and (b) not take any action in respect of any Convenio de Adhesi6n or any Collaboration Agreement, or any of their provisions which shall affect materially and adversely, in the opinion of the Bank, the ability of CONAVI to implement the Project, as set forth in this Agreement. For purposes of this Project, in case of any conflict between the terms of any Convenio de Adhesi6n or any Collaboration Agreement and those of this Agreement, the terms of this Agreement shall prevail. C. Contrato de Mandato 1. For purposes of carrying out the Project, the Borrower, through SHCP and CONAVI (in its capacity as the Project implementing entity), shall enter into a contract (Contrato de Mandato) with NAFIN, satisfactory to the Bank, whereby: (a) (b) CONAVI agrees to carry out the Project in accordance with the provisions of this Agreement including compliance with the POM and the Anti- Corruption Guidelines (including the provisions set forth in Section I. D of this Schedule); NAFIN agrees to act as financial agent of the Borrower with respect to the Loan, meaning that, inter alia, NAFIN agrees to represent the Borrower vis-a-vis the Bank for purposes of submitting Loan withdrawal applications to the Bank in form and substance sufficient to justify disbursements by the Bank to the Borrower, referred to in the additional instructions cited in Section IV.A. 1 of this Schedule, all of this in

11 compliance with the provisions of this Agreement, and to abide by the Anti-Corruption Guidelines; (c) (d) The Borrower, through SHCP, shall have the right to, in case of fraud or corruption (as defined in the Anti-Corruption Guidelines) provide for the early termination of the Contrato de Mandato or temporarily suspend its effects, or, if applicable, require the Restitution of funds transferred to NAFIN under the Contrato de Mandato; and CONAVI agrees to cooperate fully with NAFIN to ensure that NAFIN and CONAVI are able to comply with all their obligations referred to in this Agreement. 2. The Borrower, through SHCP and CONAVI, shall and shall cause NAFIN to, exercise their rights and carry out their obligations under the Contrato de Mandato in such a manner as to protect the interests of the Bank and to accomplish the purposes of the Loan. 3. Except as the Bank shall otherwise agree, neither the Borrower, through SHCP and CONAVI, shall, and shall cause NAFIN to, not amend, terminate, abrogate, waive or fail to enforce any provision of the Contrato de Mandato. In case of any conflict between the provisions of the Contrato de Mandato and those of this Agreement, the provisions of this Agreement shall prevail. D. Anti-Corruption 1. The Borrower shall ensure that the Project is carried out in accordance with the provisions of the Anti-Corruption Guidelines. In this regard, the Borrower, through CONAVI, shall ensure compliance with, inter alia, paragraph 9 (d) of the Anti- Corruption Guidelines, as follows: (a) (b) (c) by requiring the Executing Entities to take appropriate measures to prevent, inform on, respond to and investigate corrupt, fraudulent, collusive, coercive and obstructive practices with respect to their participation in the Project; by allowing the Bank to, in the company of CONAVI's representatives, inspect accounts, records and other documents of any and/or all the Executing Entities relating to the Project upon the Bank's request; by allowing the Bank, at its request, to have such accounts, records and other documents audited by or on behalf of the Bank, using the Bank's terms of reference for such purpose, with the collaboration of the Borrower and CONAVI; and

12 (d) by agreeing to obtain Restitution from any and/or all of the Executing Entities, as the case may be, all the above pursuant to audit, transparency, control, restitution and information sharing clauses within the Convenios de Adhesi6n, the POM, the Oficio referred under Section I.D.2 below, and/or any other means (including, but not limited to the Borrower's rights under the Federal Budget and Fiscal Responsibility Law, the Federal Public Debt Law, and the Monitoring and Accountability Law). 2. (a) Without limitation to the provisions in paragraph 1 of this Section, and prior to the carrying out of any activity under Parts 1 and 2 of the Project, the Borrower, through CONAVI shall issue a notice (Oficio) acceptable to the Bank, which Oficio shall provide, inter alia, that: (i) any Executing Entity participating in the Project shall comply and ensure compliance with the transparency and governance provisions referred to above, and (ii) upon deposit of the Direct Support(s) by CONAVI in the relevant Executing Entity's account, such deposit shall be interpreted as an acceptance of the Oficio's transparency and governance provisions. (b) The Borrower, through CONAVI, shall ensure, throughout Project implementation, that each Executing Entity referred to in (a) above shall comply with the terms and conditions of the respective Oficio. E. Safeguards. The Borrower, through CONAVI, shall: (a) carry out the Project in accordance with the ESMF and the IPP; and (b) cause each Executing Entity to: (i) carry out Part 1 of the Project in accordance with the ESMF and the IPP; and (ii) ensure that the OEOs shall carry out the activities under Part 2 of the Project in accordance with the ESMF and the IPP. Except as otherwise agreed by the Bank, the Borrower, through CONAVI, shall not amend, abrogate, waive, or fail to enforce the ESMF and IPP or any of their provisions. Section II. Project Monitorin2 Reporting and Evaluation A. Project Reports The Borrower, through CONAVI, shall monitor and evaluate the progress of the Project and prepare Project Reports in accordance with the provisions of Section 5.08 of the General Conditions and on the basis of indicators acceptable to the Bank. Each Project Report shall cover the period of one calendar semester, and shall be furnished to the Bank not later than sixty (60) days after the end of the period covered by such report.

13 B. Financial Management, Financial Reports and Audits 1. The Borrower, through CONAVI, shall maintain or cause to be maintained a financial management system in accordance with the provisions of Section 5.09 of the General Conditions. 2. Without limitation on the provisions of Part A of this Section, the Borrower, through CONAVI, shall prepare and furnish to the Bank not later than forty-five (45) days after the end of each calendar semester, interim unaudited financial reports for the Project covering the semester, in form and substance satisfactory to the Bank. 3. The Borrower, through CONAVI, shall have the Financial Statements audited in accordance with the provisions of Section 5.09 (b) of the General Conditions. Each audit of the Financial Statements shall cover the period of one (1) fiscal year of the Borrower. The audited Financial Statements for each such period shall be furnished to the Bank not later than six (6) months after the end of such period. Section HI. Procurement A. General 1. Goods, Works and Non-consulting Services. All goods, works and nonconsulting services required for the Project and to be financed with an amount equivalent to the amount in Dollars provided under this Agreement shall be procured in accordance with the requirements set forth or referred to in Section I of the Procurement Guidelines, and with the provisions of this Section. 2. Consultants' Services. All consultants' services required for the Project and to be financed with an amount equivalent to the amount in Dollars provided under this Agreement shall be procured in accordance with the requirements set forth or referred to in Sections I and IV of the Consultant Guidelines and with the provisions of this Section. 3. Definitions. The capitalized terms used below in this Section to describe particular procurement methods or methods of review by the Bank of particular contracts refer to the corresponding method described in Sections II and III of the Procurement Guidelines, or Sections II, III, IV and V of the Consultant Guidelines, as the case may be.

14 -13- B. Particular Methods of Procurement of Goods, Works and Non-consulting Services 1. International Competitive Bidding. Except as otherwise provided in paragraph 2 below, goods, works and non-consulting services shall be procured under contracts awarded on the basis of International Competitive Bidding. 2. Other Methods of Procurement of Goods, Works and Non-consulting Services. The following methods, other than International Competitive Bidding, may be used for procurement of goods, works and non-consulting services for those contracts specified in the Procurement Plan: (a) National Competitive Bidding; (b) Shopping; (c) Direct Contracting; and (d) Well-established Private Sector Procurement Methods or Commercial Practices which have been found acceptable to the Bank and set forth in the POM. C. Particular Methods of Procurement of Consultants' Services 1. Quality- and Cost-based Selection. Except as otherwise provided in paragraph 2 below, consultants' services shall be procured under contracts awarded on the basis of Quality- and Cost-based Selection. 2. Other Methods of Procurement of Consultants' Services. The following methods, other than Quality- and Cost-based Selection, may be used for procurement of consultants' services for those contracts which are specified in the Procurement Plan: (a) Quality-based Selection; (b) Selection under a Fixed Budget; (c) Least Cost Selection; (d) Selection based on Consultants' Qualifications; (e) Single-source Selection of consulting firms; (f) Procedures set forth in paragraphs 5.2 and 5.3 of the Consultant Guidelines for the Selection of Individual Consultants; and (g) Single-source procedures for the Selection of Individual Consultants. D. Review by the Bank of Procurement Decisions The Procurement Plan shall set forth those contracts which shall be subject to the Bank's Prior Review. All other contracts shall be subject to Post Review by the Bank.

15 Section IV. Withdrawal of Loan Proceeds A. General 1. The Borrower may withdraw the proceeds of the Loan in accordance with the provisions of Article II of the General Conditions, this Section, and such additional instructions as the Bank shall specify by notice to the Borrower (including the "World Bank Disbursement Guidelines for Projects" dated February 2017, as revised from time to time by the Bank and as made applicable to this Agreement pursuant to such instructions), to finance Eligible Expenditures as set forth in the table in paragraph 2 below. 2. The Bank shall, on behalf of the Borrower, withdraw from the Loan Account on or after the Effective Date and pay to itself the Front-end Fee payable pursuant to Section 3.01 of the General Conditions. The remaining proceeds of the Loan shall be disbursed in Dollars unless otherwise agreed between the Borrower and the Bank and so reflected in the additional instructions referred to in Section IV.A.1 immediately above. Consistently with Section 2.05 of the General Conditions, the Borrower shall use an amount equivalent to the amount in Dollars provided under the Loan Agreement to finance Eligible Expenditures. 3. The following table specifies the categories of Eligible Expenditures that may be financed with an amount equivalent to the amount in Dollars provided under this Agreement ("Category"), the allocation of the amounts of the Loan to each Category, and the percentage of expenditures to be financed for Eligible Expenditures in each Category:

16 - 15- Percentage of Amount of the Loan Expenditures to be Allocated financed Category (expressed in USD) (inclusive of Taxes) (1) Direct Supports under 99,750, % Parts 1 and 2 of the Project; consultants' services and, non-consulting services under Part 3 of the Project (2) Front-end Fee 250,000 Amount payable pursuant to Section 2.03 of this Agreement in accordance with Section 2.07 (b) of the General Conditions (3) Interest Rate Cap or 0 Amount due pursuant to Interest Rate Collar Section 2.08(c) of this premium Agreement TOTAL AMOUNT 100,000,000 B. Withdrawal Conditions; Withdrawal Period 1. Notwithstanding the provisions of Part A of this Section, no withdrawal shall be made for payments made prior to the date of this Agreement, except that withdrawals up to an aggregate amount not to exceed $20,000,000 may be made for payments made prior to this date but on or after the date twelve (12) months prior to the date of this Agreement, for Eligible Expenditures under the Project. 2. The Closing Date is May 31, 2021.

17 - 16- SCHEDULE 3 Amortization Schedule The Borrower shall repay the principal amount of the Loan in full on January 15, 2032.

18 - 17- APPENDIX Section I. Definitions 1. "Anti-Corruption Guidelines" means the "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 and revised in January "Category" means a category set forth in the table in Section IV of Schedule 2 to this Agreement. 3. "CONAVI" means Comisi6n Nacional de la Vivienda, the Borrower's National Housing Commission with separate legal personality and budgetary autonomy established pursuant to Article 18 of the Borrower's Ley de Vivienda (published in the Official Gazette on June 27, 2006, and amended throughout March 24, 2014), or any successor thereto. 4. "Consultant Guidelines" means the "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011 (revised in July 2014). 5. "Collaboration Agreement" means any of the agreements referred to in Section I.B.3 of Schedule 2 to this Agreement. 6. "Contrato de Mandato" means the agreement between the Borrower (through SHCP and CONAVI) and NAFIN referred to in Section I.C. I of Schedule 2 to this Agreement. 7. "Convenio de Adhesi6n" means any of the agreements referred to in Section I.A.2 of Schedule 2 to this Agreement. 8. "Convenio Marco" means any of the agreements referred to in Section I. A. 2 of Schedule 2 to this Agreement. 9. "Direct Support" means a non-reimbursable contribution in an amount to be defined by a resource allocation methodology set forth in the POM, made out of an equivalent amount of the proceeds of the Loan to any given Low-income Beneficiary under Parts I and 2 of the Project. 10. "Eligible Location" means any of the Borrower's geographical locations selected pursuant to the criteria established in the POM. 11. "ESMF" means the Environmental and Social Framework prepared by CONAVI, acceptable to the Bank, published in the Borrower's territory and on the Bank's external website on April 21, 2017, setting forth the principles, guidelines, rules

19 and procedures to assess the potential environiental, social, health and safety impacts of Project activities, and mitigation, monitoring and institutional measures to be taken to offset or eliminate any such negative impacts, or reduce them to acceptable levels, including a list of specific requirements to be included the terms of reference to be prepared under Part 3 of the Project; as said framework may be amended from time to time with the Bank's prior written approval. 12. "Executing Entity" means, inter alia: any of the Borrower's national housing entities (inter alia, INFONAVIT, FOVISSSTE and ISSFAM), commercial banks, savings and loans financial institutions, financial intermediaries and municipal and state housing organisms; all selected to participate in the implementation of Parts 1 and 2 of the Project, pursuant to the criteria and procedures established in the POM, and "Executing Entities" means, collectively, all such entities. 13. "Federal Budget and Fiscal Responsibility Law" means the Borrower's Ley Federal de Presupuesto y Responsabilidad Hacendaria, as said law and its subsequent amendments have been published in the Official Gazette. 14. "FOVISSSTE" means Fondo de Vivienda del Instituto de Seguridad y Servicios Sociales de los Trabajadores del Estado, or any successor thereto. 15. "Federal Public Debt Law" means the Borrower's Ley Federal de Deuda Pblica, as said law and its subsequent amendments have been published in the Official Gazette 16. "General Conditions" means the "International Bank for Reconstruction and Development General Conditions for Loans", dated March 12, 2012, with the modifications set forth in Section II of this Appendix. 17. "Hedging Guidelines" means the Bank's Guidelines for Using Hedging Products dated March 23, 2009, or any later guidelines issued by the Bank to replace said guidelines. 18. "INFONAVIT" means Instituto Nacional de la Vivienda para Trabajadores, or any successor thereto. 19. "IPP" means the Indigenous Peoples Plan prepared by CONAVI, acceptable to the Bank, and published in the Borrower's territory and on the Bank's external website on April 11, 2017, which includes, inter alia, measures to ensure that indigenous peoples receive social and economic benefits that are culturally appropriate under the Project, as said plan may be updated, from time to time, with the Bank's prior written approval. 20. "ISSFAM" means Instituto de Seguridad Social para las Fuerzas Armadas, or any successor thereto.

20 "Low-income Beneficiary" means any low-income individual selected to receive a Direct Support under Parts 1 and 2 of the Project pursuant to the criteria and procedures established in the POM. 22. "Monitoring and Accountability Law" means the Borrower's Ley de Fiscalizaci6n y Rendicidn de Cuentas de la Federacidn, as said law and its subsequent amendments have been published in the Official Gazette. 23. "NAFIN" means Nacional Financiera, S.N.C., I.B.D., a Mexican development bank serving as the Borrower's financial agent for purposes of the Loan, or any successor thereto. 24. "Official Gazette" means the Borrower's official gazette (Diario Oficial de la Federaci6n). 25. "Oficio" means the notice referred in Section I.D.2(a)(i) of Schedule 2 to this Agreement. 26. "Participating Municipality" means any of the Borrower's municipalities selected pursuant to criteria and procedures set for in the POM to collaborate with CONAVI in the technical implementation of the activities under Part 3 of the Project. 27. "Project Operational Manual" or "POM" means the manual prepared by CONAVI, satisfactory to the Bank, referred to in Section I.A.1 (b) of Schedule 2 to this Agreement, which includes inter alia: (a) the procurement, disbursement and financial management requirements for the Project; (b) the eligibility criteria of Low-income Beneficiaries, Executing Entities and OEOs under Parts 1 and 2 of the Project and Participating Municipalities under Part 3 of the Project; (c) the IPP; (d) the ESMF; (e) the indicators for monitoring and evaluating progress towards the attainment of the Project objective; (f) the Anti-Corruption Guidelines; (g) the Oficio; and (h) the model agreement for the Convenio de Adhesi6n, the Convenio Marco and the Collaboration Agreement. 28. "Procurement Guidelines" means the "Guidelines: Procurement of Goods, Works and Non-consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011 (revised in July 2014). 29. "Procurement Plan" means the Borrower's procurement plan for the Project, dated May 12, 2017 and referred to in paragraph 1.18 of the Procurement Guidelines and paragraph 1.25 of the Consultant Guidelines, as the same shall be updated from time to time in accordance with the provisions of said paragraphs.

21 "Restitution" means the refund to the Borrower of the portion of the equivalent amount of the Loan with respect to which fraud and corruption has occurred as set forth in the Anti-Corruption Guidelines. 31. "Rules of Operation" means the Borrower's Reglas de Operaci6n del Programa de Acceso al Financiamiento para Soluciones Habitacionales, the Borrower's Rules of Operation of the Financing for Housing Solutions Program, published in the Official Gazette in December 30, 2016, as the same may be amended from time to time. 32. "SHCP" means Secretaria de Hacienda y Crdito Puiblico, the Borrower's Ministry of Finance and Public Credit, or any successor thereto. 33. "Works-Executing Entity" or "OEO" means Organismo Ejecutor de Obra, a Borrower's non-profit or social housing developer, state or municipal housing authority or similar organization approved by CONAVI and registered in CONAVI's OEO registry, as published in CONAVI's website, all selected pursuant to the criteria and procedures set forth in the POM. Section H. Modifications to the General Conditions The General Conditions are hereby modified as follows: 1. In the Table of Contents, the references to Sections, Section names and Section numbers are modified to reflect the modifications set forth in the paragraphs below. 2. Section (Front-end Fee) is modified to read as follows: "Section Front-end Fee; Commitment Charge (a) The Borrower shall pay the Bank a front-end fee on the Loan amount at the rate specified in the Loan Agreement (the "Front-end Fee"). (b) The Borrower shall pay the Bank a commitment charge on the Unwithdrawn Loan Balance at the rate specified in the Loan Agreement (the "Commitment Charge"). The Commitment Charge shall accrue from a date sixty days after the date of the Loan Agreement to the respective dates on which amounts are withdrawn by the Borrower from the Loan Account or cancelled. The Commitment Charge shall be payable semi-annually in arrears on each Payment Date." 3. In the Appendix, Definitions, all relevant references to Section numbers and paragraphs are modified, as necessary, to reflect the modification set forth in paragraph 2 above.

22 The Appendix is modified by inserting a new paragraph 19 with the following definition of "Commitment Charge", and renumbering the subsequent paragraphs accordingly: "19. "Commitment Charge" means the commitment charge specified in the Loan Agreement for the purpose of Section 3.01(b)." 5. In the renumbered paragraph 49 (originally paragraph 48) of the Appendix, the definition of "Front-end Fee" is modified by replacing the reference to Section 3.01 with Section 3.01 (a). 6. In the renumbered paragraph 68 (originally paragraph 67) of the Appendix, the definition of the term "Loan Payment" is modified to read as follows: "68. "Loan Payment" means any amount payable by the Loan Parties to the Bank pursuant to the Legal Agreements or these General Conditions, including (but not limited to) any amount of the Withdrawn Loan Balance, interest, the Frontend Fee, the Commitment Charge, interest at the Default Interest Rate (if any), any prepayment premium, any transaction fee for a Conversion or early termination of a Conversion, the Variable Spread Fixing Charge (if any), any premium payable upon the establishment of an Interest Rate Cap or Interest Rate Collar, and any Unwinding Amount payable by the Borrower." 7. In the renumbered paragraph 73 (originally paragraph 72) of the Appendix, the definition of "Payment Date" is modified by deleting the word "is" and inserting the words "and Commitment Charge are" after the word "interest".