Loan Agreement. Public Disclosure Authorized CONFORMED COPY LOAN NUMBER 1558 CO. Public Disclosure Authorized. (Urban Development Project)

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1 Public Disclosure Authorized CONFORMED COPY LOAN NUMBER 1558 CO Public Disclosure Authorized Loan Agreement (Urban Development Project) Public Disclosure Authorized between REPUBLIC OF COLOMBIA and INTERNATIONAL BANK FOR RECOYSTRUCTION AND DEVELOPMENT Public Disclosure Authorized Dated July 21, 1978

2 LOAN NUMBER 1558 CO LOAN AGREEMENT AGREEMENT, dated July 21, 1978, between REPUBLIC OF COLOMBIA (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). ARTICLE I General Conditions; Definitions Section The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein, subject, however, to the following modification thereof (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank, as so modified, being hereinafter called the General Conditions): Section is amended to read as follows: Section Action on Behalf of the Borrower or Guarantor. Any action required or permitted to be taken, and any documents required or permitted to be executed, pursuant to the Loan Agreement or the Guarantee Agreement, on behalf of the Borrower or the Guarantor, may be taken or executed by the representative of the Borrower or the Guarantor designated in the Loan Agreement or the Guarantee Agreement for the purposes of this Section or any person thereunto authorized in writing by him. Any modification or amplification of the provisions of the Loan Agreement or the Guarantee Agreement may be agreed to on behalf of the Borrower or the Guarantor by written instrument executed on behalf of the Borrower or the Guarantor by the representative so designated or any person thereunto authorized in writing by him; provided that such modification or amplification is reasonable in the circumstances and will not substantially increase the obligations of the Borrower under the Loan Agreement or of the Guarantor under the Guarantee Agreement. Section Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings:

3 -2- (a) "IPC" means the Programa de Integraci6n de Servicios Participaci6n Comunitaria of the Borrower for the years 1977 through 1981; (b) "Project Area" means the area covered by twenty-seven geographical zones (identified by SIP and to be agreed upon between the Borrower and the Bank) in the twenty-three cities in Colombia listed in 3chedule 5 to this Agreement, as such Schedule may be amended by agreement between the Borrower and the Bank; (c) "DAP" means Departamento Administrativo de la Presidencia de la Repfiblica of the Borrower; (d) "SIP" means Secretaria de Integraci6n Popular of DAP, which is to be responsible for the management, coordination, supervision and evaluation of IPC with the technical assistance of Departamento Nacional de Planeaci6n of the Borrower; (e) "Ministerio de Educaci6n" means the Ministerio de Educaci6n Nacional of the Borrower; (f) "Ministerio de Salud" means the Ministerio de Salud Pfiblica of the Borrower; (g) "Ministerios" means collectively the ministerios referred to in paragraphs (e) and (f) of this Section; (h) "Project Entities" means collectively the entities listed in Part II of the Annex to Schedule 2 to this Agreement, as such Annex may be amended by agreement between the Borrower and the Bank; (i) "Empresa" means an enterprise established and operating, or to be established and operated, under the laws of the Borrower, which shall participate with the Borrower and Instituto Nacional de Fomento Municipal in the carrying out of Part C (a) of the Project; (j) "Sede Central de los Centros de Desarrollo Vecinal" and "Sede" mean the community development centers set up by the Borrower in urban areas under IPC for providing social services to the population of such areas; and (k) "pesos" and "Col.$" mean the currency of the Borrower.

4 -3- ARTICLE II The Loan Section The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to twenty-four million eight hundred thousand dollars ($24,800,000). Section The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank, for expenditures made (or, if the Bank 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 Loan. Section Except as the Bank shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Loan, shall be governed by the provisions of Schedule 4 to this Agreement. Section The Closing Date shall be June 30, 1982 or such later date as the Bank shall otherwise establish. The Bank shall promptly notify the Borrower of such later date. Section The Borrower shall pay to the Bank a commitment 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 The Borrower shall pay interest at the rate of seven and one-half per cent (7.50%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section Interest and other charges shall be payable semiannually on April 15 and October 15 in each year. Section The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement.

5 ARTICLE III Execution of the Project Section (a) (i) The Borrower shall carry out the Project through SIP, with the participation of Ministerio de Educaci6n, Ministerio de Salud and the Project Entities, with due diligence and efficiency and in conformity with appropriate urban, health, nutritional, educational, administrative, economic, engineering and financial practices, and shall provide, or cause the Project Entities to provide, promptly as needed, the funds, facilities, services and other resources required for the purpose (the funds to be provided by the Borrower and the Project Entities, in addition to the proceeds of the Loan, being on the date hereof estimated to aggregate the equivalent of not less than thirty-seven million two hundred thousand dollars ($37,200,000). Ministerio de Educaci6n, Ministerio de Salud and the Project Entities shall participate in the carrying out of the Project as indicated in the Annex to Schedule 2 to this Agreement, as such Annex may be amended by agreement between the Borrower and the Bank. (ii) Without limitations on the foregoing, the Borrower shall transfer the equivalent of not less than $10,900,000, $12,400,000 and $2,000,000, in pesos, to Instituto de Cr&dito Territorial, Instituto Nacional de Fomento Municipal and Corporaci6n Financiera Popular, respectively; such transfers to be made on a non-reimbursable basis and for purposes of the Project; provided, however, that such transfer to Corporaci6n Financiera Popular shall be in addition to any capital contribution to Corporaci6n Financiera Popular made or to be made pursuant to any agreement to which the Bank is a party. (b) The Borrower shall prepare, or cause to be prepared, in accordance with methodological guidelines agreed upon between the Borrower and the Bank, Project implementation plans, satisfactory to the Bank, for each of the geographical zones included in the Project Area. (c) In the carrying out of the credit programs under Parts B and C of the Project, the Borrower undertakes that it will at all times follow, or cause to be followed, the lending terms and conditions set forth in Schedule 6 to this Agreement, as such Schedule may be amended by agreement between the Borrower and the Bank. (d) The Borrower shall enter into a contract, satisfactory to the Bank, with each of the Project Entities for: (i) defining

6 - 5 - in detail the responsibilities (including financial responsibilities), functions and administrative procedures of SIP and the Project Entity, respectively, in respect of the carrying out of the Project, and (ii) subject to sub-paragraph (ii) of paragraph (a) of this Section, making available to the Project Entity the equivalent in pesos of such portions of the proceeds of the Loan and such other contributions of the Borrower as shall be necessary, in addition to the own resources of the Project Entity, to cover the expenses of the Project Entity in respect of the Project. (e) The Borrower shall cause SIP to enter into contracts, satisfactory to the Bank, with Ministerio de Educaci6n and Ministerio de Salud, respectively, for defining in detail the responsibilities (including financial responsibilities), functions and administrative procedures of SIP and Ministerio de Educaci6n and Ministerio de Salud, respectively, in respect of the carrying out of the Project. (f) Tha Borrower shall exercise its rights under each of the contracts referred to in paragraph (d) above in such manner as to protect the interests of the Borrower and the Bank and to accomplish the purposes of the Loan, and except as the Bank shall otherwise agree, the Borrower shall not assign, nor amend, abrogate or waive such contracts or any provision thereof. *(g) The Borrower shall cause SIP and Ministerio de Educaci6n and Ministerio de Salud to exercise their rights under the contracts referred to in paragraph (e) above in such manner as to protect the interests of the Bank, SIP, Ministerio de Educaci6n and Ministerio de Salud and to accomplish the purposes of the Loan, and except as the Bank shall otherwise agree, the Borrower shall cause SIP, Ministerio de Educaci6n and Ministerio de Salud not to assign, amend, abrogate or waive such contracts or any provision thereof. (h) In order to assist in the carrying out of Part B of the Project, the Borrower shall cause Banco Popular to enter into a contract with Corporaci6n Financiera Popular under which Banco Popular shall make a peso loan in the equivalent of two million dollars ($2,000,000) to Corporaci6n Financiera Popular, on terms and conditions agreed upon between the Borrower and the Bank, such terms and conditions to include, inter alia, the terms and conditions set forth in Schedule 7 to this Agreement, as such Schedule may be amended from time to time.

7 - 6 - Section (a) The Borrower shall cause Instituto Nacional de Fomento Municipal, in accordance with the provisions of the contract referred to in paragraph (d) of Section 3.01 of this Agreement, to enter into a contract, satisfactory to the Bank, with each Empresa for: (i) defining in detail the responsibilities (including financial responsibilities), functions and administrative procedures of Instituto Nacional de Fomento Municipal and the Empresa, respectively, in respect of the carrying out of Part C (a) of the Project; and (ii) making available to the Empresa such portion of the amounts made available by the Borrower to Instituto Nacional de Fomento Municipal under the contract referred to in paragraph (d) of Section 3.01 of this Agreement as shall be necessary, in addition to the own resources of the Empresa, to cover the expenses of the Empresa in respect of the carrying out of Part C (a) of the Project. Instituto Nacional de Fomento Municipal shall make available to each such Empresa the funds referred to herein on terms and conditions agreed upon between the Borrower and the Bank, such terms and conditions to include, inter alia, the terms and conditions set forth in Schedule 7 to this Agreement, as such Schedule may be amended from time to time. (b) The Borrower shall cause Instituto Nacional de Fomento Municipal to exercise its rights under the contracts referred to in paragraph (a) above in such manner as to protect the interests of the Borrower, the Bank and Instituto Nacional de Fomento Municipal and to accomplish the purposes of the Loan, and except as the Bank shall otherwise agree, the Borrower shall cause Instituto Nacional de Fomento Municipal not to assign, amend, abrogate or waive such contracts or any provision thereof. Section The Borrower shall take and shall cause its agencies and entities to take all action which shall be necessary on their part to enable the Project Entities to carry out the Project activities required from them, and shall not take or permit to be taken any action which might interfere with the carrying out of such activities.

8 - 7 - Section In order to assist the Borrower in the carrying out of the engineering and supervision of the works included in Part C (a) of the Project, the Borrower shall employ, or cause to be employed, consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank; unless the Bank shall agree that no consultants' services shall be required in respect of the carrying out of any component included in such part of the Project. Section (a) The Borrower undertakes to insure, or cause to be insured, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) Except as the Bank shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the Project. Section (a) The Borrower shall furnish, or cause to be furnished, to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower: (i) shall maintain,.r cause to be maintained, records and procedures adequate to record and monitor the progress of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Loan, and to disclose their use in the Project; (ii) shall enable the Bank's accredited representatives, or cause them to be enabled, to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) shall furnish, or cause to be furnished, to the Bank at regular intervals all such information as the Bank shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. (c) Promptly after completion of the Project, but in any event not later than six months after the Closing Date, or on such

9 - 8 - other date as may be agreed for this purpose between the Borrower and the Bank, the Borrower shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reasonably request, on: (i) the execution and initial operation of the Project; (ii) its cost and the benefits derived and to be derived from it; (iii) the performance by the Borrower and the Bank of their respective obligations under the Loan Agreement; (iv) the performance by the Borrower and each of the Project Entities of their respective obligations under the applicable contract to be entered into pursuant to Section 3.01 (d) of this Agreement; (v) the performance by SIP and each of the Ministerios of their respective obligations under the applicable contract to be entered into pursuant to such Section 3.01 (e); (vi) the performance by Banco Popular and Corporaci6n Financiera Popular of their respective obligations under the contract to be entered into pursuant to Section 3.01 (h) of this Agreement; (vii) the performance by Instituto Nacional de Fomento Municipal and each Empresa of their respective obligations under the applicable contract to be entered into pursuant to Section 3.02 (a) of this Agreement; and (viii) the accomplishment of the purposes of the Loan. Section The Borrower shall take, or cause to be taken, all such action as shall be necessary to acquire as and when needed all such land and rights in respect of land as shall be required for the construction and operation of the facilities included in the Project. Section (a) The Borrower shall employ, and shall cause the Project Entities to employ, such qualified and experienced staff as shall be required for the efficient and timely carrying out of the Project. (b) Without limiting the generality of the provisions in paragraph (a) above, the Borrower shall employ, or cause to be employed, in each of the Sedes in the Project Area the following staff: (i) one regional administrative coordinator (Delegado Administrativo Regional), one small enterprises promoter (Coordinador de Peque?as Empresas) and one community development promoter (Tgcnico en Desarrollo Social), all of whom shall have adequate qualifications and experience and shall be appointed by SIP; provided, however, that in the case of cities containing more than one geographical

10 - 9 - zone, the Bank may agree that such staff serve more than one Sede; and (ii) such other qualified and experienced staff as shall be required for the efficient and timely carrying out of the Project and the operation of such Sedes. (c) Without limitation on the provisions of paragraph (a) above, the Borrower shall cause: (i) Instituto Nacional de Fomento Municipal to assign to the carrying out of Part C (a) of the Project such technical and financial staff as shall be required for the efficient and timely carrying out of such Part. (ii) Instituto de Cr&dito Territorial to assign competent teams to each applicable geographical zone included in the Project Area, to promote and supervise the credit program of Instituto de Credito Territorial included in the Project. Section The Borrower shall establish and maintai until completion of the Project: (a) a national council (Consejo Nacional de los Centros de Desarrollo Vecinal) composed of the Secretary of SIP and representatives of the Departamento Nacional de Planeaci6n of the Borrower, Ministerio de Salud, Ministerio de Educaci6n, Instituto Colombiano de Bienestar Familiar, Servicio Nacional de Aprendizaje, Instituto de Cr&dito Territorial, Instituto Nacional de Fomento Municipal and Corporaci6n Financiera Popular; (b) a local council (Consejo Local de los Centros de Desarrollo Vecinal) composed of a representative of SIP, the chief of municipal or departmental planning and the regional chief of each Ministerio and Project Entity; and (c) in each of the geographical zones included in the Project Area, a coordinating committee (Junta Ejecutora y Coordinadora del Centro de Desarrollo Vecinal) composed of a representative of each of the Project Entities providing services in such zone, community representatives residing in each such zone, and the regional administrative coordinator of the applicable Sede.

11 ARTICLE IV Other Covenants Section (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members rot to seek, in normal circumstances, special security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of foreign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Borrower, in creating or permitting the c-eation of such lien, shall make express provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or administrative subdivisions, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, the Borrower shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other assets, satisfactory to the Bank, of the Borrower or of any entity owned or controlled by, or operating for the account or benefit of, the Borrower, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Borrowev. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; and (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "public assets" means assets of the Borrower, of any political or administrative subdivision thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Borrower or any

12 such subdivision, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Borrower. Section The Borrower shall take all action, including the granting of all necessary authorizations, import licenses, foreign exchange permits and all other approvals required under the laws of the Borrower, to ensure the timely procurement of the goods and services required for the Project. Section The Borrower shall establish and maintain records adequate to reflect in accordance with consistently maintained sound accounting practices the operations, resources and expenditures, in respect of the Project. Section The Borrower shall include in the contracts to be entered into pursuant to paragraph (d) of Section 3.01 of this Agreement, and shall cause Instituto Nacional de Fomento Municipal to include in the contracts to be entered into pursuant to Section 3.02 of this Agreement, respectively, such provisions as shall be necessary to ensure that each Project Entity and Empresa shall: (a) establish and maintain separate accounts on its records to be used exclusively for the Project and to register in such accounts all its receipts and payments for or in connection with the Project, in accordance with sound accounting principles and procedures consistently applied; and (b) (i) have the accounts referred to in paragraph (a) above and related statements for each fiscal year audited, in accordance with sound auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Borrower and the Bank, as soon as available, but in any case not later than four months after the end of such entity's fiscal year, (A) certified copies of such accounts and related statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and

13 (iii) furnish to the Bank such other information concerning such accounts and related statements of such entity and the audit thereof as the Bank shall from time to time reasonably request. Section The Borrower shall take, and cause the Project Entities to take, all action, including the provision of funds and resources, to ensure that the facilities and equipment included in the Project are adequately operated, maintained, renewed and repaired. Section Except as the Bank shall otherwise agree, the Borrower shall, with respect to the health services provided under Part A of the Project, put into effect and maintain a system of charges for the recovery, on the average, from the beneficiaries of such services of at least the cost of drugs and medicines provided through the centers and staff referred to in Part A (c) of the Project. Section The Borrower shall take and cause to be taken all action as shall be necessary to ensure that each Empresa shall: (a) establish and maintain water supply and sewerage tariffs and other charges for its services at such levels as shall be required to generate enough revenues to cover the Empresa's investment, operating and maintenance costs; provided, however, that: (i) the Bank may agree that the Empresa shall recover less than its total investment costs; and (ii) unless the Bank shall otherwise agree, whenever there is an agreement regarding tariffs between an Empresa and Instituto Nacional de Fomento Municipal on account of funds made or to be made available to such Empresa out of the proceeds of any loan made by the Bank to Instituto Nacional de Fomento Municipal, the provisions of such agreement shall be incorporated into the contract referred to in Section 3.02 (a) of this Agreement; and (b) except as the Bank shall otherwise agree, set aside out of the funds generated by the tariffs and other charges referred to in paragraph (a) above, simultaneously with and Iro rata to the Empresa's debt service payments to Instituto Nacional de Fomento Municipal under the contract entered into in accordance with Section 3.02 of this Agreement, amounts which, at the time the Empresa shall finish servicing its debt to Instituto Nacional de Fomento Municipal, shall be equal to the equity contributions made

14 by Instituto Nacional de Fomento Municipal to the Empresa in accordance with such contract, and utilize the amounts set aside for future water supply and sewerage investments to be made by the Empresa. Section The Borrower shall cause: (a) Instituto Nacional de Fomento Municipal to utilize until after six years from the Closing Date all funds repaid to it by the Empresas under the contracts referred to in Section 3.02 of this Agreement exclusively for the financing of projects similar to those included in the Project; and (b) Instituto de Credito Territorial to utilize until after six years from the Closing Date all funds repaid by beneficiaries of loans made under paragraphs (b) and (c) (i), (ii) and (iii) of Part C of the Project exclusively for the financing of projects similar to those included in the Project. ARTICLE V Remedies of the Bank Section For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof: (a) Any party to any contract entered into pursuant to paragraphs (d), (e) and (h) of Section 3.01 and Section 3.02 of this Agreement shall have failed to perform any of its respective obligations thereunder. (b) An extraordinary situation shall have arisen which shall make it improbable that any party to any contract entered into pursuant to paragraphs (d), (e) and (h) of Section 3.01 and Section 3.02 of this Agreement will be able to perform any of its respective obligations thereunder. (c) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of SIP, Ministerio de Educaci6n, Ministerio de Salud, any Project Entity, Banco Popular or any Empresa or for the suspension of their operations related to the execution of the Project.

15 (d) The Borrower or any other authority having jurisdiction shall have divested SIP, Ministerio de Educaci6n, Ministerio de Salud, any Project Entity, Banco Popular or any Empresa of any of the functions or powers vested in any of them as of the date of this Agreement so as to affect adversely the efficient carrying out of the Project. Section For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof, namely, any of the events specified in paragraphs (a), (c) and (d) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower. ARTICLE VI Effective Date; Termination Section The following events are specified as additional conditions to the effectiveness of the Loan Agreement within the meaning of Section (c) of the General Conditions: (a) the loan from Banco Popular to Corporaci6n Financiera Popular referred to in paragraph (h) of Section 3.01 of this Agreement has been made; (b) the execution and delivery of the contracts referred to in paragraph (d) of Section 3.01 of this Agreement have been duly authorized or ratified by all necessary corporate and governmental action; and (c) the execution and delivery of the contracts referred to in paragraph (e) of Section 3.01 of this Agreement have been duly authorized or ratified by all necessary corporate and governmental action. Section The date November 21, 1978, is hereby specified for the purposes of Section of the General Conditions. ARTICLE VII Representative of the Borrower; Addresses Section The Ministro de Hacienda y Cr&dito Pfiblico of the Borrower is designated as representative of the Borrower for the purposes of Section of the General Conditions.

16 Section The following addresses are specified for the purposes of Section of the General Conditions: For the Borrower: Ministerio de Hacienda y Cr&dito Pfblico Palacio de los Ministerios Plaza San Agustin Bogota, Colombia Cable address: For the Bank: MINHACIENDA Bogota International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C United States of America Cable address: INTBAFRAD Washington, D.C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, 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 COLOMBIA By /s/ Virgilio Barco Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /sf Enrique Lerdau Acting Regional Vice President Latin America and the Caribbean

17 SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. 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 Category Dollar Equivalent) to be Financed (1) Civil Works (Parts A 6,400,000 40% and C (a) of the Project), including consultants' services for the engineering and supervision of the works included in Part C (a) of the Project (2) Equipment, materials 800,000 and vehicles (Parts A, B (b) and C (a) of the Project) (a) directly imported 100% of foreign expenditures (b) imported and 40% procured locally 40% of the ex- factory costs (c) locally manufactured (3) Training and Technical 900,000 50% Assistance for Parts B (b) and (c), and E of the Project

18 Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (4) Loans under 2,000,000 50% of amounts Part B (a) of disbursed by the Project Corporaci6n Financiera Popular (5) Loans under 8,000,000 50% of amounts Part C (c) of disbursed by the Project Instituto de Credito Territorial (6) Unallocated 6,700,000 TOTAL 24,800, For the purposes of this Schedule, the term "foreign expenditures" means expenditures in the currency of any country other than.the Borrower and for goods or services supplied from the territory of any country other than the Borrower. 3. The disbursement percentages have been calculated in compliance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Loan decreases or increases, the Bank may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Bank. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for: (a) expenditures prior to the date of this Agreement;

19 (b) expenditures in connection with any geographical zone included in the Project Area: (i) until the date upon which the Bank dispatches to the Borrower notice of its satisfaction with the Project implementation plan prepared for such geographical zone in accordance with paragraph (b) of Section 3.01 of this Agreement, and (ii) unless such expenditures are covered by such plan; (c) expenditures incurred by any Empresa until evidence satisfactory to the Bank has been furnished to the Bank that the contract between Instituto Nacional de Fomento Municipal and such Empresa has been duly executed and delivered in acc:rdance with Section 3.02 of this Agreement; and (d) expenditures incurred by any Empresa in connection with water supply works included in Part C (a) of the Project, unless the Bank shall have received studies satisfactory to the Bank regarding water sources and treatment facilities available to, or to be developed by, any such Empresa, including plans for financing any needed additional works. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank may: (i) at the request of the Borrower, reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, by notice to the Borrower, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures therevnder shall have been made. 6. If the Bank shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as, in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan.

20 SCHEDULE 2 Description of the Project The Project is part of IPC and consists of the following Parts to be carried out during the period in the Project Area. Part A: Social Services (a) (i) Construction, in accordance with design standards agreed upon between the Borrower and the Bank, of new, or renovation or expansion of existing, facilities for the Sedes in each of the geographical zones included in the Project Area; and (ii) Equipping, staffing and operation of such Sedes. (b) (i) Construction outside of the Sedes, in accordance with design standards agreed upon between the Borrower and the Bank, and utilization of about 165 new classrooms, including about 143 sanitary units, about 61 administrative units and ancillary facilities, and renovation and utilization of about 86 existing classrooms; (ii) (iii) (iv) Acquisition, installation and utilization of teaching aids and equipment for about 366 new and existing classrooms; Improvement of the organization of school facilities to accomodate increased student enrollment either through the use of double shifts or other system satisfactory to the Bank; and Intensification of the use of existing classroom facilities by using them for such activities as adult education and related community programs. (c) (i) Acquisition, installation and utilization of equipment for 27 community health centers to be operated in each of the Sedes referred to in paragraph (a) above;

21 (ii) (iii) Acquisition, installation and utilization of equipment for the field staff of the community health posts referred to in paragraph (c) (i) above; and Strengthening of the operations of the community health posts including the mobile health unit, referred to in paragaraph (c) (i) and (ii) above. (d) Acquisition, installation and utilization of equipment for 27 child and family welfare centers to be operated in each of the Sedes referred to in paragraph (a) above, including equipment required for the carrying out of community day care programs in decentralized locations such as private homes, and rehabilitation of such private homes. Part B: Employment and Productivity (a) Loans for the financing of fixed assets and working capital requirements to: (i) productive enterprises with total assets (excluding land) not exceeding the equivalent of $15,000 owned by residents of the Project Area, provided that such enterprises are not owned or controlled by any individual or group of individuals or legal entity whose respective total assets (including land) exceed the equivalent of $50,000; and (ii) community or cooperative productive enterprises with total assets (excluding land) not exceeding the equivalent of $100,000 substantially owned by residents of the Project Area. (b) Acquisition, installation and utilization of equipment, vehicles and materials for 27 training and production workshops to be operated in each of the Sedes through which there will be provided training for workers and managers and technical assistance to, including promotion of, enterprises in the Project Area, including those referred to in paragraph (a) above, in the preparation of projects for financing under the Project. (c) Strengthening the financial position and increasing the lending capacity of savings and loans cooperatives which will conduct their business in the Project Area, by means of promoting the activities of, and providing technical and financial assistance to, such cooperatives, including, if so needed, the establishment of new cooperatives and the subscription of share capital in both new and existing cooperatives.

22 Part C: Physical and Environmental Improvements (a) Construction of water supply and sewerage facilities, including distribution networks and individual dwelling connections, and rehabilitation of existing facilities. (b) Regularization of land tenure benefiting approximately 31,000 households, including loans for such purpose to community groups and individuals. Part D: (c) (i) Development of serviced lots (including serviced lots with a sanitary core unit or with a sanitary core unit and minimum shelter) and loans to individuals for (A) the purchase, at prices determined in accordance with criteria satisfactory to the Bank, of such lots and (B) the construction of dwellings thereon; and (ii) Loans to individuals for home improvement, priority to be given to the installation of sanitary facilities made possible by the works to be carried out under paragraph (a) above. Project Management and Evaluation Establishment and operation of a project management and evaluation system, satisfactory to the Bank, to: (i) implement the Project; (ii) review continuously the progress of the Project both at local and national levels; and (iii) periodically evaluate the effects of the Project, including inter alia, the carrying out of studies for the evaluation of (A) the management effectiveness of the Project at the local and national levels; (B) the intrafamily benefits of the health and nutrition, child and family welfare, and education components of the Project; and (C) the effects of the skills improvement and small-scale industry credit components on the productivity of adult workers. Part E: Training Training of staff of the agencies and entities participating in the carrying out of the Project. The Project will be carried out with the participation of the agencies and entities listed in the Annex to this Schedule. The Project is expected to be completed by December 31, 1981.

23 ANNEX TO SCHEDULE 2 Participation in the Project Part I 1. Ministerio de Educaci6n Parts A (b) and E 2. Ministerio de Salud Parts A (c) and (d), C (a) and E Part II 3. Project Entities: (a) Instituto de Crédito Territorial (b) Instituto Colombiano de Construcciones Escolares (c) Instituto Colombiano de Bienestar Familiar (d) Corporaci6n Financiera Popular (e) Servicio Nacional de Aprendizaje (f) Instituto Nacional de Fomento Municipal Parts A (a) (1) and C (b) and (c) Part A (b) (i) and (ii) Parts A (d) and E Parts B (a) and E Parts B (b) and E Part C (a)

24 SCHEDULE 3 Amortization Schedule Date Payment Due Payment of Principal (expressed in dollars)* On each April 15 and October 15 beginning October 15, 1982 through October 15, ,000 On April 15, ,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal.

25 Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) of the General Conditions: Time of Prepayment Premiums Not more than three years before maturity 1.30% More than three years but not more than six years before maturity 2.65% More than six years but not more than eleven years before maturity 4.85% More than eleven years but not more than fifteen years before maturity 6.60% More than fifteen years before maturity 7.50%

26 SCHEDULE 4 Procurement A. General Procedures 1. Except as provided in paragraph 4 below, contracts for the purchase of goods shall be procured in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. For goods to be procured in accordance with the provisions of paragraph 1 above and in addition to the requirements of paragraph 1.2 of the Guidelines, the Borrower shall prepare and forward to the Bank as soon as possible, and in any event not later than 60 days prior to the proposed date of availability to the public of the first tender documents relating thereto a general procurement notice, in such form and detail and containing such information as the Bank shall reasonably request; the Bank will arrange for the publication of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods remain to be procured in accordance with the provisions of paragraph I above. 3. For bidding purposes, goods to be procured in accordance with the provisions of paragraph 1 above shall be grouped in such manner as shall be agreed between the Borrower and the Bank prior to issuing the invitation to bid. 4. Contracts for the purchase of goods estimated to cost the equivalent of less than $150,000 shall be procured in accordance with the Borrower's competitive bidding procedures. 5. Contracts for civil works shall be procured in accordance with the Borrower's competitive bidding procedures. 6. Notwithstanding the provisions in paragraph 5 above: (a) Contracts for civil works estimated to cost less than the equivalent of $15,000, may be procured on a negotiated basis or may be carried out by force account; and

27 (b) With the prior approval of the Bank, civil works under paragraphs (a) (i) and (b) (i) of Part A of the Project, may be carried out by force account. B. Evaluation and Comparison of Bids for Goods; Preference for Domestic Manufacturers 1. For the purpose of evaluation and comparison of bids for the supply of goods except those to be procured in accordance with the Borrower's procedures: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex-factory price for domestically-manufactured goods; (ii) customs duties and other import taxes on imported goods, and sales and similar taxes on domestically-supplied goods, shall be excluded; and (iii) the cost to the Borrower of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Goods manufactured in Colombia may be granted a margin of preference in accordance with, and subject to, the following provisions: (a) All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Colombia if the bidder shall have established to the satisfaction of the Borrower and the Bank that the manufacturing cost of such goods includes a value added in Colombia equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in Colombia. (3) Group C: bids offering any other goods. (c) All evaluated.bids in each group shall be first compared among themselves, excluding any customs duties and other import

28 taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest evaluated bid of each group. Such lowest evaluated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. (d) If, as a result of the comparison under paragraph (c) above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the c.i.f. bid price of the imported goods offered in each group C bid, for the purpose of this further comparison only, an amount equal to (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group C bid; or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from group C which as a result of the comparison under paragraph (c) is the lowest evaluated bid shall be selected. C. Review of Procurement Decisions by the Bank 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts referred to in paragraph 1 of Part A of this Schedule estimated to cost the equivalent of $150,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Bank, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Borrower shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and shall furnish to the Bank, in sufficient time for

29 its review, a detailed report on the evaluation and comparison of the bids received, and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Bank's concurrence, materially differ from those on which bids were asked. (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the delivery to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 2. With respect to each contract referred to in paragraph 1 of Part A of this Schedule to be financed out of the proceeds of the Loan and not governed by the preceding paragraph, the Borrower shall furnish to the Bank, promptly after its execution and prior to the delivery to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids, recommendations for award and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination.