Loan Agreement. Public Disclosure Authorized CONFORMED COPY LOAN NUMBER 1418 PA. Public Disclosure Authorized. (Second Rural Development Project)

Transcription

1 Public Disclosure Authorized CONFORMED COPY LOAN NUMBER 1418 PA Public Disclosure Authorized Loan Agreement (Second Rural Development Project) Public Disclosure Authorized between REPUBLIC OF PARAGUAY and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Public Disclosure Authorized Dated May 18, 1977

2 LOAN AGREEMENT AGREEMENT, dated May 18, 1977, between REPUBLIC OF PARAGUAY (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS (A) the Borrower has requested the Bank to assist in the financing of the Project described in Schedule 2 to this Agreement by making the Loan as hereinafter provided; (B) the Borrower intends to borrow from Kreditanstalt fur Wiederaufbau (hereinafter called KfW), the equivalent in Deutsche Marks of about $2,600,000 (hereinafter called the KfW Loan) for relending to Banco Nacional de Fomento (hereinafter called BNF) to assist in financing Part V of the Project in Sub-Project Area A; (C) the Project will be partly carried out by Banco Nacional de Fomento (hereinafter called BNF) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to BNF part of the proceeds of the Loan and the proceeds of the KfW Loan as hereinafter provided; and WHEREAS the Bank has agreed, on the basis inter alia of the foregoing, to make the Loan available to the Borrower upon the terms and conditions set forth hereinafter and in a project agreement of even date herewith between the Bank. and BNF; NOW THEREFORE the parties hereto hereby agree as follows: 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), namely, the words "and the Project Agreement" are added after the words "the Loan Agreement" wherever they occur in Section 6.06 of the General Conditions.

3 -2- Section Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Project Agreement" means the agreement between the Bank and BNF of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement and all agreements supplemental to the Project Agreement; (b) "Banco Central" means the Central Bank of the Borrower; (c) "Beneficiary" means an individual farmer of the Project Area to whom BNF proposes to make or has made a Sub-loan; (d) "CNPS" means Consejo Nacional de Progreso Social established under Decree No of the Borrower, dated March 3, 1967; (e) "Guaranies" means the currency of the Borrower; (f) "IBR" means Instituto de Bienestar Rural established under Law No. 852 of the Borrower, dated March 22, 1963; (g) "Farm Development Project" means a development project consisting of on-farm improvements to be carried out by a Beneficiary and to be financed in part by means of a Sub-loan; (h) "Project Area" means an area located in the southern part of the Eastern Region of the Borrower and comprises: Sub-Project Area A: of about 80,000 hectares included within the settlement colonies known as Unificadas and Federico ChAvez (except for the area west of the Encarnaci6n-Hohenau road); and Sub-Project Area B: of about 235,000 hectares included within the following limits: ParanA River to the South-east, the Yacui-Guazfi River to the North, Lhe Manduviyu River to the South and a straight line drawn from a point on the Manduviyu River at ' of latitude South and ' of longitude West to a point on the Yacui-Guazd River at ' of latitude South and 550 of longitude West to the North-west;

4 -3- (i) "Project Coordinator" and "Deputy Project Coordinator" mean the coordinator and the deputy coordinator referred to in Section 3.04 of this Agreement; (j) "Sub-loan" means a short-term loan for working capital or a medium- or long-term loan for on-farm investment made or proposed to be made by BNF to a Beneficiary for a Farm Development Project in accordance with the provisions of the Project Agreement, and to be partly financed out of the proceeds of the Loan or of the KfW Loan; (k) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower, Banco Central and BNF, referred to in Section 3.01 (b) hereof; (1) "MAG" means the Borrower's Ministry of Agriculture and Livestock; and (m) "Debt Recovery Plan" means the plan to improve BNF's debt collection procedures and the quality of BNF's portfolio, set forth in Resolution No. 25 dated April 5, 1977 of BNF's Board of Directors. 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-two million dollars ($22,000,000). 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, contracts for the purchase of goods or for civil works to be financed out of the proceeds of the Loan, shall be procured in accordance with the provisions of Schedule 4 to this Agreement.

5 -4- Section The Closing Date shall be December 31, 1981 or such later date as t-ie Bank shall otherwise establish. The Bank shall promptly noify 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 eight and two-tenths per cent (8.20%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section Interest and other charges shall be payable semi-annually on January 1 and July 1 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. Section Banco Central is designated as representative of the Borrower for the purposes of taking any action required or permitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions. ARTICLE III Execution of the Project Section (a) The Borrower shall carry out Parts I, II, III and IV of the Project, and shall cause BNF to carry out Part V of the Project, with due diligence and efficiency and in conformity with appropriate agricultural, administrative, economic, financial and engineering policies and practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) The Borrower shall re-lend to BNF the proceeds of the Loan withdrawn from the Loan Account under Category (5) of Schedule 1 hereto, under an agreement on terms and conditions which shall have been approved by the Bank. Except as the Bank shall otherwise agree, the Borrower shall not change or fail to enforce any provision of such agreement.

6 -5- (c) The Borrower shall cause BNF to perform, in accordance with the Project Agreement and the Subsidiary Loan Agreement, all the obligations therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable BNF to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. Section (a) In order to assist the Borrower in carrying out Parts I and II of the Project, the Borrower shall employ engineering consultants and health advisers, respectively, whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. (b) In order to assist MAG and BNF in the carrying out of Part V of the Project, the Borrower shall employ, by August 31, 1977, to work under the Project Coordinator, a farm management expert whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. Section The Borrower shall: (a) cause CNPS to: (i) coordinate and supervise the carrying out of the Project; (ii) ensure close cooperation between all interested institutions and agencies of the Borrower and BNF orn all matters related to the Project; and (iii) furnish to the National Economic Council the annual programs for carrying out the Project, and reports on the progress of the Project; and (b) cause each of the institutions and agencies referred to in (a) (ii) above, to assign one of its officers to program with the Project Coordinator the activities of its institution or agency in the carrying out of the Project. Section In order to assist CNPS in fulfilling the tasks referred to in Section 3.03 of this Agreement, the Borrower shall employ a Project Coordinator and a Deputy Project Coordinator acceptable to the Bank with such authority and responsibilities as are set forth in Schedule 5 to this Agreement; the Deputy Project Coordinator to be appointed not later than August 31, 1977 or such later date as the Bank shall agree.

7 -6- Section In carrying out the Project the Borrower shall, as and when needed, assign, or cause to be assigned: (a) 2 extension agents of MAG to Sub-Project Area A, and (b) 14 extension agents of MAG and 14 land tenure specialists of IBR to Sub-Project Area B. Section The Borrower shall (a) ensure that the Deputy Project Coordinator and the technicians referred to in Section 3.05 (b) of this Agreement reside in the Project Area; and (b) provide them with the necessary supporting administrative staff. Section Except as the Bank shall otherwise agree, the Borrower shall open and maintain with Banco Central an account into which it shall deposit the proceeds of the Loan and of the KfW Loan, and all service payments under the Subsidiary Loan Agreement, and from which it shall withdraw all amounts to be lent to BNF for Part V of the Project, and the proceeds of the Loan withdrawn to finance the remainder of the Project; including separate records regarding said deposits and withdrawals in respect of Part V of the Project. Section The Borrower shall: (a) cause Banco Central to rediscount or otherwise finance out of the proceeds of the Project Account 62% of the Sub-loans made by BNF on terms and conditions satisfactory to the Bank, including the following: (i) the rediscounting rate shall be seven per cent (7%) per annum; and (ii) BNF shall repay to Banco Central the proceeds of the Project Account so lent to BNF, over a period of 17 years, including a grace period of 3-1/2 years; (b) cause Banco Central and BNF to use all funds accruing from the carrying out of Part V of the Project exclusively to finance on-farm investments and working capital in the Project Area on the terms and conditions set forth in the Schedule 1 to the Project Agreement. Section The Borrower shall contribute one billion three hundred million Guaranies to BNF's capital. For this purpose, the Borrower shall: (i) issue bonds with such aggregate amount, to

8 -7- mature after 25 years and bear interest at the rate of 2% per year; (ii) cause Banco Central to subscribe such issue entirely; (iii) cause such bonds to be repaid out of the net profits of Banco Central, in accordance with Article 103 (c) of Decree-Law 281/61 of the Borrower, after meeting Banco Central's capital and current expenditures budget, and in such ratio as its Board of Directors shall determine annually; (iv) enter into an agreement with Banco Central and BNF, on terms and conditions satisfactory to the Bank, which shall provide, inter alia, the utilization by BNF of such funds; and (v) take and cause to be taken all measures required regarding the increase of BNF's authorized capital referred to in Section 4.04 of the Project Agreement. Section The Borrower shall cause IBR to: (a) issue land titles to farmers in the Project Area in accordance with a timetable satisfactory to the Bank; such land titles to be issued to not less than 440 farmers of Sub-Project Area B by November 30, 1977; (b) give to any farmer who has paid 10% of the purchase price of his land a certificate whereby IBR guarantees to issue to such farmer title to such land within not more than six months from the date such payment was made; and (c) agree to the Beneficiaries undertaking the obligation referred to in Section 2.09 of the Project Agreement. Section The Borrower shall cause CNPS to establish, in consultation with the Bank, not later tnan January 1, 1978 and thereafter operate, a monitoring system for collecting data for measuring the physical, financial, economic and social impact of the Project. Section (a) The Borrower undertakes to insure, 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.

9 -8- Section (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications, contract documents and procurement schedules for Parts I, II, III and IV of 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 records adequate to record the progress of Parts I, II, III and IV of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Loan, other than those proceeds relent to BNF for purposes of Part V of the Project, and to disclose the use thereof in said Parts I, II, III and IV of the Project; (ii) shall enable the Bank's accredited representatives 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 to the Bank all such information as the Bank shall reasonably request concerning the Project, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. 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 carrying out the Project and shall furnish to the Bank, promptly after such acquisition, evidence satisfactory to the Bank that such land and rights in respect of land are available for purposes related to the Project. Section The Borrower shall use its best efforts to obtain the KfW Loan. Se ction The Borrower shall cause the Farm Development Projects to be designed with due regard to ecological and environmental factors, including: (i) maintenance of adequate wood areas in each lot, and (ii) maintenance of forest areas on waterfronts and sloping land, as required to control erosion. ARTICLE IV Other Covenants Section (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek,

10 - 9 - 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 -2xchange, 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 creation of such lien, shall make express provision to that effect; 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, 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 public assets satisfactory to the Bank. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as gecurity 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 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 (a) The Borrower shall maintain or cause to be maintained separate accounts and records adequate to reflect in accordance with consistently maintained 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 there.

11 (b) The Borrower shall: (i) have the accounts referred to in paragraph (a) hereof for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than four months after the end of each such year, (A) certified copies of such accounts 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 (iii) furnish to the Bank such other information concerning such accounts and the audit thereof as the Bank shall from time to time reasonably request. Section (a) The Borrower shall at all times employ, or cause to be employed, qualified staff in adequate numbers to operate the institutions included in the Project. (b) The Borrower shall adequately maintain or cause to be maintained the roads, buildings, furniture and equipment included in the Project and make or cause to be made all necessary repairs and renewals thereof in accordance with sound engineering, technical and administrative practices. (c) The Borrower shall provide or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the foregoing. 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) BNF shall have failed to perform any of its obligations under the Project Agreement. (b) An extraordinary situation shall have arisen which shall make it improbable that BNF will be able to perform its obligations under the Project Agreement. (c) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of BNF or for the suspension of its operations.

12 (d) (i) Subject to subparagraph (ii) of this paragraph: (A) The right of the Borrower to withdraw the proceeds of the KfW Loan shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the agreement providing therefor; or (B) The KfW Loan shall have become due and payable prior to the agreed maturity thereof. (ii) Subparagraph (i) of this paragraph shall not apply if the Borrower establishes to the satisfaction of the Bank that: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obligations under such agreement, and (B) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement. Section For the purposes of Section 7.01 of the General Conditions, the following events are specified pursuant to paragraph (h) thereof: (a) The event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Bank to the Borrower and BNF; and (b) Any event specified in paragraphs (c) or (d) (i) B of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section The following events are specified as additional condilions to the effectiveness of the Loan Agreement within the meaning of Section (c) of the General Conditions: (a) The execution of the Project Agreement on behalf of BNF has been duly authorized or ratified by all necessary corporate and governmental action;

13 (b) The Subsidiary Loan Agreement has been executed and celivered; (c) BNF has adopted a manual for debt collection satisfactory to the Bank, in accordance with the procedures established in the Debt Recovery Plan, and the measures required to carry out such plan are being taken; and (d) BNF has received and utilized the funds referred to in Section 3.09 hereof pursuant to the agreement therein provided for. Section The following are specified as additional matters, within the meaning of Section (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank: (a) That the Project Agreement has been duly authorized or ratified by BNF, and is legally binding upon BNF in accordance with its terms; and (b) That the Subsidiary Loan Agreement: (i) has been duly executed and authorized by all necessary corporate and governmental action; and (ii) constitutes a valid and binding obligation of the respective parties thereto in accordance with its terms. Section The date of September 20, 1977, is hereby specified for the purposes of Section of the General Conditions. ARTICLE VII Representative of the Borrower; Addresses Section The Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section of the General Conditions. Section The following addresses are specified for the purposes of Section of the General Conditions: For the Borrower: Ministerio de Hacienda Asunci6n, Paraguay

14 Cable address: For the Bank: MINHACIENDA Asunci6n International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C United States of America Cable address: INTBAFRAD Washington, D.C. Telex: (ITT), (RCA) or (WUI) 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 PARAGUAY By Is/ Mario Lopez Escobar Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Is/ A. Krieger Regional Vice President Latin America and the Caribbean

15 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 8,000,000 66% (2) Vehicles and equip- 2,100, % of foreign ment expenditures (3) Consulting services 700, % of foreign expenditures (4) Training and Proj- 1,200,000 66% ect administration (5) Sub-loans to Bene- 5,100,000 47% of amounts ficiaries in Sub- disbursed Project Area B (6) Unallocated 4,900,000 TOTAL 22,000,000

16 For the purposes of this -chedule, the term "foreign expenditures" means expenditures in the currency of a 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: (a) no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement; and (b) not more than the equivalent of $1,730,000 shall be withdrawn under Category (5) in respect of Sub-loans to Beneficiaries who own more than 20 hectares, of which not more than the equivalent of $1,000,000 shall be withdrawn in respect of sub-loans to Beneficiaries who own more than 50 hectares. 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 Catez.agory, the Bank may, by notice to the Borrower: (i) 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 suah reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made.

17 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.

18 SCHEDULE 2 Description of the Project The Project will provide roads, social infrastructure, technical assistance and credit facilities to farmers in the Project Area, and consist of the following Parts: Sub-Project Area B: Part I: Construction of about 100 kilometers of all-weather roads and about 238 kilometers of earth roads, including bridges and culverts for such roads. Part II: 1. Construction, furnishing and equipping of eight health posts and two health centers. 2. Upgrading of two health centers. 3. Training of health field technicians to staff the abovementioned posts and centers. Part III: Construction, furnishing and equipping of two community centers. Part IV: Acquisition and utilization of about 39 vehicles. Sub-Project Area A and Sub-Project Area B: Part V: Sub-loans to Beneficiaries to finance Farm Development Projects. The Project is expected to be completed by June 30, 1981.

19 SCHEDULE 3 Amortization Schedule Date Payment Due Payment of Principal (expressed in dollars)* On each January 1 and July 1 beginning July 1, 1981 through January 1, ,000 On July 1, ,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.

20 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 Premium Not more than three years before maturity 1.45% More than three years but not more than six years before maturity 2.90% More than six years but not more than eleven years before maturity 5.30% More than eleven years but not more than fifteen years before maturity 7.25% More than fifteen years before maturity 8.20%

21 SCHEDULE 4 Procurement A. International Competitive Bidding Except as provided in Parts B and C hereof, contracts for the purchase of goods or for civil works shall be procured in accordance with procedures consistent with those set forth in the General Introduction and in Part A of the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in August 1975 (hereinafter called the Guidelines), on the basis of international competitive bidding. B. Other Procurement Procedures 1. Construction of, and furniture and equipment for, the health and community facilities shall be procured on the basis of competitive bidding locally advertised or other procurement procedures acceptable to the Bank. 2. Farm inputs shall be procured by the Beneficiaries through regular commercial channels. C. Procurement Without Contracting Civil works for the earth roads included in Part I of the Project may be carried out on force account, provided, however, that the Borrower has furnished to the Bank evidence satisfactory to the Bank that it has the technical capability required for this purpose. D. 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 for civil works, equipment: vehicles or

22 (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 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 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.

23 SCHEDULE 5 Project Coordinator and Deputy Project Coordinator 1. Project Coordinator The main functions of the Project Coordinator will be to: (a) prepare outlines for the annual programs for carrying out the Project and direct the agencies participating in the execution of the Project to prepare such programs; (b) furnish such programs to CNPS for approval and to the Bank for information; (c) programs; monitor the subsequent execution of the approved (d) ensure that BNF,IBR and the Ministerios de Agricultura y Ganaderia, Salud PGblica y Bienestar Social, and Obras Pfiblicas y Comunicaciones, make a separate and identifiable financial allocation in their annual expenditure budgets to cover the total cost of their respective contributions in each year to Project execution, including operational and maintenance costs; (e) coordinate the carrying out of Section 4.02 of the Loan Agreement and Sections 4.01 and 4.02 of the Project Agreement; (f) inform CNPS and the Bank on (d) hereof; (g) countersign all expenditures eligible for reimbursement out of the Loan; (h) prepare quarterly progress reports for the information of CNPS and the Bank; (i) act as the channel of communication with the Bank; and (j) supervise the Deputy Project Coordinator.

24 Deputy Project Coordinator to The main functions of the Deputy Project Coordinator will be (a) ensure coordination among participating agencies at the field level, including supervision of all activities at the two new community centers; (b) assist the Project Coordinator in liaising with the field staff of participating agencies; (c) assist the Project Coordinator in the preparation of the quarterly progress reports referred to in 1 (h) above; and (d) carry out such functions as will be delegated to him by the Project Coordinator.