Development Credit Agreement

Transcription

1 Public Disclosure Authorized CONFORMED COPY CREDIT NUMBER 765 BD Public Disclosure Authorized Development Credit Agreement (Jute Project) Public Disclosure Authorized between PEOPLE'S REPUBLIC OF BANGLADESH and INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized Dated February 8, 1978

2 CREDIT NUMBER 765 BD DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated February 8, 1978, between PEOPLE'S REPUBLIC OF BANGLADESH (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association.) WHEREAS (A) the Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) Parts A.1 and B.1 of the Project will be carried out by the Sonali Bank, a commercial bank operating under the laws of the Borrower, with the Borrower's assistance and, as part of such assistance, the Borrower will make available to the Sonali Bank part of the proceeds of the Credit as hereinafter provided; and WHEREAS the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth and in the Project Agreement of even date herewith between the Association and the Sonali Bank; 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 Development Credit Agreements of the Association, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agreements of the Association being hereinafter called the General Conditions). 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 Agreeement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Project Agreement" means the agreement between the Association and the Sonali Bank of even date herewith, as the

3 -2- 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) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and the Sonali Bank pursuant to Section 3.01 (c) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement; (c) "DAJ" means the Directorate of Agriculturt (Jute) under the jurisdiction of the Ministry of Agriculture, or any successor thereto; (d) "IRDP" means the Integrated Rural Development Program, an agency of the Borrower's Ministry of Land Administration, Local Government, Rural Development and Cooperatives, or any successor thereto; (e) "TCCA" means Thana Central Cooperative Association under IRDP, an association of KSSs, at the thana level; (f) "KSS" means Krishak Samabaya Samiti, a farmers' cooperative society at the village level; (g) "IJCS" means the Intensive Jute Cultivation Scheme of the Borrower; (h) "Zone" means an administrative area of IJCS headed by an Assistant Director of Agriculture; (i) "Unit" means an administrative area of IJCS headed by a Jute Extension Officer; (j) "Jute Block" means an administrative area of IJCS headed by a Jute Extension Assistant; (k) IJCS; "JFA" means a Jute Farmers' Association operating under (1) "Project Area" means the Borrower's territory, excluding Chittagong, Chittagong Hill Tracts and Patuakhali Districts; (m) "Project Revolving Fund" means the revolving fund to be established in accordance with the provisions of Section 3.10 of this Agreement;

4 - 3 - (n) "Sub-loans" means the loans to be made available to farmers under Parts A.1 and B.1 of the Project; (o) "BADC" means the Bangladesh Agricultural Development Corporation, a corporation established and operating under the laws of the Borrower, or any successor thereto; (p) "BJRI" means the Bangladesh Jute Research Institute, an autonomous institute under the Borrower's Ministry of Jute, established and operating under the laws of the Borrower, or any successor thereto; and (q) "Taka" and "Tk" mean the currency of the Borrower. ARTICLE II The Credit Section The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies e,uivalent to twenty-one million dollars ($21,000,000). Section The amount of the Credit may be withdrawn from the Credit 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 Association, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit. Section Except as the Association shall otherwise agree, contracts for the purchase of goods or for civil works required for the Project and to be financed out of the proceeds of the Credit, shall be let in accordance with the provisions set forth or referred to in Schedule 3 to this Agreement. Section The Closing Date shall be June 30, 1983 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent

5 (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section Service charges shall be payable semi-annually on May 1 and November 1 in each year. Section The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each May 1 and November 1 commencing May 1, 1988, and ending November 1, 2027, each installment to and including the installment payable on November 1, 1997, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section The currency of the United Kingdom of Great Britain and Northern Ireland is hereby specified for the purposes of Section 4.02 of the General Conditions. Section The Managing Director of the Sonali Bank, and in the event of his absence or inability to act such other off i- cial or officials as may be designated by him, are hereby designated as representatives of the Borrower for the purposes of taking any action required or permitted to be taken with respect to Categories (1) and (2) of the table set forth in paragraph 1 of Schedule 1 to this Agreement, 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 the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and agricultural practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) The Borrower shall ensure that DAJ shall at all times be staffed and managed by persons who shall have the qualifications and experience required for the effective execution of the Project. (c) For the purposes of Parts A.1 and B.1 of the Project, the Borrower shall relend to the Sonali Bank the proceeds of the Credit allocated to Categories (1) and (2) of the table set

6 -5- forth in paragraph I of Schedule 1 to this Agreement, under a subsidiary loan agreement to be entered into between the Borrower and the Sonali Bank under terms and conditions which shall have been approved by the Association. (d) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. Section In order to assist the Borrower in preparing and supervising the building programs included in the Project, the Borrower shall, not later than April 1, 1978 or such other date as shall be agreed with the Association, employ engineering consultants (or architects) whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. 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 Credit 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 Association shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the Project. Section (a) The Borrower shall furnish to the Association, 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 Association shall reasonably request. (b) The Borrower: (i) shall maintain records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Credit, and to disclose the use thereof in the Project; (ii) shall furnish to the Association, on a quarterly basis, reports on the progress. of the Project which shall be

7 -6- consistent with the formats to be agreed with the Association pursuant to Section 3.17 of this Agreement; (iii) shall enable the Association'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 Credit and any relevant records and documents; and (iv) shall furnish to the Association all such information as the Association shall reasonably request concerning the Project, the expenditure of the proceeds of the Credit 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 Association, promptly after such acquisition, evidence satisfactory to the Association that such land and rights in respect of land are available for purposes related to the Project. Section The Borrower shall cause (a) its Directorate of Agriculture (Extension and Management) to furnish to DAJ about 20,000 hand sprayers of a design and in a condition satisfactory to DAJ and (b) DAJ to make available, under arrangements satisfactory to the Association, such sprayers to farmers participating in the Project. Section The Borrower shall cause DAJ to construct the houses referred to in Part A.4 of the Project in accordance with construction standards satisfactory to the Association. Section The Borrower shall cause DAJ to employ, not later than April 1, 1978 and July 1, 1978, respectively, or such other dates as shall be agreed with the Association, the Project management advisor and the marketing specialist referred to in Part C.1 of the Project and whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Section The Borrower shall, not later than March 1, 1978 or such other date as shall be agreed with the Association, (a) furnish to the Association for approval its proposals for the Project evaluation program referred to in Part C.2 of the Project, and (b) employ a research institution whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association for the implementation of such program.

8 - 7 - Section Without any limitation or restriction upon the provisions of Section 3.01 of this Agreement, the Borrower shall: (a) establish and maintain, in a commercial bank, a Project Revolving Fund to be administered by the Director of Agriculture (Jute) and to be used exclusively to account and make payments for expenditures for goods and services (excluding short-term credit and staff salaries and allowances) required for the Project to the extent payment for such expenditures is to be made in Takas; (b) deposit in such Project Revolving Fund an initial amount of Tk2,000,000; and (c) replenish, as and when needed, the amount in the Project Revolving Fund to a level which shall be (i) sufficient to cover at any time the estimated local expenditures required for the purposes of the Project for the following three months and (ii) in any case at least equal to Tkl,000,000. Section In order to ensure efficient coordination in the implementation of the Project, the Borrower shall maintain (a) the Central Coordination Committee established for the purposes of the Project, chaired by the Secretary, Ministry of Agriculture, and whose membership includes representatives of the Ministry of Finance, the Ministry of Planning, the Ministry of Jute, IRDP, the Jute Research Institute, the Sonali Bank and the Bangladesh Jute Association and (b) the Zonal Coordination Committees established for the purposes of the Project at the Zonal level, each Committee being chaired by the Assistant Director of Agriculture (Jute) and its membership including representatives of the Borrower's Directorate of Agriculture (Extension and Management), BADC, the Sonali Bank, IRDP (in IRDP thanas), JFAs, the Bangladesh Jute Association and the Borrower's Jute Trading Corporation or Jute Marketing Corporation. Section The Borrower shall make available to DAJ's staff the motorcycles and bicycles included in Part A.5 of the Project under arrangements satisfactory to the Association. Section The Borrower shall annually set and collect from the beneficiaries of the jute storage sheds included in Part B.2 of the Project marketing fees (whenever DAJ shall operate these sheds and sell JFAs' jute) or rental charges (whenever TCCAs/KSSs shall operate these sheds themselves) at levels satisfactory to the Association.

9 - 8 - Section The Borrower shall take all steps required on its part as shall ensure that IJCS requirements for fertilizer, jute seed and pesticides for each jute season shall be furnished by BADC, the Seed Directorate of BJRI and the Borrower's Directorate of Agriculture (Extension and Management), respectively. Section (a) The Borrower shall cause IRDP to adopt, not later than March 1, 1978 or such other date as shall be agreed with the Association, modified membership regulations satisfactory to the Association in favor of farmers participating in the Project. (b) The Borrower shall cause IRDP to take, in the following thanas of the Project Area: Kotwali, Gabtali, Sariakandi, Muktagacha, Trisal, Gaffargaon, Raiganj, Kazipur, Serajganj and Ullapara, all steps required on its part to enable all farmers participating in the Project to join (i) existing KSSs or (ii) new KSSs to be established in accordance with criteria and a schedule satisfactory to the Association. Section The Borrower shall, not later than September 1, 1980 or such other date as shall be agreed with the Association, furnish to the Association for review a plan for the future organization of IJCS credit operations based on the assessment of the effectiveness of the credit systems in operation under the Project. Section The Borrower shall, not later than March 1, 1978 or such other date as shall be agreed with the Association, prepare formats, satisfactory to the Association, to be used for monitoring the various components of the Project. Section For the purposes of Parts C.3 and C.4 of the Project, the Borrower shall prepare and implement training programs which shall be satisfactory to the Association. Section The Borrower shall, not later than March 31, 1978 or such other date as shall be agreed with the Association, prepare and thereafter implement programs, satisfactory to the Association, for training Jute Extension Assistants at Agricultural Training Institutes or at such other institutions as shall be agreed with the Association. Section The Borrower shall cause DAJ to organize and implement its annual extension work programs in accordance with procedures satisfactory to the Association.

10 - 9 - Section The Borrower shall (a) not later than March 1, 1978 or such other date as shall be agreed with the Association, appoint in DAJ's headquarters an Administrative/Procurement Officer, a Finance/Accounts Officer and a Construction Engineer; (b) consult with the Association on the functions and responsibilities of, and qualifications and experience required for, the positions referred to in (a) above prior to making any such appointment; and (c) cause DAJ to appoint for its headquarters, not later than May 1, 1978 or such other date as shall be agreed with the Association, the administrative and technical staff referred to in Part A.3 (i) of the Project, excluding the officers referred to in (a) above. Section For the purposes of Parts A.1 and B.1 of the Project, the Borrower shall cause Sub-loans made to farmers to be on terms and conditions acceptable to the Association, provided that no Sub-loans shall be made to the farmers referred to in Section 2.02 (b) and (c) of the Project Agreement. ARTICLE IV Other Covenants Section (a) The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations, resources and expenditures, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. (b) The Borrower shall cause DAJ and IRDP to (i) establish separate accounts for the purposes of the Project; (ii) have such accounts for each fiscal year audited, in accordance with sound auditing principles consistently applied, by independent auditors acceptable to the Association; (iii) furnish to the Association as soon as available, but in any case not later than six months after the end of each such year, (A) certified copies of said 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 Association shall have reasonably requested; and (iv) furnish to the Association such other information concerning said accounts and the audit thereof as the Association shall from time to time reasonably request.

11 Section The Borrower shall: (a) maintain or cause to be maintained the buildings, vehicles and equipoent provided under the Project and make or cause to be made all necessary repairs thereof; and (b) provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section The Borrower shall: (a) not later than March 1, 1978 or such other date as shall be agreed with the Association, employ consultants whose qualifications, experience and terms of reference shall be satisfactory to the Association, to assist the Borrower in carrying out (i) a study of the Borrower's marketing and pricing procedures and policies for raw jute and jute goods and (ii) a study of medium and long-term world supply and demand prospects for raw jute, jute goods and jute substitutes; and (b) furnish to the Association for review, not later than December 31, 1978 or such other date as shall be agreed with the Association, a plan (including an implementation schedule) based on the results of the studies referred to in (a) of this Section, to establish, in consultation with the Association, and thereafter maintain improved jute pricing mechanisms. Section Until December 31, 1982, the Borrower shall, before undertaking any expansion of the area covered by IJCS above one million acres: (a) ensure that such expansion shall (i) not adversely affect the operation of the Project and (ii) be economically justified, on the basis of medium and long-term world supply and demand prospects for raw jute and jute goods; and (b) inform the Association of any such expansion. Section Without any limitation or restriction upon its obligations under Section 3.01 of this Agreement, the Borrower shall make available to DAJ's extension staff adequate amounts for travel and daily allowances to enable such staff to promptly carry out their functions and responsibilities under DAJ's annual work programs. 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 (h) thereof:

12 (a) the Sonali Bank 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 the Sonali Bank will be able to perform its obligations under the Project Agreement; (c) the by-laws of the Sonali Bank shall have been amended, suspended, abrogated, repealed or waived in such a way as to materially and adversely affect the ability of the Sonali Bank to carry out its obligations under the Project Agreement; and (d) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of the Sonali Bank or for the suspension of its operations, unless arrangements satisfactory to the Association shall have been made to replace it by other banks or financial institutions which shall assume and perform all its functions in respect of the Project and covenants under the Project Agreement upon such dissolution, disestablishment or suspension. Section For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) 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 Association to the Borrower and the Sonali Bank; and (b) any event specified in paragraph (c) or (d) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section (b) of the General Conditions: (a) the execution of the Project Agreement on behalf of the Sonali Bank has been duly authorized or ratified by all necessary corporate and governmental action;

13 (b) the execution of the Subsidiary Loan Agreement on behalf of the Borrower and the Sonali Bank, respectively, has been duly authorized or ratified by all necessary corporate and governmental action; (c) the Borrower has established the Project Revolving Fund and has deposited in such Project Revolving Fund the amount referred to in Section 3.10 (b) of this Agreement; (d) the Project Proforma has been approved by the Borrower; (e) the auditors referred to in Section 3.02 (i) of the Project Agreement have been appointed; and (f) DAJ's Director and Deputy Director have been appointed; (g) the Borrower has established the committees referred to in Section 3.11 of this Agreement. Section The following are specified as additional matters, within the meaning of Section (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) that the Project Agreement has been duly authorized or ratified by the Sonali Bank, and is legally binding upon the Sonali Bank in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly authorized or ratified by the Borrower and the Sonali Bank and is legally binding upon the Borrower and the Sonali Bank in accordance with its terms. Section The date May 9, 1978 is hereby specified for the purposes of Section of the General Conditions. Section The obligations of the Borrower under Sections 4.02 and 4.05 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date 15 years after the date of this Agreement, whichever shall be the earlier.

14 ARTICLE VII Representatives of the Borrover; Addresses Section Any Secretary, Additional Secretary, Joint Secretary or Deputy Secretary of the External Resources Division of the Ministry of Planning 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 purpose of Section of the General Conditions: For the Borrower: External Resources Division Ministry of Planning Government of the People's Republic of Bangladesh Dacca, Bangladesh Cable address: BAHIRSAMPAD Dacca For the Association: International Development Association 1818 H Street, N.W. Washington, D.C United States of America Cable address: INDEVAS Washington, D.C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this

15 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. PEOPLE'S REPUBLIC OF BANGLADESH By Is/ M.R. Siddiqi Authorized Representative on behalf of the President INTERNATIONAL DEVELOPMENT ASSOCIATION By Is! W. David Hopper Regional Vice President South Asia

16 - 15 SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Short-term credit 4,700,000 55% of eligible under Part A.1 expenditures of the Project (2) Short-term credit 1,100,000 55% of eligible under Part B.1 expenditures of the Project (3) Salaries and al- 2,200,000 55% of local exlowances of incre- penditures mental professional staff referred to in Part A.3 of the Project (4) Vehicles, equip- 2,500,000 ment and materials (a) directly imported (b) locally manufactured and procured exfactory (c) other local procurement 100% of foreign expenditures 100% of local expenditures ex-factory 70% of local expenditures

17 Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (5) Civil works 5,200,000 70% (6) Experts' and con- 1,000, % sultants' services and training (7) Unallocated 4,300,000 TOTAL 21,000, For the purposes of this Schedule: (a) 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; (b) the term "local expenditures" means expenditures in the currency of the Borrower and for goods or services supplied from the territory of the Borrower; and (c) the term "eligible expenditures" with respect to Categories (1) and (2) means: (i) until December 31, 1978, the increment of the aggregate principal amounts of loans disbursed in 1978 by the Sonali Bank under IJCS over the aggregate principal amounts of loans disbursed by the Sonali Bank in 1977 under IJCS; and (ii) thereafter, the increment of the aggregate principal amounts of loans disbursed by the Sonali Bank in any fiscal year under IJCS over the maximum of aggregate principal amounts disbursed by the Sonali Bank under IJCS in any previous fiscal year.

18 The said "eligible expenditures" shall be recorded in audited statements to be prepared by the auditors specified in Section 3.02 of the Project Agreement and furnished to the Association by the Sonali Bank. 3. The disbursement percentages have been calculated in compliance with the policy of the Bank that no proceeds of the Credit 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 Credit decreases or increases, the Association 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 Association. 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 and (b) expenditures under Category (2) until the levels of marketing fees and rental charges to be collected by the Borrower in accordance with Section 3.13 of this Agreement have been approved by the Association for the first year of the Project. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures, and (ii) if such 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. 6. If the Association 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

19 of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit.

20 SCHEDULE 2 Description of the Project The purposes of the Project are (i) to support a five-year program under IJCS to improve jute production in the Project Area, on about one million acres, by helping farmers to increase yields and reduce production costs and by providing technical assistance and training and (ii) to introduce a pilot jute marketing scheme aimed at improving marketing efficiency and increasing farmers' benefits. The Project consists of the following parts: Part A. Production 1. Provision of short-term credit to farmers through DAJ or TCCAs/KSSs to finance fertilizers, hand sprayers and the hiring of weeding or harvesting labor. 2. Provision of about 25,000 seed drills and about 20,000 hand hoes to farmers. 3. Appointment of additional staff required by DAJ to carry out its five-year expansion program, including (i) about 9 senior administrative and technical staff for DAJ's headquarters, (ii) about 11 Assistant Directors of Agriculture, (iii) about 20 Deputy Assistant Directors of Agriculture, (iv) about 250 Jute Extension Officers, (v) about 500 Input Supply Officers and (vi) about 40 Subject Matter Specialists. 4. Construction of about 2,500 houses for Jute Extension Assistants and provision of office equipment to DAJ. 5. Provision of vehicles for DAJ's staff, including about 24 motor vehicles for headquarters and zonal staff, about 10 speed boats for Jute Extension Officers and Assistant Directors of Agriculture, about 1,060 motorcycles for Deputy Assistant Directors of Agriculture, Subject Matter Specialists, Jute Extension Officers and Input Supply Officers, and about 2,500 bicycles for Jute Extension Assistants. 6. Provision of demonstration and field research materials and equipment.

21 Part B. Pilot Jute Marketing Scheme 1. Provision of short-term credit to farmers through DAJ or TCCAs/KSSs for marketing. 2. Construction of about 50 jute storage sheds equipped with baling presses with an aggregate storage capacity of about 400,000 maunds. Part C. Technical Assistance and Training 1. Provision of about 24 man-months of project management expert assistance and about 24 man-months of marketing expert assistance to the Director of Agriculture (Jute). 2. Appointment of a research institution to implement a detailed Project evaluation system. 3. Carrying out of an overseas training program for selected staff of DAJ and the Sonali Bank and selected JFAs' members. 4. Carrying out of in-service training programs for Jute Extension Officers, Input Supply Officers and Jute Extension Assistants. The Project is expected to be completed by December 31, 1982.

22 SCHEDULE 3 Procurement A. General Procedures 1. Contracts for civil works, construction materials, vehicles, baling presses, office furniture and equipment, seed drills and hand hoes shall be let on the basis of competitive bidding advertised locally in accordance with procedures acceptable to the Association. 2. Fertilizers and pesticides shall be procured through local shopping. 3. Goods estimated to cost less than $10,000 equivalent may be procured through local shopping, provided that the aggregate of all goods so procured shall not exceed $300,000 equivalent. B. Review of Procurement Decisions by the Association 1. With respect to all contracts for goods or civil works estimated to cost the equivalent of $100,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Association, 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 Association shall reasonably request. Any further modification to the bidding documents shall require the Association'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 Association of the name of the bidder to which it intends to award the contract and shall furnish to the Association, in sufficient time for its review, a detailed report, by the consultants referred to in Section 3.02 of this Agreement, on the evaluation and comparison of the bids received, together with the recommendations for award of the said consultants and such other information as the Association shall reasonably request. The Association shall, if it determines that the intended award would be inconsistent with the "Guidelines for Procurement under World

23 Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called 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 Association's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract. 2. With respect to each contract to be financed out of the proceeds of the Credit and not governed by the preceding paragraph, the Borrower shall furnish to the Association, promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit 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 Association shall reasonably request. The Association 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.