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February 3, 1993
His Excellency 
Mr. Paulo Roberto Haddad 
Minister of Finance 
Federative Republic of Brazil
Mr. Antonio Barros de Castro 
President Banco Nacional de Desenvolvimento
Economico e Social
Re:
Loan No. 2831-BR (Second Industrial Pollution
Control Project)
Special Account - Amendment
Dear Sirs:
Please refer to the Loan Agreement, dated July 27, 1987, entered into  between 
Federative Republic of Brazil (the Borrower) and International Bank for Reconstruction 
and Development (the Bank) and Banco Nacional de Desenvolvimento Economico e Social 
for the above Project.
As a result of the Borrower's decision, approved by the Bank, to transfer to 
commercial banks the Special Account opened pursuant to the Loan Agreement, the 
following amendments need to be made in such Agreement:
1. The expressions "CESA" and "FESA" are replaced by the expression "Special 
Account" wherever they appear in the Loan Agreement.
2. Paragraph (b) of Section 2.02 of the Loan Agreement is amended to read
as follows:
"(b)
The Borrower shall, for the purposes of the Project, open and 
maintain in 
dollars a special deposit account (the Special Account) in a 
commercial bank 
acceptable to the Bank on terms and conditions 
satisfactory to the Bank, including 
appropriate protection against set-off, 
seizure or attachment. Deposits into, and 
payments out of, the 
Special Account shall be made in accordance with the provisions 
of Schedule 3 
to this Agreement."
3. The provisions of Schedule 3 to the Loan Agreement are replaced by the 
provisions in the Annex to this letter.
If you agree with the foregoing amendment, please sign the copy of this letter 
in the space provided below and return it to us.
The present amendment will become efective only after the Bank shall have 
received a certified statement of the Special Account reconciled to  the satisfaction 
of the Bank, and the Bank shall be satisfied that the  Borrower is in full compliance 
with the Special Account provisions of the Loan Agreement being amended hereby.
Sincerely yours,
INTERNATIONAL BANK FOR 
   RECONSTRUCTION AND DEVELOPMENT
By /s/ Stephen J. Ettinger
Acting Director
Country Department I 
Latin America and the Caribbean Region
AGREED: 
FEDFRATTVE REPUBLIC OF BRAZIL
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By /s/ 
Authorized Representative
BANCO NACIONAL DE DESENVOLIMENTO
   ECONOMICO E SOCIAL
By /s/
Authorized Representative
Date:
JUNE 02, 1994.
ANNEX
SCHEDULE 3
Special Account
1.
For the purposes of this Schedule:
(a)
the term "eligible Categories" means the categories of items to be 
financed out of the proceeds of the Loan pursuant to paragraph (d) of  Section 2.02 of 
this Agreement;
(b)
the term "eligible expenditures" means expenditures in respect of the 
reasonable cost of goods and services required for the Project and to be financed out 
of the proceeds of the Loan allocated from time to time to  the eligible Categories in 
accordance with the provisions of Section 2.02 of  this Agreement; and
(c)
the term "Authorized Allocation" means an amount equivalent to $5,000,000 
to be withdrawn from the Loan Account and deposited into the Special Account pursuant 
to paragraph 3 (a) of this Schedule.
2.
Payments out of the Special Account shall be made exclusively for eligible 
expenditures in accordance with the provisions of this Schedule.
3.
After the Bank has received evidence satisfactory to it that the  Special 
Account has been duly opened, withdrawals of the Authorized Allocation and subsequent 
withdrawals to replenish the Special Account shall be made as follows:
(a)
For withdrawals of the Authorized Allocation, the Borrower shall furnish 
to the Bank a request or requests for a deposit or deposits which  do not exceed the 
aggregate amount of the Authorized Allocation. On the basis of such request or 
requests, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account 
and deposit in the Special Account such amount or amounts as the Borrower shall have 
requested.
(b)
(i)
For the replenishment of the Special Account, the Borrower shall 
furnish to 
the Bank requests for deposits into the Special Account at 
such intervals as 
the Bank shall specify.
(ii)
Prior to or at the time of each such request, the Borrower shall 
furnish to 
the Bank the documents and other evidence required pursuant 
to paragraph 4 of 
this Schedule for the payment or payments in respect 
of which replenishment is 
requested. On the basis of each such request, 
the Bank shall, on behalf of the 
Borrower, withdraw from the Loan Account 
and deposit into the Special Abcount 
such amount as the Borrower shall 
have requested and as shall have been shown 
by said documents and 
other evidence to have been paid out of the Special 
Account for 
eligible expenditures.
All such deposits shall be withdrawn by the Bank from the Loan Account under the 
respective eligible Categories, and in the respective equivalent amounts, as shall 
have been justified by said documents and other  evidence.
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4.
For each payment made by the Borrower out of the Special Account, the Borrower 
shall, at such time as the Bank shall reasonably request,  furnish to the Bank such 
documents and other evidence showing that such payment was made exclusively for 
eligible expenditures.
5.
Notwithstanding the provisions of paragraph 3 of this Schedule, the Bank shall 
not be required to make further deposits into the Special Account:
(a)
if, at any time, the Bank shall have determined that all further 
withdrawals should be made by the Borrower directly from the Loan Account in 
accordance with the provisions of Article V of the General Conditions  and paragraph 
(a) of Section 2.02 of this Agreement; or
(b)
once the total unwithdrawn amount of the Loan allocated to the eligible 
Categories, less the amount of any outstanding special commitment entered into by the 
Bank pursuant to Section 5.02 of the General  Conditions with respect to the Project, 
shall equal the equivalent of twice the  amount of the Authorized Allocation.
Thereafter, withdrawal from the Loan Account of the remaining unwithdrawn amount of 
the Loan allocated to the eligible Categories shall follow such procedures as the Bank 
shall specify by notice to the Borrower. Such  further withdrawals shall be made only 
after and to the extent that the Bank shall have been satisfied that all such amounts 
remaining on deposit in the  Special Account as of the date of such notice will be 
utilized in making payments  for eligible expenditures.
6.
(a)
If the Bank shall have determined at any time that any payment out of the 
Special Account: (i) was made for an expenditure or in an amount  not eligible 
pursuant to paragraph 2 of this Schedule; or (ii) was not  justified by the, evidence 
furnished to the Bank, the Borrower shall, promptly upon notice from the Bank: (A) 
provide such additional evidence as the Bank may request; or (B) deposit into the 
Special Account (or, if the Bank shall so request, refund to the Bank) an amount equal 
to the amount of such payment or the portion thereof not so eligible or justified. 
Unless the Bank shall otherwise agree, no further deposit by the Bank into the Special 
Account shall be made until the Borrower has provided such evidence or made such 
deposit or refund, as the case may be.
(b)
If the Bank shall have determined at any time that any amount outstanding 
in the Special Account will not be required to cover further payments for eligible 
expenditures, the Borrower shall, promptly upon  notice from the Bank, refund to the 
Bank such outstanding amount.
(c)
The Borrower may, upon notice to the Bank, refund to the Bank all or any 
portion of the funds on deposit in the Special Account.
(d)
Refunds to the Bank made pursuant to paragraphs 6 (a), (b) and (c) of 
this Schedule shall be credited to the Loan Account for subsequent withdrawal or for 
cancellation in accordance with the relevant provisions  of this Agreement, including 
the General Conditions."