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July 27, 1999
Mr. Levon Barkhudarian
Minister of Finance 
Ministry of Finance 
1, Government House
Republic Square
Yerevan 375010
Republic of Armenia
Re:
Development Credit Agreement 3007 AM - Education Financing and 
Management Project
Amendment to the Development Credit Agreement
Dear Mr. Barkhudarian:
We refer to the above-referenced Development Credit Agreement (the Agreement) 
between the Republic of Armenia and International Development Association (the 
Association) dated February 4, 1998 and to the letter from Mr. Edward Sandoyan, then 
Minister of Finance and Economy, dated June 14, 1999, requesting certain modifications 
to the Agreement. We hereby agree to amend the Agreement as follows:
Schedule 1 "Withdrawal of the Proceeds of the Credit" is amended as follows:
1.
In paragraph 1, a new disbursement category "Grants for Microprojects" is 
introduced in  paragraph 1 and the Credit proceeds are re-allocated between the 
categories in a following way:
Amount of the Credit
   % of 
Allocated (Expressed 
Expenditures
Category
in SDR Equivalent) 
to be Financed
(1)
Civil works
   73,000
80%
(2)
Textbooks (including
5,218,000
100% of foreign
printing and delivery
expenditures, 100% of
Services)
local expenditures (ex-
factory cost) and 80%
of local expenditures
for other items pro-
cured locally
(3)
Goods other than
  505,000
100% of foreign
textbooks
expenditures, 100% of
local expenditures (ex-
factory cost) and 80%
of local expenditures
for other items pro-
cured locally
(4)
Consultants' services,
1,837,000
100%
Training, fellowships
and Studies
(5)
Incremental operating
  588,000
100%
costs
(6)
Refunding of
  661,000
Amounts due pursuant
Project Preparation
to Section 2.02 (c)
Advance
of this Agreement
(7)
Unallocated
  812,000
(8)
Grants for Microprojects
1,406,000
90%
TOTAL
     11,100,000
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2.
Paragraph 4 is amended to read as follows:
"4.
The Association may require withdrawals from the Credit Account to be 
made on the basis of statements of expenditure for expenditures for: (a) 
textbooks, goods and works under contracts not exceeding $200,000 equivalent, 
(b) 
services provided by consulting firms under contracts not exceeding 
$100,000 equivalent; (c) services provided by individual consultants under 
contracts not exceeding $50,000 equivalent; (d) training, fellowships and 
studies under contracts not exceeding $50,000 equivalent; (e) operating costs; 
and 
(f) Grants for Microprojects, all under such terms and conditions as the 
Association shall specify by notice to the Borrower.
Schedule 5 "Special Account"
3.
Paragraph 1 (a) is amended to read as follows:
"(a)
the term "eligible Categories" means Categories (1), (2), (3), 
(4), (5) and (8) set forth in the table in paragraph 1 of Schedule 1 to this 
Agreement".
Please confirm your agreement to the foregoing by signing, dating and returning 
to us the form of confirmation on the enclosed copy of this letter.
This amendment shall become effective upon receipt of the countersigned copy of 
this letter by us.
Sincerely,
By /s/ Judy O’Connor
Country Director for Armenia
Country Unit III
Europe and Central Asia Region
CONFIRMED BY:
REPUBLIC OF ARMENIA
By /s/ Levon Barkhudarian
Authorized Representative
Date:  November 15, 1999