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CONFORMED COPY
CREDIT NUMBER 3416-ET
Development Credit Agreement
(Multisectoral HIV/AIDS Project)
between
FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA
and
INTERNATIONAL DEVELOPMENT ASSOCIATION
Dated October 12, 2000
CREDIT NUMBER 3416-ET
DEVELOPMENT CREDIT AGREEMENT
AGREEMENT, dated October 12, 2000, between FEDERAL DEMOCRATIC 
REPUBLIC OF ETHIOPIA (the Borrower) and INTERNATIONAL DEVELOPMENT 
ASSOCIATION (the Association).
WHEREAS (A) the Borrower, having satisfied itself as to the 
feasibility and priority of the project described in Schedule 2 to this 
Agreement, has requested the Association to assist in the financing of 
the Project; 
(B)
the Association has received from the Borrower the following 
policy documents, namely: (i) the Policy on HIV/AIDS of the Federal 
Democratic Republic of Ethiopia (1998); (ii) the Strategic Framework for 
the National Response to HIV/AIDS in Ethiopia for 2000-2004 (1999); (iii) 
the Federal Level Multisectoral HIV/AIDS Strategic Plan 2000-2004; and 
(iv) the Regional Multisectoral HIV/AIDS Strategic Plans 2000-2004, 
describing the Borrower’s program of actions, objectives and policies 
designed to prevent and control the HIV/AIDS epidemic (the said documents 
being hereinafter referred to as the Multisectoral HIV/AIDS Program or 
the Program) and declaring the Borrower’s commitment to the execution of 
the Program; and
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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 set forth in this Agreement;
NOW THEREFORE the parties hereto hereby agree as follows:
ARTICLE I
General Conditions; Definitions
Section 1.01. The “General Conditions Applicable to Development 
Credit Agreements” of the Association, dated January 1, 1985 (as amended 
through October 6, 1999), with the modifications set forth below (the 
General Conditions), constitute an integral part of this Agreement:
(a)
A new paragraph (12) is added to Section 2.01 to read as set 
forth below, and the existing paragraphs (12) through (14) of said 
Section are accordingly renumbered as paragraphs (13) through (15):
“12.
‘Participating Country’ means any country that the 
Association determines 
meets the requirements set forth 
in Section 11 of Resolution No. 194 of the Board of 
Governors of 
the Association, adopted on April 8, 1999; and ‘Participating Countries’ 
means, collectively, all such countries.” ; and
(b)
The second sentence of Section 5.01 is modified to read:
“Except as the Borrower and the Association shall otherwise 
agree, no withdrawals 
shall be made: (a) on account of 
expenditures in the territories of any country which is not 
a 
Participating Country or for goods produced in, or services supplied 
from, such 
territories; or (b) for the purpose of any payment to 
persons or entities, or for any import 
of goods, if such payment or 
import, to the knowledge of the Association, is prohibited by a 
decision of the United Nations Security Council taken under Chapter VII 
of the Charter of 
the United Nations.”
Section 1.02. 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)
“AIDS” means the Acquired Immune Deficiency Syndrome;
(b)
“Assistant Program Coordinator” means the Assistant Program 
Coordinator referred to in paragraph 3 (b) of Schedule 4 to this 
Agreement;
(c)
“Beneficiary” means a CBO (as hereinafter defined), an NGO 
(as hereinafter defined), or a private sector entity, which has met the 
eligibility criteria set out in the Project Implementation Manual and the 
requirements of Schedule 4 to this Agreement and which, as a result, has 
received or is entitled to receive, a Grant for the carrying out of a 
Subproject;
(d)
“CBO” means a community-based organization operating under 
the Borrower’s laws and meeting the criteria provided in the Project 
Implementation Manual;
(e)
“Eligible Categories” means with respect to: (i) the NS 
Special Account (as hereinafter defined), Categories (1), (3) and (4) set 
forth in the table in Part A.1 of Schedule 1 to this Agreement; and (ii) 
the Fund Special Account (as hereinafter defined), Category (2) set forth 
in the said table;
(f)
“Eligible Expenditures” means expenditures for goods and 
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services referred to in Section 2.02 (a) of this Agreement and to be 
financed out of the proceeds of the Credit;
(g)
“Emergency HIV/AIDS Fund” means the fund to be established 
pursuant to Part C of the Project; 
(h)
“Finance Manager” means the Finance Manager referred to in 
paragraph 3 (c) of Schedule 4 to this Agreement;
(i)
“Financial Controller” means the Financial Controller 
referred to in paragraph 3 (c) of Schedule 4 to this Agreement;
(j)
“Financial Management Manual” means the manual referred to 
in paragraph 5 (f) of Schedule 4 to this Agreement;
(k)
“Fund Special Account” means the special deposit account 
opened in the name of the Emergency HIV/AIDS Fund pursuant to Part B of 
Schedule 1 to this Agreement; 
(l)
“Grant Agreement” means the agreement referred to in 
paragraph 6 (a) of Schedule 4 to this Agreement;
(m)
“Grant” means a grant to be made to finance a Subproject 
pursuant to Part C of the Project;
(n)
“HIV” means the Human Immuno-Deficiency Virus;
(o)
“IAPSO” means the Inter-Agency Procurement Services of the 
United Nations; 
(p)
“IEC materials” means information, education and 
communication material;
(q)
“Implementation Agencies” includes NAC, a Federal line 
ministry, an agency, commission or regional bureau of the Borrower, 
private sector entities, the WAC, the RAC, the NGOs, the CBOs, Woredas, 
Kebeles, networks of people living with HIV/AIDS and research 
organizations participating in the Project;
(r)
“Initial Deposit” means the initial deposit referred to in 
Section 3.02 (ii) of this Agreement;
(s)
“Kebele” means a sub-unit of a Woreda established and 
operating under the laws of the Borrower;
(t)
“MEU” means the Monitoring and Evaluation Unit to be 
established pursuant to Part D of the Project;
(u)
“NAC” means the Borrower’s National HIV/AIDS Prevention and 
Control Council established in April 2000;
(v)
“National Secretariat” means the National HIV/AIDS Council 
Secretariat referred to in paragraph 2 (a) (i) of Schedule 4 to this 
Agreement;
(w)
“NGO” means a non-governmental organization registered under 
the laws of the Borrower and meeting the criteria provided in the Project 
Implementation Manual and includes a religious organization;
(x)
“NRB” means the National Review Board of NAC referred to in 
paragraph 5 (d) of Schedule 4 to this Agreement;
(y)
“NS Special Account” means the special deposit account 
opened in the name of the National Secretariat pursuant to Part B of 
Schedule 1 to this Agreement;
(z)
“PCU” means the Project Coordination Unit referred to in 
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paragraph 3 (a) of Schedule 4 to this Agreement;
(aa)
“Program Coordinator” means the Program Coordinator referred 
to in paragraph 3 (b) of Schedule 4 to this Agreement; 
(ab)
“Project Account” means the account to be opened pursuant to 
Section 3.02 of this Agreement;
(ac)
“Project Implementation Manual” means the Project 
Implementation Manual referred to in paragraph 1 (a) of Schedule 4 to 
this Agreement;
(ad)
“Project Management Report” means each report prepared in 
accordance with Sections  4.01 and 4.02 of this Agreement;
(ae)
“Project Year” means the 12 month period beginning from the 
Effective Date and ending 12 months thereafter and each successive 12 
month period following thereafter;
(af)
“RAC” means a Regional AIDS Council established and 
operating under the laws of the Borrower;
(ag)
“Regional Secretariat” means a Regional Secretariat of the 
RACs;
(ah)
“RRB” means the Regional Review Board of the RAC referred to 
in paragraph 5 (c) of Schedule 4 to this Agreement;
(ai)
“Special Accounts” means the NS Special Account and the Fund 
Special Account;
(aj)
“STD” means sexually transmitted diseases;
(ak)
“Subproject” means a program or other initiative to be 
carried out by Beneficiaries under Part C of the Project which having met 
the eligibility criteria set out in the Project Implementation Manual and 
the provisions of Schedule 4 to this Agreement is eligible for financing, 
on a grant basis, in accordance with the provisions of the Project 
Implementation Manual;
(al)
“UNFPA” means the United Nations Fund for Population 
Activities;
(am)
“UNICEF” means the United Nations Children’s Emergency Fund;
(an)
“WAC” means a Woreda AIDS Council established by a Woreda 
Council and operating under the laws of the Borrower;
(ao)
“WHO” means the World Health Organization; and
(ap)
“Woreda” means a local government unit established and 
operating under the laws of the Borrower.
ARTICLE II
The Credit
Section 2.01. The Association agrees to lend to the Borrower, on 
the terms and conditions set forth or referred to in the Development 
Credit Agreement, an amount in various currencies equivalent to forty 
five million two hundred thousand Special Drawing Rights (SDR 
45,200,000).
Section 2.02. The amount of the Credit may be withdrawn from the 
Credit Account in accordance with the provisions of Schedule 1 to this 
Agreement for: (i) expenditures made (or, if the Association shall so 
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agree, to be made) in respect of the reasonable cost of goods, works and 
services required for the Project and to be financed out of the proceeds 
of the Credit; and (ii) amounts paid (or, if the Association shall so 
agree, amounts to be paid) by the Borrower on account of withdrawals made 
to meet the reasonable cost of goods, works and services required for any 
Subproject in respect of which the withdrawal from the Credit Account is 
requested.
Section 2.03. The Closing Date shall be June 30, 2004 or such later 
date as the Borrower and the Association shall establish. The Association 
shall promptly notify the Borrower of such later date.
Section 2.04. (a) The Borrower shall pay to the Association a 
commitment charge on the principal amount of the Credit not withdrawn 
from time to time at a rate to be set by the Association as of June 30 of 
each year, but not to exceed the rate of one-half of one percent (1/2 of 
1%) per annum.
(b)
The commitment charge shall accrue: (i) from the date sixty 
days after the date of this Agreement (the accrual date) to the 
respective dates on which amounts shall be withdrawn by the Borrower from 
the Credit Account or canceled; and (ii) at the rate set as of the June 
30 immediately preceding the accrual date and at such other rates as may 
be set from time to time thereafter pursuant to paragraph (a) above. The 
rate set as of June 30 in each year shall be applied from the next date 
in that year specified in Section 2.06 of this Agreement.
(c)
The commitment charge shall be paid: (i) at such places as 
the Association shall reasonably request; (ii) without restrictions of 
any kind imposed by, or in the territory of, the Borrower; and (iii) in 
the currency specified in this Agreement for the purposes of Section 4.02 
of the General Conditions or in such other eligible currency or 
currencies as may from time to time be designated or selected pursuant to 
the provisions of that Section.
Section 2.05. The Borrower shall pay to the Association a service 
charge at the rate of three-fourths of one percent (3/4 of 1%) per annum 
on the principal amount of the Credit withdrawn and outstanding from time 
to time.
Section 2.06. Commitment charges and service charges shall be 
payable semiannually on March 1 and September 1 in each year.
Section 2.07. (a)  Subject to paragraphs (b), (c) and (d) below, 
the Borrower shall repay the principal amount of the Credit in semiannual 
installments payable on each March 1 and September 1 commencing March 1, 
2011 and ending September 1, 2040. Each installment to and including the 
installment payable on September 1, 2020  shall be one percent (1%) of 
such principal amount, and each installment thereafter shall be two 
percent (2%) of such principal amount. 
(b)
Whenever: (i) the Borrower's per capita gross national 
product (GNP), as determined by the Association, shall have exceeded for 
three consecutive years  the level established annually by the 
Association for determining eligibility to access the Association's 
resources; and (ii) the Bank shall consider the Borrower creditworthy for 
Bank lending, the Association may, subsequent to the review and approval 
thereof by the Executive Directors of the Association and after due 
consideration by them of the development of the Borrower's economy, 
modify the repayment of installments under paragraph (a) above by: (A) 
requiring the Borrower to repay twice the amount of each such installment 
not yet due until the principal amount of the Credit shall have been 
repaid; and (B) requiring the Borrower to commence repayment of the 
principal amount of the Credit as of the first semiannual payment date 
referred to in paragraph (a) above falling six months or more after the 
date on which the Association notifies the Borrower that the events set 
out in this paragraph (b) have occurred, provided, however, that there 
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shall be a grace period of a minimum of five years on such repayment of 
principal.
(c)
If so requested by the Borrower, the Association may revise 
the modification referred to in paragraph (b) above to include, in lieu 
of some or all of the increase in the amounts of such installments, the 
payment of interest at an annual rate agreed with the Association on the 
principal amount of the Credit withdrawn and outstanding from time to 
time, provided that, in the judgment of the Association, such revision 
shall not change the grant element obtained under the above-mentioned 
repayment modification.
(d)
If, at any time after a modification of terms pursuant to 
paragraph (b) above, the Association determines that the Borrower's 
economic condition has deteriorated significantly, the Association may, 
if so requested by the Borrower, further modify the terms of repayment to 
conform to the schedule of installments as provided in paragraph (a) 
above.
Section 2.08. The currency of the United States of America is 
hereby specified for the purposes of Section 4.02 of the General 
Conditions.
ARTICLE III
Execution of the Project
Section 3.01. (a) The Borrower declares its commitment to the 
objectives of the Project as set forth in Schedule 2 to this Agreement, 
and, to this end, shall carry out the Project through NAC with due 
diligence and efficiency and in conformity with appropriate 
administrative, financial and public health practices, and shall provide, 
or cause to be provided, promptly as needed, the funds, facilities, 
services and other resources required for the Project.
(b)
Without limitation upon the provisions of paragraph (a) of 
this Section and except as the Borrower and the Association shall 
otherwise agree, the Borrower shall carry out the Project in accordance 
with the Implementation Program set forth in Schedule 4 to this 
Agreement.
Section 3.02. The Borrower shall: (i) open and thereafter maintain, 
until completion of the Project, a Project Account in a bank
acceptable 
to the Association in the name of NAC into which the Borrower shall 
deposit its counterpart contributions to the costs of the Project; (ii) 
deposit an initial amount equivalent to $300,000 (the Initial Deposit) 
into the Project Account, being the Borrower’s estimated counterpart 
contribution to the costs of the Project for the first 6 months of 
Project implementation; and (iii) thereafter during each following 
quarter deposit into the Project Account the amounts required to cover 
the Borrower’s counterpart contributions for each such quarter, as 
determined by the Borrower and the Association. 
Section 3.03. Except as the Association shall otherwise agree, 
procurement of the goods, works and consultants’ services required for 
the Project and to be financed out of the proceeds of the Credit shall be 
governed by the provisions of  Schedule 3 to this Agreement.
Section 3.04. For the purposes of Section 9.06 of the General 
Conditions and without limitation thereto, the Borrower shall:
(a)
prepare, on the basis of guidelines acceptable to the 
Association, and furnish to the Association not later than six (6) months 
after the Closing Date or such later date as may be agreed for this 
purpose between the Borrower and the Association, a plan designed to 
ensure the future achievement of the objectives of the Project; and
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(b)
afford the Association a reasonable opportunity to exchange 
views with the Borrower on said plan.
ARTICLE IV
Financial Covenants
Section 4.01. (a) The Borrower shall maintain a financial 
management system, including records and accounts, and prepare financial 
statements, all in accordance with accounting standards acceptable to the 
Association, consistently applied, adequate to reflect its operations and 
financial condition and to register separately the operations, resources 
and expenditures related to the Project.
(b)
The Borrower shall:
(i)
have its records, accounts and financial statements 
(balance sheets, 
statements of income and expenses 
and related statements) and the records and 
accounts for 
the Special Accounts for each fiscal year audited, in accordance 
with auditing standards acceptable to the Association, 
consistently applied, 
by independent auditors 
acceptable to the Association;
(ii)
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 the 
financial statements referred to in paragraph (a) of this Section, for 
such 
year as so audited, and (B) an opinion on such 
statements and report of such 
audit, by said auditors, of 
such scope and in such detail as the Association 
shall 
have reasonably requested; and
(iii)
furnish to the Association such other information 
concerning such records, 
accounts and financial 
statements, and the audit thereof, and concerning said 
auditors, as the Association may from time to time reasonably 
request.
(c)
For all expenditures with respect to which withdrawals from 
the Credit Account were made on the basis of Project Management Reports 
or statements of expenditure, the Borrower shall:
(i)
maintain or cause to be maintained, in accordance 
with paragraph (a) of this 
Section, records and 
separate accounts reflecting such expenditures;
(ii)
retain, until at least one year after the Association 
has received the audit 
report for the fiscal year in 
which the last withdrawal from the Credit 
Account 
was made, all records (contracts, orders, invoices, bills, receipts 
and other documents) evidencing such expenditures;
(iii)
enable the Association’s representatives to examine 
such records; and
(iv)
ensure that such records and accounts are included in 
the annual audit 
referred to in paragraph (b) of 
this Section and that the report of such audit 
contains a separate opinion by said auditors as to whether the Project 
Management Reports or statements of expenditure 
submitted during such fiscal 
year, together with the 
procedures and internal controls involved in their 
preparation, can be relied upon to support the related withdrawals.
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Section 4.02. (a) Without limitation upon the provisions of Section 
4.01 of this Agreement, the Borrower shall carry out a time-bound action 
plan acceptable to the Association for the strengthening of the financial 
management system referred to in paragraph (a) of said Section 4.01 in 
order to enable the Borrower, not later than 12 months, or such later 
date as the Association shall agree, to prepare quarterly Project 
Management Reports acceptable to the Association, each of which:
(i)
(A) sets forth actual sources and applications of 
funds for the Project, both 
cumulatively and for the 
period covered by said report, and projected sources 
and 
applications of funds for the Project for the six-month period following 
the period covered by said report, and (B) shows 
separately expenditures 
financed out of the 
proceeds of the Credit during the period covered by said 
report and expenditures proposed to be financed out of the proceeds 
of the 
Credit during the six-month period 
following the period  covered by said 
report;
(ii)
(A) describes physical progress in Project 
implementation, both cumulatively 
and for the period 
covered by said report, and (B) explains variances between 
the actual and previously forecast implementation targets; and 
(iii)
sets forth the status of procurement under the 
Project and expenditures under 
contracts financed out of 
the proceeds of the Credit, as at the end of the 
period covered by said report.
(b)
Upon the completion of the action plan referred to in 
paragraph (a) of this Section, the Borrower shall prepare, in accordance 
with guidelines acceptable to the Association, and furnish to the 
Association not later than 45 days after the end of each calendar 
quarter, a Project Management Report for such period.
ARTICLE V
Effective Date; Termination
Section 5.01. The following events are specified as additional 
conditions to the effectiveness of the Development Credit Agreement 
within the meaning of Section 12.01 (b) of the General Conditions:
(a)
the Borrower has adopted the Project Implementation Manual 
in form and substance satisfactory to the Association; 
(b)
the Project Account has been opened and the Initial Deposit 
paid into the Project Account;
(c)
the Borrower has appointed a Finance Manager and a Financial 
Controller, both acceptable to the Association;
(d)
the Borrower has established an accounting and a financial 
management system satisfactory to the Association;
(e)
the Borrower has instituted arrangements satisfactory to the 
Association for the payment of duties and taxes on goods required for the 
carrying out of the Project;  
(f)
the Borrower has appointed a Program Coordinator and an 
Assistant Program Coordinator acceptable to the Association; and
(g)
the Borrower has appointed the Senior Procurement Consultant 
in accordance with paragraph 3 (d) of Schedule 4 to this Agreement.
Section 5.02. The date ninety (90) days after the date of this 
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Agreement is hereby specified for the purposes of Section 12.04 of the 
General Conditions.
ARTICLE VI
Representative of the Borrower; Addresses
Section 6.01. The Minister of Finance of the Borrower is designated 
as representative of the Borrower for the purposes of Section 11.03 of 
the General Conditions.
Section 6.02. The following addresses are specified for the 
purposes of Section 11.01 of the General Conditions:
For the Borrower:
Ministry of Finance
P.O.Box 1905
Addis Ababa
Ethiopia
Cable address:
Telex:
Facsimile:
MINFIN
21147
2511551355
For the Association:
International Development Association
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Cable address:
Telex:
Facsimile:
INDEVAS
248423 (MCI) or
202-477 
6391
Washington, D.C.
 64145 (MCI)
IN WITNESS WHEREOF, the parties hereto, acting through their duly 
authorized representatives, 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.
FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA
By /s/ Berhane Gebre Christos
Authorized Representative
INTERNATIONAL DEVELOPMENT ASSOCIATION
By /s/ Callisto Madavo
Regional Vice President
Africa
SCHEDULE 1
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Withdrawal of the Proceeds of the Credit
A.
General
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
SDR Equivalent)
to be Financed
(1)
Goods
   11,350,000
100% of foreign
expenditures and
85% of local
expenditures
(2)
Grants
   18,950,000
100% of amounts
disbursed
(3)
Consultants’
   10,200,000
100%
services,
training and audits
(4)
Incremental Operating
    1,150,000
90%
Costs
(5)
Unallocated
    3,550,000
     TOTAL
   45,200,000
2.
For the purposes of this Schedule:
(a)
the term “foreign expenditures” means expenditures in the 
currency of any country other than that of the Borrower for goods or 
services supplied from the territory of any country other than that of 
the Borrower;
(b)
the term “local expenditures” means expenditures in the 
currency of the Borrower or for goods or services supplied from the 
territory of the Borrower; and
(c)
the term “Incremental Operating Costs” means the incremental 
operating costs arising under the Project on account of maintenance of 
vehicles, fuel, equipment, office supplies, utilities, consumables, 
travel per diems and allowances, travel and accommodation, office rental 
and Project support staff recruited to work in the PCU and the Regional 
Secretariats, excluding salaries of civil servants.
3.
Notwithstanding the provisions of paragraph 1 above, no withdrawals 
shall be made in respect of:
(a)
payments made for expenditures prior to the date of this 
Agreement, except that withdrawals, in an aggregate amount not exceeding 
the equivalent of SDR 760,000, may be made in respect of Categories (1), 
(3) and (4) on account of payments made for expenditures before that date 
but after March 31, 2000; and
(b)
expenditures under Category (2) unless (i) NAC has formally 
approved and adopted the Financial Management Manual; and (ii) the Grant 
in question has been made in accordance with the procedures, guidelines 
and other provisions set out or referred to in the Project Implementation 
Manual and this Agreement.
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4.
The Association may require withdrawals from the Credit Account to 
be made on the basis of statements of expenditure for (i) goods under 
contracts costing less than $100,000 equivalent each; (ii) services under 
contracts costing less than (A) $100,000 equivalent each for consulting 
firms, and (B) $50,000 equivalent each for individual consultants; (iii) 
all Incremental Operating Costs and training; and (iv) all Grants to (A) 
Woredas, and (B) other Beneficiaries, costing less than $50,000 
equivalent each.
B.
Special Accounts
1.
The Borrower shall open and maintain in dollars in a bank 
acceptable to the Association two separate special deposit accounts, one 
in the name of the National Secretariat (the NS Special Account) and the 
other in the name of the Emergency HIV/AIDS Fund (the Fund Special 
Account), all on terms and conditions satisfactory to the Association, 
including appropriate protection against set-off, seizure and attachment. 
Except as the Association may otherwise specify by notice to the 
Borrower, all withdrawals from the Credit Account shall be deposited by 
the Association into the respective Special Account in accordance with 
the provisions of this Schedule. Payments out of each Special Account 
shall be made exclusively for Eligible Expenditures. For each payment 
made by the Borrower out of a Special Account, the Borrower shall, at 
such time as the Association shall reasonably request, furnish to the 
Association such documents and other evidence showing that such payment 
was made exclusively for Eligible Expenditures.
2.
After the Association has received evidence satisfactory to it that 
a Special Account has been opened, withdrawals from the Credit Account of 
amounts to be deposited into the Special Account shall be made as 
follows:
(a)
until the Association shall have received (i) the first 
Project Management Report referred to in Section 4.02 (b) of this 
Agreement; and (ii) a request from the Borrower for withdrawal on the 
basis of Project Management Reports, withdrawals shall be made in 
accordance with the provisions of Annex A to this Schedule 1; and
(b)
upon receipt by the Association of a Project Management 
Report pursuant to Section 4.02 (b) of this Agreement, accompanied by a 
request from the Borrower for withdrawal on the basis of Project 
Management Reports, all further withdrawals shall be made in accordance 
with the provisions of Annex B to this Schedule.
3.
Payments out of each Special Account shall be made exclusively for 
Eligible Expenditures.  For each payment made by the Borrower out of a 
Special Account, the Borrower shall, at such time as the Association 
shall reasonably request, furnish to the Association such documents and 
other evidence showing that such payment was made exclusively for 
Eligible Expenditures.
4.
Notwithstanding the provisions of Part B.2 of this Schedule, the 
Association shall not be required to make further deposits into any 
Special Account:
(a)
if the Association determines at any time that any Project 
Management Report does not adequately provide the information required 
pursuant to Section 4.02 of this Agreement;
(b)
if the Association determines at any time that all further 
withdrawals should be made by the Borrower directly from the Credit 
Account; or
(c)
if the Borrower shall have failed to furnish to the 
Association within the period of time specified in Section 4.01 (b) (ii) 
of this Agreement, any of the audit reports required to be furnished to 
Page  12
the Association pursuant to said Section in respect of the audit of (A) 
the records and accounts for any Special Account or (B) the records and 
accounts reflecting expenditures with respect to which withdrawals were 
made on the basis of Project Management Reports.
5.
The Association shall not be required to make further deposits into 
any Special Account in accordance with the provisions of Part B.2 of this 
Schedule if, at any time, the Association shall have notified the 
Borrower of its intention to suspend in whole or in part the right of the 
Borrower to make withdrawals from the Credit Account pursuant to Section 
6.02 of the General Conditions. Upon such notification, the Association 
shall determine, in its sole discretion, whether further deposits into 
the Special Accounts may be made and what procedures should be followed 
for making such deposits, and shall notify the Borrower of its 
determination.
6.
(a)
If the Association determines at any time that any payment 
out of any Special Account was made for an expenditure which is not an 
Eligible Expenditure, or was not justified by the evidence furnished to 
the Association, the Borrower shall, promptly upon notice from the 
Association, provide such additional evidence as the Association may 
request, or deposit into the said Special Account (or, if the Association 
shall so request, refund to the Association) an amount equal to the 
amount of such payment. Unless the Association shall otherwise agree, no 
further deposit by the Association into any 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 Association determines at any time that any amount 
outstanding in any Special Account will not be required to cover payments 
for Eligible Expenditures during the six-month period following such 
determination, the Borrower shall, promptly upon notice from the 
Association, refund to the Association such outstanding amount.
(c)
The Borrower may, upon notice to the Association, refund to 
the Association all or any portion of the funds on deposit in a Special 
Account.
(d)
Refunds to the Association made pursuant to sub-paragraph 
(a), (b) or (c) of this paragraph 6, shall be credited to the Credit 
Account for subsequent withdrawal or for cancellation in accordance with 
the provisions of the Development Credit Agreement.
Annex A to SCHEDULE 1
Operation of Special Account When Withdrawals Are 
Not Made On the Basis of Project Management Reports
1.
For the purposes of this Annex, the term “Authorized Allocation” 
means in the case of: (i) the NS Special Account, an amount equivalent to 
$3,500,000  (three million five hundred thousand dollars) to be withdrawn 
from the Credit Account and deposited into the NS Special Account 
pursuant to paragraph 2 of this Annex; and (ii) the Fund Special Account, 
an amount equivalent to $4,000,000 (four million dollars) to be withdrawn 
from the Credit Account and deposited into the Fund Special Account 
pursuant to paragraph 2 of this Annex.
2.
Withdrawals of the Special Accounts’ Authorized Allocations and 
subsequent withdrawals to replenish the Special Accounts should be made 
as follows:
(a)
For withdrawals of said Special Accounts’ Authorized 
Allocations, the Borrower shall furnish to the Association a request or 
requests for deposit into said Special Accounts of an amount or amounts 
which in the aggregate do not exceed said Authorized Allocations. On the 
basis of each such request, the Association shall, on behalf of the 
Borrower, withdraw from the Credit Account and deposit into said Special 
Page  13
Accounts such amount, as the Borrower shall have requested.
(b)
For replenishment of said Special Accounts, the Borrower 
shall furnish to the Association requests for deposit into said Special 
Accounts at such intervals as the Association shall specify. Prior to or 
at the time of each such request, the Borrower shall furnish to the 
Association the documents and other evidence required pursuant to Part 
B.3 of Schedule 1 to this Agreement for the payment or payments in 
respect of which replenishment is requested. On the basis of each such 
request, the Association shall, on behalf of the Borrower, withdraw from 
the Credit Account and deposit into said Special Accounts 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 said Special 
Accounts for Eligible Expenditures. Each such deposit into said Special 
Accounts shall be withdrawn by the Association from the Credit Account 
under one or more of said Special Accounts’ Eligible Categories.
3.
The Association shall not be required to make further deposits into 
the Special Accounts, once the total unwithdrawn amount of the Credit 
minus the total amount of all outstanding special commitments entered 
into by the Association pursuant to Section 5.02 of the General 
Conditions, shall equal the equivalent of twice the amount of said 
Special Accounts’ Authorized Allocations. Thereafter, withdrawal from the 
Credit Account of the remaining unwithdrawn amount of the Credit shall 
follow such procedures, as the Association shall specify by notice to the 
Borrower.  Such further withdrawals shall be made only after and to the 
extent that the Association shall have been satisfied that all such 
amounts remaining on deposit in said Special Account as of the date of 
such notice will be utilized in making payments for Eligible 
Expenditures.
Annex B to SCHEDULE 1
Operation of Special Accounts When Withdrawals Are 
Made On the Basis of Project Management Reports
1.
Except as the Association may otherwise specify by notice to the 
Borrower, all withdrawals from the Credit Account shall be deposited by 
the Association into the Special Accounts in accordance with the 
provisions of Schedule 1 to this Agreement. Each such deposit into the 
Special Accounts shall be withdrawn by the Association from the Credit 
Account under one or more of said Special Accounts’ Eligible Categories.
2.
Each application for withdrawal from the Credit Account for deposit 
into the Special Accounts shall be supported by a Project Management 
Report.
3.
Upon receipt of each application for withdrawal of an amount of the 
Credit, the Association shall, on behalf of the Borrower, withdraw from 
the Credit Account and deposit into the Special Accounts an amount equal 
to the lesser of (a) the amount so requested; and (b) the amount which 
the Association has determined, based on the Project Management Report 
accompanying said application, is required to be deposited in order to 
finance Eligible Expenditures during the six-month period following the 
date of such report; provided, however, that the amount so deposited, 
when added to the amount indicated by said Project Management Report to 
be remaining in the Special Account, shall not exceed: (i) the equivalent 
of $6,900,000 in the case of the NS Special Account; and (ii) the 
equivalent of $5,000,000 in the case of the Fund Special Account. 
SCHEDULE 2
Description of the Project
The objective of the Project, which forms a part of the Borrower’s 
Multisectoral AIDS Program, is to assist the Borrower in carrying out the 
Page  14
Multisectoral HIV/AIDS Program through: (i) the provision of HIV/AIDS 
prevention, care and support services at all levels and in all sectors in 
the Borrower’s territory; and (ii) the utilization of a variety of 
services and activities provided by public and private sector entities, 
the NGOs and Community-Based Organizations.
The Project consists of the following Parts, subject to such 
modifications thereof as the Borrower and the Association may agree upon 
from time to time to achieve such objectives:
Part A:
Capacity Building for the Borrower’s Agencies and Civil 
Society
Strengthening the institutional, financial and technical capacity 
of the Borrower’s agencies and organizations and public and private 
sector entities participating in the HIV/AIDS epidemic control activities 
and efforts, including:
(a)
the strengthening of the National AIDS Prevention and 
Control Council, the Regional AIDS Councils, the Zonal AIDS Councils, 
Woreda AIDS Councils, the Kebele HIV/AIDS Committees and such other 
HIV/AIDS bodies as may be established by or with the approval of the 
Borrower;
(b)
improvement of the capacity of Governmental agencies to 
respond multisectorally to the HIV/AIDS epidemic through the provision to 
such agencies of training, technical advisory services and necessary 
resources, facilities and equipment; and
(c)
building the capacity of the NGOs, the CBOs and other 
private sector entities to confront effectively the HIV/AIDS epidemic 
through the provision to the NGOs, the CBOs, and said agencies of 
training, technical advisory services and necessary resources, facilities 
and equipment. 
Part B:
Expanding Multisectoral Response
1.
Expansion of the Borrower’s HIV/AIDS activities to all regions and 
all levels and initiating new HIV/AIDS interventions, including: (i) the 
carrying out of an inventory of ongoing HIV/AIDS related activities and 
assessing the overall effectiveness of the said activities; and (ii) 
prioritizing of potential programs on the basis of existing capacity.
2.
The provision of resources and facilities to strengthen HIVAIDS 
prevention, treatment, care and support activities of key ministries, 
agencies, commissions and other government bodies, including the 
strengthening of the STD and tuberculosis services.
Part C:
The Emergency HIV/AIDS Fund
The establishment of an Emergency HIV/AIDS Fund to provide funds to 
Woredas, the CBOs, the NGOs and private sector entities for the carrying 
out of Subprojects including multisectoral HIV/AIDS programs and local 
initiatives. 
Part D:
Program Coordination and Management
The programming, coordination and monitoring of Program operations 
by the National Secretariat, Regional Secretariats, Zonal Bureas, Woreda 
HIV/AIDS Councils and the Project Coordination Unit, including the 
establishment of a Monitoring and Evaluation Unit to be responsible for: 
(i) the development of a data collection system to be used to establish 
the performance criteria, including social impact for each component of 
the Project; (ii) the compilation  and consolidation of monitoring 
information including data related to expenditure, disbursements and 
Program outcomes and impact; and (iii) the preparation of consolidated 
Page  15
quarterly implementation reports for the overall Project.
* * *
The Project is expected to be completed by December 31, 2003.
SCHEDULE 3
Procurement and Consultants’ Services
Section I.
Procurement of Goods and Works
Part A:
General
1.
Goods shall be procured in accordance with: (a) the provisions of 
Section I of the “Guidelines for Procurement under IBRD Loans and IDA 
Credits” published by the Bank in January 1995 and revised in January and 
August 1996, September 1997 and January 1999 (the Guidelines), and (b) 
the provisions of the following Parts of this Section I.
2.
In paragraphs 1.6 and 1.8 of the Guidelines, the references to 
“Bank member countries” and “member country” shall be deemed to be 
references, respectively, to “Participating Countries” and “Participating 
Country”.
Part B:
International Competitive Bidding
1.
Except as otherwise provided in Part C of this Section, goods shall 
be procured under contracts awarded in accordance with the provisions of 
Section II of the Guidelines and paragraph 5 of Appendix 1 thereto.
2.
The following provisions shall apply to goods to be procured under 
contracts awarded in accordance with the provisions of paragraph 1 of 
this Part B.
(a)
Grouping of contracts
To the extent practicable, contracts for goods shall be grouped in 
bid packages estimated to cost $100,000 equivalent or more each.
(b)
Preference for domestically manufactured goods
The provisions of paragraphs 2.54 and 2.55 of the Guidelines and 
Appendix 2 thereto shall apply to goods manufactured in the territory of 
the Borrower.
Part C:
Other Procurement Procedures 
1.
Procurement for Emergency purposes
(a)
The following items if: (i) listed on a procurement plan for 
the Project satisfactory to the Association and determined by the 
Borrower and the Association as emergency requirements for purposes of 
the Project; and (ii) procured by PCU under contracts awarded within a 
period not later than 12 months after the Effective Date, may in the case 
of:
(A)
drugs, chemicals, kits and condoms (up to an 
aggregate amount not to 
exceed $1,700,000 
equivalent) be procured from IAPSO, UNFPA, UNICEF and 
WHO in accordance with the provisions of paragraph 3.9 of 
the Guidelines;
(B)
laboratory equipment (up to an aggregate amount 
not to exceed $300,000 
equivalent) be procured 
under contracts awarded on the basis of 
Page  16
international shopping procedures in accordance with the provisions 
of 
paragraphs 3.5 and 3.6 of the Guidelines;
(C)
computers and accessories, office and power 
equipment (up to an 
aggregate amount not 
to exceed $150,000 equivalent) be procured from 
IAPSO in accordance with the provisions of paragraph 3.9 of the 
Guidelines;
(D)
vehicles (up to an aggregate amount not to 
exceed $200,000 
equivalent) be procured (A) 
from IAPSO in accordance with the 
provisions of paragraph 3.9 of the Guidelines, and/or (B) under 
contracts awarded on the basis of national 
shopping procedures in 
accordance with the 
provisions of paragraphs 3.5 and 3.6 of the 
Guidelines; and
(E)
furniture for the PCU and Regional Coordinating 
Offices (up to an 
aggregate amount not to 
exceed $200,000 equivalent) be procured from 
local 
manufacturers or suppliers under contracts awarded on the basis 
of national shopping procedures in accordance with 
the provisions of 
paragraphs 3.5 and 3.6 of the 
Guidelines.
2.
National Competitive Bidding
(a)
Except as otherwise provided in paragraph 1 of this Part, 
the following items may be procured under contracts awarded in accordance 
with the provisions of paragraphs 3.3 and 3.4 of the Guidelines, namely:
(i)
goods estimated to cost less than $100,000 equivalent 
per contract, up to an 
aggregate amount not to exceed 
$4,300,000 equivalent; and
(ii)
office furniture and production of IEC materials for 
which capacity exists in 
the Borrower’s territory.
(b)
Except as otherwise provided in paragraph 5 of this Part, 
works, may be procured under contracts awarded in accordance with the 
provisions of paragraphs 3.3 and 3.4 of the Guidelines.
3.
National and International Shopping and Procurement from UN 
Agencies
Subject to the provisions of paragraph 1 of this Part, goods 
estimated to cost less than $30,000 equivalent per contract, up to an 
aggregate amount not to exceed $500,000 equivalent, may be procured: (i) 
under contracts awarded on the basis of national or international 
shopping procedures in accordance with the provisions of paragraphs 3.5 
and 3.6 of the Guidelines; and/or (ii) from IAPSO, UNFPA, UNICEF and WHO 
in accordance with the provisions of paragraph 3.9 of the Guidelines. 
4.
Direct Contracting
Medical equipment related to HIV/AIDS, power generators for cold 
storage facilities and other specialist equipment and spare parts related 
to HIV/AIDS which are of a proprietary nature costing $10,000 equivalent 
or less per contract, up to an aggregate amount not to exceed $100,000 
equivalent, may, with the Association's prior agreement, be procured in 
accordance with the provisions of paragraph 3.7 of the Guidelines.
5.
Community Participation
Goods and works required for Part C of the Project shall, pursuant 
to paragraph 3.15 of the Guidelines, be procured in accordance with 
Page  17
procedures acceptable to the Association.
6.
Procurement of Small Works
Subject to the provisions of paragraph 6 of this Part, works 
included in Subprojects and estimated to cost less than $20,000 
equivalent per contract, up to an aggregate amount not to exceed $200,000 
equivalent, may be procured under lump-sum, fixed-price contracts awarded 
on the basis of quotations obtained from three (3) qualified domestic 
contractors in response to a written invitation. The invitation shall 
include a detailed description of the works, including basic 
specifications, the required completion date, a basic form of agreement 
acceptable to the Association, and relevant drawings, where applicable. 
The award shall be made to the contractor who offers the lowest price 
quotation for the required work, and who has the experience and resources 
to complete the contract successfully.
Part D:
Review by the Association of Procurement Decisions
1.
Procurement Planning
Prior to the issuance of any invitations to bid for contracts, the 
proposed procurement plan for the Project shall be furnished to the 
Association for its review and approval, in accordance with the 
provisions of paragraph 1 of Appendix 1 to the Guidelines. Procurement of 
all goods and works shall be undertaken in accordance with such 
procurement plan as shall have been approved by the Association, and with 
the provisions of said paragraph 1.
2.
Prior Review
(a)
The procedures set forth in paragraphs 2 and 3 of Appendix 1 
to the Guidelines shall apply to the following:
(i)
each contract for goods (A) estimated to cost the 
equivalent of $100,000 or 
more, and (B) to be procured for 
emergency purposes under paragraph 1 of Part 
C of this 
Section;
(ii)
the first three contracts to be procured under 
national competitive bidding 
procedures; and
(iii)
the first three contracts to be procured by each 
Implementing Agency under 
shopping procedures.
(b)
With respect to goods procured under direct  contracting 
procedures estimated to cost the equivalent of $5,000 or more per 
contract, prior to the execution of any such contract: (i) NAC shall 
provide to the Association a copy of the specifications and the draft 
contract; and (ii) the procedures set forth in paragraphs 2 (f), 2 (g) 
and 3 of Appendix 1 to the Guidelines shall apply.
3.
Post Review
With respect to each contract not governed by paragraph 2 of this 
Part, the procedures set forth in paragraph 4 of Appendix 1 to the 
Guidelines shall apply.
Section II.
Employment of Consultants
Part A:
General
1.
Consultants’ services shall be procured in accordance with (a) the 
provisions of the Introduction and Section IV of the “Guidelines:  
Selection and Employment of Consultants by World Bank Borrowers” 
published by the Association in January 1997 and revised in September 
1997 and January 1999, subject to the modifications thereto set forth in 
Page  18
paragraph 2 of this Part A (the Consultant Guidelines), and (b) the 
provisions of the following Parts of this Section II.
2.
In paragraph 1.10 of the Consultant Guidelines, the references to 
“Bank member countries” and “member country” shall be deemed to be 
references, respectively, to “Participating Countries” and “Participating 
Country”.
Part B:
Quality- and Cost-Based Selection
1.
Except as otherwise provided in Part C of this Section, 
consultants’ services estimated to cost the equivalent of $100,000 or 
more per contract shall be procured under contracts awarded in accordance 
with the provisions of Section II of the Consultant Guidelines, paragraph 
3 of Appendix 1 thereto, Appendix 2 thereto, and the provisions of 
paragraphs 3.13 through 3.18 thereof applicable to quality- and 
cost-based selection of consultants.
2.
The following provisions shall apply to consultants’ services to be 
procured under contracts awarded in accordance with the provisions of the 
preceding paragraph.  The shortlist of consultants for services estimated 
to cost less than $100,000 equivalent per contract, may comprise entirely 
national consultants in accordance with the provisions of paragraph 2.7 
of the Consultant Guidelines.
Part C:
Other Procedures for the Selection of Consultants
1.
Quality-Based Selection
Services estimated to cost $20,000 equivalent or more, including 
the selection of training institutions, may be procured under contracts 
awarded in accordance with the provisions of paragraphs 3.1 through 3.4 
of the Consultant Guidelines.
2.
Least-Cost Selection
Services for: (i) financial audits; and (ii) other repetitive 
tasks, estimated to cost less than $50,000 per contract, up to an 
aggregate amount not to exceed $350,000, may be procured under contracts 
awarded in accordance with the provisions of paragraphs 3.1 and 3.6 of 
the Consultant Guidelines.
3.
Individual Consultants
Services for tasks that meet the requirements set forth in 
paragraph 5.1 of the Consultant Guidelines shall be procured under 
contracts awarded to individual consultants in accordance with the 
provisions of paragraphs 5.1 through 5.3 of the Consultant Guidelines.
4.
Single Source Selection
The services of both consulting firms and individual consultants 
under Parts A, B and D of the Project estimated to cost less than $5,000 
equivalent, up to an aggregate amount not to exceed $75,000 equivalent, 
may be procured in accordance with the provisions of paragraphs 3.8 
through 3.11 of the Consultant Guidelines.
Part D:
Review by the Association of the Selection of Consultants
1.
Selection Planning
Prior to the preparation of short lists of consultants and the 
issuance to consultants of any requests for proposals, the proposed plan 
for the selection of consultants under the Project shall be furnished to 
the Association for its review and approval, in accordance with the 
provisions of paragraph 1 of Appendix 1 to the Consultant Guidelines.  
Selection of all consultants’ services shall be undertaken in accordance 
Page  19
with such selection plan as shall have been approved by the Association, 
and with the provisions of said paragraph 1.
2.
Prior Review
(a)
The procedures set forth in paragraphs 1, 2 (other than the 
third subparagraph of paragraph 2 (a)) and 5 of Appendix 1 to the 
Consultant Guidelines shall apply to the following:
(i)
all contracts for services under Parts A, B and D of 
the Project estimated to 
cost (A) $50,000 equivalent or 
more per contract for (A) consulting firms, and 
(B) 
$30,000 equivalent or more per contract for individual consultants; 
(ii)
all contracts for Parts A, B and D of the Project for 
the employment of 
consulting firms and individual 
consultants under the single source selection 
procedures 
referred to in paragraph 4 of Part C of this Section;
(iii)
all contracts procured under quality and cost-based 
selection procedures 
estimated to cost $50,000 
equivalent or more; and
(iv)
all contracts for services procured under single 
source procedures estimated 
to cost $5,000 equivalent 
or more.
(b)
Subparagraph (a) of this paragraph shall not apply to 
services required for Part C of the Project.
3.
Post Review
With respect to each contract not governed by paragraph 2 of this 
Part, the procedures set forth in paragraph 4 of Appendix 1 to the 
Consultant Guidelines shall apply.
SCHEDULE 4
Implementation Program
1.
Project Implementation Manual
(a)
The Borrower shall prepare and furnish to the Association a 
Project Implementation Manual in form and substance satisfactory to the 
Association setting out details of all procedures, guidelines, processes, 
timetables and criteria for the Project (including procedures, 
guidelines, eligibility and other Operational Manual criteria for the 
Emergency HIV/AIDS Fund). 
(b)
The Borrower shall carry out the Project in accordance with 
the Project Implementation Manual and, except as the Association shall 
otherwise agree, shall not amend or waive any provision of the Project 
Implementation Manual if, in the opinion of the Association, such 
amendment or waiver may materially and adversely affect the carrying out 
of the Project or the achievement of the objectives thereof.
2.
National AIDS Prevention and Control Council, the RACs and the WACs
(a)
The Borrower shall cause:
(i)
NAC to maintain its National Secretariat in a form 
and with functions, 
staffing and resources 
satisfactory to the Association; and
(ii)
each RAC and WAC to be maintained in a form and with 
functions, staffing and 
resources satisfactory to the 
Association.
Page  20
(b)
The RACs shall provide the necessary technical support to 
the Woredas including organizing regional training for the Woredas on 
participatory community appraisal techniques. 
(c)
The National Secretariat shall assist in the strengthening 
of the capacity of the RACs for technical, impact assessment, financial 
audits and monitoring and evaluation of Project activities.
(d)
The majority of the membership of each RAC and WAC shall be 
drawn from civil society.
3.
Project Coordination Unit 
(a)
The Borrower shall no later than September 7, 2000 establish 
and thereafter maintain in a form and with functions, staffing and 
resources satisfactory to the Association a Project Coordination Unit in 
the National Secretariat. The PCU shall be assigned the coordination, 
liaison, supervision, monitoring and longer-term planning and policy 
support responsibilities under the Project. The PCU shall also have 
oversight responsibilities in respect of the Emergency HIV/AIDS Fund.
(b)
The PCU shall be headed by a Program Coordinator acceptable 
to the Association who shall be assisted by an Assistant Program 
Coordinator.
(c)
The PCU shall employ a Finance Manager and a Financial 
Controller acceptable to the Association to assist in the management of 
the Emergency HIV/AIDS Fund and the financial and accounting requirements 
of the Project. 
(d)
The PCU shall employ a Senior Procurement Consultant and a 
Procurement Consultant to assist with the management of procurement 
activities of the Project.
(e)
The PCU shall through the National Secretariat (i) report to 
the Board of advisors of NAC on the discharge of its functions under the 
Project; and (ii) furnish to the Board, for the approval of the Board and 
NAC, consolidated annual work programs, related annual budget proposals, 
various progress reports and other documents relating to the PCU’s 
functions.
(f)
The Monitoring and Evaluation Unit shall utilize technical 
advisory services (including services of the Central Statistical 
Authority, the Regional Statistical Offices, Universities and private 
institutions) to assist it in the generation of information and analysis. 
MEU’s functions shall include (i) the development of a data collection 
system, including social impact monitoring, to be used to establish the 
performance criteria and impact for each component of the Project; (ii) 
the compilation and consolidation of monitoring information including 
data related to performance, impact, expenditure and disbursements; and 
(iii) the preparation of consolidated quarterly implementation reports 
for the overall Project.
4.
Work Plans for Multisectoral Response to the HIV/AIDS Epidemic 
In carrying out the multisectoral response to the HIV/AIDS epidemic 
under Part B of the Project, the Borrower shall cause all ministries, 
regional bureaus, departments and other agencies participating in the 
said Part of the Project, to prepare and furnish to NAC an annual work 
plan in form and substance satisfactory to the Association. The said work 
plans shall (i) be consolidated by (A) the RAC concerned at the regional 
level, and (B) the National Secretariat and the PCU at the national 
level; and (ii) submitted to NAC.
5.
Emergency HIV/AIDS Fund
Page  21
(a)
The Emergency HIV/AIDS Fund shall have two windows, namely 
(i) one window for the NGOs and private sector entities; and (ii) a 
second window for the Woredas. Grants made to the NGOs and private sector 
entities from the Emergency HIV/AIDS Fund shall only be used to finance 
items on a positive list satisfactory to the Association.
(b)
The Emergency HIV/AIDS Fund shall be set up, and its 
management carried out, by staff with qualifications and experience 
satisfactory to the Association. The PCU shall be responsible for 
overseeing the operations of the Emergency HIV/AIDS Fund.
(c)
The Borrower shall cause the RACs to set up Regional Review 
Boards with functions, staffing and resources satisfactory to the 
Association. The said Regional Review Boards shall be responsible for the 
selection for financing, under the Emergency HIV/AIDS Fund, of eligible 
proposals for regional activities to be carried out under Part C of the 
Project in accordance with terms of reference approved by NAC.
(d)
The Borrower shall set up a National Review Board with 
functions, staffing and resources satisfactory to the Association. The 
NRB shall be responsible for the selection for financing, under the 
Emergency HIV/AIDS Fund, of eligible proposals for the following 
activities to be carried out under the said Part of the Project, namely 
(i) national and inter-regional activities; and (ii) regional activities 
beyond the approval authority of the Regional Review Boards.
(e)
The eligibility of programs and initiatives for financing 
under the Emergency HIV/AIDS Fund shall be determined in accordance with 
the criteria set out in the Project Implementation Manual and the 
provisions of this Agreement. Proposals submitted for financing shall in 
the case of (i) the NGOs and private sector entities be reviewed and 
selected for financing by the NRB; and (ii) Woredas by the WACs.
(f)
The Borrower shall no later than February 28, 2001, prepare 
and furnish to the Association a Financial Management Manual for the 
Emergency HIV/AIDS Fund (including financial management procedures) in 
form and substance satisfactory to the Association.
6.
Provisions of Grant Agreements 
(a)
NAC shall make proceeds of the Emergency HIV/AIDS Fund 
available to a Beneficiary, on a grant basis, under an agreement, 
satisfactory to the Association, to be entered into between NAC and the 
Beneficiary (the Grant Agreement).
(b)
The Grant Agreement shall provide for rights adequate to 
protect the interests of the Association, the Borrower and NAC, including 
to the extent that it shall be appropriate the right to require the 
Beneficiary to:
(i)
carry out the Subproject with due diligence and 
efficiency and in accordance 
with sound administrative, 
financial, health, technical and managerial 
standards; 
(ii)
maintain adequate records for the Subproject 
concerned;
(iii)
procure all goods, works and services required for a 
Subproject or activity in 
accordance with the provisions of 
Schedule 3 to this Agreement;
(iv)
use the goods, works and services so procured 
exclusively in the carrying out 
of the Subproject or 
activity; and
(v)
permit NAC or the Borrower to inspect, by itself or 
Page  22
jointly with 
representatives of the Association if 
the Association shall so request, any 
goods, works, plants 
and construction included in the Subproject or activity, 
the operation thereof, and any relevant records and documents.
(c)
Without limitation or restriction upon the provisions of the 
preceding subparagraphs of this paragraph, a Grant Agreement shall (i) 
specify the contribution to be made by a Beneficiary carrying out a 
Subproject to the total costs of the Subproject; and (ii) provide for the 
right of NAC to suspend or terminate the right of the Beneficiary to the 
use of the proceeds of the Grant upon the failure by the Beneficiary to 
perform any of its obligations under the Grant Agreement.
7.
The Borrower shall:
(a)
maintain policies and procedures adequate to enable it to 
monitor and evaluate, on an ongoing basis, in accordance with the 
indicators satisfactory to the Association, the carrying out of the 
Project and the achievement of the objectives thereof;
(b)
prepare, under terms of reference satisfactory to the 
Association, and furnish to the Association, on or about January 15, 
2002, a report integrating the results of the monitoring and evaluation 
activities performed pursuant to paragraph (a) of this Section, on the 
progress achieved in the carrying out of the Project during the period 
preceding the date of said report and setting out the measures 
recommended to ensure the efficient carrying out of the Project and the 
achievement of the objectives thereof during the period following such 
date; and
(c)
review with the Association, by February 15, 2002, or such 
later date as the Association shall request, the report referred to in 
paragraph (b) of this Section, and, thereafter, take all measures 
required to ensure the efficient completion of the Project and the 
achievement of the objectives thereof, based on the conclusions and 
recommendations of the said report and the Association’s views on the 
matter.
8.
The Borrower shall prepare and furnish to the Association no later 
than December 15, 2000, the performance indicators referred to in 
paragraph 7 (a) of this Schedule.
9.
(a)
The Borrower shall no later than March 15 each Project Year 
(i) undertake a joint in-depth review of the carrying out of the Project; 
and (ii) take all necessary action to ensure the participation in the 
said annual review of representatives of the Implementing Agencies. The 
annual review shall assess the following (A) the overall progress made in 
the implementation of the Project; (B) the results of the monitoring and 
evaluation activities; and (C) the replicability of Project activities on 
a wider scale.
(b)
The Borrower shall, three months before such review, prepare 
and furnish to the Association reports including a technical audit and 
Beneficiary assessment, in scope and detail satisfactory to the 
Association, needed to undertake the review, including preparation of a 
program of action, to deal with deficiencies in Project implementation 
identified prior to such review.
(c)
The Borrower shall, based on such review, promptly prepare 
an action plan, satisfactory to the Association, for the further 
implementation of the Project, and shall thereafter implement such action 
plan.
Page  23