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CONFORMED COPY
LOAN NUMBER 4424-MOR
Loan Agreement
(Health Financing and Management Project)
between
KINGDOM OF MOROCCO
and
INTERNATIONAL BANK FOR RECONSTRUCTION
AND DEVELOPMENT
Dated September 29, 1999
LOAN NUMBER 4424-MOR
LOAN AGREEMENT
AGREEMENT, dated September 29, 1999, between KINGDOM OF MOROCCO (the 
Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank).
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 Bank to assist in the financing of the Project; and
(B)
the Bank has received a letter dated November 17, 1998, from the 
Borrower describing a program of actions, objectives and policies designed to 
indicate the objectives, main actions and key indicators of the health sector 
strategy (the Program) and declaring the Borrower's commitment to the execution 
of the Program.
WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, 
to extend the Loan 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
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Section 1.01. The "General Conditions Applicable to Loan and Guarantee 
Agreements for Single Currency Loans" of the Bank, dated May 30, 1995, as 
amended through December 2, 1997, (the General Conditions) constitute an 
integral part of this Agreement.
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)
“Action Plan” means, for each of the Project Hospitals, as 
hereinafter defined, the comprehensive plan setting forth the population served, 
hospital’s areas of intervention, main activities to be developed, including 
environmental protection measures acceptable to the Bank for rehabilitation of 
hospitals, anticipated revenues under cost-effective fee-schedules, expected 
outputs and the annual budgetary transfer to such Project Hospitals;
(b)
“CNSS” means the Borrower’s National Social Security Fund;
(c)
“CNOPS” means the National Fund of the Borrower’s Social Security 
Organizations;
(d)
“DHSA” means the Directorate of Hospital and Ambulatory Care of the 
Borrower’s MOH, as hereinafter defined;
(e)
“DPRF” means the Directorate of Planning and Financial Resources of 
the Borrower’s MOH as hereinafter defined;
(f)
“DRC” means the Directorate in charge of regulations and legal 
affairs of the Borrower’s MOH, as hereinafter defined;
(g)
“Dirham” means the currency of the Borrower;
(h)
“General Inspectorate” and “IG” mean the general inspectorate of 
the MOH, as hereinafter defined;
(i)
“ICG” means an Infection Control Group established and functioning 
in the MCC, as hereinafter defined;
(j)
“MCC” means a Medical Consultation Committee established and 
functioning in each of the Project Hospitals, as hereinafter defined;
(k)
“MoF” means the Borrower’s Ministry of Economy and Finance or any 
successor thereto;
(l)
“MoH” means the Borrower’s Ministry of Health or any successor 
thereto;
(m)
“MoI” means the Borrower’s Ministry of Interior or any successor 
thereto;
(n)
“MSD” means the Borrower’s Ministry of Social Development, 
Solidarity, Labor and Vocational Training, or any successor thereto;
(o)
“NHA” means a National Health Account system of analysis and 
monitoring of financial flows within the Borrower’s health sector;
(p)
“PFU” means the Project Follow-up Unit, established within MOH and 
responsible for overall coordination of all Project activities;
(q)
“Project Hospitals” and “PHs” mean the following selected hospitals 
identified under the Project: Hopital General Regional Hassan II (Agadir), 
Hopital General Regional Beni Mellal (Beni Mellal), Hopital General Provincial 
Moulay Abdallah (Essaouira), Hopital General Regional Mohamed V (Al Hoceima), 
Hopital General Regional Mohamed V (Safi), Hopital General Regional Hassan II 
(Settat), Hopital General Regional Al Idrissi (Kenitra), Hopital General 
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(Settat), Hopital General Regional Al Idrissi (Kenitra), Hopital General 
Regional Mohamed V (Tanger-Azilah), Hopital General Regional Hassan Ben al Mahdi 
(Laayoune), Hopital General Regional Mohamed V (Meknes El Menzeh), Hopital 
General Provincial Hassan II (Tantan), Hopital General Provincial Khemisset 
(khemisset), Hopital General Prefectoral Sidi Othmane (Ben M’sick Sidi Othman), 
Hopital General Provincial Mohamed V (Sefrou), and “Project Hospital” and “PH” 
mean a hospital selected under the Project;
(r)
"Special Account" means the account referred to in Section 2.02 (b) 
of this Agreement;
(s)
“TG” means a Therapeutic Group established and functioning within 
MCC, in each of the Project Hospitals;
(t)
"Management Committee" means a committee whose overall mission will 
be to monitor hospital activities and which will, inter alia, analyze PH’s 
productivity and performance, approve the Action Plan, be in charge of the 
project’s budget as established by each PH manager, approve PH’s upgrade program 
and decide on the ongoing training program for PH personnel;
(u)
"Regional Hospital Plan" means a development plan for public 
hospitals defining their hierarchy, number and distribution of beds among 
different categories of hospitals, by type of specialty, according to stated 
objectives, coordination between hospitals, deployment of personnel, equipment, 
and relationship between these hospitals and the basic health network;
(v)
“Waste Disposal and Management Plan” means the Borrower’s plan, 
acceptable to the Bank, including procedures, training and equipment for PHs’ 
waste disposal management and treatment;
(w)
“Euro” and “EUR” means the lawful currency of the member states of 
the European Union that adopt a single currency in accordance with the Treaty 
establishing the European Community, as amended by the Treaty on European Union; 
and
(x)
“NHIS” means the Borrower’s National Health Insurance System 
developed under the Project.
ARTICLE II
The Loan
Section 2.01. The Bank agrees to lend to the Borrower, on the terms and 
conditions set forth or referred to in the Loan Agreement, an amount equal to 
sixty one million and one hundred thousand Euro (EUR61,100,000).
Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan 
Account in accordance with the provisions of Schedule 1 to this Agreement for 
expenditures made (or, if the Bank shall so agree, to be made) in respect of the 
reasonable cost of goods and services required for the Project described in 
Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan.
(b)
The Borrower may, for the purposes of the Project, open and 
maintain in Dirham a special deposit account in its General Treasury on terms 
and conditions satisfactory to the Bank.  Deposits into, and payments out of, 
the Special Account shall be made in accordance with the provisions of Schedule 
6 to this Agreement.
Section 2.03. The Closing Date shall be December 31, 2003 or such later 
date as the Bank shall establish.  The Bank shall promptly notify the Borrower 
of such later date.
Section 2.04. The Borrower shall pay to the Bank a fee in an amount of one 
percent (1%) of the amount of the Loan. On, or promptly after the Effective 
Date, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account 
and pay to itself the amount of said fee.
Section 2.05. The Borrower shall pay to the Bank a commitment charge at 
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Section 2.05. The Borrower shall pay to the Bank a commitment charge at 
the rate of three-fourths of one percent (3/4 of 1%) per annum on the principal 
amount of the Loan not withdrawn from time to time. In accordance with Section 
3.02 of the General Conditions, this charge will accrue from a date sixty (60) 
days after the date of the Loan Agreement to the respective dates on which 
amounts shall be withdrawn by the Borrower from the Loan Account or shall be 
cancelled.
Section 2.06. (a) The Borrower shall pay interest on the principal amount 
of the Loan withdrawn and outstanding from time to time, at a rate for each 
Interest Period equal to LIBOR Base Rate plus LIBOR Total Spread.
(b)
For the purposes of this Section:
(i)
"Interest Period" means the initial period from and 
including the date of this 
Agreement to, but excluding, the 
first Interest Payment Date occurring 
thereafter, and 
after the initial period, each period from and including an 
Interest Payment Date to, but excluding the next following Interest 
Payment Date.
(ii)
"Interest Payment Date" means any date specified in Section 
2.07 of this 
Agreement.
(iii)
"LIBOR Base Rate" means, for each Interest Period, the 
London interbank 
offered rate for six-month deposits in 
Euro for value the first day of such 
Interest Period (or, in the 
case of the initial Interest Period, for value the 
Interest 
Payment Date occurring on or next preceding the first day of such 
Interest Period), as reasonably determined by the Bank and 
expressed as a 
percentage per annum.
(iv)
"LIBOR Total Spread" means, for each Interest Period: (A) 
three fourth of one 
percent (3/4 of 1%); (B) minus (or plus) 
the weighted average margin, for such 
Interest Period, below (or 
above) the London interbank offered rates, or other 
reference 
rates, for six-month deposits, in respect of the Bank’s outstanding 
borrowings or portions thereof allocated by the Bank to fund single 
currency 
loans or portions thereof made by it that include the 
Loan; as reasonably 
determined by the Bank and 
expressed as a percentage per annum.
(c)
The Bank shall notify the Borrower of LIBOR Base Rate and LIBOR 
Total Spread for each Interest Period, promptly upon the determination thereof.
(d)
Whenever, in light of changes in market practice affecting the 
determination of the interest rates referred to in this Section 2.06, the Bank 
determines that it is in the interest of its borrowers as a whole and of the 
Bank to apply a basis for determining the interest rates applicable to the Loan 
other than as provided in said Section, the Bank may modify the basis for 
determining the interest rates applicable to the Loan upon not less than six (6) 
months' notice to the Borrower of the new basis. The basis shall become 
effective on the expiry of the notice period unless the Borrower notifies the 
Bank during said period of its objection thereto, in which case said 
modification shall not apply to the Loan.
Section 2.07. Interest and other charges shall be payable semiannually on 
March 15 and September 15 in each year.
Section 2.08. The Borrower shall repay the principal amount of the Loan in 
accordance with the amortization schedule set forth in Schedule 3 to this 
Agreement.
ARTICLE III
Execution of the Project
Section 3.01. (a) The Borrower declares its commitment to the objectives 
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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 Part A of the Project  through DHSA and the Project Hospitals, 
and Parts B and C of the Project through DPRF, with due diligence and efficiency 
and in conformity with appropriate administrative, financial, medical, public 
health administration and engineering practices, and shall provide, 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 Bank shall otherwise agree, the 
Borrower shall carry out the Project in accordance with the Implementation 
Program set forth in Schedule 5 to this Agreement.
Section 3.02. Except as the Bank 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 Loan shall be governed by the provisions of 
Schedule 4 to this Agreement.
Section 3.03. For the purposes of Section 9.08 of the General Conditions 
and without limitation thereto, the Borrower shall:
(a)
prepare, on the basis of guidelines acceptable to the Bank and 
furnish to the Bank 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 Bank, 
a plan for the future operation of the Project; and
(b)
afford the Bank a reasonable opportunity to exchange views with the 
Borrower on said plan.
ARTICLE IV
Financial Covenants
Section 4.01. (a) The Borrower shall maintain or cause to be maintained 
records and accounts adequate to reflect in accordance with sound accounting 
practices the operations, resources and expenditures in respect of the Project 
of the departments or agencies of the Borrower responsible for carrying out the 
Project or any part thereof.
(b)
The Borrower shall:
(i)
have the records and accounts referred to in paragraph (a) of this 
Section 
including those for the Special Account for each 
fiscal year audited, in 
accordance with appropriate auditing 
principles consistently applied, by 
independent auditors 
acceptable to the Bank;
(ii)
furnish to the Bank as soon as available, but in any case not 
later than six 
(6) months after the end of each such year, the 
report of such audit by said 
auditors, of such scope and in such 
detail as the Bank shall have reasonably 
requested; and
(iii)
furnish to the Bank such other information concerning said records 
and 
accounts and the audit thereof as the Bank shall from time 
to time reasonably 
request.
(c)
For all expenditures with respect to which withdrawals from the 
Loan Account were made on the basis of statements of expenditure, the Borrower 
shall:
(i)
maintain or cause to be maintained, in accordance with 
paragraph (a) of this 
Section, records and accounts reflecting 
such expenditures;
(ii)
retain, until at least one year after the Bank has received 
the audit report 
for the fiscal year in which the last 
withdrawal from the Loan Account was 
made, all records 
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withdrawal from the Loan Account was 
made, all records 
(contracts, orders, invoices, bills, receipts and other 
documents) evidencing such expenditures;
(iii)
enable the Bank’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 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.
ARTICLE V
Remedies of the Bank
Section 5.01. Pursuant to Section 6.02 (p) of the General Conditions, the 
following additional event is specified, namely, that a situation shall have 
arisen which shall make it improbable that the Program or a significant part 
thereof will be carried out.
ARTICLE VI
Termination
Section 6.01. The date ninety (90) days after the date of this Agreement 
is hereby specified for the purposes of Section 12.04 of the General Conditions.
ARTICLE VII
Representative of the Borrower; Addresses
Section 7.01. The Minister of  Economy and Finance of the Borrower is 
designated as representative of the Borrower for the purposes of Section 11.03 
of the General Conditions.
Section 7.02. The following addresses are specified for the purposes of 
Section 11.01 of the General Conditions:
For the Borrower:
Ministry of  Economy and Finance
Rabat
Kingdom of Morocco
Cable address: 
Telex:
MINFIN 36715
36715
For the Bank:
International Bank for Reconstruction
  and Development
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Cable address: 
Telex:
INTBAFRAD
248423 (MCI) or
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 
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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.
KINGDOM OF MOROCCO
By /s/ Fathallah Oualalou
Authorized Representative
INTERNATIONAL BANK FOR
   RECONSTRUCTION AND DEVELOPMENT
By /s/ Kemal Dervis
Regional Vice President
Middle East and North Africa
SCHEDULE 1
Withdrawal of the Proceeds of the Loan
1.
The table below sets forth the Categories of items to be financed out of 
the proceeds of the Loan, the allocation of the amounts of the Loan to each 
Category and the percentage of expenditures for items so to be financed in each 
Category:
Amount of the
   % of
Loan Allocated
Expenditures
Category
    (Expressed in Euro)
to be Financed
(1)
Civil works
   12,960,000
85%
(2)
Goods
   30,890,000
100% of foreign
expenditures and
85% of local
expenditures
(3)
Consultants' services
   11,100,000
100%
and training
(4)
Fee
      611,000
Amount due under
Section 2.04 of
this Agreement
(5)
Unallocated
    5,539,000
TOTAL
   61,100,000
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; and
(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.
3.
Notwithstanding the provisions of paragraph 1 above, no withdrawals shall 
be made in respect of payments made for expenditures prior to the date of this 
Agreement, except that withdrawals, in an aggregate amount not exceeding the 
equivalent of EUR3,050,000 may be made on account of payments made for 
expenditures before that date but after October 15, 1998.
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4.
The Bank may require withdrawals from the Loan Account to be made on the 
basis of statements of expenditure for expenditures under contracts not 
exceeding $500,000 equivalent for works, $500,000 equivalent for goods, $100,000 
equivalent for consulting firms and $50,000 equivalent for individual 
consultants, under such terms and conditions as the Bank shall specify by notice 
to the Borrower.
SCHEDULE 2
Description of the Project
The objectives of the Project are to assist the Borrower in: (i) improving 
the efficiency and quality of public hospital services, (ii) introducing new 
financial mechanisms for the health sector, and (iii) strengthening the MoH’s 
policy formulation and sector management capacities.
The Project consists of the following parts, subject to such modifications 
thereof as the Borrower and the Bank may agree upon from time to time to achieve 
such objectives:
Part A:
Strengthening Hospital Management and Improving Hospital Service 
Quality
1.
Improvement and strengthening of the legal, managerial and organizational 
framework for Project Hospitals in order to reinforce financial autonomy, 
accountability and performance-oriented management.
2.
Improvement of health service quality for the development of quality 
enhancing techniques through: (a) the training of medical and para-medical 
hospital staff, (b) the setting up of quality control mechanisms, and (c) the 
rehabilitation of Project Hospitals upon satisfactory introduction of new 
management tools and procedures.
Part B:
Improving Health Sector Financing
Technical support to the gradual implementation of a mandatory NHIS and to 
the financing of the economically disadvantaged population through: (a) the 
carrying out of studies on (i) assessment of existing health insurance systems, 
(ii) definition of health care financing regimes and their follow-up information 
systems, (iii) definition of cost-control tools for the PH; and (b) the training 
of the health financing regimes’ management personnel.
Part C:
Strengthening the MOH’s Health Policy and Decision Making Capacity
1.
Development of NHA and of a database aimed at improving effective health 
policy formulation.
2.
Technical support to MoH in its decentralization efforts, through the 
provision of consultant’s services.
3.
Implementing a training program in policy formulation, decision-making, 
executive management and financial analysis.
***
The Project is expected to be completed by June 30, 2003.
SCHEDULE 3
Amortization Schedule
Payment of Principal
Date Payment Due
(Expressed in Euro)*
September 15, 2004
1,435,000
March 15, 2005
1,465,000
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September 15, 2005
1,500,000
March 15, 2006
1,535,000
September 15, 2006
1,570,000
March 15, 2007
1,610,000
September 15, 2007
1,645,000
March 15, 2008
1,685,000
September 15, 2008
1,720,000
March 15, 2009
1,760,000
September 15, 2009
1,800,000
March 15, 2010
1,845,000
September 15, 2010
1,885,000
March 15, 2011
1,930,000
September 15, 2011
1,975,000
March 15, 2012
2,020,000
September 15, 2012
2,065,000
March 15, 2013
2,115,000
September 15, 2013
2,165,000
March 15,  2014
2,215,000
September 15, 2014
2,265,000
March 15, 2015
2,315,000
September 15, 2015
2,370,000
March 15, 2016
2,425,000
September 15, 2016
2,480,000
March 15, 2017
2,540,000
September 15, 2017
2,595,000
March 15, 2018
2,655,000
September 15, 2018
2,720,000
March 15, 2019
2,795,000
__________________________
*
The figures in this column represent the amount in Euro to be repaid, 
except as provided in 
Section 4.04 (d) of the General Conditions.
SCHEDULE 4
Procurement
Section I.
Procurement of Good and Works
Part A:
General
Goods and works shall be procured in accordance with 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 and 
September 1997 (the Guidelines) and the following provisions of this Section.
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.
Part C:
Other Procurement Procedures
1.
National Competitive Bidding
Goods estimated to cost less than $500,000 equivalent per contract, up to 
an aggregate amount not to exceed $5,000,000 equivalent, may and works shall, be 
procured under contracts awarded in accordance with the provisions of paragraphs 
3.3 and 3.4 of the Guidelines.
2.
National Shopping
Goods estimated to cost less than $50,000 equivalent per contract, up to 
an aggregate amount not to exceed $3,000,000 equivalent, may be procured 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.
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Part D:
Review by the Bank 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 Bank, 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 agreed with the Bank, and with the 
provisions of said paragraph 1.
2.
Prior Review
With respect to each contract for goods and works estimated to cost the 
equivalent of $500,000 or more, the procedures set forth in paragraphs 2 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
Consultants’ services shall be procured in accordance with the provisions 
of the Introduction and Section IV of the "Guidelines:  Selection and Employment 
of Consultants by World Bank Borrowers" published by the Bank in January 1997 
and revised in September 1997 (the Consultant Guidelines) and the following 
provisions of Section II of this Schedule.
Part B:
Quality- and Cost-based Selection
Except as otherwise provided in Part C of this Section, consultants’ 
services 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.
Part C:
Other Procedures for the Selection of Consultants: 
Individual Consultants
Services for individual consultants under the Project 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.
Part D:
Review by the Bank of the Selection of Consultants
1.
Selection Planning
Prior to 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 Bank, 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 with such selection plan as shall have been 
agreed with the Bank, and with the provisions of said paragraph 1.
2.
Prior Review
(a)
With respect to each contract for the employment of consulting 
firms estimated to cost the equivalent of $100,000 or more, 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.
Page  11
(b)
With respect to each contract for the employment of individual 
consultants estimated to cost the equivalent of $50,000 or more, the 
qualifications, experience, terms of reference and terms of employment of the 
consultants shall be furnished to the Bank for its prior review and approval. 
The contract shall be awarded only after said approval shall have been given.
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 5
Implementation Program
1.
Responsibility for the overall coordination and management of the Project 
shall be vested with the PFU. The Borrower shall maintain the PFU with terms of 
reference satisfactory to the Bank and shall provide it at all times with such 
staff, functions and authorities as to carry out the aforementioned 
responsibility.
2.
The Borrower shall provide DHSA, DPFR, DRC and Project Hospitals at all 
times with such staff, functions and authorities as to enable them to carry out 
their respective parts of the Project.
3.
The Borrower, through MoH, shall enter into an annual Action Plan with 
each PH and shall allocate the necessary annual budgetary resources for each of 
the PH on the basis of said Action Plan.
4.
The Borrower shall: (a) through TG and ICG’s merging into MCC, enlarge 
MCC’s role and, (b) broaden IG’s role for quality control of hospital services 
and their conformity to generally accepted standards.
5.
The Borrower shall, by November 30, 1998, establish a timetable outlining 
actions to be undertaken for the incremental setting-up of a health coverage and 
a financing system for the economically disadvantaged, and shall, in accordance 
with such timetable and under terms of reference acceptable to the Bank, 
carry-out the necessary studies covering inter alia:
(a)
an assessment of the existing private and public health insurance 
systems;
(b)
definition of mechanisms for cost-control and performance 
improvement to be set up in the PHs;
(c)
definition of health care financing regimes aimed at the coverage 
of different social categories; and
(d)
definition of an information system for the monitoring and 
follow-up of the financing regimes’ management and financial viability.
6.
The Borrower shall carry out the training program under the Project in 
accordance with terms of reference, and pursuant to a time schedule, acceptable 
to the Bank.
7.
The Borrower shall, twelve (12) months after the date of this Agreement: 
(a) take the following administrative acts: (i) delegation of the Minister of 
Health’s signature to the PH directors in matters related to PH personnel 
management, (ii) revision of the PH internal regulations, including the creation 
of an infirmary care unit, (iii) setting-up of Management Committees for the 
PHs; and (b) prepare and execute a management training program for PHs’ 
directors and other PHs’ relevant staff, under terms of reference and according 
to a timetable acceptable to the Bank.
8.
The Borrower shall, twenty four (24) months after the date of this 
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8.
The Borrower shall, twenty four (24) months after the date of this 
Agreement: (a) submit to the council of government a draft legislation on the 
national health care system, (b) prepare, under terms of reference satisfactory 
to the Bank, and submit to the Bank, a Regional Hospital Plan for the PHs’ 
regions, (c) adopt the Waste Disposal and Management Plan for each PH.
9.
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 agreed upon 
between the Borrower and the Bank the carrying out of the Project and the 
achievement of the objectives thereof;
(b)
(i) prepare and submit to the Bank in January and July of each year 
of Project implementation, a report integrating the results of the activities 
under the Project, and (ii) prepare, under terms of reference satisfactory to 
the Bank, and furnish to the Bank, on or about March 30, 2001, 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 Bank, by June 30, 2001, or such later date as the 
Bank shall request, the report referred to in subparagraph (b) of this 
paragraph, 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 Bank views on 
the matter.
SCHEDULE 6
Special Account
1.
For the purposes of this Schedule:
(a)
the term "eligible Categories" means Categories 1, 2 and 3 set 
forth in the table in paragraph 1 of Schedule 1 to 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 Schedule 1 to this 
Agreement; and
(c)
the term "Authorized Allocation" means an amount equivalent to  
EUR4,600,000 to be withdrawn from the Loan Account and deposited into the 
Special Account pursuant to paragraph 3 (a) of this Schedule, provided, however, 
that unless the Bank shall otherwise agree, the Authorized Allocation shall be 
limited to an amount equivalent to EUR2,800,000 until the aggregate amount of 
withdrawals from the Loan Account plus the total amount of all outstanding 
special commitments entered into by the Bank pursuant to Section 5.02 of the 
General Conditions shall be equal to or exceed the equivalent of EUR9,000,000.
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 deposit into the Special Account 
of an amount or amounts 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 into the 
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on behalf of the Borrower, withdraw from the Loan Account and deposit into the 
Special Account such amount or amounts as the Borrower shall have requested.
(b)
(i)
For 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 Account 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.
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;
(b)
if the Borrower shall have failed to furnish to the Bank, 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 the Bank pursuant to said Section 
in respect of the audit of the records and accounts for the Special Account;
(c)
if, at any time, the Bank 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 Loan Account pursuant to the provisions of Section 6.02 of 
the General Conditions; or
(d)
once the total unwithdrawn amount of the Loan allocated to the 
eligible Categories, minus the total amount of all outstanding special 
commitments 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.
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(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.