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                 REPUBLIC OF YEMEN
                                    March 6, 1996
International Development Association
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
                   Re: Credit No. 2819 YEM
                       (Transport Rehabilitation Project)
                       Payment of Contracts
Dear Sirs:
    We refer to Sections 2.20 through 2.26 of the Guidelines
for Procurement under IBRD Loans and IDA Credits published by
the International Development Association (the "Association")
in May 1992. Until such time as the official rate of exchange
of the Yemeni Rial is equivalent to the market rate of
exchange, we agree that contracts to be financed by the
Association under the above-referenced Credit will be entirely
expressed in a currency or currencies widely used in
international trade.
    Moreover, in the event that a portion of such contracts
may be paid in Yemeni Rials, that portion shall not exceed the
amount to be financed by us, which is 30% for Category (1) (a)
of the table in paragraph 1 of Schedule 1 to the Credit
Agreement of even date herewith, or 20% for Category (1) (b),
and 5% for Categories 2 (a) and (b). We further agree that the
market rate of exchange prevailing 28 days before bid opening
(or in the event that such contract is not tendered, the market
rate of exchange prevailing on the date of signature) shall
apply for the purposes of calculating the payments for any
portion of such contracts to be paid in Yemeni Rials.
Furthermore, for contracts to be completed in excess of 12
months from the date of bid opening, the rate of exchange shall
be adjusted annually to reflect the current market rate of
exchange.
                             Very truly yours,
                             REPUBLIC OF YEMEN
                             By /s/ Mohsin A. Alaini
                               Authorized Representative
CONFIRMED:
INTERNATIONAL DEVELOPMENT ASSOCIATION
By /s/ Inder K. Sud
     Acting Regional Vice President
     Middle East and North Africa